n// CORNELL UNIVERSITY LIBRARY Digitized by Microsoft® 3^1924 092 556 368 Date Due Digitized by Microsoft® This book was digitized by Microsoft Corporation in cooperation witli Cornell University Libraries, 2007. You may use and print this copy in limited quantity for your personal purposes, but may not distribute or provide access to it (or modified or partial versions of it) for revenue-generating or other commercial purposes. Digitized by Microsoft® Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924092556368 D/Q/Y/zeu by Microsoft® Digitized by Microsoft® The Industrial Development of Nations Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® IF THERE BE ANY ONE TRUTH IN POLITICAL E.roNOMY MORE SACREIl AND IRREFRAGIBI.E THAN ANOTHER, IT IS. THAT THE PROSPERITY OF NATIONS BEARS AN EXACT PROPORTION TO THE ENCOURAGEMENT OF THEIR DOMESTIC INDEISTRY AND THAT THEIR DECAY AND DECREPITUDE COMMENCES AND PROCEEDS PARI PASSU WITH THEIR NEGLECT OF IT." MATHEW CAREY. Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® The Industrial Development OF Nations AND A HISTORY OF THE TARIFF POLICIES OF THE UNITED STATES, AND OF GREAT BRITAIN, GERMANY, FRANCE, RUSSIA AND OTHER EUROPEAN COUNTRIES. BY GEORGE B. CURTISS, ESQ. counselor at law Author of "Protection and Prosperity." AUTHOR'S EDITION Volume II. THE UNITED STATES FROM 1607 TO 1860. Neither the conversion of the world to the Christian religion, the establish- ment of wise ordinances of civil government, nor the industrial growth of pros- perous nations, has come about by leaving man to the blind fate of chance, or by his submission to the control of that course of events called by free trade econo- mists "the laws of nature." BINGHAMTON. N. Y. GEORGE B. CURTISS - - PUBLISHER MCMXII fo Digitized by Microsoft® COPYRIGHT, 1912, BY GEORGE B. CURTISS, Esq ENTERED AT STATIONERS' HAXL, LONDON. All rights reserved. f\- H(pl^^ Digitized by Microsoft® ILLUSTRATIONS. MathEw Carey Frontispiece facing page George Washington 64 Ai,EXANDER Hamieton 132 Thomas Jeeeerson 144 James Madison 158 John Quincy Adams 232 Andrew Jackson 306 Daniee Webster 476 Henry Ceay 492 Horace GrEEEEy 524 Digitized by Microsoft® Digitized by Microsoft® TABLE OF CONTENTS. PART I. PERIOD 1607 TO 1789. y^ PAGE Chaptbe I. — EoREiGN Tradb and British Navigation Laws— The Produce of the Forests — Fisheries .... 1 Chapter II. — Raw Materials — Manueactures— British Legislation Restraining Manufactures 14 1768 TO 1776. Chapter III. — Causes Which Precipitated the Revolutionary War-^ Revolt Against the British Policy of Colonial Government — Preparations for the Struggle . 37 Chapter IV. — The States Under the Articles of Confederation — The Depression in Business — Experience Under Free ' Trade — Rise of the Protective System — Tariff Legislation of the States — Adoption of the Federal Constitution 51 PART II. PROTECTIVE PERIOD. 1789 TO 1834. Chapter V. — Industrial Revolution — State of Industrial Arts AT Close of the Eighteenth Century — Inventions of Labor-Saving Machinery — Rise of the Factory System in England — Legislation by Great Britain ,- Against the Export of Machinery and Emigration OF Mechanics — Effect of British Navigation - Laws on American Shipping and Trade ... 79 Chapter VI. — Protection to Shipping — War of 1812 .... 101 Chapter VIL— Tariff Legislation 1789 to 1816 123 Chapter VIII.— Tariff Act of April 27, 1816— American Market Overwhelmed by Foreign Goods — Panic of 1819 to 1824 156 Digitized by Microsoft® CONTENTS. Chapter IX.— Popular Discussion oif the Tarifi? Question- -Act OF 1824 — Failure oe the WooeEn Bile oE 1827 — The Harrisburg Convention — Adams' Administra- tion and Jackson's First Term — The Act oe 1828 185 Chapter X. — Revision oe the TariEE by the Act oe July 14, 1832 — Protection vs. Free Trade — The Prosperous Condi- tion OE THE Country — Origin oe the Free Trade Party 224 Chapter XI. — Growth oe Industries Erom 1816 to 1836 — Foreign Trade— Agricultural Productions— Markets . 246 PART III. PERIOD 1834 TO 1860. Chapter XII. — Sectional Opposition to Protection — Protection vs. Free Trade — Sectional Objections to the Pro- tective Policy 301 Chapter XIII. — Jackson's Second Term — NulliEication Ordinance OE South Carolina — The Compromise Act oe 1833— Panic oe 1837-1842 and its Causes ... 333 Chapter XIV. — Return to Protection — Act oe August 30, 1842 — Revenues — Exports and Imports — Return oe Pros- perity — Prices — Expansion oe Industries and Trade — Failure to Overthrow Protection in 1844 361 Chapter XV. — Election oe James K. Polk in 1844 — Secretary Robert J. Walker's Report Analyzed — Principles oe Pro- tection AND Free Trade Contrasted 391 Chapter XVI. — Economic Discussion 440 Chapter XVII. — The Revenue or Free Trade TariEEs oe 1846 and 1857 — Supremacy oe the Democratic Party — Economic Conditions — Railroad Building — Gold Production — Foreign Trade — Revenues — Depressed Condi- tion OE Manufactures — Panic oe 1857 .... 476 Digitized by Microsoft® LIST OF PRINCIPAL TABLES. pagh; Total Official Value of Exports to and Imports from Gre;at Britain BY THF American Colonies, from 1701 to 1772 8 Trade between United States and Great Britain from 1783 to 1789 Inclusive 56 Rates and Principal Articles upon which Ad Valorem Duties were Imposed From 1789 To 1812. (Table No. 1) 133 Rates and Principal Articles upon which Specific Duties wErE Im- posed FROM 1789 TO 1812. (Table No. 2) 136 Census of Manufactories, 1810 140 Values of Principal Articles of Merchandise Imported into the United States, 1821-1840 (Table No. 3) 277 Values of Principal Agricultural Products Exported from United States, 1821, 1825, 1830, 1835, 1840, 1842; also Products of Forests and Fisheries (Table No. 4) 278 Value of Various Manufactures of the United States Exported in EACH of the AftermEntioned Years, 1827, 1830, 1835, 1840, 1842 (Table No. 5) 279, 280 Destination of Wheat Flour Exported from the United States in 1821, 1825, 1830, 1835, 1840, 1842 (Table No. 6) 281 Increase of Population in the United States Compared with the Growth and Export of Wheat, 1790-1840 (Table No. 7) . . . 282 Rates and Principal Articles upon which Specific Duties were Im- posed BY THE Several Acts of 1816, 1824, 1828, 1832, 1842, 1846 (Table No. 8) 289 Rates and Principal Articles upon which Ad Valorem Duties were Imposed by the Several Acts of 1816, 1824, 1828, 1832, 1842, 1846 (Table No. 9) 297 Statement of Various Classes of Agricultural Capital, in the United States and the Value Thereof, June 1, 1850 (Table No. 11) 386 Production of Gold, 1849 to 1860 (Table No. 12) 468 Exports and Imports of Merchandise from June 30, 1846, To June 30, 1860 (Table No. 13) 500 ix Digitized by Microsoft® X LIST OF TABLES. Summary of the PrincipaIv Classes oif Exports ot Domestic Products :prom the United States, showing the Vaeue oe each Class, 1846- 1860 inclusive (Table No. 14) 503 Exports oe Manufactures, 1846 to 1860 inclusive (Table No. IS) . 505 Imports oe Principal Manueactured Articles into the United States EROM Great Britain EROM 1846 TO 1850 (Table No. 17) . . . 511,512 Receipts and Expenditures oe the United States from June 30, 1846 TO June 30, 1861 (Table No. 18) 527, 528 Statistics of Manufactures of the United States 1850. Table 10 533-541 Exports of Grains and Provisions from the United States, 1846 To 1860. Table 16 542-549 Digitized by Microsoft® THE TARIFF QUESTION IN THE UNITED STATES. PART I. PERIOD 1607 TO 1789. The only use of American colonies or West India Islands, is the monopoly of their consumption and the carriage of their produce. — I,oed Sheffield. CHAPTER I. Foreign Trade and British Navigation Laws — The Produce o? the Forests — Fisheries. An account of the discoveries, explorations and colonization in North America belongs to the subject of general history, rather than to a treatise on the trade and industries of the thirteen colonies. Neither is it necessary to treat of the specific forms of government under which the settlements were planted and existed. Mr. McCulloch, in his article on the colonies, after describing the efforts which were made by the Spanish and British to find gold in America, and the objects which actu- ated the early visits of the Spaniards to Central and South America, speaking of those who settled the British possessions, says : The founders of the colony of Virginia had been actuated solely by the hope of gain ; but the colonies that were soon established in New England were chiefly planted by men who fled from religious and political persecution. From this it might be inferred, and it is certainly claimed by some, that the British settlers in North America came from the two types of and' **"* political civilization which, in the main, divided the opposing forces of l"%j^J^ the mother country; that the Cavaliers and the Royalists settled in the <"'^<'"'^»- South, while the Puritans, imbued with the ideas of constitutional gov- ernment, civil and religious liberty, settled the New England colonies. Hence, at the very outset fundamental differences of opinion which were deep rooted became so early intrenched that even to this day they have not been fully effaced. The founders and builders of the whole thirteen colonies, however, came from the same stock, the Anglo-Saxon, and were reared under what Ivas then the most enlightened civilization of the Old World. They (1) Digitized by Microsoft® TRADE AND INDUSTRY IN THE COLONIES. Early industrial lite. brought with them the common law of England and that system of juris- prudence which gave protection and security to person and property. They inherited courage, perseverance, industry, integrity and frugality; they brought with them that profound respect for government and law and that discipline in society which among men are the foundation of moral and material progress. Separated from the environments of a life under a monarchical form of government, surrounded by conditions which begat a spirit of self-reliance and independence, suffering from unjust restrictions of their natural rights, they finally rejected the sov- ereignty of the king and every vestige of feudalism, and evolved a form of government and a system of civil institutions based on the sovereignty of the individual. The industrial life of these early settlers was necessarily confined to those pursuits which were permitted by the legislative policy of the mother country, the necessities of their condition, and the opportunities presented in the settlement and development of a new and unbroken country. The pursuits of agriculture, commerce, shipping, fisheries and lum- bering, the clearing of the forests for building and tillage, the growth of settlements and villages and of domestic manufactures for the supply of clothing and implements, will all be briefly considered in order that the reader may be able to trace the industrial development of the people and the conditions existing when the independence of the colonies was declared, and when, later on, the States assumed the responsibilities of a sovereign nation. The three primary sources from which they derived their subsistence and made their accumulations were the forests, fisheries and the soil. Forests and Timber. The produce of the forests and trade in furs with the Indians fur- nished the first articles of export; besides, the fisheries furnished an inducement to navigation. The extensive lumbering interests carried on by the colonists also provided a market for various kinds of merchan- dise and produce. The products of the forest, exported, were composed of lumber, of the various kinds, naval stores (such as tar, pitch, turpen- tine and rosin), pot and pearl ashes, skins and furs, ginseng, oak bark and dye woods. The term " lumber " comprised boards, plank, scantling and timber for masts, spars and buildings, and those of minor importance, as staves and heading, hoops and poles. In 1770 the official value of the different kinds of lumber exported from the colonies was about $686,588. The trade in naval stores became very large. Before they were Digitized by Microsoft® EARLY TRADE CONDITIONS. Crude Exports. produced in her North American possessions England obtained them from the north of Europe, and principally from the Pitch and Tar Com- pany of Sweden. This company induced Great Britain to grant by the Third and Fourth Anne (1703) a bounty of four pounds per ton on the importation of tar and pitch, and three pounds per ton on the importation of rosin and turpentine from the North American colonies. A reward was also given for the construction of ships of large size (Anti. vol 1, p. 86). In 1770 the value of naval articles exported from the American plantations amounted to about 34,693 pounds sterling. In 1761 a society instituted in London for the encouragement of arts, manufactures and commerce offered large premiums to those who should import the great- est quantity of pot and pearl ashes from the North American colonies. In 1770 the value of these articles exported was estimated at 64,660 pounds sterling. The New England colonies supplied most of the white pine masts for the navy, live oak and other kinds of oak, white and red oak staves, hooks, shingles and clapboards, manufactured by the farmers during the winter to exchange for manufactured goods. For a long time the taxes were paid in wood and provisions, prices being fixed by official authority ; white oak staves three pounds per thousand; red oak hogshead staves, three shillings per thousand; Indian corn, three shillings per bushel; wheat, five shillings. Furs and skins constituted a portion of American exports. In 1770 the official value of furs exported from all the North American colonies, including Canada, was 149,244 pounds sterling. Oak and other bark and wood for tanning and dyeing were also articles of export. ShIP-BUIIvDING. It is not intended here to attempt to trace the consecutive steps in the growth of ship-building. The abundance of timber so well suited to this purpose, together with the natural outlets on the ocean, bays and navigable rivers, made ship-building an important industry. Mr. Bishop tells us that on September 10, 1623, three years after the landing of the Pilgrims, a ship of 140 tons, called the Anne, was freighted at Plymouth, and returned to England with a cargo of clap- boards and a few beaver skins and other furs. In 1627 a fishing boat was constructed by the people of Plymouth, and in 1641 a vessel of 50 tons burden was constructed by an association of thirteen members. During the colonial period Salem, Newburyport, Salisbury, Boston, Charlestown, Ipswich, Haverhill and other places in Massachusetts; Portsmouth, New Hampshire; several points on the coast of Maine; New London, Connecticut ; Newport, Bristol, Warren and other places in Rhode Island, became important centers of this industry. Digitized by Microsoft® TRADE AND INDV8TRT IN TEE COLONIES. Monopoly of the Dutch West India Company. The ship- huildlng Industry. mes in Ship-building in New York was not so early engaged in, by reason of the fact that until 1664 it was under the Dutch government, which had given to the Dutch West India Company a monopoly of the trade. This company discouraged the building of ships. Shortly after the occupation by the British the industry was promoted, and by 1696 New York had 40 square-rigged vessels, 62 sloops and 60 boats. The industry continued until the Revolution, when it was checked by the English occupation of New York. The business of ship-building commenced in New Jersey in 1683. It was not so extensively engaged in here as in the New England colo- Soon after the arrival of Penn, in 1683, a shipyard was established Philadelphia. The industry steadily progressed there during the eighteenth century. There were nineteen ships built in 1724, of 959 tons; in 1769, 469 tons; in 1770, 2350 tons; in 1771, 1307 tons. Ship-building was engaged in at Wilmington, Delaware, as early as 1642. Maryland began this industry later. In 1752 there was only one sea-going vessel owned in Baltimore. In 1769, however, there was built 1344 tons. Although the export trade of Virginia was very large, especially in carrying tobacco, the industry of ship-building was neglected until shortly before the Revolution. The same is true of North and South Carolina and Georgia, although their forests contained some of the very best timber for the purpose. European traders came to Portsmouth and other places to build ships, which they could do much cheaper than at home by reason of the large profits on the goods that they sold to the colonists. Ships were built also at Portsmouth of two and three hundred tons for the West India trade. Most of these, freighted with lumber, fish, live stock, etc., proceeded to the Islands, where the cargoes were exchanged for sugar, which was taken to England in the same ship, and there exchanged for merchandise for the return voyage. Other vessels laden with spars and timber proceeded directly to the British ports and were sold with other cargoes for the same purpose. The red and brown cedar of the American forests was a very durable wood, and the red pine was one of the most valuable woods for the decks and ceilings of ships, the oak durable and strong for the sides of war and marine ships, the tall pines for masts. These materials, not only so desirable but produced so cheaply and in such abundance, formed the basis of the shipping and ship-building industry, and also of a large ex- port trade. The vessels built in the American colonies in 1772 numbered 172, and had 26,536 tonnage, divided among the colonies as follows: in New England, 149; in New York, 15; New Jersey, 1; Pennsylvania, 8; Virginia, 7; North Carolina, 3; South Carolina, 2; Georgia, 5.^ 1 American Legislation of the United States. MaoGregor. Digitized by Microsoft® EARLY TRADE CONDITIONS. Fisheries. The taking of fish, not only for food, but for commerce, early became a very extensive industry. The rivers and streams were filled with a great variety of the most desirable fishes for food, and ocean fishing along the coast of New England and on the Banks of Newfoundland was in very many respects the most valuable in the world. The great fishing banks of Newfoundland were about 200 miles broad and 600 miles in length. The cod fishing on the Newfoundland coast was commenced a few years after its discovery and soon became a famous resort by the English, Biscayans and French for the catching of cod. The rights of the French and the English finally became settled and con- firmed by treaties, and since the Revolutionary war the rights of the United States have also been preserved and embodied in commercial treaties. The inhabitants of Massachusetts and other New England States early began to carry on the fisheries along the adjacent shores, and after- wards on the banks and coasts of Newfoundland and Nova Scotia. Ac- cording to Mr. Pitkin's statement, before the Revolutionary war about 4000 of the inhabitants were employed in the fisheries, chiefly in schoon- ers and small crafts measuring about twenty tons. The average quan- tity of fish caught annually was about 350,000 quintals, of the value of 200,000 pounds sterling. Early New England fish- eries. Whale Fisheries. The New England whale fisheries were commenced from the island of Nantucket by an adventurous and hardy race of settlers. In 1715 the number of vessels engaged from this port was six, all sloops of from 30 to 40 tons burden. Larger vessels were soon introduced as the busi- ness increased ; additional men were employed, Boston at that time being the chief market, whose merchants began purchasing the oil and shipping it to England in their own vessels. In 1745 a small vessel from Nan- tucket was loaded and despatched to England with a cargo of oil. The enterprise proved prosperous, and from that time on the traffic increased and grew profitable in exchanging the oil for iron, hardware, hemp, sailcloth and other commodities, which were sold at a profit upon the return of the vessel. Ships were enlarged from 30 to 100 tons burden. The business was extended, and vessels were soon despatched to Davis Strait and other points. Whaling continued to be the main occupation of the inhabitants of Nantucket, and attempts were made to carry on the business from other parts of the country. Prior to the American Revolution, the American whale fisheries Exports of whale all. Digitized by Microsoft® TRADE AND INDUSTRY IN THE COLONIES. Manufac- ture of candles. had been extended as follows: To Davis Strait, in the year 1746; the Island of Disco, in the mouth of Baffin's Bay, in the year 1751 ; the Gulf of St. Lawrence, in the year 1761 ; the coast of Guinea, in the year 1765; eastward of the Banks of Newfoundland, in 1765; the coast of Brazil, in 1774. (See History of Nantucket by Obed Macy.) The business grew from 78 vessels and 9440 barrels of oil in 1762 to 115 vessels and 12,574 barrels of oil in 1771. The price of whale oil in England in 1742 was 18 pounds 13 shillings per ton; in 1743, 14 pounds 8 shillings per ton; in 1744, 10 pounds per ton, and in 1745, 20 pounds per ton. At this time a large portion of spermaceti oil was sent to England in an unseparated state, the head matter being generally mingled with the body of the oil. A considerable portion of the oil procured from the right whale was shipped to Boston or other parts of our American colo- nies for inland consumption, or was exported to the West Indies. The manufacture of sperm candles, which was first commenced in Rhode Island in 1750, was carried on to a considerable extent in New England and Philadelphia, and tended to furnish a motive for the fisheries to procure this species of matter. From a table pubhshed in Hunt's Maga- zine by Mr. Pitkin it appears that the whale fisheries of Nantucket, Wellfleet, Dartmouth, Lynn, Martha's Vineyard, Barnstable, Boston, Falmouth and Swansea from 1771 to 1775 employed 183 vessels of 13,820 tons burden annually, for the Northern whale fisheries, and 121 vessels of 14,200 tons burden annually, for the Southern whale fisheries, and 4059 seamen. The spermaceti oil taken annually was 39,390 barrels, and the whale oil taken annually was 8650 barrels. A few years previous to the Revolution the average price in the market for spermaceti oil was about 40 pounds per ton, and for the head matter 50 pounds per ton. Common whale oil was worth about 15 pounds per ton, and the bone was worth 2 shillings 4 pence per pound. Mr. Pitkin states that the produce of the fisheries of Massachusetts at this time amounted to $1,160,000. The fishery industry made a considerable market for the produce of the farmers in providing provisions for the long voyages. But scanty information respecting the extent of the commerce of the North American colonies until 1670 is obtainable. After this date, however, we are able to gather from official and other sources quite reliable statistics. As early as 1670 the colonists began to supply the sugar plantations of the West Indies with cattle, hogs, flour, timber, staves and other lumber, and in times of scarcity the settlements in New York, New Jersey and Pennsylvania exported some grain and corn to the mother country. The trade between the colonies and the British West Indian posses- sions increased rapidly and by 1733 reached very considerable propor- Digitized by Microsoft® EARLY TRADE CONDITIONS. tions. At this time complaints were made by the British interests in the West Indies to parliament because the colonies in North America ob- tained such a large share of the trade of these possessions. In 1733 parliament interfered and imposed nearly prohibitory restrictions on that trade, although the proceeds and profits were nearly all remitted to England in payment of manufactures. For some time this trade was seriously interrupted, but it was not suppressed. The trade was so profitable and was participated in to such an extent by British merchants residing in England that, although interrupted and embarrassed, it was continued. At this time New York was able to pay for the foreign fab- rics imported from Great Britain by being permitted to exchange pro- visions and lumber with the West Indian colonies for money, rum, molasses, cocoa, indigo, and cotton. Horses and lumber were exported from Connecticut in return for sugar, molasses, salt and ardent spirits. The amount of tonnage which entered and cleared from the colonies from January 5, 1770 to January 5, 1771, was 331,644 entries and 351,686 departures. (Lord Sheffield on American Commerce.) Mr. MacGregor says that the actual amount of tonnage employed at that time in the colonial trade was about 300,000, which was owned first by the British merchants residing in European British dominions, secondly by British merchants occasionally residing in the colonies, and thirdly by native colonial merchants. In 1762 the articles exported from South Carolina consisted of pitch, pine, staves, shingles and various kinds of woods ; also 259,000 pounds of indigo, 62,288 barrels of rice, 23,194 bushels of corn, 3980 bushels of peas, 3888 bushels of oats, 2275 barrels of pork, 1648 pounds of bacon, 5 barrels of ham, 80 kegs of butter, 32 cakes of tallow, 215 bales of deer skins, 1040 deer skins, loose; 1199 barrels of tar, 75 barrels of turpentine, 19 barrels of rosin, 16 casks of beeswax, 2693 tanned hides, 14 boxes of myrtle wax candles; besides hoops, handspikes, furs, pink root, reeds, etc. The foreign trade before the Revolutionary war was quite exten- sive. Vessels would go to the ports of the French and Dutch West Indies with cargoes of lumber, fish oil and provisions, and bring home molasses to be distilled. Vessels also went to the Azores or the Canaries with pipe staves, fish and provisions, and returned with cargoes of wine, the balance being settled in cash or bills. Sometimes a ship which had been to England would get a freight to Lisbon or Cadiz, and return laden with salt or fruit. Comparatively little is known of the statistics of the New England colonies prior to the Revolution. No general account was kept of the articles of produce or of the state of agriculture, manufactures and commerce. The people were thinly scattered over a wide space of country and mainly occupied in clearing the Prohiii- iory re- strictions. South Carolina's exports. Digitized by Microsoft® TRADE AND INDUSTRY IN TEE COLONIES. Colonies drained of specie. forests and procuring means of subsistence. The custom house records were rarely, if ever, published, and many of them were lost. The returns published m London, in some respects imperfect, present the only view of the imports and ex- ports of New England which can be found prior to 1750. These returns do not designate the commerce of the separate colonies, all the New England settlements being included in one general return.^ The official statistics of the British government are as follows: Total Official Value of Exports to and Imports From Great Brit- ain BY THE American Colonies During the Following Years (Pounds Sterling). Tears. 1701 1710 1720 1730 1740 1750 1760 1761 1762 1763 1764 1765 1766 1767 1768 1769 1770 1771 1772 Exports to England. £ 309.136 249,817 468,190 663,586 718,419 804,770 761,102 847,894 742,635 1,106,163 1,110,576 1,151,702 1,422,103 1,472,892 1,656,583 1,531.515 I.OI5.S3S 1,339,84s 1,258,518 Imports from England. £ 343.828 293,662 319.70S 536,862 813,385 1.313,075 2,611,767 1,652,082 1.377,164 1,632,001 2,249,713 1,944,120 1,983,003 2,168,112 2,390.322 1,604,974 1.925.575 4,202,474 3,012,638 Tears. 1773 1774 1775 1776 1777 1778 1779 1780 1781 1782 1783 1784 178s 1786 1787 1788 1789 1790 Exports to Imports from England. England. £ £ 1,369,232 1,979,417 1,373,848 2,590,440 1,921,253 196,163 103,967 55,415 12,619 57,295 17,694 33,986 19,579 349,797 18,560 825,431 99,847 847,883 28,676 256,325 313.998 1,435.229 749,329 3,679,468 893,595 2,308,023 843,120 1,603,466 893,698 2,014,112 1,023,790 1,886,142 1,050,199 2,525,299 1,191.233 3,431,779 An examination of the foregoing table discloses a heavy balance in favor of Great Britain, which was settled by the colonists in coin. This kept the colonies constantly drained of specie and prevented an accumulation of coin sufficient to support a healthy, prosperous condi- tion of business. A resort was had to the issue of paper money, with all of the disasters which necessarily follow, especially in a country having a lack of banking capital and coin to insure its redemption. The general character of the trade is further shown by Smith in his History of New York, printed in 1757. He says : The imports were manufactures from England; tea to the value of 10,000 1 J. B. Moon on Commerce and Resources of New Hampshire, MacGregor, Vol, III, p. 57. Digitized by Microsoft® NAVIGATION LAWS. pounds per annum, by the East India Company; wines from Madeira and Portugal. The payments were made in dollars received from the Spanish in the West Indies, and in dye woods, rum, sugars and molasses, received in payment for provisions sold in those countries by the merchants of New York; and in furs, woods, etc., received in exchange for British and East and West Indian wares and flax seed, between the 9th of December, 1755, and the 23rd of February, following, 12,528 hogsheads; during the year ending the 29th of September, 1756, 23 ships, 22 brigs, 45 brigantines, 31 sloops, and 11 schooners entered, and 36 ships, 28 brigs, 58 brig- antines, 150 sloops and 14 schooners sailed from the port of New York. Copper ore, mined in New Jersey and shipped from New York, was sold for 40 pounds per ton at Bristol; 6731 tons of provisions, chiefly flour, were exported besides grain, enumerated by bushels, and not by tons. About 800 pipes of Madeira were imported annually, in payment of which Indian corn, grain, flour, timber, and other articles were sent to Portugal and Madeira. Two thousand, six hundred and fifty-four barrels of tar brought from North Carolina were among the exports. Before 1756 about 80,000 barrels of flour from America were exported. Benjamin Franklin, during his examination on the repeal of the Stamp Act before the British House of Commons in 1766, spoke of the trade between the province of Pennsylvania and Great Britain as follovi^s : The imports from Great Britain into the province (in Pennsylvania) are com- puted at more than 500,000 pounds sterling, annually, and the exports to Great Brit- ain at only 40,000 pounds sterling, the balance being paid by the produce of the province, carried to the British, French, Spanish, Danish and Dutch West India Islands; to New England, Nova Scotia, Newfoundland, Carolina and Georgia; and the different parts of Europe, as Spain, Portugal, and Italy, for which neither money, bills of exchange nor other commodities, suitable for a remittance to Eng- land, are received. These, together with the profits of the merchants and mariners, as well as the freights earned in their circuitous voyages all finally centre in Great Britain to pay for British manufactures used in the province or sold to foreigners by American traders. Large excess of imports. Navigation Laws. The conditions imposed by the home government, under which the British colonists in America became mariners, developed their shipping, and participated in the ocean-carrying trade, so that foreign commerce forms an important part of their early industrial history. The colonies were planted and existed at a time in the history of the world of great rivalry in commercial and industrial affairs between Great Britain and the powers of Europe. Under the reign of Queen Elizabeth the British Empire entered upon a vigorous and comprehensive industrial and com- mercial policy, of which the system now known as Protection was an important element. While this policy was operating to promote the well-being of the English people, it was in some respects, in its applica- British protective policy. Digitized by Microsoft® 10 TRADE AND INDVSTR7 FN THE COLONIES. England's maritime supre- macy. tion to the British colonies, unwisely administered and applied, and worked to their injury and detriment. The condition under which the colonists engaged in foreign trade and commerce is disclosed by a brief examination of the Navigation Laws, and those statutes enacted by parliament prohibiting the prose- cution of manufacturing by the colonists. The Navigation Laws ex- cluded the French, Dutch, Spanish, Fortuguese and, in fact, all the European nations from the trade with all British colonies. The first act, passed in 1651, provided: That no merchandise, either of Asia, Africa, or America, including also the English plantations there, should be imported into England in any but English- built ships, and belonging either to England or English plantation subjects, navi- gated also by an English commander, and three-fourths of the sailors to be Eng- lishmen, excepting such merchandise as should be imported directly from the original place of their growth or manufacture, in Europe solely; and that no iish should, thenceforward, be imported into England or Ireland, nor exported thence to foreign ports, nor even from one of their own home ports, but what should be caught by their own fisheries only. The clause of this act, " excepting such merchandise as should be imported directly from the original place of their growth or manufacture, in Europe solely," was directed more particularly against the Dutch, who were then engrossing the carrying trade of the world. Under this policy the shipowners of each nation could carry to England only those commodities of the produce or manufacture of their own country. For instance, the Dutch could not carry the produce of France or of any other foreign country. The Dutch and British had just completed the destruction of the shipping of the Spanish and Portuguese; they now became the great rivals for maritime supremacy. England, under Cromwell, passed the law of 1651; war followed; England triumphed; the power of the Dutch was broken, and as their trade, commerce and shipping gradually declined, the British Empire rose year by year in power and greatness, until, by the close of the Napoleonic wars, in 1815, it became the most formidable sea power the world had ever witnessed. In 1660 the British parliament further extended the Navigation Laws by estabHshing a list of special articles, called enumerated articles, which provided: That from and after the first day of April, i66i, no sugars, tobacco, cotton, wool, indigo, fustic or other dyeing woods, of the growth, produce or manufacture of any English plantations in America, Asia, or Africa, shall be shipped, carried, conveyed, or transported from any of the said English plantations to any land, island, territory, dominion, port, place whatsoever, other than to such other English Digitized by Microsoft® NATIOATION LAWS. 11 plantations as do belong to his Majesty, etc. and all vessels sailing to the planta- tions were to give bonds to bring said commodities to England. The most sub- missive colonists considered this act grievous and contrived various methods to evade it.^^ Before these enumerated articles could be shipped to any foreign country they must first be taken to England, there unladen, and from British ports reshipped. This confined the exporting of these com- modities from the British American colonies to the mother country and to the other British colonies and possessions. The high import duties imposed by the British parliament upon agricultural produce excluded, excepting in times of scarcity, from the English market the principal farm produce of the colonies, such as wheat, oats, barley, corn, beef, pork, etc. In this respect the products of the colonists were treated in the same way as those of foreign coun- tries, and this class of exports found their only markets in the British and Spanish possessions of the West Indies. The acts of 1651 and 1660 compelled the colonists to sell the enumerated articles in Great Britain and her colonies, and secured the carrying trade and their distribution to foreign countries to the British shippers and merchants. Parliament now turned its attention to the import trade of the colonies and compelled them to buy their manufac- tures and all articles which they might desire in England and of English merchants. By the act of 1663 merchandise was prohibited to be shipped from France, Holland or any foreign country directly to the colonies. It provided that: No commodities of the growth, production or manufacture of Europe shall be imported into British plantations, but such as are laden and put on board in England, Wales, or Berwick-upon-Teed, and in English-built ships, whereof the master and three-fourths of the crew are English. The preamble of this Act states its purpose to be: The maintaining of greater correspondence and kindness between the subjects at home and those in the plantations; keeping the colonists in a firmer dependence on the mother country, making them yet more beneficial to it, and in the further employment and increase of English shipping, and the vent of English manufac- tures and commodities rendering the navigation to and from them more safe and cheap; and making this Kingdom a staple, not only of the commodities of the plantations but also of the commodities of other countries and places for their supply; it being the usage of other nations to keep their plantation trade ex- clusively to themselves. In addition to the restrictions placed on the carrying trade by the Navigation Laws, it was a part of the policy to impose higher duties on 1 MacGregor, Vol. Ill, p. 767. Excluded Colonial farm products. Protection through navigation laws. Digitized by Microsoft® 12 TRADE AND INDUSTRY IN TBE COLONIES. Other nations excluded from colonial trade. commodities imported into England in foreign vessels than were levied on articles imported in British vessels. Foreign vessels were also re- quired to pay higher lighthouse and port charges. This policy contm- ued practically unbroken until the treaty with the United States in 1815, and the adoption of what is known as the Reciprocity policy in 1828. Adam Smith, in " The Wealth of Nations," published about 1776, said of the Navigation Laws: When the Act of Navigation was made, though England and Holland were actually at war, the most violent animosity subsisted between the two nations. It had begun during the government of the Long Parliament which first framed this Act, and it broke soon after in the Dutch wars during that of the Protector and Charles the II. It is not impossible therefore, that from some of the regulations of this famous Act proceeded their natural animosity. They were as wise, how- ever, as if they had been dictated by the most deliberate wisdom. National ani- mosity at that particular time aimed at the very same object which the most de- liberate wisdom would have recommended— the diminution of the naval power of Holland, the only naval power which could endanger the security of England. MacPherson, in giving his approval of the Navigation Laws, said: We, by this Navigation Act, have gradually obtained a vast increase of shipping and mariners; for by patience and steadiness we have, in length of time, obtained the two ends of this ever-famous Act, viz., the bringing our own people to build ships for carrying on such an extensive commerce as they did not have before. Sir Josiah Child was of the opinion that "without this act we had not now (in l668) been owners of one-half of the shipping or trade, nor should have employed one-half of the seamen we do at present." So vast an alteration had this Act brought about in a few years; insomuch that we are at length become, in a great measure, what the Dutch once were, i. e., the great carriers of Europe, more especially within the Mediterranean Sea. By this Act we have absolutely excluded all other nations from any direct trade with our American plantations, and were it not for this Act we should see forty Dutch ships at our plantations for one of England. That before the passage of this Act, and while our American colonies were but in childhood, the ships of other European nations, more especially the Dutch, resorted to our plantations both to lade and unlade; and their merchants and factors nestled themselves among our people there, which utterly frustrated the original intent of planting these colonies, viz., to be a benefit to their mother country to which they owed their being and protection; and it could not therefore be thought strange that when our planters were become able to stand on their own legs, to supply considerable quantities of materials for exportation (as was now the case with Virginia for tobacco, and with Barbadoes for sugar, ginger, cotton, etc.), our Legislature thought it high time to secure to themselves alone those increasing benefits, which had been produced at our sole charge and trouble. And in this respect, Spain had long before set up a just and laudable example, since followed by other principal European nations who have planted in America. We may here also note that, till this Act took place, the Dutch in a manner engrossed the whole trade of Sweden ; whereas hereby our British ships have since got a share of the trade thither. The growth of British shipping under the Navigation Laws and the Digitized by Microsoft® NAVIGATION LAWS. 13 Growth of British shipping. decline in the ships of foreign countries trading in England establish the fact that these laws were effectual in building up the shipping of the United Kingdom. The tonnage of ships cleared outwards from British ports belonging to British shipowners was, in 1660, 540,211 tons; in 1663, 631,724 tons; in 1775, 882,572 tons; in 1785, 1,074,862 tons; in 1789, 1,512,021 tons. The number of foreign ships cleared outwards from the British ports was, in 1660, 107,237 tons; in 1663, 91,593 tons; in 1775, 68,034 tons; in 1785, 107,484 tons; and in 1789, 103,722 tons.^ The statesmen of the colonies generally recognized the right of the British government to exercise its sovereign power to regulate commerce with foreign nations and with its colonies. How far the policy which kept the colonial mariners from trading directly with foreign countries entered into the causes which resulted in the separation, does not clearly appear. It may be concluded, however, that no serious objection was raised by the colonists to the Navigation Laws, even during the few years which preceded the signing of the Declaration of Independence, when they were considering the legal grounds for rejecting British rule. The Navigation Laws were not directed against the colonists, but were enacted as a part of the definite national policy of the British Em- pire to cripple the maritime power of foreign nations, especially the Dutch, and at the same time to build up the shipping interests of Eng- land. They enhanced the market in England for ship-building materials and naval stores produced in the colonies. They expelled from the colonial trade all foreign vessels and confined the competition between colonial and British vessels. At the same time the mother country drove pirates and privateers from their coasts and guarded and protected the rights and possessions of the colonists in time of war. In some respects the colonies reaped many benefits from this policy. 1 McCulIoch's Dictionary, p. 1167. Digitized by Microsoft® CHAPTER II. The English colonists in North America have no right to manufacture a nail or horseshoe.— IvORD Chatham. Agriculturb;— Raw MaT]5riai,s — Manufactures — British Legisla- tion Restraining Manufactures. Eousehold industries. Trade with the West Indies. The principal occupation of the people in all of the colonies from the time of the first settlement until the Revolutionary war was agricul- ture. Manufacturing was not engaged in as a business. The farmers, however, carried on a system of domestic or household industries to an extent necessary to supply themselves with many of the ordinary sorts of clothing, tools and implements. Hence, during this period, the two industries were so allied that they should properly be treated together. Throughout the New England colonies the soil and climate were less favorable to agriculture than those of the Middle and Southern sec- tions. The settlements were near the coast and skirted the shores of the short navigable rivers. The fisheries in the immediate vicinity and the accessibility of the great fishing Banks of Newfoundland; the abundance of ship-building material; the products of the forests, and the fur trade naturally induced the settlers to engage more extensively in trade and navigation. The severe winters required more comfortable habitations and warmer clothing. The streams with their abundant water power fur- nished favorable locations for mill sites, for the grinding of food and setting up of saw mills, tanneries and fulling mills. The colonists soon learned to cultivate the Indian corn and introduced the cultivation of wheat and many vegetables and fruits, but as the country developed and years rolled by it was found to their advantage to look to the Middle States for a large portion of their supply of wheat and many other food products. Speaking of the New England colonists, MacMaster says: They went to the English, Dutch, Spanish, West Indian Islands with food, salt, meat, horses, oxen, cod, mackerel; the staves of barrels; with onions and salted oysters. In return they came back with sugar, molasses, cotton, logwood and Spanish dollars, with which the New England colonists paid for the goods they brought back from England. They went to Spain, where the ships were often sold, the captains chartering English vessels, and returning with cargoes of goods made in England. Farming, outside of Connecticut, yielded little more than a bare subsistence. Manufacturing in general was prohibited by English law. Paper and (14) Digitized by Microsoft® EARLT INDUSTRIES. 15 hats were made in small quantities; leather was tanned, lumber was sawed, and rum was distilled from molasses; but it was on home-made manufactures that the people depended. The Middle colonies, by reason of the milder climate, broad and fertile bottom lands along the rivers and the very rich and quite easily cultivated hills, were well adapted to prosperous farming. Wheat, oats, barley, corn and all grains and vegetables grew in abundance. The winters were favorable for cattle, horses, swine and sheep; while water powers were less numerous, they abounded sufficiently to provide ade- quate mill sites. Here, also, timber was found quite as extensively as throughout New England. In fact, the whole Atlantic coast was skirted with great rich forests. In this section the same system of household manufacturing was carried on by the people, arising from the same causes and the same necessities. Lumbering, ship-building and the fur trade were engaged in to a less extent than throughout New Eng- land. An account of the trade and industries of Pennsylvania, which is in many respects typical of the other Central colonies, is found in Hunt's Magazine, as follows: For the first few years the attention of the settlers was necessarily very much engrossed by the clearing of the land, and the cultivation of grain for the con- sumption of the colonists, but trade, and the commerce in which the Quakers were known to excel, soon claimed their notice. A trade was opened with the Indians for furs and skins, and the cultivation of tobacco was carried on so extensively that in one year (1688-1689) there were exported 14 cargoes of the weed. In this branch of agriculture, however, Virginia and Maryland were found too power- ful rivals, and it was soon abandoned for the cultivation of wheat, barley, rye, etc., and the grazing of cattle and cutting of timber. The exports consisted of grain, salt, provisions, pipe staves, etc., and at a later date included flour, bread, flax seed, iron, etc., which were not wanted in England at that time (a great grain exporting country), but found a market in the neighboring province and the West Indies, and subsequently also in Portugal, Spain, and several European and African ports in the Mediterranean, and the various groups of islands in the North Atlantic, adjacent to Africa. The returns from these various branches of foreign trade, except a small portion required for the consumption of the province and its trade with the Indians, were all carried to England; or the produce received was sold in other foreign countries, and the proceeds remitted to England, where all the avail- able funds of the province were required to pay for the manufactures imported thence, which, from the restrictions imposed by parliament on manufactures in the colonies, were to a very great amount, embracing almost every article of clothing and household utensils, even to the most simple and common kinds. . . . Dur- ing the war between Great Britain on the one part and France and Spain on the other, which continued from 1702 to 1713, the commerce of the province was ex- posed to repeated depredations by privateers. In 1707-1708 the capture of vessels off the Delaware Capes was so frequent as almost wholly to interrupt the trade. The year 1722 was one of great commercial embarrassment in the province. The OetUng into trade and com- merce. Digitized by Microsoft® 16 TRADE AXD INDUSTRY IN THE COLONIES. "No indus- irialism in the Southern colonies. Products of slave labor. imports appear to have been too great ; the country was drained of specie, for remittance to England, and there was consequently a deficiency in circulating medium. The payment of debts was procrastinated, law suits multiplied, produce was made a legal tender in payment of debts, executions for debts were stayed, the rate of interest was increased from 6 to 8 per cent, and the value of coin was raised 25 per cent. Southern Colonies. While some attempts were made at manufacturing during the early history of the Southern colonies, they were unsuccessful and soon aban- doned for the more congenial pursuits of agriculture. Governor Bev- erly, writing in 1705, of the industrial condition of the inhabitants of the State of Alrginia, said : They have their clothing of all sorts from England, as linen, woolen, silk, hats and leather. Yet flax and hemp grow nowhere in the world better than there; their sheep yield good increase and bear good fleeces; but they shear them only to cool them. The mulberry tree, whose leaf is the principal food of the silk worm, grows there like a weed, and silk worms have been observed to thrive, and without hazard. The very furs that their hats are made of perhaps go first from thence; almost all their hides lay and rot, and are made use of only for covering dry goods in a leaky house. Indeed, some few hides, with much ado, were tanned and made into servants' shoes, but at so careless a rate that the planters do not care to buy them if they can get others ; sometimes perhaps a better manager than ordinary will vouchsafe to make a pair of breeches of a deer skin. Nay, they are such abominable ill husbands, that though their country be overrun with wood, yet they have all their woodenware from England. Cabinets, chairs, tables, chests, boxes, cart wheels, and all other things, even so much as their pails and kitchen brooms, to the eternal reproach of their laziness. The Southern colonists with their slave labor, early began the cul- tivation of rice and tobacco as their chief articles of export. They had no cities of any size, and few villages. Charleston was the only city of importance; the other towns were struggling villages of about two hun- dred inhabitants. Tobacco was the principal crop, especially in Vir- ginia, but it was gathered and cured to be shipped to England, where the proceeds of each year's crop were invested in hardware, glass, crock- ery, clothing, furniture, household utensils, wines, etc. jManufacturing was so little carried on in this section, notwithstanding the abundance of timber, that tables, chairs, cartwheels, bolts, birch brooms and many articles made of wood were imported from the mother country. Mr. MacMaster says : Wood for building houses was actually cut, and sent to England in logs, to be dressed and then taken back to Virginia for use. Maryland also raised tobacco which was shipped to England and ex- Digitized by Microsoft® EARLY INDUSTRIES. 17 changed for clothing, household goods, brass and copper wares and iron utensils. South Carolina's great staple was rice. The cultivation of rice was begun in South Carolina in about the year of 1693. Its introduction contributed much to the prosperity of the colony. It became valuable, not only for consumption at home but as an article for exportation. By an Act of parliament Third and Fourth Anne (1706), rice was placed among the enumerated articles and could only be shipped directly to Great Britain, but afterwards, in the year 1730, it was permitted to be carried under certain limitations and restrictions to the ports of Europe lying south of Cape Finisterre. Its cultivation had so increased that as early as 1734, 18,000 barrels were exported. In 1770 the value of this article exported, 160,000 barrels, amounted to about $1,530,000. Sugar and molasses were not made from the cane in the American colonies prior to the Revolution. Molasses and sugar were obtained from the West Indian Islands and other sources, and large quantities of maple sugar were manufactured throughout all of the Northern colo- nies to supply the domestic wants of the people. The cultivation of tobacco was begun in Virginia in 1616. Its cul- tivation spread to other colonies, although being confined principally to Virginia, until it became an important article of export, and a great source of revenue both to the colonies and the mother country. The annual revenue of Great Britain from this source amounted to $4,500,000. In 1753 the king of Portugal farmed out the tobacco trade for about $2,500,000, and in the same year the revenue of the king of Spain from this article amounted to $6,330,000. In 1759 the duties in Denmark brought in $400,000. In 1770 the empress of Austria received a revenue from it of $800,000. In 1773, the duties on tobacco in the two Sicilies amounted to $446,000. For at least thirty years preceding 1775 the annual exports of tobacco from the American colonies averaged 48,000,000 pounds, of which about 7,000,000 pounds annually were con- sumed in Great Britain and 33,000,000 pounds in the other European countries. Cotton. Mr. Seabrook observes : A short time before the Revolution a few of our planters by growing patches of cotton, some of which was of the black seed kind, succeeded in clothing, not only their families, to which they had been accustomed, but also their slaves. The necessities of the war, and the state of things existing for some time after, greatly increased the number of the domestic fabrications of the wool, until about the year of l7go, then the practice of using homespun for plantation purposes became very CuUiva- iion of rice and tobacco. First at- tempts at cotton groioing. Digitized by Microsoft® 18 TRADE AVD INDOSTBT IN THE COLONIES. Primitive Industrial arts. common in the districts and upper parishes. The yarn was spun at home, and sent to the nearest weaver. Among the manufacturing estabhshments the only one in the vicinity of Murray's Ferry, in Wilhamsburg, was owned by Irish settlers, who supplied the adjacent country. _ , u 4.u c ia The cotton for the spinning process was prepared m general by the held laborers, who, in addition to their ordinary work, picked the seed from the wool at the rate of 4 pounds per week. Flax and Hemp. The cultivation of flax and hemp in the New England colonies was limited to the raising of small quantities to be worked up in the house- hold. Their cultivation was begun in Pennsylvania by the Germans and Irish, and in Maryland soon after the first settlements. The ex- port of flax seed from Pennsylvania was commenced, and in 1729 255 hogsheads of seven bushels each, worth one pound three shillings per cask, were shipped. The exports continued to increase until they amounted in 1750 to 6361 hogsheads worth 22,263 pounds sterling, and 9895 hogsheads in 1751. In 1752 Doctor Franklin estimated that the exports that year from Philadelphia would amount to 10,000 hogsheads, or 70,000 bushels, and said that all the flax that grew with it was manu- factured into coarse cloth. Manufacturing. The colonists brought to the New World the primitive industrial arts as then understood in England, and on the Continent, for the pro- duction of all of the ordinary sorts of tools, implements and clothing; they introduced the hand card for preparing the cotton and sheep's wool ; the spinning wheel and the hand loom ; the forge, the hammer and the anvil for working the metals ; the plow, the sickle, the scythe and the flail ; the ax, the adz, the saw, and finally the saw mill ; the primitive tannery; the implements for making paper; the pans for making salt from the brine of the ocean; they brought the querne for grinding corn by hand and horse power, and soon set up mills for grinding by wind and water power. Masons, bricklayers, carpenters, ship-builders, tan- ners, shoemakers and mechanics, having knowledge of the more simple trades, in the course of time became a part of the industrial life. The women of the household were acquainted with the methods of preparing, carding, spinning and weaving cotton, wool and flax; they could make the coarser articles of clothing and wearing apparel. Every farmer became a jack-of -all-trades ; every household a domestic manu- factory. While the women were spinning, weaving and making cloth- ing and bedding, the men were preparing their implements of husbandry I and improving their habitations. Digitized by Microsoft® EARLY INDUSTRIES. 19 Women and girls as manu- facturers. " Every farmer," says MacMaster, " and his sons made their own shoes, beat out the nails and spikes, hinges and every sort of ironmon- gery, and constructed much of the household furniture. The wife and her daughters manufactured the clothing, from dressing the flax and carding the wool to weaving the cloth ; knit the mittens and socks ; and, during the winter, made straw bonnets to sell in the towns in the spring. Even in such towns as were large enough to support a few artisans, each made, with the help of an apprentice, and perhaps a journeyman, all the articles he sold." It was not in the nature of things that an industrious, energetic and progressive people should be satisfied to confine their energies to that system of household productions which they early introduced. Many branches of employment were soon undertaken on a small scale, such as the making of paper, glass, salt, ale, beer and distilled spirits, boots and shoes, cloth, furniture, mining, smelting, casting and forging of iron, lumber and products of wood, ships, pot and pearl ashes, pitch, tar and turpentine, the drying and curing of fish, fulling mills, cards and spinning wheels. The efforts to plant and extend manufactories in the colonies were checked and stifled during the eighteenth century by the action of the home government. It was from about the year 1700 to 1776 that, under protection, the extensive growth and development of manufacturing took place in England, and after 1730 England became a large exporter of manufactures, and during the whole period after the enactment of the Navigation Laws, in 1661, the distributer and exporter to her colonies of all manufactures of other countries sold in the colonies. The state of the industrial arts was such at this time that the colonists, under the system of handworkmanship which then prevailed, could have by slow degrees built up an extensive system of manufacturing if they had been permitted to do so. They enjoyed many natural advantages. They could easily provide themselves with the raw materials for making cot- ton, woolen and linen goods. Iron ore existed in abundance in many places. They had plenty of wood for fuel for the iron furnaces. The water powers of the country were unsurpassed. For all ordinary articles made of wood they had timber in abundance. The cost of ocean carriage was so great that it afforded a degree of natural protection even to the towns near the coast, and the expense of carrying commodities into the interior gave the back settlements additional security. They lacked, however, capital and skilled workmen, but these deficiencies would have been supplied. The same causes which impelled the farmer, the merchant, the trader and the mechanic to emigrate from the Old World would also have in- spired the more skilled artisans to join the tide of emigration and set up Industrial effort stifled hy the Home Qovern- ment. Digitized by Microsoft® 20 TRADE AND WDU8TRT W THE COLONIES. First paper mill In America. their crafts. Capital and enterprising masters would have embraced the opportunities offered. It was not until after about 1750 that the British, manufacturers became so rich and produced such large quantities for export that, by force of competition arising from these causes alone, they were able to break down rival industries. Hence, in order to restrain the growth of manufacturing in the colonies restrictive regulations were resorted to. The system of household productions was not opposed. It was the setting up of manufactories as a business and the making of articles for sale and export to neighboring settlements and colonies that was restricted. Paper. The manufacture of paper was introduced into England in 1498. " Very little excepting brown paper," says Bishop, " was made there prior to 1688." The making of white paper was first attempted in 1690. During the seventeenth century England obtained her supply from France and Holland. The first paper mill in America of which we have any account was built at Roxborough in Pennsylvania about 1693 ; the second at Elizabeth, N. J., in 1728; the third in Milton, seven miles from Boston, in 1728, the latter under a grant from the legislature of the colony, to continue ten years, which required them to make forty reams of brown paper and sixty reams of printing paper the first fifteen months, and after the third year to make twenty-five reams of a superior quality of writing paper each quarter, the entire yearly product to be not less than five hundred reams. One of the complaints to the British Board of Trade in 1731-32 was against the making of paper in Massachusetts. In 1729 a paper mill was erected on Chester Creek in Delaware County, Pennsylvania, in which writing paper, printing paper and clothiers' pasteboard were manufactured. This mill was in operation in 1779, and continued until 1829. In 1765 one was built at Olneyville, Rhode Island, and another at Norwich in 1768. In 1768 a paper mill was erected at Fort George, New York, and at about the same time another at Hempstead, Eong Island. In 1769 the number of paper mills in the provinces of Pennsylvania, New York and Delaware had increased to the number of forty ; the value of their manufactures was estimated at 100,000 pounds sterling annually. Six of these were in the county of Phil- adelphia. At the commencement of the Revolution there were but three mills in Massachusetts; one in Rhode Island (out of repair); New Hampshire had none. In 1776 there was one in East Hampton, Connecticut, which manufactured paper sufficient to supply a weekly issue of eight thousand Digitized by Microsoft® EARLY INDOSTRIES. 21 papers for the Hartford Press, in addition to much of the writing paper used in the colonies. Printing and Publishing. The first printing press in the country was established at Cambridge, Massachusetts in 1639. The first outside of the colony of Massachusetts was set up in Philadelphia in 1668 ; in New York in 1693 ; in Maryland, 1728; in Rhode Island, 1730; New Hampshire, 1756; Delaware, at Wil- mington, 1761 ; Savannah, Georgia, 1762. At the breaking out of the Revolution thirty-seven newspapers were being printed; the whole number of printing presses in the country was about forty. The first enterprise of book-binding was begun in Boston in 1663. At the close of the colonial period book-binding was carried on in Boston, New York, Philadelphia, Charlestown and other places. The printing was all done on the old hand press, the roller press not being introduced until after 1790. " The old wooden press used before the Revolution," says Bishop, " was worked by hand, and the ink was also applied by manual process, called ' beating,' by means of leathern balls, which gave place to the roller." The type was imported from Eng- land. The first type foundry was established at Germantown, in 1740. This was the only one in America until 1768, when one was started in Boston. In 1775 Dr. Franklin brought with him from Europe the materials for a complete type foundry which he had purchased in France. Glass. Notwithstanding some attempts to introduce the manufacture of glass into the colonies, no great progress was made before the Revolution. All glass, pottery and earthenware used in the Southern colonies came from England. Salt. Salt, from the foundation of the first colony, was at all times an article of prime necessity, not only for use in the household, but especially among the New Englanders for curing fish. The demand for salt by the New England fishermen was so great that it was excepted by the Naviga- tion Act of 1663 from those articles which the colonists must necessarily import from England. This provision of the law was by an act of parlia- ment extended to Pennsylvania in 1727, and subsequently to New York. Hence there was no provision of British law which prohibited the colonists from obtaining their supply of salt direct from any country. Salt was News- papers and printing presses. How thei/ got their salt. Digitized by Microsoft® 22 TRADE AND INDDSTRY IN TEE COLONIES. Raising sheep for wool and flam tor cloth. Cultiva- tion oj indigo. first made by boiling sea water, the quality made from this process being very poor. The system of solar evaporation w^as early practiced in France and came into general use. Salt was, however, made from sea water in America until after the Revolution, when the rock salt from the beds of Onondaga County, New York, was worked. The principal supply of salt, before the Revolution, was obtained by the numerous lumber, provision and tobacco ships which traded to Spain, Portugal, France, the Wine Islands, and other salt-producing countries in Europe, and the West Indies. The provincial exports being bulky, and the return cargoes much less so, salt for the fisheries was usually taken in as ballast, or as part lading. Al- though the article did not pay as a full cargo, its high price and its supposed benefit to the ship timbers, rendered it acceptable and profitable as part freight. Fine salt, of a higher price, for culinary use, was obtained in small quantities from England, but was not well suited to the fisheries. For some time preceding the war much was brought from Liverpool in sacks of four bushels each.i CWTH. Shortly after the first settlement in Massachusetts the people began making cloth and extending the knowledge of spinning and weaving. They had early given their attention to raising cattle, and very soon under- took the raising of sheep for wool and the cultivation of flax. As soon as trade opened with Barbadoes, to which port they exported some cattle and other commodities, they obtained a supply of raw cotton. Cattle soon declined in value. The lack of money with which to purchase a supply of clothing for the thirty thousand inhabitants of Massachusetts forced upon them the necessity of providing means for making their own clothing. Their efforts were first directed to supplying themselves with sufficient raw materials. Sheep raising was introduced into Virginia in 1607, and into the New Netherlands in 1625 ; into Massachusetts in 1633. Forty sheep were brought to Boston in 1634, and in 1642 it was claimed that there were more than 1000 in the colony of Massachusetts. It was said that in 1661 the numbers had so increased that in all the colonies there were 100,000. The first manufacture of fulled and dressed cloth was begun by a com- pany of Yorkshiremen who in 1638 settled in Rawley, Massachusetts. They consisted of twenty families, all skilled in the making of woolens; they built the first fulling mills erected in America. The cultivation of the indigo plant and the manufacture of dyes had succeeded in the Southern plantations to the extent that in 1741 100,000 pounds of indigo were exported from Charleston to England. Before the Revolutionary war the exports had reached 1,000,000 pounds annually. Primitive methods of tanning were introduced into all of the Amer- ican colonies soon after the first settlements. The ample supply of bark 1 Bishop's History of American Manufactures, Vol. I, p. 288. Digitized by Microsoft® EARLY INDUSTRIES. suitable for this purpose, together with the abundant streams, offered unusual facilities for promoting the industry. It was prosecuted in nearly all of the colonies and developed to such an extent that before the Revolu- tion leather was exported. The increase of cattle and sheep furnished a plentiful supply of hides, to which was added the skins of deer and other wild animals. The making of boots and shoes was carried on as a domestic industry, the shoemaker going from house to house and farm to farm to make up the boots and shoes for the family, from the leather tanned in the settlements. The manufacture of harnesses, saddles, saddle- bags and boots and shoes was carried on in Boston, New York, Phila- delphia and at other places to such an extent that before the Revolution some exportations were made from one colony to another. Linen Manufacture. In 1719 the manufacture of linen was introduced by Scotch and Irish Protestants from the North of Ireland, who located in New Hampshire and Massachusetts. They brought the low flax spinning wheel, which soon found a place in the homes of nearly all of the colonists. In 1722 the General Court of Massachusetts gave a premium on the manufacture of sail duck and linen from home-grown flax. Similar encouragement was given to the industry in Rhode Island in 1722, when a bounty of twenty shillings for each bolt of duck manufactured in the province from home-grown hemp was paid. In 1724 the Assembly of Connecticut gave to Richard Rogers, of New London, for a term of years the exclusive right to. make canvas for ships and in 1735 a bounty was paid for the manufacture of fine linen cloth. The manufacture of sail cloth in the colonies had increased to the extent that efforts were made by parliament in 1746 to suppress the industry. It was enacted that no sails should be made or repaired in Great Britain or the plantations, with foreign sail cloth unstamped, under penalty of fifty pounds, and every vessel built in either country was required under like penalty to have her first sails made new and complete of British manufactured sail cloth. Manufactures Prohibited. It was upwards of a century after the first settlement before steps were taken by parliament to restrict the establishment of manufactures in the British possessions in North America. At this time some attempts had been made to advance beyond the making of coarse cloth, imple- ments and utensils in the household. But when the colonial governments of Massachusetts and Connecticut had adopted measures to encourage the setting up of the textile industries on a scale for sale and export from TJnen from home- nrown flax. Besfrietion of Colo- nial manu- facturea. Digitized by Microsoft® 24 TRADE AND INDUSTRY IN THE COLONIES. Com- pMnta made in England. one colony to another, such as the manufactures estabHshed at Rawley, and the building of a few fulling mills to which the farmers and people of the small settlements could take the cloth spun and woven in their households, to be fulled and dressed for market, the suppression of manu- factories became the settled policy of the home government. The first attention in this respect given to the American colonies seems to have been in 1671, when a Board of Commissioners of Trade was established. The first act of these Commissioners was the drawing up of a circular letter to the Governors of plantations and territories. Evelyn, one of the Commissioners, says : What we most insisted on was to know the condition of New England, which appearing to be very independent as to their regard to England or his Majesty, rich and strong as they now were, there were great debates in what style to write them, for the condition of the colony was such that they were able to contest with all the other plantations about them, and there was a fear of their breaking from all dependence on this nation. In 1696 King William erected a new and standing council for com- merce and plantations, styled the Lords Commissioners for Trade and Plantations. With this the Board of Governors of the American Colonies was obliged to hold constant correspondence; and to this board they transmitted the journals of their councils and assemblies and the accounts of the collectors of customs, naval officers, etc.^ At this time a small quantity of woolen cloths in excess of local needs was being made in seme of the New England colonies, and suf- ficient at least had found its way into the export trade to attract the at- tention of the Board of Trade and cause complaints to be made in Eng- land. Hence in 1699 we find the first Act of Parliament designed to prevent the establishment of manufactories in the colonies in competition with those of the mother country. The Act 10 and 11, William III., provided that: After the first day of December, 1699, no wool, wool-felts, jams, cloth, or woolen manufactures of the English plantations in America shall be shipped in any of the said English plantations or otherwise laden, in order to be transported thence to any place whatsoever, under the penalty of forfeiting ship and cargo, and SCO pounds fine for each offense; and the Governors of the Plantations, and officers of Customs and Revenue there are to see this act, as it relates to the Plantations, duly executed. In 1719 the House of Commons enacted " that erecting any manu- factories in the colonies tended to lessen their dependence upon Great Britain." In 1732 hats were prohibited from being exported from the colonies, 1 MacGregor's Commercial Statistics, Vol ITT, p. 759. Digitized by Microsoft® HOSTILE BRITISH LEOISLATION. 25 or from being loaded on a horse, cart, or any other carriage for transporta- tion from one plantation to another. The same act limited the number of apprentices who were to be engaged in this business, and prohibited the exportation of hats from one British plantation to another, as well as the manufacture of hats, except by those who had served an apprentice- ship of seven years, and forbade any black or negro from making hats at all. The authors of this legislation well knew that a manufacturer could not thrive if deprived of a market, but the restriction did not stop here. A person who set up a manufactory in any colony was guilty of a mis- demeanor in creating a nuisance. In speaking of this legislation Adam Smith said : It effectually prevented the establishment of any manufacture of such com- modities for distant sale, and confined the industry of her colonists in this way to such coarse and household manufactures as a private family commonly makes for its own use, or for that of its neighbors in the same province. As long as New Netherlands remained under the government of Holland the weaving of all sorts of textiles and the making of linen, cotton and woolen cloth were absolutely prohibited under penalty of banishment. Tfie policy adopted by parliament for shaping and directing the in- dustrial life of the colonies had for its paramount purpose the increase of the wealth and power of Great Britain. The establishment of com- peting manufactories in the colonies was prohibited, and at the same time an endeavor was made to promote the production and export from the colonies of such commodities as were needed by the mother country, and which, if not obtained from the colonies, must necessarily be sought for in Europe. By an act passed in 1704 for the encouragement of the im- portation of naval stores from Her Majesty's plantations in America, a bounty of four pounds per ton was paid upon tar and pitch; three pounds upon turpentine, and six pounds upon water retted hemp, and also upon masts, yards, and bowsprits a bounty was paid, which was continued until 1741. The bounty on hemp stimulated its culture in Virginia and Carolina. The payment of bounties tended to allay the prejudices of the colonists against the mother country. Lord Cornbury in his sug- gestions to parliament in 1705 recommended the above form of legislation in order to enable the colonists to purchase British wares. He said : Besides the want of wherewithal to make return to England, puts them on a trade which I am sure will hurt England in a little time, for I am well informed that upon Long Island and in Connecticut they are setting up linen manufactures, . and I, myself, have seen serge made upon Long Island that any man can wear. Npw if they begin to make serge they will, in time, make coarse cloth, and then Deprived of a market. Selfish policy of Oreat Britain. Digitized by Microsoft® 26 TRADE AVD INDUSTRY IN THE COLONIES. Compelled io pur- chase British ■wares. English appreheti' sions. fine ■ we have as good fuller's earth and tobacco pipe clay in these provinces as any in the world. How far this will be for the service of England I submit to thg better judgment, but whatever I hope, I may be pardoned if I declare my opinion to be that all these colonies, which are but twigs belonging to the mam tree, ought to be kept entirely dependent upon and subservient to England, and that can never be if they are suffered to go on in the notions they have that as they are Englishmen, so they may set up the same manufactures here as people may do in England; for the consequence will be, if once they can see they can clothe them- selves, not only comfortably but handsomely, without help of England, they, who are already not very fond of submitting to government, would think of putting into execution desires they had long harbored in their breasts. This will not seem strange when you see what sort of people this country is inhabited by, In 1708 Colonel Heathcote, Lord Cornbury's successor, wrote to the Board of Trade that he had labored to divert all America from going on with their linen and woolen manufactures. He says : They are so far already advanced that three-fourths of the linen and woolen used was made among them, especially the coarser sort. And if some speedy and effectual ways are not found to put a stop to it they will carry it on a great deal further, and, in time, perhaps very much to the prejudice of our manufactories at home. Governor Hunter, in 1715, writes to the same effect. Speaking of cloth, he says : " The people wear chiefly the product of their own looms." He had never known the homespun to be sold in stores. He also recom- mended the encouragement of the importation of naval stores from the colonies in return for the home manufactures. In 1731 the House of Commons, through the Board of Trade, made an inquiry " with respect to laws made, manufactures set up or trade car- ried on, detrimental to the trade, navigation or manufactures of Great Britain." A report made by the Board of Trade in 1732 gives an ac- count of the extent of manufacturing as it then existed in the colonies. It is as follows : In New England, New York, Connecticut, Rhode Island, Pennsylvania, and the County of Somerset, in Maryland, they have fallen into the manufacture of woolen cloth and linen cloth for the use of their own families only; for the product of these families being chiefly cattle and grain, the estates of the inhabitants depended wholly on farming, which could not be managed without a certain quantity of sheep; and their wool would be entirely lost were not their servants employed during the winter in manufacturing it for the use of their families. Flax and hemp being likewise easily raised, the inhabitants manufactured them into a coarse sort of cloth, bags, traces and halters for their horses, which they found did more service than those they had from any part of Europe. However, the high price of labor in America rendered it impracticable for people there to manufacture their linen cloth at less than twenty per cent dearer than that which is exported from home for sale. It were to be wished that some Digitized by Microsoft® HOSTILE BRITISH LEGISLATION. 27 expedient might be fallen upon to direct their thoughts from undertakings of this nature; so much the rather because these manufactures, in process of time, may be carried on in greater degree, unless an early stop be put to their progress by employing them in naval stores. Wherefore, we take leave to renew our repeated proposals, that reasonable encouragement be given to the same. More- over, we find that certain trades carried on and manufactures set up there are detrimental to the trade, navigation and manufacture of Great Britain. For the state of these plantations varying almost every year, more or less so in their trade and manufactures, as well as in other particulars, we thought it necessary for His Majesty's service, and for the discharge of our trust, from time to time to send general queries to the several governors in America, that we might be the exactly more informed of the condition of the plantations; among which were several that related to their trade and manufactures, to which we received the following returns, viz : The Governor of New Hampshire, in his answer, said that there were no settled manufactures in that province, and that their trade consisted principally in lumber and fish. The Governor of Massachusetts Bay informed us that in some parts of this province the inhabitants worked up their wool and flax into an ordinary coarse cloth for their own use, but did not export any. That the greater part of the woolen and linen clothing worn in this province was imported from Great Britain, and sometimes from Ireland ; but considering the excessive price of labor in New England, the merchant could afford what was imported cheaper than what was made in the country. There were also a few hat-makers in the maritime towns, and that the great part of the leather used in that country was manufactured among themselves, etc. They had no manufactures in the province of New York that deserve men- tioning; their trade consisted chiefly in furs, whalebone, oil, pitch, tar and provi- sions. No manufactures in New Jersey that deserve mentioning; their trade be- ing chiefly in provisions shipped from New York and Pennsylvania. The chief trade of Pennsylvania lay in their exportation of provisions and lumber; no manu- factures being established, and their clothing and utensils for their houses being all imported from Great Britain. By further advices from New Hampshire, the woolen manufacture appears to have decreased; the common lands, on which the sheep used to feed, being now appropriated, and the people almost wholly clothed with woolen from Great Britain, The manufacture of flax into linens, some coarse and some fine, daily increased by the great resort of people from Ireland thither, who are skilled in the business. By late account from Massachusetts Bay, in New England, the Assembly have voted a bounty of thirty shillings for every piece of duck or canvas made in the province. Some other manufactures are carried on there as brown holland for women's wear, which lessens the importation of calicoes, and some other sorts of East India goods. They also make some small quantities of cloth, made of linen and cotton, for ordinary shirting. By a paper mill, set up three years ago, they make to the value of 200 pounds sterling yearly. There are also several forges for making bar iron, and some furnaces for cast iron or hollow ware, and one slitting mill and a manufactory for nails. The Governor writes concerning the woolen manufacture, that the country people who used to make most of their clothing out of their own wool, do not now make a third part of what they wear, but are mostly clothed with British manufacture. The Surveyor-Gen- eral of His Majesty's woods writes that they have in New England six furnaces and nineteen forges for making iron; and that in this province many ships are Progress of manu- factures^ Digitized by Microsoft® 28 trade; and industry in the colonies. When New York had no industries. Manu- facturing mostly in northern ooJonies. built for the French and Spaniards, in return for rum, molasses, wines, and silks, which they truck there by connivance. Great quantities of hats are made in New England, of which the company of hatters in London have complained to us that great quantities of these hats are exported to Spain, Portugal, and our West India Islands. They also make all sorts of iron for shipping. There are several still- houses and sugar bakeries established in New England. By the last advices from New York there are no manufactures there that can affect Great Britain. There is yearly imported into New York a very large quantity of the woolen manufactures of this Kingdom, for their clothing, which they would be rendered incapable to pay for and would be reduced to the necessity of making for themselves, if they were prohibited from receiving from the foreign sugar colonies the money, rum, molasses, cocoa, indigo, cotton, wool, etc., which they at present take in return for provisions, horses and lumber, the produce of that province and of New Jersey, of which he affirms the British colonies do not take above one-half. But the company of hatters of London have since informed us that hats are manufactured in great quantities in this province. By the letters from the Deputy-General of Pennsylvania, he does not know of any trade in that province that can be considered injurious to this Kingdom, They do not export any woolen or linen manufactures; all that they make, which are of a coarse sort, being for their own use. We are further informed that in this province they build many brigantines and small sloops, which they sell to the West Indies. The Governor of Rhode Island informs us, in answer to our queries, that there are iron mines there, but not a fourth part enough to serve their own use; but he takes no notice of any manufactures there. No returns from the Governor of Connecticut. But we find by some accounts that the produce of this colony is timber, boards, all sorts of English grain, hemp, flax, sheep, black cattle, swine, horses, goats and tobacco. That they export horses and lumber to the West Indies, and receive in return sugar, salt, molasses and rum. We likewise find that their manufactures are very inconsiderable; the people being generally employed in the tillage, some few in tanning, shoemaking, and other handicrafts; others in building, and in joiners', tailors, and smithwork, without which they could not subsist. No report is made from Carolina, the Bahama or the Bermuda Isles. From the foregoing statement, it is observed that there are more trades carried on and manufacturing set up in the provinces on the continent of America to the northward of Virginia, prejudicial to the trade and manufactures of Great Britain, particularly in New England, than in any other of the British colonies; which is not to be wondered at, for their soil, climate, and produce being pretty nearly the same with ours, they have no staple commodities of their own growth to exchange for our manufactures, which puts them under greater necessity, as well as under greater temptations, for providing themselves at home; to which may be added, in the charter governments, the little dependence they have put upon the mother coun- try, and consequently the small restraints they are under in any matters detrimental to her interests. And therefore we humbly beg leave to repeat and submit to the wisdom of this honorable House the substance of what we formerly proposed in our report on the silk, linen and woolen manufactures hereinbefore recited— whether it might not be expedient to give these colonies proper encouragement for turning their industry to such manufactures and products as might be of service to Great Britain, and more particularly to the production of naval stores.^ 1 History of American Manufactures (Bishop), Vol. I, pp. 339-354. Digitized by Microsoft® HOSTILE BRITISH LEGISLATION. 29 It is apparent from the foregoing that the manufacture of cloth in the colonies had extended to little beyond the household, and that the cloths made were almost exclusively the stout and coarser kinds of mixed fabrics, into which linen or hempen thread largely entered as a material. Bishop says: Linens made at that time were for the most part of quite a coarse texture. The kerseys, linsey-woolseys, serges, and druggets consisted of wool variously com- bined with flax or tow, and formed the outer clothing of a large part of the popula- tion during the colder seasons. Hempen cloth and linen of different degrees of fineness from the coarsest tow-cloth to the finest Osanburg or Holland, constituted the principal wearing apparel outward and inward at other times. The inner gar- ments and the bed and table linen of nearly all classes were almost entirely supplied from the serviceable products of the household industry. Iron Industry. Before the invention of the steam engine by Watt and Bolton (1774), and its use for pumping water from the mines, sinking shafts and bring- ing coal to the surface, wood was the fuel used in the iron furnaces in England. This caused such destruction to the forests that for their preservation, as early as 1581, the erection of iron works within a certain distance from London and the Thames was prohibited. In about the year 1700 it was calculated that there were one hundred eighty thousand tons of iron produced in England yearly. The restric- tions on the cutting of the forests were such that by 1740 the production had been reduced to seventeen thousand tons. At this time England an- nually imported twenty thousand tons ; fifteen thousand tons from Sweden at a cost of one hundred fifty pounds sterling, and five thousand tons from Russia, nearly all of which was paid for in specie. In the colonies the conditions were entirely different. They had an abundance of iron ore, timber for fuel and water power. No restrictions were placed by the British government on the working of iron mines and the making of pig iron in the colonies. In fact, no restrictions were placed upon the devel- opment of any branch of the iron industry in the colonies until 1719, when an act was passed by parliament which provided : That none of the plantations should manufacture iron wares of any kind, out of any sows, pigs or bars, whatsoever, under certain penalties. It should be noted that this enactment in no way restricted the mak- ing of pig or bar iron. The prohibition was against the making of iron wares or the manufacture of bolts, spikes, nails and other articles from the metal. The act of 1719 further provided that Coarse tahrice and garments. Abun- dance >t iron ore. Digitized by Microsoft® 30 TRADE AND INDUSTRY IN THE COLONIES. Exporting pig and bar iron. Iron man- ufacture restricted. No forge going by water or other work whatsoever, should be erected in any of the plantations, for making sows, pigs or cast iron into rods or bar iron. In 1737 a controversy arose between the merchants and the iron masters as to the propriety of permitting the free importation of pig iron and bar iron into England from the colonies. It was urged on the part of the merchants that on account of the price of cord wood the manu- facture of bar iron would not be increased in England, and that they must necessarily look to Russia and Sweden for their supply, which must be paid for in specie, and that in order to provide themselves with the means with which to purchase British manufactures it would be wise policy to encourage the colonists to export pig and bar iron as well as naval stores. Thus, by encouraging the production of pig and bar iron in the colonies, the prohibitory laws enacted would be more effectual in preventing the rise of those manufactures in the colonies which came into competition with those of the home government. The controversy lasted until 1750, when the policy of the merchants prevailed, and an act was passed entitled " An Act to Encourage the Importation of Pig and Bar Iron from His Majesty's Plantations in America." It provided that pig iron made in the British colonies in America may be imported duty free, and bar iron into the port of London; no bar iron so imported to be car- ried coastwise or to be landed at any other port except for the use of His Majesty's dockyards, and not to be carried beyond ten miles from London." Great care, however, was taken to prevent the extension of the manu- facture of iron beyond the stage of the production of the raw materials, the bill further providing that From and after the 24th day of June, 1750, no mill or other engine for slitting or rolling iron, or any plating forge to work with the tilt hammer, or any furnace for making steel, shall be erected, or after such erection continued in any of His Majesty's colonies in America, under penalty of two hundred pounds. The duty on bar iron thus taken off was two pounds one shilling and six pence per ton, and on pig iron three shillings nine pence per ton. In 1757 the law was amended by extending the privilege of importation of pig iron and bar iron into other ports of Great Britain, and in 1765 it was made applicable to Ireland. In pursuance of the act of 1750 the governors of the colonies were ordered to make returns to the Board of Trade of all slitting mills, plating forges, and steel furnaces then existing in the colonies. The returns of the governors showed that Massachusetts contained two slitting mills and rolling mills, Pennsylvania one, New Jersey one, Massachusetts contained one plating forge working with a tilting hammer. New York six, Penn- sylvania one, and Maryland one with two hammers. Massachusetts, Digitized by Microsoft® HOSTILE BRITISH LEQISLATIOy. 31 Connecticut and New Jersey had each one steel furnace, and Pennsylvania two. Between this time and the Declaration of Independence the produc- tion of pig and bar iron made great progress. In 1761 the governors and Council of Maryland reported to the Commissioners of the Board of Trade of England that there were eighteen furnaces and ten forges which made 2500 tons of bar iron. The seat of the industry at the break- ing out of the Revolutionary war was in Pennsylvania, New York, New Jersey, Virginia and Maryland. The endeavor to prohibit manufactures of iron and to limit the in- dustry to the production of the raw material in the colonies aroused strong opposition, especially throughout the New England colonies, from which there was no possibility of an export of pig or bar iron. The idea that the colonists must send their raw material to England for manu- facture, and receive in return nails, steel and all finished productions of iron, was recognized as a great injustice. To prohibit the erection of any slitting or rolling mills, plating forge or steel furnace would effectually arrest the progress of manufacturing. Massachusetts declared the act of 1750 an infringement on her natural rights, and other colonies consid- ered it equally unjust. We are not aware that any manufactures of the prohibited class were set up in the State during the remainder of this colonial history, with the exception, perhaps, of a few tilting hammers, one of which was erected in Enfield, Hampshire County, about the year 1773. During the entire colonial period much bar iron, wrought-iron, steel, nails, and manufactures of iron were imported from England by the colonists. The nails went largely to the Southern provinces, while the wrought, bar iron and steel were imported into the Central and more largely the New England colonies. The steel and nails imported were made principally from Swedish and Russian iron which had been imported into England. For several years preceding the Revolu- tion England annually imported from Sweden and Russia 30,000 tons, which was then regarded as a superior quality of iron.^ Progress op the Iron Industry from 1607 to 1776. The basis for the establishment of any industry is a supply of raw materials. The raw materials developed into finished iron products are, first, the iron ore in the mine, and then the pig iron, the blooms, and the bar iron. The two main divisions of iron as it was used in the manu- factories were cast iron and forge iron. Bar iron was the merchantable form in which the metal was distributed throughout the colonies to be worked by the blacksmiths into various forms and shapes for imple- ments used by the agriculturist. The nail-rods, principally obtained from England, were beaten into spikes and nails by blacksmiths and by farmers, 1 Bishop, p. 629. Opposition in the colonies. Produc- tion chieflv- of raw materials. Digitized by Microsoft® 32 TRADE AND INDUSTRY IN THE COLONIES. Iron mines discovered and worked. some for use on their farms and others for sale to their neighbors. Wrought-iron was also beaten into scythes and sickles. The hammer and the anvil, the blacksmith's forge, worked with a hand-bellows, using charcoal for fuel, constituted the means throughout all of the colonies for working the metal. Bar iron was at first wholly, and at all times, to a large extent, imported from England. The development of the iron industry in the colonies before their independence was only slightly ex- tended beyond the production of the raw materials. "In Massachusetts,'' says Bishop (ib. p. 623), "iron works had existed for many years, but did not supply one-twentieth part of the iron required for the country's use. There were iron mines in Rhode Island, but one-fourth part enough to serve their own use." Furnaces, however, were erected for smelting the ore and producing pig and bar iron. In a few instances foundries for casting were set up, while but few castings were made. Forges were also erected for making wrought-iron into bars and nail rods, and in some localities the industry had passed beyond this stage and a small quantity of scythes, shovels, sickles, guns, gun-locks, edge tools, some hollow-ware casts, such as potash and common iron kettles, camp kettles, blaze pans, tea-kettles and other wares were made. An attempt will not be here made to give an account of the inception and growth of iron furnaces in the colonies during the period now being considered. Iron mines were early discovered and worked in western Connecticut; Columbia and Orange Counties, New York; New Jersey, Pennsylvania and Maryland. The natural advantages possessed by the colonists for the production of pig and bar iron induced the opening of mines and the erection of furnaces for their production, so that by 1728 we have official records of shipments to England. The exports between that date and 1748 were 1227 tons in 1728, increasing each year until it reached 2155 tons in 1748. The removal of the duties in 1750 and the encouragement given by the home government to its imports caused a large increase in production during the succeeding twenty-five years. The most valuable deposits of iron ore in Connecticut were found in the townships of Salisbury, Sharon and Kent in Litchfield County. A bed of this ore was worked as early as 1732. In 1734 Philip Livingston of Albany, New York, received a grant of one hundred acres and set up a furnace or bloomery to smelt the ore. Pig iron and various castings, as potash and common iron kettles were made there in 1736. In 1740 Mr. Livingston erected iron works at Ancram, in Columbia County, New York. In 1762 a blast furnace was erected at Salisbury. New York. The iron industry was first established in Columbia County, New Digitized by Microsoft® IRON INDUSTRY. 33 York, in 1740 by Robert Livingston. The ore was obtained principally from Ore Hill, in Salisbury, Connecticut. Shortly before 1750 the in- dustry was established in Orange County, as appears by the report of Governor Clinton in 1750, and at that time there was a plating forge with a tilt hammer in operation in Orange County. It was the property of a blacksmith and was built four or five years before, but was then not in use. It was the only mill of the kind in the province. There were no rolling or slitting mills or steel furnaces in the State of New York at that time. In 1751 a charcoal blast furnace was erected in Warwick, which was afterwards called Sterling Iron Works. The next year a forge was erected in Monroe near the furnace. A gun factory was es- tablished at Albany, in 1740, and muskets and rifles were made in con- siderable quantities for the Indian trade, of which Albany was the prin- cipal centre. Nails had long been articles of handicraft production in sev- eral of the colonies, but the consumption of nails and spikes was great and the importation of England was larger. New JbrsEy. Prior to 1750 iron works were established in the town of Shrewsbury, in Monmouth County, New Jersey. A bloomery forge was in operation in the village of Troy in 1743, and on the Rockaway and its branches several forges and a bloomery were erected in 1760. The Etna forge at Burnt Meadow Brook was set up about the same time, and others built in the Berkshire valley in 1775. A charcoal blast furnace was built at Oxford in 1743. A superior quality of iron was mined at Andover, in Sussex County, about forty miles from New York. It was in this section that the extensive ironworks of Cooper & Hewitt were estab- lished and developed during the first half of the nineteenth century. The Franklin furnace, one of the oldest, was erected in New Jersey in 1770. Furnaces were also erected in the southern part of New Jersey in 1766. By the report made in 1774 New Jersey was ascertained to have eight furnaces and seventy-nine forges for the manufacture of iron. Pennsylvania. Iron was discovered in Pennsylvania soon after its settlement. Sir William Keith had iron works in New Castle County (now Delaware) previous to 1730, and probably from 1717 to 1726. A bloomery was es- tablished in Chester County about 1720 which made the first iron manu- factured in the State. In 1728 there were four furnaces in Pennsylvania in blast. A charcoal blast furnace was built on French Creek in 1736. (From this furnace cannon were cast in 1736.) The furnaces were Early be- ginnings in 'New York. Develop- ments In New Jersey and Penn- sylvania. Digitized by Microsoft® 34 TRADE AND INDUSTRY IN THE COLONIES. In Mary- land and Tirginia. Iron exports blown by long wooden bellows worked by hand. These bellows were 20 feet 7 inches long, 10 feet 5 inches across the breech and 14 inches at the insertion of the nozzle. When in blast this furnace made from twen- ty-five to thirty tons per week. The Cornwall furnace was built in Lebanon County in 1742. The stack was 32 feet high, IVA feet square at the base and 11 feet at the top. It was worked until 1798. A large charcoal blast furnace was erected at Colebrookdale in 1745. The Ehza- beth furnace, fourteen miles from Lancaster, was built in 1756. A large blast and iron furnace was erected in the village of Manheim, in Lan- caster County, in 1762. A Speedwell forge in Lancaster County was built in 1750 and one in Martic township in 1765. Windsor forges were built in 1745. Several others were erected on the same stream during the next fifty years; the Poole forge, near the Speedwell, in 1760; in Philadelphia County a forge was built in 1733. Others were built in the vicinity in 1750 and 1770. A bloomery forge was built in Rockland township, Berks County. Maryland. About 1715 pig and bar iron began to be made in Maryland. Dur- ing the thirty years following 1719 eight furnaces and nine forges were set up in the State. The industry was encouraged by the Legislature in 1721. The industry was carried on to some extent in Maryland and Virginia before the Revolution, but it was after the Revolutionary war that the furnaces and forges of Maryland made their greatest progress during the century. After the removal of the duty the exports of pig iron increased from 2924 tons in 1750 to 3441 tons in 1755, and reached 5303 tons in 1771. The exports of bar increased from 5 tons in 1750 to 389 tons in 1775, reaching 2222 tons in 1771. The larger portion was from Pennsylvania, Maryland and Virginia. During this period the ex- ports from New York had increased from 75 tons of pig iron in 1750 to 457 tons in 1755. A small quantity of bar iron was also shipped from New York.^ While the laborers, agriculturists and people generally were clothed in their domestic productions, the wealthier classes patronized foreign manufactures. In the households of the wealthy were to be found such importations as blue china, cut-glass, silver-plate, high English clocks, candelabra, brass andirons, plushes, lawns, fine dyed jeans, galloons and silk ferrets, crimson velvets from Genoa, silks from China, linens from Ireland, rich damasks and cambrics from England, sewing silks and Persian flowered silk bonnets, swords, garterings, vests, vest-patterns and figured silk cloaks. 1 Bishop's History of American Manufactures, Vol. I, p. 628. Digitized by Microsoft® COLONIAL IMPORTS. 35 In 1764 the exports from the colonies to England amounted to the sum of $5,622,255; the same year the importations were valued at $11,- 365,115. The importations consisted of all sorts of manufactured articles. The nature of the articles imported at this time may be found in a resolu- tion passed at a town-meeting held in Boston in the fall of 1766. They are described as foreign superfluities, the importation of which caused a drain of specie from the colony and threatened its ruin and poverty; they are as follows: Loaf-sugar, cordage, anchors, coaches, chaises and carriages of all sorts, horse- furniture, men's and women's hats, men's and women's apparel ready-made, house- hold furniture, gloves, men's and women's shoes, sole-leather, sheathing and deck- nails, gold, silver and thread lace of all sorts, gold and silver buttons, wrought plate of all sorts, diamonds, stone and paved ware, snuff, mustard, clocks and watches, silversmith and jewelers' wares, broad-cloths that cost above ten shillings per yard, muffs, furs and tippets and all sorts of millinery ware, starch, women's and children's stays, fore-engines, china ware, silk and cotton velvet, gauze, pewters, hollow ware, linseed oil, glue, lawns, cambrics, silks of all kinds for garments, malt liquor and cheese. These were denounced as " foreign superfluities " which the colonists pledged themselves to no longer import or use. The importations, however, were not confined to those articles which found their market among the wealthier classes. Up to this time the colonists obtained all sorts of manufactured articles from abroad. The imports in addition to those articles enumerated were made up of an- chors, anvils, axes, adzes, buckles, buttons, cables, calico, cards, cotton and wool carpets, chains, chemicals, chinaware, cordage, cutlery, duck and sail cloth, earthenware, edge tools, files, firearms, glass, gloves, grind- stones, guns, gun-barrels, and locks, stocks, gunpowder, hats, hollow- ware, horsemills, hosiery, lace, fringe, looms, linen, muskets, nails, spikes, paper, parchment, pewter and pewter ware, pins, pottery, ribbons, sad- dlery, silks, saws, sheet-iron, screws, scythes, sewing silks, shoes and boots, shovels, hoes, shuttles, spinning wheels, steel, stocking looms, tea- kettles, thread, types, wool combs and cards. The imports had greatly increased during the last twenty years of this period, growing from $5,881,400 in 1754 to $11,365,115 in 1774. In addition to the articles above enumerated the colonists were every year buying in England large quantities of woolen, consisting of broad and narrow cloths, between six and seven shillings per yard; friezes, from three shillings six pence to six shillings ; druggets, serges, Campbeletts, Campbell cottons, plains, half-thicks, flannels, Scotch-plaids, hand-woolen hosiery, together with linens, of England, Scotch, Irish and Dutch manu- facture, and a considerable amount of indigo goods and silks, gold and silver and fine Flanders lace, and the finest Dutch linens, French cambrics. Foreign svperftu- Uies. Increase in imports. Digitized by Microsoft® 36 TRADE AND INDUSTRY IN THE COLONIES. Clothed in their own woolens. and chintzes for the use of the planters' own famiHes. The colonists were made dependent on the mother country for manufactures. They could only export raw materials, and must exchange them for British manufactures or those manufactures of other countries which were brought to England by British merchants in British ships, there unladen and then exported to the colonies. The balance of the trade between England and her North American provinces was settled with specie which the colonists obtained from the Spanish and West India Islands; hence the colonists were made more dependent on the mother country by reason of the constant drain of the precious metals. On account of the market in England for their tobacco, rice and naval stores, the re- strictions of the British government were less burdensome on the planters of the Southern colonies than on the people of New England. While household manufacturing was carried on throughout the South to a great extent, the soil, climate and natural resources were so favorable to other productions that they were not by the same necessities which actuated those of New England impelled to engage in commerce and manufacturing. In 1754 Comptroller Weare, in a letter written to a British noble- man, said : Upon actual knowledge, therefore, of these Northern colonies, one is surprised to find that notwithstanding the indifference of their wool, the planters through- out all New England, New York, the Jerseys, Pennsylvania and Maryland (for south of that province no knowledge is here pretended), almost entirely clothe themselves in their own woolens. "During the thirty years," says Bishop, "that elapsed between the enactment of the law prohibiting the exportation of hats which followed the report of the Board of Trade, in 1732, and the Peace of Paris in 1763, we do not find that any material advances were made towards the introduction of the manufacture of cloth." In 1766 the governors were again called upon by the Board of Trade for reports of the condition of manufactures, and the growth, if any, which had taken place since 1734. The Council of New York, in response to the inquiry made by Sir Henry Moore, the governor, reported " that no new manufactures had been set up or received public encouragement, nor had they known of any manufacture of wool or woolen cloth but what was principally confined to private families for their own consump- tion." Governor Moore reported, in 1776, that " there is a general manu- facture of woolen carried on here and consists of two sorts; the first a coarse cloth, entirely woolen, three-fourths of a yard wide; and the other a stufif which we call ' linsey-woolsey,' the warp of which is linen and the woof woolen. A very small quantity of it is sent to market." Digitized by Microsoft® CHAPTER III. 1764 TO 1776. Causes Which Precipitated the Revolutionary War. — Revolt Against the British Policy oe Colonial Government. — Preparations for the Struggle. That to heighten still the idea of parliamentary injustice, and to show with what moderation they are likely to exercise power where themselves are to feel no part of its weight, we take leave to mention to His Majesty certain other acts of the British parliament by which we were prohibited from manufacturing for our own use the articles we raise on our own lands, with our own labor. By an Act passed in the fifth year of the reign of his late Majesty, King George the II., an American subject is forbidden to make a hat for himself of the furs which he has taken, per- haps, on his own soil ; an instance of despotism to which no parallel can be produced in the most arbitrary ages of the history. By one other Act passed in the 23rd year of the same reign the iron which we make we are forbidden to manufacture; and heavy as that article is, and necessary in every branch of husbandry, besides commissions and insurance, we are to pay freight for it to Great Britain, and freight for it back again. — Thomas Jefferson. Jefferson'i protest. Among the most just causes of complaint in the British colonies against the British government were the restrictions which discouraged manufactures. To prevent a whole people from following any branch of industry is assuredly a measure which human nature cannot bear with tame submission; nor can the severity of the regulations be denied, on the grounds that the articles prohibited be imported cheaper from England. The injury felt by the provisions was not at that time of much consequence, but the regulation was in itself considered an in- sult to the understanding of the colonists, far more intolerable than previous oppression.! The twelve years which intervened between 1764 and 1776, from the passage of the first Act by Parliament, to levy taxes on the colonists, to the Declaration of Independence, is full of events of great interest to the student of economic history. It was during this time that the colonists were first brought to a full realization of their financial and industrial weakness. The purpose of that series of arbitrary restrictions which parliament had placed on their industrial life now fully appeared. They were for the first time made acquainted with the meaning of that ex- 1 MacGregor (British America, 2nd edition, Vol. I, p. 17). (37) Their industrial weaJitiess. Digitized by Microsoft® 38 REVOLVTIONAJir PERIOD. On political grounds. pression in the Act of 1719 which declared that "the erection of manu- factures in the colonies tends to lessen their dependence on Great Britain." The king and his far-seeing ministers from the outset well understood the temper of their American subjects. They fully appreciated the fact that the vast majority of them abhorred tyranny in every form, and that as soon as by weahh and numbers they became able to assert the rights of English freemen, they would demand either separation or the enjoyment of a larger measure of self-government. The policy of the king was to keep them poor and dependent. No more effectual means could be de- vised to accomplish this end than to keep their trade, commerce and in- dustries within narrow limits. To develop their mines and resources, to utilize their water powers and to introduce a diversity of manufactures would draw capital and skilled artisans from the Old World, create a manufacturing and trading population, increase the accumulation of wealth, build cities and villages and make the colonists so rich and power- ful that within a few years they would be strong enough to defy not only the king of England but any nation in Christendom. No higher recognition of the benefits and advantages to a people of an organized system of manufactures can be found than is contained in the Resolution of 1719. The first objection to the establishment of manufactories in the colonies was undoubtedly based upon political rather than commercial grounds. Later, however, the interests of the home producers, com- bined with political considerations, reduced the policy to a complete system. The military power displayed by the colonists during the French and Indian war in assisting the king to wrest Canada from France, and expel the hostile Indians from their borders, awakened a spirit of jealousy and fear that the colonists would not long submit to the unjust and ar- bitrary system of government which had been imposed upon them. It was claimed by the British Ministry that the war had been undertaken in the defence of the colonies, while, in fact, it was a war of conquest. Under the Treaty of Peace, 1763, France ceded to England, Cape Breton, Canada and Louisiana, east of the Mississippi, and at the same time Eng- land acquired Florida from Spain. As soon as the war closed, under the leadership of Lord Granville, supported by Mr. Charles Townshend, the President of the Board of Trade, a comprehensive plan for the govern- ment of the British colonies in North America was devised. The terri- tory acquired from Spain was made into two provinces. East and West Florida. In Canada the Province of Quebec was created. By the same proclamation which established these provinces a line was drawn around the head-waters of all of the rivers which flow into the Atlantic Ocean, and the colonists were forbidden to settle west of it. All of the land AcQuisi- iion of Canada, Louisiana and Florida. Digitized by Microsoft® OAVSES LEADING TO BETOLVTION. 39 from the Great Lakes to West Florida and from the Proclamation Line to the Mississippi was set apart for the Indians. The plan comprehended the sending of an army of ten thousand regular troops to be quartered in the country for its defence, the enforcement of the Trade and Naviga- tion Laws, the restrictions on manufactures and a system of taxation to compel the colonists to bear a part of the expense of the French and Indian war and to carry on the scheme of colonial government. A mem- ber of the British parliament, who had formerly resided in New Hamp- shire, and who was very familiar with the resources of the country, ad- vised the home government that the colonists were able to pay a tax of $2,500,000 annually. George III. had ascended the throne in 1761. He was young, inexperienced and surrounded by unwise advisers and min- isters. The right of the British government to tax the American col- onies, without their consent, had at all times been questioned. It was be- lieved by many English statesmen that the enforcement of such a policy would be resisted by the colonists and provoke open revolt. In 1732, during the British war with Spain, a scheme for taxing the colonies was submitted to Sir Robert Walpole. " I will leave that," says the Minis- ter, " for some of my successors who may have more courage than I have." When a similar measure was suggested to Pitt, in 1759, he said : " I will never burn my fingers with an American Stamp Act." George III., with perhaps more courage, but less wisdom than Walpole or Pitt, was willing to hazard the consequence of war and perhaps the loss of the American colonies in order to establish a principle of colonial government which was in violation of the rights of British freemen. In 1764 parliament renewed the Sugar Act, which imposed duties on sugar, molasses, indigo, etc., imported into the colonies from the West Indies, and upon coffee, wines, silks and other East India and Chinese goods, calicos, etc. This was the first act passed by parliament in which the object of raising a revenue from the colonies was directly expressed. Armed vessels were stationed along the Atlantic coast, and revenue of- ficers were sent to carry into effect this and other trade restrictions which were now to be vigorously enforced. The Sugar Act dealt a severe blow to the colonial trade with the Spanish colonies and French Islands, from which the colonists had, in years past, obtained specie with which to settle the annual balance of trade with England. The passage of this act brought forth a storm of opposition from all of the colonies. The people, to show their resentment, immediately began abstaining from the use of British goods and turned their attention to the increase of their home industries. A gentleman writing from Virginia, in September, 1764, said: The acts of Parliament have made such impression on the minds of the north- ScTieme for taxing the colonies. Colonial resent- ment. Digitized by Microsoft® 40 REVOLDTIONARY PERIOD. ward people, and the men of war so strictly enforced them, that there is an entire stagnation of trade. Nothing do they talk of but their own manufactures. The downfall of England and the rise of America is sung by the common ballad singers about the streets, as if, in a little time, we would supply ourselves with most of the necessaries we used before to take from England. Another person, writing from Boston, October 3, the same year, said : The " Stamp Act." The disposition seems to continue in many of the inhabitants of this and the neighboring government, to clothe themselves with their own manufactures. This obnoxious measure was followed in March, 1765, by the famous " Stamp Act," which required that stamps sold by the British govern- ment, be placed on all legal documents. A stamp for a common deed cost one shilling and sixpence; for a diploma or certificate of college degree, two pounds sterling, etc. The Stamp Act was more obnoxious to the people than the Sugar Act. Riots broke out in several cities, and the people at once were ripe for revolution. The stamps were seized upon their arrival and secreted or burned. Stamp distributers were insulted, and the opposition became so bold and threatening that no officers were found with sufficient courage to execute the law. A General Congress of delegates from several of the colonies met in New York in October, 1765. This convention contained delegates from Massachusetts, New York, Rhode Island, Pennsylvania, Delaware and Maryland. It passed resolutions condemning the Stamp Act and petitioned the king for re- dress. A Declaration of Rights and Grievances was signed. The griev- ances complained of were : Spirit of revolt. 1. Taxation without representation. 2. Trials without a jury (in the Vice-Admiralty Courts). 3. The Sugar Act. 4. The Stamp Act. 5. Restrictions on trade. The House of Burgesses of Virginia, under the leadership of Patrick Henry, had resolved: 1. That by two royal charters the people of Virginia had been declared entitled to all rights of Englishmen " born within the realm of England." 2. That one of these rights was that of being taxed, " by their own Assembly." 3. That they were not bound to obey any law taxing them without consent of their Assembly. On the first day of November, the day appointed for the act to go into effect, the courts were closed, all business was suspended, processions paraded the streets of the principal cities, and everywhere throughout the colonies the spirit of revolt was manifested. Digitized by Microsoft® CAUSES LEADING TO BETOLUTION. 41 Companies called the " Sons of Liberty " were formed to openly re- sist the enforcement of the Stamp Act. Agreements were entered into by the merchants of the cities not to import British goods, and the people began forming associations agreeing not to consume the same. Mer- chants canceled orders which they had placed in England for merchandise, and British ships returned to England carrying back the same wares which they had brought over but were unable to sell. Trade was at a standstill. British merchants soon felt the injurious effect on their trade of the non- importation of goods, and joined with the colonists in petitions to parlia- ment for the repeal of the Stamp Act. The British government was forced to yield, and the act was repealed in March, 1766. Although the British Ministry yielded to the pressure brought to bear on it by the Brit- ish merchants for the repeal of this obnoxious measure, yet it did not surrender the principle involved. The same resolution which repealed the Stamp Act embodied a declaration that parliament possessed the right to bind the colonies, " in all cases whatsoever." The policy of the British government, however, was not abandoned. The same object was soon attempted to be accomplished by another measure, differing in form, but in principle the same. The rejoicing which followed the repeal of the Stamp Act was of short duration. The interval was but a truce in the war upon the rights and liberties of the colonies which the British king was precipitating. On June 15, 1766, a pamphlet prepared by Mr. Ingersoll was printed and circulated throughout the colonies. It contained an extract from the speech of Mr. Isaac Barre, made in parliament in reply to Mr. Charles Townshend on the Stamp Act. An extract from the pamphlet is as follows : Children planted it/ oppres- sion. Mr. Charles Townshend spoke in favor of the bill (stamp duty), and con- cluded his speech by saying to the following effect: These children of our plant- ing (speaking of the Americans), nourished by our indulgences until they are grown to a good degree of strength and opulence, and protected by our arms, will they grudge to contribute their mite to relieve us from the heavy load of national expense which we lie under? Which having said and sat down, Mr. Barre arose, and, with eyes darting iire, and an outstretched arm, spoke as follows, with a voice somewhat elevated and with a sternness in his countenance which expressed in a most lively manner the feel- ings of his heart : " Children planted by your care, No ! Your oppression planted them in America. They fled from your tyranny into a then uncultivated land, where they were exposed to all the hardships to which human nature is liable, and among others, to the savage cruelty of the enemy of the country — a people the most subtle, and, I take upon me to say, the most truly terrible of any people that ever inhabited any part of God's earth; and yet actuated by principles of true English liberty, they met all these hardships with pleasure, compared with those they suffered in their own country from the hands of those that should have been their own friends. Digitized by Microsoft® 42 REVOWTIOVARY PERIOD. Jealous 0} their Uiertiea. Agreed not to import. "They nourished by your indulgence? They grew by your neglect of them. As soon as you began to care about them, that care was exercised in sending per- sons to rule over them, in one department and another, who were perhaps the deputies of some deputy of members of this House, sent to spy out their liberty, to misrepresent their actions, and to prey upon them — men whose behavior on many occasions has caused the blood of these Sons of Liberty to recoil within them, men promoted to the highest seat of justice; some, to my knowledge, were glad by going to a foreign country to escape being brought to a bar of justice in their own. " They protected by your arms ? They have nobly taken up arms in your defence, have exerted their valor, amidst their constant and laborious industry, for the defence of a country whose frontiers, while drenched in blood, its interior parts have yielded all its savings to your enlargement; and believe me — remember I this day told you^that the same spirit which actuated that people at first will continue with them still; but prudence forbids me to explain myself further. God knows, I do not at this time speak from motives of party heat. What I deliver are the genuine sentiments of my heart ; however superior to me in general knowledge and experience the respectable body of this House may be, yet I claim to know more of America than most of you, having seen and been conversant in that country. The people there are as truly loyal, I believe, as any subjects the king has; but a people jealous of their liberties, and who will vindicate them, if they should be violated I But the subject is too delicate. I will say no more." It was the publication of Barre's speech which gave rise to the term, " Sons of Liberty," which became general throughout the colonies. The Sugar Act remained in force. The next year, 1767, parliament passed what is known as the " Townshend Act." It had for its purpose the laying of additional taxes on the colonists and the more effectual en- forcement of the restrictions on trade and commerce. It I. Prohibited the Legislature of the State of New York from passing any more laws, until it had provided the royal troops, in the city, with beds, candles, fires, vinegar and salt, as was required by what was called " The Mutiny Act" Troops had been sent to New York in June, 1766, and the Mutiny Act was passed by parliament, which provided for their partial subsistence by the colonists. The Townshend Act further imposed a duty on paper, glass, red and white lead, painters' colors, and tea, and for the quartering of soldiers in the colonies, for a more effectual enforcement of the revenue system by the establishment of a custom house and a Board of Commis- sioners of Customs at Boston, to enforce the laws relating to trade. In August, 1768, the merchants and traders of Boston subscribed a paper in which they engaged not to import nor purchase any kinds of goods or merchandise imported from Great Britain, from January 1769, to January, 1770, excepting a few enumerated articles; nor to import, nor purchase of any one who shall import from any other colony in America, within that time, any tea, paper, glass or other goods commonly imported from Great Britain. The Connecticut, Salem and New York merchants Digitized by Microsoft® CAVSES LEADIJiG TO RE70LVTI0N. 43 entered into similar agreements. In 1769 the Legislature of Virginia, after being dissolved by the governor, met and adopted resolutions against importing British goods. This was followed in other colonies, and the practice became general. In May, 1768, the new Commissioners of Customs arrived in Boston and entered upon the enforcement of the law. The people absolutely refused to pay the duties, and in June the sloop " Liberty " belonging to John Hancock, arrived at that port with a cargo of Madeira wine. The payment of duties was refused and the ship was seized by the Commis- sioners. The streets of Boston were soon filled with a clamorous, in- dignant mob. A custom house boat was seized and dragged through the town and burned. The mob assaulted the house of the Commissioners and compelled them to seek safety in Castle William, a small fort at the entrance to the harbor. In the following September seven hundred Brit- ish soldiers arrived in Boston. The presence of the soldiers irritated the people and the Assembly of Massachusetts refused to supply a single dollar for their support. The soldiers were insulted, and on March 5, 1770, the first blood of the Revolution was shed when the British soldiers fired into a mob, killing three and wounding five of the citizens. The British merchants who traded in America sustained immense losses by the non-importation of their goods, and presented petitions to parliament stating their losses and praying for a repeal of the act. On March 5, 1770, Lord North proposed a bill for the repeal of that part of the Act of 1767, which laid a duty on glass, paper, painters' colors, etc., excepting the duty on tea, which was continued for the sole purpose of maintaining the Parliamentary Right of Taxation. The bill was carried through parliament by a large majority. The issue between the British government and the colonists was then clearly defined and joined. This bill was considered as a direct attack on the liberties of the colonists which it was the duty of all to oppose, and it was generally declared that who- ever directly or indirectly countenanced this dangerous invasion of their rights would be considered an enemy to his country. The East India Company freighted several ships to the colonies with tea, and appointed agents for its sale. Some cargoes were sent to New York, some to Philadelphia, some to Charleston, South Carolina, and three to Boston. The citizens of New York and Philadelphia sent the ships arriving in their ports back to London. The inhabitants of Charleston unloaded the tea and placed it in cellars ; prohibited its use and left it to be thoroughly damaged. None of it was used. At Boston the ships were boarded and the tea thrown off the dock. On March 17, 1774, intelligence of the destruction of the tea at Boston was communicated in a message from the throne to both Houses of parliament. A bill was passed which received the royal assent March 3L 1774, closing the port of Boston to commerce Disorders in Boston. The issue joined. Digitized by Microsoft® 44 REVOLUTIONARY PERIOD. TiigM of local self- govern- ment. and trade, and providing for the transportation of persons who had violated the EngHsh laws to Great Britain for trial. The colonists in the very outset of the controversy went beyond the objections to the taxes imposed, and asserted the right to govern them- selves in all their local affairs. This in itself was a revolution, for nowhere in Europe, at this time, either in England, France or Germany, was the right of public meeting, the freedom of the press, or the publicity of discussion recognized by the monarchies as a right existing in the people. The bold and defiant exercise of the rights by the colonists, the condemnation of the colonial policy of the king and parliament, the ap- pointment of committees of correspondence by the several colonial As- semblies to communicate with the other Assemblies of the colonies for the purpose of bringing about combined opposition, the holding of united conventions, issuing Declaration of Rights, defining and pointing out their grievances, and petitioning the king for a redress of the wrongs of which they complained, were all regarded by the king and his ministers as subversive of the British Constitution. To still further assert and exercise the power of the king to bind the colonies in all things, laws were passed by parliament designed to destroy every vestige of local self-government which the colonists had exercised under their charters and privileges. April 15, 1774, Lord North introduced a bill for the better administration of justice in Massachusetts Bay, and an- other for the impartial administration of justice. These bills were passed by large majorities on May 3, and received the royal assent May 20. The king was so much in their favor that he expressed himself " infinitely pleased " at their passage. The first, for regulating the administration, and known as the " Regulating Act," made the election of the council, as the charter provided, void; and ordered that they should be appointed by the crown, and should consist of not less than twelve or of more than thirty-six persons. The governor had the power to appoint and remove the judges of the inferior courts, the justice of the peace, and other minor officers. The governor and council were to appoint and remove the sheriffs, who had the power to select the jurymen. Town meetings were forbidden without the permission of the governor, except for the purpose of selecting officers. The other act, supplementary to the first, provided for the transportation of offenders and witnesses to England, or to other colonies, for trial. A protest was made in the House of Lords that the parties affected by such legislation had not been notified or heard in their own defence, and that by such legislation the governor and council were intrusted " with powers with which the British Constitution had not trusted His Majesty and his privy council," since " the lives, liberties and properties of the subject were put into their hands without control." In 1774 the information of the " regulating acts " reached Boston on The king was pleased. Digitized by Microsoft® CAV8E8 LEADING TO REVOLUTION. 45 Orutl and oppressive edicts. June 2, and the next day they were printed in the papers, and immediately sent by the committee of correspondence to all the other committees. The letter accompanying them said : " These edicts, cruel and oppres- sive as they are, we consider but as bare specimens of what the continent are to expect from a parliament who claim a right to make laws binding us in all cases whatsoever." In 1775 another act was passed restraining the trade and commerce of the provinces of New Hampshire, Massachusetts, Rhode Island and the West Indies; and prohibiting these provinces from engaging in the fisheries on the Banks of New Foundland. To punish the Middle and Southern colonies for their approval of the acts of the colony of Massa- chusetts, another act was soon passed by parHament imposing similar restrictions on the colonists of East and West Jersey, Pennsylvania, Mary- land, Virginia, South Carolina and the counties on the Delaware. The omission of New York, Delaware and North Carolina in this bill was considered in the colonies as calculated to promote disunion ; but the three exempted colonies rejected the favor and voluntarily subjected themselves to the same restraint as was imposed upon the other colonies. On the day designated by the Port Act business was finished at Boston at 12 o'clock at noon, and the harbor shut up against all vessels. The day was devoutly kept at Williamsburg, in Virginia, as a day of fasting and humiliation. In Philadelphia it was solemnized with every manifestation of pubHc grief; the inhabitants shut up their houses, and after divine service " a stillness reigned over the city which exhibited the appearance of a general mourning, or of the most solemn Sabbath." In most places it was observed as a day of mourning. Realizing their weak and dependent condition and foreseeing the events which were to follow, steps were taken to induce all of the colonists to diminish their trade with the mother country and to provide themselves with all those articles of necessity which they had hitherto obtained from the mother country. As early as August 14, 1774, a convention was held in Virginia, and resolutions were passed, signed by George Washington, Thomas Jefferson and other statesmen, as follows : Virginia convention ot mi- We do hereby resolve and declare that we will not, either directly or indirectly, import from Great Britain any goods, wares or merchandise, nor any of her manu- factures. We will turn our attention from the cultivation of tobacco to the culti- vation of such articles as may form the basis for domestic manufactures, which we will endeavor to encourage throughout this colony to the utmost of our abilities. The idea of making themselves self-sustaining immediately spread throughout the colonies, and the Continental Congress which assembled in Philadelphia on September 5, 1774, took up the question, and made Digitized by Microsoft® 46 RE70LUTI0NART PERIOD. certain recommendations on the subject. A synopsis of the proceedings of Congress on this subject appears in the first volume of Elliott's Debates on the Federal Constitution, in a preliminary paper entitled " Gradual Approaches Towards Independence." The following synopsis is given on pages 15 and 16 of Mason's Short Tariff History of the United States: BriUsh exports shut out. Non-expor- tation and non-impor- tation. On the nineteenth of September (1774) it was unanimously resolved that the Congress request the merchants and others, in the several colonies, not to send to Great Britain any orders for goods, and to direct the execution of all orders already sent to be delayed or suspended until the sense of Congress on the means to be taken for the preservation of the liberties of America should be made public. On the twenty-seventh of September the Congress unanimously resolved that from and after the first of December, 1774, there should be no importation into British America, from Great Britain or Ireland, of any goods, wares or mer- chandise exported therefrom, and that they should not be used or purchased if im- ported after that day. On the thirtieth of September it was further resolved that, from and after the tenth of September, 1775, the exportation of all merchandise, and every commodity whatsoever, to Great Britain, Ireland and the West Indies, ought to cease, unless the grievances of America should be redressed before that time. On the sixth of October (1774) it was resolved to exclude from importation, after the first of December following, molasses, coffee or pimento from the British plantations, or from Dominica; wines from Madeira and the Western Islands; and foreign indigo. On the twentieth day of October (1774) the non-importation, non-consumption and non-exportation agreement was adopted and signed by the Congress. This agreement contained the clause to discontinue the slave trade, and a provision not to import East India tea from any part of the world. In the article respect- ing non-exportations, the sending of rice to Europe was excepted. In general, the Association expressed a determination to suppress luxury, encourage frugality, and promote domestic manufactures. The agreement was dated the twenty-fourth of October. On the seventeenth of May (1775) it was unanimously resolved that all expor- tations to Quebec, Nova Scotia, the Island of St. John's, Newfoundland, Georgia (except the parish of St. John's) and to East and West Florida, immediately cease, and that no provisions of any kind, or other necessaries, be furnished to the British fisheries on the American coasts until it be otherwise determined by the Congress. On the first of August Congress adjourned to the fifth of September, 1775, having first passed a resolution declaring the non-exportation and non-importation association to comprise the islands of Guernsey, Jersey, Sark, Alderney, and Man, and every European island and settlement within the British Dominions, as well as all the West India Islands, British and foreign, to whatever state, power or prince belonging, or by whomsoever governed; and also Somer's Islands, Bahama Islands, Herbicia, and Surinam, on the main, and every island and settlement within the latitude of the southern line of Georgia and the equator. On the twenty-first of March (1776) Congress recommended to the several provincial Assemblies to exert their utmost endeavors to promote the culture of hemp, flax, and cotton, and the growth of wool, in the United Colonies ; and to take the earliest measure for erecting and establishing, in each colony, a society for Digitized by Microsoft® CAUSES LEADING TO REVOLUTION. 47 the improvement of agriculture, arts, manufactures, and commerce; and forthwith to consider the ways and means of introducing and iraproviding the manufactures of ducks, sail-cloth and steel. On July 4, 1776, the Declaration of Independence was signed; war followed, which continued until November 3, 1782, when a temporary treaty of peace was signed at Paris, and on September 3, 1783, the per- manent Treaty of Peace was signed at Paris, which was ratified by Con- gress on January 14, 1784, and the United States became free and independent. The resistance to taxation, and the eflforts on the part of the British government to coerce the colonists into submission, were the immediate cause of the revolt. That part, however, of the British policy which pro- hibited manufactures, while it was galling, oppressive and obnoxious to the colonies, would not, at this time, alone, have been ground for separa- tion; yet that it aroused a temper and spirit which was ready to revolt against further aggressions cannot be denied. The prohibitions placed upon manufactures must then be stated as one of the causes which led to the Revolution. The enforcement of the Navigation Laws, however, was recognized as the exercise of a right justly belonging to the sovereign power of the British Empire, and cannot be stated to have influenced the colonists in the struggle. Benjamin Franklin, in his examination before the House of Commons in 1766, states the attitude of his countrymen as follows : Q. What will be the opinion of the Americans on those resolutions? (Assert- ing the right of -Great Britain to tax America.) A. They will think them unconstitutional and unjust. Q. Was it an opinion in America, before 1763, that the parliament had no right to lay taxes and duties there? A. I never heard any objections to the right of laying duties to regulate com- merce, but a right to lay internal taxes was never thought to be in parliament. Q. On what do you found your opinion, that the people of America make any such distinction? A. I know that whenever the subject had occurred in conversation, it has ap- peared the opinion of every one, that we could not be taxed by a parliament where we were not represented. But the payment of duties, laid as regulations of com- merce, was never disputed. On January 14, 1776, Lord Chatham, in addressing the House of Commons on the " Right of Taxing America," said : If the gentleman does not understand the difference between external and in- ternal taxes, I cannot help it. There is a distinction between taxes levied for the purposes of raising a revenue, and duties imposed for the regulation of trade, for the accommodation of the subject; although, in the consequences, some revenue may incidentally arise from the latter. Declara- tion of Indepen- dence. Lord Chatham't plea. Digitized by Microsoft® 48 RETOLVTIONARY PERIOD. War became inevitaile. The Commons of America, represented in their several Assemblies, have been in possession of this, their constitutional right of giving and granting their own money. They would have been slaves if they had not enjoyed it ! At the same time, this kingdom, as the supreme governing and legislative power, has always bound the colonies by her laws, by her regulations and restrictions in trade, in navi- gation, in manufactures, in everything except that of taking their money out of their pockets without their consent. Upon the whole, I will beg leave to tell the House what is my opinion. It is, that the Stamp Act be repealed absolutely, totally and immediately. That the reason for the repeal be assigned, viz., because it was founded upon an erroneous principle. At the same time, let the sovereign authority of this country over the colonies be asserted in as strong terms as can be devised, and be made to extend to every point of legislation whatsoever, except that of taking money out of their pocket without their consent. The same views were expressed by Edmund Burke in his speech before the House of Commons on April 19, 1774, and March 22, 1775. Hence, in stating the immediate causes which influenced the colonists in making their Declaration of Independence, we should keep in mind the distinction between " duties imposed for the regulation of trade " and " taxes imposed for the purpose of raising a revenue." Development of Industries as a Means of Defence. The enforcement of the colonial policy made war, sooner or later, inevitable. While the assertion of the right to bind the colonists in all things, and the attempted execution of the measures which imposed taxes on them, hastened the struggle and were the immediate cause which aroused the colonists to revolt, the restrictions on trade and the suppres- sion of manufactures would ultimately, unless abandoned, have brought about the same result. The denial to the colonists of the right to utilize all the resources of their country, the development of the skill and genius of their people, and to engage in all branches of manufacturing, trade and commerce was then recognized as an unjust and arbitrary limitation on their most sacred rights. When the policy of Lord Granville, in 1764, was promulgated, the colonists immediately begun preparations for war. In seeking out de- fensive measures they at once discovered that they must become inde- pendent of Great Britain for munitions of war and necessaries and com- forts of life. Open hostilities would cut off their trade and communication with the rest of the world, and leave them dependent upon their own re- sources. They could not export pig and bar iron, but they could improve their foundries and forges and make it into cannon, cannon-shot and rifles. While they could not at once clothe an army, yet, within a few years, by giving encouragement to the making of cloth they would soon become self-sustaining in this respect. They had so far advanced their Digitized by Microsoft® CAUSES LEADING TO REVOLUTION. 4» system of household productions and acquired such knowledge of the useful arts that within a short time, by depriving themselves of many of the superfluities $nd luxuries which they had been in the habit of import- ing, they could live within themselves and wage a strong and successful war for the defence of their liberties. In addition to the non-importation agreements heretofore mentioned, which were entered into by the mer- chants, and the policy adopted to abstain from the use of imported wares, the encouragement of manufacturing soon became the settled policy of all the colonies and received the zealous and patriotic support of the people. Immediately after the passage of the Acts of 1764 a society was formed in the City of New York, styled " The Society for the Promotion of Arts, Agriculture and Economy." The encouragement of the linen industry was first undertaken. The society offered premiums for the production of raw materials and manufactures. For the largest quantity of linen yarn spun, under the direction of one person in the province in 1765, regard being had to the quality, thirty pounds sterling to ten pounds sterling, respectively ; for linen cloth in like manner, five premiums, from twenty-five pounds sterling to five pounds sterling ; for woven stockings (three thread), sixteen pounds sterling to twelve pounds sterling; and small amounts for the best sole leather, women's shoes, dressed deer- skins for breeches, beaver-skin gloves, roofing slate, etc. Premiums were also offered to farmers for raising flax. In March, 1766, the same society renewed their premiums on linen thread cloth and for machinery, etc., including fifteen pounds sterling, thirty-six inch, linen check, each color of the highest perfection, white and blue ; ten pounds sterling for the first three-stocking looms of iron set up in that year ; and five for the next three. For a model for the first flax mill erected in the province in 1766, to go by water, fifteen pounds sterling, and thirty pounds sterling for the first knitting mill costing one hundred fifty pounds sterling, or one in proportion to that sum. At a town meeting held in Boston in the fall of 1767, resolutions were passed binding the people not to buy or use a long list of specified articles of British manufacture, and advising by all prudent ways and means the encouragement of home manufacturing. Spinning matches were held and instructors sent out to teach the art of spinning. Similar measures were adopted in Connecticut and Rhode Island. Resolutions were passed by the Assemblies of Massachusetts to promote certain branches of manufacturing. Several recommended the improve- ments of their breeds of sheep and advised against eating mutton, that their flocks might be increased ; encouraged the raising of hemp and flax and the manufacture of flax-seed into oil, the manufacture of nails, steel, firearms, saltpetre, gunpowder, glass and salt, etc. The Provincial Con- gress of South Carolina, in 1775, recommended the raising of cotton, and North Carolina, in the same year, for the encouragement of manufactures Pn.illl'UIAS on ■iHiimtr!/. ^creasing ■Jiheep ftocics. Digitized by Microsoft® 50 BE70LUTI0NABT PERIOD. offered the following premiums : Fifty pounds sterling for fifty pairs of cotton cards of wire made and drawn in the province ; fifty pounds sterling to the maker of the first one hundred pairs of wool cards ; the same reward was offered for the finest piece of linen of twenty-five yards; one hun- dred pounds sterling for six pieces of woolen cloth, well dressed, each piece twenty-five yards long and three-fourths wide, and equal to British cloth worth four shillings and sixpence per yard. Large premiums were offered for the manufacture of given quantities of pins, needles, paper, hollow-ware, gunpowder, saltpetre, and for the erection of works for their manufacture and of rolling mills, iron furnaces, etc. Measures were also adopted for the encouragement of manufactures in Virginia. When the war broke out it was with the greatest difficulty that clothing, and particularly woolen suitable for the use of the army, was obtained. The Colonies were called upon by the Continental Congress to furnish a suit of clothes, of which the waistcoat and breeches might be of deerleather, a blanket, felt hat, two shirts, two pairs of hose and two pairs of shoes for each soldier in the army. Digitized by Microsoft® CHAPTER IV The States Under the Articles oe Confederation — The Depression IN Business — Experience Under Free Trade — Rise oe the Protective System — Tariee Legisi,ation oe the States — Adoption of the Federal Constitution. I defy the man in any degree conversant with the history, in any degree ac- quainted with the annals of this country from 1787 to 1789, when the Constitution was adopted, to say that protection of American labor and industry was not a leading, I might almost say the leading motive, South, as well as North, for the formation of the new government. Without that provision in the Constitution it never could have been adopted. — Daniei, Webster. A whole people, a whole generation of our fathers, had in view, as one grand end and purpose of their new government, the acquisition of the means of restrain- ing, by governmental action, the importation of foreign manufactures, for the encouragement of manufactures and labor at home; and desired and meant to do this by clothing the new government with this specific power of regulating com- merce. This whole country, with one voice, demanded to have inserted in the Constitution the power to enact protective legislation, a power which they held as another Declaration of Independence — a power by which we are able to protect all our children of labor. This power must not be surrendered, must not sleep, until the Union flag shall be hauled down from the last masthead— a sight which, I trust, neither we nor our children to the thousandth generation are doomed to see. — RuFus Choate. The Period from 1776 to 1789, under the Articles of Confederation. The Continental Congress, after signing the Declaration of Independ- ence, urged the colonies to form separate State governments. This had already been done by the State of New Hampshire, which adopted a constitution in June of that year. The colonies all adopted State con- stitutions, with the exception of Connecticut and Rhode Island, which continued, during the Revolution, under their charters. On November IS, 1777, the delegates in Congress of New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Penn- sylvania, Delaware, Maryland, Virginia, North Carolina, South Carolina and Georgia agreed on Articles of Confederation, which, on July 9, 1778, were ratified by the people of ten States ; by Delaware on February 23 following, Maryland holding off until March 1, 1781. Hence the form of government under which the Revolutionary war was fought consisted of a confederation of these new States for mutual defence. The excutive officers were the Secretary of Treasury and the Sec- (51) Protection the leading motive. Confeder- ation of states. Digitized by Microsoft® 52 THE STATES UNDER THE CONFEDERATION. retary of War and Foreign Affairs, who performed the duties of Secretary of State. Bills of credit, or Continental money, were issued by Congress, and a postal system and War Department were established. This form of government continued until the adoption of the Federal Constitution in 1789. As a directing body to press the Revolutionary war to a success- ful termination, the Continental Congress had the sympathetic assistance and aid of all the States, yet, as a legislative body to make laws for the government of the nation, it lacked authority. Each State was represented in Congress by not more than seven nor less than two delegates, chosen by the State Legislatures. Each State, however, had a right to one vote. All important measures required the concurrence of nine States, and no amendment could be made until it had received the approval of all. Although the States bound themselves to perpetual union, they pre- served their independence and reserved to themselves so many important functions that it left the general government weak and ineffectual. While Congress had the power to regulate the alloy or value of the coins struck by their own authority, or by that of the respective States, it could make no laws for the punishment of counterfeiting. It could fix the standard of weights and measures throughout the United States; yet it could not enforce their use by the people; establish a postal system and exact postage on mail matter passing from one State to another; appoint and commission all officers in the army and navy, excepting regi- mental officers in the land forces, and make rules for the regulation of the army and navy. The ninth article provides as follows : WeaTc a»4 ineSectual govern- ment. The United States, in Congress assembled, shall have the sole and exclusive right and power to determine on peace and war, except in cases mentioned in the 6th article ... of sending and receiving embassadors, — entering into treaties and alliances, provided that no treaty of commerce shall be made whereby the legislative power of the respective States shall be restrained from imposing such duties and imposts on foreigners as their own people are subject to, or from pro- hibiting the exportation or importation of any species of goods or merchandise whatsoever. Article 6 provides : That no State shall lay any imposts or duties which may interfere with any stipulations in treaties, entered into by the United States in Congress assembled, with any king, prince, or^state, in pursuance of any treaties already proposed by Congress to the Courts ot France and Spain.i While Congress had power to declare war, it had no power to enforce 1 A treaty with France was then being negotiated, and one with Spain, it was thought, could be entered inta Digitized by Microsoft® MILITARY PROTECTION. 53 Limited powers of Congress. the raising of troops, nor to compel the States to provide funds for the equipment and support of the army. While it could make certain treaties, it had no means of preventing the States from violating them. It could determine how much money was needed to provide for the annual expenses of the government, as well as for the interest and principal of the Continental debt, but its power stopped there. It could levy no taxes and had no means of raising money. It might, however, refuse to carry a letter from one State to another unless the postage was paid. The power to impose duties on imports and to regulate foreign trade was reserved by each State, and it is to their history that we must look for the tariff legislation, or lack of it, and the lessons taught. Protection to Native Industries Through the Necessities of the War. During the war, from 1776 to 1783, commercial intercourse not only with the United Kingdom but with all the other countries was cut off. Each State, under severe penalities and forfeitures, prohibited all com- mercial intercourse with Great Britain. The hostile war vessels and privateers rendered trade so hazardous with others that foreign com- merce was almost wholly suspended. This condition relieved the States of the necessity of passing any customs laws, even for revenue purposes. Although the war consumed their treasures, interrupted their business and occupations, drew many thousand away from industrial and commer- cial pursuits, and they were left burdened with heavy debts, yet, com- pelled as they were to provide for their domestic wants from their own resources, they made some progress in industrial pursuits. This situation not only stimulated the increase of domestic manufac- ture, but taught them a lesson concerning their capabilities in this direc- tion more convincing and conclusive than could have been accomplished in any other way. The war at once transformed the country from that British system by which the people were prohibited from engaging in certain manufactures, into a condition under which they were compelled to engage in all sorts of production within their industrial and financial capabilities. They lived for seven years within a wall of protection, established by military power. This, in effect, afforded them a degree of protection from foreign competition which in its extent was absolute. Had they been possessed of capital, of skilled manufacturers and laborers in the various industrial arts, the increase in manufacturing, although in time of war, would have been one of the marked and distinguishing features of this period. Lacking, however, as they were in capital and skill necessary to the production of manufactured articles, they took on a new industrial life. Much of the skill and capital which they possessed were directed to new and undeveloped fields, and the foundations were then laid for many of the industries which were subsequently developed under the fostering care of protective tariffs. stimulated domestic manu- factures. Digitized by Microsoft® 54 TEE STATES VNDEB THE CONFEDERATION. The United States under Free Trade. 1782 to 1789. During the first two years and a half (1783, 1784 and part of 1785) following close on the war commodities of all nations, and their ships, were admitted to all the ports of the United States, under freedom of trade, Georgia, North and South Carolina, Maryland, Delaware and New Jersey imposed no duties, excepting for revenue purposes, from 1782 to 1789. In 1785 and 1786, Connecticut, Rhode Island, Massachusetts, Pennsylvania and New York; in 1786, New Hampshire; and in 1787, Virginia levied duties on the importation of certain coarse articles for the purpose of protection. Hence, within this period we find free trade practiced in all the States for over three years ; in six States all of the time; and in seven States, protection a part of the time to certain things, and free trade in others. Free trade in all the states. Foreign Trade. Recipro- city propo- sition rejected. At the conclusion of peace the States of the Confederation became subject to the navigation laws of England, France, Spain and Portugal. England, jealous of the new American States which had entered the race of competition in international commerce, endeavored to prevent the growth of their shipping and foreign trade. She at first practically re- fused to permit their ships to trade at British ports ; she declined to enter into a reciprocity treaty and to place the commercial relations of the two countries upon a fair and equitable basis. The empressment of seamen and the seizing and searching of American ships will be referred to in subsequent pages when the causes which led to the War of 1812 are being considered. It is simply intended here to present the situation which confronted the States under the Confederation, exposed the weak- ness of their government, and influenced the adoption of the Federal Constitution. In 1785 John Adams, the United States Minister at the Court of St. James, proposed to the British government that the navigation between all the dominions of the Crown of England and all the territories of the United States of America be placed upon the basis of perfect and liberal reciprocity. This proposition was rejected and Mr. Adams was given distinctly to understand that no change would be made in the policy of Great Britain. It was tantamount at this time to a refusal to enter into a commercial treaty with the United States. On October 21, 1785, Mr. Adams wrote to John Jay, the Secretary of Foreign Affairs, as follows : This being the state of things, depend upon it, the commerce of America will have no relief at present, nor in my opinion ever until the United States shall have generally passed navigation laws. If this measure is not adopted, we shall Digitized by Microsoft® TEE STATES UNDER FREE TRADE. be derided; and the more we suffer, the more will our calamities be laughed' at. My most earnest exhortations to the States, then, are and ought to be, lose no time in passing such laws. The lack of uniformity among the States in adopting a system of navigation laws, in fact, the difficulty of enforcing such laws even by those States which attempted protection to their shipping, especially when some of the States whose citizens were not engaged in navigation main- tained open ports, convinced the people of the various States of the wis- dom and necessity of surrendering the power to regulate commerce with foreign nations to the general government. Mr. MacGregor, in a note (ibid, p. 1130) commenting on the effect which the attitude of Great Britain had on the public sentiment of the United States, said: This was one of the principal causes of the adoption of the present Constitu- 65 tion. The enactment of a system of Navigation laws for the protection and encouragement of the shipping of the United States received the approval of Hamilton, Jefferson, John Adams, Madison, John Jay, Monroe and all of the statesmen of that time. In fact, the people of all the States became strongly in favor of such policy. Between 1780 and 1785 Benjamin Franklin, Thomas Jefferson, John Adams, James Madison and Patrick Henry made declarations favoring freedom of trade and commerce, but after a few years of actual experi- ence they are found among the strong advocates of protection to shipping and industries. It should be noted, however, that these opinions were entertained before the people had experienced the disastrous effects of the large im- portations of goods during the years following the close of the Revolu- tionary war. A short trial, however, of the " let alone " policy convinced the people of the necessity and wisdom of protection to their shipping and manufacturing interests. They had been self-sustaining during the seven years of the war. They had engaged in the production of many articles which had hitherto been obtained from England. Capital had been invested, water power utilized, mines opened, and labor given employment. The hostilities of the war which had cut off trade prevented the exportation of coin in ex- change for foreign goods. The specie which had been brought over to pay the British army and which had been imported from France and Holland by the Continental Congress and from the West India Islands remained in the country, and at the close of the war there was a larger supply of the precious metal in circulation than at any time during the colonial period. In three years nearly all the precious metals had returned Navigation laws. Digitized by Microsoft® 56 THE STATES VNDER TBE CONFEDERATION. to Europe and passed into the pockets of British merchants and manu- facturers. As soon as peace was declared British merchant vessels returned to our ports freighted with all sorts of commodities which were suddenly placed on our markets for sale. Our imports from Great Britain alone in 1784 and 1785 were $30,000,000, while to her we exported only $8,000,000. Trade Between the United States and Great Britain ?rom 1783 to 1789 Inclusive. From MacGregor's Commerciai, Statistics, Vol. 5, 2nd Supplement. enormout drain. Balance Imports from Exports to against Year. England. England. United States. 1783 $4,135,100.80 $ 823,966.44 $4,311,134-36 1784 17,808,644.48 3,626,752.36 14,181,692.12 178s 11,173,819-32 1,285,003.64 9,888,815.68 1786 7,760,775-44 4,083,207.92 3,677,567-42 1787 9,748,302.08 4,325,207.92 5,423,094.16 1788 9,128,927.28 4,955,138.76 4,173,788.52 1789 12,222,452.00 5,082,963.76 7,139,488.24 $71,978,021.40 $24,162,240.80 $47,815,780.60 The above table was compiled by Mr. MacGregor from the official records of Great Britain and is approximately correct. (MacGregor's Commercial Statistics, Vol. 3, p. 800). Thus it will be seen that in seven years the excess of imports over exports exceeded $47,815,780.60, an enormous drain in those early days of our history. This was the result of free trade. Here we have, at the very threshold of our government, proof of the unsoundness of that most important free trade assumption " that importa- tions of merchandise are paid for in exportations of merchandise," and that international trade is simply an exchange of commodities. The fact that the large importations immediately following the close of the Revolu- tionary war drained the country of its specie is so well attested that but few authorities need be cited on the point. The importance, however, of this fact is the influence it had on moulding public opinion and determin- ing the question as to whether the people of the United States would continue the policy of free trade, or abandon it for the system of pro- tection. The disastrous effects of the large importations of merchandise on the industries and business of the country awakened a study and discus- sion of economic questions throughout all the States. A small number of quotations from the writings of this time are here given as proof of the Digitized by Microsoft® TBE STATES UNDER FREE TRADE. 57 fact stated, and more especially to show the current which the economic thought of the time was taking, John Marshall says in " The Life of George Washington," Vol. 2, p. 98: On opening their_ports, an immense amount of foreign merchandise was intro- duced into the country, and they were tempted by the sudden cheapness of im- ported goods, and by their own wants, to purchase beyond their capacities for pay- ment. Into this indiscretion they were in some measure beguiled by their own sanguine calculations on the value which a free trade would bestow on the produce of their soil, and by a reliance of those evidences of the public debt which were in the hands of the most of them. . . . The delusive hopes created by these vision- ary calculations were soon dissipated, and a great proportion of the inhabitants found themselves involved in debts they were unable to discharge. One of the consequences resulting from this unprosperous state of things was a general dis- content with the course of trade. It had commenced with the native merchants of the North, who found themselves incapable of contending in their own ports with foreigners; and was soon communicated to others. From Governor Bowdoin's message to the Assembly of Massa- chusetts, May 31, 1785, the following is taken : The state of our foreign trade, which has given so general an uneasiness, and the operations of which through the extravagant importation and use of foreign manufactures, has occasioned so large a balance of trade against us, demands serious consideration. To satisfy that balance, our money is exported, which, with all the means of remittance at present in our power, falls very far short of a suiBciency. Pelatiah Webster, writing at this time, said : The presence of specie had been for some time a common incident in the States ; from the beginning of the year 1780, hard money, as it was then called, had been plentiful. This was occasioned by large sums by various means coming from the English army in New York and spreading through the States; also by large sums remitted from France to their army and navy here; also by large importa- tions of hard money from Havana and other places abroad; so that hard money was never more plentiful and more easily collected than at that time. Lord Sheffield, speaking of the large importations which took place at the close of the war in 1784, said : England and rival nations have vied with each other in pouring their manufac- tures into America. The country is already stocked, most probably overstocked, with European commodities.^ A writer for the Philadelphia Gazette, May 11, 1785, said: We have been blind to our own interests and our existence as a nation. We have encouraged the importation of British gewgaws. Our towns have swarmed iLord Sheffield's Observations, i. p. 99. Involved In deMa, Bard money plentiful. Digitized by Microsoft® 58 THE STATES UNDER TEE CONFEDERATION. with English factors. Our money has been sent in cargoes to England, and the whole trade has been wrested from our merchants, who have been obliged to sit still and see themselves hastening to destruction. Ready-made clothes and every article of merchandise in large quantities have been imported; so that valuable branch of men, the mechanics, would in a little while be reduced to beggary. At last, thanks to Heaven, though our government sleeps, its citizens are awakening. We now see, because we severely feel, that we are going headlong to inevitable ruin. Protective policy demandicti In April, 1785, a meeting was held by the tradesmen of Boston, and resolutions were passed demanding the adoption of the protection sys- tem. They said: We, the tradesmen and manufacturers of the town of Boston, impressed with the danger which threatens the several branches of our occupations, by the large importations from Europe of certain articles commonly manufactured in this coun- try; which practice, if pursued, either by our own merchants or foreign agents, we conceive must eventually ruin those branches, which, for a long time have been established among us : Voted, That a committee be appointed by this body to draft a petition to the next General Court, setting forth the difficulties the manufacturers of this town labor under, by the importation of certain articles (to be enumerated in the petition), and praying a prohibition, or that such duties may be laid as will effectually promote the manufacture of the same. One signing himself " A Friend to Commerce," in a communication to the London Evening Post, quoted by the Independent Chronicle of Boston, May 27, 1784, said : Free trade's destructive conse- quences. Let us consider of the late exportations, to what an amazing amount has al- ready been shipped to that country, but how small in comparison have been the returns. An American ship comes, freighted principally with SPECIE— the cur- rency of that country is daily draining to make us remittances. What must be the natural consequence? Nothing short of a poor, impover- ished country, having its very blood drawn from it, to pay for their extravagant importations. Can any one suppose a trade so disadvantageous to continue, or that a country is pursuing its interest to persist in such destructive measures? The consequences are too evident. Here we find an example of a people occupying a rich agricultural country. The soil was easily tilled and crops were abundant. They had superior natural advantages for ship-building and navigation, with forests unsurpassed, with the greatest fishing grounds known, and facilities for the production of a great variety of raw materials. These are the condi- tions under which the free trader asserts that the most profitable and ad- vantageous exchanges can be carried on with other people having capital, skilled laborers, experience and superior facilities for manufacturing. Digitized by Microsoft® TBE STATES UNDER FREE TRADE. 59 Here, in the mind of the free trade philosopher, is to be found that perfect state of things wherein the people can easily become rich and prosperous by " letting nature take its course." They can buy all manu- factured articles, from the most refined and delicate fabrics to the coars- est tools, implements and titensils, cheaper from others than they can make them themselves. Besides, all of these commodities will be brought to their doors and offered in exchange for the surplus of the produce of their soil and forests. It is not even necessary for them to build or own any ships, employ any sailors or bother themselves in the slightest degree about the carrying trade. Moreover, foreigners even stand ready to catch, cure, salt and provide them with fish for food, cheaper than they can do it themselves. Happy people ! They should have grown amaz- ingly rich. Without customs officers to add a duty to the price ; without home manufactures to enhance the price, and without monopolies to foster, they were not burdened with any of those " hindrances or restrictions " which a protective tariff imposes ; neither was " labor drawn from agri- culture," nor " one section of the country, nor one part of the community taxed for the benefit of another." With abundant crops, surrounded by all the riches and bounties of nature, an industrious, frugal and ambitious people ; with every conceivable article of luxury and necessity offered for sale at less than its cost price, this condition ought to satisfy the yearnings of the most ardent free trade economists. They were, however, in the situation of the man who, when relating how much he could buy in the old country for $1, when asked why he did not make the purchase replied that he could not get the dollar. There was one thing, however, which they derived from this state of things: they were taught a lesson in political economy. They saw water wheels abandoned, which had been set up during the war to furnish power for small industries; the proprietors ruined, and laborers looking in vain for further employment, with their wives and children in want. They saw little enterprises which had been started to make nails, spikes, wagon irons, scythes, implements and many coarse articles of necessity discontinued. The fulling and carding mills which had been started were no longer needed. Those who by increasing their household productions had been supplying the villages and cities with stockings, mittens, linen and woolen cloths and many other necessary articles were compelled to surrender their customers over to the British manufacturers who could provide the same articles cheaper, or who, to re-establish their trade, sold under cost. This was the condition with which the people were confronted as soon as the ports were thrown open and the British merchant ships returned. The undermining and impover- ishing of these infant industries spread through all the States and localities. Ideal " free trade conditions. Could not get the dollar. Digitized by Microsoft® 60 TEE STATES UNDER THE GONFEDEBATION. Bad economic conditions. Early patriots and pro- tectionists. Farmers, in turn, were also injured by the inability of the people of the villages and cities to purchase their produce. The people of the States failed to respond to the requisitions of Con- gress and furnish money to pay the war debt, not because Congress lacked the power to enforce its requests, not because the people were repudiators, but solely because of their inability to raise the money. They were poor. They had no specie, because it had been sent to England to settle an ad- verse balance of trade. The restrictions upon setting up manufactures had kept business men, manufacturers and artisans out of the country and effectually retarded the accumulation of capital. The lack of banking capital had prevented the establishment of solvent banks of issue to supply circulating currency so much needed to take the place of specie or to pro- cure and keep it in the country. Cattle and other kinds of property had been used to pay their taxes and to take the place of money. To be sure, they had the produce of their farms, forests and fisheries to sell; they had ships to carry them to market, but that market was limited by the restrictions of every country, and the produce was reduced in value by freight charges and import duties before it found a purchaser. There were no accumulations. The one essential thing which they lacked was " a home market." This could only be found in that diversity of in- dustries which exists with a general system of manufacture. Their poverty, their idleness and their unfortunate financial situation could only be relieved by industrial effort. To do their own work; to employ and support their own laborers instead of giving employment and support to British labor ; to produce their own raw materials instead of buying from others; carry their international commerce in American-built ships, manned by American seamen and owned by Americans: their inability to do these things was the fundamental cause of their distressful condi- tion. The inability of Congress to make it possible for them to do these things was the defect in their government. Rise oif THU Protective System. An experience of seven years under the Articles of Confederation demonstrated to the people that a form of government which was power- less to secure to them industrial as well as political independence was a failure. They were convinced also that a system of free trade under which they were powerless to set up factories, to work up their raw materials by their own labor, to utilize all of their resources, to keep the precious metals at home, to accumulate wealth and to become rich and prosperous, was unwise and disastrous. This conclusion was reached, not hastily or inconsiderately, but after seven years of experience and after a full discussion and consideration of Digitized by Microsoft® RISE OF THE PROTECTIVE SYSTEM. 61 the subject in all its phases. There were no manufacturing interests at this time to influence public opinion or to shape legislation. The con- clusion was reached by a nation of farmers. In 1777 John Dickinson of Pennsylvania wrote : " We are tillers of the earth, from Nova Scotia to West Florida." A short experience with free trade disclosed the cause of their mis- fortune. John Adams, Thomas Jefferson, Patrick Henry and James Madison became protectionists and advocated the adoption of a Constitu- tion conferring upon Congress power to protect the shipping and manu- facturing interests of the country by duties on imports. Although Madi- son was slower in changing his opinion than either Jefferson or Adams, yet each in turn abandoned his free trade views and as President sup- ported the protectionist policy, uttering his strongest expressions in favor of the cause in the later years of his life. Franklin returned from France in 1785 ; was elected Governor of Pennsylvania the same year ; re-elected in 1786 and 1787; was a member of the Convention that framed the Federal Constitution. It was under his administration as Governor that Pennsylvania in 1785 enacted the protective tariff law which was taken as the model for the first protective tariff enacted by Congress. August 7, 1785, John Adams, in a letter to Thomas Jeiferson, said : Franklin as a pro- tecUoniet. We must do more than lay alien duties; we must take measures by which the increase of shipping and seamen will be, not only encouraged, but rendered in- evitable. We must adopt in all the States the regulations that were once made in England, and ordain that no American citizen or denizen, or alien friend or enemy, shall ship any merchandise out of or into the United States but only in ships built in the United States, and navigated by an American captain and three- fourths American seamen. I should be sorry to adopt a monopoly; but driven to the necessity of it I would not do things by halves.^ r Madison, confronted with the distress of the people m New Eng- land, which was spreading throughout all the colonies, in June, 1785, in a letter to Monroe said : The commercial discontents of Boston are spreading to New York and Phila- delphia. If they reach Virginia, it will be because the interests of the planters are affected. The British merchants monopolize the Virginia trade as completely as ever, selling imports high and paying low for tobacco.^ When the attitude of Great Britain became known, Jefferson said: The system into which the United States wished to go was that of free com- merce from every shackle. A contrary conduct in Great Britain will occasion them to adopt a contrary system, at least as to that island.^ iJohn Adams' Works, Vol. VIII, p 292. 2 Madison's Works, Vol. I, p 150. 8 Jefferson's Works, Vol. I. p 479. Digitized by Microsoft® 62 THE STATES UNDER TEE CONFEDERATION. In October, 1789, Jefiferson had arrived at the conclusion that it was necessary for the United States to adopt the protective policy. He said : Jefferson vrqed protection. Alexander Hamilton We wish to do it (promote commerce) by throwing .open all the doors of commerce, and knocking off all its shackles. But as this cannot be done for others, unless they will do it for us, and there is no probability that Europe will do this, I suppose we may be obliged to adopt a system by which we may shackle them in our ports, as they do us in theirs.^ Alexander Hamilton was from his youth a staunch protectionist, be- ginning its advocacy as early as 1774. His knowledge of governmental affairs and his profound judgment and familiarity with fundamental prin- ciples enabled him to start right in every undertaking. Hence, he was not compelled, as other able and patriotic statesmen of his time were, to overhaul his conclusions and change his position. In 1774 he said : We can live without trade of any kind. Food and clothing we have within ourselves. Our climate produces cotton, wool, flax and hemp, which with proper cultivation would furnish us with summer apparel in abundance. The article of cotton, indeed, would do more; it would contribute to defend us from the in- clemency of the winter. We have sheep, which, with due care in improving and increasing them, would soon yield a sufficiency of wool. The large quantities of skins we have among us would never let us want a comfortable suit. . . . Those hands which may be deprived of business by the cessation of commerce may be occupied in various kinds of manufactures, and other internal improvements. If, by the necessity of the things, manufactures should once be established, and take root among us, they will pave the way still more to the future grandeur and glory of Ainerica, and by lessening its need of external commerce, will render it still securer against the encroachment of tyranny. ... It would be extremely hurt- ful to the commerce of Great Britain to drive us to the necessity of laying a regular foundation for manufactures of our own, which, if once established, could not easily, if at all, be undermined or abolished.^ Again, in the " Farmer Refuted," he said : If we were to turn our attention from external to internal commerce, we should give greater stability and more lasting prosperity to our country than she can possibly have otherwise. We should not import the luxuries and vices of foreign climes; nor should we make such hasty strides to public corruption and depravity.^ Before the Treaty of Peace was signed, he fully appreciated the im- portance to the nation of clothing Congress with power to impose duties on imports for the purposes of protection. In 1782 he wrote: 1 Jefferson's Works, Vol. I, p 465. 2 Hamilton's Works, Vol. I, pp 18 and 19. Written December 15, 1774. 3 Ibid., Vol. I, p. 150. Digitized by Microsoft® RISE OF THE PROTECTIVE SYSTEM. 63 TJie power to regulate commerce. The vesting Congress with a power to regulate commerce ought to have been a principal object of the Confederation, for a variety of reasons. It is as neces- sary for the purposes of commerce as of revenue. There are some who maintain that trade will regulate itself, and is not to be benefited by the encouragements or restraints of government. Such persons will imagine that there is no need of a common directing power. This is one of the wild speculative paradoxes which have grown into credit among us contrary to the uniform custom and practice of the most enlightened nations. Contradicted by the numerous institutions and laws which exist everywhere for the benefit of trade, by the pains taken to cultivate particular branches and to discourage others, by the known advantage derived from these measures, and by the palpable evils that would attend their discontin- uance, it must be rejected by every man acquainted with commercial history. Com- merce, like other things, has its fixed principles, according to which it must be reg- ulated. If these are observed and understood it will be promoted by the attention of the government; if unknown or violated it will be injured — but it is the same with every other part of administration. To preserve the balance of trade in favor of a nation ought to be a leading aim of its policy. The avarice of individuals may frequently find its accounts in pur- suing channels of traffic prejudicial to that balance, to which the government may be able to impose effectual impediments. There may, on the other hand, be a possibility of opening new sources, which, though accompanied with great dif- ficulties in the commencement, would in the event amply repay the trouble and expense of bringing them to perfection. The undertaking may often succeed the influence and capital of individuals, and may require no small assistance, as well from the revenue as from the authority of the State.^ Washington. The influence and teachings of Washington and Hamilton were a potent factor in bringing about the union under the Constitution. Wash- ington was one of the most far-seeing and level-headed statesmen of his time. His name and opinion carried more weight with the people than those of any other. His opinion and advice calmed disturbing elements and inspired confidence. Washington was a protectionist. In a letter to Lafayette he said : Washing- ion a pro- tectionist. Though I would not force the introduction of manufactures by extravagant encouragement, and to the prejudice of agriculture, yet I conceive much might be done in that way by women, children and others, without taking one really neces- sary hand from the tilling of the earth. Certain it is, great savings are already made in many articles of apparel, furniture and consumption. Equally certain it is that no diminution in agriculture has taken place at the time when greater and more substantial improvements in manufactures are making than were ever before known in America. In Pennsylvania they have attended particularly to the fabrica- tion of cotton cloths, hats and all kinds of leather. In Massachusetts they are es- tablishing factories of duck, cordage, glass and several other useful and extensive branches. The number of shoes made in one town and nails in another is incred- ible. In that State and Connecticut there are also factories of superfine and other Hamilton's Works, Vol. I, p 254. Digitized by Microsoft® 64 TEE STATES UNDER TBE CONFEDERATION. broadcloths. I have been writing to our friend, General Knox, this day, to pro- cure me homespun broadcloth of the Hartford fabric, to make a suit of clothes for myself. I hope it will not be a great while before it will be unfashionable for a gentleman to appear in any other dress. Indeed we have been too long subject to British prejudices.^ Protection the people's cause. Thus by 1790 the whole tone of the controversy had changed, or better, the controversy had yielded to a general agreement to encourage manufacturers in this country. The demand for protective duties sprang from the people. The cause of protection was their cause. They insisted on their right to enjoy industrial independence with that same spirit and resolution with which they had demanded political freedom. The movement was irresistible. The benefits to be derived from a home market for the farmers, from embracing all branches of trade, commerce and productions suited to their soil, climate, resources and capabilities, were comprehended and under- stood. They were willing to meet and surmount all obstacles which stood in the way of their growth and progress. If opportunities did not exist it was in their very nature to create them. They fully realized that when the treaty of peace was signed the work of laying the foundation for a great and enduring nation had just begun. The sword had won their political freedom, but left them industrial slaves. A movement to liberate them from the oppression of foreign competition was soon inaugurated and found expression in the Federal Constitution which gave Congress the power to regulate commerce with foreign nations and to shield the rising industries from destruction by a system of protective tariffs. The Constitution was their second Declaration of Independence. The first steps to aid manufacturers by duties on imports were taken by several of the States. First steps to aid manufac- turers. Connecticut. Shortly after the close of the Revolutionary war the people of Con- necticut undertook to encourage the establishment of industries by levy- ing duties on imports, the payment of bounties and exemption from taxa- tion. Prior to January 1, 1785, duties had been levied for revenue pur- poses. At this time, however, the revenue rates were increased to 7 per cent, and specific duties were imposed on the importation of rum, brown sugar, saddles, leather, boots, shoes and hats, expressly for the purpose of encouraging their manufacture. The next year a duty of J^-penny per pound was levied on nails ; six shillings per cwt. on hemp and cordage, and exempting from taxation the land on which hemp was grown. In 1 Washlneton's Works, Vol. II, p. 853. Digitized by Microsoft® HOWEVER UNIMPORTANT AMERICA MAY BE CONSIDERED AT PRESENT, AND HOWEVER BRITAIN MAY EFPECT TO DESPISE HER TRADE, THERE WILL ASSUREDLY COME A DAY WHEN THIS COUNTRY WILL HAVE SOME WEIGHT IN THE SCALE OF EMPIRES-" WASHINGTON (Letter to LaFayette). Digitized by Microsoft® Digitized by Microsoft® RISE OF TEE PROTECTIVE SYSTEM. 1788 a law was passed relieving iron works and woolen factories from local taxation, and exempting the employees in such industries from the payment of a poll tax. It was expressly stated " That all due encourage- ment should be given to manufactories in this State." On June 1, 1789, the State provided for the payment of 1 penny per pound on yarn spun in the factories at Hartford.^ Rhode Island. 65 In Rhode Island the influences moulding and shaping public opinion did not differ from those existing in Connecticut. In 1783 the Legisla- ture of the State passed certain measures imposing small duties of 2^ per cent, which were soon after increased by 2 per cent on imported articles for the purpose of raising revenue. In 1785, however, the ques- tion was taken up, and on a report of a committee duties were imposed distinctively for the purpose of protection. The articles enumerated within the schedule were scythes, axes, hoes, a great many tools, iron, pewter, tinware, hats, boots, leather, paper, coaches, carriages, etc. The duties raised on some of the articles were as high as 25 per cent. In 1786, for the purpose, as stated in the resolution, " to encourage the growth of all raw materials, more especially those that supply cloth- ing to the inhabitants, and duck and cordage, for carrying on commerce," to every person owning sheep in the State, shall be paid a bounty of $1.00 per head, each year, and the producer of hemp and flax shall be paid 1 penny per pound. Duties for protection. Massachusetts. Although Massachusetts, in 1782 and 1783, had enacted laws purely for revenue purposes, and had given expression through the members of its Legislature to a policy of free commercial intercourse, yet we find in 1784 duties of 7j4 per cent imposed on the importation of paper, candles, soap, linseed oil, leather, beef and pork. It was not until 1785 that the State enacted a distinctive protective policy. In the preamble to the act of 1785 we find this expression : Whereas, it is highly necessary for the welfare and happiness of all States, and more especially such as are Republican, to encourage agriculture, the improvement of raw materials and manufactories, a spirit of industry, frugality and economy, and at the same time to discourage luxury and extravagance of every kind, etc. Protection in Massa- chusetts. By this act the importing of certain articles was prohibited, duties as 1 Acts and Laws of Connecticut, 1784, p. 309. Ibid, 345 and 346, and 361. Digitized by Microsoft® 66 TEE STATES UNDER TEE CONFEDERATION. high as 25 per cent were imposed on some, while specific rates were applied to others. A copy is herewith given : And whereas it is the duty of every people, blessed with a fruitful soil, and a redundancy of raw materials, to give all due encouragement to the agriculture and manufactures of their own country; Be it therefore enacted, that on and after the first day of March next, the following articles, not being the growth or manufacture of any of the United States of America, be, and they are hereby, declared to be contraband, and are pro- hibited from being brought into this State by land or water, on pain of forfeiture, viz.: loaf sugar, hats made of fur, hair and wool or any or either of them; boots and shoes of every denomination, coaches and all other riding carriages or any part thereof, any harness of all sorts, scythes, iron shovels, hoes, broad and narrow axes, fiat-irons for ironing clothes, anchors, iron and brass stoves, mill saws, sad- dles and bridles, wool cards, cotton cards, ready-made millinery, articles of dress of all kinds, plumes and artificial flowers of all kinds, white and blond lace of all sorts, fans charged more than five shillings sterling apiece in the invoice exhibited, embroidered patterns for waistcoats, or for any other parts of dress, gold and silver lace and trimmings, women's and children's stays, leather gloves and mitts of all sorts, message cards, playing cards, hair powder of all kinds, pomatum and all kinds of perfumery, paper hangings, children's toys, spelling books and primers, novels, romances and plays, whips, walking-canes, horn and tortoise shell combs, porter, beer and ale, butter, cheese and mustard, coffins, furniture of all kinds, lin- seed-oil, candles, snuff and all kinds of manufactured tobacco, all kinds of wearing apparel and wooden household furniture except the furniture brought by persons who shall come to reside in this country. Some im- portations proliibited. This act, which absolutely prohibited the importation of fifty-eight distinct articles, was passed upon the report of a committee of the two Houses, which investigated the subject and recommended what it be- lieved to be the most eflFectual measure for the encouragement of the manufactures of the State. The same law placed on the free Hst wool, dye woods, lead, tin, brass, molasses, salt and other raw materials.^ New Hampshire. On March 4, 1786, the State of New Hampshire passed a tariff law imposing an import duty of 15 per cent on boots, shoes, hats, saddles, carriages, furniture, nails, wrought iron, cheese, linseed oil, etc., 10 per Distinctly ^^"* °" earthen, stone and china ware, and 5 per cent on ale, porter, beer protective, and wines. Revenue duties were also imposed on other articles, and a reward of one hundred pounds was offered to the person who should erect the first slitting and nail mill, and fifty pounds for the establishment of a sail-cloth factory. The policy of the State of New Hampshire was distinctively iMass. House of Representatives, Manuscript Journal, 1785, 293. Laws of Mass. 1783-1789, p. 503 Digitized by Microsoft® RISE OF THE PROTECTIVE SYSTEM. 67 protective and was entered upon for the avowed purpose of encouraging the establishment of industries. The preamble to the act of March 4, 1786, sets forth the purpose as follows : " That the laying duties on articles of the produce or manufacture of foreign countries will not only- produce a considerable revenue to the State, but will tend to encourage the manufacture of many articles within the State." NiSw York. In March, 1784, the State of New York passed a tariff law which was renewed by the Legislature in the following year, and continued until the adoption of the Federal Constitution. Duties were laid on cordage, ropes, yarns, boots and linseed oil. The system of specific duties was applied to about forty different articles. The schedules were revised in 1787 and again in 1788. Acts were passed discriminating against goods imported in British vessels, by doubling the rates of import duties on the same. The State of New York further provided in the Act of 1785 that " all goods, wares and merchandise, other than the produce and manufacture of the United States, imported into this State from the States of Rhode Island, Connecticut, New Jersey, and Pennsylvania, shall be subject to like duties as are paid by goods imported in British vessels, unless it be proved to the satisfaction of the collector that such goods are not im- ported into said States in British vessels." The necessity for such specific regulations arose from the lack of uniformity in the policies adopted by the several States. New Jersey's open ports made it as necessary for the Legislature of the State of New York to inspect goods coming in from New Jersey as those entering the harbor in British vessels from abroad. Pennsylvania. In 1780 the State of Pennsylvania levied low import duties on numer- ous articles, purely for the purpose of providing reventie. These duties were increased in 1782, repealed the next year, and restored in 1784. It was not until September 20, 1785, that a law distinctively protective was enacted. This act was prepared with such care, and was so in harmony with the ideas of protectionists, that it was taken, as is claimed, as a model for the first tariff law enacted by the Federal Government in 1789. It imposed specific duties on a large number of articles which were intended to be high enough to encourage their production in the State, and ad valorem duties on others. The articles were as follows : Every coach, chariot or landau or other carriage having four wheels, the sum of twenty pounds. Every chaise, chair, kittereen, curricle or other carriage, having two wheels, ten pounds, and in the same proportion for any parts of such carriages. Every clock thirty shillings. New York's tariff law of mi. Pennsyl- vania's model law. Digitized by Microsoft® 68 THE STATES DNDER TEE CONFEDERATION. Every dozen packs of playing cards, seven shillings and six-pence. Every dozen reaping hooks and sickles, twelve shillings. Every dozen scythes, except Dutch and German, fifteen shillings. Every hundredweight of refined sugar, eight shillings and fourpence. Every gallon of beer, ale, porter and cider, sixpence. Every dozen bottles of beer, porter or cider, four shillings. All malted barley, or other malted grain, five per cent ad valorem. All salted or dried fish, seven shillings and sixpence for every hundredweight thereof. Every hundredweight of cheese and butter, eight shillings and fourpence. All beef, 2 per cent ad valorem. All pork, 5 per cent ad valorem. Every pound of soap, excepting castile soap, one penny. Every pound of chocolate, fourpence. Every pound of candles, of tallow or wax, one penny. Every pound of glue, twopence. Every pound of starch or hair powder, one penny. All hulled barley, dried peas and mustard, 10 per cent ad valorem. All manufactured tobacco, other than snuff, sixpence for every pound thereof. Every pound of snuff, including the bottles, canister or other package, one shilling. All lampblack, cotton and wool cards, manufactured leather pasteboards, parch- ment, writing, printing, wrapping and sheathing paper, and paper hangings, 10 per cent ad valorem. Every pair of men's and women's leathern shoes, two shillings. Every pair of women's silken shoes and slippers, two shillings and sixpence. Every pair of women's stuff shoes or slippers, one shilling. Every pair of boots, five shillings. Every saddle for men's or women's use, twelve shillings and sixpence. Every ounce of wrought gold, twenty shillings. Every ounce of wrought silver, two shillings. All utensils and vessels of pewter, tin or lead, all wrought copper, brass, bell- metal and cast iron, 10 per cent ad valorem. All British steel, 10 per cent ad valorem. All slit iron, nail-rods and sheet iron, 10 per cent ad valorem. All garments ready made, for men's or women's wear, including castor and wool hats, 10 per cent ad valorem. Every beaver hat, seven shillings and sixpence. All blank books, bound or unbound, 10 per cent ad valorem. All tarred cordage, yarns or fixed rigging, eight shillings and fourpence for every hundredweight thereof. All white ropes, log lines, twine and seins, twelve shillings and sixpence for every hundredweight thereof. All polished or cut stones in imitation of jewelry, chimney pieces and tables, and other polished marble; all cabinet or joiner's work, horsemen's whips, carriage whips, walking-canes, musical instruments, and instruments used in surveying, 10 per cent ad valorem. All stone and earthen ware, 10 per cent ad valorem. All panes, plates, vessels and utensils of British glass, 25^ per cent ad valorem. All teas imported from Europe or the West Indies, viz., every pound of Hyson tea, sixpence; every pound of other tea, twopence. Digitized by Microsoft® RISE OF TEE PROTECTIVE SYSTEM. 69 All rum imported in any vessel belonging to any foreign state or kingdom, sixpence for every gallon thereof, and the like sum upon all rum imported into this State by land or water from any of the United States, except it should be made to appear by the oath of the exporter, certified by the collector of the port, from whence it may be last shipped that it was distilled in the State from whence it be imported, or that it has been imported into that State by vessels belonging to the United States. All wines and fruits being the growth of the kingdom of Portugal, or of the territories thereunto belonging, viz. : All wines, one shilling for every gallon thereof; every box of lemons, five shillings; every hundredweight of raisins, or other fruit, seven shillings and sixpence; the said duty to continue so long as the flour of America is prohibited from being imported into the kingdom and terri- tories aforesaid. Every ton of shipping belonging in whole or in part to any foreign nation or state whatever, except such as the honorable Congress of the United States have entered into treaties of commerce with, seven shillings and sixpence for every ton thereof, carpenter's measure, for each and every voyage. All ready-made sails, lo per cent ad valorem. All testaments, psalters, spelling books and primers, in the English and Ger- man language; all romances, novels and plays, 15 per cent ad valorem. All bone and tortoise shell combs 5 per cent ad valorem. All saddle trees, 10 per cent ad valorem. All linens made of flax, 2}4 per cent ad valorem. And the same imposts, and every one of them, shall become due and payable to the commonwealth, in the manner hereinbefore specified and directed, from and after the first day of the year one thousand seven hundred and eight-six.^ The Preamble to Pennsylvania's Tariff Law reads as follows : Section i. Whereas, divers useful and beneficial arts and manufactures have been gradually introduced into Pennsylvania, and the same have at length risen to a very considerable extent and perfection, insomuch that during the late war between the United States of America and Great Britain, when the importation of European goods was much interrupted, and often very difficult and uncertain, the artisans and mechanics of this State were able to supply in the hours of need, not only large quantities of weapons and other implements, but also ammunition and clothing, without which the war could not have been carried on, whereby their oppressed country was greatly benefited and relieved. Sec. 2. And whereas, although the fabrics and manufactures of Europe and other foreign parts, imported into this country in times of peace, may be afforded at cheaper rates than they can be made here, yet good policy and a regard to the well-being of divers useful and industrious citizens, who are employed in the mak- ing of like goods in this State, demand of us that moderate duties be laid on certain fabrics and manufactures imported, which do most interfere with, and which (if no relief be given) will undermine and destroy, the useful manufactures of the like kind in this country. For this purpose, etc.^ Virginia. The State of Virginia, at the close of the Revolutionary war, under- 1 Mason's Short Tariff History of the United States, pp. 64 and 65. 2 Extract from the Pennsylvania laws of 1785, p. 669. Oood Policy. Digitized by Microsoft® 70 TEE STATES UNDER THE CONFEDERATION. Patrick Eenry converted. took to pursue a free trade policy. At this time Patrick Henry uttered that expression which has been so frequently quoted. He declared : Why should we fetter commerce? Fetter not commerce, sir; let her be free as the air. She will range the whole creation and return on the wings of the four winds of Heaven to bless the land with plenty. The hard times which followed, the large importations of foreign merchandise, the heavy balance of trade arising against the States, and the drain of specie, converted Patrick Henry into a protectionist. Henry, in time, swung entirely around (The First Stages of the Tariff Policy of the United States, p. 42) from the position he had held in 1783, and in 1787 favored the prohibition of the importation of distilled liquor, cheese, butter, pork, beef, tallow, and candles, and the imposition of a duty on iron, coal, hemp, and cordage. His biographer says : " He thought it wise to stimulate home industry, and was not bound by previous utterances, nor any theory of political economy." 1 At this time Madison and Mason entertained liberal views concerning foreign trade, and prevented the enactment of Henry's tariff policy. Many customs laws for revenue purposes were enacted by the State, be- tween the close of the war and the adoption of the Federal Constitution. Mr. Hill further states : These acts contained little internal evidence of their protective purpose, but Madison asserts that the desire to encourage manufactures, as well as the need of revenue, caused the passage of the tariff acts in 1786 and 1787.^ The States of North and South Carolina, Georgia, Maryland and Delaware imposed duties on imports purely for revenue purposes. The principal articles embraced within the schedules were: staves, rum, spirits, wines, tea, coffee, sugar, etc. Pree trade in New Jersey. New Jersey. New Jersey, after the close of the Revolutionary war, kept her ports open to the free commerce of the world, and in 1783 the Legislature passed a resolution in the following words : In order to give the fullest encouragement to trade and commerce within this State, all the ports in the State shall be free and open for the importation or ex- portation of any goods, wares or merchandise, whatsoever; clear of all duties, customs or impositions of any species or denomination. New York and Pennsylvania, whose people desired to set up manufac- 1 Hill's Life of Henry, Vol. II, p. 328, 2 Madison's Works Vol. I, p. 271. Digitized by Microsoft® ADOPTION OF THE COVSTITVTIOV. IX tures and protect them from foreign competition, had for their neighbor the State of New Jersey, a free trade commonwealth which maintained open ports in which goods could be landed and surreptitiously taken across the border into these States. Without a well-regulated system for the enforcement of the collection of customs, with custom houses and custom officers on their borders, those States, which desired to protect their in- dustries, were powerless to prevent the smuggling even of those coarser and more common articles which would come in competition with their infant industries. Goods could very easily be taken from New Jersey across to the jobbing houses of New York City and distributed along the Hudson and throughout the State, and even find their way into Rhode Island, Connecti- cut and Massachusetts. The open door maintained by New Jersey made partially ineffectual the tariff barriers sought to be erected by Pennsyl- vania, New York Massachusetts, Connecticut and Rliode Island. This situation, alone, was enough to demonstrate the necessity of transferring the power to impose protective tariff duties to the central government. Adoption ot ths Federai, Constitution. While the treaty of peace which was finally ratified by Congress on January 14, 1784, was regarded, especially respecting the territory ceded to the United States by Great Britain, as exceedingly favorable, the failure to speedily fulfill its provisions aroused much antagonism and complaints on both sides. The British complained of the failure to at once pay the debts of their subjects which had been suspended during the war, and also of the ill treatment of the tories. The detention of posts on the lakes and the failure on the part of Great Britain to completely withdraw its troops from the territory ceded to the Union added to the animosity which naturally grew out of the war. The agitation for a change in the form of the government began soon after the close of the Revolutionary war and spread rapidly from the New England States throughout all of the States, and after the disastrous experiences of free trade with all the States, during the years of 1782, 1783 and 1784, it began to assume a definite shape, and the protective ideas were formulated into a more definite plan. Congress was at first moved by the need of funds to discharge national obligations to consider the question of vesting the Continental government with greater powers over the States. In 1784, Jefferson, Gerry and others were made a committee to investigate and report upon these matters to Congress. On April 20, 1784, the committee reported the adoption of the following: Resolved, That it be and hereby is recommended to the Legislatures of the Change In form of govern- ment. Digitized by Microsoft® 72 TEE STATES mfDER TBS OONFEDERATIOy. several States to vest the United States in Congress assembled, for the term of fifteen years, with the power to prohibit any goods, wares and merchandise from being imported into or exported from any of the States in vessels belonging to or navigated by the subjects of any power with whom these States shall not have formed treaties of commerce. Resolved, That it be and hereby is recommended to the Legislatures of the several States to vest the United States in Congress assembled, for the term of fifteen years, with power of prohibiting the subjects of any foreign state, kingdom or empire unless authorized by treaty, from importing into the United States any goods, wares or merchandise which are not the produce of the dominions of the sovereigns whose subjects they are. Provided that to all acts of the United States in ' Congress assembled, in pur- suance of the above powers, the assent of nine States shall be necessary. Jefferaon'i poUcu. Laei of uni- tormtty. Enibar- raaamenta increased. The action of the several States on this recommendation was so lack- ing in uniformity that the power was not granted. Two years later Vir- ginia, New Jersey, New York and Massachusetts had adopted the recom- mendations of Congress. Maryland, Pennsylvania and Connecticut ap- proved the plan, with conditions imposing the date when it should begin to operate in conflict with the recommendations. " New Hampshire," says Hill, " had given power to regulate trade for fifteen years, and other States did the same." Rhode Island had given power to regulate trade between the States for twenty-five years, and to prohibit, restrain or regulate the importation only of goods in foreign vessels. North Caro- lina had granted powers over foreign commerce similar to those granted by Rhode Island, but unrestrained in duration; and when other States did the same it was to become an article of confederation and perpetual union. The other three States (Delaware, Georgia and South Carolina) had done nothing. " The action of each State, however, was conditioned upon like action by every other State. Conformity was never obtained." '■ In describing the situation which existed immediately preceding the adoption of the Constitution, Marshall said (Life of Washington, Vol. 2, p. 102) : The discontent arising from the embarrassments in which individuals were involved, continued to increase. At length two great parties were formed in every State, which were distinctly marked, and which pursued distinct objects, with systematic arrangement. The one struggled with unabated zeal for the exact observance of public and private engagements. By those belonging to it, the faith of a nation, or of a private man, was deemed a sacred pledge, the violation of which was equally forbidden by the principles of moral justice and of sound policy. The distresses of individuals were, they thought, to be alleviated only by industry and frugality, not by a relaxation of the laws, or by a sacrifice of the rights of others. They were consequently the uniform friends of a regular administration of justice, and 1 Early Stages ol the Tariff Policy of ths Unitsd States, pp. 97 and 98. Digitized by Microsoft® ADOPTION OF TEE OOWSTITVTION. 73 of a vigorous course of taxation which would enable the State to comply with its engagements. By a natural association of ideas they were also, with very few ex- ceptions, in favor of enlarging the powers of the Federal Government, and of enabling it to protect the dignity and character of the nation abroad, and its in- terests at home. The other party marked out for themselves a more indulgent course. View- ing with extreme tenderness the case of the debtor, their efforts were unceasingly directed to his relief. To exact a faithful compliance with contracts was, in their opinion, a harsh measure which the people would not bear. They were uniformly in favor of relaxing the administration of justice, of affording facilities for the payment of debts, or of suspending their collection, and of remitting taxes. The same course of opinion led them to resist every effort to transfer from their own hands into those of Congress powers which by others were deemed essential to the preservation of the Union. In many of these States the party last mentioned constituted a decided majority of the people; and in all of them it was very powerful. The emission of paper money, the delay of legal proceedings and the suspension of the collection of taxes were the fruits of their rule wherever they were completely predominant. Even where they failed to carry their measures, their strength was such as to encourage the hope of succeeding in a future at- tempt; and annual elections held forth to them the prospect of speedily repairing the loss of a favorite question. Throughout the Union the contest between these parties was periodically revived; and the public mind was perpetually agitated with hopes and fears on subjects which essentially affected the fortunes of a consid- erable proportion of the society. The Confederation was without funds, and without the assent of the States could raise none to pay either the interest or principal of the public debt. Hence the obligations of the Confederacy greatly depreciated in value. In many of the States the government obligations sunk in value to as low as four shillings on a pound sterling in value. The lack of con- fidence and depreciation of securities were not confined to public obliga- tions. " The bonds of men," says Marshall, " whose ability to pay their debts was unquestionable, could not be negotiated but at a discount of 30, 40 and 50 per cent. Real property was scarcely vendable, and sales of any article for ready money could be made only at a ruinous loss." "But," says Marshall (Marshall's Life of Washington, Vol. 2. p. 96) : The cause of the most extensive disquiet was the rigorous commercial system pursued by Great Britain. With many, therefore, the desire of counteracting a system which appeared to them so injurious triumphed over their attachment to State sovereignty; and the converts to the opinion that Congress ought to be em- powered to regulate trade were daily multiplied. On the mind of no person had this impression been more strongly made than on that of General Washington. Although New York had defeated the efforts to confer on Congress the power to impose duties on imports for the specific purpose of raising a revenue, she came to the rescue of the country and gave her approval to Poverty of the confeder- ation. First constitu- tional conven- tion. Digitized by Microsoft® 74 TEE STATES UNDER THE CONFEDERATION. the convention called to frame a constitution to be submitted to the people. By a vote of its Legislature its delegates in Congress were instructed to favor a resolution recommending to the several States the appointment of delegates to meet in convention for the purpose of revising and proposing amendments to the Federal Constitution. On February 21, 1787, with the aid of New York, Congress passed a resolution recommending that the several States appoint delegates to meet in Philadelphia on the second Monday in May, " for the sole and express purpose of revising the Articles of Confederation, and reporting to Con- gress and the several Legislatures such alterations and provisions therein as shall, when agreed to in Congress and confirmed by the States, render the Federal Constitution adequate to the exigencies of the government and the preservation of the Union." Constitu- tion adopted and ratified. " On receiving this report, the Legislature of Virginia passed an act for the appointment of Deputies, to meet such as might be appointed by other States; to assemble in convention at Philadelphia, at the time and for the purpose specified in the recommendation from the convention which had met at Annapolis. "At the time and place appointed, the Representatives of twelve States convened. In Rhode Island alone a spirit sufficiently hostile to every species of reform was found to prevent the election of Deputies on an occasion so generally deemed mo- mentous. Having unanimously chosen General Washington for their President, the convention proceeded, with closed doors, to discuss the interesting and ex- tensive subject submitted to their consideration. " On the 17th of September, 1781, the Constitution was presented to the Amer- ican public. . . . " Congress resolved, unanimously, that the report be transmitted to the several States, during which its ultimate fate hung for some time in dubious and painful suspense. The convention of eleven out of the thirteen States assented to and ratified the Constitution." The States ratified the Constitution on the dates given below: I. Delaware Dec. 7 1787 8. South Carolina May 24, 1788 2. Pennsylvania Dec. 12 1787 9- New Hampshire June 21 1788 3. New Jersey Dec. 18 1787 10. Virginia June 27, 1788 4- Georgia Jan. 2 1788 II. New York July 25, 1788 S- Connecticut Jan. 9 1788 12. North Carolina Nov. 13, 1789 6. Massachusetts Feb. 7 1788 13- Rhode Island May 29 1790 7. Maryland Apr. 28 1788 Growth 0^ Industries from 1776 to 1790. Following the twelve years of preparation which preceded the war came seven years of trade interrupted by hostilities, and industries shielded from foreign competition by the absolute exclusion of foreign wares. The advantages thus secured were, however, reduced by the Digitized by Microsoft® GROWTH OF INDUSTRIES. 75 hazards and hardships imposed by the war, and the progress which other- wise would have taken place was restricted by the lack of capital and skilled artisans. Notwithstanding the large importations which followed the Treaty of Peace the industrial energy which had asserted itself during the Revolutionary struggle continued, until the adoption of the Federal Constitution, to incite activity and promote the establishment and growth not only of household industries, but the extension, to some extent, of manufacturing in small establishments conducted by hand labor and primitive methods of production. A review of the industries set up during the Revolution and prose- cuted under the Confederation forms an interesting chapter in the de- velopment of the country which occurred during the first fourteen years of the independence of the States. It has been mentioned in previous pages that during this period seven of the States imposed duties on im- ports for the encouragement of manufactures. The duties were in most cases very low and had little effect as a protecting agency. The impulse, however, given to manufacturing by the bounties awarded by the States and the cessation of foreign competition during the war, followed by pro- tective duties, extended by seven States from 1785 to 1789, and especially by Massachusetts and Pennsylvania, is shown by the large number of small enterprises undertaken on a limited scale in all of these States for the manufacture of a great variety of articles, and especially in the ex- tension of household industries. The ability of the people at this time to extend certain industries against the strong competition which was in- troduced from abroad is found in the fact that those industries were car- ried on in Europe as well as in America by hand workmanship, and that they were confined to the making of articles of the coarser sorts and for the production of which we possessed certain natural facilities; besides, the protection afforded by the duties imposed by the States aided in over- coming the advantages held by the foreign producer by reason of capital, established business and quantity of product put on the market. It is a noteworthy fact that in these States which did not impose protective duties, manufacturing, as before the Revolution, was confined exclusively to household productions. Textiles. The making of cloth during the period under review, 1763 to 1789, was extended little beyond the household industry. The old methods of spinning and weaving continued to be employed. So far, however, as this method of production is concerned, the people made great progress. The special efforts in this direction shortly preceding and during the Revolutionary war, as a means of defence, converted nearly every house- J776 to mo. Slow progress. Digitized by Microsoft® 76 THE STATES UNDER THE CONFEDERATION. Additional raw materials. Spinning and weaving cotton. hold into a little manufactory. In 1770 a company in Boston caused spinning wheels to be made, engaged rooms and set to work a large num- ber of girls and women. Spinning schools where children were in- structed free of cost in the art of spinning were opened, and within a short time three hundred women and children had become competent to earn wages. A factory was soon opened in which the yarn spun in the house- holds was woven into cloth. It is stated that fifty looms were kept constantly at work, and the goods were completely finished, dyed, and placed on the market. This establishment and others for making woolens, linen or cotton and linen goods received encouragement and support from the Assembly. The Society of Arts in Boston offered premiums for machines in wool, cotton, flax and silk manufactures, and several winding, doubling, and twisting machines and improved spinning wheels were made. The more extensive cultivation of flax and the increase of sheep soon supplied the much- needed additional quantity of raw materials. Spinning wheels were made in great numbers ; fulling mills multiplied everywhere ; looms were pro- vided, and the people in every part of the country bent their energies to the production of cloth sufficient for a supply of bedding and wearing ma- terial. A joint stock company for the manufacture of woolens, linen and cotton was organized in Philadelphia in 1775. Four hundred women were employed in spinning. It is reported that in March, 1777, the goods manufactured consisted of linens of the value of $7250 and cotton and woolen goods worth $3370. Two years later the company contracted with Congress to make woolen cloth for the army. In 1779 Nathanial Niles of Norwich, Connecticut, set up at that place a manufactory of wire for making wool card teeth, which he continued during the Revolu- tion. Jeremiah Wilkinson was engaged in the same business at Cum- berland, Rhode Island. In 1777 Oliver Evans of Philadelphia, who had been engaged in the making of card teeth by hand, as then practiced, invented a machine for manufacturing them at the rate of 1500 per minute. In 1780 an association was formed in Worcester, Massachusetts, for spin- ning and weaving cotton, and on April 30 the first piece of corduroy made in a manufactory in this town was taken from the loom. The business was continued, and in 1790 jeans, corduroys, federal-rib and cottons were made. The society formed in Philadelphia in 1787 made some progress in the manufacture of various kinds of goods, such as jeans, corduroys, fustians, plain cottons, flax-linens, tow-linens, etc., but the machinery em- ployed was of the very rudest kind. Shortly before this an attempt to spin cotton yarn by machinery had been made at Bridgewater and Beverly in Massachusetts. The manufacture of textiles in establishments made little headway Digitized by Microsoft® 9B0WTH OF INDUSTRIES. 77 prior to the adoption of the Federal Constitution; but the household in- dustry had greatly augmented and spread throughout the entire country. "The progress and present state of this branch of the natural industry," says Mr. Coxe, " exceeds every idea, it is believed, that has been formed of it either in this country or in Europe. In all the States inhabited al- most entirely by white people domestic manufactures are known to .be very considerable, yielding a considerable surplus for other parts of the Union." The nature of the industries which had been undertaken in the States at the time of the adoption of the Federal Constitution (1789,) is de- scribed in Hamilton's Report of Manufactories, made to Congress on December 5, 1791. The Report says in its introduction : The expediency of encouraging manufactories in the United States which was, not long since, deemed very questionable, appears at this time to be pretty generally admitted. The embarrassments which have obstructed the progress of our ex- ternal trade have led to serious reflections on the necessity of enlarging the sphere of our domestic commerce. The restrictive regulations which, in foreign mar- kets, abridge the vent of the increasing surplus of our agricultural produce, serve to beget an earnest desire that a more extensive demand for that surplus may be created at home, and the complete success which has rewarded manufacturing enterprises in some valuable branches, conspiring with the promising symptoms which attend some less mature essays in others, justifies a hope that the obstacles to the growth of this species of industry are less formidable than they were ap- prehended to be; and that it is not difficult to find, in its further extension, a full indemnification for any external disadvantages which are or may be experienced, as well as an occasion of resources favorable to national independence and safety. The enumeration of the manufactories set up is as follows : Of skins. Tanned and tawed leather, dressed skins, shoes, boots and slip- pers ; harness and saddlery of all kinds ; portmanteaus and trunks ; leather breeches, gloves, muffs and tippets ; parchment and glue. Of iron. Bar and sheet iron, steel nail-rods and nails; implements of hus- bandry, stoves, pots, and other household utensils; the steel and iron work of carriages and for ship-building, anchors scale beams and weights, and various tools of artificers; arms of different kinds; though the manufacture of these last has of late diminished for want of demand. Of wood. Ships, cabinet wares and turnery; wool and cotton cards, and other machinery for manufactures and husbandry; mathematical instruments; coopers' wares of every kind. Of flax and hemp. Cables, sail-cloth, cordage, twine and pack-thread. Bricks and coarse tiles, and potters' wares; ardent spirits and malt liquors; writing and printing paper, sheathing and wrapping paper, pasteboard, fullers' or press papers, paper hangings ; hats of fur and wool and mixtures of both ; women'i stuff and silk shoes; refined sugars; oils of animals and seeds, soap, spermaceti and tallow candles; copper and brass wires, particularly utensils for distillers, sugar refiners and brewers; andirons and other articles for household use; philo- sophical apparatus; tinware for most purposes of ordinary use; carriages of all Bamtt ton't report. Digitized by Microsoft® 78 TEE STATES UNDER THE CONFEDERATION. kinds; snuff; chewing and smoking tobacco; starch and hair-powder; lampblack and other painters' colors; gunpowder. Besides manufactures of these articles, which are carried on as regular trades, and have attained to a considerable degree of maturity, there is a vast scene of household manufacturing, which contributes more largely to the supply of the community than could be imagined, without having made it an object of particular inquiry. Great quantities of coarse cloths, coatings, serges, and flannels; linsey-woolseys ; hosiery of wool, cotton and thread, coarse fustians, jeans, and muslins; checked and striped cotton and linen goods; bed-ticks, coverlets and counterpanes; tow linens, coarse shirtings, sheetings, towelings and table-linen; and various mixtures of wool and cotton and of cotton and flax are made in the household way, and, in many instances, to an extent not only sufficient for the supply of the families in which they are made, but for sale. Household manufac- turing. A. con- trolling Influence. The foregoing historical narrative of events from the close of the French and Indian wars to the adoption of the Federal Constitution es- tablishes many important facts which prove that protective duties were absolutely necessary to the establishment of manufactories. Resistance to the Stamp Act and other encroachments on the rights of the colonists preceding the Declaration of Independence gave the first active impulse to manufactories. During this time the temper of the people was such that an enforcement of the legislative restrictions would have provoked open revolt. In this respect Great Britain lost entire control of her sub- jects some years before the Declaration of Independence was signed. The bounties and encouragement given by the colonies to induce the set- ting up of industries ; the increase of sheep ; the growth of flax, the making of cards, spinning wheels, etc. ; the protection afforded by the non-inter- course and suspension of trade during the war; the prohibition imposed by the tariff law of Massachusetts; the duties levied op imports by the States of Rhode Island, Connecticut, New York and Pennsylvania, in- duced the colonists not only to greatly extend their household produc- tions, but to engage in the manufacture of many articles in small estab- lishments. Moreover, the injurious effect on the industries, the depression of business, and the drain of specie caused by the heavy importation at the close of hostilities, all combined to conclusively demonstrate to the people the ruinous effects of their importations and exerted a controlling influence in the adoption of the Federal Constitution and the protective legislation which followed. Digitized by Microsoft® PART II. PROTECTIVE PERIOD. 1789 TO 1834. CHAPTER V. Industriai, Revolution — State oe Industrial Arts at Close oif the Eighteenth Century — Inventions oe Labor-Saving Ma- chinery — Rise of the Factory System in England — ■ Legislation by Great Britain Against the Ex- port OE Machinery and Emigration oe Me- chanics — Effect oe British Navigation Laws on American Shipping and Trade. During the last half of the French Revolutionary wars, England, owing to successive victories, became the mistress of the ocean. Her flag floated tri- umphantly over every navigable parallel of latitude, and her merchants and manu- facturers commanded a monopoly of the markets of the globe. For a period of more than ten years an enemy's ship was scarcely to be seen, unless a fugitive from the thunders of our vessels of war. No neutrals were allowed to pass along that thoroughfare of nations, the ocean, without submitting to pay homage to British powers or undergoing the humiliation of a search by our cruisers. — Richard Cobden. It is by iron fingers, teeth and wheels, moving with exhaustless energy and devouring speed, that the cotton is opened, cleaned, picked, spread, carded, drawn, roved, spun, wound, warped, dressed and woven. — Baine, History of Cotton Manufactures. The Industrial Revolution. The invention of labor-saving machinery and the rise of the factory system, which had their beginning in the latter part of the eighteenth century, revolutionized the methods and system of manufacturing. The building of large factories, the installation of machinery and the conduct of business on an immense scale, required large investments of capital. The productive power of labor was so increased and the cost of produc- tion so reduced that competition by hand workmen against machinery could not exist. One living in this age of automatic machinery and (79) Lalor- saving machinery. Digitized by Microsoft® 80 ESTABLISHMENT OF THE AMERICAN SYSTEM. Hand labor in cloth malting. The one-thread spinning wheel. marvelous inventions and discoveries can little appreciate the changes brought about by the application of the inventions at that time. The primitive methods of manufacturing are of so early a date that we are unable to discover their origin. The industrial arts as practiced by the people of the Orient were carried into Greece and Rome and by the Romans planted throughout Western Europe. They flourished in the Italian cities and in Venice in the twelfth and thirteenth centuries. Later the Dutch and Flemish became the great manufacturers of Western Europe. They were transplanted from the Continent to Great Britain and carried to America by the colonists. From the earliest times to near the close of the eighteenth century manufacturing was carried on by hand workmanship. Under the old industrial system people made their own clothing, implements and articles of necessity. Manufacturing was also carried on as a business in combination with agriculture, the time of the farmer being divided at different seasons of the year between tillage and making of cloth and other articles for sale. It was also conducted as a business in establishments by masters employing journeymen and ap- prentices. Cloth-Making. The process of making cloth of silk, flax, wool and cotton was in many respects very similar. The preparation of the raw material, the spinning of threads, the weaving, dyeing and finishing were all performed by hand labor, aided by the few implements which were improved from time to time. In the preparation of the raw material for making linen cloth the flax was pulled by hand and placed in stagnant pools for the purpose of rotting the covering of the fibers. It was then in small bundles placed in a wooden frame and broken, and the woody part was dressed off by a stick in the form of a sword, held in the hand, and the fibers reduced to tow ready to be placed on the distaff of the spinning wheel. Cotton wool was separated from the seed by hand. The fibers of cotton and wool were formed into small rolls by use of cards or brushes containing teeth. Two of these brushes were used, one in each hand, and in use were drawn past each other, the fibers being between them. By this method the cotton and wool were prepared for the spinning wheel. Down to the year 1530 no essential improvements had been made in the machinery for spinning and weaving beyond the ancient distaff and spindle and primitive loom. In this year the common one-thread spin- ning wheel was invented at Brunswick in Germany. Prior to this time and from a very early period all of the spinning of wool, flax and cotton was done with the material placed on the distaff, which was a stick a few Digitized by Microsoft® TEE moVSTRIAL RETOWTION. 81 feet long held by a belt under the left arm. The spindle was held in the right hand, upon which the yarn was wound as it was fed by the fingers from the distaff and twisted. The invention of the spinning wheel consisted in placing the spindle in a frame to be turned by a cord attached to a wheel revolved by the hand, and the material was fed on the point of the spindle with the other hand and twisted and wound as the spindle revolved. These single-thread spinning wheels remained in use until dis- placed by British machinery invented in the last decades of the eighteenth century. The low treadle wheel for spinning flax made upon the same principle was a variation of the spinning wheel as first invented. " The ancient loom [Encyclopaedia Britannica] was composed of a- few sticks or reeds which the Indian carried with him and set up into place in the shade of a tree or at the side of his cottage. He dug holes deep enough to contain his legs, or ' gear,' and fastened the splints to some convenient branch overhead. The two loops underneath the gear in which he inserted his great toes served as treadles and employed the shuttle, formed like a netting needle, but of the length somewhat exceeding the breadth of the cloth, using it alternately to draw through the woof. . . ." The primitive loom of the Indian artisans contained the principles upon which the loom of later centuries was built; the modern hand loom, the " weaver's " or " Dutch " loom brought into use in London from Holland about the year 1676, which with some improvements merged into quite a complicated machine. It contained the warp from which the thread forming the warp was arranged upon a revolving axis, instead of being drawn out at full length in the open field, as was the ancient method. One of the chief improvements of the hand loom was the invention of the flying shuttle by Kay in 1733. Previous to this in- vention the shuttle was drawn by the weaver's hand across and through the web and from side to side. By the hand loom as it was perfected during the latter part of the eighteenth century a great variety of fabrics of cotton, linen, silk, were woven, including carpets and bed clothing. Calico Printing. The art of calico printing has been used from time immemorial in India, Egypt and Asia Minor. It was first introduced into England in 1696, but was not practiced extensively until 1768. Until the invention of the cylinder press by Bell, in 1785, three methods had been in use in stamping the designs and figures on cloth by hand : first, by small wooden frames worked by hand ; second, by large wooden blocks set in a frame ; third, by flat copper plates. The flying shuttle. Digitized by Microsoft® 82 ESTABLISHMENT OF TEE AMERICAN SYSTEM. First paper- making machine. Paper-Making. The art of paper-making from fibrous matter reduced to a pulp was discovered by the Chinese in the year 95 B. C. It was introduced into England early in the sixteenth century. Paper was entirely made by hand until the invention of the paper machine by Louis Robert in 1798. The first paper machine was operated in England in 1804. In 1820 such a machine was erected for the first time by Messrs. T. Gilpin & Co., on the Brandywine, in the United States. By the hand method the pulp was put in a large vat and kept at a proper temperature, either by stove or steam pipe, and the fibrous matter held in suspension by steaming. The paper was made with a mould or deckle, which was covered by a wire cloth a little larger than the sheet intended to be made up. The deckle was a very thin frame of wood which fitted close upon the mould and retained the pulp on the mould and moulded the size of the sheet. The workman inclined the mould a little toward him, dipped it into the vat, and lifted it up again horizontally. He shook it to distribute the pulp equally and the water drained through the wire. He then laid the mould on the edge of the vat and took off the deckle which he required to apply another mould. After remaining two or three seconds to drain, the mould was taken by another workman, who removed and deposited the sheet of paper upon a piece of cloth and returned the mould to the dipper, who, in the meantime, had made another sheet. Thus they proceeded until they had made a pile of sheets consisting of six or eight quires, which were then taken and hung up, five or six together, in the dry room. Writing paper was dipped five or six sheets together in a tub and afterwards pressed. The sheets were examined and perfected. Salt-Making. Salt was first made by boiling sea water, and later by the system of solar evaporation. Leather. The making of leather by tanning and dressing hides and skins was a simple process which had been practiced for centuries. The hides and the powdered bark of trees containing tannin were laid in alternate layers in the tan pit, which was then filled with water. After some time the pit was emptied and refilled with fresh bark and water, and this process was repeated until the chemical changes which prepared the hides for dressing had taken place. An abundance of trees for tanbark, running streams to supply water and lumber for the vats were required. The Digitized by Microsoft® TEE INDUSTRIAL REYOLVTION. 83 leather was dressed and finished by hand workmen. Boots and shoes, harnesses, saddles and saddlebags were made by hand labor. Shoe- makers went from home to home and from farm to farm and made boots and shoes for the family from the leather tanned in the settlement. Glass-Making. Glass-making, one of the oldest and most ancient industries, was carried on by hand workmen. The processes and tools with which the operations were performed were simple and do not appear to have re- ceived any noticeable improvements until nearly the middle of the nine- teenth century. Prior to the introduction of machinery, which so greatly extended the manufacture of cotton, the manufacture of woolens was the chief industry carried on in England, and received the greatest encouragement from the government. By 1774 it is estimated that the production of woolen cloths had reached the value of $65,000,000. In 1701 there was exported $10,000,000 worth of these fabrics, which constituted one-fourth part of the domestic exports of the country. In 1770 the exports had increased to $20,000,000, or between one-third and three-fourths of the total exports. Prior to the use of machinery the manufacture of cotton goods was carried on entirely by the primitive method, and had, in 1760, 40,000 persons employed at Manchester and Bolton. It is said that at the latter date the value of the products was $3,000,000. The exports were valued at $216,170 in 1701, and $1,001,170 in 1766. In 1760 Wedge- wood made the great discovery which so materially contributed to the development of pottery. Although England was backward in the pro- duction of pig iron, the industry increased very rapidly during the latter part of the century. The quantity made increased from 17,000 tons from 59 furnaces in 1740 to 68,000 tons from 85 furnaces in 1788 and 125,000 tons from 120 furnaces in 1796. During these latter years, however, about 30,000 tons of bar and wrought iron imported from Russia and Sweden were converted into finished products. All sorts of iron wares then in use were extensively made. The fine muslins and calicoes from India, the elegant silks, embroideries, millineries, and most costly fabrics and wares from the Orient and from the continent of Europe, were im- ported by British merchants and distributed to all markets. The manu- facture of silk fabrics reached $3,500,000 as early as 1771, and by the close of the century the manufacture of silk and linen hosiery had de- veloped into a very important industry. The industrial arts remained for centuries in a very backward state, with very few and slight improvements on the ancient methods, until special opportunities for profit were secured to individuals by a system Glass made wholly ty liand. Develop- ment of pottery. Digitized by Microsoft® 84 ESTABLISHMENT OF TEE AMERICAN SYSTEM. Impulse of pro- tection. The spinning jenny. of national protection. Protection wherever applied gave an active im- pulse to the arts. It stimulated the people to great personal effort and fruitfulness of mind. In 1767 James Hargrave invented the spinning jenny, by which one person was able to spin at first eight, then sixteen, and finally one hun- dred and twenty threads of cotton weft or filling at once. In 1769 Sir Richard Arkwright invented the spinning frame, with which one person could spin a great number of threads of any degree of fineness and tex- ture. The person attending the machine was only required to keep it filled with the raw material and to mend the broken threads. This ma- chine at once increased the productive power of labor more than thirty fold. Next came the power loom, invented by Dr. Cartright in 1785, to be run by steam or water power. By this machine, attended by one person, twelve or fifteen times more cloth could be woven in a day than by the old hand loom. It was at first so imperfect that it was not applied to practical use until 1801, and was not brought to a state of perfection until much later. It was introduced very slowly. The estimated number of power looms in use in Great Britain in 1813 was but 2400, and in 1820 only 14,150. In 1834 the number in the United Kingdom had in- creased to 116,891. The number of hand loom weavers in Great Britain in 1833 was estimated at from 200,000 to 250,000. A machine for card- ing was invented, and in 1775, by machinery perfected by Arkwright, all of the processes of carding, drawing and roving silk and preparing cotton, flax and wool for spinning were accomplished. Other improvements were made by Crompton in 1779. In 1794 the saw gin was invented by Eli Whitney for separating the seeds from cotton. This invention revo- lutionized the industry and made cotton the chief article of export from the United States. By this machine with the labor of one man a thousand pounds could be cleaned for the market in the same length of time that it had taken to clean fifty or sixty pounds by hand. This invention, fol- lowing that of the power loom, spinning machinery and steam engine, made cotton at once the cheapest and most economical article of clothing. By 1800 other machines had been invented for opening, cleaning, picking and spreading the cotton and fitting it for carding. By 1806 all of the series of machines had come into use, and most of them before 1790. By 1806 the productive power of labor in the manufacture of textiles had been increased fifteen fold, and by 1845 fifty or sixty fold. During this same period, and in 1785, a Scotchman by the name of Bell invented a machine for printing calicoes by cylinders upon which the figures were engraved. By this invention of Bell a piece of cloth could be printed and dyed in one or two minutes, which, by the old method, would have required the application of the blocks four hundred forty- eight times. Two, three, four and even five cylinders could be used at Printing ealieoea. Digitized by Microsoft® TEE INDUSTRIAL REVOLUTION. 85 the same time in one press. By this machine, attended by a man and a boy, it was possible to produce as much work as could be printed by one hundred block printers and as many boys. Mr. Baine, in his "History of the Cotton Manufacture," in describ- ing the application of machinery to the production of textiles said: It is by iron fingers, teeth and wheels moving with exhaustless energy and devouring speed, that the cotton is opened, cleaned, picked, spread, carded, drawn, roved, spun, wound, warped, dressed and woven. The process of bleaching by the use of chemicals instead of spread- ing the cloth out in open fields, exposed to the sunlight, should also be mentioned among the wonderful improvements in the manufacture of tetxiles which were made at this time. Iron. The art of working iron was practiced in Asia Minor by the Gre- cians, Romans, Carthaginians and early Spaniards, and existed among the aborigines of Western Europe. After the Dark Ages it spread throughout Western Europe and to England and was by the colonists brought to the New World. It has been a pioneer of civilization. Agri- culture without the use of iron could not and did not pass beyond a very primitive stage. It is equally true that the military supremacy of nations had at all times been dependent upon the extent to which the use of iron and steel has been employed. The working of the metals has had more to do with the advancement of the industrial civilization and progress of the world than any other of the industrial arts. Mr. James M. Swank, in his notable work, says : All of the nations of antiquity used implements and weapons made of iron, and possessed the knowledge of the working of the metals. They made various agricultural implements and other tools of iron, and iron weapons of war. Men- tion is made of spear-heads, axes, saws, harrows, nails, threshing implements of iron, chains, fetters, arrow-heads and swords. Speaking of India steel [Iron in All Ages] he says: This steel, which is still made in India and Persia, was a true steel of a quality even superior to the steel in our day. It was and still is manufactured by a process similar to that by which crucible iron is now made. Ages ago the city of Damascus manufactured its swords from Indian and Persian steel. Swords are still made at Damascus but of inferior quality. The cutlers of India now make the best swords from native steel. George Thomas told Wendell Phillips that he saw a man in Calcutta throw a handful of floss silk into the air which a native cut with his saber. Iron a pioneer of civilisa- tion. Iron making. Digitized by Microsoft® E8TABLI8EMENT OP THE AMERICAN SYSTEM. Eighteenth century improve- ments. The first process in the manufacture of iron from the earliest times to the present has been smelting, or the separation of the metal from the ore, and in the production of what is known as "pig iron." This has been accomplished at all times by fusion in some sort of a furnace. The next stage in the manufacture of iron is the making from pig iron of two divisions, known as " foundry iron " and " forge iron " ; the former being used for castings and the latter for conversion into malleable or wrought iron and steel. Forged iron is worked by a process of heating, refining and hammering. The furnace, the bloomery, the forge, the foundry, the mills for slit- ting and rolling the iron into various shapes and forms for merchantable use, have been defined as follows : • Furnace : A structure in which to make and maintain a fire, the heat of which is to be used for some mechanical purpose, as the melting of ore or metals, etc; specifically a structure of considerable size built of stone or brick, used for some purposes connected with the great operation of smelting metals. Furnaces are constructed in a great variety of ways, according to the different purposes to which they are applied. Pig-iron : Iron in oblong masses, or pigs, as turned out by the smelting fur- nace; so-called, because the molten metal is run into a long mass with shorter ones attached to it at right angles, the long ones being called the sow and the shorter ones the pigs. Bloomery : An establishment in which wrought-iron is made by the direct process, that is, from the ore directly, or without having been first introduced in the form of cast-iron. Foundry: A manufacturing establishment in which articles are cast from metals. Bar-iron: Wrought-iron rolled into the form of bars. Rolled-iron : Iron passed between steel rolls of different sizes, according to the shape desired to be imparted to the metal. Rolling-mill : A metal-working establishment using, in connection with heat- ing-furnaces, systems of steel rollers for forming into sheets bars, rods or wires. Slitting-mill : A mill in which iron bars or plates are slit into nail-rods, etc But slight improvements were made in the means and methods em- ployed in the manufacture of iron and the art of working the metals from the earliest times until near the close of the eighteenth century. Wood and charcoal were used for fuel. The furnaces and works were small and located in or near the forests where a supply of fuel was easily ob- tainable. The bellows was originally operated by hand and later by water power, and was the instrument used for accelerating the fire of the fur- nace. Rolling and slitting mills, introduced in the latter part of the eighteenth century, for making the roll and bar iron, were worked by water power. The methods employed in the New World, introduced from England and Germany, were the same as those practiced throughout the Old. Bar iron was the merchantable form in which the metal was distributed Digitized by Microsoft® TEE INDUSTRIAL RETOLVTWy. 87 throughout the world to be worked by the blacksmiths into various forms and shapes. Nail-rods were beaten into nails and spikes by blacksmiths and by farmers in their households; some for use on their farms and others for sale in the neighborhood. Wrought iron was also beaten into scythes and other implements, etc. The hammer, the anvil, the hand bel- lows and the blacksmith's forge constituted the means throughout the entire world for working the metals. It was by hand workmanship that in England the manufacture was extensively carried on. Nails, scythes, spikes, shovels, sickles, guns, gun-locks, edge tools, cutlery, hardware, hollow-ware, castings of every form, and all sorts of implements and utensils were made for domestic use and for exportation. It is said that as early as 1757, 50,000 persons were employed in making hardware and cutlery in Sheffield. All sorts of steel tools and implements then in use were extensively used and formed a large part of the export trade. New Inventions and Processes. With the invention of the steam engine by Watt in 1767 in its ap- plication as a motive power to the mining of iron and coal ; the working of the bellows in blast furnaces to smelt iron with the use of mineral coal for fuel; in the operation of large machinery; rolling and slitting mills, and with other inventions which soon followed, the iron industry in Great Britain was revolutionized. One of the most important early improve- ments was the invention of the reverberatory air furnace by Mr. Cort, in 1783. With vast beds of coal and great quantities of iron ore lying side by side, the British ironmasters entered vigorously upon the prosecution of the industry. The quantity of pig iron made in England by the use of the steam engine as a motive power, coke for fuel and by the intro- duction of the reverberatory air furnaces, rose from 30,000 tons in 1770 to about 68,300 tons in 1788 ; 108,793 tons in 1796 and, including Scotland, to 124,879 tons, having more than doubled in Scotland in eight years ; in 1802 the annual product of Great Britain was estimated at 170,000 tons; in 1823 it increased to 442,066 tons and in 1828 to 703,184 tons, with 279 furnaces in blast; in 1839 it reached over 1,200,000 tons and in 1844 1,500,000 tons. "The manufacture of pig iron," says Mr. Swank ("Iron in all Ages," p. 53), " with mineral fuel was greatly facilitated by the invention of a cylindrical cast- iron bellows by John Smeaton in 1760, to take the place of wooden or leather bel- lows, and by the improvements made in the steam engine by James Watt about 1769, both these valuable accessions to blast-furnace machinery being used for the first time, through the influence of Dr. Roebuck, at the Carron iron works in Scotland. The effect of their introduction was to greatly increase the blast, and consequently increase the production of iron. The blast, however, continued to Invention of the steam engine. The Tiot tlast invention. Digitized by Microsoft® E8TABLI8BMBNT OF THE AMERICAN SYSTEM. Coal 08 fuel. be cold at all furnaces, both coke and charcoal, and so remained until 1828, when James Beaumont Neilson, of Scotland, invented the hot-blast, which is now in general use in Great Britain and other iron-making countries. " These and other changes in the manufacture of pig iron were accompanied by equally important improvements in the manufacture of wrought, or finished, iron. In 1783 Henry Cort, of Gosport, England, obtained a patent for rolling iron into bars with grooved iron rolls, and in the following year he obtained a patent for converting pig iron into malleable iron by means of a puddling furnace. These patents did not relate to entirely new inventions in the manufacture of iron, but to important improvements on existing methods, which had not, however, been generally employed. John Payne and Major Hanbury rolled sheet iron as early as 1728 at Pontypool, and patents were granted for grooved rolls to other Eng- lishmen before Cort's day. From Cort's time forward bituminous coal was used in the puddling furnace as well as in the blast furnace, but in its raw state. To the important improvements introduced by Cort the iron trade of Great Britain is greatly indebted. The refining of pig iron in forges and its subsequent con- version into bars and plates under a hammer formed the only general method of producing finished iron down to Cort's day, both in Great Britain and on the Continent, and it was wholly inadequate to the production of large quantities of iron of this character. With mineral fuel, powerful blowing engines, the pud- dling furnace, and grooved rolls Great Britain rapidly passed to the front of all iron-making nations. But the foundation of this progress was the possession of mineral fuel, or pit-coal, of superior quality and in large and apparently inex- haustible quantities. On the Continent at this time the pit-coal which had been developed was supposed to be unsuited to the manufacture of iron. Owing to this belief and to the demoralization of all industries caused by the Napoleonic wars coke pig iron was not made on the Continent until 1826, when John Cockerill successfully introduced the use of coke at a blast furnace at Seraing. " Steel was largely made in England as early as 1609, and most probably in cementation furnaces, the product being known as blister steel and shear steel. The manufacture of steel by cementation did not, however, originate in England, but on the Continent. In the year mentioned John Hawes held the site of the Abbey of Robertsbridge in Sussex, upon which were eight steel ' furnaces.' The invention of crucible cast steel originated with Benjamin Huntsman, an English clockmaker, at Sheffield, in 1740, and not only Sheffield, the principal seat of its manufacture and of the manufacture of all kinds of cutlery, but all England as well has greatly profited by his discovery. The manufacture of cemented steel also became a leading industry of Sheffield in the eighteenth century." The British ironmasters at once acquired great superiority over those of other countries in the production of iron. By reason of the new pro- cesses and the large quantities which they were able to put on the market they could overwhelm all competitors. The production of pig iron reached 2,000,000 tons in 1848 and the quantity of bar iron increased in a corresponding ratio. The usual estimate has been that seven-tenths of the pig iron was converted into bars, bolts, rods, sheets, nails, chains, anchors, etc., by hammering, rolling, slitting, and other machinery. It is said that by the introduction of machinery for rolling iron, instead of ham- mering it, to convert it into malleable iron bars, bolts, etc., fifteen tons Digitized by Microsoft® THE mDUSTRIAL REVOLUTION. were obtained in twelve hours, while, in the same time, only one ton could be drawn from the hammer. The quantity and value of iron annually made in Great Britain from 1842 to 1844 are stated in Mr. Watterson's Cyclopedia of Commerce as follows : Pig iron, 1,500,000 tons, worth £4 per ton £6,000,000 Cost and profits of converting seven-tenths of it into bars, bolts, etc 3,000,000 Total value of products of iron £9,000,000 The quantity of pit coal consumed in 1840 in making 1,396,400 tons of pig iron was estimated at 4,877,000 tons, and in making bar and other wrought iron 2,000,000 tons. About three-fourths of this prodigious quantity of iron appears to have been used in Great Britain (1840), the greater part having been used in making machinery, steam engines, railroads, carriages, cars, locomo- tives, steam-boats and other vessels, cannon, and other firearms, stoves and plows.^ The declared and real value of the British iron and steel, hardware and cutlery exported from Great Britain is stated by Mr. Porter in pounds sterling as follows : Year. Iron and Steel. Hardware. Total. 1828 £1,226,617 ii.387,204 £2,613,821 1836 2,342,674 2,271,313 4,613.987 1840 2,524,859 1,349,137 3,873,997 1844 3.193,368 2,179,087 5,371,455 The steam-engine was perfected by James Watt in 1767, and by 1790 had come into quite general use in raising coal from the mines and in supplying power for propelling the machinery in factories for manu- facturing cotton, wool, silk and linen. It was soon applied as a power for working iron-mines, for smelting the ores of copper and iron, for forging and rolling the iron, and for moving nearly all of the machinery for the manufacture of bar and wrought iron, and, in fact, for moving the ma- chinery in all sorts of manufactories in which water power was not avail- able. The art of boring artesian wells brought into use about this time, together with the steam-pump, made it possible to work beds of salt many hundred feet below the surface. Cause of Great Britain's Competitivh; Supremacy It was through the application of these inventions that Great Britain 1 McCulloch's Statistics. Progress of Nations, Seaman, First Series, pp. 154-155. Digitized by Microsoft® British iron pro- duction. 90 ESTABLISHMENT OP THE AMERICAN SYSTEM. Productive pmcer of British macliinery. defeated Napoleon and emerged from the war richer and more powerful than ever. The machinery multiplied the productive power of the Eng- lish people and enabled them to create and accumulate wealth much faster than it was exhausted by these most gigantic and destructive military operations. They at once supplied at high prices more than half the world with manufactures and sent them to market in their own ships. During the Continental wars, and for many years thereafter, they domi- nated trade and enjoyed a substantial monopoly of their own and foreign markets. At the same time they were perfecting and improving their machinery, investing their unparalleled capital in new machinery, new factories, the purchase of raw material, the payment of labor, the devel- opment of their iron mines and coal beds, and the building of new and enlarged war and merchant vessels. Although at this time the popula- tion of the United Kingdom had increased from 15,000,000 in 1801 to 19,000,000 in 1815, it was through the increase in the productive powers of the people by the use of machinery that her supremacy was so greatly augmented. It was estimated by McCulloch that in 1840 about 1,500,- 000 persons were engaged in all of the branches of cotton manufacture of Great Britain. The labor saved by the use of steam engine and of machinery in the manufacture of wool, silk, mining of coal and iron, and in the manufacture of iron and in other industries in 1815 has been estimated as equal to the labor of 28,000,000 persons operating by the old methods. Without indulging in speculation or making estimates upon the extent of the increased productive power of the English people by the use of the inventions from 1793 to 1815, the fact remains that from 1793 to 1815 the increase in wealth, industries, trade and commerce is without a parallel, and that such growth is due to British industries, augumented by the invention of machines and new devices.^ Beginning with the close of the French Revolution (1793), and con- tinuing almost unabated until the defeat of Napoleon at Waterloo in 1815, the Continental powers and the United Kingdom were engaged in the most destructive and gigantic wars recorded in history. This pro- longed and gigantic struggle was but the culmination of a long series of wars and diplomatic maneuvers for the commercial supremacy of the world, in which England had been the chief actor. Step by step, decade after decade. Great Britain had forged ahead, achieving victories on land and sea, seizing new possessions, building up her shipping and navy, extending her foreign trade, and developing her domestic industries, until in 1815 she was the richest and most powerful nation in Christendom. During her entire protective period her foreign trade had steadily Produc- tion increased iy inven- tions. British protective period. iln 1S54 It wag estimated by the Anti-Corn Law League that the 28,000,000 of people In the United Kingdom had the productive capacity of 600,000,000 of people practicing the methods in use prior to the invention of machinery. Digitized by Microsoft® SUPREMAGT OF GREAT BRITAIN. 91 grown. Her total imports in 1698 were $23,661,800; in 1750, $38,860,- 195 ; and in 1792, the year before the war broke out with France, $98,- 296,790. Her total exports had grown from $32,610,520 in 1698 to $63,495,400 in 1750, and to $124,526,000 in 1792. In the latter year she had a favorable balance of trade of $26,229,210; in fact, with the ex- ception of two years (1718 and 1785) the balance of trade was in favor of Great Britain every year from 1697 to and including 1793. During this period England sold to other countries merchandise of the value of $1,040,316,540 more than she purchased. This vast sum derived from trade in foreign countries made up of accumulated balances of trade in England's favor, from all parts of the globe, together with the industrial activity, the growth of her manufactures, the development of her resources, the increase in ship-building, and the extent of her ship- ping interests, contributed to that vast wealth which at the close of the eighteenth century made England the richest nation in the world. When war broke out with France in 1793 the English government placed a loan among the merchants of London of $375,000,000, which was sub- scribed in less than a week. Secure from attack at home, in her insular position, with a navy that commanded the sea and protected her foreign trade, she allied herself with the nations of the Continent against Napoleon; made their cause her cause ; furnished armies to aid in fighting their battles, munitions of war, clothing for their armies and money to support their governments. She dictated treaties and terms of peace, inspired and provoked renewals of hostilities, and was instrumental in prolonging the Continental wars until Erance was subdued and crushed, Napoleon placed in exile on St. Helena, and every Continental power was exhausted and impoverished. England emerged from the long struggle a complete master of the Old World, richer and more powerful than ever. The navies and merchant vessels of every Continental country had been destroyed and driven from the seas. The entire ocean-carrying trade of the world fell into her hands, save the small part held by the United States. The resourcefulness displayed by England as the war progressed and grew more burdensome, astonished the statesmen of the world. Na- poleon had predicted and confidently believed that Great Britain would break down under the strain. Loan after loan was placed as her national debt increased. Fresh revenues sprang from the people as new armies were equipped and additional advances made to Napoleon's enemies. The public revenues from taxation, directly or indirectly, were over three hundred and forty millions of dollars for each year of 1813 and 1814. " Such enormous taxes as the people of Great Britain paid from 1800 to 1815," says Alison, " were never paid and never could have been paid by any other people." Master of the Old World. Digitized by Microsoft® 92 ESTABLISHMENT OP THE AMERICAN SYSTEM. When the expenditures had increased from $65,000,000 in 1793 to $185,000,000 in 1796, speaking of the latter sum Mr. Pitt said, in parlia- ment, " It never had been equaled and probably never vi^ould be sur- passed." During this period the English people loaned to the Conti- nental powers $328,000,000. Alison, speaking of the period from 1797 to 1815, said: The next eighteen years of the war, from 1797 to 1815, were, as all the world knows, the most glorious, and, taken as a whole, the most prosperous, which Great Britain had ever known. Ushered in by a combination of circumstances the most calamitous, both with reference to external security and internal in- dustry, it terminated in a blaze of glory and a flood of prosperity which have never since the beginning of the world descended upon any nation. Hardly had the run upon the Bank shaken to its centre the whole fabric of our commercial industry, and the mutinies at the Nore, Plymouth and off Cadiz paralyzed the arm of our naval defenders, when the victories of St. Vincent and Caraperdown again restored to us the dominion of the seas; and ere long the thunderbolts of the Nile and Trafalgar prostrated the naval strength of the enemy, and the victories of Wellington, first arrested, and at length broke, his military power. Pros- perity, universal and unheard of, circled the earth, — the whole West Indian Islands had fallen into our hands; an empire of sixty millions of men in Hin- dostan acknowledged our rule; Java was added to our Eastern possessions; and the flag of France had disappeared from every station beyond the sea. Agri- culture, commerce and manufactures at home had increased in an unparalleled ratio; the landed proprietors were in affluence; wealth to an unheard-of extent had been created among the farmers; the soil, daily increasing in fertility and breadth of cultivated land, had become almost adequate to the maintenance of a rapidly increasing population; our exports, imports and tonnage had more than doubled since the war began; and though distress, especially during 1810 and 181 1, had at times been severely experienced among the manufacturing operatives, yet, upon the whole, and in average years, their condition was one of extraordinary prosperity. The revenue raised by taxation within the year had risen to £72,- 000,000 in 1815 from £21,000,000 in 1796; the total expenditures from taxes and loans had reached, in 1814 and 1815, the enormous amount of £117,000,000 each year. In the years 1813 and 1814, being the twentieth and twenty-first of the war, Great Britain had above a million of men in arms in Europe and Asia, and re- mitted £11,000,000 yearly in subsidies to the Continental powers. Yet was this prodigious and unheard-of expenditure so far from exhausting either the capital or resources of the country, that the loan in 1814 was obtained at the rate of £4 IIS. id. per cent, being a lower rate than that at the commencement of the war; although the annual loan at its close was above £35,000,000, and the population of the Empire at that period was only eighteen millions, just two-thirds of what it was found to be by the census of 1841.1 Thorold Rogers, one of the most eminent English writers of recent years, speaking of the position held by England at the close of these wars, says: The exhaustion of Europe after the peace of 1815 left the British people as 1 Sm Vol. I, p. 124. Digitized by Microsoft® SUPREMACY OF GREAT BRITAIN. 93 completely the masters of a sole market as if they had conquered it themselves. The Continental war had absolutely arrested all Continental progress. All the while England was making fresh way in the newer sciences, such as chemistry was, and her rivals were of the future. The real cause which most contributed to the mihtary and naval supremacy of England and made possible the magnitude of her wealth at the breaking out of the Napoleonic wars is found in the industrial de- velopment arising from a long period of protective tarififs and naviga- tion laws. As the people were directed and guided from pursuits of agriculture to those of manufacture, commerce and trade, their inventive genius was quickened and developed. It was protection which gave to England her industrial population. As her manufactures increased, her civiHzation advanced; the spirit of progress was quickened and the great inventions of the latter part of the eighteenth century followed as a natural result and a part of the national development which was taking place. Mr. G. Byng, an English manufacturer, in his recent book on Pro- tection, in discussing the relation of industries and inventions said: " In- dustries go hand in hand with invention. The country which has the largest and most go-a-head manufactures will produce the greatest num- ber of inventors." " There are, of course, some inventions which are the result of purely scientific research, or the advent of some happy inspira- tion, but these are few and far between; hardly one in a thousand. Among all the innumerable inventions which have been brought out in connection with electrical science I know of but few that could be classed in the latter category. They could be counted on one's fingers." " It is in the factory that, in the regular course of industrial enterprise, the necessity for some improvement, some new process, makes itself known, and the resulting invention is the outcome of much careful thought, hard work and continued experiment, aided and supported by the enterprise and capital of the master, and fostered by the prospect of gain." It was the policy of Great Britain to, if possible, prevent other nations from using its inventions and to prevent its skilled mechanics from car- rying their skill and knowledge abroad. In 1782 parliament re-enacted and extended the laws against the ex- portation of machinery. The bill provided that any person who packed or put on board, or caused to be brought to any place, in order to be put on board of any vessel, with a view to exportation, any machine, engine, tool, press, paper, utensils or implement, or any part thereof, which now is, or hereafter may be, used in the woolen, cotton, linen or silk manu- facture of this Kingdom ; or goods where wool, cotton, linen or silk are used, or any model or plan thereof, etc., " shall forfeit every such ma- chine, and the goods packed therewith, and two hundred pounds, and Masters of a sole market. An exclusive policy. Digitized by Microsoft® 94 ESTABLISHMENT OF THE AMERICAN SYSTEM. suffer imprisonment for twelve months." The Hke penalty attached to having in custody, or collecting, making, applying for, or causing to be made, any such machine, and the forfeitures were to go to the use of the informer after the expense of the prosecution was paid. The ex- portation and the attempt to put on board for that purpose, " any blocks, plates, engines, tools, or utensil used in, or which are proper for the pre- paring or finishing of, calico, cotton, muslin, or linen printing manufac- ture, or any part thereof," were in 1782 prohibited under the penalty of five hundred pounds. The same act interdicted the transportation of tools used in the iron and steel manufactures. " These statutes," says Bishop, " which were vigilantly enforced, along with those against en- ticing artificers to emigrate, proved serious obstacles to the introduction of machinery both in America and on the continent of Europe." In 1784 a German was fined five hundred dollars for seducing oper- atives to Germany; but a native of Amiens succeeded the same year in importing into France the first machine for spinning cotton. In 1786 a complete set of brass models of Arkwright's machinery was seized on the eve of its shipment to Philadelphia. To make more certain the inability of the people of the other nations to engage in manufacturing, the restrictions placed on the emigration of artisans, in 1765, were supplemented by the prohibition of the export, in 1781, of woolen machinery; in 1782, of cotton machinery, and artificers in cotton; in 1785, of machinery for making iron and steel, and work- men in this industry; and in 1799, by the prohibition of the export of colliers, in order that other countries might not acquire the art of mining coal. (See Anit, pages 88 and 89.) This legislation was not repealed until about 1845, when Great Britain changed her tariff policy. Smuggling spindles. "In the London Times for October 30, 1811," says Mr. Swank ("Foot- prints of the British Lion," by James M. Swank, p. 3), "will be found a cir- cumstantial account of the arrest of Hugh WagstafE for placing on board the American ship Mount Vernon, bound to New York, twenty-three boxes containing spindles used in the spinning of cotton. Wagstaff was committed to Lancaster Castle for trial under the act of 21 Geo. IIL, Chapter 37, and the boxes were seized. The federalists of 1811 who objected to our second war with Great Brit- ain, and who had knowledge of such facts as these, were not very patriotic American citizens. We are enabled to record circumstantially another occurrence of similar character. Samuel C. Lewis, who died at Pittsburg only a few days ago, was the son of Thomas C. Lewis, and the nephew of George Lewis, two Welshmen to whom belongs the honor of having erected for Colonel Isaac Meason, at Plumsock, in Fayette County, Pennsylvania, in 1816 and 1817, the first rolling mill in the United States to puddle iron and roll iron bars. To use the exact language of the old man, who has just gone to his rest, his father and uncle, who arrived in this country just prior to i8i6, and who were skilled work- men, were compelled to ' smuggle ' their passage across the Atlantic. It was under such adverse circumstances that our first complete rolling mill was built." Digitized by Microsoft® SUPREMACY OF GREAT BRITAIN. 95 When the wars closed in 1815 British manufacturers, enabled by the new productive forces at their command to manufacture a large excess for exportation, flooded not only Europe but the United States with their surplus productions, with the definite plan of creating a glut in the markets, breaking down every competing industry, and hoping that after this was accomplish to be able to hold possession of the markets, ad- vance prices and recoup the losses which they had thus sustained. Hence, every endeavor was made to develop and establish the factory system and to engage in manufacturing on the most gigantic scale ever undertaken by any nation. Thousands and millions of laborers were put to work, estabUshments of the greatest magnitude were erected and equipped with effective machinery. Agriculture was not neglected; the high duties amounting practically to a prohibition excepting in seasons of short crops, were imposed and maintained on the importation of agri- cultural products until 1846. Great Britain's Protective; PoIvICy. The primary cause underlying the supremacy of Great Britain in manufacturing and commerce was the system of protection to industries and shipping. An account of the navigation laws which secured to her merchant marine a monopoly of the foreign carrying trade has been given. Her foreign possessions, as well as her control of international trade, were acquired through great commercial wars. The protective policy inaugurated by Edward IH., who in 1331 invited John Kemp, a Flemish weaver, to set up cloth weaving in England, guaranteeing to him special protection, and who came with his servants and apprentices, including weavers, fullers and dyers, was gradually extended to other industries by successive monarchs until, under the reign of Elizabeth, a broad and comprehensive policy was formulated by Lord Bacon during the latter part of the sixteenth century. The policy was vigorously prose- cuted and strengthened by successive acts of parliament, imposing duties and prohibitions on the imports of all sorts of manufactured articles; bounties and drawbacks were paid on exports and the financial stability of the realm was sustained by restricting the exportation of bullion and specie, until abandoned as to agriculture in 1846 and as to manufactures in 1853, when the policy of free trade was adopted which has been con- tinued until the present time. It is unnecessary here to mention the numerous acts of parliament increasing protective duties and extending the fostering care of the government to new industries which were enacted between 1793 and 1828. No other nation in modern times has prosecuted the protective policy so vigorously and uninterruptedly, in all of its phases, for so long a period of time, and no other nation (except perhaps Protee- \ Hon the vriniary cause. Digitized by Microsoft® 96 E8TABLISEMENT OF THE AMERICAN SYSTEM. the United States since 1860) furnishes a better example of the wisdom and influence of protection as an adequate means of establishing and promoting the industrial development of a nation, the increase of its wealth, the advancement of its civihzation and the well-being of its people. In the year 1463, under Edward IV., the wisdom and policy of fos- tering domestic industry having become generally understood, the pro- hibition of importation, which had previously been confined chiefly to woolens, was extended to a very great variety of articles, viz. : Protection in H6S. Woolen caps Woolen cloths L,aces Rings of copper, or latten gilt Chafing-dishes Crosses Ribands Fringes of silk Ditto of thread Laces of thread Silk-twined Silk in anywise embroi- dered Laces of gold Ditto of silk and gold Saddles Stirrups All harness pertaining to saddles Spurs Bosses for bridles Hammers Pincers Fire-tongs Andirons Gridirons Locks Dice Tennis balls Points Purses Globes Girdles Harness for girdles, of iron, latten, steel, tin, or alkemine Anything wrought of tanned leather Any tanned furs Corks Knives Daggers Sword blades Bodkins Shears Scissors Razors Chessmen Playing cards Buskins Shoes Galoches Combs Pattens Pack-needles Painted ware Forcers Caskets Chafing-balls Hanging candlesticks Rings for curtains Ladles Scummers Sacring-bells Counterfeit basins Ewers Hat brushes Wool cards White wire If detected in the im- portation, they were to be forfeited, one-half to the king and the other half to the informer. More pro- hibition. Under Charles II. the prohibition was extended to Fringe Buttons Buttons or needle work Wool-cards Bone-lace Card-wire Cut-work Iron wire Embroidery Dripping-pans The list of articles prohibited to be imported into Great Britain in 1820 was not quite so extensive as that of Edward IV. They were as follows : Brocades Calicoes Fringe Girdles Velvet Laces Digitized by Microsoft® BRITISH PROTECTION. 97 Chocolate and cocoa paste Embroidery Silk stockings Thread Silk or leather mits and Needle work gloves Plate Manufactures of gold, sil- Ribands ver or metal Laces Tobacco stalks and snuff Shapes for gloves or mits work Wire The penalties for the importation of some of those articles were very severe. For example, besides the confiscation of the goods, there was a forfeiture of two hundred pounds sterling for every offence in the case of leather gloves. The most general mode, however, of encouraging domestic industry in Great Britain in 1820 was by the imposition of such heavy duties as in most cases amounted to a prohibition. We annex a list of some of the articles thus protected, with the amount of the duties imposed on them: Extracts from the British Tariff of 1818. Articles subject to duty of £59 7s. 6d. per £100 value. Baskets Musical instruments Nuts Oil of pine Oils not particularly enumerated Paintings on glass Pencils Pieces of skins and furs Spouts of wood Statues, except of mar- ble or stone Steel not otherwise enum- erated Ticking Ticks Tin-foil Tooth-powder Toys Tubes for smoaking Tubs Watches Almond paste Dressing-boxes To £31 13s. 4d. per £100. Snuff-boxes Manufactures of brass Pens Pomatum Stone pots Colored paper and paints Sago powder Scratch brushes Seeds not particularly enumerated Silk-worm guts Skates Skins and furs Walking-sticks Thread or worsted stock- ings Filtering stones Open tapes Worsted tapes Tapestry, not of silk Telescopes Thread, not otherwise enumerated Turnery, not otherwise enumerated Vases, except of stone or marble Wicker-ware Silver, gilt or plated ware Worsted yarn Goods of all kinds in part or wholly manu- factured. Bronze figures Worsted caps Carpets Carriages Clocks Manufactures of copper Copperplate engraved etc., etc. Imposi- tion of heavy duties. Chalk Cast iron Lime-stone Britisli tariff exclusions. Digitized by Microsoft® gs ESTABLISHMENT OF THE AMERICAN SYSTEM. Copper in pigs Hoofs of cattle Horns Silk laces Pig lead To £79 3s. 4d. per £100. Chinaware Earthenware To £63 6s. 8d. per £100. Linen, not being checked or striped To £85 los. per £100. Cotton stockings Cotton caps To £114 per £100. Glass bottles Rough plate glass To £142 los. per £100. Leather fan mounts Linens checked or striped, painted, or stained Minerals not otherwise enumerated Polishing rushes Ships with their tackle Shawls Polishing stones Rag stones Tanners' waste Tare Touchstone Cotton thread Tobacco pipes Cause of thread Linen sales German sheet glass Glass manufactures Skins or furs, tanned tawed, curried or any way dressed Articles made of leather Articles whereof leather is the most valuable part Hides, or pieces of hides tanned, tawed, or in any way dressed Great Britain prohibited the importation of calicoes, silks, threads, ribands, velvets, etc., even from her own dependencies. (See page 43). She imposed a duty of 85 per cent ad valorem on various articles of cotton; the production of those dependencies. She imposed a duty of 79 per cent ad valorem on earthenware. She imposed a duty of 142}/$ per cent on leather manufactures. British Duties. Farm produce excluded. Woolen cloths, per yard, 34s. sterling, equal to about $7.50. Hats, per piece, 34s. or $7.50. Glass bottles, 114 per cent. Linens, not checked or striped 63 per cent Linens, checked or striped, 142 per cent. The foregoing compilation of British tariff duties is copied from Matthew Carey's " Political Economy." Under protection to agriculture the importation of farm produce was excluded, excepting in periods of scarcity and very high prices. The land was brought to a high state of cultivation and her yeomanry was made prosperous and independent. In the year 1840 less than $5,000,000 of farm produce of all kinds were imported. During the ten years end- ing with 1840 the home grown wheat was sufficient to supply 16,628,188 persons out of a population of 17,535,826, and between 1841 and 1849 only 375,930 persons were fed on imported wheat. In 1846 the total quantity of imported manufactured goods was only $8,946,450, of which silks were valued at $5,232,970, leaving the following importations to make up the balance : clocks, $429,275 ; cork, $280,550 ; cottons, $638,775 ; Digitized by Microsoft® BRITISH PROTECTION. 99 glass, $270,395 ; leather gloves, $286,800 ; linen, $265,025 ; woolen goods, $1,327,250, and unenumerated, $215,110. The British government made absolutely secure to its own subjects the home market of the United Kingdom. It compelled its people to con- sume the produce of its own farms ; to provide themselves with clothing, implements and tools made by native labor, and to prosecute that system of domestic exchanges which would secure to the realm the whole benefit of the industry and enterprise of the people. Under acts of parliament the people of the United Kingdom must mine and burn British coal, and convert British iron into finished products by British labor in British works. No water power, no natural resources, no industry which would give employment to home labor, was neglected. The ships which carried their goods must be built in British ship-yards; must be manned with British subjects and sail under the British flag. The producer was pro- tected, encouraged and rewarded for his efforts. The merchants and distributers of commodities were treated as the mere agents of the pro- ducers, whose interests were subordinate in importance to those of agri- culture, mining and manufacturing. Under this policy the United King- dom became the greatest in trade, commerce, manufactures and wealth of any nation the world had ever known. France under Napoleon I. embraced the policy of protection to home industries and prosecuted it vigorously until relaxed by the reciprocity treaty made with Great Britain by Napoleon III. in 1860. The German states protected their industries by a customs union formed in 1833, known as the Zollverein, adopting the main features of the Prussian tariff of 1818 (established by Frederick the Great between 1746 and 1786), which was in force until 1865, when the duties were materially reduced. With the exception of cotton, tobacco, rice and naval stores there was no market in England for American raw materials and agricultural pro- duce. Beginning with 1818 by the protective tariff of Prussia, shortly extended to all of the German states, every Continental country soon maintained rigid systems of protection for the development of their own industries until about 1865. It is only by understanding those external conditions affecting inter- national trade and competition that the student of the tariff question in the United States is enabled to fully appreciate the necessities which im- pelled the American people to adopt a system of protection to manufactur- ing and shipping. No nation in any period of the world's history entered upon an industrial and commercial career under such difficulties as did the people of the United States. The industrial revolution had just begun. The old methods of hand workmanship were being superseded in England by the use of machinery, and the factory system was inaugurated. The manufacturing supremacy of a nation was now made to depend largely on Marine protection. Protection an American necessity. Digitized by Microsoft® 100 E8TABLISEMENT OF THE AMERICAN SYSTEM. the abundance of capital. Competitive power arose from cheapness and quantity of production, as well as from the ability of the manufacturer to sell on long terms of credit, and to sustain losses, in order to defeat rivals. The possibility of conducting manufactures in small establish- ments, with limited capital and by employing a few journeymen and ap- prentices, under free international competition, was at an end. The foregoing affords a complete answer to the assertions of those free trade writers who have argued that, if it was necessary for England to suppress by penal laws the establishment of manufactories in the colo- nies before the revolution, there could have been no need of protective legislation as soon as the British yoke was thrown off. This argument in a measure would be justified, if the system of handicraft workmanship had continued to be employed throughout the world. In that event, the chief disadvantages against the American would have been those arising from the competition of superior capital and established markets. Digitized by Microsoft® CHAPTER VI. Proti;ction to Shipping — War of 1812. Building ships and navigating them utilize vast capital ; it creates a home market for the farm and shop; it diminishes the balance of trade against us pre- cisely to the extent of freight and passage money paid to American vessels, and gives us a supremacy of the seas of inestimable value in case of foreign war. — U. S. Grant, Message to Congress in 1870. Admitting their [other nations] rights of keeping theirs to themselves, ours cannot be denied of keeping our carrying trade to ourselves, and if there be any- thing unfriendly in this, it is the first example. — Thomas Jefferson. If particular nations grasp at undue shares of our commerce, and more especially if they seize on the means to convert them into aliment for their own strength, and withdraw them entirely from the support of those to whom they belong, defensive and protective measures become necessary on the part of the nation whose marine resources are thus invaded; or it will be disarmed of its defence, its productions will be at the mercy of the nation which has possessed itself exclusively of the means of carrying them, and its policies may be influenced by those who command its commerce. — Thomas Jefferson. The national interest in cultivating nautical and naval power was well shown at the beginning of our government in the protective legislation which built up our early marine. It was estimated in 1789 that of 600,000 tons of shipping, two-thirds of it was foreign, chiefly under the British flag, and engaged in our commerce at home and abroad. In six years time foreign tonnage fell off to one-tenth in foreign trade and wholly disappeared in domestic trade. — William W. Bates. At the conclusion of peace in 1783, the States under the Confedera- tion assumed the position of an independent nation; hence they were brought within the restrictions of the navigation laws of European nations. Thus denied the right to trade with foreign colonies, and pos- sessions, the States immediately engaged in direct trade with France, Holland, Russia, Spain, Portugal, Madeira, Great Britain and the ports of Hamburg and Bremen. At this time Brazil was a Portuguese possession. Spain held dominion over Mexico, California, Texas, Louisiana, Gautemala, Cuba, Puerto Rico, New Grenada, Caracas, Peru, ChiH, Buenos Ayres or LaPlata and Florida. Great Britain held Canada, British North America, Newfoundland, New Brunswick, Nova Scotia, Bermuda, British Co- lumbia, Dominica, British Honduras, Anguilla, Antigua, Bahamas, Bar- (101) Grant and Jefferson on ship protection. European Navigation laws. Digitized by Microsoft® 102 ESTABLISHMENT OF THE AMERICAN SYSTEM. badoes, Barbudo, Barbie and Granada. The independence of the United States lost our merchant marine the trade of the British possessions in the West Indies and North America, and the free market in England for naval stores and ship timber, and under the navigation laws of Spain, France and Portugal, we were excluded from trade with all of the other people of the Western Hemisphere. fields tor . American commerce. Vrgent need of ship pro- tection. In some instances France allowed her colonies to receive foreign articles, which could not be supplied by the mother country; and these legal imports into the French colonies from the United States amounted in 1786 to 13,263,000 livres, or about 520,000 pounds sterling; imports by American ships from those colonies amounted to about 7,263,000 livres. The exact value of the illicit trade has always been uncertain.^ Spain and Portugal, finding it impossible during the Continental wars to control the trade of their possessions in the New World in 1809, threw them open to the trade of other nations. A few years later the South American republics had gained their independence and a new field was opened to the admission of American commerce. The proposal made by Mr. Adams to the, British government, favor- ing reciprocity in shipping, met with the approval of Mr. Pitt, who, in 1785, presented to parliament a bill which, if it had passed, would have temporarily secured reciprocal trade between the United States and the British West India Islands. The British shipping interests, however, under the leadership of Lord Sheffield opposed its passage, and the power to regulate commerce between the two countries was lodged with the king and Council. By orders of the Council, soon after issued, American ves- sels were entirely excluded from the British West Indies; and some of the staple products of the United States, particularly fish, beef, pork, butter, lard, etc., were not permitted to be carried there even in British vessels.^ By high import duties the markets of Europe were practically closed to many of our products and our merchants and shippers were denied the privilege of trading with their colonies and possessions. At the same time our ports were open to the free admission of their vessels without a charge or restriction excepting those which had been imposed by some of the States during the Confederation. Protection to shipping was in some respects at this time more urgent than protection to manu- factures. To build up a system of manufactories by import duties would necessarily take many years, while with the natural advantages possessed and the start which had already been made, under a vigorous system of 1 MacGregor, Vol. IV, p. 828. 2 MacGregor's Commercial Statistics, Vol. IV, p. 30. Digitized by Microsoft® PROTECTION TO SBIPPING. 103 protection and navigation laws, not only our coasting trade but a large part of the ocean traffic could within a short time be transferred to American vessels. That development of our shipping interests would add greatly to the wealth of the country and bring innumerable benefits was well under- stood by our early statesmen. A merchant marine would not only furnish a training school for seamen and navigators, and exist as an auxiliary naval force in time of war, but it would furnish a home market for ship- building materials and naval stores, and give employment to labor. Ship timbers could be obtained from our forests; the work of building dry docks, repairing vessels, making spars, block and pumps, fitting, rigging and sail-making, the manufacture of anchors and chains, windlasses and capstans, provisioning, equipping and outfitting vessels, would all increase greatly native industries. Apart, however, from the subject of national defence and industrial development, underlying the whole question of protection to shipping, was the influence which ocean carriage in the hands of American merchants and ship owners would have in preventing a large adverse balance of trade and maintaining within the country a supply of precious metals. Mr. William W. Bates, in his work on American Marine, p. 11, said : Ocean transportation of freightage to foreign countries, by vessels of our own, is itself an export; but, done by foreign flags, it is an import, or the equivalent of these transactions in settling the balance of trade abroad. From foreign coun- tries freightage is an equivalent of an import by foreign vessels; but an export by our own. In other words, freightage, transportation, carriage, freight money, whatever the name given, is a product — the production of vessels, of shipping, of a merchant marine. When we ship a cargo abroad under a foreign flag, the mer- chandise goes to our credit, but the freightage, being a foreign product, goes to foreign credit. When, however, we ship under our own flag, both the merchandise and the freightage go to our credit. On the other hand, when we import cargoes by foreign ships, we import also the freightage, and must pay abroad for both merchandise and carriage; whereas, if we import by our own ships, we only pay abroad for the merchandise, and may earn part of the money for that by our vessel's work. In our early West India trade in lumber, first opened by North Carolina and Georgia, the vessels engaged earned from ten to twenty-five per cent more tifan the mills. So they do now in Puget Sound trade. There are two cargoes in New York and two other cargoes in I^iverpool, each valued at $100,000. The freightage will amount to the same sum both ways. An American ship takes one of the New York cargoes to Liverpool, and returns with one of the Liverpool cargoes to New York and returns with the remaining New York cargo to Liverpool. We build, equip, man, provision, insure and run our own ship, and the British do likewise by their ship. We do the banking, commission and insurance on our cargoes, and the British do likewise for their cargoes. There is a fair exchange of merchandise and a just reciprocation of services, and the balance of trade is even between the two countries, thus : Transpor- tation is a product. Digitized by Microsoft® 104 ESTABLISHMENT OF TEE AMERICAN ST8TEM. Thb American Account. Two cargoes at $100,000 each $200,000 Freight on two cargoes at 20 per cent of value 40,000 Insurance, banking, etc., two cargoes at 5 per cent 10,000 Total $250,000 The British Account. Two cargoes at $100,000 each $200,000 Freight on two cargoes at 20 per cent of value 40,000 Insurance, banking, etc., two cargoes at S per cent 10,000 Total $250,000 Mathe- matical demon- Btration. The better way. Now suppose that two British ships, one at Liverpool and the other at New York, carry each one of the British and one of the American cargoes. The freight- age or freight is equivalent to 20 per cent of cargo value in each case. The banking, insurance and other items of expenditure are 5 per cent Then the British account will stand : The British Account. Two cargoes at $100,000 each $200,000 Freight on four cargoes at 20 per cent of value 80,000 Insurance, banking, etc., four cargoes at 5 per cent 20,000 Total $300,000 The American Account. Two cargoes at $100,000 $200,000 Adverse balance of trade 100,000 Total $300,000 From these examples it will be easily seen how an adverse balance of over- sea commerce may be due, not to a lack of exported goods (for which there may be no market), but to the freighting of foreign marine, and the use for foreign capital in banking and insurance in connection therewith. It is no answer to say that our people not engaged in ship-building, navigation, insurance, banking, etc., are " as well employed " at other work, earning lower wages or none at all, per- haps, for this is not and cannot be true; and there is no practical way in which they can be so well employed as in directly preventing panics, bankruptcy and ruin, by doing our own proper share of international business, and thus keeping our precious metals at home. For, be it observed, there are only two ways to deal with the problem of transportation. The first and better is to do our proper share of it; the second and worse, is to hire it done. Either way we may solve the problem it involves an export. In the first case we export freightage; in the second case, the export must be merchandise or specie.^ 1 W. W. Bates, pp. 12, 13 and 14. Digitized by Microsoft® PROTECTION TO SHIPPING. 105 The soundness of the proposition presented by Mr. Bates {s dem- onstrated when we compare the experience of the United States between 1784 and 1789, when we had both free trade in shipping and free trade in commodities, and the effect which the protection to American shipping had on the carrying trade during the first six years following the enact- ment of the legislation by Congress giving protection to our shipping. When peace was restored, in 1783, foreign vessels, mostly British, returned to our ports and engaged in both our international and coasting trade. From that time until 1789, 75 per cent of our ocean traffic was carried by foreign vessels. During these six years our imports from Great Britain alone were $72,696,001.40, and our exports to Great Britain were $27,219,729.20, leaving a balance of trade against us of $45,476,272.16. At this time the cost of freight was 20 per cent; in- surance, banking, etc., 5 per cent ; making a total charge on the business of 25 per cent. This charge upon the carrying trade was necessarily settled by the export of the precious metals, because exports of com- modities were insufficient. The persistent depression of trade continued during the six years mentioned. The drain from the country of the precious metals was due in part to the fact that 75 per cent of the ocean traffic was carried in foreign vessels. From the following calculation, based on the assumption that the entire export and import trade between the United States and Great Britain was carried in foreign vessels, during the period mentioned, we have the following result : Dr. British. Merchandise imported $56,522,001.03 Freightage on same 18,174.000.37 Total $72,696,001.40 Cr. American. Merchandise exported $27,219,729-24 Adverse balance of trade 45,476,272.16 Total $72,696,001.40 Had the carriage been made in American ships owned by American shippers, and the freightage retained in the United States, the result would have been reversed, and instead of a balance of trade against us of $45,476,272.16, the balance of trade would have been only $4,323,529.70, as shown by the following calculations : Adverse trade lialancea. Dr. Merchandise imported. British. .$56,522,001.03 Digitized by Microsoft® 106 ESTABLISHMENT OP TEE AMERIGAW SYSTEM. Cr. Freight on imports Merchandise exported. / Freight on merchandise exported. Adverse balance of trade A question of public utility. American. $18,174,000.37 27,219,729.24 6,804,723.31 4,323,539.11 $56,522,001.03 It should be noted, however, that in arriving at the actual balance wrhich during this period was required to he settled between the two coun- tries, less than 25 per cent was carried by ships owned and sailed by American citizens. This calculation serves to illustrate the proposition and to demonstrate the public utility of the development and maintenance of the merchant marine by a system of ship protection. At the first session of Congress which convened April 6, 1789, the subject of protection to shipping and manufactures was immediately taken up. In the debates which followed James Madison made two important declarations. Replying to those who counseled the consideration of local opinions and supposed local interests, he impressed on the members the duty they owed the whole country to safeguard the national welfare. He said : I am sensible that there is a great weight in the observation that fell from the honorable gentleman from South Carolina [Mr. Tucker], that it vv^ill be necessary, on the one hand, to weigh and regard the sentiments of the gentlemen from the different parts of the United States; but, on the other hand, we must limit our considerations on this head; and, notwithstanding all the deference and respect we pay to those sentiments, we must consider the general interest of the Union; for this is as much every gentleman's duty to consider as is the local or State interest, and any system of import that this committee may adopt must be founded upon the principle of mutual concession. On the subject of protection to shipping, Mr. Madison said : Madison on pro- tection to sliipping. If America was to leave her ports perfectly free, and make no discrimination between vessels owned by her citizens and those owned by foreigners, while other nations make this discrimination, it is obvious that such policy would go to exclude American shipping, although one of her most important interests. To this we may add another consideration, that by encouraging the means of transporting our productions with facility, we encourage the raising of them; and this object, I apprehend, is likely to be kept in view by the general government. By the same act (Act of July 4, 1789), by which Congress imposed duties on imports for the protection of manufactures, the following dis- criminating import duties were levied on certain merchandise for the pur- pose of securing its carriage in American vessels: Digitized by Microsoft® PROTECTION TO 8EIPPIN0. 107 Duties on Different Kinds of Tea— (Cents Per Pound). Bohea. 6 From China or India in American ships From Europe in American vessels 8 In any other way than as above IS Souchong. 10 13 22 Hyson. 10 26 4S Other Green. 12 i6 27 The duties on certain other goods from the East Indies were 12.5 per cent ad valorem if brought in foreign vessels, and about half that amount if brought in American vessels. On July 20 another act was passed giving still further protection in the form of Tonnage Duties, imposed as follows : On all vessels American-built, owned by citizens, or foreign-built owned by citizens the 29th of May, 1789, and while owned by citizens, per ton 6 cents On all vessels hereafter built in the United States, partly or wholly owned by foreigners, per ton ^ 30 cents On all other ships or vessels, at the rate of per ton go cents The supremacy of our merchant marine was established by protec- tion. During the first twenty-five years the shipping interests were sup- ported by the almost unanimous vote of Congress. " They had," says Mathew Carey, " powerful advocates on the floor of that body who never failed to urge their grievances with eloquence and to propose the proper remedies. They were ever heard with attention and their requests gen- erally accorded." By the first and second acts of 1789 ^ they were made secure in the absolute monopoly of the entire Chinese and East India trade. The duties on tea brought from China in foreign vessels were more than 100 per cent higher than when carried in American vessels. The same ratio of discrimination existed on all goods imported from East India. The same act secured another advantage by giving a discount of 10 per cent on all goods imported in American ships.^ By the act of 1794 an additional duty of 10 per cent was imposed on all goods entered from foreign vessels.^ The fisheries were also favored by a bounty of five cents on every quintal of dried fish and every barrel of salted provisions. By an act passed in 1792 one dollar and fifty cents per ton bounty was given on vessels engaged in the fisheries, if of twenty tons and below thirty tons; one dollar per ton on all fishing boats above five and below twenty tons; and on vessels engaged in the fisheries of above thirty tons 1 Laws of the United States, Vol. II, p. 5. 2 Idem. 3 Idem, p. 437. Discrimi- nating duties. Discounts and iounties. Digitized by Microsoft® 108 ESTABLI8SMENT OF TEE AMERICAN SYSTEM. Tonnage duties. British discrimi- nation. the bounty was two dollars and fifty cents.^ In 1802,^ to raise a fund for the protection of our seamen against the Barbary Powers, an additional duty of 2y2 per cent was made to the duties on goods imported in Amer- ican, and 10 per cent if the goods were imported in foreign vessels. The tonnage duties of 1789 so aided the discriminating duties on imports that the foreign carrying was almost absolutely secured to native shipowners. The tonnage duties applied to the foreign carrying trade imposed duties of six cents a ton on American-built and owned vessels; thirty cents per ton on all vessels thereafter built in the United States, partly or wholly owned by foreigners. In part to encourage American ship-building the duty was fifty cents per ton on all foreign-built and owned vessels. Foreign vessels were excluded from our coasting trade by the provision which required them to pay the tonnage duties of thirty or fifty cents upon every arrival, while American ships " only paid the duties once a year." Of this legislation Mr. MacGregor said: The acts passed by the first Congress that met under the new form of govern- ment, imposing discriminating, tonnage and other duties, did not escape the parti- cular notice of British statesmen. Their injurious eiifects upon the navigating in- terests of Great Britain were at once perceived by them. They saw that American commerce was no longer at the mercy of thirteen distinct legislative bodies, nor subject to the control of the king and council. In September, 1789, the legislation of Congress for the protection of shipping and manufactures was referred by the British government to the Committee of the Lords of Trade with instructions to report " what were the proposals of a commercial nature, it would be proper to be made by their government to the United States." In January, 1791, this committee made a report, not only upon the subject of import duties, but also upon the general subject of the commercial relations between the two countries. The report presented by Lord Liverpool, on the subject of a commercial treaty, especially with reference to navigation, states: After full consideration of all that has been offered on the subject of naviga- tion, the committee think that there is but one proposition which it would be advis- able for the ministers of Great Britain to make, on this head, to the government of the United States, in a negotiation for a commercial treaty between the two countries, viz. : that British ships, trading to the ports of the United States, should be treated, with respect to the duties on tonnage and imports, in like manner as the ships of the United States shall be treated in the ports of Great Britain. The committee add, however: "If Congress shall propose (as they certainly will) that this principle of equality should be extended to the ports of our colonies and islands, and that the ships of the United States should be treated there as British ships, it should be answered that this demand cannot be admitted even as a subject of negotiation. lldem, p. 242. 2 Idem, Vol. Ill, p. 447. Digitized by Microsoft® WAR OF 1812. 109 As to the advantages this circuitous trade would secure to British shipping, the same committee says : " Many vessels go now from the ports of Great Britain, carrying British manufactures to the United States, there load with lumber and provisions for the British Islands, and return with the produce of these islands to Great Britain. The whole of this branch of trade," they add, " may also be considered as a new acquisition, and was attained by Your Majesty's order in council before mentioned, which has operated to the increase of British navigation compared with that of the United States." The committee also recommended that negotiations be opened with a view of making a treaty with the United States limiting the import duties on manufactures, and for the purpose of preventing the imposi- tion of such duties on imports as would restrict the sale of British goods in American markets. The French Republic was established in 1792, and the following year war was declared against England. At this time the United States had two treaties with France; one of alliance, and the other of amity and commerce. Our treaty of alliance bound us " to guarantee to France the possessions of the Crown of France in America." This raised a serious question in regard to the United States remaining neutral in the struggle. Washington's administration, however, construed the treaty to mean that we were bound only to protect France in a war waged against her by another power, and, thereupon, President Washington issued a Proclama- tion of Neutrality. France, realizing full well that she could not en- force her navigation laws during the war and prevent other nations from trading with her West India possessions, threw them open to the trade of the world. The American merchants, taking advantage of this situation, sent hundreds of ships freighted with commodities to engage in this commerce. This caused a clash between the United States and England. England now reasserted four propositions which she had contended for and maintained for years, as follows : French navigation laws. 1. That under International Law she might seize any kind of food going to French ports in our ships. The United States contended that only military stores might be declared contraband and so seized. 2. That when a port has been declared to be blockaded, a ship bound to that port might be seized even on the high seas. The United States contended that no port was in a state of blockade unless there was a fleet actually stationed at it to prevent ships from entering or leaving it; that a mere paper blockade did not exist in International Law. 3. Great Britain held that our ships might be captured if they had French goods on board. The United States contended for the doctrine that " free ships made free goods." That our ships were not subject to capture, no matter whose goods they had on board. 4. Great Britain in 1756 had adopted a rule that no neutral should have, in time of war, a trade that she did not have in time of peace. Digitized by Microsoft® 110 ESTABLISHMENT OF TEE AMERICAN SYSTEM. Seizure of American vessels. Under the rights so asserted England immediately began the seizure of American vessels trading in the West Indies. At this time negotiations were under way for a commercial treaty, we simply having at this time, with England, the Treaty of Peace. England was undoubtedly aroused to jealousy by the bold and aggressive policy in favor of domestic shipping and industries which had been adopted by Congress. This legislation secured to American vessels a great advantage in the coasting trade, and imperiled over two hundred thousand tons of foreign shipping then trading in our ports. Great Britain recognized this legislation as the first step taken to secure the industrial independence of the United States, and instead of yielding to the inevitable and consenting that the States be permitted to carry on their commerce in peace and without molestation, still refused to enter into a just or fair treaty. The treaty negotiated by John Jay on behalf of the United States with England in November, 1794, and ratified by the Senate June 24 the following year, was ex- ceedingly unsatisfactory. It secured only small advantages of a com- mercial nature. It opened the West India Islands to trade to a very limited extent, to end within two years after the close of the war with France, and the only permanent commercial advantage gained by the United States arose from the right to engage in the British East India trade, which it guaranteed. None of the vexed questions was settled. We secured a commercial treaty with Spain in 1795, and a new treaty with France in 1800. Under the treaty with Spain the mouth of the Mississippi River was opened to our vessels to pass in and out upon the payment of small duties. Strained relations continued between France and the United States until the year 1800, when the Directory had fallen, and with Napoleon as First Consul of France a treaty was entered into. In 1803 France sold to the United States the territory of Louisiana for $15,000,000, and immediately thereafter war between England and France was renewed, and continued with little interruption until 1815. From the inception of the Napoleonic wars England declared that vessels of the United States could not trade directly between French West India Islands and France; or a Spanish West India Island and Spain; or a Dutch colony and Holland. American shippers attempted to evade this restriction by bringing the goods to American ports, entering the same, and then taking them directly to France, Holland or Spain. To prevent trade of this character the British High Court of Admiralty in 1805 de- cided " that goods in transit from French possessions, although brought to the United States before shipment to France, were subject to seizure"; thus reversing the rule adopted by the same court in 1779 and 1780, which made such trade lawful if the entry was evidenced by the custom house records. To enforce this decision British men-of-war were stationed along our coast to seize goods and vessels, to search American ships for Opening of the Missis- sippi. Digitized by Microsoft® WAR OF 1812. Ill British sailors, and by the close of 1805, 116 United States ships were seized and 1000 sailors were impressed into the British service. In 1806 Napoleon excluded British goods from European ports. England an- swered by her order in council declaring the whole coast of Europe in a state of blockade, and directed that if any American vessel attempted to enter such ports with cargoes of merchandise it should be confiscated. This was followed by Napoleon's Berlin Decree in November, 1806, de- claring the English ports to be in a state of blockade. In January, 1807, a new order in council was issued by the British government forbidding neutrals to trade from one European port to another if both were in possession of France or her allies; and in November, 1807, by another order in council every port on the face of the earth from which any British ships were excluded was closed to neutrals unless they first stopped at some British port and obtained a license to enter. This was followed by Napoleon's Milan Decree in 1807, which declared that any ship that submitted to be searched by British cruisers or took out a British license, or entered any ports from which French ships were excluded, was to be seized and confiscated wherever found. As a result of this policy within a short time the English had taken 194 of our ships, and the French almost as many. Jefferson in a private letter said that " England seemed to have become a den of pirates and France a den of thieves." In April, 1806, to counteract the effect of these measures, and in retaliation. Con- gress passed a Non-importation Act which prohibited the importation into the United States of certain enumerated British wares. (See page 147.) Trade with England was almost entirely suspended. In December, 1807, Congress passed an Embargo Act which prohibited our merchant vessels from sailing for any foreign country. On March 1, 1809, the Embargo Act was repealed and an act passed interdicting all commercial inter- course between the United States and Great Britain, France and her de- pendencies, after May 20. In case the orders in council should be re- voked or modified, the President was empowered to reopen by proclama- tion trade with these countries. On assurance received from the British minister that the orders in council would be withdrawn after June 10, the President, on April 19, issued a proclamation suspending the non-intercourse act after that time, in so far as it related to Great Britain. The British government having disavowed the act of its envoy, Mr. Erskine, who was recalled, a second proclamation (August 9) re-established the interdict, and diplomatic inter- course between the two countries soon after ceased. The situation con- tinued until November, 1810, when Napoleon proposed to withdraw his Berlin and Milan Decrees in case the United States would not trade with England. This was agreed to, and on November 1, 1810, President Madi- son issued a proclamation to the efifect that unless Great Britain should Blockades and con- fiscation. England a den of pirates. Digitized by Microsoft® 112 ESTABLISHMENT OF THE AMERICAN SYSTEM. Agreement with Napoleon. recall her orders in council on or before February 1, 1811, all trade with her would cease. Trade with France was resumed on November 1, 1810. A large fleet of American merchantmen set sail for her ports, and every ship was seized and their cargoes of merchandise confiscated. All negotiations, all protests and remonstrances for commercial peace, failed. England persistently continued her warfare on American shipping, the seizure of vessels and the impressment of sailors. Down to 1812 1600 American ships had been seized on the high seas, and 6000 sailors taken from American vessels and forced into the British navy. War could not longer be avoided. Early in May, 1811, the British ship " Guerriere," cruising off the port of New York, searched an American merchantman and held an American citizen for the British service. This was im- mediately followed by the naval battle between the United States frigate " President " and the British 22-gun ship " Little Belt." The situation remained unchanged until June 18, 1812, when a declaration of war was made by Congress. The causes of war set forth in the proclamation of President Madi- son, issued June 23, 1812, are as follows : War of 1812. 1. Tampering with the Indians and urging them to attack our citizens on the frontier. 2. Interfering with our trade by the orders in council. 3. Putting cruisers off our ports to stop and search our vessels. 4. Impressing our sailors, of whom more than 6000 were in the British service. The war continued until the Treaty of Peace was signed at Ghent in December, 1814; but the news did not reach the United States until in February, 1815, after the battle of New Orleans had on January 8, 1815, been fought. Through this short struggle the American people dem- onstrated to the world their ability to defend their rights and possessions on land and sea against the most powerful nation of the world. In the short space of two years and six months we expended over $100,000,000 in prosecuting the war, built and equipped some of the most complete and powerful war vessels which had then been known, and won some of the greatest naval battles in all history. We captured on the ocean and lakes 56 British men-of-war, mounting 886 cannon, and 2360 mer- chant vessels, carrying 8000 guns. The British also lost on the American coast during the war, by wreck and otherwise, 29 vessels, mounting 800 guns. The Americans during the entire war lost only 25 warships. The efficiency of our war vessels, the seamanship, marksmanship and courage of our sailors, displayed in the naval engagements, placed the United States in the front rank of naval powers. Our flag was respected, our rights were acknowledged and the independence of our country was made secure from further attack. At the conclusion of negotiations, which con- Digitized by Microsoft® WAJi OF 1812. 113 tinued for some months, the plenipotentiaries representing Great Britain and the United States signed a treaty of peace at Ghent on December 24, 1814. The article signed pledged the parties to a " firm and universal peace," but omitted reference to the disputed questions which caused the war. James Monroe, then Secretary of State, in a communication to the plenipotentiaries, on April 15, 1813, said : " The impressment of our sea- men and illegal blockades, as exemplified more particularly in the orders in council, were the principal causes of the war." ^ On account of the uni- versal pacification of Europe which occurred in 1815, and the removal of the causes which incited the war, it was not deemed advisable on the part of the United States, as a condition for terminating hostilities, to insist on a formal settlement of the abstract questions involved. As early as June 13, 1813, Secretary Monroe stated in a letter to the United States Commissioners : The British government having repealed the orders in council and the blockade of May, i8o6, and all other illegal blockades, and having declared that it would institute no blockade which should not be supported by an adequate force, it was thought better to leave that question, on that ground, than to continue the war, to obtain a more precise definition of blockade, after the other essential cause of the war, that of impressment, should be removed. . . . This cause of war being removed, the United States are under no obligation to continue it for want of such stipulated definition. . . . The same remark is applicable to the case of im- pressment; for, if the British government had issued orders to its cruisers not to impress seamen from our vessels, and notified the same to this government, that cause of war would also have been removed.^ The Administration has been accused of concluding a dishonorable peace and of settling nothing. This is an unjustifiable criticism. The naval strength displayed by the United States was a more secure guar- antee of perpetual peace, and of a final settlement of the question of blockade and the right to search our vessels and impress our seamen, than the most definite treaty stipulations would have been. Speaking of the United States, the London Times said : " Their first war with Eng- land made them independent ; their second made them formidable." Results Achieved by Protection to Shipping. The legislation which secured protection to our shipping interests by imposing tonnage duties and discriminating duties on imports proved most satisfactory. It secured our merchantmen the whole of the coasting trade, amounting to over 400,000 tons per annum, and 86 per cent of the tonnage engaged in the foreign trade. 1 Appendix to Annals of Congress, Vol. Ill, 1814, 2 Id. 1299. 1815, p. 1285. Atstract questions not settled. Digitized by Microsoft® 114 ESTABLISHMENT OF THE AMERICAN SYSTEM. Qrowth rapid progress than ever was made by th at of any other natior of the world, as is 0/ our shipping. shown by the following statement of tonnage for the years named : Foreign trade. Coasting. Whale Cod Coasting. Cod Total Tear. Fishery. Fishery. Fishery. 1790 346,253 103,775 2,363 28,348 478,377 1796 808,284 309,977 1,229 50,353 30,562 8,829 1,208,735 1801 576,733 195,423 736 28,509 22,416 6,453 831,900 1806 713.549 246,255 728 31,279 28,296 8,101 1,003,218 181S 854,284 435,066 1,053 26,510 40,598 10,427 1,368,127 1820 619,047 539,080 792 60,842 48,944 11,197 1,280,166 1830 576,475 496,639 95,014 20,338 3,315 1,191,776 A great advantage. In 1789 the British vessels which entered inwards in Great Britain, engaged in the trade of the United States, were 253. Those cleared for the United States 358. In 1799 those that entered inwards in the British trade were only 42; out- wards, 57. In 1790 the American vessels engaged in the British trade were only 464. In 1800 there were 1057. In 1806, 561 vessels engaged in the trade of the United States entered inwards in Great Britain; of these only 56 were British. In the same year, of 575 entered outwards, only 39 were British. Under the fostering system the tonnage of the United States made a more The growth of our shipping is also shown by the gain which was made in the percentage of imports and exports carried in American vessels, as follows : Proportion of American Carriage in Foreign Trade. Tear. 1789 1790 1791 1792 1793 1794 1795 Imports, Per cent. 17-5 41.0 58.0 67.0 82.0 91.0 92.0 Exports, Per cent. 30.0 40.0 52.0 61.0 77.0 86.0 88.0 Imports, Exports, Tear. Per cent. Per cent. 1800 91.0 87.0 1805 93-0 89.0 1810 93-0 90.0 1815 77-0 71.0 1820 90.0 89.0 1825 95-2 8g.o 1830 93-6 86.3 The imposition of a higher rate of duty on goods imported into the United States in foreign vessels than was charged on the same goods if carried in American vessels gave to our shipping interests a great advant- age. It insured to our vessels a full cargo upon a return voyage. They were sought after by the foreign exporter because, and only because, he could make a saving by sending his goods to America in American vessels. Mr. Bates says : " On the security of employment abroad rested the whole force of the argument for discriminating protection." Moreover, it had the effect to counteract the discriminations of for- eign governments against our vessels. The discriminating import duties Digitized by Microsoft® PROTECTION TO SHIPPING. U5 supported by these on tonnage so levied as to practically exclude foreign vessels from the coasting trade constituted a harmonious and complete system for the support of this great arm of public defence and source of national wealth. The shipping interests of the country at this time played an important part in making permanent the independence of the nation. Whether viewed solely as an industry which enlarged the market for supplies and commodities and increased the opportunities for labor and great business enterprises, or as a means of national defence and commercial security, the wisdom of the legislation which made possible such great achievements is fully vindicated. Considering the state of the finances at this time, the lack of capital in the country, the inability of the people to discharge foreign obligations, and the injurious effect of a con- stant drain of the precious metals to settle foreign balances, the influence exerted by the earnings from the carriage in maintaining a favorable balance of trade was of great national importance. While it would be impossible to give figures showing the exact value of such earnings dur- ing this time, our calculations must be based upon the best authorities ob- tainable. Thomas Jefferson stated that the freightage, or charge, on the carriage was 22y^ per cent in 1791. But at the close of the wars and upon the restoration of peace in Europe, in 1815, when British merchant vessels were vigorously competing for the trade of the entire world, when the larger and swifter vessels were built, when better seamanship and lower cost of ship materials and supplies were introduced, the per- centage of freightage must have been less. Our total imports grew from $29,200,000 in 1791 to $129,410,000 in 1806. During the same period our total exports increased from $19,- 012,041 to $101,536,963. Of our exports in 1791, $18,500,000 were of domestic produce and $51,204,100 were re-exports. The re-exports of foreign produce in 1806 had reached the enormous sum of $60,283,236. Hence we were, in 1806, carrying 93 per cent of our imports and 89 per cent of the exports, and were the distributers throughout the markets of the world of $60,283,236 of foreign commodities. The calculations given below are based upon a freightage cost of 20 per cent. The magnitude of the earnings may be illustrated by the fol- lowing computation : The total imports, 1791 to 1806, were $1,179,218,962.00 Total exports, 1791 to 1806 963,333,004.00 Average annual imports 73.075,756.01 Average annual exports per year 60,208,312.75 Excess of imports over exports, 1791-1806 215,885,958.00 Total adverse balance of trade 215,896,857.00 Average annual adverse balance of trade for sixteen years 13,493,553-56 The average annual imports in American vessels, 93 per cent 67,960,453.089 Groivth foreign trade. ot Digitized by Microsoft® 116 ESTABLISHMENT OF THE AMERICAN SYSTEM. The average annual imports in foreign vessels, 7 per cent S.11S.302.021 The average annual exports in American vessels, 89 per cent.... S3>S8S,398.34 The average annual exports in foreign vessels, 11 per cent 6,622,914.41 Freightage of American vessels on 93 per cent of imports, 20 per cent 13,592,090.61 Freightage of American vessels on the 7 per cent of imports at 20 per cent 1,023,060.58 Freightage of American vessels on the 89 per cent of exports at 20 per cent 10,717,079.66 Freightage of foreign vessels on the 11 per cent of exports at 20 per cent 1,324,582.88 Total annual freightage on exports and imports carried in Amer- ican vessels, 1791-1806, inclusive 24,309,171,27 Total amount freightage on exports and imports carried in foreign vessels, 1791-1806, inclusive 2,347,643.46 American ship earningt. 21,961,527.81 13,493,553.56 Average annual adverse balance of trade from 1791-1806, inclusive. Annual balance in favor of United States in international trade. . . .$ 8,468,172.85 From the statistics, showing our exports and imports, and from the table given showing tonnage of American vessels in the foreign-carry- ing trade, during the period in question, 1789-1834, a calculation may be made showing the earnings of the American shipping interests. Mr. Bates, in his valuable work on American marine (p. 18), has given the estimates for the twenty-six years preceding the Peace of 1815, showing that during this time the balancing power of the American merchant marine was not less than $25,000,000 annually. The yearly average value of our imports and exports being about $125,000,000, he states that our trade and transportation were worth about $50,000,000 annually to the country at large, and says : It was by means of this business, most of it on a cash basis, that our young nation got out of debt, paid the revenues of the government, enjoyed its early prosperity, and imported so large per capita as it did. It may be concluded, therefore, that if the United States had per- mitted the policy of free trade which existed under the Confederation to continue, the ocean-carrying trade would have remained under the control of foreign vessels, largely British ; that we could not have controlled our coasting trade ; and the earnings from this commerce would have gone to the credit of foreign merchants and shipping interests. The adverse balance of trade would have been increased by the amount of the freight- age; the country would have been constantly drained of the precious metals; the establishment of solvent banks upon a specie basis would have been made impossible; the credit of the nation could not have been estab- Digitized by Microsoft® PROTECTION TO SHIPPINO. 117 lished. The accumulation of capital would have been greatly restricted; trade would have been depressed, and there would have been no relief from the hard times which prevailed under the Confederation. Protection to Shipping Abandoned. At the close of the Revolutionary war it was the belief of John Adams, James Madison and many other statesmen that the navigation laws of other nations were serious obstacles to the growth of American shipping. It was thought that our national facilities for the construction and equipment of vessels were so great that we could successfully com- pete with any nation for the foreign-carrying trade. Hence, a proposal for complete reciprocal relations in shipping was made by Mr. Adams to the British government. Although favored by Mr. Pitt, the proposal was rejected at the instance of the British shipping interests. Even after Congress had enacted the protective legislation of 1789, England in sign- ing the Jay Treaty in 1794 refused to give up the monopoly of her colonial trade. At the conclusion of peace, in 1815, conditions had wholly changed. Great Britain had emerged from the Continental wars the sole master of the world's commerce. The ships of every European rival had been driven from the seas and their commerce destroyed. In their bankrupt and prostrate condition it would be years before their merchant marine could be restored and they would again, to a great extent, engage in foreign commerce. England now turned her attention to the cultiva- tion of peaceful relations with all nations and to the removal of all barriers which restricted the unlimited expansion of her trade and commerce. The United States was her most serious competitor for the carrying trade. The United States offered the greatest market for the sale of her goods and wares and was the producer of those commodities most desired by her people, cotton, naval stores, and ship-building materials. Having failed to destroy the commerce of the United States in open conflict, Eng- land, believing in the superiority of her shipping, was ready to bargain and trade for what she could not secure by force. She now favored what was loudly proclaimed as "the reciprocal liberty of commerce," or free trade in shipping. With the nations of Europe lying prostrate at her feet she could with safety be magnanimous. The sentiment in favor of reci- procity in shipping soon became popular in the United States, and between 1815 and 1830, by legislation and treaties, ship protection was wholly abandoned. Legislation. On March 3, 1815, the bill to repeal the discriminating duties on imports and tonnage, on condition that reciprocal measures were adopted Mistaken policy of marine reolp- rocity. Repeal of ship protection. Digitized by Microsoft® 118 E8TABLI8BMENT OF TEE AMERICAN SYSTEM. Coasting and lake carriage. by foreign governments, passed Congress without debate and by a unanimous vote.^ The provisions of the act were as follows : That so much of the several acts imposing duties on the tonnage of ships and vessels, and on goods, wares and merchandise imported into the United States, as imposes a discriminating duty on tonnage, between foreign vessels and vessels of the United States, and between goods imported into the United States in foreign vessels and vessels of the United States, be, and the same are hereby repealed; such repeal to take effect in favor of foreign nations, whenever the President of the United States shall be satisfied that the discriminating or countervailing duties of such foreign nations, so far as they operate to the disadvantage of the United States, have been abolished. It was not the purpose of Congress at this time to disturb the laws which were passed in 1789 protecting American ships engaged in the coasting trade. Moreover, two years later, by section 4 of the Act of 1817, it was provided by Congress : That no goods, wares or merchandise shall be imported, under penalty of for- feiture thereof, from one port of the United States to another port thereof, in a vessel belonging wholly or in part to a subject of any foreign power; but this clause shall not be construed to prohibit the sailing of any foreign vessels from one to another part of the United States, provided no goods, wares or merchandise, other than those imported in such vessels, from such foreign ports, and which shall be unladen, shall be carried to one port or another in the United States. This statute confirmed the policy of the United States which has continued up to the present time, and which has secured to the American ships a monopoly of the coasting and lake carriage. The first treaty under the Act of March 3 was concluded between the United States and Great Britain on July 3 following. By this treaty equality of port charges and tonnage and other duties was guaranteed. The shipping of each nation was placed on the footing of the most favored nations in the ports of the other. The equality of duties, etc., secured by this treaty only related to the direct trade, excepting that the right of American vessels to engage in the East India trade, as provided in the treaty of 1794, was continued. England continued to exclude American vessels from trade with her West India Islands for fifteen years, and from her North American possessions for thirty-five years. To retaliate against Great Britain for refusing to permit our vessels to trade in the West India Islands, Congress passed a law in 1818 prohibit- ing British vessels from entering our ports from places from which our ships were excluded. To meet this situation and to at the same time hold the trade with her possessions in North America, England imposed regula- tions under which goods of American production if taken to England or to 1 Annals of Congress, Vol. Ill, 1814-1815, p. 1267. Digitized by Microsoft® PROTECTION TO SHIPPING ABANDONED. 119 her colonies from British warehouses in Canada would be admitted at a lower rate of duty. This policy continued until complete reciprocity was established in 1830. Under acts of 1817, January 7, 1824, and May 24, 1828, and by treaties, every vestige of protection to shipping in the foreign-carrying trade was destroyed. The following act was passed May 24, 1828 : That upon satisfactory evidence being given to the President of the United States by the government of any foreign nation that no discriminating duties of tonnage or impost are imposed or levied in the ports of said nation upon vessels wholly belonging to citizens of the United States, or upon the produce, manufac- tures or merchandise imported in the same from the United States, or from any foreign country, the President is hereby authorized to issue his proclamation de- claring that the foreign discriminating duties of tonnage and imposts within the United States are, and shall be, suspended and discontinued so far as respects the vessels of the said foreign nation, and the produce, manufactures and merchandise imported into the United States in the same from the said foreign nation, or from any other foreign country ; the said suspension to take effect from the time of such notification being given to the President of the United States, and to continue so long as the reciprocal exemption of vessels belonging to citizens of the United States and their cargoes, as aforesaid, shall be continued, and no longer. The shipping interests seem to have been divided in opinion on the wisdom of repealing ship protection. Senator Woodbury of New Hamp- shire, in advocating the passage of the bill, said : In a country which justly boasts of the freedom and superiority of its institu- tions, nothing is to be proved from a rivalship on this subject, free as air and ex- tensive as the widest range of civilization. He said further : We are known to possess a skill and economy in building vessels; a cheapness in fitting them out ; an activity in sailing them, which without discrimination [pro- tection] would give us an advantage in coping with any commercial power in existence. Such are the accurate calculations of our merchants, the youth and agility of our seamen and the intelligence of our shipmasters that American vessels can, on an average, make three trips to Europe while a foreign vessel is making two. It must be manifest to all that circumstances like these, rather than any discriminating duty, must always give and maintain to us a superiority and pro- tection which leaves nothing to be feared from the fullest competition. The bill was recommended by John Quincy Adams in his message of 1825, and signed by him in 1828. The fancied security arising from a supposed permanent superiority, and the marvelous growth in American shipping since 1789, must have led many New Englanders to believe that protection was no longer needed. This opinion, however, was not enter- Discrimi- nating duties aban- doned. Mistaken sense of security. Digitized by Microsoft® 120 BSTABLISEMENT OF THE AMERICAN SYSTEM. tained by all, for the merchants and shippers of Portsmouth, New Hamp- shire, in 1822, memorialized Congress against the repeal of tonnage and discriminating import duties. At the beginning of the session of 1821, the Chamber of Commerce of the City of New York sent a petition to Congress protesting against " the renewal of an attempt to repeal the acts making a discrimination between American and foreign duties on imports and tonnage." Political conditions in the United States were favorable to the re- laxation of marine protection. More than two-thirds of our exports were from the cotton- and tobacco-growing States, which had no shipping. The New England shipping interest had pursued a narrow, selfish and unwise policy since the formation of the government. While they had earnestly asked for protection to their own interests, they had with equal vigor opposed, in Congress and out, efforts to extend protection to manu- factories upon the ground that the establishment of manufactories in the United States might tend to reduce the quantity of goods imported and diminish the foreign-carrying trade to that extent. They also opposed protective duties on iron, ropes, sail-cloth and other commodities which might be used in the construction or the equipment of vessels. Many representatives who earnestly defended their interests were in favor of protection to shipping and desired free trade in everything else. More- over, notwithstanding the fact that the War of 1812 had been undertaken and carried on in the defence of commerce and the rights of seamen, yet on account of the interruption of trade and the losses sustained by the commercial cities, the opposition to the war was carried to the extent of holding a convention at Hartford, Connecticut, early in December, 1814, in opposition to the Administration, at which resolutions were passed couched in language interpreted by many as treasonable. The shipping interests had lost their hold on legislation and their influence in the halls of Congress. The great seat of their industry was along the coast of New England. The agitation of the slavery question had raised an irrepressible conflict between the slaveholding States and Massachusetts. The shipping interests had, since 1789, largely dominated the politics of the coast cities, and had allied themselves with the mer- chants and importers in opposition to protection to manufactures, advocat- ing protection for themselves and favoring free trade for others. They met the common fate of those who attempt to stand alone. Addressing Congress in 1819, when the shippers and merchants of New York City petitioned Congress for protection to the merchant marine, and opposed giving it to the agriculturists and manufacturers, Mr. Baldwin said : Lost their injluence. Attempted to stand alone. We are told that this bill will destroy commerce. This is not an unexpected alarm; it was raised when the last tariff was passed. It is equally loud when any Digitized by Microsoft® PROTECTION TO SEIPPINO ABANDONED. 121 measure is proposed which adds a cent or a dollar to a duty on importation. Joined with smuggling, we shall always hear the cry repeated when any measure is proposed not tending to the exclusive benefit of that interest. I had indulged the hope that, at this time, when the commerce of the country was as prostrate as our manufactures, when both are pressing us for protection from the same dangers, its friends would make common cause and join in a common struggle for self- preservation. The hope was not a sanguine one; commerce has been too long a pet, the spoiled child, of government, to think there are any other interests worth protecting. The mere creature of legislation, raised to importance by our laws, and the expenditure of a great portion of our revenue for its support, commerce has presented herself as the Atlas which supports the government, country and all its great interests. Yet, while approaching you in a suppliant posture, praying for a bankrupt law to save her merchants, navigation laws to save her shipping, she still retains the spirit; she still thinks that legislation must be for her benefit; boldly claiming the right of primo-geniture ; loudly protesting that anything done for the other children of the nation is her destruction. While this is commerce, " I am against it"; but if she claims equal protection or even a double portion in her favor, I will go as far as any man in this House to support the fair trade of the country. Important as I think manufactures, commerce is no less so; but I must be understood as not meaning that commerce which is confined to the export of raw materials, and imports of manufactures for home consumption, which adds nothing to the labor and wealth of the nation ; only draws from the consumer what he ought to retain at home — our resources to enrich other nations ; but that commerce which, by the carrying trade — the export of foreign produce and our own manu- factures — draws wealth from others to us; equally promoting the great interests of the country. But, sir, listen to all alike. Do not let revenue, calling for a loan, commerce for bankrupt and navigation acts, drown the voice of manufacturers asking for protection. Mr. Baldwin was not the only statesman who in his patriotic zeal for the common welfare appealed to the shipping interests to make com- mon cause with the manufacturers and agriculturists for the development of the country. When the protectionists in 1816 were endeavoring to shield from destruction the manufactories which had sprung into exist- ence during the war from a foreign competition which was then threaten- ing their lives, the shipping interests of New England interposed the strongest opposition. By 1828 and 1833 the entire situation had changed. The slaveholding interests of the South had risen to such power and in- fluence that they were enabled to destroy the last vestige of ship protec- tion in 1828, and five years later to accomplish their purpose against the Northern manufacturers. Mr. W. W. Bates, in his "American Marine," quotes President John Quincy Adams as attributing this legisla- tion in part to the influence of Great Britain. Mr. Bates says : In the acknowledgment that foreign nations were promoting this free-ship legislation, Mr. Adams gives away the secret of the whole matter, and lets out the truth. Great Britain had her share in the suggestions made from time to time, and Listen to all alike. Digitized by Microsoft® 122 ESTABLISHMENT OF THE AMERICAN SYSTEM. so had other European powers. There was no movement at home, except from free trade politicians, mainly residents of the cotton States. The merchants, the ship-builders, the master-marines and other classes of American citizens, to whom the country was indebted for the name and fame of our ships, were not con- sulted. No name of any citizen, entitled to speak for the American ship, was ever put to a petition for the stripping of protection from our marine; but its divestment was the bad work of politicians, some of them with bees in their bonnets, and none giving evidence of rightly understanding or appreciating the different interests to be affected, perhaps ruined, by the adverse acts which were passed. New England's over- conftdence. It is undoubtedly true that the shipping interests of New England felt secure from foreign attack. The New Englanders from the first had been natural mariners; they loved the sea and seafaring life, and courted the dangers and hazards of the storm. In seamanship they were unrivaled. Their marine architects in designing and in the construction of ships were unsurpassed. Their naval stores and ship-building materials existed in abundance. But they misjudged the future. European nations, espe- cially Great Britain, while proclaiming reciprocity in shipping as an olive branch, were ready to repudiate its principles as soon as they could profit by so doing. As long as the ocean traffic was carried in wooden sailing vessels, the American marine enjoyed a fair share of the traffic, but as soon as ships were made of iron and propelled by steam, England's ad- vantage was restored, and by the granting of subsidies and subventions and by means of insurance discrimination, a new form of protection to British shipping was introduced. Under these conditions the American merchant marine gradually declined. In the Civil war, between 1861 and 1865, Great Britain's opportunity came, and by building, manning and equipping privateers the last vestige of American shipping was destroyed and British monopoly of the carrying trade was again secured. This phase of the history of American shipping will be mentioned in a later chapter. Digitized by Microsoft® CHAPTER VII. Tariff Legislation 1789 to 1816. However unimportant America may be considered at present, and however Britain may affect to despise her trade, there will assuredly come a day when this country will have some weight in the scale of empires — Washington, letter to LaFayette. It is the interest of the community with a view to eventual and permanent economy to encourage the growth of manufactures. — Hamilton. Every manufacturer encouraged in our country makes part of a market for provisions within ourselves, and saves so much money to the country as must otherwise be exported to pay for the manufactures he supplies. Here in England it is well known and understood that, wherever a manufacture is established which employs a number of hands, it raises the value of land in the neighboring country all around it; partly by the greater demand near at hand for the produce of the land, and partly from the plenty of money drawn by the manufacturers to that part of the country. It seems, therefore, the interest of all our farmers and owners of lands to encourage our young manufactures in preference to foreign ones im- ported among us from distant countries. — Dr. Franklin, writing from London, in 1771, to Humphrey Marshall. The true power of the French Republic should consist, above all, in its not allowing a single idea to exist which it does not make its own. — Napoleon. In feudal times there was one kind of property — land ; but there has grown up another — industry. They are alike entitled to the protection and benefits of the governrnent — NapolEon. Spain has twenty-five million merinos [sheep] ; I wish France to have one hundred million. — Napoleon. It has been almost everywhere found that rising manufactures are unable to struggle against the establishments cemented by time, nourished by numerous capitalists, with a credit established by continuous success and conducted by mem- bers of experience and successful artists. — Chaptal, Napoleon's Minister of the Interior. The substitution of foreign for domestic tariffs, is a transfer to foreign nations of the advantages of machinery and the mode in which it is capable of being em- ployed with most utility and to the greatest extent.— Hamilton. Not only the wealth, but the independence and security of a country appear to be materially connected with the prosperity of manufactures. Every nation, with a (123) Value ot manu- tactures. Digitized by Microsoft® 124 E8TABLI8BMENT OF THE AMERICAN SYSTEM. An organized system of protection. They thrived hy foreign trade. view to these great objects, ought to endeavor to possess within itself all the essentials of national supply. — Hamilton. As the reign of Queen Elizabeth marked the beginning of a new epoch in the history of England, so the administration of Washington stands as a landmark or dividing line between the old and the new in the history of the United States. Like England under Elizabeth, the energies of the people under an organized system of protection were directed to the development of native resources, and to the establishment of manu- factures. The first Congress of the United States was composed of representaT, tives of a people who were engaged largely in the cultivation of the soil. In 1777 John Dickinson of Pennsylvania wrote, " We are tillers of thej// earth from Nova Scotia to West Florida." The statesmen of the time,_wjth/ few exceptions, were planters). There were no manufacturers to appeal to Congress and exert a united influence on legislation. Those engaged in the fisheries and shipping formed a large and influential body of citizens whose interests were dependent upon international regulations of the ocean traffic, and all the States without a home supply must for a long time look to the people of the Old World for the artistic and more com- plicated manufactured articles, many raw materials, and for a market for the sale of tobacco,xice, naval stores, furs and the produce of their forests and fisheries. ^Foreign commerce at this time was not only essential to their prosperity, but^ Ys~we might say, almost to their existence. To sup- press piracy, to keep the thoroughfares of the ocean open to commerce, to stand guard over the nation in times of peace and defend it in time of war, the hardy seamen and navigators formed the strong arm of the nation. Hence to promote the shipping interests was universally rec- ognized as a purpose of the greatest importance and of the highest public concern. The rivalry among nations was such at this time that a country which could not defend its commerce on the sea was a prey for pirates and at the mercy of its rivals. The merchants of the seaboard cities, the great purchasers and distributers of foreign and domestic produce, thrived by foreign trade. ,They purchased for export those commodities of which the people had a surplus. They sent their own ships freighted with produce to foreign parts to return with cargoes of importations obtained in exchange, to be then sold and distributed throughout the interior of the country. Hence, at the very threshold of our government the shipping interests were so associated with, dependent upon and accustomed to in- ternational trade that it was with extreme difficulty and not until after much experience that they were brought to appreciate the necessity and wisdom of establishing in the United States a system of manufactures. That the nation should be able to provide itself with all articles of prime Digitized by Microsoft® INDUSTRIAL CONDITIOyS. 125 necessity and become independent and able to live within itself in time of war, appealed to the reason and understanding of the most ordinary- mind. The planting of the industrial arts and the establishment of a system of manufactures upon an extensive scale, however, rested upon those principles of public economy which are more difficult of comprehen- sion and were fully understood only by the most enlightened and patriotic statesmen and by able and public-spirited business men. The industrial and economic conditions existing at this time afforded a fruitful field for the application of statesmanship and sound principles of political economy. The ills which befall a people and bring hard times and poverty to their firesides, close the doors of opportunity and stifle development and growth, breed discontent and unrest in the minds of the unthinking. The wise statesman and economist discover the cause of their misfortunes, prescribe the remedy and lead and guide the people to that state of civiliza- tion which makes secure and lasting their well-being and happiness. The wisdom of those statesmen who piloted the colonists through the Revolu- tionary struggle, drafted the Federal Constitution and enacted those laws which laid the foundation of our Republic, has been vindicated by a form of government and national policy more conducive to the moral and intel- lectual development of mankind, and the material growth of nations, than any to be found -in the history of men. One-essential^part of .this policy haf For i ts purpos e the e stabl ishment of an extended system of manufac- tures.'^ Washington, Hamilton, Marshall, Jefferson, Madison and in fact nearly all of the statesmen of the time recognized the importance to a nation of diversified industries. They_knew that the^history of the world shows that the more defenceless and backward nations have been those whose people were engaged solely in tillage ; that the most enlightened, opulent, progressive and powerful nations, those attaining the highest state of civilization, those in which inventive genius has been stimulated to the greatest discoveries and inventions, were those who cultivated the industrial arts and divided their energies and talents between agriculture, trade, commerce and manufacturing. They were familiar with the methods and governmental regulations by which the industrial arts were transplanted from the Orient to Venice and the Italian cities, extended throughout Western Europe, and finally reached their highest state of development in Great Britain. They knew that these great industrial and commercial achievements were due to that protection to home industries which had been embraced by all progressive and enlightened nations. They well understood the situation of their own people and that, unless the United States adopted the same economic policy, they would remain poor, weak and dependent. They had before them the experience of the people during the Revolutionary struggle and under the Confederation and were familiar with the competitive power of their European rivals. Tlieir wisdom vindicated. Planting the industrial arts. Digitized by Microsoft® 126 ESTABLISHMENT OF TEE AMERICAN STSTEM. Guided by the lamp of experience, impelled by high and lofty motives, they paved the way for the planting of the industrial arts on American soil. They were friends of manufactories. They ^ were, however, com- pelled to deal with a situation. T*he-people were witllQlit capitaljo under- take large enterprises ; they were poor. The population embraced but few skilled artisans ; capital must-be-ereated ; factory hands trained ; business men and skilled mechanics must be induced to come from the Old World and aid in the great work of developing the industries of the new. Our own inhabitants must be encouraged to embark their capital in new enter- prises, trades and occupations. In the face of the destructive competition which was sure to be waged against them by British manufacturers, busi- ness men could not be induced to imperil their capital without security. That security could only be given by bounties or protective duties on im- ports. There were other difficulties to be overcome. The state of in- dustrial arts had reached a high degree of perfection in the Old World. Foreign-made goods were excellent in design and quality. The people were accustomed to their use and prejudiced in their favor. The im- portation, sale and distribution of foreign wares were in the hands of merchants residing in the coast cities who watched every encroachment on their business with great jealousy. Moreover, the shipping interests were led to believe that an increase in home manufactures would restrict importations and diminish the carrying trade. It was under these condi- tions that the first Congress, impelled wholly by a desire to promote the public welfare, enacted the first protective tariff law and inaugurated the policy of protection to native industries which has since been called the " American System." Congress convened in its first session at the old Federal Hall, at the corner of Wall and Nassau streets, opposite Broad street, in the City of New York, and on April 6, 1789, the Senate and House of Representatives The tariff in nS9. were organized for work under the Constitution. Washington had been elected President and John Adams, Vice-President. After prescribing the form of oath to be taken under the 6th article of the Constitution, and the adoption of rules to govern its proceedings, the House, on April 8, entered upon the consideration of mea sures fo r providingTeyemies-for the sup- port of the nation and for giving: protection to manufactures, agriculture and shipping. While the House was perfecting a Tariff bill, the Senate gave its attention to enacting laws for the creation of the three departments of the Treasury, Foreign Affairs and War, and to framing the Judiciary act for the establishment of courts of inferior jurisdiction. Alexander Hamilton was placed at the head of the Treasury, Jefferson the State, and Knox the War Department. At the opening of the session, on the morning of the 8th, Mr. Madi- Digitized by Microsoft® THE FIRST TARIFF LAW. 127 son presented a resolution which formed the basis of a bill for imposing duties on imports, leaving blanks to be filled in by the House for the amount of duty to be levied on the several articles. It was Mr. Madison's plan to at first take up the question of imposing duties for revenue pur- poses, leaving the " regulation of commerce," or the system of protection, to be adjusted after the House had better acquainted itself with the facts pertaining to industries. On'lhe morning of April 9 the debate, or, more properly, the sugges- tions of the members of the House on the subject, was begun, and con- tinued until the 29th, the day before the inauguration of the President. Mr. Madison stated that his object in confining the measures to revenue duties was " for the sake of that expedition which is necessary in order to embrace the spring importations." The speeches which were delivered on the subject, and the final action taken, show that notwithstanding the pressing necessity for revenue, the subject of protection was, after ail, paramount, or regarded as of equal importance by nearly every member of the body. Congress, refusing to concur with Mr. Madison, proposed and provided for protection as well as revenue. Credit for their immediate attention being given to protection is due to a member from the State of Pennsylvania, that great commonwealth whose people have ever been loyal to the cause. Mr. Fitzsimmons of Pennsylvania moved a resolution which added a large number of articles to the list for specific duties. He said : Protection teas para- mount. I observe, Mr. Chairman, by what the gentlemen have said, who have spoken on the subject before you, that the proposed plan of revenue is viewed by them as a temporary system, to be continued only until proper materials are brought forward and arranged in more perfect form. I confess, sir, that I carry my views on this subject much further; that I earnestly wish such a one which, in its opera- ' tion, will be some way adequate to our present situation, as it respects our agricul- ture, our manufactures and our commerce.^ It being my opinion that an enumeration of articles will tend to clear away difficulties, I wish as many to be selected as possible; for this reason I have pre- pared myself with an additional number, which I wish subjoined to those already mentioned in the motion on your table ; among these are some calculated to encour- age the productions of our country, and protect our infant manufactures; besides others tending to operate as sumptuary restriction upon articles which are often termed those of luxury. The articles mentioned by Mr. Fitzsimmons were Ale and porter, beef, pork, butter, candles, cheese, soap, cider, boots, steel, cables, cordage, twine or pack thread, malt, nails, spikes, tacks or brads, salt, tobacco, snuff, blank books, writing, printing and wrapping paper, pasteboard, cabinet ware, buttons, saddles, gloves, hats, millinery, castings of iron, slit or rolled 1 Annals of Congress, p. 106. To protect our infant manufac- tures. Digitized by Microsoft® 128 E8TABLISEMENT OF TEE AMERICAN SYSTEM. iron, leather, shoes, slippers and golf shoes, coach, chariot and other four wheel carriages, chaise, two-wheel carriages, nutmegs, cinnamon, cloves, raisins, figs, cur- rants, almonds. Mr. Hartley said : If we consult the history of the ancient world we shall see that they have thought proper, for a long time past, to give great encouragement to the establish- ment of manufactures, by laying such partial duties on the importation of foreign goods as to give the home manufactures a considerable advantage in the price when brought to market. It is also well known to this committee that there are many articles that will bear a higher duty than others, which are to remain in the common mass, and be taxed with a certain impost ad valorem. From this view of the sub- ject, I think it both politic and just that the fostering hand of the general govern- ment should extend to all of those manufactures which will tend to national utility. I take it to be the policy of every enlightened nation to give their manufactures that degree of encouragement necessary to perfect them, without oppressing the other parts of the community; and under this encouragement the industry of the manufacturer will be employed to add to the wealth of the nation. Madison favored protection. At this point Mr. Madison delivered an elaborate statement of his views, adhering somewhat to his former expressed opinion that it would be better if commerce could be left free to take its own course. He, however, conceded the wisdom and necessity of according protection to the shipping and manufacturing interests. He said : There is another consideration : The States that are most advanced in popula- tion, and ripe for manufactures, ought to have their particular interests attended to in some degree. While these States retained the power of making regulation of trade, they had the power to protect and cherish such institutions; by adopting the present Constitution they have thrown this power into other hands; they must have done this with an expectation that those interests would not be neglected here. Mr. Boudinot of New Jersey moved that the committee rise for the purpose of framing a temporary law. The sense of the House was taken on Mr. Boudinot's resolution, to make the bill a temporary (simply for revenue) one. It was decided in the negative. This action of the House should be sufficient answer to those free trade writers who have per- sistently contended that the legislation of this session was not intended to be protective. On the same day (April 11) when this vote was taken, Mr. Smith of Maryland presented a petition from the tradesmen, manufacturers and others of the town of Baltimore. Other memorials were presented from tradesmen and shipowners of the cities of Charleston, New York, Phila- delphia and Boston, urging the necessity for protective legislation. The bill passed the House on June 1, 1789. It was finally passed by the Senate on the 29th, and was signed by the President on July 4. The preamble read as follows : Digitized by Microsoft® THE FIRST TARIFF LAW. 129 Whereas, it is necessary for the support of the government, for the discharge of the debts of the United States, and the encouragement and protection of manu- factures, that duties be laid, &c. Both in its revenue as well as in its protective features the bill was regarded as simply a beginning of the system of protection as favored by Washington and Hamilton. The proceedings of Congress show that the plan of the bill, as first proposed, was changed from one solely for taxation to one coupling with'lt protective features. While some con- tende^ that a more thorough investigation should be made before taking up the subject of protection, others thought the delay occasioned by a more full understanding would result, in the meantime, in a great loss of revenue; but from no source did Mr. Fitzsimmons' proposal en- counter serious opposition. While we had been liberated from the tyranny of that nation which had made it a crime to erect a system of manufactures in America, we were still a subject of its watchfulness and concern. This legislation attracted the immediate attention of the British parliament. The committee to which the Tariff act of 1789 was referred by the British government recommended that negotiations be opened with the United States with a view of making a treaty limiting the import duties on manufactures, and for the purpose of preventing the imposition of such duties on imports as would restrict the sale of British goods in American markets. Two proposals were made : First, " That the duties on the British manufactures imported into the United States shall not be raised above what they are at present." " It may be of use," they said, "to bind the United States not to raise those duties above what they are at present, by obtaining an express stipulation for this purpose ; but, if this concession cannot be obtained, it may be sufficient to stip- ulate that the duties on British manufactures shall not at any time be raised above the duties now payable on the like manufactures imported into Great Britain, France and Holland, according to the commercial treaties with those powers." Second, "That the duties on all mer- chandise, whether British or foreign, imported from Great Britain into the United States, shall not be raised higher at any time than is the like merchandise imported from European nations." The British manufac- turers of that time knew more of the effect which this legislation would have in promoting American industries than free trade writers living seventy-five years later. Mr. Bishop says:^ "The publication of the report in England, early in the following year, also created much alarm in the manufacturing districts. Meetings were called in many of the towns, and £50,000 is said to have been subscribed at a single meeting in I American Manufactures, Vol. 11, p. 43. Passage of the first tariff UU. BriUsh tariff proposals. Digitized by Microsoft® 130 ESTABLISHMENT OF THE AMERICAN SYSTEM. Manchester, to be invested in English goods, for the purpose of over- stocking the American market, and thereby discouraging the newly ex- cited hopes of our manufacturers." Finances. Hamil- lon's financial system. The national debt, as it was assumed and stood in 1791, amounted to $75,463,475.33. To provide for the finances of the government, the following sources of revenue were devised: Customs, internal revenue, direct taxes (on dwelling houses, lands and slaves. This tax was levied in 1798 and greatly modified in 1802) ; postage, public lands, loans and treasury notes.; dividends, sale of national bank stock, bonds and mis- cellaneous. The expenditures were for the civil list, public debt, naval establishments, military services, including fortifications, arsenals, ordi- nances, provisions, etc. ; Indian department, foreign intercourse and mis- cellaneous. Connected with the financial plan, a National Bank was chartered in 1791 to continue until 1811. The charter was renewed again in 1816 for twenty years. In 1835 President Jackson withdrew the public deposits, and the charter expired. Among the first work of Congress was the enactment of the coinage laws and a law for the establishment of the United States mint. The whole financial policy of the government, including the system of pro- tection, was the creation of Alexander Hamilton, whose plans and views were approved by Congress. Of the financial policy of Hamilton, Mr. Lodge said : ^ But after all the best evidence is in results. There was no public credit. Hamilton created it. There was no circulating medium, no financial machinery; he supplied them. Business was languishing, and business revived under the treasury measures. There was no government, no system of life in it, only a paper constitution. Hamilton exercised the powers granted by the Constitution, pointed out those which lay hidden in its dry clauses, and gave vitality to the lifeless instru- ment. He drew out the resources of the country, he exercised the powers of the Constitution, he gave courage to the people, he laid the foundations of national gov- ernment, — and this was the meaning and result of the financial policy. Hamii,ton's Report on Manufactures. The next session of Congress convened January 6, 1790. Wash- ington, in his address, delivered on the 8th, said : The advance of agriculture, commerce and manufactures, by all proper means, will not, I trust, need recommendation, etc. 1 Alexander Hamilton, by Henry Cabot Lodge, pp. 132, 133. Digitized by Microsoft® HAMILTON'S REPORT. 131 Seven days after this address was delivered Congress by resolu- tion ordered That it be referred to the Secretary of the Treasury to prepare and report to this House, a proper plan or plans conformably to the recommendations of the President of the United States, in his speech to both Houses of Congress, for the encouragement and promotion of such manufactures as will tend to render the United States independent of other nations, etc. This resolution, coming so soon after and in response to the recom- mendations of the President, shows clearly that the subject of protection had only been introduced and partly undertaken at the last session. Hamilton complied with this resolution by presenting to Congress at its next session on December 5, 1791, his famous " Report on Manufac- tures." The Report entire occupies 132 pages of " The Works of Alex- ander Hamilton" (Vol. 4, pgs. 70 to 202, Edition by Lodge), and con- tains the ablest and most adequate presentation of the protective system which the world had received up to that time. Principles of Protection. While there had been much discussion of the tariff question during the period of the Confederation, the definite features of the subject, as applied to the conditions existing in the United States in 1789, had not been embodied in any single treatise until Hamilton's Report on Manu- factures appeared. This Report presented all of the essential principles, and formed the basis for the protective tariff arguments which were urged in support of the policy for more than half a century, and which, in all of their essential features, are as sound to-day as when uttered. It should be noted that the Report does not deal with the question oi wages, which, since 1860, has entered so largely into the discussion. The possibility, under protection, of bringing about a condition in which wages might be more than doubled and American labor be paid two and, in some instances, three times the wages paid in the Old World, and that, as protection was continued and made more effectual, a constantly increasing wage scale might be secured, was not fully appreciated until the Republican party made protection the corner-stone of its political creed, and supported it by higher duties and more adequate protection than had ever been applied. The well-defined principles of protectionism, as embodied in Hamil- ton's Report, and as urged by protectionists in the earlier history of our country, were as follows: First. That protection was necessary in order to establish a system of manufacturing. Second. That by establishing a system of manufacturing, these re- sults would follow : To en- courage Manu- facture. As sound To-day as They Then Were. Digitized by Microsoft® 132 ESTABLISHMENT OF TEE AMERICAN SYSTEM. Fesults Sure to Floic from Protection. Means of Securing Protection, I. Diversification of industries. II. Division of labor. III. The producer and consumer would be brought together, saving to the consumer expense of transportation. IV. It would encourage home trade. V. It would build up a home market. VI. Encourage the immigration of skilled artisans, manufacturers and agriculturists. VII. Invite the investment of foreign and domestic capital. VIII. Give employment to labor. IX. Stimulate the inventive genius of the people. X. Stimulate the industry of the people. XL Insure to industry the rewards of its labor. XII. It would develop the resources of the country. XIII. It would secure to the agriculturist the most reliable and largest possible market for the greatest variety of the produce of the farm and garden. Third. That it shields the consumers of the country from foreign monopoly, and the competition between native and foreign manufac- turers tends to reduce the price of commodities to the level of fair profits based on the cost of production, under conditions existing at home. Fourth. That it increases foreign trade. Fifth. That it tends to secure a favorable balance of trade and pre- vents a drain of the precious metals. Sixth. That it makes the nation independent of other nations in time of war. Seventh. That it makes possible the accumulation of capital which is necessary to the establishment of sound banks, and the growth of agri- culture, manufacturing, mining, shipping, means of transportation, and everything upon which the material well-being of the people depends. The Secretary mentions the following means of securing protection to the industries to be promoted : I. Protecting duties, or duties on those foreign articles which are the rivals of the domestic ones intended to be encouraged. II. Prohibitions of rival articles, or duties equivalent to prohibitions. III. Prohibitions of the exportation of die material of manufactures. IV. Pecuniary bounties. V. Premiums. These differ from bounties. Bounties are appli- cable to the whole quantity of an article produced, or manufactured, or exported, and involve a correspondent expense. Premiums serve to re- ward some particular excellence or superiority, some extraordinary exer- tion or skill, and are dispensed only in a small number of cases. VI. The exemption of the materials of manufactures from duty; Digitized by Microsoft® ■ NOT ONLY THE WEALTH BUT THE INDEPENDENCE AND SECURITY OF A COUNTRY APPEAR TO BE MATERIALLY CONNECTED WITH THE PROSPERITY OF MANUFACTURES." ALEXANDER HAMILTON. Digitized by Microsoft® Digitized by Microsoft® TARIFF ACTS 1789 TO 1810. 133 the policy of which, as a general rule, particularly in reference to new establishments, is obvious. IvSGISI,ATlON PROM 1789 TO 1816. From the enactment of the first law, July 4, 1789, to the year 1816, seventeen bills were passed imposing import duties for revenue and pro- tective purposes. Their several dates are as follows : July 4, 1789 August 10, 1790 September 30, 1790 March 3, 1791 May 2, 1792 June 5. 1794 January 29, 1795 March 3, 1797 July 8, 1797 May 13, 1800 March 26, 1804 March 3, 1807 March 4, 1808 July I, 1812 July 29, 1813 March 3, 1815 February S, 1816 For the rate of duty imposed on the principal articles by the several acts mentioned, reference is had to table No. 1, showing these articles upon which ad valorem duties were levied; table No. 2, showing articles subject to specific duties. (See tables Nos. 1 and 2.) Tabu No. 1. Showing the Principal Artici,i;s Upon Which Ad Valorem Duties WERE Imposed from 1789 to 1812 Inclusive. Articles 3 l^ Per cent Arms, fire and side n. o. p.*. . . . Bonnets Books, blanks 7/^ Brushes 7J^ Buckles, shoe and knee 10 • Not otherwise provided for. ■a C4 xi a S >. t. u t- cq SoO .a a tH ■ -co a dirt 00 • ^§ 3'-i .J3 .-C-. c-S; t-5 t— Oi-t 1-ft- 03 N ^-a i:do QO T-l ■M m eJ U3 ^ J3 . TH 3 oco P a 3 1-^ 0) 3 1-3 Per Per Per Per Per Per cent cent cent cent cent cent IS IS IS I-^ 3S ID IS IS v'A 35 10 10 15 IS 17/2 35 7/2 10 IS 15 17^ 35 10 10 IS IS 17/2 35 / Dates Early Tariff Bills. 0] Digitized by Microsoft® 134 ESTABLISHMENT OF TEE AMERICAN SYSTEM. Tabi-> Per cent Buttons 7^ Cabinetware 7V2 Calicoes Canes, walking sticks, whips... 7^ Caps Carpets and carpeting Chinaware 10 Clocks and parts of Clothing, ready made 7J4 Colors, painters, dry or in oil. Copper, in bars or pigs Copper, manufactures of n. o. p. Cotton goods, not printed, stained or colored (muslins)' manufactures, n. o. p Dolls Drugs, medicinal Earthenware 10 Feathers and flowers, orna-' mental and artificial Floor cloth Gauzes Glass, all manufactures n. o. p. except black qt. bottles 10 Gloves, leather, men's, &c 754 Hats jYz Iron, rolled or hammered yYz Iron castings, n. o. p yYi Iron, manufactures, n. o. p. . . Jewelry and paste work y/z Laces Lampblack Lawns (cotton) Leather, tanned and tawed, sole and bend jYi Leather, manufactures of, w S >i ^M u t- Kj (M a j3 Ti %^ A s iH •■00 U ri •^7-i u i-j °°d Oi .-C- c-o> 1-5 . t^ CJ Or-I ^ t- C4 u eq IS M 05 t3 rH rd d ■- T-l C tii „-l coo MOO 00 03 N ira a .a . .4 13 aeo ho a 1-! d % Per Per Per Per Per Per cent cent cent cent cent cent 7/. 10 IS IS 17;^ 3S yVz 10 10 I2>4 IS 30 7/2 10 IS IS 17Y2 3S 7/a 10 IS IS l7/a 3S 10 IS IS 17/2 3S 7^ 10 15 13 17/2 3S 12Y2 IS IS IS 17/2 35 10 10 IS IS 17^^ 3S 7V2 7^ 10 12^ IS 30 10 IS IS IS 17^ 35 free free free free free 7^ 10 IS 15 17/2 35 IS 17;^ 35 7Y2 7/. 12Y2 IS 17^ 35 10 15 IS 17/2 35 7^ 10 IS IS 17^ 35 10 10 IS IS 17V2 35 ID IS IS i7'/4 35 10 IS IS 17;^ 35 7V2 10 10 I2J4 15 30 12Y2 IS 20 20 22Y2 45 7Y2 10 IS IS ly'A 35 7Y2 10 IS IS lyyi 35 7^ 10 IS IS 17/2 35 754 10 IS IS 17^ 35 7/2 10 IS IS 17V2 35 10 10 15 IS ly'A 35 7^ 15 IS IS 17K2 35 10 ID 10 \2Y2 IS 30 7H 10 ID 12Y2 IS 30 7/2 ID IS IS 17^ 35 Digitized by Microsoft® TARIFF ACTS 1189 TO 1816. 135 Table No. 1 — Concluded. Articles 3 1-3 Per cent n. o. p 7V2 Linens Mats and mattings ' Millinery, ready-raade 7}^ Mits and mittens, wool 7^2 Mortars, marble or slate Muskets Mustard, flour Nankeens Paints, all in oil, excluding for dyeing 10 Paper 7>2 Paper, hangings 7'A Paper, for sheathing Pewter manufactures, n. o. p. . . 71/2 Pickles of every kind and sauces Pictures and prints Saddles 7^ Sail-cloth Satins Silk manufactures, n. o. p Slates Socks and stockings, wool .... Steel, manufactures, n. o. p. . . . Stone-ware 10 Tiles, for building Tin, manufactures, n. o. p.... 7^ Toys Types for printing Velvets and velverets Watches and parts of Wood, manufactures, n. o. p . . Unenuraerated articles 5 Discriminating duties, foreign vessels.' • After 1789 10 per cent additional. ■0 w a 13 u l- °°o 3'-l t-S 1-3 1-1 cc 05 •a 5>' M «S too (MOO 00 +J m C^f 10 JS fi . ,h" OCO < C 3 3 1-3 Per Per Per Per Per Per cent cent cent cent cent cent 7/. 10 IS IS I7J^ 3S 12^ 121/2 IS 30 10 15 15 17^ 3S 7/2 10 IS IS 17^ 3S 7/2 10 IS IS 17^ 35 10 10 10 I2j^ IS 30 15 IS IS 17;^ 3S 10 10 IS IS 17K2 35 7Ka 10 IS IS I7J^ 35 10 10 10 12^ IS 30 10 10 10 1214 IS 30 10 IS IS 15 17^ 35 10 IS IS 17/2 35 7V2 10 IS IS i7y2 35 10 10 IS 15 17^ 35 10 10 10 121/2 IS 30 7/2 10 10 12^ IS 30 10 10 I2j^ IS 30 7/2 10 10 12^ IS 30 7V2 10 10 i2y2 15 30 10 10 15 15 17^ 35 10 IS IS 17/2 35 10 IS IS 17^ 35 10 10 IS 15 17^ 3S 10 10 IS IS 17^ 35 7^ 10 IS IS 17/2 35 10 10 12^ IS 30 10 1214 IS 30 7/2 10 IS 17^ 20 40 10 10 IS IS 17^ 35 I2I4 1214 IS 30 5 7^ 10 \2V2 IS 30 Digitized by Microsoft® 136 ESTABLISBMENT OF THE AMERICAN STSTEM. Tabi,e No. 2. Showing the Principai, Artici,es upon Which Specific Duties WERE Imposed from 1789 to 1812 Inclusive. Articles 3 centa Ale, porter, beer in bottles, doz 20 Boots, pair SO Candles, tallow, lb 2 Candles, wax and spermaceti, lb 6 Candy, lb Cards, playing, pack lo Cards, wool and cotton, doz. . . 50 Cheese, lb 4 Cordage, tarred, cwt 75 Cordage, untarred and yarn, cwt 90 Cotton, raw, lb Free Fish, dried or smoked, quint... 50 Fish, mackerel, herrings, pickled or salted, bbl Fish, salmon, pickled, bbl Fish, all other pickled, bbl Glass, bottles, black, gross Glass, window not above 8x10, 100 sq. ft Glass, window, above 8x10, not 10x12, 100 sq. ft Glass, window, 10x12, 100 sq. ft. Glauber salts, cwt Glue, lb Gunpowder, lb *io Hairpowder, lb Hemp, unmanufactured, cwt. . . 60 Iron, sheets, cut, slit, hoop, rolled, lb *;i/^ Iron cables or chains, cwt 75 * Per cent, ad valorem. •0 s J3 a a 3 t- et rqod S3 iH >-> Hj 0) rn" .-«^ t- . t- ■oa rH 03 ■0 a too woo 00 09 M la ja 1-* si . T^ u UM bo H ^ h >, a < a S 3 ►l cents cents cents centa cents cents 20 20 20 20 20 40 SO SO 75 75 75 ISO 2 2 2 2 2 4 6 6 6 6 6 12 *I0 *I0 *i5 9-iiJ^ iiVn 23 10 25 25 25 25 50 SO 50 50 50 50 100 4 4 7 7 7 14 100 180 180 200 200 400 ISO 225 225 250 250 500 3 3 3 3 3 50 60 100 40 6 100 120 200 80 60 60 120 160 160 320 175 175 350 225 225 450 200 200 200 200 400 *iS *IS 4 4 8 *I0 *I0 *I0 4 4 8 *i5 *IS 4 4 8 S4 100 100 100 100 200 154 i^ 3 *7y2 *I0 *I5 I I a 100 180 180 2 2 4 Digitized by Microsoft® TARIFF ACTS 1789 TO 1816. 137 Tabi^e No. 2 — Concluded. "d M J3 CI .. o cd >. .. tj •s s '^ "S P .5? «? "*^ CIS ^_ g 00^ OS CTSlrt S*"* "-^^ • -t- [-5; 1-5 J- p Articles , S„- . t-" S:^ f^ S =■ t- a iS „£ 00 >? tio ^ d h b ^ 5 I s >? s a 5 cents cents cents cents cents cents cents Lead free Lead, bars, pigs, manufactures of, lb I I I I I 2 Lead, white and red, lb 224 Malt, bu 10 10 10 10 10 10 20 Molasses, gal 2^ 3 3 3 4 S 10 Nails, iron, lb i i 2 2 2 2 4 Pepper, black, lb 6 6 6 6 6 12 Pewter, plates and dishes, lb. . . 10 448 Pimento (allspice), lb 444448 Quicksilver, lb 6 12 Salt, bu 10 12 12 12 20 free [free 1 20 Seines, lb 4 8 Shoes or slippers, silk, pair.. 10 10 20 25 25 25 50 Galoshes, leather, pair 7 7 10 15 IS i5 30 Soap, lb 2222224 Spikes, cut iron, lb I I 2 2 2 2 4 Steel, unwrought, cwt s6 75 100 'oo 1°° 100 200 Sugar, brown, raw or clayed, lb I VA VA 2^&i^ 2 2^ 5 Sugar, loaf, or candy, refined, lb 3 5 5 9 9 9 18 Sugar, white, clayed or pow- dered, lb 3336 Sugar, other, lb i^ 2^ 2^ 2'/^ 2^ 2^ S Tobacco, manufactured, n. o. p. lb. 6 6 6 10 10 10 20 Tobacco, cigars (1000) 200 400 Snuff, lb 10 10 10 22 22 22 44 Twine and pack thread, cwt... 200 300 400 400 400 400 800 The years covered by this chapter should be considered in two parts, first, covering the period from 1789 to 1806, during which time our for- eign trade was not interrupted by foreign complications ; second, from 1806 to the close of the War of 1812, or the enactment of the tariff law of March 27, 1816. Digitized by Microsoft® 138 E8TABL1SBMENT OF TEE AMERIOAN S78TEM. Protection and iia critics. A Dis- couraging Situation, Period i^rom 1789 to 1807. The duties imposed by the several acts of Congress during the years preceding 1807 had two distinct objects in viejJU-the-dfiYelopmegt _oiiadustdfisjxid_the raising^ofrevenues. Critics of the free trade school point to the moderate ad valorem rates on certain articles and assert that the fact that they were low proves that, it was not then intended by Con- gress to extend protection to our industries. From this it is argued that the public expressions of the statesmen of that time should not be cited by protectionists in support of their arguments. An examination of the schedule of ad valorem duties, No. 1. page 133, shows that in 1791 2^ per cent was added, increasing the rates to 10 per cent and fifteen per cent. In 1800 another Zyi per cent was added and by 1804 the rates had reached 15 and 17J4 per cent. The free trade critics leave out of their calculations the fact that at this time the cost of carriage was high and the hazards of ocean traffic were great. Secretary Hamilton stated in his report that the cost to foreigners of marketing their goods was from IS to 30 per cent. There must also be taken into consideration the heavy charge for carriage upon all goods sent into the interior from the points of landing on the coast. We should also take into consideration the fact that nearly all of the articles enumerated were being produced- abroad by hand workmanship, and that it had not then been demonstrated what particular rate of duty would be necessary to secure adequate protection to Americans. No protection was given to the manufacture of pig or bar iron, because it was then believed that with our natural facilities for production in our charcoal furnaces we would be exporters of iron without protection. The use of mineral coal for fuel, of the steam engine for moving large machinery, the introduction of those dis- coveries and inventions which revolutionized the iron industry and gave to Great Britain a supremacy in its production, came in later years. The textile industry in England had been revolutionized by the applica- tion of machinery. All efforts on the part of the Americans to obtain it had failed. It was a criminal offence to export any of the machines, patterns or designs, or for a person to leave the kingdom who had knowledge of their construction or use. This presented a most discour- aging situation to those who might desire to set up cotton and woolen manufactories in America. Moreover, it was not known until about 1795 that the cotton industry had a great future. By the acts of July 4, 1789, and of May 2, 1792, a duty of three cents a pound was imposed on cotton, to stimulate its cultivation. Cot- ton at this time only to a limited extent, and simply in garden patches, was raised in the Southern States. The production of cotton cloth in Digitized by Microsoft® INFLUENCE OF PROTECTION. 139 America was confined exclusively to households, from cotton imported principally from the West Indies. McCulloch (Commercial Dictionary) says that "had any one then [previous to 1793] ventured to predict that 10,000 pounds of upland cotton would ever be exported from America, he would have been looked upon as a visionary dreamer." A member from North Carolina said: " If good seed could be obtained he hoped it [the cultivation] might succeed." Previous to 1790 not a pound of American cotton had been exported. The trifling quantity of 189,316 pounds was sent to England in 1791. Whitney's cotton gin was invented in 1792, came into use the next year, and in 1794 1,601,760 pounds were exported. Previous to this England had obtained her supply from the West India Islands, East India and Brazil. Her imports in 1801 were; from the United States, 8400 bales; Brazil, 70,000 bales; West Indies, 92,000 bales, and from East India, 14,000 bales. It was the invention of the gin for separating the seeds from the wool which made the short staple, or upland cotton, which was scarcely worth raising it cleaned by hand labor, the great staple of the south. When it was demonstrated that we could obtain the raw material and machinery was introduced, attention was given to the prose- cution of this industry. It was not until about 1810 that machinery was applied to the manu- facture of flax. Previous to this all of the processes of preparing, spin- ning and weaving were done by hand in all countries. Protection by Specific Duties. Table No. 2, pages 136-137 shows that specific duties were im- posed on the importation of between forty and fifty manufactured articles and various crude materials. It was the avowed purpose of Congress that the articles named in these schedules should be manufactured in America, by American labor, and that their importation should be diminished by protective duties. It may be that in view of the lack of capital and the scarcity of skilled ar- tificers that Congress intended to at first confine protection to the in- dustries last named. The fact that specific instead of ad valorem duties were applied, which make more difficult undervaluation and fraud, and which increase the degree of protection as prices fall, is significant. Speaking of the sentiment of the people during the first session of Congress, Mr. Bolles says : ^ But the protection of American industries was not ignored, as the history of 1 Financial History of the United States, p. 78. Cultivation oS Cotton. To Diminish Imports. Digitized by Microsoft® 140 ESTABLISHMENT OF TBE AMERICAN SYSTEM. Beginning of Factory Bystem. the proceedings in Congress clearly shows. The subject, however, did not assume such importance in the debates of that body as it has subsequently acquired. One reason was, because public sentiment was so strongly united. The report of the committee of Congress and the subsequent debates thereon show very clearly that the protection of American industries from foreign competition was a principle very widely accepted . . . The atmosphere was very heavily charged at that time with the idea of improving home industries. Mr. Bishop, in his exhaustive history of American manufactures, shows a substantial grovk^th of industries under the protective duties im- posed by Congress from 1789 to 1807. It was during this time that our factory system had its beginning. Incorporated companies were char- tered, capital was subscribed, and manufacturing was at once under- taken as a business on a scale which at that time was large, in all of the New England and Middle States. The memorials presented to Congress at nearly every session from people of the various cities asking for pro- tection, and giving to Congress information on the state of the industries, show that interest in the development of the country increased from year to year. Every branch of business and industry grew more pros- perous and inviting, considering the lack of capital, the depressed condi- tion of the country, and the low state of credit in 1789. The results were exceedingly satisfactory. That the inventive genius of the people was quickened is shown by the number and nature of the patents applied for each year. Mr. Bishop says: The increased demand and high prices during the next twenty years of agri- cultural productions and shipping attracted an unusual amount of capital into these branches, and in the same proportion withdrew it from manufacturing enterprises. With the exception of ship-building, which was increased to a degree unparalleled in any age or country. In 1805, according to the estimates made by Secretary Gallatin, the entire number classed as mechanical citizens of our 6,000,000 popula- tion was 500,000. The produce of the sea and rivers consumed was valued at $5,000,000 annually; agricultural food, $85,000,000, and the produce of domestic manufactures was $30,000,000, and of forests $12,000,000 The following estimate, prepared by Mr. Coxe on the returns of the census, taken in 1810, shows the state of manufactures as follows: 1. Goods manufactured by the loom, from cotton wool, hemp, flax and silk, including stockings $ 39,497,057 2. Other goods spun from the fine materials above enumerated 2,052,120 3. Instruments and machinery manufactured, estimated at $186,630, carding, fulling, and floor-cloth staining by machinery, estimated at $5,9S7,8i6 6,144,446 4. Hats of wool, fur, etc., and from mixtures thereof 4,328,744 5. Manufactures of iron 14,364,526 Digitized by Microsoft® Btaie of Manufac- torlea in 1810. INFLUENCE OF PROTECTION. 141 6. Manufactures of gold, silver, set-work, mixed metals, etc 2,483,912 7. Manufactures of lead 325,560 8. Soap, tallow, candles and wax, spermaceti, and whale oil 1,766,292 9. Manufactures of hides and skins 17,935,477 10. Manuiactures from seeds 858,589 11. Manufactures from grain, fruit, and case liquors, distilled and fermented 16,528,206 IZ Dry manufactures from grain, exclusive of flour, meal, etc 75,7^7 13. Manufactures of wood S,S54,7o8 14. Manufactures of essences of oils 179,150 15. Refined sugar 1,4x5,724 16. Manufactures of paper, paste boards, cards, etc 1,939,285 17. Manufactures of glass 1,047,004 18. Manufactures of marble, stone and slate 462,115 ig. Earthen manufactures 259,720 20. Tobacco manufactures 1,260,378 21. Drugs, dye-stuffs and dyeing 500,382 22. Cables and cordage 4,243,168 23. Manufactures of hair 129,731 24. Various and miscellaneous manufactures 4,347,611 Total $127,694,602 This would be a remarkable showing under any circumstances, but considering the condition of the people when the tariff was first adopted, considering the constant hostility of England to our industrial progress, and considering the fact that we had only the crudest of machinery, the progress of our forefathers in manufacture was indeed marvelous. The protective legislation recommended by Washington and Hamil- ton, and affirmed by Adams, Jefferson and Madison, was accomplishing the laudable purpose intended. The transformation from household in- dustry to an organized system of factories was begun. The condition of labor in 1789 was deplorable. There was little employment for labor and no cash payments of wages. Money was scarce. A system of barter was universal; the farmer exchanged his produce with the mer- chant for groceries, etc. Employers of labor kept stocks of goods and paid their employees in provisions, clothing, gin and rum, or in orders which proved a substitute for currency. The employer made a profit on the commodities exchanged. Labor was kept poor and dependent. A writer said: The implements of husbandry were very poor and very crude. Plowing was done with a wooden plow; threshing with a flail. The winnowing was done by the wind. Slow and laborious hand labor for nearly all processes of the farm was the rule, and machine labor the exception. Indeed, it has been said that a strong man could have carried on his shoulders all the implements used on his farm, except, perhaps, the old wooden cart and the harrow, previous to the beginning of the present century.^ 1 Annals of North America, p. 471. Deplorable Oondition of Labor, Digitized by Microsoft® 142 ESTABLISHMENT OF THE AMERICAN SYSTEM. WasTiing- tov an(l Adams. The small factories located in the midst of the rural population gave the first impulse to the improvement of the condition of labor and the prosperity of the farmer. Shielded from destructive competition by pro- tective legislation, mills and factories followed the tide of immigration into new States, and the country was soon being supplied with a great variety of necessary articles from the industry of its own citizens. The population increased from 3,929,328 in 1790 to 7,239,903 in 1810. The Atlantic cities of Boston, New York, Philadelphia, Balti- more, New Orleans and Charleston grew in population from 130,051 in 1790 to 314,795 in 1810. In his last annual message to Congress, Washington said : Congress have repeatedly, and not without success, directed their attention to the encouragement of manufactures. The object is of too much consequence not to insure a continuation of their efiforts in every way which shall appear eligible, Adams, in his first message, said : I should hold myself guilty of neglect of duty if I forbore to recommend that we should make every exertion to protect our commerce. Jefferson gave his approval, as President, to the acts of March 25 and 27, 1804, March 3, 1807, and March 4, 1808, which materially in- creased the duties on those imports which came into competition with the manufactures then being encouraged. During the session of 1803 and 1804 many petitions were presented to Congress, urging an increase of protective duties on certain articles, such as " gunpowder, hats, print- ing types, brushes, manufactures of starch, paper, and umbrellas; and for calico printers, cordwainers, shoemakers, printers, combmakers. gun- smiths and corkcutters." These petitions, with other memorials, had been referred to the Committee on Commerce and Manufactures. In 1804, this committee took up the question and made a report setting forth the means by which manufactures might be protected. As a result of this consideration, Congress passed the Act of March 27, 1804, which in- creased the specific duties on many articles. Our imports had increased from $29,200,000 in 1791 to $129,410,010 in 1806. The exports of domestic produce were $18,500,000 in 1791 and $41,253,727 in 1806. The re-exports of foreign merchandise were $512,041 in 1791 and $60,283,236 in 1806. By 1806, $23,000,000 of the national debt had been extinguished and the administration was con- fronted with a surplus in the treasury. President Jefferson in his mes- sage to Congress said : " Shall we suppress the impost and give that ad- vantage to foreign over domestic manufactures?" Instead, however, of advising a reduction of protective duties, he recommended the ap- Digitized by Microsoft® IMPORTS. 14a plication of the surplus revenues to " public education, roads, rivers, canals and si:ch other objects of public improvement as it may be thought proper." The folio wfing schedule shows the quantity and value of articles im- ported into the United States in 1806, paying specific and ad valorem duties : A Statement ot Goods, Wares and Merchandise Imported into the United States During the Fiscal Year Ended September 30, 1806.^ Merchandise paying ad valorem and 1806. specific duties. Paying ad valorem duty of 15 per cent $ 43,iiS,367 Paying ad valorem duty of 15^ per cent 112,179 Paying ad valorem duty of i6>^ per cent 1,434,856 Paying ad valorem duty of 17V2 per cent 8,913,970 Paying ad valorem duty of 19^ per cent 336,736 Paying ad valorem duty of 225^2 per cent 479,634 Paying ad valorem duty of 2454 per cent 69,215 Wines, Madeira gallons 365.033 Burgundy " 6,963 Sherry " 280,951 all others " 4,172,683 Spirits from grain " i>054,6i7 from other materials " 9,937,687 Ale, beer and porter " 274,779 Molasses • " 8,597,456 Teas, Bohea pounds 385,497 Souchong " 2,957,912 Hyson " 955,392 other green " 2,720,649 Coffee 55,993,788 Cocoa 8,543,111 Chocolate 3,630 Sugar, brown 162,102,040 white 37,026,090 candy, loaf, refined and lump 5,307 Almonds 345,122 Fruits : currants " 293,354 prunes and plums ' 222,686 figs " 312,622 raisins, in jars " 617,864 other " 1,036,751 Tallow " 1,727,271 Candles, tallow " 288,856 wax and spermaceti 5,449 Cheese " 612,803 Soap " 2,692,889 t Tarife Legislation, Toungs, pp. 82, 83. Digitized by Microsoft® Hi ESTABLISHMENT OP THE AMERICAN SYSTEM. Spices : n mace nutmeg cinnamon cloves pepper " pimento " Chinese cassia " Tobacco, manufactured n. o. s " Snuff " Indigo " Cotton " Hairpowder " Gunpowder " Starch " Glue " Pewter plates and dishes " Iron anchors and sheets " slits and hoops " nails and spikes " Quicksilver " Paints : yellow ocher in oil " dry yellow ocher " Spanish brown " white and red lead " Lead and manufactures of " Seines " Cordage, tarred " untarred " Cables hundred-weight Steel Hemp " Twine and packthread " Glauber salts " Salt pounds Salt bushels Coal Malt [[[ " Fish, foreign caught, dried quintals pickled salmon barrels mackerel " all other « Glass bottles, black quart gross windows, not above 8xio loo square feet not above 10x12 " above 10x12 " Cigars miHe Lime, foreign casks J^oo's pair. iS.113 23,175 19,286 38,22s 3,682,06s 301,111 282,960 9,840 19,263 488,055 2,293,064 9,739 354,993 7,364 67,634 71,341 820,674 231,215 4,640,776 105,298 26,853 159,637 650,203 2,741,253 4,941,083 9,180 372,572 58,279 88,493 12,447 101,540 3,336 290 93.473,152 2,272,452 373,744 153,501 8,484 12,789 13,616 23,454 24,462 4,892 S.850 28,417 387 3.515 Digitized by Microsoft® TO CULTIVATE peace; MAINTAIN COMMERCE AND NAVIGATION, TO FOSTER OUR FISHERIES, AND PROTECT M ANUE ACTURES ADAPTE.I) TO (JUR CIRCUMSTANCES, ETC., ARE THE LANU-.MARKS I! V WHICH TO GriDi: OURSKL\KS I ,N ALL OUR RELATIONS." JEEEERSON (Mcssagc 1802). Digitized by Microsoft® Digitized by Microsoft® THE PROTECTIVE SENTIMENT. 145 Shoes, silk " 18,506 kid, Morocco, etc., for women " 62,914 kid, etc, for children " 8,489 Cards, wool and cotton dozen playing packs 14,687 In the message sent to Congress by Jefferson on December 15, 1802, he gives approval to the protection of manufactures in the following language : Jefferson's Approval. To cultivate peace, maintain commerce and navigation, and protect manufac- tures adapted to our circumstances, etc., are the landmarks by which to guide our- selves in all our relations. Thomas Jefferson vi^as one of the great defenders of the Amer- ican System. In 1809 he wrote to Thomas Leiper of Philadelphia as follows: I have lately inculcated the encouragement of manufactures to the extent of our own consumption, at least in all articles of which we raise the raw material. On this, the Federal papers and meetings have sounded the alarm of the Chinese policy, destruction of commerce, etc. . . . This absurd hue and cry has con- tributed much to federalize New England; their doctrine goes to the sacrificing agriculture and manufactures to commerce; to the calling all our people from the interior country to a sea-shore to turn merchants; and to convert this great agricultural country into a City of Amsterdam. But I trust the good sense of our country will see that its greatest prosperity depends on a due balance between agriculture, manufactures and commerce. To Governor Jay, a Httle later, he wrote : An equilibrium of agriculture, manufactures and commerce is certainly be- coming essential to our independence. Three years before war was declared against Great Britain Con- gress took up the question of a further extension of protective duties. In response to memorials and petitions from those engaged in making hats, cotton goods, hemp and linen, shot and woolen clothing, the Com- mittee on Commerce and Manufactures of the House on June 7, 1809, adopted the following resolution : Extension of Protec- tive Duties. Resolved : That the Secretary of the Treasury be directed to prepare and re- port to this House at their next session, a plan for the application of such means as are within the power of Congress, for the purpose of protecting and fostering the manufactures of the United States, together with a statement of the several manufacturing establishments which have been commenced, the progress which Digitized by Microsoft® 146 ESTABLISHMENT OF THE AMERICAN SYSTEM. has been made in them, and the success with which they have been attended; and such other information as, in the opinion of the Secretary, may be material in exhibiting a general view of the manufactures of the United States. The House also ordered a reprinting of Secretary Hamilton's Re- port on Manufactures. In its report, made to the House on June 21, the Committee states that: A nation erects a solid basis for the support and maintenance of its independ- ence and prosperity whose policy is to draw from its native sources all articles of the first necessity. It recommended that Congress give " to our manufactures the sup- port necessary to withstand foreign competition, skill and capital," and the imposition of additional duties on ready-made clothing and mil- linery, on the cotton manufactures from beyond the Cape of Good Hope, on bed-ticking, corduroys, fustians, shot and other manufactures of lead, and on salt. Mr. Gallatin, the Secretary of the Treasury, in his report recommended that our manufactures be fostered by Congressional legislation, as follows: Manufae- iures to be Fostered. Madison as a Pro- tectionist. (i) By bounties. (2) By increased duties on imports. (3) By loans from the Government. He also recommended that the United States should create a cir- culating stock, bearing a low rate of interest, and lend it at par to manu- facturers, on the principle of the loan office, which had been estab- lished in some of the States. He believed that $5,000,000 a year, but not to exceed $20,000,000 in all, might be advantageously loaned for the purpose without any material risk of ultimate loss, and without taxing or injuring any other part of the community. Mr. Madison was so im- pressed with the importance of encouraging domestic manufactures that he referred to the matter more frequently in his messages than any of his predecessors. In his second message in 1810 he said: I feel particular satisfaction in remarking that an interior view of our country presents us with grateful proofs of its substantial and increasing prosperity. To a thriving agriculture, and the improvements relating to it, is added a highly interesting extension of useful manufactures, the combined product of professional occupations, and of household industry. Such, indeed, is the experience of economy, as well as of policy, in these substitutes for supplies heretofore obtained by foreign commerce, that in a national view the change is justly regarded as of itself more than a recompense for those privations and losses resulting from foreign injustice which furnished the general impulse required for its accomplishment. How far it may be expedient to guard the infancy of this improvement in the distribution of labor by regulations of the commercial tariff, is a subject which cannot fail to sug- gest itself to your patriotic reflections. Digitized by Microsoft® EXPANSION OF INDUSTRIES. 147 In his third message (1811) he again refers to the national advan- tages of manufactures, as follows : Although other subjects will press more immediately on your deliberations, a portion of them cannot but be well bestowed on the just and sound policy of secur- ing to our manufactures the success they have attained, and are still attaining, in some degree under the influence of causes not permanent; and to our navigation, the fair extent of which is at present abridged by the unequal regulations of foreign governments. Besides the reasonableness of saving our manufactures from sacrifices which a change of circumstances might bring on them, the national interest requires that, with respect to such articles at least as belong to our defence and our primary wants, we should not be left in unnecessary dependence on external supplies. Again, in his message of 1813, referring to the conditions then exist- ing when the war was in progress, he said : If the war has increased the interruptions of our commerce it has at the same time cherished and multiplied our manufactures so as to make us independent of all other countries for the more essential branches for which we ought to be de- pendent on none, and is even rapidly giving them an extent which will create additional staples in our future intercourse with foreign markets. War of 1812. War was declared against Great Britain on June 18, 1812, and hos- tilities continued until December 24, 1814, when the Treaty of Peace was signed, although news did not reach the United States of the sign- ing of the treaty until after the battle of New Orleans, January 8, 1815. A tarifif act was passed on July 1, 1812, which added 100 per cent to existing import duties, and 10 per cent additional upon such mer- chandise as was imported in foreign vessels. It also imposed an addi- tional tonnage duty of $1.50 per ton on foreign ships; the bill to continue in force until the close of the war and until one year after the conclusion of peace. Oompensa- Hon for Losses Through War. 1807 TO 1815. The great impulse to manufacturing came during the seven years of interrupted trade and open hostilities between 1807 and 1815. Had the United States by prohibitory duties protected her industries for a period of seven years, the effect would have been the same. Instead of calling this a period of war we might say it was one of the highest protection. Tlie British orders in council and the French decrees of 1806 and 1807 annihilated trade with Europe. Prohibitions were laid on all of our com- merce by the Embargo Act of December 22, 1807, and the non-inter- Impulse to Manufao- turing. Digitized by Microsoft® 148 ESTABLISHMENT OF THE AMERICAN SYSTEM. Importa- tions Pro- hibited. Cotton Spinning Machinery. course act of March 1, 1809. From 1807 to the close of 1815, a period of eight years, imports from England greatly declined. In 1806 the imports from that country were valued at upwards of $42,000,000; in 1807, over $40,000,000 ; in 1808, following the blockade of English and European ports, they dropped to $15,000,000; were as low as $7,000,000 in 1811, and in 1814 trade was wholly suspended. The security given to American manufacturers in the home market arising from the causes which preceded the war, together with the protective duties imposed by Congress, induced them to establish many new branches of industry and to greatly extend those previously undertaken. Our people were thrown on their own resources and compelled to manufacture for their own needs. The importation from England and France of the following articles was absolutely prohibited by the non- intercourse act: all leather, silks, hemp and flax, tin and glass, tin in sheets, woolen cloths, costing over a dollar and a quarter a square yard, woolen hosiery, window glass and all other glassware, silver and plated ware, paper of every description, nails and spikes, hats, clothing ready made, millinery of all kinds, playing cards, ale, beer and porter. The interruption of trade continued with little cessation until the declaration of war on June 18, 1812, when all trade was suspended until the con- clusion of peace on December 24, 1814. That this state of affairs caused the establishment of the cotton, woolen and many other industries is conceded by all writers on the subject. Professor Taussig, an eminent free trade authority, says : * This series of restrictive measures blocked the accustomed channels of ex- change and production and gave an enormous stimulus to those branches of indus- try whose products had before been imported. Establishments for the manufac- ture of cotton goods, woolen cloths, iron, glass, pottery and other articles sprang up with a mushroom growth. It is sufficient here to note that the restrictive legislation of 1808-181S was, for the time being, equivalent to extreme protection. It has been shown in Chapter V that the first attempt to intro- duce cotton spinning machinery in America was a failure. In 1790-91, however, Samuel Slater successfully applied Arkwright's water frame spinning at Providence, R. I. In 1803 there were only four cotton mills in the United States in which yarn was spun by machinery. The in- terruption of commerce by the blockade of European ports, the non-in- tercourse and embargo acts of 1806 and 1807, so restricted importations that capital was turned rapidly to the cotton, woolen and other industries. Cotton mills had increased to 226 in 1810, distributed as follows : ^ 1 Tariff History of the United States, pp. 16, 17. 2 See Wright, p. 173. Digitized by Microsoft® EXPANSION OF INDUSTRIES. 149 States. No. of mills. Massachusetts 54 Vermont i Rhode Island 28 Connecticut 14 New York 26 New Jersey 4 Pennsylvania 64 States. Delaware Maryland Ohio .... Kentucky Tennessee No. of mills. 3 II IS 14 226 It was simply machinery for spinning that was used in the mills, the weaving all being done on hand looms until about 1815, when a power loom invented by Francis C. Lowell was installed in his factory at Wal- tham, Massachusetts. The consumption of cotton was 500 bales in 1800, 1000 bales in 1805, 10,000 bales in 1810, and 90,000 bales in 1815. The number of spindles was approximately 4500 in 1805 and 130,000 in 1815. In Massachusetts alone fifty corporations were organized, says Carroll D. Wright, from 1806 to 1814, to manufacture cotton alone, and during the last named year thirty were formed for making not only cotton and wool- ens, but glass, files, wire, etc. " Labor was in demand, wages advanced and profits were large." ^ The great demand for the production of tex- tile fabrics created by interruption of foreign trade is shown by the former imports ranging from about $30,000,000 in 1804 to $47,000,000 in 1807, mostly cottons, woolens and linens, only about $600,000 of which were re-exported. The extent and value of the cotton manufactures of the United States in 1815, as set forth in the report of the Committee on Commerce and Manufactures, February 13, 1816, was as follows: The cotton manufacture of the United States employed this year (1815) a capital of $40,000,000; males employed from the age of seventeen and upwards, 10,000; women and female children, 66,000; boys under 17 years of age, 24,000; wages of 100,000 persons averaging $1.50 each, $150,000; cotton wool manufactured, 90,000 bales, or 27,000,000 pounds; yards of cotton of various kinds, 81,000; cost at an average of thirty cents per yard, $24,300,000.2 The above estimates seem almost incredible. They are very likely quite reliable as to the quantity of cotton spun into yarn by machinery. The weaving of the cloth, however, all having been done on hand looms, was in part performed by private families who purchased the yarn and wove the fabrics for sale at the country stores. Mr. Newton, from the Committee on Commerce and Manufactures, reported to the House on March 6, 1816,' that from the memorials and petitions presented from the woolen manufacturers it appeared the fol- lowing estimate was made of the state of the woolen industry : 1 Report on Statistics of Labor, 1885, p. 173. 2 Annals of Congress, VoL I, 1815, 1816, p. 962. ( Id., p. 702. Gotten Manufac- ture in 1815. Digitized by Microsoft® 150 ESTABLISHMENT OF THE AMERICAN STBTEU. Amount of capital supposed to be invested in buildings, machinery, etc. . .$12,000,000 Value of raw material consumed 7,000,000 Increase value by manufacturing 12,000,000 Value of vvfoolen goods manufactured annually 19,000,000 The TT , , , , f Constantly 50,000 Woolen Number of persons employed ■< .^ Industry. j^, Occasionally 50,000 100,000 Deflclency of Rate Material. That the above amounts are based on estimates and not on an of- ficial enumeration appears from the petitions. The weaving was all done on hand looms, much of it undoubtedly in households. In one of the petitions it is stated that " a great portion of the woolen manufacture is done by labor-saving machinery." In the petition signed by Arthur Magill and William Young, from the State of Connecticut, it is stated that There wers in the State of Connecticut alone twenty-five establishments for the manufacture of woolen cloths, employing 1200 persons and as many more indirectly; with capital already invested of $450,000, and probably manufacturing annually 375,000 yards of narrow, or 125,000 yards of broadcloths. The petitioners further state that Besides this quantity made at the establishments it is calculated there are 500,000 yards made annually in families and dressed in the country clothier shops, part of which are regularly sold to the country stores, doing away thus far with their former practice of supplying themselves with British goods of a similar description. The petition in mentioning the fact that employment is given to labor which otherwise might be idle, says: Among these descriptions are to be numbered many valuable foreigners who are daily arriving among us in needy and indigent circumstances and whose only employment has been in the manufacturing business at home. The petitioners further mention the deficiency in raw material which existed. The importation of merinos and the great increase in sheep husbandry; the im- provement in the quality of the wool, brought about by the introduction of woolen manufactures in establishments. A further account of the state of industries at the close of the war is found in the report of Secretary Dallas. Iron. In his Report on Manufactures Secretary Hamilton called to the at- tention of Congress the importance of fostering the iron industry by protective duties. He said: Digitized by Microsoft® EXPANSION OF INDD8TRIES. 151 The manufacture of this article is entitled to a pre-eminent rank, more essential and extensive in its use. None is He urged that duties be levied on the importation of foreign iron as well as upon firearms and military weapons. By the act of 1792 Con- gress imposed a duty of $20 per ton on steel and $36 a ton on iron cables and chains, $40 a ton on nails and spikes. The duties levied by Congress to take effect July 17, 1794, if imported in American vessels, were 15 per cent on steel and rolled iron ; 10 per cent on hardware and 15 per cent ad valorem on all other manufactures of iron, steel, or brass, and 10 per cent additional if imported in foreign vessels. Notwithstand ing the fact that the industry had suffered greatly under the Confedera tion, no duties were placed on pig or bar iron by the early legislation, as it was thought the Americans would be able with their natural facilities to supply the country without protective duties. Mr. French,'' writing of the state of the iron industry under the Confederation, says: Most of the iron works in New England and the Middle States were closed by the sheriff, and the exports of bar and pig iron were reduced more than one half. From 1789 to 1790 the United States exported but 200 tons of bar iron and 3500 tons of pig iron, so completely had Great Britain taken possession of the market. From this time also may be dated the commencement of her system of protection to her manufactures and prohibition to all others, by which the domestic competition of forty-one years enabled her to manufacture iron at prices defying all rivalry, and throw open her ports and proclaim free trade when she knew that no nation could compete with her. The prices of bar iron in this country, from 1793 to 1807 were as follows : From 1793 to 1797 $ 90 to $ 95 per ton " 1800 to 1801 100 to los " " 1803101807 no to IIS " The use of iron for the manufacture of machinery at this time (1796) created an abnormal demand which for a few years caused an advance in the price, both in the United Kingdom and America, of about thirty per cent. Note. This was the year before the bank restriction, and the rise occurred in consequence of the importation having fallen off, instead of keeping pace with the increasing demand for consumption in this country, and in the rest of Europe as well as in the United States. Between 1796 and the close of 1800 there was no further advance; but the embargo in Russia in the latter year had the effect of raising the price. The advance altogether, including the new duty of £1 per ton, 1 Iron Trade of the United States, p. 12. Tariff on Iron Im- portations. Oreat De- mand tor Iron. Digitized by Microsoft® 152 ESTABLISHMENT OF THE AMERICAN SYSTEM. Primitiva Furnaces. was nearly £io per ton, and this operated as a sufficient premium for applying in- creased capital to the production of iron, and bringing into operation all the powers of machinery. Thenceforward the production of iron proceeded so rapidly that with the aid of further duties, amounting almost to a prohibition of importation, it not only kept pace with the increasing demand, but nearly superseded the use of foreign iron in England, and furnished a surplus for exportation. — Tooke.^ This greatly stimulated the industry in both countries. The revival of the business in the United States v^^as, however, of short duration, for the industry had so expanded in Great Britain that within a few years our imports became very large. We received from Norway and Sweden from 1795 to 1801 an average of about $80,000 per annum of imported iron. In 1802, 1803 and 1804 our annual imports of manufac- tures of iron from Great Britain amounted to upwards of $1,500,000, and increased yearly until trade was interrupted by the embargo and non- intercourse acts. Mr. French in his description of the state of the in- dustries at this time, the cost of production, etc., says : The furnaces, up to this time, were blown by wooden and leather bellows, and the cold blast, and one tuyere, and their working profitably was greatly influenced by the skill and influence of the founder. With the greatest skill and every precaution, the yield still depended much upon the blast, and as this was invariably produced by water power, which was often very irregular and weak, and in dry seasons incapable of furnishing the necessary power, it will account for the small average annual product of the furnaces of that day. The ores used were mainly the hematites and magnetic ores, and the weekly average of the furnaces was from twenty to twenty-five tons per week. Materials. Quantities. Cost. Charcoal 240 lbs. at 3 cents $ 7.20 Ore 3 tons at $2.00 6.00 Limestone 30 Labor 4,00 Incidental — wear and tear, etc 2.50 Capital, estimated upon an investment of $50,000 for real estate business, etc., and on a production of 800 tons to the furnace, per annum 3.75 „ ^ ^ , . $23-75 Profit for deterioration of estate, etc 5.00 Total cost per ton of pig iron $28.75 The pig metal was sold to forges in the neighborhood, for but few were wealthy enough to carry it throughout the entire process. The cost of transportation varied from $3 to $5 per ton. It was then converted into bar iron, without refining. The pig metal, by the time it reached the forge, cost the ironmaster $33.75 per ton; and to convert it into bar iron, $83.25 per ton. 1 French, Iron Trade of the United States, p. 16. Digitized by Microsoft® EXPANSION OF INDUSTRIES. 153 Materials. Quantities. Cost. Pig metal 30 cwt. at $34.50 ?Si-7S Charcoal 375 lbs. at 3 cents n-^S Labor i3-2S Incidental expenses 2.50 Interest on capital — say $15,000, and producing 200 tons of bar 4-SO Total cost per ton of bar iron $83.25 The great expense of making iron at that time arose not only from the ex- pense of cutting, charring, hauling wood and transporting the same to the furnace, but afterwards the crude iron to the forge, and from the forge to the rolling-mill, for the purpose of manufacturing into merchant bar, and then again to the slitting and nailing factory, and all these establishments were sometimes many miles from each other; and after this hauling and transportion, carried at an enormous cost, in many cases, to the Atlantic market, where it would probably command from $110 to $120 per ton, and blooms from $75 to $80 per ton.^ By the report of Secretary Gallatin, compiled from the census returns of 1810, the iron manufactured in the United States was estimated at about $13,000,000, consisting of $3,616,457 of pig iron and castings and $10,998,086 of manufactures of wrought iron carried on in thirteen States, the greatest quantities being produced in the State of Pennsyl- vania. There were in the United States 153 furnaces which made 53,908 tons of pig iron and 330 forges which made 24,541 tons of bar iron and 410 concerns which manufactured 15,727,914 pounds of nails. It was impossible to determine at this time the quantity of pig iron produced because many of the furnaces were connected with foundries which made all sorts of casting from metal which was not reported as pig iron. From 1807 to the peace of 1814 the production of pig and bar iron was greatly increased in those districts which were developed before and during the Revolutionary war. The industry was now extended to New Hampshire, Vermont, Northern New York, Berkshire Hills in Western Massachusetts and to Central and Western Pennsylvania. The inter- ruption of foreign trade had so completely cut off importations that a great stimulus was given to the manufacture of articles made from iron, such as scythes, axes, mill irons, mill cranks for saw mills, grist mill ma- chinery, anchors, guns and gun locks, gun barrels, camp kettles, tea- kettles, etc., farming implements, stoves and household implements, mill spindles, iron axletrees, fuller's plates, forge plates, hearths for pearl and ash furnaces, forge hammers, potash kettles, plates for sugar and still house grates, sash weights, clock weights, wire, sheet iron, nails, etc. The manufacture of paper, pasteboard, fuller's board, sheathing, writing paper, card board, the manufacturing of window glass, glass bottles and other articles of glass were greatly extended at this time. 1 Iron Trade In United States, pp. 16, 17, 18. Pig Metal and Bar Iron. Iron Pro- duction in 18X0. Digitized by Microsoft® 154 ESTABLISHMENT OF THE AMERWAN SYSTEM. Henry C. Martindale in his great speech in 1824, in speaking of the stimulus given to the estabUshment of industries during the war said: American Skill and Enterprise. But suddenly, and as if by magic, manufacturing establishments arose all over the country, and the native skill, energy and enterprise of our citizens were never more conspicuously displayed than by the sudden and unexpected supply of various manufactured articles, to nearly the extent of our wants. Flocks of sheep were quickly multiplied and enlarged, and a tolerable supply of wool was furnished. The farmer found a new branch of industry pointed out to him, requiring less labor, and producing more profit. His accustomed productions for food found a new market, a ready sale, and a liberal price. The farmer's prosperity was really greater than it had been in the days of commercial prosperity. His expenses were retrenched and his profits increased, and he began to emerge from debt. Could the war have been continued, unattended by any consequence but that of shutting out foreign importations, it would have been a national blessing. Conditions at thi Close of the War oj XS12. Another feature of protection from 1789 to 1815 is its influence on the finances of the country. During the Confederation, when freedom of trade was the rule, the country was drained of the precious metals, and under protection they returned. Mr. Gallatin estimated the amount of specie in the banks of the United States at the close of each year as follows: 1810, $15,400,000; 1814, $17,000,000; 1815, $19,000,000. It should be noted that nearly $15,000,000 of the specie must have returned to the United States before 1807. The condition of the country at the close of the war, as witnessed by Mathew Carey, is described as follows : Our situation at the close of the war. 1. Every man, woman or child in the nation, able and willing to work, could procure employment. 2. We had an extensive and profitable cotton manufacture, spread throughout the union, and producing about $24,000,000 annually, which might, by proper en- couragement, have been extended to $50,000,000 in a few years. 3. This manufacture consumed about one-fourth of ous whole crop of cotton. 4. We had capital invested in merino sheep to the amount of $1,000,000. 5. We possessed a valuable woolen manufacture which produced us annually clothing to the amount of $19,000,000, and which might have been extended before now (1819) to double the amount. 6. Almost all our manufacturing establishments were fully and advantageously employed. 7. Confidence between our citizens was general. 8. Our debts to Europe were fairly and honorably discharged. 9. Little, if any, of our public stock was held in that quarter of the globe. 10. Money could be easily borrowed at legal interest 11. Debts were collected without difficulty. 12. Our character, as a mercantile people, stood fair with the world. 13. Every man who had capital could find advantageous employment for it in regular business. Digitized by Microsoft® EXPANSION OF INDUSTRIES. 155 14. The country was generally prosperous, except a few places which has suffered desolation during the war. The growth of industries during the War of 1812 furnished a con- vincing object lesson to the statesmen of the country. It demonstrated that under protection the people when shielded from foreign compe- tition, when thrown on their own resources, could create new avenues of employment, and by the application of their industry to the native re- sources of the country bring into existence a system of manufacturing which in its magnitude was almost incredible. It demonstrated how the wealth of the nation could be created and augmented under protection. It also demonstrated the hardships and misfortunes which befall a people who in time of war are dependent upon other nations for a supply of clothing, implements and necessary articles of manufacture. A Oon- vincing Object Lesson. Digitized by Microsoft® CHAPTER VIII. Tariff Act of Aprii, 27, 1816 — American Market OverwhEi^med by Foreign Goods— Panic of 1819 to 1824. Shall tee Make Our Own Com- JorM Compare the present state of things with that of 1785 and say whether an opinion founded in the circumstances of that day can be fairly applied to those of the present. We have experienced what we then did not believe, that there exist both profligacy and power to exclude us from the field of interchange with other nations— that to be independent for the comforts of life, we must fabricate them for ourselves. We must now place the manufacturer by the side of the agriculturist. The former question is suppressed, or rather assumes a new form. The grand inquiry is, Shall we make our own comforts, or go without them at the will of another nation? He, therefore, who is now against domestic manufactures, must he for reducing us either to a dependence on that nation, or be clothed in skins, and to live like wild beasts in dens and caverns. I am proud to say I am not one of them. Experience has taught me that manufactures are now as necessary to our independence as to our comfort; and if those who quote me as of different opinion will keep pace with me in purchasing nothing foreign, where an equivalent of domestic fabric can be obtained, without regard to any difference of price, it will not be our fault if we do not have a supply at home equal to our demand, and wrest that weapon of distress from the hand that has so long wantonly violated it. — Thomas Jefferson, letter January 9, 1816, to Benjamin Austin. I have read with great satisfaction the eloquent pamphlet you were so kind to send me, and sympathize with every line of it. I was once a doubter whether the labor of the cultivator, aided by the creative power of the earth itself, could not produce more than that of the manufacturer, alone and unassisted by the dead subject on which he acted; in other words, whether the more we could bring into action of the energies of our boundless territory in addition to the labor of our citizens, the more would be our gain. But the inventions of the later times, by labor-saving machines, do now as much for the manufacturer as the earth for the cultivator. Experience, too, has proved that mine was but half the question; the other half is, whether dollars and cents are to be weighed in the scale against real independence. The question is then solved, at least as far as respects our wants. I must fear the effects on our infant establishments [manufactures] of the policy avowed by Mr. Brougham and quoted in the pamphlet. Individual British merchants may lose by the late immense importations, but British commerce and manufactures in the mass will gain by beating down the competition of ours in our own markets.— Thomas Jefferson, letter (1817) to William Simpkins. At the conclusion of peace with Great Britain a revision of the tariff became the most important subject for Congressional action. The war (158) Digitized by Microsoft® RENEWAL OF BRITISH COMPETITION. 157 revenue act of July 1, 1812, which added 100 per cent to the then existing duties, would expire one year after the close of the war. It has been shown in the preceding chapter that at the time when foreign complica- tions arose which so interrupted international trade, Congress was about to increase duties on imports for the purpose of giving better protection to industries; that the decrees of Napoleon, the orders of the British Council, the non-intercourse and embargo acts, and the war which fol- lowed, afforded more absolute security to our manufacturers against foreign competitors than would have been effected by legislation. Many of the industries which sprang up during the war, and among them the most important, would be left wholly without protection as soon as the act of July 1, 1812, expired. The industrial conditions had experienced a great change. Many industries existing during the war had not been considered by Congress in the early tariff laws, and would be left with- out protection. This was the situation not only of the cotton and woolenj_^iltJ3iany other industries. Companies had been organized hur- rie3lyto meet the exigencies of "the situation, promoted on much borrowed capital, and had not become sufficiently matured and intrenched to with- stand vigorous foreign competition. Moreover, the industrial conditions in Great Britain had greatly changed during the past seven years. Notwithstanding the European wars, British manufacturing establishments had been greatly enlarged and extended ; her factory system had become more perfected, and even those articles to the production of which machinery had not been ap- plied were produced on a much larger scale so cheaply and in such abun- dance that those industries in the United States carried on by the old methods of hand workmanship, which at first were thought to be secure under low duties, were placed at a great disadvantage. Apart from the necessity of an increased revenue to discharge the war debt and meet the ordinary expenses of the government, additional protection to manufactures was a pressing necessity. The industries soon began to suffer from the influx of all sorts of foreign goods, and it was soon made apparent that many would be totally extinguished unless they were saved from that inevitable fate by protective duties. The Treaty of Ghent was ratified on February 17, 1815, and on the 23rd of the same month the House by resolution requested the Secre- tary of the Treasury to report a complete plan of duties. President Madison, realizing the situation, presented the matter to Congress in his message of December 5, 1815. In this message he recom- mends " protection," not only as a means of securing our industrial in- dependence, but as a "source of domestic wealth." He said: "In ad- justing the duties on imports to the object of revenue the influence of the tariff on manufactures will necessarily present itself for consideration." New Tariff Legislation Needed. Increasing Foreign Competir tion. Digitized by Microsoft® 158 ESTABLISHMENT OF THE AMERICAN SYSTEM. In this message we find a condemnation of the " let alone " policy and a strong indorsement of the principles set forth in Hamilton's Re- port. Mr. Madison s^id: Lessons of Experi- ence. A Tariff Oommiitee of 181S. However wise the theory may be which leaves to the sagacity and interest of individuals the application of their industry and resources, there are in this, as in other cases, exceptions to the general rule. Besides the condition which the theory itself implies, of a reciprocal adoption of other nations, experience teaches that so many circumstances must concur in introducing and maturing manufacturing estab- lishments, especially of the most complicated kind, that a country may remain long without thetn, although sufficiently advanced, and in some respects even peculiarly fitted for carrying them on with success. The subject is concluded as follows: Under circumstances giving a powerful impulse to manufacturing industry, it has made among us a progress and exhibited an efficiency which justify the belief that, with a protection not more than is due to the enterprising citizens whose in- terests are now at stake, it will become, at an early date, not only safe against occasional competition from abroad, but a source of domestic wealth, and even of external commerce. In selecting the branches more specially entitled to the public patronage, a preference is obviously claimed by such as will relieve the United States from a dependence on foreign supplies, ever subject to casual failures, for articles necessary to the public defence, or connected with the primary wants of individuals. It will be an additional recommendation of particular manufac- tures where the materials for them are extensively drawn from our agriculture, and consequently impart and secure to that great fund of national prosperity and independence an encouragement which cannot fail to be rewarded. This part of the message was referred to the Committee on Com- merce and Manufactures, to which was referred the petitions and me- morials from the manufacturers. With Mr. Newton of Virginia as its chairman, the committee was composed of representatives from Vir- ginia, North Carolina, South Carolina, Pennsylvania, Massachusetts and Rhode Island. Report ot Secretary Dallas. On February 12, 1816, Secretary Dallas, in response to the resolu- tion of the previous February, made to Congress his report on the sub- ject of protection and revenues. The report comprehended (1) A view of the tariff of the United States and its incidents upon the Peace Es- tablishment. (2) A statement of the general principles for reforming the tariff of the United States, including the means of enforcement. (3) A general tariff proposed for the consideration of Congress. Under the second sub-division the Secretary said : The peace of Europe will give a new course and character to the commerce of the world, and the condition of the United States is essentially changed in popula- tion, wealth, in the employment of labor and capital, in the demand for luxuries and Digitized by Microsoft® ^/ZyC^C^yi^ o^ £i:yC^<2SS- This latter sum, if the goods had come charged as high as in 1824, would probably rise to at 1 Annals of Congress, Part 2, Vol. 4, 1828, p. 1733. 2 Annals of Congress, Part 2. Vol. 4, 1827-1828, pp. 1887, 1888. Digitized by Microsoft® 250 GROWTH OF INDUSTRIES. least $14,000,000. Yet during the same period our manufactures had greatly increased." Imports of Manufactures of Wool into the United States in each of the following years: Cloths and merino shawls.. Blankets Hosiery, gloves, mitts, etc.. Worsted stuffs Woolen and worsted yarns.. Carpeting Flannels and baizes All other manufactures.... Total 1 I82I. 1825. 1830. $5,038,255 434,256 . 198,783 1,766,443 $5,264,562 891,197 369,747 2,277,486 $2,854,339 594,044 133,453 1,397,545 515,391 1,065,609 1,008,272 201,649 266,060 •?io.'?o6 $7,437,737 11,392,264 $5,766,396 1835. ' ' 1840. $7,048,334 $4,823,138 1,865,344 ' 570,417 652,680 506,452 6,549,278 2,387,338 262,515 1 104,738 603,084 338,501 399,785 118,71s 453,404 221,885 17,834,424 $9,071,184 It should be noted that the increase in importations shown by the above table was in the superfine cloths, blankets and worsted stuffs which met with no competition in the American market. The duties not being sufficient to enable our home manufacturers to undertake their produc- tion. Hence the duties on this class of goods existed only for revenue purposes. Beginning ot carpet manujac- ture. Large In- crease of carpet protection. Carpets. The manufacture of carpets was established under specific duties, beginning with 50 cents per square yard on Brussels and Turkish in 1824, 70 cents per square yard in 1828 and 63 cents in 1832, remaining at that rate until reduced to 55 cents per square yard by the act of August 30, 1842. On Venetian and ingrain the duty was 25 cents per square yard by the act of 1824, increased to 40 cents in 1828, reduced to 35 cents in 1832 and remained at that rate until the act of 1842, when it was fixed at 30 cents. A duty of 63 cents per square yard was imposed on Wilton and treble ingrain by the act of 1832 and remained at that rate until 1842, when it was raised to 65 cents. Mr. Pitkin observes that The manufacture of carpets has lately increased in this country very rapidly. In December, 1834, there were in operation in the United States at least 511 carpet looms, in from 18 to 20 factories; of which 18 were for Brussels, 21 for what was called Treble Ingrain; 424 for other ingrained, 44 for Venetian and 4 for Damask Venetian and that the number of yards produced yearly from these looms was 21,600 yards of Brussels, 31,500 yards of Three Ply, 954,000 yards of other ingrain, 132,000 yards of Venetian and 8,400 yards of Damask Venetian, making a total of 1,147,500 yards of the average value of $1.00 per yard. Digitized by Microsoft® COTTON INDUSTRY. 261 Mr. Bishop, speaking of this time (1834), says: Nearly every description of carpeting made in Europe was at this time produced in the United States, of a quality nearly equal to the imported, and supplied much of the demand. The average quantity from 1828 to 1842 imported was 536,296 yards, valued at the place of export at $416,944, and in 1833 the quantity was 344,113 yards, worth $319,592. There were large quantities of carpeting of inferior quahty manufactured in the households, much of which was sold in the market. It was about 1849 that Mr. Bigelow brought into use a carpet loom of his own invention which gave a great impetus to the industry. Hosiery Industry in 1843. Hosiery, says Mr. Ellsworth, is now made in the United States with astonishing rapidity, by the aici of the power weaving loom, an American invention, which has not yet been introduced into England. While, there, it is a full day's work to knit by hand two pairs of drawers, a girl, here, at $2.50 per week, will make, by the power loom, twenty pairs in the same time. A piece twenty-eight inches in width and one inch long can be knit in one minute, thus reducing the expense of manufacturing this article to one-tenth of the former method by the handlooms. The im- portance of this improvement may be estimated from the fact that the quantity of hosiery used in the United States is valued at $2,500,000; and the stockings, woven shirts, and drawers, made in this country, at $500,000. Cotton Industry. The manufacture of coarse cotton fabrics owes its inception, growth arid maintenance solely to protection. As shown in Chapter VII., the factory system for the manufacture of this fabric was brought into ex- istence under the Embargo and Non-intercourse acts which preceded the War of 1812 and the absolute exclusion of importations during the war. Prior to that time all efforts to establish the industry had failed. The invention of and the exclusive monopoly held by the British of machinery for its fabrication operated to prevent its introduction into the United States until Mr. Samuel Slater set up at Pawtucket, Rhode Island, in 1797, machinery for spinning. The remarkable growth of the industry during the War of 1812 demonstrated the ability of Americans, if ade- quately protected, to maintain the industry on a large scale. The large importations at the close of the war demonstrated the inability of Ameri- can manufactures, without adequate protection, to resist British compe- mrst machine proceaa in hosiery manufac- ture. Cotton Industry created 61/ protection. Digitized by Microsoft® 252 GROWTH OF INDUSTRIES. Only the coarser qualities were woven. Capital and talent attracted 10 the industry. tition. Hence the law of 1816 imposed an ad valorem duty of 25 per cent, and provided that all cotton cloths costing in the place of their pro- duction less than 25 cents per square yard, shall be valued at 25 cents a square yard, and the duty levied on such legal valuation. That all cot- ton yarn imported shall pay a duty of 25 per cent, ad valorem, and that certain grades costing less than 65 cents per pound shall be valued at 65 cents per pound. This imposed a duty of 61^, cents per yard on fabrics costing 25 cents per square yard, with the addition of 10 per cent, if im- ported from this side of the Cape of Good Hope and 20 per cent, if im- ported from beyond the Cape of Good Hope. Nearly all cotton fabrics at this time cost more than the amount of the minimum valuation ; hence upon those of a greater valuation the du- ties were equivalent to more than 6I/2 cents a yard. Mr. Smith, of Maryland, in the discussion of the Act of 1816, presented a statement of prices, commissions and charges which were borne by the importers tending to show that the duties were the equivalent of 11 cents per yard on British goods and 12% cents per yard on East India goods. The fabrics manufactured in this country to the greatest extent at the time of the system of minimum valuation was adopted, were plaids, stripes, chambrays and cotton shirtings of the coarser quality. These were the goods then costing in England about 25 cents per square yard, and were consequently made subject to the minimum rates. A petition signed by the Chamber of Commerce of the city of Phila- delphia on April 28, 1820, calculated the duties on the various kinds of cotton goods at that time as follows : Plaids, stripes or chambrays equal to 32 per cent Cotton shirtings " " 46 Carlisle ginghams " " 46^^ " Printed calicoes " " 37 " Cambric muslins " " 53 " It should be noted, however, that as prices declined, as a result both of the perfection and application of American machinery, and do- mestic competition, the minimum valuations remained the same, the effect being to increase the ad valorem equivalents until 1828 and 1834, when the duties on this class of goods were equivalent to more than one hun- dred per cent. It was solely from the security given by such adequate protection that capital and the best of talent were attracted to the industry. The minimum value was increased to 30 cents per yard in 1824, and to 35 cents per yard in 1828. This legislation excluded from the Ameri- can market all of the East Indian goods and secured to the American manufacturer the home market for the coarser grades of fabrics. No better illustration of the advantages of a protective tariff and the manner in which it operates to stimulate the establishment of in- Digitized by Microsoft® COTTON INDUSTRY. 263 dustries, to break a foreign monopoly and to reduce prices to consumers, is shown than by the history of the cotton manufacture in the United States. It completely answers the arguments so frequently indulged in by advocates of a low tariff — that a protective duty is added to the price and is a tax on the consumer. Notwithstanding the fact that the British government prohibited, under severe penalties, the export of cotton man- ufacturing machinery, the Americans in this instance, as in all others, were equal to the occasion. Mr. Daniel Lowell, who had visited England and studied cotton manufacturing machinery, returned to the United States and in 1814 invented the power loom, which was fully equal, and in some respects superior, to the loom invented by Crompton. Hence, before 1833 all the processes of manufacturing were carried on by ma- chinery invented and manufactured in the United States. In the ar- rangement and construction of factory buildings, in the operation of the plants, and in the management and conduct of the business, the genius, ability and business sagacity of Americans, supported by experienced foreigners, more largely English manufacturers and artisans who came among us, placed the industry here on an enduring foundation. Mill sites and water powers throughout the New England and Middle States were soon utilized. Thriving and prosperous villages and cities sprang up; capital was created; labor given employment; a market was created for the produce of the farm, and every prediction made by the friends of protection was realized. The report on cottons, made by the committee of the New York convention of 1831, presents a detailed view of the manufacture of that article in various establishments, in the twelve States of Virginia, Mary- land, Maine, Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania and Delaware. It appears that in these twelve States there were in operation, in 1834, cotton mills to the number of 795, viz. : Having a capital (in fixtures principally) of $ 40,614,894 Number of spindles in operation was 1,246,503 Number of yards of cloth made 230,461,900 Pounds of yarn sold 10,642,000 Pounds of cotton used 77,757,3i6i Males employed i8,S30 Females employed 38,927 Children under 12 years 4.691 62,148 The annual value $26,000,000 And the annual amount of wages 10,294,944 And in these factories there was used pounds of starch 1,641,253 Barrels of flour for sizing 17.245 Cords of wood 46,SI9 1 Making 214,382 bales, ot the average weight of 361 86-100 Iha. Remark- able progress under Prottction. Digitized by Microsoft® 254 GROWTH OF INDUSTRIES. Saw mate- rial, labor and wages. Tons of coal 24420 Bushels of charcoal 9,205 Gallons of oil 300,338 Value of other articles $599,223 That the spindles building were 172,024 Hand-looms 4,76o Looms 33,506 And the total of the dependents was 117,626 In addition to this, the committee, in the same report, estimate the amount of capital employed in shops : For making machinery, at $ 2,400,000 The annual value of machinery made, at 3,500,000 And the annual wages 1,248,000 The capital in bleacheries was estimated at 900,000 The annual product, at 1,036,760 The annual wages, at 209,814 The capital employed in printing cottons was estimated at 1,000,000 Annual value 1,500,000 Annual wages, at 402,965 And number of yards printed at 25,000,000 Making the annual value of all these establishments 32,036,760 And the annual amount of wages 12,155,723 The report of the committee shows that its estimates were defective and fell greatly short of the facts both as to the capital invested and the number of pounds of cotton consumed. The committee stated: seo,ooo,ooo of capital invested. The capital above reported for good reasons assigned, is thought to be from one-fourth to one-third short of its real amount. The floating capital in numerous cases not being added to the cost of lands, improvements and fixtures. So the real capital vested in the States named may be nearly $60,000,000. The spindles reported " building " are mainly short, for there are no returns from Rhode Island. Pennsylvania, Delaware, Maryland and Virginia. The machine shops for Rhode Island only, are competent to the supply of 50,000 annually, and there are other establishments in Pennsylvania. The operating spin- dles will be greatly increased in the present year unless because of adverse events, for many new and large factories are preparing. The committee has a knowledge of thirty mills not included in the returns. So it would seem reasonable to believe that the amount of cotton consumed last year (1831) was not less than 80,000,000 pounds. It would not be rash, we think, to say that in the consumption of the present year (1832) the domestic market will take 100,000,000 pounds. In 1831 the cotton manufactories of the country gave employment to 62,148 persons. While the value of the product between 1831 and 1836 increased 70 per cent., it will be fair to estimate that the number of laborers employed was increased by 30 per cent., which would raise the number of hands employed in 1836 to about 80,000. Digitized by Microsoft® COTTOif INDUSTRY. 255 Secretary of the Treasury Levi Woodbury, in a special report to Congress on March 4, 1836, gives the consumption of cotton in the United States that year as 100,000,000 pounds; capital invested, employed in manufacture by machinery, -$80,000,000, and the value of the product $45,000,000; the total number of spindles employed in this manufacture was estimated at 1,750,000. Hence it appears that the invested capital had greatly increased since 1831 ; that the number of pounds of raw cot- ton consumed had increased by 19,000,000, and the number of spindles employed was 504,000 greater than in 1831. During the same year we exported 320,250,000 pounds of cotton, showing that more than one- fourth of the entire American crop was being worked up in American mills. The United States at this time stood second as a cotton manu- facturing nation. The capital employed in England in manufacturing by machinery was $185,000,000. The amazing growth of this industry under adequate protection to the more ordinary sorts of the fabrics dur- ing the few years preceding the operation of the " compromise measure " shows that had protection been continued and extended to the finer grades of fabrics, the United States within a short time would have rivaled England as a cotton manufacturing nation. Mr. Baine ^ after comparing the cost of manufacturing cotton in the United States and England in 1832, said: It may be said that Americans are capable of rivaling the English in coarse and stout manufactures, in which large quantities of raw materials are used, espe- cially in an article called " domestics," which they consume largely and export to some extent; but that in all other kinds of goods, all of which require either fine spinning or hand-loom weaving, the English possess and must long continue to possess a great superiority ; in other words, " the Americans cannot economically produce fine manufactures." It is even stated that the American " domestics " are now imitated at Manchester at a cheaper rate. Our manufactures have, therefore, little to fear from American competition. James Montgomery, Superintendent of York factory, Saco, State of Maine, in his work, " The Cotton Manufacture of Great Britain and America," compiled in 1839, page 82, said: In fancy weaving, either by power or hand, this country (America) so far as I am informed has not made a beginning. Imports of Cotton Fabrics from British East Indies.^ 1830. 1835. i» Printed and colored. White Total. I82I. 1825. $87,416 75.033 $135,156 46,16/ $162,449 $181,323 5,678 5.435 $67,113 $85,329 5.511 $90,840 iBaine's History of Cotton Manufactures, pp. 509, 510 2 MacQregor's Commercial Statistics. Vol. 3, pp. 558-660. Second as a cotton- weaving nation. Could not economi- cally pro- duce finer goods. 3,177 $63,177 Digitized by Microsoft® 256 GROWTH OF IHDVSTRIES. Imports from Europe and the East Indies. Imports of Manufactures of Cotton from France. Printed and colored. White Total. I82I. 1825. 1830. 1835. 1840. $17,394 22,035 $107,480 46,766 $352,789 178,784 $1,145,368 198,673 $589,591 134,189 $39,429 $154,246 $531,573 $1,344,041 $723,780 Imports of Manufactures of Cotton from England. Printed and colored White Twist, yarn and thread.. Total 1821. $3,788,018 2,096,554 139,402 6,523,974 1825. $6,561,599 2,517,532 149,621 9,228,752 1830. 1835. $3,553,509 1,863,723 141,212 $8,835,657 2,435,003 470,829 $5,563,444 $11,740,489 Total Manufactures of Cotton Imported 1821-1840. Dyed and colored White Hosiery, gloves, mitts and bindings Twist, yarn and thread... Nankeens from China.... Articles not specified Total 1830. 1835. $4,356,675 $10,610,722 2,487,804 2,738,493 387,454 906,369 172,785 544,473 228,233 9,021 220,375 558,507 $7,853,326 $15,367,585 1840. $3,075,623 756,871 372,320 $4,204,814 1840. $3,893,694 917,101 792,078 387,095 1,102 513,415 $6,504,484 Insufficient duties on finer fabrics. The importations shown in the above table consisted of those fine and delicate fabrics referred to by Mr. Montgomery in the above quota- tion, in the vi^eaving of which Americans had not made a beginning. The duties on these fabrics operated for revenue and not for protection. Although the duties imposed were in 1832 equivalent to more than 100 per cent, according to value, yet they were not sufficient to prevent the importation of these finer fabrics, even with the advantage American manufacturers held in having the raw material produced at home, and machinery propelled by water power. In England three times as many spindles and factories were moved by steam as by water power. In the United States not one in a hundred factories was moved by steam. Prices. The prices of cotton cloths declined as the industry grew and pro- tection was maintained. Digitized by Microsoft® COTTON INDUSTRY. 257 The following table shows the prices per square yard of imported goods in 1816 and of similar domestic goods in 1828: i8i6. 1828. Former prices. Present prices. Indian sheeting 16 to 25 cents 9 to 10 cents " " 25 to 42 " 12 to 14 British sheeting 25 to 37^ " 13 to 22 33 to 42 " 16 to 25 Bed ticking SO to $1.00 25 to 40 Satinett $1.50 30 Negro cloths 50 37 Cotton yarn $1.00 30 Merrimac prints, which in 1825 averaged 25.07 cents per yard at the factory, declined to 16 cents in 1830, 12 cents in 1840, 10.90 cents in 1845 and 9.24 cents in 1850. The cotton fabrics made at Waltham, a staple article, were year by year reduced in price per yard as follows : 1816, 30 cents per yard; 1819, 21 cents; 1826, 13 cents; 1829, Sy^ cents, and in 1843 had declined to 61/^ cents per yard. The price of cotton machinery fell 320 per cent, from 1810 to 1830. Mr. Clark of Kentucky ^ to show the reduction which was caused in the price of cotton bagging by domestic competition, presented the fol- lowing facts. He said that five or six factories were established in Ken- tucky since the act of 1824 was passed. In 1821-1822 the price of imported bagging was 40 cents per yard; in 1823 by the establishment of factories in Kentucky, 30 cents per yard. Act of 1824 reduced importations one-half, and the price in 1828 was 20 to 22 cents per yard, and that made in Kentucky was 24 cents per square yard. A Striking illustration of the benefits arising from the domestic manufacture of cotton goods to the American people was given by Sen- ator Knight of Rhode Island in his speech on Mr. Clay's resolution in 1832. He said: We can probably manufacture, at this time, 100,000,000 pounds of cotton, valued at $10,000,000. Suppose the fabric to be quadruple, the raw material, the manufactured articles would be worth $40,000,000. Deduct the exportation, and the whole consumption of cotton fabrics, foreign and domestic, can fall little short of $45,000,000; which, at the price of 1821, would amount to $135,000,000. How are these things to be accounted for, but from an intensely active competition be- tween manufacturers, foreign and domestic? Your protective system, if it has not done all, contributed largely to this result.^ Niles' Register said of this industry, February 18, 1832: 1 Congressional Debates, 1828. 2 Congrressional Debates, 1831-1832; Vol. 8. Part 1, p. 214. Prices SecUned as the industry grew. Benefits arising from domestic production. Digitized by Microsoft® 258 GROWTH OF INDUSTRIES. We see that almost 150,000 of the free people of the United States are sub- sisted by a manufacture which consumes nearly one-fourth of the whole product of cotton, and gives a value to that fourth almost equal to that of the entire crop. So that the interest of cotton spinning is equal to the interest of cotton planting, to say nothing of the market which the manufacture affords to the farming interests. Glass. Success in the manufac- ture of The British government promoted its glass industry by prohibitive import duties and by giving bounties on exports. Mr. Webster, in favor- ing an increase of duties in 1824, said: I think it entirely proper, therefore, to raise our own duty by such an amount as shall be equivalent to that bounty. The successful prosecution of the manufacture of glass fully vindi- cated the policy of Congress in extending protection by specific duties. In 1831 the manufacture of flint glass was prosecuted in twenty-one fur- naces, containing 140 pots, located at Boston, Providence, Rhode Island, New York and vicinity, Philadelphia, Baltimore, Pittsburg, Wellsburg and Wheeling. The value of flint glass made in these establishments was about $1,300,000. In two establishments located at Boston the value of the product amounted to $400,000, having a capital of $450,000, and paying, in yearly wages, $140,000. The industry was so successful that in 1832 the exportations amounted to $106,855. The manufacture of window glass and glass bottles was no less successful. The New Eng- land Crown Glass manufactory, situated at Boston, had a capital of $150,000, with an annual product of $100,000. At this time there were 31 manufactories of cylinder glass; ten in Pennsylvania, four at Pittsburg and four at Brownville, two at Wheeling in Virginia, two in Maryland, two in New York, two in Ohio, one in Massachusetts, one in New Hamp- shire, one in Vermont, one in Connecticut and one in the District of Co- lumbia. These had a capital of $690,000, employed 800 men, whose wages were $230,000, and made annually 172,500 boxes of glass, or 8,625,000 feet, valued at $851,000. The most extensive manufactory of glass bottles, demijohns, apothe- caries' wares and shop furniture was that of Dyott, near Philadelphia, employing from 253 to 300 men and boys, and melting about 1200 tons per annum. Near Boston was a manufactory of glass bottles, having a capital of $50,000, making annually 6000 gross and employing sixty- five men and boys. By the report of the committee, the whole value of glass made in the United States in 1831 was as follows: Digitized by Microsoft® 0LA8S, LEATHER 259 Flint glass $1,300,000 Crown window glass 150,000 Cylinder window glass 851,000 Glass bottles, phials, apothecaries' wares, demijohns, carboys, etc 200,000 Total $2,501,000 Employing 1800 men, whose wages amount to 600,000 By 1833 the value of the product was estimated by Pitkin at $3,000- 000. In December, 1834, the number of glass works in Pittsburg had increased to ten. The industry was so successful that there was little annual increase in the importations from 1827 to 1842 of apothecaries' phials, perfumery phials, black bottles, demijohns and window glass. Under a duty, of $3 and $4 per box imposed in 1816, the price of window glass was reduced largely by reason of American competition from $15 per box in 1816 to $5 per box in 1828. A like reduction was effected in prices to the American consumers of the other glassware manufactured in our factories. Value of Glass Imported into the United States, 1825 to 1840, Inclusive. Glassware paying ad valorem duty Apothecaries' phials Perfumery phials Black bottles Demijohns Window glass Total 1825. ■ ' 1830. $255,749 : 1835- $218,005 $438,118 7,075 3,473 1,555 122 64,658 52,991 118,22s 15,437 15,624 21,307 59,656 25,597 136,968 $384,831 $353,434 $716,295 1840. $360,847 925 1,571 ' 118,268 25,072 56,746 $573,429 Leather and Manufactures oe Leather. Up to this time the tanning of leather had been carried on chiefly in New Jersey, Pennsylvania, Maryland and Delaware and in the Eastern States of Connecticut, Massachusetts and Vermont, the former tanning exclusively with oak bark and the latter chiefly with hemlock. The in- dsutry was very extensive in the State of New York, chiefly in the town of Hunter, Green County, in the region of the Catskill Mountains, the counties of Delaware, Schoharie, Sullivan and Ulster. In this district by 1836, without enumerating many small ones, there were 56 tanneries of a capacity sufficient to manufacture annually 328,000 hides, equal to 656,000 sides, or 9,840,000 pounds of sole leather, and in value $1,672,- 800. At this time it was estimated that one-third of the whole quantity of tanned leather was manufactured in the State of New York, having prices lower because of American competi- tion. The tan- ning indus try in me. Digitized by Microsoft® 260 GROWTH OF INDUSTRIES. about 450 tanneries, the whole amount of leather annually produced being about $6,000,000. Notwithstanding the natural fadllitj'es possessed by the Uqited States for the prosecution of this industry, Congress imposed duties on tanned leather in 1816 of 30 per cent, which was continued through all the legislation until 1846. Boots and Shoes. Protection for the hoot and shoe industry. The boot and shoe industry owed its great progress to protection be- ing given by specific duties. The first tariff act in 1789 imposed a duty on boots of 50 cents per pair. This was increased to 75 cents a pair and in 1812 to $1.50, which rate was continued through several acts until 1842, when it was placed at $1.25. On shoes and slippers the act of 1789 began with a duty of 10 cents a pair, which was soon increased to 25 cents and in 1812 to 50 cents, and during the legislation beginning with 1816 to 1842 the specific rates varied from 25 cents to $1.50 a pair. By 1834 the making of boots and shoes, saddlery, harness and trunks was carried on in almost every village and town throughout the North- ern States. The inhabitants of some towns were almost exclusively em- ployed in making shoes alone. In the city of Lynn, Massachusetts, the number of shoes made in 1832 was 1,675,781, valued at $942,191, giving employment to 1741 males and 1775 females. The improvements made and the success of the industry greatly re- duced the price of shoes. Mr. Pitkin further says : Allowing, therefore, $3 per head for each person in the United States for shoes, the cost of the whole article in the country would be $50,000,000, one-third of which, sold, would be over $16,000,000. While some inventions had been made during the early history of the industry, those inventions which placed the boot and shoe industry in the United States so far in advance of other countries, had not taken place until shortly before the Civil War. The extent to which the Americans supplied their own market is shown by the small importations in 1832 as follows: Saddlery $ 29,572 Boots and shoes 277,388 Leather, pounds 381,590 The total value of the products of the leather industry in 1832 was $20,000,000. Digitized by Microsoft® PAPER, HATS, FDRNITVRE AND BEMP. 261 Paper. The manufacture of paper until about 1825 was a handicraft indus- try. The value of the paper manufactured in the United States in 1831 was between $5,000,000 and $6,000,000. The product of the State of Connecticut alone was $546,000. The duties were specific, ranging from three cents per pound on wrapping paper to 20 cents per pound on writing paper, as will appear from these schedules of duties mentioned elsewhere. Rags were imported free of duty, which came principally from Italy and Trieste, of the value of $446,387 in 1832 and $411,785 in 1833. It was in 1825 that the manufacture of paper by the Fourdrinier ma- chinery was commenced in the United States at Springfield, Massachu- setts, the machine being imported. It was not, however, until 1830 that this machine was successfully made in the United States. Hats. Mr. Pitkin says : Paper making by machinery. The American manufacturers long supplied the domestic market with hats and made a surplus for exportation. In 1831 the value of hats made in the United States was $10,500,000, exclusive of caps of various sorts, and the number of men and boys employed directly in this industry was estimated at 15,000, and of females 3000 ; and the amount paid for their labor was calculated to be $4,200,000. The manufacture of caps, of various kinds, is carried also to a great extent; an establishment of this description in Albany has employed, in this business, from 600 to 700 persons and has paid wages to the amount of $100,000 a year. And we beg leave here to refer to a branch of domestic industry, carried on principally in Massachusetts, in making braid, or straw bonnets, and palm leaf hats. The value of these articles made in 1832, as appears by the returns made to the Secretary of the Treasury, was from $800,000 to $900,000. Hand workmanship, or the same methods as those employed in Eng- land, were practiced in the United States. The success of this industry presents a gratifying contrast with colonial times when Great Britain made it a crime for the American colonists to manufacture hats or trans- port them from one settlement to another. American hats for Americans to wear. Cabinet Ware and Furniture. Cabinet ware was made solely by hand workmanship, hence the duties imposed by Congress were ad valorem, being 30 per cent. The value of the output in 1831 was estimated at $10,000,000, employing 15,000 men who received $4,700,000 in wages. The industry was so successful that in 1832 the exportations amounted to $169,038 of furniture alone and in 1833 to $200,635. Digitized by Microsoft® 262 GROWTH OF INDUSTRIES. Manufactures from Fi^ax and Hemp. When tee had no tariff on linen. By 1832 and 1834 the manufacture of cotton bagging had become so extensive that it had substantially supplanted bags made from hemp and flax. Mr. Pitkin states that in 1833 and 1834 there were about 1,110,000 bales of cotton raised in the United States, requiring about five yards of bagging for each bale, making 5,500,000 yards necessary for the annual consumption. The average quantity of this article imported, in the years 1832 and 1833, was 1,112,000 yards, leaving for consumption of domestic production, say, 4,400,000 yards, which, at 20 cents per yard, is $880,000 ; and the whole value of the domestic manufacture of flax and hemp, in the United States, he is of the opinion, ought not, at that time, to be esti- mated higher than between $5,000,000 and $6,600,000. The manufactures from flax and hemp furnish a typical example of the influence of a low tariff or a high tariff in our industrial history. Prior to 1861 the manufacture of linens was not undertaken in the United States excepting as to some of the coarser kinds in small establishments and in the households. The duties imposed as shown by the schedule presented were 25 per cent, ad valorem, which operated solely for revenue purposes, not being sufficiently high to warrant the establishment of the industry on a large scale. Under duties, however, of 4 and 5 cents per pound, cordage and cables, tarred and untarred, were very extensively made. Imports of Manufactures of Hemp, Cordage, Embracing Sail Cloth, etc. Imports of hemp, cordage and sail cloth. Hemp and cordage Sail duck Sheeting, brown and white . . Ticklenburgs, Osnaburgs and Burlaps Cotton bagging Other manufactures Total ' l82I. ■ 1825. ' ■ 1830. 1835. $6i8,3S6 894,276 226,174 484,826 1 677,151 405,739 381,063 637,023 22,408 279,743 ' 317,347 250,237 563,665 69,126 133,103 616,341 828,826 426,942 ' 337,011 924,036 ' 39,032 $1,738,806 $2,619,210 $1,613,221 $3,172,188 1840. ' 786,115 ' 615,723 261,173 329,054 310,211 71,994 $2,374,270 Imports of Linen and Other Manufactures of Flax. Linens Other manufactures of flax, Total. I82I. 1825. 1830. 1835. $2,564,159 $3,675,689 212,098 $2,527,778 483,502 $6,056,141 415,880 $2,564,159 $3,887,787 $3,011,280 $6,472,021 1840. $4,292,782 321,684 $4,614,466 Digitized by Microsoft® SUGAR, TOBACCO AND CANDLES. 263 Manufactures of Silk. The ad valorem duties of 25 and 30 per cent, on manufactures of silk were insufficient to give encouragement to the industry, although a few jacquard looms vi^ere imported, which were set up at Baltimore and other places, and some silks and worsted vestings were manufactured. The production in the country was, however, practically confined to the manufacture of sewing silks, fringe, tassels, gimp, satin, velvets and other silks. The importations were larger than those of any other fabric and reached in 1839 nearly $23,000,000, as follows : Silks from India and China, piece goods $1,738,509 Silks from India and China, sewings 50,650 Silk sewings from other places 78 gg^ Silks, raw 33^258 Silks from other places than India, veils, shawls, etc , 345,490 Silks, other manufactures, from other places than India 18,685,295 Manufactures of silk and worsted, $2,319,884 (allowing one-half the value to be of silk) 1,159,942 Total $22,838,028 The importations increased from $4,486,924 in 1821 to $22,880,684 in 1839, falling to $15,511,000 in 1841. The re-exports varied from $1,057,233 in 1821 to $1,212,721 in 1840. The total importations from 1821 to 1841 were $210,541,051, with $27,827,285 re-exPorted, leaving a domestic consumption in 21 years of $183,713,766, which had reached $200,000,000 in 1843. This industry was not given sufficient protection until the Republican party came into power in 1861. The above figures furnish an example of the loss which the labor, capital and wealth of the country sustained by the neglect of this most important industry. Sugar. The sugar industry was established and promoted by the protective policy. The lyouisiana planters could not produce sugar for less than Sl/^ cents per pound, while their rivals in the West Indies could produce the article at a profit at from 21/^ to 3 cents per pound. The duty on brown sugar of 3 cents per pound, which was equivalent to an ad valorem rate of 65 per cent., shielded this important industry from the ruinous effects of importations. The region especially adapted to the production of sugar was South and East Florida, Georgia, the Carolinas, Alabama, Middle and Western Florida and Louisiana. New Orleans became the great center of the sugar market. The whole production in Louisiana, in the year 1828, was No ade- quate pro- tection for Hlk until 1861. American sugar the child of protection. Digitized by Microsoft® 264 GROWTH OF INDUSTRIES. Pro- icctiou for tobacco and muff. Stated at 88,878 hogsheads of 1000 pounds each. The capital invested in the sugar States was estimated at $45,000,000; the number of sugar plantations was 700. In 1840 only about 525 plantations were in opera- tion. The average annual amount of sugar produced was about 90,000,- 000 pounds. The quantity of molasses produced in the same States was 4,000,000 gallons and the amount of capital invested was estimated to be in 1840 $52,000,000. The quantity imported in 1833 was 97,688,132 pounds, chiefly from Brazil and the Spanish West Indies. The quantity of maple sugar annually produced in the United States was about 30,000,- 000 pounds. Tobacco. The manufacture of tobacco and snuff was among the first indus- tries to receive adequate protection. The duties under the act of 1789 were specific and equivalent to 100 per cent. In 1834 the value of tobacco used in the United States was estimated at $16,000,000, of which $9,000,000 was supposed to have been for smoking Spanish cigars, $6,500,000 for smoking and chewing American tobacco, and $500,000 for American manufactured snuff. Candies. The specific duties of 3 cents in 1816 and 5 cents per pound from 1824, on tallow candles, and of 6 cents in 1816 and 8 cents per pound on spermaceti candles after 1824, secured the home production of these arti- cles. It was stated by Mr. Pitkin in 1834 that the home consumption in 1834 of candles was in the neighborhood of $12,000,000. In estimating the number of families at 2,330,000 and allowing four and a half dollars to each family for these articles, the value will be about $10,500,000. The importations were about $1,000,000. Spermaceti candle production in 1831 was about 2,730,000 pounds, worth $709,800; and the annual value of this kind of candles exported, is about $250,000, leaving for home consumption the amount of $460,000. Eome market secured for American fishermen. Produce of the; Fisheries of the United States. According to the census of 1840, the produce of the fisheries of the United states was as follows : Smoked or dried fish, quintal 774,047 Pickled fish, barrels 472,359 Spermaceti oil, gallons 4,764,708 Whale and other fish oils, gallons 7,536,778 Whalebone and other products, value $1,153,237 Men employed 36,584 Capital invested $16,429,620 Digitized by Microsoft® LEAD, SVTTOnS A2fD CHEMICALS. 265 The exports, principally to Hayti and the Spanish and Danish West Indies, became very large. The duties imposed for the protection of this industry secured nearly the whole American market to American fishermen. The importa- tions of sperm oil and candles were kept within narrow limits, ranging in value from $175,117 in 1821, and reaching nearly $302,040 in 1833. Lead. Lead mines in the United States were productive and worked with great profit. Those of Fever River and in Missouri produced the follow- ing quantities in 1823 and 1832 : Pounds. Fever River, 1823 33S,I30 Fever River, 1829 I3,343,IS0 The product of Missouri was 386,590 pounds in 1825 and 12,311,730 pounds in 1828. The total production of the United States from 1823 to 1832 was 55,904,398 pounds. The success of this industry fully justified the specific duty imposed by Congress of three cents per pound in 1816, which was increased to five cents in 1828 and 1832. Red and White Lead. By 1835 the American manufacture of white and red lead, as well as shot, nearly supplied the domestic market. In 1821 the quantity of white and red lead imported was about 4,000,000 pounds, valued at $322,568; and the quantity of pigs, bars and sheets was 3,197,409 pounds; and the quantity of shot was 2,290,596 pounds, both valued at $204,710. But since 1830 the value of white and red lead imported averaged about $30,000 a year; and in 1833 the value of pig, bar and sheet lead was $60,660 and of shot only $85,000. In 1834 the value of white and red lead manufactured in the United States was not less than $1,000,000. Two establishments in Salem, Massachusetts, manufactured upwards of 2,000,- 000 pounds. The product was protected by specific duties beginning with three cents in 1816 and increased to five cents per pound in 1828 and 1832. Protective duties on lead. Buttons. Congress imposed an ad valorem duty on buttons of 20 per cent, in 1816 and 1824, increasing it to 25 per cent, in 1828 and 1832. The industry was extensively carried on at Waterbury and Meriden in Con- necticut and at several points in Massachusetts. The total product of the country was estimated at $800,000. The value of those that were gilt was $300,000 and others $500,000. This was an industry engaged Buttons made in New Eng- land. Digitized by Microsoft® 266 GROWTH OF INDUSTRIES. in b)' hand workmanship, pursuing the same methods as in the United Kingdom. Chemical industry eslabliahed vnder tariff of 182i. Chemicals. The report of the committee of the New York Convention states that in 1831 there were no less than 30 chemical estabhshments in this coun- try, having a capital of $1,158,000, and making various chemical articles, to the annual value of $1,000,000, and employing 900 hands. This in- dustry was secured principally by the tariff of 1824. The committee states that the general price of chemical articles in the United States was at that time one-half less than before their domestic manufacture, under the tariff of 1824; and in some instances the difference was much greater. That in 1820 the price of epsom salts was from 11 to 12 cents per pound — in 1824 a duty of four cents was imposed on foreign salts of this de- scription; and the price in 1831 was three and a half cents per pound. American chrome yellow was, for a short time, exported to Great Britain, not being embraced in the tariff of British duties. The British manufacturer of this article, however, soon procured a duty upon its importation, amounting to a prohibition. About 4,000,000 pounds of copperas were made in the United States ; 3,000,000 pounds in Vermont ; 500,000 pounds in Ohio, and 500,000 pounds in other States. This quan- tity was sufficient for the supply of this country, and in 1832 was sold at two and two and a half cents per pound. Among the articles made in the various chemical establishments were calomel and other mercurial preparations, glauber salts, rochelle salts, epsom salts, tartar emetic, ammonia, sulphate of quinine, oil of vitriol, tartaric acid, aqua fortis, prussian blue, chrome yellow, chrome green, nitric acid, muriatic acid, barilla, oxalic acid, chloride of lime, chlorine of soda, refined saltpeter, refined borax, crude and refined camphor, acetic acid, acetate of lead, nitrate of lead, prussiate of potash, bichromate of potash, sugar of lead, ochre dry, ochre in oil, whiting, litharge, red and white lead, indigo, copperas, alum. Most of the materials used in these establishments were the produce of the United States, and nearly the whole of this branch of domestic in- dustry was a clear gain to the United States. The great saving to the consumers by reason of the tariff is shown by the following schedule of duties and prices: Duty per pound. Glauber salts 3 cts. Copperas 2 " Refined salt peter 3 " Price per Price per pound, 1816. pound, 1828 10 cts. 3 cts. 6 " 3 " ID " 7 " Digitized by Microsoft® IRON IND08TRY. 267 Similar results might be shown in the whole list of chemicals covered by the duties. Iron Industry. The iron industry has two distinct branches: (1) The first stages of manufacture, including pig iron, then bar and bolt iron, rolled or ham- mered, hoop and sheet iron, brazier's rods, nails and spike rods, bands, scroll or casement rods slit or hammered; (2) Manufactures from iron. Congress, through protective legislation, endeavored to promote not only the production in the United States of the crude material, but the manu- facture of all tools and implements excepting the finer grades of hard- ware and cutlery. The importations of iron in the form of bars and rods from Great Britain was so large during the few years following the peace of 1814 that most of the ironmasters of the United States were substan- tially ruined. The production of pig iron fell oflf from 54,000 tons to less than 20,000 tons annually for several years. The new tariff passed in 1816 imposed a duty on bar iron rolled at $30 per ton, unrolled at $9.00 per ton and on steel at $20 per ton,which was increased in 1818. The duties imposed by the acts of 1824, 1828 and 1832 were specific and formed the barrier which alone enabled the industry to expand. The imports of hammered bar iron came from Sweden, Norway and Russia. Daniel Webster, in addressing the House in 1824 on the propo- sition to increase the duty on bar iron, said : The freight on iron from Sweden was $8 per ton to Boston or New York. This is not more than the price of so miles of land carriage. Stockholm, there- fore, for the purpose of this argument, may be considered as within so miles of Philadelphia. The question is, Shall we employ its foreign labor at 7 cents a day when our own labor can get employment at much higher wages. Webster approved the duty. The increase in the manufacture of iron in its first stages of pro- duction between 1816 and 1836 is shown by the following statements which are accepted as approximately correct. The quantity of pig iron produced in 1828, reported by a committee appointed by the Convention of Iron Manufacturers held in Philadelphia in 1830, was as follows : Pig iron, tons, 108,564 ; castings from the ore at blast furnaces, 14,840; bloom bar made from the bar, equal in pig at 28 cwt. pig iron to the ton, 7477; total made, reckoned in pig, 130,881 tons. The quantity of pig iron produced in 1830 as reported to Congress by the committee of the New York Convention of 1831, from 202 fur- naces was as follows: Pig iron, tons, 137,075; castings from ore at blast furnaces, 18,273 tons; Bloomed bar iron, equal in pig iron to 8194 tons; from 37 additional furnaces making pig iron and castings, 25,250 tons; American iron mas- ters suf- fered from. Free Trade. Subsequent expansion under pro- tection. Digitized by Microsoft® 268 GROWTH OF INDUSTRIES. Seven years of Protection prosperity. bloomed bar iron, equal to pig, 2744 tons; total of iron equal to pig iron, 191,536 tons. Tlie following is a summary of the report of the committee of the New York Convention of 1831 on the production of bar iron: From 202 furnaces, bar iron, 90,768 tons; bar iron made at bloomeries, 5858 tons; total, 96,626 tons; from 37 additional furnaces, bar iron, 14,285 tons; bloomed bar, 1960 tons; total bar iron made in the United States, 112,871 tons. The committee of the New York Convention states in its report that " In two years from 1828 to 1830 the supply has increased very nearly 25 per cent., in fact, the returns from the 37 furnaces additional, investigated by Mr. Peter Townsend, show the increase to have been from 130,881 tons in 1828 to 191,536 tons in 1830, or an increase in two years of over 60 per cent. The industry was exceedingly prosperous from 1830 to 1837, a period of seven years, as the committee stated, it is known that old establishments are enlarging and new ones erecting, giving as- surance that the increase may be progressive." Assuming an increase of 40 per cent, in the production between 1831 and 1835, the result would be an increase of 76,641 tons, or a total pro- duction of 268,140 tons of pig iron, or nearly equal to the quantity of 286,903 tons shown by the census returns of 1840. The pig iron was all converted into castings, bar iron, rods and other wrought iron. In its merchantable form it was shipped to all parts of the country for use by blacksmiths, wagon makers, etc., and for con- version into tools and implements of various forms. The importations of iron in the first stages of manufacture in 1833 were 75,000 tons, and of steel 2431 tons. The report of the committee of the New York Convention makes the following statement showing the benefits of the iron industry to the labor and agricultural interests of the country: Benefits to lalior and agricul- tural interests. From a critical examination of the returns from 73 furnaces and 132 forges in a great variety of situations, they find that in the manufacture of the iron, in its first stages only, made in the United States in the past year, agricultural produce to the amount of nearly three and a half million dollars has been consumed by the persons thus employed, which vast sum has of course been paid to the farmer, showing how completely his interest is identified with that of the iron manufac- turer, and furnishes him with the means of estimating the probable consequences to himself of the destruction of this branch of industry, and the conversion of so large a body of consumers into cultivators and producers. By the same state- ment it appears that nearly 25,000 workmen are constantly employed, receiving annually the sum of $7,493,700, making, with their families, nearly 125,000 persons directly dependent on this manufacture. For transporting this iron to the markets where it is sold to the consumer, it is estimated that about twelve hundred and fifty thousand dollars are annually Digitized by Microsoft® IROT)} INDUSTRY. 269 paid— being a further contribution to the wealth of the country, through its inter- nal commerce. These facts show how completely interwoven are the interests of agriculture, commerce, and labor with those of manufactures. In the supplemental report on the manufacture of steel the commit- tee enumerated fourteen steel furnaces in the following places, namely: Pittsburg, 2 ; Baltimore, 1 ; Philadelphia, 3 ; New York, 3 ; York, 1 ; Troy, 1 ; New Jersey, 2 ; Boston, 1 ; and stated that these furnaces had a ca- pacity sufficient to supply more than 1600 tons of steel annually, an amount equal to the whole import of steel of every kind; but observed that steel for common agricultural purposes is not the best, although it is most used, and that the American is equal to English steel used for such purposes in England, and that American competition had excluded the common British blistered steel altogether. The committee further showed that the price of bHstered steel was much less than before the Act of 1828 was passed, and that the " only steel now imported from Great Britain is a different and better quality than that just mentioned." It was at this time that by the use of anthracite coal and the appli- cation of discoveries and improvements the iron industry, not only of Europe but of America, was greatly enlarged. It was at this time also that railroad building had its inception. Pennsylvania led all other States in the production of iron, and by this time great developments had taken place in the Champlain District, in Ohio, Missouri and other sections of the country. Pittsburg was rap- idly becoming a great iron manufacturing city, and Cincinnati was the center of manufactures from iron, supplying the Western States. Space will not permit a detailed history of the growth and extension of the in- dustry. Anthra- cite coal and the inception of railroad building. Manui^actueES from Iron. Foundries, machine shops and establishments for iron manufactur- ing became very extensive. With the crude materials produced from our own mines and furnaces and furnished at greatly reduced prices, the manufacture of tools and implements made great progress. The duties on the crude materials were in most cases specific, while on the tools and implements they were levied according to value. The articles exten- sively manufactured were anvils, blacksmith hammers, cables, chains, mill-irons, mill-cranks, saws, nails, spikes, tacks, tubes for gas and water, wire, castings, adzes, fire and side arms, axes, brass wire, brass plates, sheet or rolled, manufactures of iron, bridle bits of all descriptions, cop- per and manufactures of, cutlery, cutting knives, drawing knives, hatch- ets, iron squares, japaned ware of all kinds, muskets, reaping hooks, Great variety of metal manvfac- tures. Digitized by Microsoft® 270 GROWTH OF INDUSTRIES. Consumers ffreatly benefited 'by pro- teotion. As duties were in- creased, prices decreased. screws, scythes, shovels, sickles, socket chisels, spades, vises, steelyards, horse shoes, horse shoe nails, steam engines and boilers, locks and fasten- ings for doors, lead pipes and various metallic articles. The census of 1840, although the returns of the industry were for 1839, when the iron industry was in a great state of depression, shows the value of the product and men employed in various branches of the industry, as follows : Total capital invested, $20,432,131. The extent of the industry in the State of Massachusetts alone is shown by the census returns of Mas- sachusetts for the year 1837. Prices. The operation of the protective duties in causing a reduction of prices through the domestic competition was fully discussed in Congress in 1828, 1830 and 1832. The iron industry furnishes some of the most conclusive evidence in support of the contention of the Protectionists that the consumers were greatly benefited by a reduction in prices brought about by domestic competition. Mr. Adams in his report from the Committee on Manufactures, presented to Congress on May 23, 1832, says : ''• Upon the passage of the act of 1828, the British owners of forges and fur- naces reduced the price of their iron not less than $8 per ton to retain the control of the American market — an operation by which, as has been shown by the memo- rial of the Free Trade Convention to Congress, they must have maintained a loss. Mr. Holmes of Maine, in speaking on Mr. Clay's resolution, referred to the same subject and said : If any one rule more than another is to be relied on, it is this, that as soon as protection begins to operate and in proportion to its operation, the tax is reflected back from the consumer to the producer. Take the case of bar iron in the years of 1818, 1826 and 1830, when the tariffs of 1816 and 1824 and 1828 were in full operation. I refer to the prices current in Boston and select for example " old sable.'' In 1818 the duty was $9 per ton and the price, including duty, $104; in 1826 the duty $18, price, including duty, $100; in 1830 the duty $22.40; price, includ- ing duty, $96. Thus while the duty has been substantially increasing, the price of the article taxed has consequently diminished. The claim that an increased duty necessarily enhances the price was fully answered by the Committee of the Iron Manufacturers in 1831. The report says : In this instance the average price of bar iron in 1828 was 118 1-3 dollars. In that year an addition to the duty on hammered iron was made of $4.40 per ton, 1 Pag'e 89, Appendix to Giles & Seaman's Register of Congressional Debates. Digitized by Microsoft® IRON INDUSTRY. 271 and on rolled iron of $7. In the following year the price fell to 114 2-3 dollars and in 1830 to 96 2-3 dollars, showing a decline in two years of 21 2-3 dollars per ton, in the face of the increased duty above mentioned; a decline effected exclu- sively by domestic competition, inasmuch as no corresponding diminution took place abroad, and the fall here was greatest in those markets which are inaccessible to foreign iron. The following is Statement B, showing the effects of a tariff of pro- tection on the article iron at Pittsburg and Cincinnati : ^ In the years 1818, 1819 and 1820, bar iron in Pittsburg sold at from $igo to $200 per ton. Now the price is $100 per ton. In the same year, boiler iron was $350 per ton. Now at $140 per ton. Sheet iron was but little made in those years, and sold at $18 per hundred- weight. Now made in abundance, and sold at $8.50 per hundredweight. Hoop iron, under same circumstances, was then $250, and is now $120. Axes were then $24 per dozen, and now are $12. Scythes are now 50 per cent lower than they were then — as are spades and shovels. Iron hoes were in those years $g per dozen. Now a very superior article of steel hoes $4 to $4.50. Socket shovels are made at $4.50 by the same individual who, a few years ago, sold them at $12 per dozen. Slater's patent stoves, imported from England, sold in Pittsburg at $350 to $400 each. A much superior article is now made there and sold at $125 to $150. English vises then sold for 20 to 22>^ cents per pound; now a superior article is sold at 10 to loYz cents. Brazier's rods in 1824 were imported, and cost 14 cents per pound, or $313 per ton. Now supplied to any amount of ]4 to f^ diameter, at $130 per ton. Steam engines have fallen in price, since 1823, one-half, and they have one-half more work on them. The engine at the Union Rolling Mill (Pittsburg), in 1819, cost $11,000 — a much superior one of 130-horsepower, for Sligo Mill, cost, in 1826, $3000. In 1830 there were made in Pittsburg one hundred steam engines. In 1831 one hundred and fifty will be made, averaging $2000 or $3000 in that article alone. A two-horsepower engine costs $250 ; six horse $500 ; eight to nine horse $700. These last are the prices delivered and put up. At least 600 tons of iron made in Pittsburg are manufactured into other articles before it leaves the city, from steam engines of the largest size down to a threepenny nail. Eight rolling and slitting mills of the largest power are in the city of Pitts- burg, five of which have been erected since 1828. Thirty-eight new furnaces have been erected since 1824 in the western parts of Pennsylvania, and that part of Kentucky bordering on the Ohio River, most of them since 1828. The quantity of iron rolled at Pittsburg was, in: 1828 tons 3,291,190 1829 6,217,170 1830 9,282,200 1 Made a part of the report of the committee of the convention held In New York City In 1831 on the iron industry. Lower prices as the result of increased home pro- duction. Growth of iron manu- facture in Western Pennsyl- vania. Digitized by Microsoft® 272 GROWTH OP INDUSTRIES. Being an increase of nearly 200 per cent in two years. The above facts were furnished by members of the committee residing at Pittsburg, who vouch for their accuracy. One fact there stated suggests the following remarks to the committee: To the Report of the Select Committee of the Senate of the United States, on the subject of iron, is appended, among other papers, one in which it is stated, that " it is now ascertained that the superiority of England over France is entirely due to the cheapness of iron; a six-horse steam engine, for instance, in France, costs, on the average, at least $500 more than in England, owing to the cheapness of iron in Great Britain. It is still dearer in the United States than in France. Here it is asserted that a six-horsepower steam engine costs $500 more in France than it does in England, and that it is still dearer in the United States than in France. Now it so happens that in the United States, at Pittsburg, a steam engine of that power can be put up, ready for action, for the identical sum of $500. Prices 01? Iron at Cincinnati. Bteady decline In prices of har Iron. In 1814 to 1818, bar iron $200 to $220 per ton; now $100, $105, $110. The fall in prices has been nearly as follows : 1826, bar iron, assorted $123 to $135 per ton. 1827, bar iron, assorted 120 to 130 per ton. 1828, bar iron, assorted 115 to 125 per ton. 1829, bar iron, assorted Ii2j4 to 12254 per ton. 1830, bar iron, assorted 100 to 120 per ton. 1831, bar iron, assorted 100 to no per ton. Castings, including hollow ware, 1814 to 1818, $120 to $130 per ton; present price, $60 to $65, and the quality much improved.^ 1 History of the Rise and Progress of the Iron Trade, by French, pp. 36, 37 and 38. Iron and Steel Imported into the United States Annually from 1821 to 1840. Relative decrease of imports of Iron and steel. Bar iron, manufactured by rolling Bar iron, manufactured otherwise Pig iron Old and scrap iron Steel Manufactured, paying duties ad valorem.. Manufactured, paying duties specific Total 1821. $1,213,041 131,291 1,630,129 238,400 $3,212,861 1823. I $ 224,497 1,562,146 36,513 291,515 3,312,758 393,658 $ 5,821,087 1830. $ 226,336 1,730,375 25,644 291,257 3,372,146 283,702 $ 5,929,460 1835. $ 1,050,152 1,641,359 289,779 ii,6og 576,988 4,827,461 524,155 $ 8,921,503 1840. $ 1,707,649 1,689,831 114,562 15,749 528,716 2,575,229 609,671 $ 7,241,407 Digitized by Microsoft® IRON INDUSTBT. 273 It should be noted that the importations of manufactures paying specific duties had been reduced by home production and competition to a very small amount, and that those paying ad valorem duties consisted of the finer grades of hardware and cutlery. With our facilities for pro- duction, the duties on iron in its crude state should have been fixed at higher rates than they were, and every pound of pig and bar iron and of steel consumed in the United States should have been made by American labor. Had this been done, the iron industry would have been more prosperous than it was. The following exhibit by articles of the importation of manufac- tures of iron and steel into the United States in 1830 indicates the extent to which American manufacturers were supplying the home mar- ket. For instance, the importation of nails was only 613,704 pounds and of spikes 37,873 pounds in 1830, while the population was 12,866,020. In the year 1799, with a population of only 5,309,758, the quantity of nails and spikes imported was 4,291,441 pounds. This illustration is sufficient to show how foreign-made wares have been excluded and their production transferred to our own labor under protective legislation. The price of nails was reduced from 16 cents a pound in 1816 to 6^ cents in 1830 by competition set up by our domestic manufacturers. The importations of manufactures of iron and steel in 1830 were: DOLLARS. Side arms and fire arms other than muskets and rifles I79.IS3 Drawing knives, axes, adzes, and socket chisels 29,207 Bridle bits of every description 62,271 Steelyards, scale beams and vises 30,899 Cutting knives, sickles, scythes, reaping hooks, spades and shovels 9S>004 Screws, weighing 24 pounds or upwards 17 Wood screws 66,817 Other articles, not specified 2,908,978 Muskets, No. 8341 25,142 Rifles, No. 8 8s Iron and steel wire, lbs., 592,733 S9<485 Tacks, brads and sprigs 2,799 Nails, pounds, 613,704 40,906 Spikes, pounds, 37,873 i.39i Cables and chains and parts thereof, pounds, 540,628 25,885 Mill cranks and mill irons, wrought, pounds, 2781 200 Mill saws, pounds, 4395 12,885 Anchors, pounds, 22,672 i>i2i Anvils, 677,246 pounds 3i>249 Hammers and sledges, 7S,6i6 3.096 Castings, 1,157,256 pounds 38,686 Brasier's rods, 218,428 pounds S,94S Nails and spike rods, 32,848 pounds 784 American producers supply the home market. The kinds of goods then im- ported. Digitized by Microsoft® 274 OROWTH OF INDUSTRIES. Develop- ment of miscella- neous in- dustries. now Massachu- setts prospered under pro- tection. 1 Sheets and hoop, 2,326,796 pounds 59,822 Slit or rolled for band, scroll or casement rods, 2,848 pounds In pigs, hundredweight, 22,499 pounds 25,644 Bar and bolt, rolled, hundredweight, 138,981 226,336 Hammered, pounds, 68,753,943 i,730,375 Steel, hundredweight, 24,472 291,957 By 1832 various other manufactures had been well established in the United States, among which may be enumerated ■ looking-glass, the printing and binding of books, umbrellas, brushes of all kinds, brass nails, stockings, gloves, wafers, webbing, lace and fringes, mathematical and musical instruments, whips, pocket-books, ready-made clothing, earthen- ware, oil, powder, beer, ale and porter, wire, bricks, types, glue, clocks, printing presses, lamps, spectacles, coffee mills, suspenders, wool and cot- ton cards, oilcloths, bellows, printers' ink, india rubber and many others. The census of 1840 gives the annual value of the product of miscel- laneous industries at $34,785,000. The New England States, Pennsylvania, New Jersey and New York had taken advantage of the protective policy and engaged in manufac- turing more extensively than the other States. Massachusetts, having taken an industrial census in 1835, makes it possible to give definite sta- tistics of its industrial development. Massachusetts employed her people in productive industries, invented and applied machinery and moved it by water power. Every force of nature was utilized. She drew wealth from the land and sea and from every branch of trade, commerce and industry. Although her soil was rocky and ill suited to agricultural pursuits, she grew rich and powerful, and her people impressed their sturdy characteristics on the whole nation. In 1837 she was substantially out of debt and by 1840 had loaned her credit for the building of railroads to the extent of $1,500,000; $4,000,000 of the capital of her people was contributed to the building of roads in Western States. The value of her taxable property was $299,878,300 in 1840, and it was stated in Resources of Massachusetts that in 1844 (Mac- Gregor's Com. Statistics, Vol. 3, p. 77) her people consumed $40,000,000 annually of the produce and materials of other States. In 1835 the exports from the State amounted to $10,043,790. Her imports were large. She brought hides, cotton, wool, leather, iron and other materials into her cities and villages, and by the industry of her people converted them into finished products to be sent to every State in the Union. She had the soundest banks and strongest business houses. Her people were few in numbers ; her population was only 737,699 in 1840 and 610,408 ten years before. Why did all this occur? The answer is simple: She availed herself of the opportunities secured by the " American System." The value of her manufactures in 1835 amounted to $85,742,927, which Digitized by Microsoft® MANVPACTVRES OF MASSACnUSETTS. 275 gave employment to 117,352 laborers. The following summary of the returns of the industrial census taken in 1835, tells the whole story: A Statement oif the Manufactured Products oi? Massachusetts Taken from the Statistics Pubi,ished by Order OF THE Legislature. Articles Manufactured. Value Hands of em- product ployed. Capital invested. Anchors, chain cables, etc Axes, scythes, snaiths, etc Beer, bellows, blacking, boats, wherries, etc Bonnets, straw and palm-leaf hats Books, stationery, pocketbooks & school apparatus Boots and shoes Brass and copper Britannia and block tin Brushes, brooms and baskets Buttons of all kinds Candles (sperm and tallow) and soap Candlesticks, playing cards, chocolate, chair stuffs and coffee-mills Cards (wool) Carriages, wagons, sleighs and harnesses, etc ... . Casks and hoops Chairs and cabinet ware Clothing, neck-stocks and suspenders Combs Cordage and twine Cotton goods (cloths) Cotton batting, thread, warp, wicking, etc Cotton printing Cutlery Drugs, medicines and dyestuff s Fishery (whale, cod and mackerel) Fur caps and other manufactures of fur Gas Glass Glue Gold and silver leaf Gunpowder Hats India rubber Iron castings, bar and rod, etc Jewelry, silver and silver plate Lead manufactures Leather, including morocco ; 114,125 325,956 152,321 1,902,803 1,048,140 14,642,520 1,469,354 66,300 289,512 246,000 1,620,730 66,914 254,420 679,442 202,832 1,262,121 2,013,316 268,500 481,441 13,056,659 169,221 4,183,121 186,200 371,019 7,592,290 73,000 100,000 831,076 34,625 43,000 246,357 698,086 1 8,000 1,658,670 325,500 201,400 3,254,416 36 $ 80,500 387 196,938 273 55,300 1,023 909,800 39,068 297 635,800 59 7,000 350 109,095 358 147,200 266 697,300 81 29,840 139 148,340 945 278,790 194 81,250 2,011 3,939 780,159 444 439 285,37s 19,754 14,309,716 IS I 78,000 1,660 1,539,000 193 92,033 97 98,995 20,126 12,484,078 100 55,000 40 375,000 647 759,400 18 19,700 36 11,200 77 160,800 867 13 10,000 1,3" 1,516,025 207 161,550 43 6,400 1,708 2,033,423 Digitized by Microsoft® 276 auOWTH OF INDDSTRIES. Articles Manufactured. Bow tanking shared in protection prosperity. Value of product. Hands em- ployed. Capital invested. Looking-glasses 165,500 Lumber, shingles and staves 167,778 Macliinery of various kinds 1,235.390 Muskets, rifles, pistols, swords, etc 288,800 Nails, brads and tacks 2,527,000 Oil (refined whale and other oils) 2,030,321 Organs and piano-fortes 324,200 Paper 1,544,200 Ploughs 54,561 Saddles, trunks and whips 351.575 Salt 246,059 Shovels, spades, forks and hoes 264,709 Silk 56,150 Spectacles, starch, stone and earthenware 35.56o- Spirits 1,238,789^ Stone (granite, marble, slate and soap-stone) 680,782 Stoves and stove-pipes 31,000 Sugar (refined) 976,454 Snuff and cigars 184,601 Tinware 394.322 Tools (carpenters', joiners' and shoemakers') .... 258,531 Types and stereotypes iS7,ooo Umbrellas 104,500 Upholstery, including bed-binding, curtains, hair and paper-hangings Vessels built annually Varnish and beeswax Window-sashes, blinds and doors Wire Wooden-ware, including boxes, rakes, shoe-pegs, yokes, helves, etc Woolen goods Engravings, essences, hosiery, lampblack, mechan- ical instruments, mustard, razor-strops, lather- boxes, pumps, blocks, etc Total $85,742,927 Banking and Finance. 55,483 1.370,650 52,600 74,166 81,770 174,692 10,399,807 63.460 58 61,600 121 27,750 1.399 1,146,77s 394 65,943 I.09S 1,974,000 145 1,133.500 239 172,200 1,173 1.167,700 73 758 109,825 708 801,753 284 225.523 125 137.000 47 20,974 1 1,177 209,950 13 11,815 92 303.653 396 33,300 377 297 110,807 215 140,000 136 56,000 86 13,160 2,834 8 9,000 93 8.350 S3 44,200 313 26,950 7.097 5,770,750 117 19,078 117,352 $52,008,863 The number of banking institutions in the United States, says Bishop, had increased from three in 1791, with a capital of $2,000,000, to 246, with an aggregate capital of $89,822,422 in 1816, when the United States Bank was chartered, until on January 1, 1834, the number was 502, their united capital $168,827,803 ; their issue $78,342,528 and the specie of their vaults $17,368,236; the deposits amounting to $66,216,087, including the Bank of the United States, the whole bank capital of the Union at this Digitized by Microsoft® FOREIGN TRADE, 1S21 TO W,0. 277 time amounting to $203,827,883 ; the issues to $97,550,907, specie in value $27,394,667; deposits $77,181,462 and discounts $323,599,843. Another result of the prosperity of the country between 1824 and 1837 was the increase of the precious metals from $21,000,000 in 1824 to $63,000,000 at the close of 1836, a gain of $43,000,000; besides this achievement $30,000,000 of the funded debt of the United States held abroad was called home and paid during the same years. On October 22, 1831, Niles' Register said: It is only about ten months since the New York Journal of Commerce com- plained of the superabundance of specie. Table No. 3. Values op Principal Articles of Merchandise Imported into the United States 1821-1840, Inclusive. Earthenware stone and chinaware Wines Spirits Molasses Teas Cottons Woolens Silks Linens and manufac- tures of flax . . . Manufactures of hemp Iron, steel and manu- factures of Coffee Sugar Salt Spices Lead Hemp and cordage. . Total I82I. 1825. 1830. $ 763,883 $ 1,086,890 $ 1,259,060 1,873,464 1,826,263 ' 1,535,102 1,804,798 3,135,210 658,990 1,719,227 2,547,71s 995,776 1,322,636 3,728,935 2,425,018 7,589,711 12,509,516 7,862,326 7,437,737 11,392,264 5,766,396 4,486,924 10,299,743 5,932,243 2,564,159 3,887,787 3,011,280 1,120,450 2,134,384 1,333,478 3,212,861 5,821,087 5,929,460 4,889,970 5,250,828 4,227,021 3,553,582 4,232,530 4,630,342 609,021 589,12s. 671,979 310,281 625,039 457,723 284,701 301,408 20,395 618,356 484,826 279,743 $43,761,761 $69,854,550 $46,996,332 1835. 1,697,682 3,750,608 1,632,681 3,074,172 4,522,806 15,367,585 17,834,424 16,677,547 6,472,021 2,555,847 8,921,503 10,715,466 6,806,174 655,097 712,638 54,112 616,341 1840. 2,010,231 2,209,176 1,592,564 2,910,791 5,427,013 6,504,484 9,071,184 9,761,223 4,614,466 1,528,155 7,241,407 8,546,222 5,580,950 1,015,426 558,939 19,455 786,115 Export Trade oe the United States. We are now brought to a consideration of the subject of markets for the produce of the American farm and factory. What surplus prod- ucts of their industry did the people have for sale, and where were their markets, at home or abroad? It has been shown in previous chapters that the United Kingdom and European countries fostered the cultivation of their own soil, and by protective regulations, excepting when prices Markets for Amer- cnn farms and fac- tories. Digitized by Microsoft® 278 GROWTH OF INDUSTRIES. ranged very high or in times of scarcity, secured their home markets for grains and animal food products to their own people. Hence but small quantities of such American produce were exported, and these principally to the West Indies and South America. The following table gives ap- proximately the several kinds of articles exported from the United States in each year named : Tabi,e; No. 4. VAiiUt oif THE Principai, AgricuIvTurai, Products Exported prom the; UNiTi;D States in the Years Mentioned. (Compiled from MacGregor's Commercial Statistics, Vol. 3.) Cotton . Tobacco Rice Total.. ' I82I. 1825. $20,157,484 5,648,962 1,494,307 $36,846,649 6,115,623 1,925,245 $27,300,753 $44,887,517 1830. 183s. 1840. 1842. $30,993,066 5,833,112 1,986,824 $67,819,982 8,250,577 2,210,331 $67,419,914 9,883,957 i 1,942,076 $50,564,154 9,540,755 1,907,387 $38,813,002 $78,280,890 $79,245,947, $62,012,296 Other Agricultural, Products. ; 1821. ■ 1825. ' 1830. ■ 1835. ' ' 1840. ' 18^2. Beef, tallow, hides and live cattle Horses & mules Sheep Pork, bacon, lard and live hogs Butter & cheese Flour Indian corn. . . . $ 698,324' 59,830 22,175 1,354,116 190,287 4,298,043 1 $ 930,465 283,835 20,027 1 1,832,679 247,787 4,212,127 $ 717,683 182,244 22,110 1,315,245 142,370 6,132,129 ,$ 638,761 285,028 36,566 1,776,732 1 164,809 4,394,777 $ 623,373 246,320 30,698 1,894,894 210,749 10,143,615 $ 1,212,638 299,654 1 38,892 2,629,403 388,185 7,375,356 345,150 Indian meal. . .. 617,817 124,396 Rye, oats and other small grain & pulse. Biscuit or ship 175,082 324,759 Potatoes 85,844 Apples 32,24s Wheat 916,616 Total $6,622,776 $7,526,920 $8,511,781 $7,296,673 $13,149,649 $14,555,237 Digitized by Microsoft® FOREIGN TRADE, 1821 TO mO. 279 Tablb No. 4 — Concluded. Products op the Forest Exported. Lumber, all kinds. Naval stores Furs and skins. .. Pot & pearl ashes. Ginseng Oak bark and other dyes .... Total. I82I. 1825. $1,512,808 314,660' 766,20s 889,348 171,786 139,534 $1,717,571 . 463,897 524,692 1,994,381 144,599 , 93,809' $3,794,341 $4,938,849 1830. ' 1835. $1,836,014 321,019 641,760 (1,105,127 67,852 1 220,275 $3,323,057 1 567,566 759,953 571,591 94,960 72^77 $4,192,047 $5,391,004 1840. ' 1842. $2,926,846 602,529' 1,237,789 533,193 24,728 229,510 $2,495,198 743,329 882,741 598,487 63,702 111,087 $5,554,595 $4,894,544 Products of the Fisheries Exported. Dried fish Pickled fish ^hale (common) oil and bone. . . Sperm oil Total I82I. 1825. 1830. ' 1835. ' 1840. ' $ 708,778 264,000 350,480 175,117 $ 830,356 448,417 296,425 219,867 $ 530,690 225,987 680,693 287,910 $ 783,895 ' 224,639 1,049,466 119,787 $ 541,058 179,106 ' 1,404,984 430,490 $1,498,475 $1,795,065 $1,725,280 $2,177,787 $2,555,638 1842. $ 567,782 162,324 1,540,793 233,114 $2,494,013 TabeE No. S. Vai,uE oi Various Manufactures of the United States Exported in Each of the Under-mentioned Years. Soap and tallow candles... Leather boots and shoes . . . Household furniture Coaches and carriages Saddlery Hats Wax Spirits from grain, beer, ale and porter Snuff and tobacco Lead Linseed oil and spirits tur- pentine Cordage Iron, subdivided into pig, bar and nails. 1827. 57,717 286,624 123,354 144,832 239,024 3,761 20,704 63,074 n 36,651 309,362 153,666 225,357 246,747 4,831 35,039 4,135 1835. ; 1840. 1 1842. $ 534,467 $ 451,995 $ 485,128 224,772 1 214,360 168,925 264,790 295,844 290,997 83,52s 74,416 48,509 62,233 59,517 52,986 171,531 103,398 ' 65,882 93,919 59,68s 103,626 134,823 128,330 155,378 357,611 813,671 525,490 2,741 39,687 523,428 47,728 63,348 34,775 11,686 43,510 30,457 90,266 147,397 Digitized by Microsoft® 280 OROWTH OF INDUSTRIES. Table No. 5— Continued. Iron castings Iron, all manufactures of Spirits from molasses.... Sugar, refined Chocolate Gunpowder Copper and brass Medicinal drugs Cotton piece goods : Printed and colored White Nankeens Twist, yarn and thread.. All other manufactures of Flax and hemp, cloth and thread Flax bags and all manu- factures of Wearing apparel Combs and buttons Brushes, billard tables, fire engines and apparatus... Umbrellas and parasols.... Leather and morocco skins. Printing presses and type.. Musical instruments Books and maps Paper and other stationery. Paints and varnish Vinegar Earthen and stoneware Manufactures of glass of tin of pewter and lead of marble and stone ' of gold, silver & gold leaf Gold and silver coin Artificial flowers & jewelry. Molasses Trunks Brick and lime Salt ' Manuf'tures, unenumerated Other articles 273,158 Total. 97,003 34,012 1,350 176,229 52,341 119,300 45,120 951,001 14,750 11,175 137,368 11,084 i 5,364' 94,768 33,415 13,038 49,138 "9,545 33,713 14,844 54,012 37,716 29,664 8,182 6,492 59,307 2,967 6,183 3,505 3,605 1,043,574 22,357 1,5" 12,483 3,365 293,379 $6,680,225 209,473 49,798 193,084 893 128,625 36,601 92,154 61,800 964,196 1,093 24,744 266,350 2,152 1,779 102,277 124,589 6,432 25,796 70,968 13,274 10,261 32,004 40,994 13,716 6,670 2,773 60,280 4,497 4,172 4,65s 3,561 937,151 13,707 3,968 6,654 2,482 22,978 347,228 6,258,131 70,922 134,687 158,544 62,293 2,605 227,961 69,791 148,560 397,412 2,355,202 400 97,808 7,859 795 1,575 107,786 101,367 10,175 17,287 11,847 16,758 8,627 59,991 69,700 22,976 4,540 16,247 79,808 I 11,665 I 5,253 729,601 16,973 1,963 5,584 4,133 46,483 896,283 $8,023,674 115,664 841,394 283,707 1,214,658 2,048 "7,347 86,954 122,887 398,977 2,925,257 1,200 31,445 192,728 7,"4 1,128 152,055 40,299 21,051 9,654 19,557 17,10s 12,199 29,632 76,957 34,631 6,401 10,959 S6,688 7,501 15,296 35,794 1,965 2,235,073 9,479 9,775 6,607 16,949 42,246 403,496 $12,108,535 1,109,522 247,745 291,499 3,094 161,292 97,021 139,313 385,040 2,297,964 37,325 250,361 1,038 I 53,219 i 34,714 5,029 5,838 : 22,502 19,611 I 16,253 44,846 69,862 27,370 10,208 7,618 36,748 5,682 16,789 18,921 1,323 1,170,754 7,638 19,040 3,916 5,728 39,064 508,976 1,359,163 $6,482,540 Digitized by Microsoft® FOREIGN TRADE, 1821 TO mO. 281 1842. Summary 0^ Articles Exported. TOTALS. 1821. 1825. 1830. 1835. 1840, Value of Produce from Slave States. $27,300,753 $44,887,517 $38,813,002 $ 78,280,890 $ 79,245,947 $62,012,296 Value of Other Agricultural Produce. 6,622,776 7,526,920 8,511,781 7,296,673 13,149,649 14,555,237 Value of produce of Forests. 3,794,341 4,938,849 4,192,047 5,391,004 5,554,595 4,894,544 Value of Produce of Fisheries. 1,498,475 1,795,065 1,725,280 2,177,787 2,555,638 2,494,013 Value of Manufactures. 6,258,131 8,023,674 12,108,535 6,482,540 Total $39,216,345 $59,148,351 $59,500,241 $101,170,048 $112,614,364 $90,438,630 Destination of the Following Named Animal Products Exported FROM THE United States in 1842. Beef, tallow. Pork, hams and hides, horned bacon, hogs, cattle. butter, cheese. Foreign, West Indies and South America $ 123,436 $ 912,562 British Possessions 360,929 97,i99 United Kingdom 160,697 237,028 France 441,697 502,108 All countries $1,212,638 $2,629,403 Table No. 6. Destination of Wheat Flour Exported from the United States in Each of the Years Mentioned. 1821. 1825. To EuROPe : Great Britain & Ireland To France To Spain and Portugal To Madeira Other Ports of Europe. To Africa To Asia To British North Amer. To West Indies To South America Destination uncertain . . Total To Ali, Countries : Rye flour, bushels Indian corn meal, bu. . Indian corn, bushels . . . Total. Bbls. 94,541 1,175 71,958 26,572 9,074 3,123 10,357 131,035 551,396 156,888 1,056,119 23,523, 131,669 607,277 762,469 Bbls. 27,272 102 730 3,597 SS,8i8 7,623 15,438 30,780 429,760 252,786 823,906 29,545 187,28s 869,644 1,086,474 1830. 1835. Bbls. Bbls. 326,182 5,376 56,590 501 10,222 564 9,628 3,100 37,553 20,247 2,080 3,039 5,114 7,290 149,996 75,406 281,276 382,841 348,593 279,788 230 1 1,244 1,227,464 779,396 26,298 30,854 145,301 166,784 444,107 755,781 615,706 953,419 1840. 1842, Bbls. Bbls. 620,919 208,024 73,925 479 1,250 225 3,087 331 13,553 6,558 4,225 3,290 1,035 5,662 32,356 369,048 474,385 393,713 289,651 255,725 10,770 27,088 1,525,256 1,270,143 53,218 34,190 206,063 209,199 574,279 600,308 833,560 843,697 Digitized by Microsoft® 2S2 GROWTH OF INDUSTRIES. O w n < w W w Q w vn vo o ^- ,^ ^ t-t Q, M (S k; :S 8§' t-i ^1 . to (0 00 00 ■* •a o 2? lO K o cS x^ 00 (s to t^ 8 8 Digitized by Microsoft® THE FARMER'S HOME MARKET. £63 An analysis of the foregoing statements shows the chief articles of export were cotton, tobacco and rice; that of the total exports in 1840 of $112,614,364, these three staples amounted to $79,245,947, and the greatest increase in the export of any one commodity was that of cotton, The exports of the " other agricultural produce " which were princi- pally from the free States, were relatively very small and had grown very little, while those of the forests and fisheries had remained almost sta- tionary. With the exception of cotton, tobacco and rice, the economic conditions existing abroad so restrained our export trade that our only market was the one built up at home by the American system of pro- tection. The wheat-growing sections of the United States in 1840 may be divided into three natural divisions: 1st, the States of Maine, New Hamp- shire, Vermont, Massachusetts, Rhode Island and Connecticut, having a population of 2,234,822 persons, with a wheat crop of 2,000,000 bushels, using 160,000 bushels for seed, consuming for human food 7,750,000 bushels and importing from other wheat-growing sections of the United States 5,910,000 bushels. 2d, The States of New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, Kentucky, Tennessee, Ohio, Michigan, Indiana, Illinois, Missouri, District of Columbia and North- west Territory, with a population of 11,317,666 persons, producing in 1840 73,000,000 bushels, using for seed, starch, etc., 7,190,000 bushels and consuming for human food 46,200,000 bushels ; exporting to foreign countries in 1840 in the form of flour and grain, 11,300,000 bushels, and importing from other wheat-growing sections 8,310,000 bushels. 3d, The States of South Carolina, Georgia, Alabama, Mississippi, Arkansas, Florida Territory, and including also North Carolina, with a population of 3,510,078 persons, using a wheat crop of 5,000,000 bushels, using for seed 400,000 bushels and consuming for human food 7,000,000 bushels, and importing from other wheat-growing sections 2,400,000 bushels. Hence, of a total crop of 80,000,000 bushels, 11,000,300 bushels were exported in the form of flour and grain to foreign countries, and 60,950,- 000 bushels consumed for human food. The New England and Southern States were dependent upon other sections of the country for a deficiency of 8,310,000 bushels, which was supplied from the second v^^heat-growing section. It appears that the wheat-growing section raised a surplus of 19,610,000 bushels, of which 8,310,000 bushels went to the New England States and Southern States in the proportion named, and 11,300,000 bushels were exported to foreign countries in the form of flour and gram, the quantity being largely in the form of flour, there being only 1,220,860 bushels of wheat, the largest export of wheat since 1793. The exports of wheat have been in 1832, 88,304 bushels; 1833, 32,421 ; 1834, 36,948; 1835, 47,762; 1836, 2,062; 1837, 17,303; 1838, 6,201; 1839, 96,325; 1840, Our iest market teas at bom*. American wheat growing sections In liiO. Deflciencv in Neto EtiffJaml and South- ern Bfeta, Digitized by Microsoft® 2S4 GROWTH OF INDUSTRIES. Heei of an enlarged home market. Farmers get little for their products. 1,720,860; 1841, 868,585; 1842, 817,958, and the exports of flour during the same years were as follows: 1832, 864,919 barrels; 1833, 955,768; 1834, 835,352; 1835, 779,396; 1836, 505,400; 1837, 318,719; 1838, 448,- 161; 1839, 916,161; 1840, 1,897,501; 1841, 1,515,817; 1842, 1,283,602; 1843, 841,474. On account of the deficiency of the harvest in Great Britain in 1840, the quantity of flour and wheat exported was greatly in excess of the quantity which had theretofore been sent abroad; hence, on account of the extremely limited foreign market for American-grown wheat our production was greater than our home demand, which tended at all times to depress the price. The need of an enlarged home market and the necessity for the extension of manufactures into the Western States, is shown by the fact that the whole export of 1840 — equivalent to 11,208,365 bushels — was produced in the States and Territories north and west of the Ohio River and came to the Atlantic cities by various outlets of the Ohio and Mississippi Rivers, the canals and railroads of Maryland, Pennsylvania and New York. In the States and Territories beyond the Ohio River, the wheat raised in 1839 was 26,000,000 bushels. Allowing 12,000,000 bushels for consumption at 4 bushels per head, and 2,500,000 for seed, starch, etc., we had left a surplus for export from that section of 11,500,000 bushels. "Now, it is a striking fact," says the Philadelphia Commercial List for 1842, " that this surplus, in short, the whole disposable surplus of the United States, is furnished by that section of our country the most remote from our Atlantic sea- ports, and with the aid of all the natural or artificial communications existing, it cannot reach those ports, from the places of shipment, much less from the farmer's door, at a charge per bushel of 45 or 50 cents, freight, insurance, com- mission and wastage included. From Cleveland to New York, the charge is about 371/2 cents; from Pittsburg to Philadelphia about 40 cents, and these are the nearest and most convenient shipping points. What, then, does the farmer in those States get for his wheat when the price in our Atlantic cities is $1.00 per bushel? Is it not a matter of serious consideration whether, with our rapidly increasing population, the consumption of wheat has not already approached too close to its production? Not leaving a sufficient margin to meet the contingency of a bad crop, which might make it necessary again to import from Europe; and under circumstances not so favorable to obtain supplies as those which existed in 1837 and 1838. It is evident from the experience of the last fifty years that the increase in the cultivation of wheat merely extends in proportion to the wants of the home population, not giving any increase in the surplus for export, unless in years of overproduction, or when the home consumption is lessened by high prices arising from unusual demands for other countries. Indian corn was worth 60 cents a bushel in Boston, 32 cents in New Orleans, 20 to 25 cents in Cincinnati and 20 cents in St. Louis and not over 10 cents in many remote places in Illinois, Kentucky, Tennessee Digitized by Microsoft® THE FARMER'S HOME MARKET. 285 and Missouri. It was worth 60 cents a bushel in Massachusetts on account of the demand created by the manufacturing population. It was only fit for fuel in the Western States, where there was no market. Mess pork, worth from $7.50 to $9.50 per barrel in New York in 1842, was worth only $5.25 in Cincinnati, and the salt, barrel and packing cost about $1.37j^ per barrel, leaving only $3.88 for 225 pounds of pork, including the waste of heads, feet, etc., being $1.75 per 100 pounds of pork. Wheat flour was worth $6.00 per barrel in New York and Bos- ton and $3.75 in Cincinnati. Mr. Seaman said: When the reader reflects that much of the farming country in the Western States lies from so to lOO miles from navigable waters or canals; that it costs about 10 cents per bushel to transport grain by wagons 30 to 33 1-3 miles, and that the cost of hiring it transported 60 to 70 miles would be generally greater than the value of corn in the Western cities, he need not wonder that the whole crop of corn in Missouri should be estimated at 15 cents per bushel, nor need he wonder that there is often no money market for it at any price, in the interior districts remote from navigable waters, and that it usually sells in barter in such districts, at from 10 to 45 cents per bushel. The foregoing tables show that of the export of 1,525,256 barrels of wheat flour in 1840, Great Britain took 620,919. This, however, was an exceptional year, as England was suffering from a deficient crop. The exports to that country fell off to 208,024 barrels in 1842. Of our exports of animal food products of $3,842,041, in 1842, the United Kingdom took only $405,725. Our exports to the United Kingdom in 1842 of domestic produce amounted to $38,253,611, which consisted of $30,102,427 of cotton and $3,212,197 of tobacco. To France, $17,015,- 298, of which $13,393,044 was cotton and $1,125,167 tobacco. The staple productions of the free States must be sold at home or not at all. Our total domestic exports in 1842 amounted to $92,969,996, of which cotton, tobacco and rice constituted $59,000,000, leaving a balance sold to all the world of all other products of $33,969,000. The State of Massachusetts alone consumed of the produce of other States $40,000,000, or was worth as a market for our domestic productions, excluding the three staples of the South, $6,000,000 more than all countries combined. The capital invested in domestic manufactures produced an annual product of about $370,000,000, which was nearly all consumed at home. Can it be doubted that the wealth and stability of the country, the accumulations and well-being of the people were due to the application of labor and capital to domestic productions, to home trade and domestic exchange ? Our coasting trade grew from a tonnage of 481,457 in 1816 to 1,018,253 in 1842, besides the vessels of under twenty tons engaged in this trade; and the advocate of free trade would have you believe that the Profits eaten up by trans- portation cost. Where else would a market have heen found? Digitized by Microsoft® 2S6 GROWTH OF INDUSTRIES. Products ot Ameri- can agrir culture mO-18U- progress of the nation depended on the suppression of manufactures, the curtailment of domestic exchanges and a reliance on foreign trade. Had it not been for the manufacturing population brought into existence by protective laws, where would the 60,000,000 bushels of surplus wheat have found a market? Where would the animal food products and other farm produce of the value of $275,900,000 (1840) have found a market? No advocate of the free trade doctrine has attempted to answer this question. The export of pork and beef to foreign countries had not materially increased, and there was no prospect of a market other than found at home. The increased consumption by the people of the towns and large cities, by those engaged in inland and coasting trade, whale fisheries, in the lake and river trade and foreign navigation, afforded to the American farmer the only market for animal food products. The agricultural productions of the United States in the year 1839, as shown by the census returns of 1840 and in part in 1844, according to estimates made by Mr. Ellsworth, were as follows : AGRICUIvTURE-IvIVE STOCK. 1840. 1844. Horses and mules 4,325,669 Neat cattle 14.971,586 Sheep 19,311.374 Swine 26,301,293 Poultry of all kinds — estimated value $9,344,410 Horticulture. Value of produce of market gardeners $2,601,196 Value of produce, nurseries and florists 593,534 Number of men employed 8,553 Capital invested $2,945,774 Value of produce of the dairy $33,787,008 Value of produce of the orchard 7,256,904 Cereai, Grains. Number of bushels of wheat 84,823,272 9S.6o7,ooo " barley 4.161,504 3,627,000 " oats 123,071,341 172,247,000 "rye 18,645,567 26,450,000 " buckwheat 7,291,743 9,071.000 " Indian corn 377,531,875 421,953,000 Pounds of rice 80,841,422 in,759,ooq Digitized by Microsoft® THE FARMER'S HOME MARKET. 2S7 Various Crops. Bushels of potatoes 108,298,060 99,493iOO0 Pounds of sugar made 155,100,809 201,107,000 Gallons of wine made 124,734 Tons of hay 10,248,10854 i7,7iS,ooo Pounds of hops 1,238,502 " wax 628,303^4 " "tobacco 219,163,319 151,705,000 " " wool 35,802,114 Cotton gathered, lbs 790,479,275 872,107,000 Silk coccoons, lbs 61,5525.^ Tons of hemp and flax 95,251^4 22,800 Cords of wood sold 5,088,891 Value of home market built up T>y protection. Ezra C. Seaman ^ presents the following brief analysis of the pro- duction and consumption of farm produce in the United States in 1840 which emphasizes the value of the home market that had been built up under a system of protection to the American farmer, and also demon- strates the striking necessity of extending protection to the production of the finer grades of articles and fabrics, the increase of the home market and the extension of manufacturing industries to the Western or wheat- and provision-growing sections of the country. He said : The estimate of the quantity of pork, ham, bacon and lard — fresh and salt, made in the United States in the year 1839; consumed by fifteen million free per- sons, and house servants. 100 pounds each on an average i.Soo million Consumed by over two million field slaves, at 185 pounds each 375 " Exported, about 25 " Total consumed and exported 1,900 " Great T)ulk of our farm prod^ ucts con- sumed at home. The quantity of beef, mutton and veal consumed during the year 1840 may be estimated at fifty pounds for each of the fifteen million free persons and domestic servants, equal to 750 millions. Beef exported during the year, 19,681 barrels, which is less than 4 million pounds. The consumption in 1840 of bread stuffs and provisions, by the white and free colored population of the United States, including house servants, may be esti- mated as follows — the prices being taken as average prices in all parts of the country at the place of production, during six years, from 1840 to 1845, inclusive : Pork, ham, etc, 100 pounds each at $4.00 $60,000,000 Beef, mutton and veal, 50 pounds, each 30,000,000 Wheat and flour, 4 bushels each, at 80 cents 48,000,000 Rye, corn and buckwheat, 3^ bushels each at 45 cents 23,625,000 Total value of the grain and meats consumed $161,625,000 1 Progress of Nations, First Series, pp. 276, 277, 278, 279. Digitized by Microsoft® 2S8 GROWTH OF INDUSTRIES. Home con- sumption $275,000,000 exports, tm,ooo,ooo. We could tuy, 6u« tee could not sell. Total value of grain and meats consumed $161,625,000 Products of the dairy consumed, about 33,000,000 Milk and cream not reported in census, one-third as much 11,000,000 Products of the orchard, valued at 7,256,000 Products of market gardens 2,601,000 Products of gardens for domestic use, estimated at 10,000,000 Poultry of all kinds, whole value returned 9,344,000 Eggs, two-thirds as much as poultry 6,230,000 Potatoes and turnips, 3 bushels for each, at 20 cents 9,000,000 Total $250,056,000 The consumption is equal to $16 2-3 for each person. The inhabitants of cities and villages paid on an average 50 per cent above these prices, on account of the expense of transportation, traders' profits, etc. Add for consumption of two million of field slaves: 24 million bushels of corn at 33 1-3 cents $8,000,000 4 million bushels of potatoes at 20 cents 800,000 Products of gardens 1,000,000 Pork and beef, 190 pounds, each at $4 per 100 pounds 15,200,000 Total for slaves $25,000,000 And making a total of $275,056,000 Value of breadstuflFs and provisions produced by the farmer and consumed in our own country. The whole amount exported during the fiscal year 1840 was valued at about sixteen millions of dollars. Here we see that the quantity of each class of provisions, breadstuffs, vegeta- bles, fruits, etc., necessary to satisfy the wants of our people, is very limited, com- pared with the capacity of the country to supply them; so limited that our markets have been generally glutted, and prices very much depressed; and the foreign demand has generally been very trifling. We were constantly told by those who were seeking to monopolize our markets with foreign wares that " if we did not buy we could not sell." Yet they excluded from their markets all of our grains and pro- visions and would not buy of us. If we could not sell abroad, then how could we buy abroad except with specie? and this we did not then have. Yet we must sell, we must have a market. With our virgin and generous soil we had a constant surplus of grains, and from pastures we easily produced more animal food products than we could consume. Unless we provided a home market our grain would not be worth threshing, and our animals would not be worth slaughtering. The creation of a market at home for the produce of the farms was an imperative necessity. This fact was so pressing that the protective policy was inaugurated and estab- lished by the farmers and supported by all the Presidents up to Martin Van Buren. As Thomas Jefferson said, " We must place the manufac- turer by the side of the agriculturist." Digitized by Microsoft® BATES OF DUTY, 1816 TO m6. 289 W W o to VJ w > w w » >< m o w O) O w . K 03 W « Q w w O ii o o o CM u tn w a o o i-r a ;2 o o W 00 00 vo oo WCQf^WfMCOCOWN • OOOIOOOOOOOOOO tJ N N C^ '^ '■^ '■'^ '^ '^ '■^ '"^ '^ '^ u rOONwmChOroOOOOioO OtSOOOOOO"i-.OC)t^ p tH (T) m 01 fO lO 0\ Q o o o o ro O O " o O M o ■ ■ ■ d o Q o O VJ o 2 £ i-i u :? !z; « HH D M f-i ^ w o O -o -i a ^ c ^ Tt n c o aj u rt n1 OJ ii pq ffl ffl m 3 C E M omoooooo OmOOOOmrtmi-t inoNOMIMOOOO w ' * oi ■^^ * • ■ • o pq n ^ w in in to *~t OJ o o o MOO o ta g.'g 2 8 ^ M « O T3 ■ C ►J o S w W u M 3 g 13! C ^ -— < ■U rt OJ OJ ^ 3 ^ w - C C O .=3 S tH o " It 6 " - B CO p. m -a o ■t-T l-" p ft-3 r3 •- w nl by Microsoft® be ~ u .S S g, .- o O U Pm S p & £^|-e 1- M to t: I" ,„ a > > 'S fi o ■" ^' ^ ., O rt ^ tj +^ o 3 0/3 u g rt C4 s s 'rt 'S S 5 Iz; iz; rt w m tn S 1^ S B O^ -s-s BATES OF DUTY, 1816 TO 18J,e. 291 o o o o CO to CO c^ oooooooo cococococococoro o o o o o CO CO M N 01 " 1 ^ 4 u lO oo g Ol rt o o q o q q i O Q O in o o o o o w CO iri 8 O li^ o o o to -Tt lO o o 00 o ^ N CO rf TJ- • CO ^ O ^ ■iri\o Q 5 S s s — od<>2 6 5 q ? 5? t? in 01 ; 8 o O in m 01 M * 01 oi <^ ■ o o o o o u^ CO O "^ O W * CO CO tJ- to rf- U. \0 O CO CO _rt q M q o O ^ M W (M 01 CO o o ; w M q q °. q a O O Q CO CO ■+ HI 00 o CO ■a a rt 4 fo "7 ts, 0) J3 a S c rt rt •a c , o -o "" . o E ^ •^ lU p 43 S E w rt S o p o I- 3 o »-> o y o o K E i:i rt o .S § "2 2 A 00 tfi tn V O > 1-, o - rt ^ C , C C C 1- ^ .C J3 JJ O _o O E 'e'e'e^ (L) 4J QJ Qj P P Ph •o J E o o l^J « *-■ -4-. O ^^ tJO o ^ & ^ O O O na TD 'Td c c c Digitized by Microsoft® 292 OROWTH OF INDUSTRIES. o n o o n n o o n n n O O o o o ^n lO )^ t> -N w W N ir> 19 t^ N OJ 1-; to "^ f^ \0 m^ O ■ ■ c fO in CO ^ o o o q O O in 10 m 10 10 ^ 01 0* HH O 2. ^ O O O 10 m m xo in < bi) " . t3 _r r^ Qj V iH 3 " S a ^ -3 crt en w c/T tn oT -*-i -t-> (U CD OJ (U O O O O O O O O J3 j3 j:; ^ W W W CO CO CO a c cq > .S -S O* ft rt rt - B O ti 60 C ^ u C p- c is « CO •—I O 13 >1' ff ^ :>3 Digitized by Microsoft® RATES OF DUTY, 1816 TO W,6. 293 00 oooooooiomoooooo 00 o Q in o o OOoOO-^0>-!pOO +--'>-■-**- 2 ^ ^ ci HH CO N o Q '"S fe 00 d < O P in o vo m VQ 00 M ro (^ O O tt Tj-invo '^^no^0\0^ OOCOt^OOOQ -fi -H- +^ 4= 00 o Q o o Q lOOvo "^"000 ■^m\o "Tl-mQ ^^ NMCOwOOoOOOONOq -■- • ns rn OJ (U hn /"^ Oh ^ w 1— 1 OJ ^ C) p* iz; ^ o ■. ^ w c^ ., Iz; d S < ii J o ri J3 MH rt ^ o- •d ?! c C! S^ p So- rt o Ph CO -^ in ro rt - B e ° OJ o c S rt rt ^ Pi 5 c m nl rt C 5 J^ q o lo w d t-* o in o o o ^ -M O £ o " o E J S^ -. . . ^ s S 8) S) ^ C C C ^- i- rt _ rtrtrtOOOJ3^_ OCXJOOUOPP 5 ^ ^ J3 * " O O < O « m ■u C 3 o E m J^ ,-r a ■^^ q U^ E =3 -^ ^6 . - - 1 " a ^ J3 J3 ^ ^ «:J n o CO cQ w en p n r^ S S S E o o o Digitized by Microsoft® 294 OROWTH OF INDUSTRIES. o o o O CO O CO o CO O 8 a ft o CO a o CO ft o CO ft o o CO 8 s lO o CO o CO o CO o CO 00 Uh tH M-i „ 00 :j;:s; lO lO UO to 01 01 o O O IT) 00 o o o CO CO H« O CO lO lO « * • • * w (\! 5^ ^^^ 13 S 00 6 w M cq CO W O O " loinmr^mioo coo rxt^O O Q u lo U-) lo r^ u^ lo 00 u-JOOOOOOOOOOO M COCOCOCOCOCOCOCOCOCOCO lU 4J c ■■ nt en M 6 - cU tn u 13 13 ca CU O. O a .-o bo rt -P ., .t^ ■" bD bo .S '^ . '5 'bO ' - C 0> rt y .S c "s c 3 - en ^OJ r- u g < « .t ojtuQjcajcuajajfuaj Ph V a) a. o, nj cfl & > bo c £ S3 ;> Pi 5 >" 3 (n 13 C bo dj lu p. P. CO « Ph Ph a •° - - ^- 'oJ 'oj OT OT W W M M >-" h CO CO bo bo 3 3 WW Digitized by Microsoft® RATES OF DUTY, 1816 TO 18^6. 295 jOOOOOQO dl • ;:5^ 4 (/I u ? 5 & 2 ^ 2 ^ 00 3 Q fi ' " ' £ ' ' yi _; 1-. "? Tl- u-j O O M lo 13 00 q o o " "? " o • • • N • • -§ *"* Q ~ 'tj o U 1-. • Tf U-) O O N "^ 00 00 04 00 HI X) O O ►- "? " o c ■ ■ • IM • • , o o o 2 w ►4 « . 1-1 \n ^ m o o ^ \n < ^ s d o O O " "? " o H 'o • ■ ■ ■ CH ■ ■ Q u3 >-• lo fo ^ o o w -rr vd JS 5" o o " "? ". q CO Q ' N ' " 3 O aj ° t" /i c'' W OT W t-i H t-* H Digitized by Microsoft® 296 GROWTH OF INDUSTRIES. Note 1. The Act of April 27, 1816, contains the following provisions in regard to cot- ton: " On cotton manufactures of all descriptions, or of which cotton is the material of chief value, and on cotton twist, yarn or thread, as follows, viz: for three years next ensuing the 30th day of June next, a, duty of 25 per centum ad valorem; and after the expiration of the three years aforesaid, a duty of 20 per centum ad valorem: — Provided that all cotton cloths, or cloths of which cotton Is the material of chief value (except nanlceens imported direct from China), the original cost of which at the place whence imported with the addition of 20 per centum if imported from the Cape of Good Hope, or from places beyond it, and of 10 per centum if imported from any other place, shall be less than 25 cents per square yard, shall, with such addition be taken and deemed to have cost 25 cents per square yard, and shall be charged with duty accordingly; provided also, that all unbleached and uncolored cotton twist, yarn or thread, the original cost of which shall be less than 60 cents per pound, shall be deemed and taken to have cost 60 cents per pound, and shall be charged with duty acordingly; and all bleached and colored yarn, the original cost of which shall have been less than 75 cents per pound, shall be taken, and deemed to have cost 75 cents per pound and shall be charged with duty accordingly, &o. By Act of April 20, 1818, this provision was extended to June 30, 1826, and by the Act of May 22, 1824, the minimum valuation was increased to 30 cents per square yard, and by the Act of May 19, 1828, it was raised to 35 cents per square yard. By the Act of August 30, 1842, a duty of 30 per cent, ad valorem was imposed on manufactures of cotton at the following minimum valuation : That all manufactures of cotton or of which cotton shall be a component part, not dyed, colored, printed or stained, not exceeding in value 20 cents per square yard, shall be valued at 20 cents per square yard; and if dyed, colored, printed or stained, in whole or in part, not exceeding in value 30 cents the square yard, shall be valued at 30 cents per square yard, excepting velvets, cords, moleskins, fustians, buffalo cloths, or goods manufactured by napping or raising, cutting or shearing, not exceeding in value 35 cents the square yard, shall be valued at 35 cents per square yard, and duty be paid thereon accordingly. All cotton twist, yarn and thread, unbleached and uncolored, the true value of which at the place whence imported shall be less than 60 cents per pound, shall be valued at 60 cents per pound, and shall be charged with a duty of 25 per centum ad valorem; all bleached or colored cotton twist, yarn and thread, the true value of which at the place whence imported shall be less than 75 cents per pound, shall be valued at 75 cents per pound, and pay a duty of 25 per centum ad valorem; all other cotton twist, yarn and thread, on spools or otherwise, shall pay a duty of 30 per centum ad valorem. Note 2. Under the Act of 1816 raw wool was free. Under the Act of 1824 wool costing not to exceed 10 cents per pound was subject to a duty of 15 per cent ad valo- rem, and wool costing more than 10 cents per pound, was subject to a duty of 20 per cent ad valorem until the 1st day of June, 1825, 25 per cent ad valorem until the Ist day of June, 1826, and afterwards 30 per cent ad valorem. By the Act of 1828 the duty was 4 cents per pound and In addition thereto 40 per cent ad valorem until the 30th day of June, 1829, from which time an additional duty of 5 per cent was imposed annually until the whole of said ad valorem duty should amount to 50 per cent. By the Act of 1832 wool valued at the place of exportation costing less than 8 cents per pound was admitted free, and wool costing more than 8 cents per pound at the place of exportation was subject to a duty of 4 cents per pound and 40 per cent ad valorem. By the Act of 1842 wool costing 7 cents or under per pound at the last port or place of exportation was subject to a duty of 5 per cent ad valorem, and on all other wool the duty was 3 cents per i)ound and 30 per cent ad valorem. By the Act of 1846 the duty was fixed at 30 per cent ad valorem. Digitized by Microsoft® RATES OF DUTY, 1816 TO 1846. 297 Tabi^e No. 9. Showing the Peincipae Articles upon Which Ad Valorem Duties Were Imposed by the Several Acts oe the Following Mentioned Years. (For the Duties Under the Compromise Act oe 1833 See Chapter XIII.) Leather. Bridles Tanned and tawed, sole or bend Manufactures of, n. o. p Saddles Chinaware. Chinaware Earthenware .... Porcelain, glass and porcelain ware Stoneware Tiles, paving Tiles, for building Clocks, and parts of Miscellaneous. Bonnets, silk or satin, for women Brushes Buttons Buckles, shoe or knee Cabinetware and household furniture i8i6. Per cent 30 30 30 25 and 30 20 20 20 20 25 30 30 20 20 30 1824. Per cent 30 30 30 30 20 20 20 20 25 30 30 20 20 1828. Per cent 30 30 30 30 30 20 20 20 20 30 25 30 30 25 25 30 • Per pound. 1832. 1842. Per Per cent cent 30 30 30 *6c 30 35 30 30 20 30 20 30 20 30 20 30 15 25 30 25 25 25 each 30 $2.00 25 25 25 30 30 30 30 30 1846. Per cent 30 30 30 30 30 30 30 30 25 30 25 30 30 Digitized by Microsoft® 2ii GROWTH OF INDDSTRIE8. 1816. 1824. 1828. Per cent , Per cent Per cent Canei and walk- ing sticks 30 30 30 Jewelry, gold, sil- V e r , platinum, etc. 7H I2J4 12V2 Lead, manufac- tures, n. 0. p 20 25 25 Millinery 30 30 30 Wood, manufac- tures of 30 30 30 Hats (wool or felt, 1842) .... 30 30 30 Hosiery, woolen or worsted . . . 35 Merino shawls . . Mits and mittens. 30 30 35 Socks and stock- ing! 20 20 35 Wool, manufac- tures of n. 0. p. See note i, or part wool. . 20 and 25 30 & 33^ p. 299 Worsted stuff, shawls, etc., of 1 silk and worsted 25 25 Wool, manufac- factures of, or^ part wool, value not above 33 1-3 cents per sq. yd. 25 *i4c (See note T,^.;, j_o) Silk. Bolting cloth 19 IS Sewing silks. . . . Silk, manufac- tures from be- yond Cape of Good Hope. . . . 25 30 Silk, manufac- factures this side of Cape of Good Hope . . . 1 Cotton. (See note I, p 296) Manufactures, n. 0. P 25 and 20 25 25 • Per square yarjl. Digitized by microsofm ' 1832. 1842. Per Per cent cent 25 30 I2y2 25 25 30 25 40 25 30 each 30 l8c 25 30 50 25 30 30 30 so 40 ID 30 5 20 40 lb. $2 10 30 Free. 30 25 30 RATES OF DUTY, 1816 TO 18^8. 29> Twist, yarn, thread, un- bleached, un- colored, value below 60 cents per pound Twist, all other twist, yarn,, etc., on spools or otherwise Gauzes Laces, n. o. p Coach of cotton or other mate- rial Thread and insertings Gold or silver. . . . Nankeens Sail duck Cotton, bleached, printed, etc Flax, manufac- tures of, n. o. p. Linen and other manufactures of flax, n. 0. p 1816. Per cent 25 7^ 20 25 1824. Per cent 25 I2y2 35- 15 25 25 1828. Per cent 25 12H 35 25 *9 and I254c 25 ' 25 • Per square yard. 1832. Per cent 25 12V2 35 25 IS 25 25 1834. 184S. Per Per cent cent 25 25 30 25 lb.$3^ 25 20 «0 35 25 15 20 15 30 30 25 *7c 25 30 25 20 25 20 Note 1. The Act of April 27, 1816, contains the following provisions in regard to woolen manufactures: " On woolen manufactures of all descriptions, or of which wool is the material of chief value, except blankets, woolen rags, and worsted or stuff goods, shall be levied, collected and paid, from and after the 30th day of June, next, until the 30th day of June, 1819, 25 per centum ad valorem; and att«r that day 20 per centum on said articles." Act of May 19, 1828, in fixing the duties on manufactures of woolen goods, pro- vides: " On manufactures of wool, or of which wool shall be * component part, except carpetinss, blankets, worsted stuff goods, bombazines, hosiery, mits, gloves, caps and bindings, the actual value of which at the place whence imported, shall not exceed 50 cents the square yard, shall be deemed to have cost 50 cents the square yard and be charged thereon with a duty of 40 per centum ad valorem, until June JO, 1832, and from that time a duty of 45 per centum. " Manufactures of wool, etc., the actual value exceeding 60 cents per square yard, shall not exceed 8$ 1-3 cents per square yard, shall pay a duty of 14 cents per squar* yard. "Manufactures of wool, etc., actual value exceeding 50 cents per square yard, not exceeding $1 the square yard, shall be deemed to have cost $1 the square yard and be charged thereon with a duty of 40 per centum ad valorem t« June 88, 1829, and from that time a duty of 45 per centum ad valorem. "Manufactures of wool, etc., value exceeding $1, not $2.50 per yard, shall be deemed to have cost $2.50 per square yard, and be charged with a duty thersen ef 40 per centum to June 30, 1829, and from that time a duty of 45 per centum. Digitized by Microsoft® 300 GROWTH OF INDUSTRIES. " Manufactures of wool, etc., value, etc. exceeding $2.50, not %i per square yard, shall be deemed to have cost at the place whence imported %i per square yard, and a duty of 40 per centum shall be levied, etc., until June 30, 1829, and from that time a duty of 45 per centum. "Manufactures of wool, etc., the actual value of which, etc., shall exceed $4 per yard, a duty of 45 per centum ad valorem until June 30, 1829, and from that time a duty of 50 per centum." " The terms • minimum,' • minimum price,' etc., which frequently occur in tariff debates, are probably not understood by every reader. The word minimum signifies the least quantity assignable in a given case. As, by this bill, all cottons, though costing less than 25 cents, are to be considered as having cost 25 cents a yard, that Is, the least or minimum price on which the percentage duty la to be charged." Digitized by Microsoft® PART III. PERIOD 1834 TO 1860. CHAPTER XII. SectionaIv Opposition to Protection. Protection vs. Free Frade — Sectional Objections to the Protec- tive POI^ICY. Slavery, in consequence of the enormous development of the cotton culture, had become the determining principle of the whole political, economical and so- cial life of the Southern States, and a protective tariff was absolutely incompat- ible with the interests of the slaveholders.— VanHolst, Life of John C. Calhoun. Sir, disguise this question as you will, it is, after all, a crusade against free white labor; this controversy is a war against the free white labor of this coun- try; a war levied by the owners of the slaves. . . . These men aver the same system of (protective) laws is encouragement to the free but discouragement to the slave-labor of the country, and that all the great interests of all the free labor in the United States must be, nay, shall be, sacrificed not to preserve but to render more profitable the capital vested in all its naked, base and odious deformity? Dare they tell the world of Christian nations the true state of this question? Would not those nations which have universally excluded slavery from their civil policy, would they not hear with a shout of indignation that one of these States had taken up arms against the Union and had sworn to destroy that Union (and thus make an end of protection) for the purpose of rendering their negro slaves more valuable by rendering the labor of those slaves more profitable (by estab- lishing free trade?) — Trisman Burgess, speech January 26, 1833. Were there no black slaves in the United States, there would be no opposition to a protection of the labor of white freemen. — Niles. What, then, remains for the Southern cotton growing States? The inevitable consequences of an absolute adhesion to their favorite maxims of policy, to the exclusive occupation of agriculture. Comparative poverty and decay, a meager and sparse population, deficient markets and languishing agriculture. The conse- quences are inevitable and invariable. They never did fail and they never will fail. A mere agricultural community was never yet a populous and wealthy com- munity. They never will be wealthy and populous. It is morally and physically impossible that they ever should be. — Speech of Henry C. MartindalE."- The secession movement had its birth in South Carolina between 1824 and 1832. During this period all of the principles fought for by the Southern Confederacy in the War of the Rebellion were formulated 1 Congressional Debates, 1S29, 1830, Vol. 6, Part 2, p. 749. (301) Inevitable and invari- able con- sequences. X Southern Free- Traders alienated from the Union. Digitized by Microsoft® 302 SECTIONAL OPPOSITION TO TUB AMERICAN SYSTEM. and openly advocated. It was during this time, following the contro- versy over the admission of Missouri, that the alarm was sounded over the safety of the institution of slavery, and by 1832 a majority of the people of South Carolina were alienated in their sentiments and convic- tions from the Union. They felt that the disruption of the Union was only a question of time. The principles then enunciated spread through all the slave States and aroused their people to united action and support of the doctrine of secession. While some objections to a protective tariff were made by the representatives from South Carolina as early as 1789, as there were from other States, yet the people in the early history of the State supported the Federalist party up to about 1820, following the leadership of William Lowndes, Langdon Cheves, John C. Calhoun and David R. Williams, a body of able young men who had supported Madison's and Jefferson's administrations and favored : The gradual increase of the navy, a moderate military establishment, properly organized and instructed, a system of fortifications for the defence of the coast, a restoration of specie currency, a due protection of those manufactures which had taken root during the period of war and restriction, and, finally, a method of connecting the various portions of the country by a judicious system of internal improvements.'^ The State Bights alarm gotten up. A disposition was also manifested to give to the Constitution a rational interpretation in harmony with the welfare of the entire country. Eldred Simpkins, a leader of thought at that time in the State, in 1818 said: This alarm of State rights has been gotten up and encouraged by gentlemen most strangely. It would really seem that both the State and the general govern- ments were not the governments of the same people, identified by the same in- terests. . . . Such strict construction would launch us into an ocean of uncer- tainties and would fritter away all the Constitution worth preserving. John C. Calhoun, in 1817, said: Calhoun's early in- terpreta- tion of the Constitu- tion. He was no advocate for refined arguments on the Constitution. The instru- ment was not intended as a thesis for the logician to exercise his ingenuity on. It ought to be construed with plain good sense. ... If the framers had in- tended to limit the use of money to the powers afterwards enumerated and de- fined, nothing could be more easy than to have expressed it plainly. Our laws are full of instances of money appropriated without reference to enumerated powers. In 1816, as shown by the extended quotation from his speech, John C. Calhoun was a consistent Protectionist. He said at that time he " hoped to see manufactories encouraged by appropriate duties and had 1 Calhoun at Abbeyvllle, May 27, 1826, Nlles Register, XXVIII, 266. Digitized by Microsoft® ATTITUDE OF JOHN C. CALHOUN IN IS16. 303 no idea of their being left without such protection." He earnestly advo- cated protection to the cotton and woolen industries and all of those industries to which the fostering care of the Government was extended under the Act of 1816. The judiciary was recognized as co-ordinate with the legislative and executive branches of the government, and vested with the power to decide questions of constitutional construction and all questions arising thereunder. As early as 1821 this doctrine was embodied in a pamphlet, written by George McDuffie to Governor Hamilton, in which he said : No climax of political heresies can be imagined in which this might not claim the most prominent place. To suppose a general government has the right to exercise certain powers and that each has the right to determine its own relative powers, is to suppose the existence of two contradictory and inconsistent rights. By 1828 the whole situation was rapidly changing. The sentiment of the people was soon reversed. The people of South Carolina took alarm at the growth of the anti-slavery sentiment in the North. The Charleston Mercury on July 28, 1826, contained a communication which read: The negro bigot still prates of the abstract rights of man ; and from the vil- lage pulpits to the halls of Congress, in defiance of the Constitution, we hear the enunciation of sentiments that can only breed among us insurrection and blood- shedding. A series of articles entitled The Crisis or Essays on the Usur- pations of the Federal Government, by Brutus (Robert J. Turnbull of Charleston), appeared in 1827 in thirty-one numbers. "Brutus," says Houston in "A Study of Nullification in South Carolina," Harvard Historical Series, Vol. 3, p. 50, "poured out a torrent of rhetoric against the policy of the general government, and called upon his fellow-citizens to resist. Brutus dealt sledge-hammer blows and struck at every evil in sight in such a bold, fearless, direct manner as to win the unbounded admiration of the masses. The phantom of consolidation was brooding over his faculties; the government, he argued, had made more rapid strides towards consolidation in the six years since 1821 than in the thirty preceding; it was to the interest of the North and West for the general government to usurp powers and depart from the social compact. " The South, therefore, from every consideration, should oppose the doctrine of implied powers ; and this dangerous doctrine Brutus proceeded to discuss in every aspect through eighty long pages. Hostility to the South was manifest, he added, not simply in the tendency of the government to go beyond its powers in the matter of the tariff and internal improvements; the presses were belching anathemas against the Southern system and the Southern policy; insurrectionary doctrines were being promulgated in a thousand ways; an insidious attack was meditated against the tranquillity of the South." Brutus said: The time approaches when Congress can take no vote that shall not be an Reversal of South- ern senti- ment. There must be no voice aqainst slavery. Digitized by Microsoft® 301 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. >( Southern outcry against protection. expression of opinion on the subject of slavery. The South .should not permit any expression of opinion whatever; but should the subject be discussed, there should be but one sentiment as to what should be the consequence. He then argued that Congress should not be permitted to express any opinion against slavery as an evil. He said : It will be an honest act of decided, unequivocal hostility. It will be a declara- tion of war, and must be treated and resisted as such. It will be the entering wedge, with which at some future day our vital interests are to be split asunder. It will be the landing of an enemy, and a bitter enemy, too, on our soil . . . He must be resisted. There must be no discussion. Discussion will cause death and destruction to our negro property. . . . The Colonization Society must be driven out of the halls of Congress, and driven out with disgrace. Should Con- gress ever countenance it, my wishes will be for disunion. . . . Let us say, then, " Hands off — mind your own business — attend to your own Post Office." If this fails, let us separate. It is not a case for reasoning or negotiation. It must be a word and a blow. The man who comes into my yard and preaches to my slaves, must not expect to go out with whole bones. The agitation was carried on by Judge William Smith, who was succeeded by Robert Y. Hayne in the United States Senate, and Dr. Thomas Cooper, president of the South Carolina College. Dr. Cooper gave more especial attention to the tariff. In 1823 he published a pamphlet on the proposed alteration of the tariff, which was submitted for the consideration of the members of South Carolina in Congress in 1823 and 1824. He had written and published other articles in 1819 and 1822. It was his endeavor to satisfy the people of South Carolina and the slave-holding States that a protective tariff imposed on them unequal and unjust burdens. Largely through the influence of ex- Senator Smith, in 1825 the legislature of South Carolina endorsed the nullification program by a series of resolutions which declared: 1. That Congress had no power to adopt a general system of internal im- provements. 2. That it was unconstitutional for Congress to tax the citizens of one State to make roads and canals for the citizens of another, and that protective duties were unconstitutional. A report intended to be an address to the people, discussed at great length the principles of our form of government under the Constitution, and laid the foundation for John C. Calhoun's " Exposition " and " The Doctrines of Nullification and Secession " which were subsequently em- braced by all of the slave-holding States. While many eminent men of South Carolina dissented from the doctrines of nullification and secession, the great majority of the people had become so inflamed and worked into such a state of alarm over the Digitized by Microsoft® MOLDING SOUTHERN SENTIMENT. 305 Calhoun ceased to be a pro- tectionist. threatened attack on the institution of slavery that the nulHfication senti- ment soon dominated the State. John C. Calhoun experienced an entire change of views upon public questions and wrote his " Exposition " of 1828. This famous document embodied the principles for which South Carolina contended and formed the basis of those political doctrines which finally united the people of the planting States and inspired their assault on the life of the nation in 1861. It was contended that Congress possessed no powers except such as were conferred by the express words of the instrument, and that no powers could arise by implication. Under this interpretation Congress could not restrict the extension of slavery or refuse to admit the people of a territory into the Union as a slave State. Under the same doctrine it was contended that Congress had no power to make appropriations for internal improvements; to charter a United States Bank, or to impose duties on imports for the purpose of promoting the development of manu- factures or shipping. Under the doctrine, also, it was asserted that the Constitution is simply an agreement existing between sovereign States; that the States are supreme and can at any time withdraw from the com- pact; that a State, being sovereign, has the right to determine for itself whether or not a federal law is authorized, and to declare it to be null and void, from which decision there is no right of appeal to any court. While the power of Congress to impose protective duties had been questioned only by a few individuals prior to i820, soon after the Mis- souri controversy arose, the lack of such power was urged by the slave- holding States as a principal ground of objection. Mr. Clay said in his debate with Mr. Calhoun, in the Senate, March 10, 1838: " He [Mr. Cal- houn] admits the truth of what I said, that the constitutional question as to the power of the government to protect our own industries was never raised before 1820 or 1822. It was at first hinted, then controverted, and soon after expanded into nullification." It was in January, 1830, that the great debate between Webster and Hayne, on the question of State Rights and Nullification, occurred. It was contended by Mr. Hayne that a State was not bound by any decision of the Supreme Court of the United States pronouncing a law of Congress constitutional; and that, in the language of the Kentucky resolutions, "the several States who formed that instrument [the Con- stitution], being sovereign and independent, had the unquestionable right to judge of its infraction; and that a nullification by these sover- eignties, of all unauthorized acts, done under color of that instrument, is the rightful remedy." It was said by Mr. Webster, on the other hand, that the Constitution, and the laws made under it, are declared to be " supreme," and it is declared that the " judicial power shall extend to all places arising under the Constitution and the laws of the United Doctrines which insvired the seces- ion oj 1861. Digitized by Microsoft® 306 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. JacTcson met the issue sauarely. States. "These two provisions," he said, "cover the whole ground. They are the keystone of the arch. With these, it is a Constitution; with- out them, it is a Confederacy. In pursuance of those clear and expressed provisions, Congress established, at its very first session, in the Judiciary Act, a mode of carrying them into full effect, and for bringing all ques- tions of constitutional power to the final decision of the Supreme Court. It then became a government ; it then had the means of self-protection." President Jackson met the issue squarely in his message of May 27, 1830, when he said: The power to impose duties on imports originally belonged to the several States. The right to adjust these duties, with a view to the encouragement of domestic branches of industry, is so completely identical with that power, that it is difficult to suppose the existence of the one without the other. The States have delegated their whole authority over imports to the general government, without limitation or restriction, saving the very inconsiderable reservation relating to the inspection laws. This authority having thus entirely passed from the States, the right to exercise it for the purpose of protection does not exist in them; and, con- sequently, if it is not possessed by the general government, it must be extinct. Our political system would thus present the anomaly of a people stripped of the right to foster their own industry, and to counteract the most selfish and de- structive policy which might be adopted by foreign nations. This surely cannot be the case; this indispensable power, thus surrendered by the States, must be within the scope of the authority on the subject expressly delegated to Congress. In this conclusion, I am confirmed as well by the opinions of Presidents Washington, Jefferson, Madison and Monroe, who have each repeatedly recom- mended the exercise of the right, under the Constitution, as by the uniform prac- tice of Congress, the continued acquiescence of the States, and the general under- standing of the people. The constitutionality of protective tariff legislation was upheld by protectionists upon two grounds: First, that it was within the express power to regulate commerce with foreign nations. Second, that it was within the power "to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States." The power to regulate commerce had, for more than a century prior to the adoption of the Constitution, obtained an unquestionable legal significance which was well understood. It was by the exercise of this power that European nations had protected their industries and shipping from foreign rivals. It was by the exercise of this power that Great Britain prohibited the export of bullion, wool and other raw materials ; paid bounties on certain exports and imports ; enacted her navigation laws ; made commercial treaties and imposed duties and prohibitions on imports for the purpose of establishing manufactures. The right to exercise this power, therefore, was not questioned by the colonists, nor made a ground of complaint in the Declaration of Inde- pendence. Digitized by Microsoft® '<^^e^^ "take from agriculture in the united states 600,000 MEN, WOMEN AND CHILDREN AND YOU WILL AT ONCE GI\E A MARKET FOR MORE BREADSTUFFS THAN ALL EUROPE NOW FURNISHES US." Letter to Dr. Culcinan (1824). Digitized by Microsoft® Digitized by Microsoft® THE COmSTlTVTWSAL OBJECTION. 307 When the question arose it was fully discussed by James Madison in a letter written to Joseph C. Cabell, September 18, 1828, in which Mr. Madison, in part, said: It is a simple question under the Constitution of the United States whether the power to regulate trade with foreign nations, as a distinct and substantive item in the enumerated powers, embraces the object of encouraging by duties, restrictions and prohibitions the manufactures and products of the country, and the affirmative must be inferred from the following considerations : 1. The meaning of the phrase "to regulate trade'* must be sought in the general use of it; in other words, in the objects to which the power was generally understood to be applicable when the phrase was inserted in the Constitution. 2. The power has been understood and used by all commercial and manu- facturing nations as embracing the object of encouraging manufactories. It is believed that not a single exception can be found. 3. This has been particularly the case with Great Britain, whose commercial vocabulary is the parent of ours. A primary object of her commercial regula- tions is well known to have been the protection and encouragement of manu- factures. 4. Such was understood to be a proper use of the power by the States most prepared for manufacturing industry, while retaining the power over their foreign trade. 5. Such a use of the power of Congress accords with the intention and ex- pectation of the States in transferring the power over trade from themselves to the government of the United States. . . . 6. If Congress have not the power it is annihilated for the nation, a policy without example in any other nation, and not within the reason of the solitary one in our own (referring to the prohibition of a tax upon exports). . . . 7. If revenue be the sole object of a legitimate impost, and the encourage- ment of domestic articles be not within the power of regulating trade, it would follow that no monopolizing or unequal regulations of foreign nations could be counteracted; that neither the staple articles of subsistence nor the essential im- plements for the public safety could under any circumstances be insured or fos- tered at home by regulations of commerce, the usual and most convenient mode of providing for both; and that the American navigation, though the source of naval defence, of a cheapening competition in carrying our valuable and bulky articles to market, and of an independent carriage of them during foreign wars, when a foreign navigation might be withdrawn, must be at once abandoned or speedily destroyed; it being evident that a tonnage duty in foreign ports against our vessels and an exemption from such duty in our ports in favor of foreign vessels must have been the inevitable effect of banishing ours from the ocean. . . . 8. That the encouragement of manufactures was an object of the power to regulate trade is proved by the use made of the power for that object in the first session of the first Congress under the Constitution, when among the members present were so many who had been members of the Federal convention which framed the Constitution, and of the State conventions which ratified it; each of these classes consisting also of members who had opposed and who had espoused the Constitution in its actual form. It does not appear from the printed pro- ceedings of Congress on that occasion that the power was denied by any of them. . . . A further evidence in support of the constitutional power to protect and To reou- late trade" is auihor- Uv for proteciion. Would hanish our sMvs from the seas. Digitized by Microsoft® 308 SECTIONAL OPPOSITION TO TBE AMERICAN SYSTEM. Dictated iv com- mercial necessity. Protection not a favor, "but a Consti- tutional riaht. foster manufactures by regulations of trade, an evidence that ought of itself to settle the question, is the uniform and practical sanction given to the power by the general government for nearly forty years, with a concurrence or acquiescence of every State government throughout the same period, and, it may be added, through all the vicissitudes of party which marked the period. No novel construction, how- ever ingeniously devised or however respectable and patriotic its patrons, can withstand the weight of such authorities or the unbroken current of so prolonged and universal a practice. Fisher Ames, in addressing the House in 1789 on the first tariff bill, said: I conceive, sir, that the present Constitution was dictated by the commercial necessity more than by any other cause. The want of an efficient government to secure the manufacturing interests and to advance our commerce was long seen by men of judgment and pointed out by patriots solicitous to promote our general welfare. A mass of evidence of this nature could be cited, but the fact that many of the very men who made the Constitution helped to frame the first tariff law, with its protective features and with a preamble specific- ally declaring that it was " for the encouragement and protection of manufactories," coupled with the fact that the first seven Presidents of the Republic concurred in their views, must be conclusive as to their motives and intentions. During the forty years from 1789 to 1834, every President had placed this interpretation on the instrument. The people vested Congress with this power, expecting and intending that it would be exercised. Had Congress failed to immediately enact laws for the purpose of protecting industries it would have been a flagrant breach of trust and a violation not only of the spirit and express terms of the instrument, but of the purpose which actuated the people in its adoption. It is not and never was a free trade Constitution. Protection to capital and labor is not a favor, but a constitutional right. It is both in its spirit and by its express terms a protective Constitution. It was the people's bill of rights; their declaration of industrial independence. For a further examination of this question, the reader is cited to the following authorities : " American Tariff Controversies in the United States in the Nineteenth Century," by Edward Stanwood, Vol. I, Chap. 9, and A Short Tariff History of the United States, by David H. Mason. Speech of Daniel Webster, delivered at Albany, August 27, 1844. Speech of Rufus Choate in the United States Senate, March 14, 1842. Speech of Edmund Burke in the House of Commons on American Taxation, April 19, 1774, and March 22, 1775. Letters of John Dickinson, 1768. Digitized by Microsoft® A TARIFF FOR REVEAWE ONLT, DEFINED. 309 Address of Daniel Webster at a dinner tendered to him in New York City, February, 1831. Letter of Julian C. Verplanck to Colonel William Drayton, November i, 1831. Address of Daniel Webster at Buffalo, June, 1833. A Tariff for Revenue Only Proposed. McDuffie's bill and the resolution of Senator Hayne (1832) pre- sented the first definite program which had been offered against the protective system since the formation of the government. It was the first proposal of a tariff bill inconsistent with the principles of protection, in harmony with free trade and designed to destroy the manufacturing interests of the United States. It was at this time that the expression " tariff for revenue only " came to have a definite meaning in the discussion of the question in American politics. The party of Calhoun opposed protection on consti- tutional grounds. The Jackson National Democratic party had supported protection. The new Democratic party which arose after the free trade convention of 1831 was composed of the importing and shipping interests and the people of the Southern States. While the Democrats of the North were equally in favor of free trade and as strenuously opposed to the principles of protection, they did not fully concur with the repre- sentatives of the planting States on the constitutional question. The Democratic party, however, since 1834 has boldly asserted that it favors the policy of a " tariff for revenue only." What did the use of the word "only" mean in this connection? What significance must be attached to it in defining the attitude of the Democratic party, or of any party which uses the expression ? The question was brought before the Free Trade convention held in Philadelphia in 1831, which declared that "they admit the power of Congress to levy and collect such duties as they may deem necessary for the purposes of revenue, and within those limits to arrange those duties as to incidentally and to that extent give protection to the manufactures." This principle Judge Job Johnson of South Carolina, representing the Southern delegation, declared was " to give away the whole case, fatal to the cause of free trade and fatal to the constitutional argument." Here we find the idea of a "tariff for revenue, with incidental protec- tion," so much used in later years by Democrats throughout the manu- facturing districts of the North. The proposition that the Constitution would permit revenue duties which " incidentally," or as an incident thereto, might afford a small degree of protection, was rejected by the Calhoun party, and to express such dissent the term " tariff for revenue only " was used. Thus, by the use of the word "only," every possibility of the slightest degree of Gcnesj* of Tariff for revenue onlu." With incidental vrotec- Hon." Digitized by Microsoft® 310 SECTIONAL OPPOSITION TO THE AUERIOAV SYSTEM. protection was excluded. Mr. Calhoun, in a speech before the Senate in 1842, gave the following clear and definite interpretation of a tariff for revenue only. He said : No two things, Senators, are more different than the duties for revenue and protection. They are as opposite as light and darkness. The one is friendly and the other hostile to the importation of the article on which they may be im- posed. Revenue seeks not to exclude or diminish the amount imported; on the contrary, if it should be the result, it neither designed nor desired it. While it takes, it patronizes; and patronizes, that it may take more. It is the reverse, in every respect, with protection — it seeks, directly, exclusion or diminution. It is the desired result; and if it fails in that, it fails in its object. A tariff for revenue only, then, seeks to accomplish two essential purposes: first, to raise revenues from duties on imports for the support of the government ; second, to fix the duty at such a low rate that pro- tection to industries is made impossible. The practical effect of a tariff expressly designed to produce revenue is to levy a tax upon the labor and industry of our country, a tax which destroys the income of labor and of capital employed in domestic pro- duction. The reason is plain. If we are to have more revenue, we must have more imports, and these additional imports must of necessity be of the competitive and dutiable class. By so much as we reduce the rates of duty, by so much we must increase this class of imports if we are to have as much revenue as before. For example, when the rates of duty are reduced 50 per cent, the volume of competitive imports must be increased 100 per cent in order to prevent a reduction of the revenue. The union of the planters with the importers and shipping interests made a formidable party in favor of free trade. These interests, taking possession of the Democratic party, made the tariff question for the first time in our history a party question. While the free trade convention which assembled in Philadelphia did not endorse the proposition that protective duties were unconstitutional, it gave encouragement to the nullification movement by declaring that: Promotee imvorta- Hon and desirous protection. Tariff ter the nrtt time a vartv question. " A system of taxation which is unequal in its operation, which oppresses the many for the benefit of the few, is, therefore, unjust not merely with ref- erence to the great immutable principle of right, but is, moreover, in direct col- lision with that constitutional equality of right which the instrument was thus confessedly intended to secure." The National Intelligencer, in commenting on this part of the ad- dress, said : It will be seen that it does not affirm the unconstitutionality of the tariff laws, but only suggests them to be contrary to the spirit of the Constitution. Digitized by Microsoft® GROUNDS OF OPPOSITION. 311 .The claim that the tariff law of 1832 was in violation of the Con- stitution because it operated unequally upon different sections of the country. President Jackson in his Nullification Proclamation answered as follows: The next objection is that the laws in question operate unequally. This objec- tion may be made with truth to every law that has been or can be passed. The wisdom of man has not yet contrived a system of taxation that would operate with perfect equality. If the unequal operation of a law makes it unconstitutional and if all laws of that description may be abrogated by any State for that cause, then, indeed, is the Federal Constitution unworthy of the slightest effort for its preser- vation. Another objection urged by the ordinance of nullification against the tariff laws was that it was proposed to raise by them more revenue than was necessary for the economical administration of the affairs of the government. To this President Jackson replied: That the Constitution has given expressly to Congress the right of raising revenue and of determining the sum the public require. That such power is discretionary, and that although it might be abused, it "must exist somewhere." The constitutional objections to the system of protection made by the planters were fully answered either in the debates in Congress or in the messages and proclamation of the President. The facts show that the grounds of the " hostility " between the two sections of the country complained of arose from the institution of slavery. A clear and definite statement of the alleged inequalities complained of was set forth in a letter written by William H. Crawford to Mr. Mahlan Dickerson of New Jersey, on February 4, 1833, as follows : The tariff is unequal, unjust and unconstitutional. It operates more oppres- sively upon the Southern than upon the people of the tariff States: (i) Because there are no manufacturing establishments in those States, consequently no local market created. (2) Because none of the laboring classes are employed by means of the tariff. (3) Because capitalists have invested no capital in them, and, (4) we are at a greater distance from the workshops which supply us with necessary articles. The freight, insurance, commissions and other necessary ex- penses enhance the price of these articles to the consumer in the Southern States, in a higher degree than in the tariff States. Who prevented the establishment of manufactures in the slave States? Who prevented the building of cities and industrial centers which create a local market? Why were no laborers employed by means of the tariff? Why did Southern capital hold aloof from manufac- ing industries ? Protection placed no obstacles in the way. Under pro- Slaverv'g hoaiiKtu to vro- tection. Alleaei IneauaH- ties com- olained of. Digitized by Microsoft® 312 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. tection they could have set up the workshops at their own doors and saved the cost of transportation and the charges of which they com- plained. The bounties of nature were everywhere in their midst, and there were hundreds of thousands of white laborers living in idleness and sinking to the level of the slaves, only waiting to be put to work and rescued from the deplorable condition into which they were falling. The States were rich with inexhaustible beds of iron and coal; with vast forests ; with pastures for sheep and cattle ; with innumerable water powers and mill sites, and with all of the natural facilities for the most inviting and profitable industries. They boasted that they had labor at twelve and one-half cents per day, the cheapest in the world, yet they cried out against Northern competition, which cost more than four times that amount. Sectional oiiec- iions of Southern vlanters. Senator Hayne States the Whole Case. Senator Hayne, speaking for the planters,'- stated their whole case and covered all of the grounds of sectional objection which they made against the American System, in the following speech: The value of the raw material is about one-fourth part of the manufactured article. Now, if the cotton yarns manufactured at Great Falls were imported from England, instead of being made in New Hampshire, we should find the market for 12,000 bales of our cotton instead of three, so that instead of gaining a market for 3000 bales we should have lost a market for 9000 bales. If trade was free, the goods manufactured in this country would be imported from England and paid for in our cotton, but in cutting off the imports, you, of course, to the same extent diminish our exports. Insisted that " the taritt is a taw." Mr. Hayne said further: But there are higher and more sound principles involved in this question which cannot be safely disregarded. These are considerations of justice and political equality which rise far above all calculations of mere profit and loss.^ Mr. Hayne then proceeded to argue that the tariff is a tax and that the duty is added to the price of protected articles. He said:' Such a duty must operate as a tax on every other class in the community, lOr the benefit of the manufacturer. I admit that there is a circle embraced within the range of the manufacturing influence that partakes of the benefits of the system. Farmers in the neighbor- hood who supply the operatives with food, mechanics who construct the buildings 1 Cong. Debates, 1831-1832, Vol. 8, Part 1, p. 86. 2 Ibid., p. 88. sPag-e 86, Vol. 8, Part 1, Congressional Debates, 1831, 1832. Digitized by Microsoft® GROUNDS OF OPPOSITION. 313 and machinery, clergymen, physicians, lawyers and others who make up a manu- facturing village, all come in for a share of the gains and constitute, in fact, the protected class which enjoys the benefits of the system, but all other classes in the community must be obviously laid under contribution to make that profitable which would otherwise be an unprofitable pursuit, and in the case assumed would be taxed to the amount of $1000 to secure the favored class a bounty of half a million dollars. Now, sir, suppose such a system as this shall be extended to all of the cottons, woolens, iron and sugar made in any country, and I will take that country to be the United States. We will suppose, further, that cotton could not be profitably manufactured without a protecting duty of from 25 to 100 per cent, and that these duties were accordingly imposed on these several articles (amount- ing in the whole to $9,000,000 annually). That in consequence of these duties the protection on all of the cottons manufactured in the country was equal to three cents a yard and amounted to $6,000,000 per annum, woolens $8,000,000, iron $1,000,000, and sugar $1,500,000, producing as a result of the whole system a tax of $9,000,000 on the foreign article to secure a bounty of $16,500,000 to the home manufacturers. I have supposed protection to be the exclusive object of this system, and it then clearly follows that all other classes would be taxed $25,000,000 per annum in order to secure to the favored class a protection of $16,000,000. Mr. Hayne then proceeds to show in what manner it was claimed that the system favored one section of the country for the benefit of another section. He says, page 86 : We will suppose our extensive country, of which one portion is exclusively agricultural, and incapable of changing its pursuits, and that the other portion embraces within its limits all of the manufactures and manufacturing capacities of the whole country. The bounty would then be exclusively enjoyed by one section, and the other would share only the burdens of the system. To make the inequality still greater it is only necessary to suppose that the agricultural section is not only incapable of manufacturing but is prevented by insuperable obstacles from emigrating or removing their property to the manufacturing regions; that their industry can only be profitably employed in exchanging their agricultural productions for the very foreign articles which enter into competition with the domestic manufactures, and which are heavily taxed for the protection of the latter, that the effect of such tax is not only to interrupt the intercourse and impair the profits of their industry, but that the agricultural section is thereby exposed to the imminent hazard of having the market for their productions en- tirely cut off and finally cap the climax of this injustice and oppression. Thus the tax levied on foreign articles is expended almost exclusively in the favored region. And you there have, Mr. President, the whole case of the South spread before you. In the very outset of his remarks, Senator Hayne indulges in a most flagrant economic error by assuming that for every dollar's worth of cotton exported, manufactures of the same value must be imported, or that exports of merchandise are exchanged dollar for dollar in value for imports of merchandise. If this were true, trade between nations would at all times be equal and no adverse balance could exist to be settled for by the export of specie. It was by such doctrine the planters were led South Carolina stule of argument. A most Uaarant economio error. Digitized by Microsoft® 314 SECTIONAL OPPOSITION TO TBE AMERICAN SYSTEM. Bouthern- er» had only them- aelves to llame. to believe that their exports of cotton were being greatly diminished by the establishment of manufactories in America. If the importation of manufactured goods made a market abroad for fcmr times more raw cotton than the production of the manufactured fabrics at home would make, well might they feel that the tariff was operating against their interests. Upon this theory, as importations of manufactures increased, ex- ports of cotton, tobacco and rice would necessarily increase to the same extent. The proposition ignored the limitations of the purchasing power of the American people, and contained the absurd assumption that the people of India, Brazil and the West Indies would abandon cotton rais- ing and leave the entire foreign market to be supplied from the slave States. It ignored, moreover, the obvious fact that by so much as the manufacture of cotton increased in our own country, by so much would raw cotton find a larger market near-by; while the cotton spinners of Lancashire would still be obliged to draw from Southern cotton their supplies of raw material ; to be paid for in cash if not in merchandise. Were the people of the Southern States " incapable of changing their pursuits " or incapable of placing the " manufacturer by the side of the agriculturist" ? If so, what was the cause? Had nature placed any limitation on the scope of their industrial life? They had iron mines, yet they refused to work them. They had coal in abundance, yet they suffered it to remain beneath the surface of the earth. They raised a great staple for the production of fabrics, which formed the basis for the most profitable industry in the world. With water power running to waste, and labor in idleness, they refused to avail themselves of the bounties of nature and the fostering care of their government. To con- fine their energies to the cultivation of cotton, tobacco and rice was their own choice. It was neither the neglect of Providence nor the legislation of the government which restricted their industry. !Every argument pre- sented by the free traders is fully answered by the speeches from which subsequent quotations are taken. Mr. Ballard of Louisiana, replying to the charge of Senator Hayne, that under protection the South " is exposed to the imminent hazard of having the market for its productions entirely cut off," said: If, then, the producer, as such, is not directly taxed in the sale of his staple, it must follow that the only operation of the tariff injurious to the South, is either the burden it imposes on consumption or by paralyzing the powers of produc- tion. Its effect in the last sixteen years, if it had discouraged production, would have exhibited itself somewhere. How has it operated? At the date of the tariff of 1816, the production of cotton in the United States was 110,256,289 pounds, of which about 27,000,000 were manufactured at home, and the remainder exported. In 1830 the production had risen to 376,000,000, of which 77,000,000 were manufactured in the United States. Here you have, in fifteen years, an in- Digitized by Microsoft® SAYNE'S ARGUMENTS REFUTED. 315 creased production of about 265,000,000 pounds. One would think this fact alone would go far towards accounting for the fall of prices, and certainly proves that production has not been discouraged. The only embarrassment the cotton planters wer6 experiencing at this time arose from the exhaustion of the soil, arising from unscientific cultivation in the old States. Emigration was moving West and bring- ing under cultivation the virgin soil of Tennessee, Mississippi, West Florida, Alabama and Louisiana. The production was so large that under the law of supply and demand prices had declined. The intro- duction of cotton machinery in the free States was creating a new market for this staple which tended to maintain prices. Senator Knight of Rhode Island, replying to the arguments pre- sented by Senator Hayne, said : ^ Creating a new market tor cotton. But another grave charge against the protecting system is this: High imposts upon the fabrics of those who take our raw materials diminish the demand for such materials. This is supposed to be done by taxing the consumer, and lessen- ing his profits, and, consequently, driving many from employment. This alarm was sounded loud in the discussions of the tariff of 1824. The Senator from South Carolina, relying on the calculations of a member of the other house [Mr. Cambreling], prophesied that that bill would diminish the importations $26,000,000, the revenue $8,000,000, exclude cotton fabrics $7,000,000, the duties on which would be $3,000,000, and diminish the exports of our cotton 44,000,0000 pounds. Yet our exportation of our cotton, which was in 1823, the year before that tariff, 173,723,- 270 pounds, value $20,445,520, had increased in 1826 to 204,535,415 pounds, value $26,625,214. Our whole imports for 1823 were $77,579,767; for 1824, $80,549,007; for 1825, $96,340,075; for 1826, $84,994,477. So also the importation of cotton fabrics increased; being over and above the amount re-exported, in 1823, $5,587,- 097; in 1824, $5,037,075; in 1825, $10,105,061; in 1826, $6,191,228. You see, sir, by this exhibit, that contrary to the strong prediction of such a fatal diminution of trade, the importations and exportations, particularly of cot- ton and cotton fabrics, have been surprisingly increased ; so that in 1830 the cotton exported was 290,311,937 pounds, valued at $29,674,883, and the cotton fabrics imported for consumption $5,926,070. Here we have the direct proof, by matter of fact, that our reasoning is sound and conclusive. The necessity of the pro- ducer had become greater than that of the consumer, by the competition which our protection has caused, and, consequently, a reduction of price and an increase of consumption. It will show most clearly that the consumption of the foreign fabric has greatly increased under the operation of our tariff. It is a palpable error to try this by the price of money value of the article imported. If the same goods are obtained for one million that heretofore cost three, the consumption is treble, though the value is the same. Take the cotton fabrics imported ; they were deducting the re-exportations, in 1821, $5,707,450; in 1830, $5,926,070 — an in- crease of $218,630 only, if you regard the price. But the price of these goods, in quantity and quality which cost 32 cents in 1821, could be produced in 1830 for II cents. So that we consumed, in the latter year, nearly three yards to one in the former. IP. 214, Vol. 8, Part 1, Congressional Debates, 1831, 1832. Both im- Borts and exvortt Increased Digitized by Microsoft® 316 SEOTIONAJL OPPOSITION TO THE AMERICAN SYSTEM. Wild specula- tions and assump- tions. Monopoly regained and losses recouped. But this is not all. There has been a corresponding increase of quantity and reduction of price in the domestic fabric. We can probably manufacture, at this time, 100,000,000 pounds of cotton, valued at $10,000,000. Suppose the fabric to be quadruple the raw material, the manufactured articles would be worth $40,- 000,000. Deduct the exportation, and the whole consumption of cotton fabrics, foreign and domestic, can fall little short of $45,000,000; which, at the price of 1821, would amount to $135,000,000. How are these things to be accounted for, but from an intensely active competition between manufacturers, foreign and do- mestic? Our protective system, if it has not done all, has contributed largely to this result. The Tariff Duties Did Not Enhance the Price of the Domestic Article. It should be carefully noted that Senator Hayne does not assert or contend that prices had been advanced by reason of the exclusion of imports and the setting up of competing industries at home. The array of facts on this proposition which were presented before Congress forced the South Carolina Senator to indulge in wild speculation and assump- tions. The results prove the absolute falsity of the theory that the tariff was a tax and that the duty was added to the price. While it may have been true as to non-competing articles, it did not apply to those articles made at home which competed in our market either with the foreign productions or others of domestic make. When our first tariff laws were passed, foreign wares and fabrics, mostly British, wholly supplied our markets. As soon as a protective duty was imposed and a domestic industry was established, competition began, the foreign producers strug- gling to hold the market and the native producer endeavoring to gain it. The new product thrown on the market from the home factory at once increased the supply. This condition of itself, under the operation of supply and demand, would reduce the price. The foreign rival then must either reduce his price or withdraw from the field. The history of our tariff legislation shows that the prices received by the foreigners, so long as they had the whole market to themselves, were very high. They charged all the consumer would pay. These exactions were so great that it was exceedingly difficult for our lawmakers to ascertain the amount of duty required to enable the home producer to carry on his business. Hence the imposition of duties that were too low simply operated to induce the importer to reduce the price and still hold the market. Another feature of such competition was the systematic selling by the foreigner on long terms of credit, and even at a loss, to keep the field until his new rival gave up the struggle and retired. As soon, however, as this happened, the monopoly of the market was again enjoyed, prices raised, Digitized by Microsoft® PROTECTION AND PRICES. 317 the losses all recouped, and great profits continued until new rivals appeared, when the same methods were repeated. This has been the course of British trade for more than a century. This is called the battle of the fabrics, and by free trade economists, the survival of the fittest, the "fittest" being the party having the largest amount of capital and the greatest facilities for cheap production. Mr. Gladstone regarded the vast wealth of the English people as one of the most powerful weapons to be used against the competing capital of foreign countries. He said : The power of capital, skill, industry, long-established character and connec- tions sustaining English commerce, bears up against all that has been done. Mr. Gladstone, in discussing the question of who must bear the loss incurred, said, in 1843: I understand that the increase of duties by the German tariffs, which before the changes were excessively high, and which are now enormously high, has not had the effect of reducing exportations from this country, but still it has neces- sarily had the effect of diminishing profits and wages in this country. The reduction of prices brought about by the competition of Amer- ican manufactures between 1816 and 1832 formed one of the most im- portant features of the speeches made in favor of protection in the Congressional debates in 1828, 1830 and 1832. The committee appointed by the protectionist convention held in New York in 1831 laid before Congress an elaborate array of statistics on this subject. Like figures were also presented to Congress in the report made by John Quincy Adams in 1832. The fact of such reductions was also conceded by the most reliable free trade authorities. The importers were taken com- pletely by surprise when the Act of 1828 was passed. They had cargoes of goods on the way which did not reach port until after the act took effect. Prices declined, and the merchants who had goods in transit that did not arrive until the new rates became operative, were compelled to pay higher duties than they had anticipated. In their application to Congress for reimbursement they showed that prices had fallen and that they had sustained losses. In a letter written to the Committee on Ways and Means in February, 1832, Mr. S. D. Bradford, an importer of Boston, said, " Nearly every article on which the duty was raised on the 30th of June, rather declined than advanced in price." The affi- davits made by the importers which were presented to Congress stated that "before the passage of said act many persons supposed that those manufactures on which the duties were increased would immediately rise in the market and command prices proportionate to said increase of duties, and at the first view of the subject such would appear as the Fall of prices un- der Act of Digitized by Microsoft® 318 SECTIONAL OPPOSITION TO TEM AMERICAN SYSTEM. The 06- surdity of the free traders' claim. The tariff not paid 6j/ con- sumers. natural result. Such, however, was not the effect of the Tariff Act of May, 1828, for, instead of advancing, most, if not all, of the principal articles of cotton, worsted and woolen goods, on which the djaty was increased, rather declined than improved in price after the passage of the Tariff Act of 1828, and would not in many cases bring so much in the market as they had done the year previous under the old duty. " Nothing can be more certain," said Mr. Bradford, " than that the extra duty laid in 1828 came, nearly all of it, out of the pockets of the importers." This question was fully discussed in Congress in 1828 by Mr. Mallary of Vermont, Mr. Davis of Massachusetts and Mr. Young of Connecticut. Mr. Mallary said : ^ It is urged that all duties on imports are taxes on consumers. This may be true as to those articles which we exclusively procure from abroad. It is untrue as to such articles produced by domestic industry nearly or wholly sufficient to supply the demand. It is said we consume $72,000,000 of woolens annually. It is claimed that on this amount the consumers pay the duties and merchants' profits which operate as a bounty to the domestic manufactures. That the effect, the tendency and design seem to be to produce a divided hostility against the system of protection. Let us see how unfounded are such absurd calculations. Seventy- two million dollars of woolens are used and ten millions are imported; twenty-two million dollars at most are produced by manufacturing establishments in the United States. Forty million dollars' worth are the result of household industry. How is the latter amount produced? By farmers who grow their own raw ma- terials; by the labor of their families; by the mechanic in the country who receives in compensation for his labor the production of the farm. In short, the forty million dollars' worth are produced by means that would be hardly worth a six- pence in a foreign country. Yet the great mass of our people who furnish their own domestic supply is charged with paying a tax of 57 per cent. Such are some of the strange arguments addressed to the farmers to excite their hostility against the manufacturers. Mr. Mallary exposed the absurdity of the claim as follows : But, it is still urged, duties are a tax on the consumer. We will see how this operates on other articles of domestic manufacture. It is supposed that we produce cotton fabrics to the value of $50,000,000. A great proportion is valued at 16 cents and under, the square yard. The duties and charges would be about 10 cents. Remove the protection, and according to the rule that the duty is so much tax on the consumer, we should be furnished with the fabric at 6 cents the running yard. The absurdity is apparent. Take a fabric valued at 9 cents the square yard; the duties and charges would be about the same as I have stated. According to the rule, this fabric could be afforded for nothing. Take nails; the duty is 5 cents ; the average price in market may be 7 cents. The consumer, by the rule laid down, should have them for 2 cents per pound. The duty on cheese is 9 cents per pound ; the average value in market is not over 7 cents. According to the rule, the consumer is entitled to 2 cents for every pound he eats. 1 Annals of Congress, Part 2, Vol. 4, p. 1733. Digitized by Microsoft® PROTECT I O:^ AND PRICES. 319 Specific figures are given in the preceding chapter of the decline in prices of many commodities. A Hke reduction in the prices of boots and shoes, gun-powder, paper, hats, and in fact all articles of domestic production might be shown. Prices o^ Non-Compi;ting Commodities. It is a most significant fact that foreign producers maintained high prices in those articles which found no competition in the American market. The decline in the prices of the imported articles such as the fine cottons and woolens, silks, linens, pottery, hardware, cutlery and all articles which were not manufactured in the United States, was very small. The foreign monopoly was continued, and we were compelled to pay the exorbitant prices exacted. This fact was brought out by the protectionists in the debates of 1828 and 1832, and furnished con- clusive evidence of the fact that it was domestic competition which had forced down the prices of all protected articles. John Davis of Massachusetts, in the speech quoted from, said in 1828: Another circumstance which has a strong bearing upon this ought also to be mentioned. Goods which have been manufactured here have experienced a greater decline than those which we have not manufactured. Coarse and middling cassimeres have fallen half, while the finest qualities have declined no more than 12^/2 per cent. These facts show that the foreign supplies of cloths have been forced into our market and the effect has been to sink the price both here and in England. The progress of this decline has kept pace very ac- curately with the increase of business in this country. This struggle for the market could produce no other effect. The principal depression is occasioned by our competition with England. Foreign monopoly and high prices. Mr. Young of Connecticut said : ^ We know that coarse cotton cloths below about No. 25 have been fairly pro- tected ; those from that to about No. 45 or 50 partially protected ; those above that very slightly, including what are termed, in our tariff, cambrics, muslins, etc. And what has been the result? While the fine cottons, which include a greater proportion of labor, and should have fallen lower, have only fallen from 15 to 25 per cent (not so much as your agricultural produce in the same time), coarse cotton goods have fallen from 50 to 75 per cent. This case I have put for the double purpose of exemplifying the effects of our protection and competition in those articles we manufacture, and of showing the use the foreigner makes of our market, so far as he supplies and controls it. I will give another instance, exemplifying the same effects, more palpable and decisive, probably. I allude to common crockery ware and common glassware, both imported and sold by the same class of merchants generally. Glass and glassware, we know, have received such protection as to excite powerful competi- 1 Congressional Debates, 1829, 1830, Vol. 6, Part 2, p. 901. Effect on prices of partial and full protection compared. Digitized by Microsoft® S20 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. tion. While the manufacture of common, enameled and printed wares bad as yet scarcely been attempted in this country, some brown wares and imitation Delphian wares have been common, and some new manufactories of porcelain are lately promising success. But the common Liverpool ware, as it is often called, has at all times occupied, commanded and controlled our market, and regu- lated its prices. And what has been the result? While one has hardly fallen 15 per cent, the other has, in many branches of it, fallen 75 per cent. And the op- posers of this system who complained so much of its injustice and oppression, are now actually saving 25 per cent or more on their glasswares in consequence of this protection, and losing the same amount on their earthen wares for the want of such protection. Our coarse cottons are successfully competing with those of British manu- facture. The greatest mystery of our competition in foreign markets is that the English manufacturer cannot, and if he could, he will not (where he can avoid it) sell his goods at our present reduced prices, where he can command the market. The American manufacturer asks no better business than to sell his goods at the English market price, where the English manufacturer and merchant have the trade. The tariff not added to the price. The claim that tariffs are a tax on the pro- ducer. Mr. Davis of Massachusetts, addressing himself to the assertion that the tariff is a tax, said : If duties are taxes, the fact is capable of clear, demonstrative proof; for if a duty of a dollar a yard be levied on cloth it will immediately be worth a dollar more, and every one who buys will find himself paying the tax, provided such is the effect of a duty. Yet, easy as it seems to be to adduce such proof, no gentle- man has ever hazarded the attempt to do it; but all have contented themselves with asserting, and on all occasions reiterating the assertion, that duties are taxes, grievous, burdensome taxes, grinding down and oppressing the poor, and robbing the rich. It is no answer to the proof above presented to say that from 1816 to 1834 a decline in prices had taken place throughout the industrial viforld. That by the use of machinery and the application of new methods the cost of production of many commodities vsras greatly reduced is a well-known fact. It is also true that the greatest reductions in prices took place in those countries which had set up competing industries, and that such reductions were confined to the articles produced under domes- tic competition by protective legislation, showing beyond question that if the people of the United States had relied on the Old World for their supply of manufactures they would have been compelled each year to pay many millions of dollars to support foreign monopoly which were saved by home production. So if the question is considered solely from the standpoint of retail prices, it is found that domestic manufactures brought about a great saving to the consumers of America. Mr. McDuFP'iE Concedbid that the Duty was Not Added to the Prices. Mr. McDuffie, confronted with the array of indisputable facts pre- Digitized by Microsoft® PROTECTION AND PRICES. 321 sented by the protectionists on the point, attempted to escape from the dilemma in which the free trade assumption that the duty is added to the price had placed the anti-protectionists by promulgating the new and novel doctrine to meet the situation that protective duties are a tax on the producers of exported commodities. This proposition was at first asserted by Mr. McDuffie in his speech of April 29, 1830 : ^ Who, then, said Mr. McDuffie, ultimately bears the burden of the tax? It is evidently levied upon the producer, in the first instance, for the merchant who really pays it is nothing more than the agent of the planter. Upon what principle of political economy, then, can it be maintained that the whole burden of the tax is ultimately thrown upon the consumer, on whom it is not laid by the government, and that no part of it rests upon the producer where the government originally placed it? How is it with the Georgia planter? asked Mr. Wilde of Georgia. He sends a cargo of cotton and receives in return a cargo of cottons, woolens and hard- ware. But a duty is levied on the homeward cargo in the United States of 40 per cent. // he could contrive to throw this duty on the consumer, he might be able to get a fair remuneration for his slave labor, but he cannot. He is met in the United States by the domestic manufacturer. If he were to add the duty to the price of his goods the domestic manufacturer would undersell him. This false, but specious doctrine that protective duties were taxes imposed on the producers of cotton, tobacco and rice was never accepted by intelligent free traders ; yet it was reiterated in the congressional debates and urged with great earnestness and vigor on the stump and in the press throughout the planting States. This argument found deep root in the minds of the planters and was very influential in ar- raying them against protection. When this argument was first seriously and elaborately presented by Mr. McDuffie in 1830, Mr. Burgess of Rhode Island, in the following interesting and instructive speech, exposed the fallacy of the whole con- tention. Mr. Burgess said : '' Thousands, both here and elsewhere, have heard the same. Thousands of honest men are made to believe it. South Carolina planters have been told that from every hundred bales of cotton, sent abroad to market, forty are taken by the collector, as a tax on the planter. Aye, sir, from this word, tax, the able orator of South Carolina has drawn large discourse, as the bees of Trebisond draw from certain flowers a honey that drives men mad. He [the planter] sold his cotton on the wharf, took his money, and, if every bale, when shipped, had gone to the bottom, or been consumed by fire, it would have been no concern of his. The cotton planter of South Carolina has no more connection with the commerce of the United States than the tea planter of China has with the same commerce. He does not, therefore, come into the home mar- 1 Vol. 6, Part 2, p. 840, Congressional Debates. 2 Con^essonal Debates, 1830, p. 931, ne tariff not paid by the producer. Digitized by Microsoft® 322 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. No tariffed goods con- sumed hy Southern labor. ket for foreign goods, to get his share of those goods; nor is he obliged to take the amount of his cotton crop, or any other amount, in cotton or woolen cloths, or hardware, or any other commodity. His money is in his pocket, and it cannot be drawn out but by his own option. If he must expend it all, he need not ex- pend it all in the markets of foreign commodities; for he will find, side by side with this, another market, abounding in all the products of the land, labor and capital of our own country. Here he may indulge his patriotism, and satisfy his wants. From which of these markets is South Carolina labor, and the employers of that labor, supplied? The answer to this question will determine who pays the duty on imported products. Does that labor consume fish? The planter buys them in New England, not only without bounty, but cheaper for the bounty on ex- ported fish. The bounty on exported fish enables the fisherman to supply the home market at a reduced price ; so that the bounty is really divided between him and the South Carolina planter. He buys shoes. The leather was made from hides, bought in Ohio at 1% cents a pound; the shoes manufactured by labor, fed with corn at 10, and wheat at 25 cents a bushel, and with meat at 2 cents a pound. The planter buys shoes at 50 cents a pair, shirting at 6J4 cents, stripes at 8 and satinets at 37 cents a yard. The whole yearly clothing for a man costs less than $5. Not one article is of foreign manufacture. Not one article taxed with a duty, or made dearer with such a tax. Nay, not one which could, on any day of the year, be purchased cheaper in the English market. What feeds the labor of South Caro- lina? Is it tea, coffee, sugar? Not an ounce. The laborers of South Carolina do not consume to the amount of one cent of any article charged with any amount of duty. If they do, what is it? Gracious Godl And notwithstanding all this, the owners of these slaves, the capitalists of South Carolina, who, in the language of the member from that State [Mr. McDufEe], "drive them day and night, summer and winter, to work harder and make more"; these mild and merciful capitalists are, by their agent here, clamorous, outrageous and abusive against the laborers of New England because they pay less than their share of impost, of tax, on imported commodities. What do New England laborers pay? They pay the duty on all they buy and consume. They consume coffee at a duty of 30 per cent, tea at 35 per cent, and sugar, as the Southern Review asserts, at 52 per cent. All these are consumed by the whole labor of New England. The skilled or manufacturing labor, in addition to these, consume fancy goods. Yes sir, fancy goods ; shawls from England, silks from France, crapes from India, tortoise shell combs from Canton, and Leghorns from Italy. This may seen a paradox to those who cannot, even in thought, separate labor from servitude; to whom work is slavery, and exemption from it freedom; " whose high and palmy " condition of liberty is rendered more lofty by the de- based and wretched servitude around it. Tell, sir, tell these high-minded votaries of fictitious liberty that the freedom of the North is felt and enjoyed the more because it is felt and enjoyed by all; and that if Southern liberty should wither and perish for lack of slavery to feed and support its growth. Northern freedom will grow and flourish, after the sun, in the whole longitude of his course, shall have ceased to shine on the head of a single slave. In the North, labor is not slavery. The persons of whom I speak are the free descendants of the free and highly respected people of New England. They are the daughters and grand- daughters of those wives and mothers who clothed and armed and blessed and hastened their husbands and sons and brothers to the fields of Lexington and Bunker Hill, Bennington and Saratoga. They are not mere bodies, though beauti- ful and blooming; they have minds well instructed; they have read and thought. Tariffed goods con- sumed bv New Eng- land laior. Digitized by Microsoft® PROTECTION AND PRICES. 323 The North- ern labor- er's ad- vantage. You will see them, modestly ornamented by the labor of their own hands, and ac- companied by their parents and brothers, attending the anniversaries of our literary institutions, the yearly discourses at the celebration of our national independence, and in the weekly assemblies for the public worship of the great God and Father of the whole human family. Do you ask how these who labor in the North can afford to consume such im- ported commodities? This cannot be done by labor in France and England. Labor is paid, in any country, in proportion to the demand and supply, in the market, for the labor of that country. In this country the demand for skilled labor is comparatively great, and the supply comparatively small. This labor, therefore, receives a much greater share of the products of labor in this country than the same kind of labor receives in England and France. This, operating alike on labor in all employments, prevents the manufacturer from raising the price of his products, and compels him to lower the rate of his profits. All the necessaries of life being much lower in this than in most other countries, labor not only re- ceives a larger proportion of the annual production of the country, but can live at a much smaller expense for necessaries; and has, therefore, a much larger amount, either to lay up for future use or to consume in accommodations and ornaments. This, sir, is the great secret of Northern prosperity; a condition not the most propitious to the capitalist, but the most beneficial to labor; and demonstrating that while the labor of South Carolina consumes no imported products, and pays not a cent on impost duty, or tax, the labor of the North, made prosperous by the Ameri- can system, pays into the treasury a greater amount of impost duty, of national tax, than even the South Carolina capitalists themselves. For what do these capi- talists buy and consume from the two great markets of the country? First, what does the Southern planter buy? Carriages, harness, saddlery, horses, household furniture. These are not imported, but, by the American system, protected and not made dearer by that protection. They buy fine cottons at i8 cents a yard, which, imported in 1821, cost $1.12. They buy prints, carpets, glass, nails, and all quite as cheap as such commodities can be bought in England. Of woolen cloths, hardware, iron, hemp, sail-cloth, cordage, who buys most, the Northern or the South Carolina capitalists? If then, the producer of exports, whether oil, fish, lumber, peltry, provisions, breadstuffs, or cotton, sell for money, and buy for money, and buy, at his option, either foreign or domestic commodities, the amount of duties, the tax paid by him is governed by his consumption, and not by his export. If he sells for money, he may keep his money in his pocket, live from the produce of his own plantation, and pay not a cent for any imported commodity. The South Carolina dogma, the tax in proportion to export, is unsupported by fact, and must have been contrived to deceive, to delude, to create popular excitement and achieve political objects. Free Labor Against Slave Labor. One of the essential purposes of the policy of protection is to dignify and elevate labor. One of the essential ends of free trade is to degrade and debase labor. The protectionists undertook to make it possible for American labor to become the best paid, fed, clothed, housed and the most intelligent and independent in the world. The free traders, and especially the planters, sought to reduce free labor to the lowest wage scale and bring it down to the level of the slave. The free trade school Free trade the en- slavement of laior. Digitized by Microsoft® S24 SECTIONAL OPPOSITION TO THE AMERICAN S78TEM. of economists contended that a nation should not undertake to establish a system of manufactures until its population became so dense that vast numbers struggling for existence would be compelled to work for the " natural wage rate," which was defined by Ricardo, one of the most au- thoritative free trade economists, as " the price which is necessary to enable the laborers, one with another, to subsist and perpetuate their race without increase or diminution." Hence, the attempt by protective laws to afford labor opportunities to rise above this condition, was held by free trade economists to be unscientific and by the slave holder to be unjust. The following quotation from the Britannica EncyclopEedia, which was extensively circulated in the United States by free traders, stated this objection urged by writers and speakers, both in England and the United States during this period, against the advisability of the United States fostering manufactures by protective legislation, as follows: Tlie sordid view of i'ommer- cialists. Before America can be in a state to carry on manufactures in competition with those of Europe, her vast tracts of unoccupied land, into which the growing popu- lation of her older settlements is regularly flowing, must be stocked. Until this is the case, her supply of laborers will be kept below the demand, and the wages above those paid in the better peopled countries of Europe. Besides the effect which this state of the supply of labor has in increasing the cost of the article, it is adverse to the proper and advantageous execution of the work. The workmen are too independent, and in consequence too unsettled, to submit to that discipline and course of training from which alone excellence of quality and a steady production of quantity are to be obtained.^ The planters contended that the wages of free labor should be kept at the natural rate. Mr. McDuffie said : The pur- pone to Tiring Northern laior do-wn to tlie Eng- lish level. The aggregate of all the other elements of price, except the wages of labor, is decidedly less in England than in the United States. Does it not follow with demonstrative clearness that in a free competition for the market of the United States the wages of manufacturing labor in the Northern States must be reduced at least as low as the wages of the same labor in England? (He was glad to ac- cept that result, and in the hope of gaining it brought in his revenue tariff bill and put forth every effort to have it adopted.) ^ I will now tell the gentleman from Massachusetts, said Mr. McDufEe, if he will pardon the liberty, what is the natural price of the manufacturing labor of the Northern States estimated in money. It is precisely the same as the manu- facturing labor of England, and not a cent more.3 Under this theory the slave labor of the South was in competition with the free labor of the North. The planter favored free trade be- 1 Thompson's History of Protective Tariff Laws, p. 178. 2 Congressional Debates, Vol. 8, p. 3827. s Ibid. Digitized by Microsoft® FREE LABOR VS. SLAVE LABOR' 325 cause it would prevent the price of free labor from rising above that of slave labor. Mr. McDuffie said: I never will consent that the price of their (Northern) labor shall be enhanced to an unnatural price by the disguised appropriation of one-third of the proceeds of Southern labor for their use and benefit.^ The inequality in the cost of labor between the wages paid for one day's work to the free laborer of the North and the cost of one day's work of a slave formed the basis for extended arguments and serious complaints on the part of the free traders of the planting States. If the cost of one day's labor (slave) was 25 cents (McDuffie claimed it was 12^ cents) and one day's labor of a free man was one dollar, it was argued that this worked a great injustice to the South, because in the purchase and consumption of commodities produced in Northern factories, the planters were compelled to pay four times as much for Northern labor as their slave labor cost, and that the protective policy which tended to maintain the higher wage scale for free labor, imposed a burden on the South and granted a bounty to the free labor of the North. As early as December 8, 1820, the citizens of Charleston, South Carolina, protested, in a memorial to Congress, against the protective system because of the benefits conferred on the laborers of the manu- facturing sections. The memorialists said: Arguments for hold- ing north- ern laior down to the plan- tation level. Every laborer employed in unproductive occupations must become directly or indirectly a burden on the community. He will either become a pauper, to be supported directly by the charity of his fellow-citizens, or he must be supported, indirectly, by their consenting to pay more for the products of his labor than would purchase the same products from other quarters. It is to this point that the premature establishment of manufactures will lead; and the effort now made to impose heavy duties or prohibitions on foreign manufactures is only to disguise, in this shape, the bounties we must pay to the laborers engaged in the domestic fabrications.^ "Our complaint," said Lewis of Alabama, "has been that protecting duties have been levied on these articles which are manufactured in one portion of our country for the purpose of raising the price of manufacturing labor; that while those duties operate as a tax on the South they operate as a bounty on the North. This is the sum and substance of it." Mr. Lewis added : " But for the operation of the tariff laws in enhancing the price of Northern labor, the state of things would have been completely the re- verse of what it now is, and a day's labor in the cotton field would have commanded two days of Northern manufacturing labor." * Mr. Clayton said: 1 Speech June 28, 1832. 2 Page 1507, Annals of Congress, 1820, 1821. » Congressonal Debates, Vol. 8, Part 3, p. 3583. Digitized by Microsoft® 326 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. If under the present tariff system it is boldly claimed for free labor, as it is called, a legislative privilege over slave labor, what will they not do when we begin to manufacture with our slaves ?i He said further: They told us openly that the free labor of the North must not, shall not, be degraded to the same footing with the slave labor of the South. . . . We have greater need to be prepared to defend ourselves against these people than against a foreign enemy.^ Clayton said: It follows, then, that the farmer who gets a market for his pigs and potatoes, his onions and leeks and a thousand other things that cannot be carried to Europe, is well able to bear the tax upon consumption on what little he does not make himself, because he has an increased means of supply by reason of this market erected immediately at his door. It follows, also, that the laborers at the fac- tories can willingly bear the tax of consumption, because without this employment they would be cut off from the means of support. Without this business they would have to fall back upon the agricultural pursuits; and having no market for their productions they would have to experience finally a loss of labor from a glutted country. Indeed the whole system is an artfully devised plan to find a market for small productions and employment for paupers.^ The slave- holding system. Mr. Burgess again, in an extended speech in reply to the NuUifiers, on June 16, 1832, said : * The Northr em system. In the anti-protection States, white men, as we are told, do not work. Work is the employment of slaves in these States, and it is, therefore, degrading; for, as South Carolina tells New England, '" none but slaves work." These States are peopled by about two million five hundred thousand white people, and by atout one million five hundred thousand slaves. What amount do these one and a half million of slaves produce, annually, in those States where none but slaves work? First, they produce all their own food. Second, they make all, or nearly all, their own clothing, and pay for the remainder. Third, they furnish all the food of the white population, except such parts of it as may be imported from foreign coun- tries. Fourth, what more? They grow about $5,000,000 in value of cotton, rice and tobacco which the white people of those States sell to the Northern protection States. Fifth, they do over and above all this; they annually draw from the lands of those States cotton, rice and tobacco amounting in value to $20,000,000. What must be the exuberance of soil, what the benignity of climate, what the productive powers of labor, which enable 1,500,000 persons of all ages and sexes, men, women and children, to feed and support 4,000,000 of people; and, over and above all this, to furnish a surplus of $25,000,000 to their quiet, uncomplaining " right good masters." Look, sir, at ten of the protection States : Delaware, Pennsylvania, New Jersey, 1 Congressional Debates, Vol. 8, p. 3564. a Congressional Debates, Ibid. 3 Conffressional Debates, Vol. 8, p. SB48. 4 Congressional Debates, pp. 3616-3618. Digitized by Microsoft® TEE SOURCE OF NEW ENGLAND'S PROSPERITY. 327 The sys- tems con- trasted. New York and the other six in " the pale, unriped region " of New England. What can they do, after supplying their hunger and fencing out the cold? Their whole surplus for the foreign market was, in 1830, no more than $22,190,935, and this, too, was produced by a population of 5,613,639 persons, and in States where to be idle is to be degraded, where to work is honorable, where all work. How quiet, how satisfied, is labor; how restless, how complaining, is idleness? Do you find in these things any proof of oppression and unequal tax paying in South Carolina, or in any other of these anti-protection States? We are told that villages spring up in the North as if by enchantment, while in South Carolina are no villages. That is, sir, because in New England labor receives so large, and consumes so small, a portion of production, that the working men in that region can build and choose to build houses; but in South Carolina labor is capital ; all production goes to the owner ; and he does not choose to build, except for himself, and that may be a palace; while for his laborer, if he builds, he builds a cabin. In New England (I know it is so in Rhode Island) labor can lay up one-fourth part of its earnings. The high rate of labor gives a low rate of profits to capital, and the low rate of cost for consumption preserves this high rate of surplus to labor. Here is the source of New England prosperity. The surplus production over the cost of consumption which goes into the hands of tens of thousands of work- ing men, has those tens of thousands of vigilant, careful keepers ; and is preserved, therefore, with much more success than if it all went into the hands of a few own- ers of capital. This reduces profits on stock, and prevents the accumulation of excessive wealth in the hands of the few; but this also prevents the poverty of the many, and brings working men to be middling interest men; to be the people, the great source, the great object of power. Hence, sir, the village, the village school- house, the village meeting house, and all accommodations of Northern prosperity. It is not because labor and capital produce more profits there than in South Caro- lina, but because those profits are there more diffused, more carefully preserved, and shared and enjoyed by more persons. In South Carolina, you have the few rich, the many poor. You have the palace of the master; the huts of his slaves. You h^e the delight of the unquestioned dominion over unquestioning submission. You have more, even more than the baronage and vassalage of feudal dominion. In the South every village is a barony, governed by one will, and that will the will of the proprietor. Sir, these planters call aloud for the free trade of ancient Europe, and tell us that the restrictive system of England was produced in an age of barbarism. It was ; but England owes to it all her advancement in arts, in wealth, in freedom and in civilization. This system introduced villages, boroughs and towns, in a country of mere plantations, mere baronies; of feudal lords and serfs, their white slaves. In these towns, the peasant became a burgess, a free citizen; and men of that humble name, protected by those laws which restricted the free traders of foreign nations, and the lawless sovereignty of baronial power in England, have, at length, reduced the whole realm to the dominion of law; and the humblest working man there is now as free under this whole system of protection as the baron of a thousand tenants. Sir, it is not the anti-Christian, but the anti-baronial, protection which calls down the anathema of South Carolina. It is not because no villages now adorn the State, but the apprehension that these little republics may, unless the protective system can be overthrown, grow up there, and call the white population of that goodly region from a condition of semi-vassalage to the condition of working men, endowed, as then they will be, with all the attributes of industry, intelligence and England's debt to protection. The cause of South Carolina's hostility to protection. Digitized by Microsoft® 328 SECTIONAL OPPOSITION TO THE AMEBICAN S78TEM. The alii- ance against American protection. Restricted Southern production. Causes of Southern hostility to protec- tion. independence. Well may the destruction of the protective system in England and in the United States be looked for by South Carolina as a glorious era. It would be a jubilee to all little tyrants in both countries. It would restore to the barons of England more than their ancient vassalage, and relieve the planters of South Carolina from all fear that their white might ever become more free than their colored slaves. Sir, the statesman of the South may now be unborn who shall at some future time build in those States this manufacturing refuge for the white population of that delightful region. Si^AvEEY, Politics and the TariPP. The alliance formed between the British manufacturers, the import- ing interests and the planters to overthrow the policy of protection, destroy or restrict the development of manufactures in the United States and place the country on a tariff for revenue only basis, became effectual in 1833. The British economists furnished our college professors with argu- ments to support their free trade assumptions. Stump speakers aroused the prejudices of the planters against the manufacturers and made the slave States the great stronghold of the Democratic party. The great newspapers of the mercantile cities of the North, controlled by the commercial and importing firms, edited and conducted with great skill and ability, promulgated free trade fallacies, defended the planting interests and divided the public sentiment of the North. Cotton became the great staple product of the slave States, and cot- ton, tobacco and rice, constituted the three great articles of produc- tion upon which these States, by slave labor, depended for their wealth and prosperity. Notwithstanding the fact that the slave States were in possession of an abundance of iron, coal, timber and innumerable water powers, and every facility for converting their cotton into fabrices, their people chose to confine their energies to the cultivation of the three great staples named. As the fruits of protection began to appear, as the hidden resources of the North were brought forth and the political power of the free States through their growth in wealth and population became manifest, and as the people of the great commonwealths of the North began to protest against the institution of slavery, then the planters looked upon the protective policy as a hideous monster to be destroyed. They gradually changed their attitude toward manufactures in the United States from one of support and friendship to one of hostility. When the Northern representatives asserted the right of Congress under the Constitution to place restrictions on the further extension of slavery, it would only be going a step farther for them to declare that the Congress had a right to abolish the institution altogether. Emancipation and Digitized by Microsoft® THE EVOLVTWN OF SECESSION. 329 abolition societies were being formed. A violent agitation had begun in the North against the institution. American politics at once became sectional politics, and every important question was considered and determined by the South from a purely sectional standpoint. The people of the Northern States were regarded as being in a combination to de- stroy the main and vital interests of the South. It was an " irrepres- sible conflict." The people of the Southern States from this time on organized to prevent, by every means possible, the increase in wealth and power of the free States, for they feared and believed that when the North became sufficiently strong and populous slavery would be abolished. Public sentiment in the slaveholding States became violent, aggressive and united for one purpose. Their statesmen were able to dominate and absolutely control the Democratic party on public ques- tions. A Northern Democrat could not hope for any political prefer- ment in national affairs unless he was subservient to Southern interests. The slaveholding power became aggressive, intolerant, dictatorial, and from. 1834 to 1860 almost absolutely controlled the affairs of the nation. John C. Calhoun said to Commodore Stewart,^ of their friendship for the Democratic party: That we are essentially aristocratic I cannot deny; but we can and do yield much to Democracy. There is our sectional policy; we are from necessity thrown upon and solemnly wedded to that party, however it may occasionally clash with our feelings, for the conservation of our interests. It is through an affiliation with that party in the Middle and Western States we control, under the Constitution, the government of these United States; but when we cease thus to control this section through a disjointed Democracy or any natural obstacle in that party which shall tend to throw us out of that rule and control, we shall then resort to a disso- lution of the Union. The protective tariff laws of 1824 and 1828 did not bring into existence the doctrine of nullification and secession. It was the attack on the institution of slavery which inspired the entire political creed of Calhoun's party. The opposition to the tariffs of 1828 and 1832 was not because they were protective measures, but because they were North- ern measures, promoted Northern interests, and increased the wealth and prosperity of the North. Slavery and free trade became one and inseparable. The most authoritative account of the causes which induced the people of the slave States to oppose the policy of protection and favor the doctrine of free trade is found in a work entitled " Cotton is King " and " Pro-slavery Arguments," edited by E. N. Elliott, LL.D., president of the Planters' College of Mississippi, published in Atlanta, Ga., by 1 Letter of Commodore Stewart, Harper's Magazine, August, 1862. Disunion in pros- pect. The slave- holder's tear of 'Northern supremacy. " Cotton is King." Digitized by Microsoft® 330 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. 2fortTiern farmer vs. Southern planter. The scheme of the planter. Reasons for Southern hostility to protection. Pritchard, Abbott & Loomis, in 1860. The part from which the follow- ing quotations are taken was written by David Christie, Esq., and pub- lished under the title of " Cotton is King, or Slavery in the Light of Po- litical Economy." From the following extracts we have the entire scheme unfolded: The logical conclusion, from these different results, was that the less pro- visions, and the more cotton grown by the planter, the greater would be his profits. This must be noted with special care. Markets for the surplus products of the farmer of the North were equally as important to him as the supply of provisions was to the planter. But the planter, to be eminently successful, must purchase his supplies at the lowest possible prices; while the farmer, to secure his prosperity, must sell his products at the highest possible rates. Few, indeed, can be so ill in- formed as not to know that these two topics for many years were involved in the " free trade " and " protective tariff " doctrines, and afforded the material of the political contests between the North and the South — between free labor and slave labor. A very brief notice of the history of that controversy will demonstrate the truth of this assertion.^ A manufacturing population, with its mechanical coadjutors in the midst of the provision-growers, on a scale such as the protective policy contemplated, it was conceived, would create a permanent market for their products, and enhance the price; whereas, if this manufacturing could be prevented, and a system of free trade adopted, the South would constitute the principal provision market of the country, and the fertile lands of the North supply the cheap food demanded for its slaves. , , , For success in the foreign markets, they relied, mainly, upon pre- paring themselves to produce cotton at the reduced prices then prevailing in Europe. All agricultural products, except cotton, being excluded from foreign markets, the planters found themselves almost the sole exporters of the country; and it was to them a source of chagrin that the North did not, at once, co-operate with them in augmenting the commerce of the nation.^ At this point in the history of the controversy, politicians found it an easy matter to produce feeling of the deepest hostility between the opposing parties. The planters were led to believe that the millions of revenue collected off the goods imported was so much deducted from the value of the cotton that paid for them, either in the diminished price they received abroad, or in the increased price which they paid for the imported articles. To enhance the duties, for the protection of our manufacturers, they were persuaded would be so much of an additional tax upon themselves, for the benefit of the North; and, besides, to give the manufac- turer such a monopoly of the home market for his fabrics would enable him to charge purchasers an excess over the true value of his stuffs, to the whole amount of the duty. By the protective policy, the planters expected to have the cost of both provisions and clothing increased, and their ability to monopolize the foreign markets diminished in a corresponding degree. // they could establish free trade, it would insure the American market to foreign manufacturers ; secure the foreign markets for their leading staple; repress home manufactures ; force a large number of the Northern men in agriculture ; multiply the growth and diminish the price of provisions ; feed and clothe their slaves at lower rates; produce their cotton for a third or fourth of former prices; rival all other countries in its cultivation; monopo- 1 Cotton l8 King, p. 67. 2 Ibid, pp. 71,72. Digitized by Microsoft® PROTECTION THE DOOM OF SLAVERY. 331 Devices for the assurance of South- ern as- cendency. Use the trade in the article throughout the whole of Europe, and build up a com- merce and navy that would make us ruler of the seas.^ Out of this conviction grew the war upon corporations; the hostility to the employment of foreign capital in developing the mineral, agricultural and manu- facturing resources of the country; the efforts to destroy the banks and the credit system; the attempts to reduce the currency to gold and silver; the system of col- lecting the public revenues in coin; the withdrawal of the public moneys from all the banks as a basis of paper circulation; and the sleepless vigilance of the South in resisting all systems of internal improvements by the general government. Its statesmen foresaw that a paper currency would keep up the price of Northern products one or two hundred per cent above the specie standard ; that combinations of capitalists, whether engaged in manufacturing wool, cotton, or iron, would draw off labor from the cultivation of the soil, and cause large bodies of the producers to become consumers; and that roads and canals, connecting the West with the East, were effectual means of bringing the agricultural and manufacturing classes into closer proximity to the serious limitation of the foreign commerce of the country, the checking of the growth of the navy, and the manifest injury of planters.2 Besides this, the abolition movement at that moment, 1832, had assumed its most threatening aspect, and was demanding the destruction of slavery or the dissolution of the Union. Here was a double motive operating to produce har- mony in the ranks of Southern politicians, and to awaken the fears of many, North and South, for the safety of the government. Here, also, was the origin of the determination, in the South, to extend slavery by the annexation of territory, so as to gain the political preponderance in the national councils, and to protect its interests against the interference of the North.^ The aboli- tion move- ment and its counter effecia. An analysis of the debates on the subject shows that there was perfect agreement between the protectionists of the North and the free traders of the South on the question of the necessary influence of the policy of protection in building up the industries of the nation. It was conceded that through protection manufactures would be established; skilled manufacturers and artisans would come from the Old World and establish themselves in America; that immigration would be stimu- lated to people the free States; that capital would flow in from abroad and new capital would be created at home ; that villages, cities and great industrial centers would spring up everywhere; that industries would follow the settlers into the new States ; that the whole North would be- come a scene of thrift, industry and prosperity. The opposition to pro- tection by the planters was based on the belief that the free States under its influence would soon become so populous, so strong and powerful that they would outvote the slave States in the halls of Congress, and the political equilibrium between the two sections of the country would be destroyed. It was to prevent the happening of such events that the planters attempted to keep the North poor and backward by preventing The effect of protec- tive tariffs upon slavery foresten. 1 Cotton Is King, pp. 72-75. slbld, pp. 98, 94. 2 Ibid, p. 79. Digitized by Microsoft® 332 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. the establishment of a system of manufactures. So when we come to consider the objections which they interposed against the American system, instead of finding any reason for the support of free trade or a low tariff policy based on national welfare, the very reverse appears, and their contentions vindicate the wisdom and justice of the protective system. Digitized by Microsoft® CHAPTER XIII. Jackson's Second Term — Nullification Ordinance; op South Caro- lina — The Compromise Act op 1833 — Panic of 1837-1842 AND its Causes. If a nation were made of adamant, free trade would grind it into powder. — Napoleon. That is the truest American policy which shall most usefully employ American capital and American labor and best sustain the whole population. . . . Agricul- ture, commerce and manufactures will prosper together or languish together. — Daniel Webster. Resolved, That an adequate protection to American industry is indispensable to the prosperity of the country; and that an abandonment of the policy at this period would be attended with consequences ruinous to the best interests of the nation. — Party platform adopted by the convention that nominated General Jack- son in 1832. Nullification. In the election of 1832 three tickets were in the field : Andrew Jack- son and Martin VanBuren, nominated by the Democratic or Jackson National Convention; Henry Clay and John Sargent, nominated by the National Republican Convention; and William Wirt and Amos Ell- maker of Pennsylvania, by the United States Anti-Masonic Convention. The issue of the campaign consisted chiefly in attacks on General Jack- son on account of his opposition to the United States Bank, his veto of appropriations for internal improvements, and the removal from office of federal employees, to make places for his friends. General Jackson was re-elected, receiving 219 electoral votes, with 49 for Henry Clay. William Wirt received the seven votes of Vermont, and John Floyd the eleven votes of South Carolina. The agitation against the tariff, instead of abating upon the re- vision of July 14, was stimulated to a violent outbreak. The storm burst in all its fury before the election was held. Public meetings were (333) The elee- tion 0/ 1832. Digitized by Microsoft® 334 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. The nulUft- cation ordinance. held in South Carolina during the summer, addressed by McDuffie, Hayne, Hamilton and other eminent men, and the public mind was aroused to the point when it was ripe for disunion. The legislature of South Carolina was convened by the Governor on the 22nd of October, and November 19 was fixed as the date for the assembly of a State Con- vention to take action on the subject. On the 24th the famous Nullifi- cation Ordinance was adopted. It was ordained: I. That the tariff law of 1828, and the amendments to the same of 1832, are null and void, and no law, nor binding upon this State, its officers or citizens. II. No duties enjoined by that law or its amendment shall be paid or permit- ted to be paid in the State of South Carolina after the first day of February, 1833. III. In no case involving the validity of the expected nullifying act of the legislature shall an appeal to the Supreme Court of the United States be permitted. No copy of proceedings shall be allowed to be taken for that purpose. Any at- tempt to appeal to the Supreme Court " may be dealt with as for a contempt of court" from which the appeal is taken. IV. Every office-holder in the State, whether in the civil or military service, and every person hereafter assuming an office, and every juror, shall take an oath to obey this ordinance, and all acts of the legislature in accordance therewith or suggested thereby. V. If the government of the United States shall attempt to enforce the tariff laws now existing by means of its Army or Navy, by closing the ports of the State, or preventing the egress or ingress of vessels, or shall, in any way, harass or obstruct the foreign commerce of the State, then South Carolina will no longer consider herself a member of the Federal Union. The people of this State will thenceforth hold themselves absolved from all further obligation to maintain or preserve their political connection with the people of the other States, and will forthwith proceed to organize a separate government and do all other acts and things which sovereign and independent States may of right do. The " Union Party." Governor Bayne and nulliftca- tion. The events of this time show in a marked degree the influence of a few strong leading men. The active free traders were but a handful compared with the masses, but they had so effectively moulded public sentiment and misguided the people that they stood forth as the repre- sentatives of an uncompromising constituency which believed that their most sacred rights were imperiled. Yet there was a considerable body of the people in both South Caro- lina and Georgia, called the " Uiaion Party," or " Union and States Rights " party, who, while opposing Nullification, were opposed to the tariff. In fact, three of the members of Congress from South Carolina supported President Jackson and voted for the " Force Bill." Robert Y. Hayne was elected governor of South Carolina and en- dorsed the action of the Convention of which he had been a member. In his inaugural address he announced his intention Digitized by Microsoft® THE GOTEBNMEXrS AVTEORITT DISPUTED. 335 "to carry into full effect, not only the ordinance of the Convention but every act of the legislature and every judgment of our courts, the enforcement of which may devolve on the executive." Provisions were made by the legislature to raise and equip a volun- teer force to defend the State. South Carolina, however, offered a plan of adjustment of the diffi- culty, provided it was accepted by the country in due time, which pro- vided that : The South Carolina plan. "The whole list of protected articles should be imported free of duty, and that the revenue derived from import duties should be raised exclusively from un- protected articles, or that whenever a duty is imposed upon protected articles im- ported an excise duty of the same rate shall be imposed upon all articles manu- factured in the United States." The ingenuity of man could not have devised a scheme better calcu- lated to absolutely prevent the establishment of manufactures in the United States, nor one which would make more supreme the British monopoly of our markets and convert our inhabitants into commercial vassals of foreign nations. When Congress convened on December 3, 1832, it found the author- ity of the Government disputed. Open resistance to its laws avowed in a decision reached by South Carolina that " if the Government . . . shall attempt to enforce the collection of the duties on imports levied by the Act of July 14, it would rebel from the Union, set up an independent Government and defend its action by force." It was indeed a trying situation for President Jackson and his ad- ministration. No man was ever endowed with more patriotism, with a greater love for his country, than Andrew Jackson. He was reluctant to depart one iota from the protective policy that had grown into an American System and had given such stability and prosperity to the nation. On the other hand, he wished to avoid disunion and civil war. There seemed one outlet of escape, — viz. ; through concession and com- promise. The doctrine of secession and nullification could not be coun- tenanced in the slightest degree. If concessions were made, they must be in the tariff, with the hope that a more enlightened public sentiment in the South would correct the erroneous belief that the establishment of manufactures in the Free States was a detriment to the people of the slave States. In any event, the calamities of civil strife should be post- poned as long as possible and every means consistent with national welfare be adopted to avert an open rupture. In the interest of harmony. President Jackson practiced the utmost patience and forbearance. In his message of December 4, he presented the matter to Congress President Jackson on nulUfi- cation. Digitized by Microsoft® 336 SECTIONAL OPPOSITION TO THE AMERICAN ST8TEM. The Presi- dent's pro- clamation. and indicated that the existing laws were sufficient to clothe the President with authority to deal with the situation, and promised to inform Con- gress if difficulties arose. He, however, at that time was preparing his famous nullification proclamation, which was issued on December 11, and in which he discussed the whole question of the right of a state to break up the Union, and defended the constitutionality of a protective tariff. We will quote here but one sentence from this famous procla- mation. He said: " I consider, then, the power to annul a law of the United States, assumed by- one State, incompatible with the existence of the Union, contradicted expressly by the letter of the Constitution, unauthorized by its spirit inconsistent with every principle on which it was founded and destructive of the great object for which it was formed." War im- minent. This was met by a defiant reply from Hayne. The enlistment of soldiers, drilling and preparation for war, the establishment of arsenals and military stations went on, and the situation grew more threatening every day. CoNCi;ssiONS Made to Avi;rt CiviIv War. The " Force Bill." The action of South Carolina was condemned by all of the States except Virginia, Alabama and Georgia, and the two former requested South Carolina to suspend her ordinance. On January 16 President Jackson by special message called on Con- gress for the enactment of the " Force Bill," as it was called, which em- powered the President to employ the land and naval force of the Union to enforce the collection of the revenue, if resistance should be offered. Almost immediately upon the convening of Congress, measures were in- troduced to revise the tariff for the purpose of making concessions to the South and reconciling the difficulties. President Jackson took the lead by proposing such action in his message of December 3. He said: The Presi- dent rec- ommends conces- sions. "It is due to the interests of the different states and even to the preservation of the Union itself that the protection afforded by existing laws to any branches of national industry shall not exceed what may be necessary to counteract the regulations of foreign nations and to secure a supply of those articles of manufac- ture essential to the national independence and safety in time of war. If upon investigation it shall be found, as it is believed it will be, that the legislative pro- tection granted to any particular interest is greater than is indispensably requisite for those objects, I recommend that it be gradually diminished, and that as far as may be consistent with those objects, the whole scheme of duties be reduced to the revenue standard as soon as a just regard to the large capital invested in estab- lishments of domestic industry will permit." This was the recommendation. Other language was used which is Digitized by Microsoft® COMPROMISE TARIFF OF 1833. 337 inconsistent with views for years entertained and openly asserted by General Jackson, but it should be carefully noted that at this time he was dealing with a perplexing situation. Concessions must be made or civil war was inevitable. At the same time the patriotism of the protection- ists must be appealed to. Sacrifices must be made, and in order to ac- complish his purpose arguments borrowed from others were undoubt- edly adopted. On the 28th of December Mr. Verplanck of New York introduced a bill into the House of Representatives which was in harmony with the report of Mr. McLane, the Secretary of the Treasury. It at first pro- posed an immediate reduction of duties, and provided further that all duties above a rate of 20 per cent ad valorem should be reduced to cer- tain rates, some of them in one year and partly in two years, and others wholly at the end of the first year, so that at the expiration of two years a uniform rate of 20 per cent ad valorem should be reached, excepting on a few articles, upon which specific duties were retained. The debate upon this bill continued from the 8th of January to the 25th of February, when a resolution introduced by Mr. Letcher of Kentucky provided for the substitution of the bill which had been introduced by Mr. Clay in the Senate. It was carried by a vote of 96 to 54. The Force Bill which had been introduced by Mr. Wilkins on the 21st of January, 1833, in response to the request of the President, passed the Senate on the 20th of February by a vote of 32 yeas to 1 nay (Mr. Tyler). On the engrossment of the bill on the 18th, Messrs. Bibb of Kentucky, Calhoun and Miller of South Carolina, King and Moore of Alabama, Troup of Virginia and Tyler of Georgia, had been recorded in the negative. This bill was taken up in the House on the 26th of February, and passed on the 1st of March by a vote of 149 to 48. Clay's Compromise Bill. On the 12th of February, 1833, while the Force Bill was pending in the House, Mr. Clay introduced his famous Compromise Tariff bill. Mr. Clay in addressing the House said the bill had two objects; one was to prevent the destruction of the tariff policy which was in imminent danger; the other, to avert Civil War and restore peace and tranquillity to the country. The tariff act of July 14, 1832, was taken as a basis of calculation, and the bill provided. Section 1 : "That from and after the 31st day of December, 1833, in all cases where duties are imposed on foreign imports, by the act of the 14th of July, 1832, entitled . . . or by any other act, shall exceed 20 per centum on the value thereof, one- tenth part of such excess shall be deducted; from and after the 31st day of Low tariff Mil intro- duced. The Force Bill be- comes law. The com- promise Wl. Digitized by Microsoft® 338 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. 'Nullifica- tion re- pealed. Vote on the com- promise till. December, 1835, another tenth part thereof shall be deducted; from and after the 31st day of December, 1837, another tenth part thereof shall be deducted; from and after the 31st day of December, 1839, another tenth part thereof shall be de- ducted; and from and after the 31st day of December, 1841, one-half of the residue of such excess shall be deducted and from and after the 30th day of June, 1842, the other half thereof shall be deducted." It was provided by the second section : " That the duty on coarse woolens, costing not more than 35 cents per square yard, which had by the act of 1832 been reduced to 5 per cent, should be raised to 50 per cent, the same as was charged on other woolens." The act placed on the free list bleached and unbleached linens, table linen, linen napkins and linen cambrics, worsted stuff goods, shawls and other manufactures of silk and worsted, manufactures of silk or of which silk shall be the component material of chief value, coming from this side of the Cape of Good Hope, except sewing silk. It should be noted that none of these fine fabrics were manufactured in the United States. The act abolished credits on duties, and provided for a home valu-. ation to take effect June 30, 1842. The Nullification Ordinance which was to go into effect the first of February, 1833, was in January suspended, and was finally repealed March 11. The nullifiers, however, claimed a great victory. The tariff act of 1832 remained in force until the 1st of January, 1834. The first reduction under it occurred on the 31st day of December, 1833. The debate on the bill continued in the Senate until the 2Sth of February; it passed the House on the 26th, and the Senate on the 1st of March by a vote of yeas 29, nays 16. Vote on the Act ot 1833. The bill passed the House on the 26th of February by a vote of 121 to 84, as follows : Maine, Yeas 6, Nays i. New Hampshire, Yeas 4, Nays I. Massachusetts, Nays 13. Rhode Island, Nays 2. Vermont, Yeas S- Connecticut, Nays 6. New York, Yeas 11, Nays 19. New Jersey, Nays 6. Pennsylvania, Yeas 4, Nay§ 21. Delaware, Nay I. Maryland, Yeas 9. Vermont, Yeas 20, Nay l. North Caro- lina, Yeas 13. South Carolina, Yeas 9. Georgia, Yeas. 6. Kentucky, Yeas 12. Tennessee, Yeas 9. Ohio, Yeas 7, Nays 6. Louisiana, Yeas 3. Indiana, Yeas 2, Nay I. Illinois, Nay I. Mississippi, Yea I. Alabama, Yeas 3. Missouri, Nay I. Every member from the slave States, excepting one from Missouri and one from Virginia, voted in favor of the bill. The strong- protec- tionists of the North were against it. The New England States, except- Digitized by Microsoft® NORTH TS. SOUTH AND WEST. 339 ing Maine and New Hampshire, voted unanimously against the measure, as also New Jersey unanimously, and a large majority of New York and Pennsylvania. The bill was supported and carried through by the Southern and Western States. Vote in the Senate. On the first of March the bill passed the Senate by a vote of 29 to 16, as follows : Yeas : Maine, Holmes, Sprague ; New Hampshire, Bell, Hill ; Connecticut, Foot, Tomlinson; New York, Wright; New Jersey, Frelinghuysen ; Delaware, Clayton, Nandin, Maryland, Chambers; Virginia, Rives, Tyler; North Carolina, Mangum; South Carolina, Calhoun, Miller; Georgia, Forsyth; Kentucky, Clay Bibb; Ten- nessee, Grundy, White; Ohio, Ewing; Louisiana, Johnson, Waggaman; Illinois, Robinson; Mississippi, Black, Poindexter; Alabama, King, Moore. Nays : Massachusetts, Sibley, Webster ; Rhode Island, Knight, Robbins ; Ver- mont, Prentice, Seymour; New York, Dudley; New Jersey, Dickerson; Pennsyl- vania, Dallas, Wilkins; Maine, Miller; Ohio, Ruggles; Indiana, Hendricks, Tipton; Missouri, Benton, Buckner. The most strenuous opposition to the measure came from the ardent protectionists. Mr. Webster in addressing the Senate asserted that the bill surrendered the constitutional power of protection; it restricted fu- . ture legislation of Congress and urged that it gave up specific duties and substituted ad valorem rates and was an abandonment of the policy of protection; that many of the industries would soon be ruined; that such industries as those for the manufacture of boots, shoes and clothing, calico, printing, woolen establishments and for the manufacture of iron 'courd not stand with a duty of 20 per cent, ad valorem. Mr. Clay, in addressing the Senate, justified his course, as follows : ■But witness the recent elections — the message of the President — the opposition of a majority, of the friends of the administration to the tariff. The protection afforded by^tKfe bill would be ample for several years, during which period manu- factures would acquire strength. He was willing the manufacturers themselves should decide the question; many of them, then in Washington, and others from whom he had received letters, had expressed themselves in favor of the bill. They now would know what to depend on, and could regulate their operations accord- ing^y.' He did not fear any misconstruction of the pledge contained in the bill; and he hoped the manufacturers would go on and prosper, confident that the abandonment of protection never was intended, and looking to more favorable times for a renewal of a more effective tariff. Mr. Clay also replied to the re- -marks of the gentlemen who would enforce the collection of duties under the existing laws, without making any concession to South Carolina. He said; The opponents of the bill rely on force; its friends cry out, force and affection. One Mr. Wei ster's op- Hr. Clay on the promise. Digitized by Microsoft® 340 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. cries out power! power! power! The other side cries out, power, but desires tc see it restrained and tempered by discretion and mercy, and not create a con- flagration from one end of the Union to the other. Jieasons for ClayU action The atti- tude of Webster. State of mind of the nullifiers. Van Buren and Buchanan, who in the past had made a strong pro- fession of their devotion to the cause of protection, were known by Mr. Clay to be mere politicians whose support could not be relied upon. An- drew Jackson was serving his last term. He had been President of a personal party which would crumble and disappear as soon as he retired to private life, and within a short time his personal followers must make new alliances in order to remain at the front. The slave States were fast being welded into a united political force; the South had become almost solid against protection. The political elements of the free States were being torn asunder by the anti-slavery movement, and such men as Van Buren, Benton, Buchanan and many other Northern Democrats were sure to pass under the banner of John C. Calhoun. We have dis- covered no reason for concluding that Henry Clay was not influenced by the same high and patriotic motives which actuated Andrew Jackson in the stand which he took. Sacrifices must be made, concessions and conciliations were absolutely necessary to avert civil war. This ac- complished, the cause of protection could be easily left to the future. But what shall we say of Daniel Webster, the great expounder of the Constitution, whose closing sentence in the memorable debate with Hayne, " Union and liberty, now and forever, one and inseparable," gave to America an undying sentiment which sealed the doom of nullification and inspired the Union army to victory from Bull Run to Appomattox? There was no spirit of compromise or concession in Mr. Webster. He met treason with defiance, and was ready to grapple with it when it first showed its head. Had the compromise not been effected, bloodshed would undoubtedly have followed, and if it had gone to this extent, An- drew Jackson would have made treason forever odious. The nullifiers realized the danger they were in. Mr. Appleton of Massachusetts, in addressing Congress on July 5, 1842, gave the follow- in account of the situation. He said: I recollect very well when the honorable gentleman from Kentucky (then Judge, now Governor Letcher) introduced the bill into the House and asked me to vote for it. The reason on which he urged me to do so was — ^that South Carolina was sick of her position and wanted an apology for retreat. The nullifiers are in a bad fix, they only want a hole to creep out of and they are willing to creep out of a very small one. Let them have it. And yet the nullifiers when they got home boasted with great flourish that they had achieved a tremendous triumph and had brought Congress and the coun- try to their feet. Digitized by Microsoft® DEPRESSION OF TRADE 341 Panic oi? 1837. Martin Van Buren entered upon his term of office on March 4, 1837, and was at once obHged to convene Congress in special session. The revenues were not sufficient to meet the wants of the government; banks suspended specie payments and the storm of a financial panic broke upon the country. The depression in trade which began with a financial panic in 1837, continued unabated until protection was restored by the act of August 30, 1842. Mr. Van Buren, however, was blind to the true state of affairs and their causes. The free traders were maintaining that the tariff law of 1833 was irrevocable and were hailing the breaking down of manufacturing interests with great joy. For the first time in our history we had a President hostile to the industrial interests of his country. The most charitable thing to be said of Mr. Van Buren is that he was weak. If he was not a free trader at heart, he was thoroughly under the influence of free traders. When speaking of our agricul- tural interests he had in mind only one product — cotton, the annual pro- duction of which was about 1,000,000 bales from 1830 to 1833, 1,800,000 bales in 1838 and nearly 2,200,000 bales in 1840. Our exports increased from 270,000,000 pounds in 1831 to 781,000,000 pounds in 1839, nearly threefold. This in itself was most gratifying, but cotton was made lord over every industry in the land, and it was forgotten that we had other agricultural productions, or should have. Mr. Van Buren's almost criminal course was rebuked in 1840 when he received only 60 out of 294 electoral votes cast, the 60, of course, including South Carolina. It was a mistake to suppose, as Mr. Van Buren contended, that the tariff of 1833 could not be amended before the horizontal scale of 20 per cent was actually reached. In fact, both President Jackson and Mr. Clay had that very thought in mind that it could be changed at any time necessary. The tariff act of 1833 greatly stimulated the importation of foreign merchandise, which was forced into the market, sold at auction and on liberal terms of credit, to merchants and speculators whose commercial paper was taken and discounted by the banks. The zeal and energy displayed by the representatives of foreign manufactories in suppressing domestic industries and seizing the Ameri- can market is shown by the table on the next page. The imports suddenly increased from $108,000,000 in 1834 to $176,- 000,000 in 1836, and within four years our imports exceeded our exports by $99,000,000. The total adverse balance of trade, 1834 to 1842, was $116,332,028. Mr. Van Buren's hias. Disastrous working of the tariff law of 18S3. Digitized by Microsoft® 342 SECTIONAL OPPOSITION TO TEE AMEBIOAN SYSTEM. Value of United States Exports and Imports of Merchandise for the Years Named. Bow tilt com- promise act operated. 1834. 1835.^ 1836., 1837.. Total.. 1838 1839- •■• 1840 1841 1842 Exports. Domestic. Foreign. $80,623,662 100,459,481 106,570,942 94,280,895 $381,934,980 $95,560,880 101,625,533 111,660,561 103,636,236 91,799,242 $21,636,553 14,756,321 17,767,762 17,162,232 $71,322,868 $9,417,690 10,626,140 12,008,371 8,181,235 8,078,753 Total. f 1 02,260,2 1 5 115,215,802 124,338,704 114,443,127 $454,257,848 $104,978,570 112,251,673 123,668,923 111,817,471 99,877,995 Imports. Total. $108,609,700 136,764,295 176,579,154 130,472,803 $552,425,952 $95,970,288 156,496,956 98,258,706 122,957,544 96,075,071 Excess of Exports. Excess of Imports. $6,349,485 21,548,493 52,240,450 19,029,676 $99,168,104 $9,008,282 $44,245,283 25,410,226 11,140,073 "^.802.024 $38,221,432 $55,385,356 Total.. $504,282,452 The removal of duties from non-competing commodities by tlie re- vision of the tariff in 1832 and the general prosperity of the country increased the importation of luxuries. The importations of foreign merchandise averaged $72,000,000 per year for five years, 1826-1830, and $130,000,000 per year during the five years of 1833-1837. They in- creased from $62,000,000 in 1830 to $176,000,000 in 1837. The country withstood the increased imports of non-competing commodities v^fhich followed the revision of 1832, but the flood of importations induced by the passage of the Compromise Act, coupled with the direct assault on domestic manufactures, carried destruction to established industries. During the first four years under the compromise act, 1834-1837, our purchases were $99,000,000 more than our sales. The consequences were inevitable. This vast surplus of goods must be disposed of at once, as they came in. They could not be held. They must be gotten out of the w£iy to make room for more to follow. A spirit of speculation and over- trading naturally ensued. This cause, if none other existed, would ac- count for the disruption of the business of the country. Its secondary effect was the displacement of a vast quantity of American-made goods, checking or closing the operation of mills, throwing labor out of em- ployment and undermining domestic industry by taking away the mar- ket. An accumulation of foreign indebtedness, a drain of specie and inability to. meet obligations were all necessary attendant evils of the excessive importations. Mr. Ezra C. Seaman, in discussing this phase of the panic of 1837,^ said: 1 Essays on the Progress of the Nation, First Series, pp. 260, 261, 262, 263. Digitized by Microsoft® EXPORT OF SPECIE. 343 There is much reason to believe that there never was more specie in the United States in proportion to the population, than there was during the general suspension of specie payments by the banks from May, 1837, to May, 1838; and consequently the suspension could not have been caused by the small amount of specie, but by the excessive amount of paper money, the wild and extravagant spirit of speculation, the excessive imports of foreign goods (which served to paralyze the industry of the country), and the rapid accumulation of a foreign debt; all of which causes contributed to alarm capitalists, bankers and business men ; to destroy confidence and credit ; to depress property and to derange business. While the several States were making loans, and selling their bonds in Europe, and to the agents of European capitalists in America, from 1833 to 1838, in order to establish banks, make canals, railroads and other improvements, and were in- creasing their debts in Europe about $100,000,000, the specie of the United States was increased, by means of importations, about $26,000,000 and the balance of the loans was imported in the shape of European manufactures. After our debts be- came so large that European capitalists became alarmed, and would not loan us any more money, nor buy our State stocks and bonds at scarcely any price less than a discount of from 20 to 80 per cent, the merchants and foreign manufacturers still continued to glut our markets with foreign goods; and during four years, under the operations of the free trade compromise act of 1833, they drained the United States of specie, and reduced the quantity in the country from $76,000,000, October I, 1838, to $62,000,000 October I, 1842. From October 9, 1839, when the most of our banks suspended specie payments the second time, to the passage of the tariff act in August, 1842, was one of the most gloomy periods in the history of our country; about as gloomy as the six years next prior to the passage of the tariff act of 1824, immediately after the heavy importations of 1815, 1816 and 1817, and exceeded only by the general embarrassment, depression, prostration and suffer- ing of the country during the period from 1784 to 1789, after the heavy importa- tions of foreign goods at the close of our Revolutionary War, when the country enjoyed, to the fullest extent, that glorious system of free trade which the nulli- iiers have long been sighing after. The amount of specie in the United States is so exceedingly small, in propor- tion to the population and commercial wants of the country, that large importations of foreign goods, and an exportation of specie to the amount of $4,000,000 or $5,000,000 a year, for two or three years in succession, will inevitably weaken the banks very much, produce a panic, and a run upon many of them, and cause many failures, if not a general suspension of specie payments. This is verified by the commercial revulsion from 1837 to 1842. In May, 1837, nearly all the banks in the United States suspended specie payments ; during the year ending Septem- ber 30, 1838, our imports amounted to but $108,486,616, including $17,747,116 specie, and but little over $90,000,000 in merchandise and foreign products ; our exports the same year amounted to $113,717,404, including but $3,508,046 in specie — that is, we exported exclusive of specie, over $110,000,000 in amount, and imported but little over $90,000,000; paid off several millions of debts, and got a balance of over $14,000,000 specie to sustain our banks. This enabled nearly all the banks in the old States, and many in the new ones, to resume specie payments during the spring and summer of the year 1838, and to go on for some time prosperously ; but the free trade compromise act again invited large importations of foreign goods, amounting during the year ending September 30, 1839, to $162,092,132, including on'y $5,595,176 in specie; while our exports were but $112,251,673, exclusive of specie to the amount of $8,776,743; showing a nominal balance of trade against Oauaea of the panto of 18S7. Digitized by Microsoft® 244 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Second suspen- sion of specie pay- ments. US that year of about $44,000,000; a drain of over $3,000,000 of specie from thi country, and a large increase of our foreign debt. This large balance of trade against us and drain of specie, occasioned a sec- ond suspension of specie payments on the 9th of October, 1839, by Mr. Biddle's United States Bank of Pennsylvania, which was soon after followed by nearly all the banks south and west of the State of New York. No other country ever felt so quickly and sensibly, and suffered so severely, the disastrous effects of excessive importations of foreign goods, and an unfavorable balance of trade; for no other country ever had so small an amount of specie in proportion to the extent of their commerce; and in no other country was the credit system ever carried to so great an extent, upon a foundation so slight and frail. The amount of specie in the United States, October i, 1839, being about $73,- 000,000, and October i, 1842, but $62,000,000, in round numbers; the quantity in the banks $45,000,000 in 1839, and but $33,S4S,ooo, December, 1842, averaging about $39,000,000, left in circulation, including what was hoarded up and withdrawn from use, from $28,000,000 to $29,000,000. When specie is exported, it is withdrawn entirely from the vaults of the banks in the commercial cities, and they draw the specie from the banks of the country and the interior cities, and the amount in circulation is scarcely affected at all. Export two years in succession to pay for foreign goods, $5,000,000 each year more specie than is imported, accompanied by a great increase of debt by means of heavy importations, these $10,000,000 being withdrawn from the banks, reduces their specie to about $30,000,000, and this, of itself, will often produce a panic and a run upon the banks, and cause a draw upon them of $5,000,000 or $10,000,000 more, and thereby occasion a failure of many of them, and perhaps a general suspension of specie payments. The suspension of October, 1839, was occasioned by the exportation of specie, and the heavy importations of goods the previous year though the balance of specie exported was but little over $3,000,000, and the suspension of May, 1837, was in consequence of the immense importation of foreign goods; the rapid accumulation of a heavy foreign debt, and the antici- pation of large exportations of specie to pay it; the great expansion of the banks, and their heavy loans to speculators who could not pay. All these things con- tributed to create a panic, and induce a withdrawal of deposits, and a run upon the banks, and soon led to a' general suspension of specie payments in self-defence, and before the anticipated exportation of specie to pay our foreign debt had com- menced. Fahueb; op the Compromise Act to Produce Su^i^icient Revenue. Condition of the treasury. The overthrow of protection stimulated a vast importation of foreign merchandise. The American market was overwhelmed; domestic pro- duction displaced; the labor and industries of the country disorganized; the people impoverished and their purchasing power destroyed. Then followed diminished importations; loss of revenue, and universal financial embarrassment. The treasury was also bankrupt. The receipts fell below the ex- penditures year by year and were replenished by increasing the national debt as is shown by the following figures : Digitized by Microsoft® DEFICIENT REVENUE. 345 Receipts from Customs, Total Net Ordinary Receipts Bxcluding Loans, Total Net Ordinary Expenditures Including Interest, and the Defi- ciency in the Treasury for the Years Named. Customs. Total receipts, excluding loans. Interest on public debt. Total net ordi- nary expendi- tures. 1834 iS-ie, $16,214,957.15 19,391,310.57 23,409,940.53 11,169,290.39 $21,791,935-55 35.430.087.10 50,826,796.08 24.954.153-04 $202,152.98 57.863.08 $18,627,570.23 17.S72.813.36 30,868,164.04 37.242.214.24 1836 18-17 Total $70,185,498.64 $133,002,971-77 $104,310,761.87 1 $260,016.06 $104,310,761.87 $28,692,209.90 8,892,858.42 Balance in Trea sury Jan. i, 1834.. mg States Surplus Distributed amc $28,692,209.90 $35,000,000.00 Had it not been for the greatly increased receipts from the sale of public lands there would have been a deficiency in the treasury during the years named. The receipts from such sources were as follows: 1834 $4,857,600.69 1835 14.757.600.7s 1836 24,877.179-86 1837 6,776.236.52 Total $51,266,617.82 Receipts from Customs, Total Net Ordinary Receipts Bxcluding Loans, Total Net Ordinary Expenditures Including Interest and the De- ficiency in the Treasury for the Years Named. Customs. Total receipts, excluding loans. Interest on public debt. Total net ordi- nary expen- tures. 1838 1839. $16,158,800.36 23.137,924.81 13,499,502.17 14,487,216.74 ' 18,187,908.76 $26,302,561.74 31,482,749.61 19,480,115.33 16,860,160.27 19.976,197-25 1 $14,996.48 399.833-89 174,598-08 284,977-55 773,549-85 $33,864,714-56 26,896,782.62 1840 24,314,518.19 I84I 26,481,817.84 1842 25,134,886.44 Total... $85,471,352.84 k.eceipts $114,101,784.20 $1,647,955.85 $136,692,719-65 $114,101,784.20 E eficiency 22,590,935-45 Sales 0/ UmdB. Digitized by Microsoft® 346 Sales 0/ public lands fall off. Features of proteO' tive laws Jroin 182i to 18SS. SECTIONAL OPPOSITION TO TBE AMERICAN SYSTEM. The receipts from the sale of public lands from 1838 to 1842 elusive had greatly- declined, being as follows: 1838 $3,730,945-66 1839 7,361,576.40 1840 3,411,818.63 1841 1,365,62742 1842 1,335,797.52 Total $17,205,765.63 As a revenue measure the Compromise Act was exceedingly disa pointing to its friends. Under the protective legislation from 1824 1833 revenues had been ample. Duties were imposed on non-compe tive as well as competitive commodities, yet these were derived almc wholly from the non-competitive classes because the protective duti had greatly excluded the importation of competing commodities, should be noted that silks, linens, hardware, cutlery and the finer grad of cottons, woolens, glass and many others were in the non-competiti classes because the duties imposed were not high enough, nor intend to be high enough, to afford protection and restrict their importati( The revision of 1832 removed duties from many non-competitive class( yet it so adjusted the duties that ample customs receipts were collecte The treasury at the close of 1832 had a balance of $11,000,702.95. T balance in 1834 was $32,327,623 and the expenditures were $2S,591,3S including the payment of the last installment of the national debt, leavii a balance of $6,736,232.00 in the treasury. During Jackson's administr tion the public debt was entirely extinguished, and $35,000,000 of su plus was distributed among the States. When the deposits were r moved from the United States Bank over $8,000,000 of coin was wit drawn and placed in State banks. Hence, when Van Buren's admini tration began the balance carried on the books of the Secretary of tl Treasury was apparent and not real, because it was not intended that tl amount distributed among the States should be recalled, and the financi situation of the banks in which the deposits were made was soon sui that this fund could not be realized upon, and Van Buren's administr tion was in great need of funds to pay even the employes of the go ernment. The deficiency in the treasury increased year by year and w replenished by the issue of treasury notes and loans until in 1842 whi the national debt had reached over $30,000,000. The following sur were borrowed by the administration to keep the government alive: 1837 $10,000,000 1840 7,114,2 1838 5,709,810 1841 7,529,0 1839 3,857,256 Digitized by Microsoft® OPERATION OF THE COMPROMISE. 347 EjFFECt of the Rates of Duty Fixed by the Compromise Act. The Compromise Act, as heretofore shown, provided for a sliding scale of reduction of 10 per cent of the excess above 20 per cent of all duties, to be made December 31, 1833, December 31, 1835, December 31, 1837, December 31, 1839, one-half of the remaining excess December 31, 1841, and the remainder of such excess on June 30, 1842, when a uni- form rate of 20 per cent ad valorem would be left. It should be noted that the largest reductions occurred on December 31, 1841, and June 30, 1842. In measuring the effect of such reductions a distinction should be made between the ad valorem and the specific rates of duty of the act of 1832 to which the reductions were applicable. The reductions in the ad valorem duties were easily calculated, as shown by the Secretary of the Treasury (see circulars of treasury April 20, 1833, December 26, 1833), who said: Suppose the dutiable value of goods, now liable to an ad valorem duty of 25 per cent, to be $500.00, the duty thereon, at that rate, would be $125.00 But the duty thereon at the rate of 20 per centum would be only 100.00 Excess $ 25.00 One-tenth part of such excess is $2.50, which, being deducted from $125, leaves the sum of $122.50 as the amount of duty to be paid in the case. In this manner the deduction would be made in accordance with the act each two years. In applying the law to those articles upon which specific duties were levied (by the pound, square yard, etc.), the foreign value was ascertained, the legal charges added and the ad valorem equivalent of the specific duty on such valuation was ascertained and the rate of duty calculated. The Secretary of the Treasury further said: Treasury regulations and inter- pretation. In relation to the specific rates, it will be supposed that an importation of four hundred pounds of sugar be made, the duty on which, at the existing rate of 2^ cents per pound, would be $10.00. The invoice and correct value of the sugar will be supposed to be $6 per one hundred pounds, making the value of the four hundred pounds to be $24.00 To which add dutiable charges 2.00 Total $26.00. . . . The duty on $26 at 20 per cent would be $5.20 Excess of the specific over the ad valorem duty .,. . $4.80 One tenth part of this excess is forty-eight cents, which being deducted from $10.00, the amount of duty at the specific rate, leaves $9.52 as the amount of duty to be paid in the case. Digitized by Microsoft® 343 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Specific duties. Minimum valuation. Take nails for instance. The foreign price was 6 cents per poun the specific duty was 5 cents per pound, equivalent to an ad valorem du of 83.3 per cent. On December 31, 1833, the excess above 20 per ce: was 63.3 per cent, 10 per cent of which was 6.3 per cent and when d ducted left a duty equivalent to 77 per cent. Prices remaining the sam the duties under the several reductions were as follows : December 3 1835, 71.2 per cent; December 31,1837, 66 per cent; December 31, 183 61.4 per cent ; December 31,1841, 40.7 per cent ; June 30, 1842, 20 per cer But in the meantime the price of nails in Liverpool dropped to fii cents per pound ; at the same time the legal charges were added besid( the cost of carriage, insurance and commissions of about 20 per cen increased the degree of protection. This illustrates the measure of pn tection enjoyed by all industries producing articles upon which specif duties were imposed by the act of 1832. So it will appear that under tl specific duties a fair degree of protection was secured by the Compromii Act until the last two or possibly three reductions were made. Under the Compromise Act the minimum valuation as a basis fc computing the ad valorem equivalent on cotton goods was not disturbe( The instructions of the Secretary of the Treasury provided as follows " Calculate the duty as per the Act of 1832, then calculate the duty upo the actual value, and from the difference make the ten per cent deduction, (Regulations of the Secretary of the Treasury, April 20, 1833. Jon( Digest and Tariff, page 98-102.) Mr. Edward Stanwood, in " Amer can Tariff Controversies in the Nineteenth Century," Vol. 2, page 3' says: In fact the retention of the minimum clause made the tariff on coarse cottc goods so high as to be fully protective. The act of March 2, 1833, was precisely what it was called, a " Con promise Act." The effect of the specific duties in preserving a fa degree of protection to many industries until at least 1839 must ha\ been taken into consideration by Mr. Clay and those protectionists wh participated in its passage. While a full Hst of such articles and their a valorem equivalents cannot be given, enough, however, is obtained t show the extent of the protection preserved under the Compromise Ac The following table of articles, with their rates of specific duties, tl: market valuation and ad valorem equivalents, is taken from a report c the Secretary of the Treasury to the Senate, based on the prices of 183 and 1831 as given in a statement of commerce and navigation for thos years, dated May 15, 1832. (Senate Documents, Vol. 3, 1831, 183; No. 144) : Digitized by Microsoft® AD VALOREM EQUIVALENTS OF SPECIFW DUTIES. 349 Articles. Bacon, per pound Beef, salt, dried, smoked or jerked, per pound Blacksmiths hammers and sledges Boots, per pair Cables, tarred, per pound untarred, per pound iron or chain or parts thereof. . . Camphor, crude, per pound refined Candles, tallow, per pound Spermaceti, per pound Cards, playing, per package Carpets and carpetings, per sq. yd. : Brussels, Turkey and Wilton, . . . All Venetian and ingrain All other, of wool, flax, hemp or cotton or parts of either. . . Oil cloth other than usually de- nominated patent floor cloth.. furniture oil cloth floor matting, made of flags, or other materials Cheese, per pound Coal, per heaped bushel Copper rods, bolts, per pound Copperas, per 112 pounds Cordage, per pound : tarred untarred Cotton, per pound : unmanufactured bagging, per sq. yard Firearms, each: muskets rifles Flax, unmanufactured, per 2240 pounds Glass, black bottles, not exceed- ing I quart, per gross Glue, other than fish glue, called isinglass, per pound Gunpowder, per pound Hammers, blacksmiths and sledges, per pound Hemp, per 2240 pounds Specific duty. $ .03 .02 .025 1.50 •04 .05 •03 .08 .12 •OS .08 .30 .70 .40 •32 •25 •15 • IS .09 .06 .04 2.00 .04 •OS ■03 .05 1.50 2.50 50. 2. •OS .08 .025 60. Value, 1830. $ .086 .025 .038 1.83 .0495 ■0565 .22 .064 •455 .105 1.265 .658 •797 •337 .199 .113 .11 .115 .20 1-43 ■0495 •0565 .088 •09s 2.865 10.66 206.46 4.46 .082 .268 .038 122.04 Ad valorem equivalent. 34.8 80. 65.8 82. 80.8 88.4 36. 78. 17- 285. 55^4 60.9 40.1 74^ 75-3 132.27 82. 52.1 .20 139-9 80.8 88.4 34- 52.6 52. 23^ 24. 44.8 61. 29.8 65.8 49.1 Digitized by Microsoft® 350 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Ad valorem Articles ( Specific duty. Value, 1830. equivalent. Iron: in bolts and bars, not enumerated, manufactured in whole or part by rolling, and all iron in slacks, blooms, loops or other form, less finished than bolts and bars not manufactured by rolling, per 2240 pounds 37. 32.01 1 IIS-S in bolts, not enumerated and in bars not manufactured by roll- ing; for instance, Russia and Swedes iron (hammered), per pound .01 .0275 41. round or brasier's rods of 3-15 to 8-16 of an inch diameter, in- clusive, and on iron in nail or spike rods, slit or rolled, and on iron in sheets and hoop iron, and on iron slit or rolled for band iron, scroll iron or casements rods, viz : Nails or spike rods, per pound. . .035 .022 159. Brasiers' rods, per pound .035 .025 137-4 Sheets and hoops, per pound .035 .0258 135-6 Vessels of cast iron, not otherwise specified •015] .03 41. Castings, not specified, per pound. . .01 J Nails, cut or wrought, per pound .05 .06s 76.9 Pig iron, per 112 pounds .625 .011 44-6 Plate irons and boiler plates. pound .035 .035 Sheet, per pound .0258 135-6 Spikes, per pound .04 •0375 106.6 Tacks, brads or sprigs, "j not exceeding 16 oz. per M exceeding 16 oz. per M J .05 .132 37.8 Wire, per pound : not exceeding No. 14 .061 exceeding No. 14 .10 1 .107 74-7 Anchors, per pound .02 .045 44-4 Anvils, per pound .02 .048 41.6 Cables or chains or parts thereof •03 .065 46.1 Mill cranks and mill irons of wrought, per pound .04 .11 36-3 Lard, per pound .03 .074 40. Digitized by Microsoft® SPECIFIO DUTIES. 351 Articles Lead in pigs, or bars, or sheets, per pound Shot, manufactured from lead.. Oats, per bushel Pack thread, per pound Paper, per pound: folio and quarto post of all kinds foolscaps and all drawing and writing paper sheathing paper, boxboards, and wrapping paper of all kinds all other paper Potatoes, per bushel Slates for roofs, per 2240 pounds : [seven classes specified, to wit : not exceeding 12x6 inches ; and exceeding 12, 14, 16, 18, 20 and 24 by 6 inches, specific duties $4, $5, $6, $7, $8, $9 and $10] . . Soap, Castile, per pound Spirits, per gallon : distilled from grain — [various classifications; duty from 57 to 90 cents] distilled from other materials — [various classifications ; duty from S3 to 85 cents] Steel, per 112 pounds Sugar, per pound : brown white, or clayed or powdered. . . lump loaf candy Twine, per pound Window glass, per 100 sq. feet : not above 8x10 inches not above 10x12 inches if above 10x15 inches sheet or crown Yarns, untarred, per pound. iSpecific duty. ■03 .04 .10 •OS .20 .17 •03 •IS .10 •04 i.So •03 .04 .10 .12 •05 3-00 3-SO S-oo S-OO •OS Value, 1830. .025 .041 .26 •13 .667 ■344 .06 .054 •44 ri.8r .046 •073 .101 •083 •13 12.925 •0565 Ad valorem equivalent. 125. 97.S 38.4 38.5 75- 29. 106.7 72. 1542 170.2 12.7 65.1 54.8 99^ 144-7 38.S 29.3 8.4 The following schedule is copied from page 166 of the " Customs Manual," issued by William C. Dayton, a customs broker of New York City, in 1840: Digitized by Microsoft® 352 SECTIONAL OPPOSITION TO TEE AMERICAN STSTEU. Prom a Philadelphia Paper. Mr. Clay's Tariff — Its Progressivb; Reduction. We are indebted to an intelligent friend for the following table, in which is shown the progress of reduction of duty made on the most important articles by Mr. Clay's new tariff: Articles. Duties to which they were subject by the act of the 14tli of July, 1832 Wool, unmanufactured, the value at the place of exportation less than 8 cents the pound ■ Wool, exceeding 8 cents per pound at the place of exportation, 4 cents per pound specific, and 40 per cent equal to average Woolen cloths, milled, fulled, known by the name of plain, kerseys, or Kendal cottons, of which wool is the only material, the value not exceeding 35 cents the square yard, 5 per cent, raised by Clay's bill to All other woolen cloths Flannels, bockings, baizes, 16 cents the square yard, equal to average Cottons, white, costing under 30 cents the square yard, valued at 30 cents, and pay 25 per cent equal to average Cottons, colored, valued at 35 cents the square yard, pay 25 per cent, equal to average Nails, S cents per pound, equal to average Spikes, 4 cents per pound, equal to average Brasiers' rod, spike rod, sheet, hoop, slit or rolled iron, 3 cents per pound, equal to average Pig iron, 50 cents per hundred- weight, equal to Bar iron, rolled, $1.50 per hun- dredweight, equal to Bar iron, hammered, 90 cents per hundredweight, equal to Steel, $1.50 per hundredweight, equal to average Oompeti- lion under the Oom- promise act. Ad valo- rem 1833 Dec.31 1-lOth 1835 Dec.31 1-lOth 1837 Dec.31 1-lOth 1839 Dec.31 1-lOth 1841 Dec.3] half of excess Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. 1 free free 1 free free free free 54 1 50.60 I 47.20 43.80 40.40 30.20 SO 47 44 41 38 29 50 47 44 41 38 29 SO 47 44 41 38 29 I 42H 40.25 38 35.7s 33-50 26.75 42J4 40.25 38 35.75 33-5CI 26.75 78 70.70 66.40 60.60 54.80 37.40 96 88.40 80.80 73-20 65.60 42.80 "3 103.70 94.90 85.10 75.80 47.90 43 40.70 38.40 36.10 33-80 26.90 95 87.50 80 72.50 65 42.50 33 31.70 30.40 29.10 27.8r 23.90 13 13 13 13 13 13 Digitized by Microsoft® EARD TIMES, ISIfi TO W,2. 353 By the 6th section of the act of the 14th July, 1832, the duties on wool, and all manufactures of wool, or of which wool is a component part, shall be paid in cash, without discount. The home valuation, after the 30th of June, 1842, is to be regulated by law; it is presumed that it will operate in favor of the American manufacturer, at least to the extent of 5 per cent; the payment of the duties in cash will at least be equal to another 5 per cent, which, added to the expenses of shipping charges, commission, freight, insurance, and the premium of exchange, will amount at least to 30 per cent; making on wool, woolen manufactures, and those of cotton, a protection, including the duty at 20 per cent ad valorem, of 50 per cent. On iron, the shipping charges, including freight and insurance, cannot be estimated at less than 20 per cent; the home valuation at S per cent; cash duties at 5 per cent; the exchange at 8 per cent premium; making, with the 20 per cent duty, 58 per cent in favor of the American iron manufacturer. That the specific duties saved certain industries for a few years from extinction, seems well established. But those industries which had since 1824, and some since 1816, enjoyed that degree of protection by specific duties which had secured to them the home market, were, after 1840, compelled to meet serious competition from foreign rivals. The most serious immediate consequences of the Compromise Act were in its effect on those industries protected by ad valorem duties. The proprietors of these industries immediately readjusted their business to meet the lowest rate of duty to which they were approaching. They were compelled to meet an overwhelming competition under diminishing duties. They reduced wages, curtailed expenses and lowered the output of the factories. Mr. Bishop states that " a large amount of capital was driven from manufactures to seek investment in agricultural and West- ern lands." Coupled with those causes, which operated as a great strain, to say the least, on the finances and general business interests of the country, the productive forces were being curtailed and under- mined. The Compromise Act stimulated a flood of importations of competing commodities which continued until the country was exhausted and buying was checked. The adverse balance of trade during the nine years closing with June 30, 1842, was $116,332,028. The home market was so taken possession of by foreigners that the manufacturers were forced to retrench, reduce wages and curtail production. The market for farm produce was diminished. The capital and talent of the country, instead of being invited and encouraged to engage in manufacturing, were repelled and driven away. If the policy of protection had been continued, if the business interests of the country could have foreseen security and safety, a large portion of the $35,000,000 which was di- vided among the States, instead of having been loaned to land jobbers and traders speculating in foreign imports and Western land, would have been invested in manufacturing enterprises and contributed to the development of the productive forces of the country. The trouble OapitaUsts would not invest in manufac- tories. Digitized by Microsoft® 354 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Plight of the manu- facturers. Started as a financial panic which continued and spent its force within a period of three or four years. The merchants, speculators and land jobbers were wiped out and driven into bankruptcy, and then the country settled down to an industrial depression. There was no revival of busi- ness until protection was restored. Hard times continued through the years of 1839, 1840, 1841 and a part of 1842. It was during these years that the country suffered most from the effect of the free trade policy. The duties were now approaching the uniform ad valorem rate of 20 per cent. Three reductions under the Compromise Act had been made. Conditions were daily growing worse instead of better for the manufac- turers. No capitalists would invest money in a manufacturing enter- prise under existing conditions. The sliding scale of reduction of pro- tective duties upset all calculations for the future. The only safe course to pursue in order to meet the future conditions was to conduct opera- tions upon the basis of the ad valorem rate of 20 per cent which would be reached in 1842. Mr. Bolles, in "Financial History of the United States," Vol. 3, page 425, says : The compromise consisted in giving manufacturers ten years' notice to pre- pare for the final abandonment of the principle of protection. The departure was radical. Hitherto, the open and avowed policy of the government, so Robert J. Walker declared, had been protection to home industries. Since 1812 the government had continued to raise ever higher and higher the barriers until now, when the policy was changed, and, after ten years, to be utterly abandoned. The result was the adoption of the horizontal scale of reduction until all duties should be reduced to one dead level of 20 per cent ad valorem. But the law was a compromise, and the friends of protection should not be blamed. They did the best they could to save the interests they cherished so dearly. " Regarded either for revenue or protection," said Robert J. Walker in his report of 1845, " the measure was a great mistake." An iron manufacturer in his examination in 1842 said: The law operated on our manufacturers like a wasting disease, so that when the crisis arrived they died without a faint struggle. The manufacturers of the country were reduced practically to the level of the Old World. The reduction in duties not only took away the protection which the manufacturers had enjoyed, but reduced them to a life-and-death struggle in competition with their foreign rivals. The struggle was fierce. Moreover, it began at a time when the general business of the country was also greatly depressed from financial causes. Joseph Jackson, who testified before an investigating committee of Congress in 1842, said that he had bought iron for rolling at his rolling Digitized by Microsoft® BARD TIMES, 1840 TO 355 mill in Jersey City from 500 to 700 tons per annum at prices ranging from $75 in 1832; $70 to $65 in 1834; $90 to $70 in 1837; as low as $60 to $50 in 1841 and $50 in 1842. He said that " the great decline must stop our operations." The importations of glass were so great that the industry was almost extinguished. The cotton industry, although equipped with the most efficient ma- chinery moved by water power, with the raw material at home, and not- withstanding a reduction in wages to meet the situation, was greatly crippled; surplus stocks accumulated; importations increased. The home manufacturer, says Mr. Bolles, had a doleful experience. The United States was the emptying ground for the foreign manufac- turer who often sold his goods at auction; at a price thus established, the home manufacturer was often compelled to sell in order to dispose of his produce. This was the most serious obstacle lying in the path of his progress. Auction prices were too low for him, and unhappily, these prevailed much of the time. This was the condition of the industry, not- withstanding the fact that the protective duties under a system of mini- mum valuation imposed by the act of 1828 induced the woolen manu- facturers to better equip their factories and greatly extend the use of machinery. The system of undervaluations and auction sales was a serious menace. One of the most prominent woolen manufacturers of that day, says Mr. Bolles, was certain that if the duties laid on woolens (SO per cent ad valorem) had been faithfully collected, the industry would have been profitable, but frauds had been so numerous as to de- prive them of not only the interest on their capital but in most instances of the capital itself. At this time the system of under-valuation had be- come so serious that the cotton and woolen manufacturers endeavored to have the laws enforced. The condition of the country as it existed before protection was restored, is described in Hunt's Merchants' Maga- zine for 1842, p. 482, as follows: These continually accumulated disasters down to the first of April had thrown a degree of gloom over the commercial circles seldom witnessed. The heavy spring payments had been falling due; remittances from the country could not be obtained; the banks were fearful of extending themselves in the smallest degree; goods could scarcely be sold for money at any price; the accounts from abroad gave but little indication of a speedy revival and of a demand for Ameri- can produce; and the sluggish and uncertain action of Congress tended to enhance the dread of the future. In the face of this unfavorable state of things, however, the heavy payments of the grocers had been gotten along with better than could have been expected. Those of the dry goods trade are yet to be encountered. The depression was not confined to the agricultural States. The actual decline in the value of real estate in New York City, says Mr. Lee, between 1836 and 1842, was $115,688,837, being the difference be- Real estate values. Digitized by Microsoft® 356 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. tween what the returns actually were in 1842 and what they would have been had the prices of 1836 been maintained. From 1816 to 1820 the annual production of sugar increased from 15,000 to 45,000 hogsheads. In 1820 the capital invested in the industry was $34,000,000. During the years following up to 1834, 383 new estates were added to the 380 previously existing, and the amount of capital invested had increased to $50,000,000. The planters addressing Congress in 1842 said: Louisiana, with its uncertain climate and extensive operations, cannot produce sugar under 5J4 cents, while in the West India Islands, with their genial climate and cheap operations muscovadoes can be produced so as to yield a fair remunera- tion at 2yi to 3 cents. Under the circumstances, the numerous investments of capital in the cultivation of sugar since i8i6 would not have taken place had not a continuation of the revenue tax then laid upon foreign sugar been implicitly relied upon. The Louisiana crop of 1835 and 1836 shrank 25,000 hogsheads, yet the price of Havana nearly doubled. The planters in their memorial to Congress stated that the gradual reduction of the tax on foreign sugars was nothing more than a premium granted to foreign industries paid by the American consumers. The iron industry, which had revived in 1838 and 1839, suffered greatly in 1840 and 1841. The production of pig iron fell as low as 230,000 tons. The duty on English bar iron was gradually reduced from $30 per ton in 1832, to $7.50 in July, 1842, and pig iron from $9.50 per ton in 1834 to $4.50 in 1842. Railway iron was admitted free. The effect of this reduction of duties on the importation of iron even in a time of depression in trade, is shown by the following statement of the impor- tation of iron and steel into the United States in the following years : 1833 (tons). 1840 (tons)'. Bar and bolt iron, rolled 28,028 63,055 Bar and bolt iron, hammered or otherwise manufactured.... 36,124 29,065 Pig iron Ii,li3 12,267 Hoop and sheet iron 2,215 3i646 Braziers' rods 3-16 to 8-16 inclusive 221 160 Nail and spike rods 54 ^35^ Band, scroll and casement rods, slit or hammered 3 I5 Old scrap iron 1,617 7^ Total iron 75,759 109,548 Total steel 2,431 2,563 The importations continued to increase even when the home market was greatly depressed and our own industries in a state of suspense. Digitized by Microsoft® HARD TIMES, I84O TO 1842. 357 1841 TO 1842. "In 1840 and 1841," says French,^ "nearly all the manufacturing establish- ments of the United States were closed, and more than 300,000 persons were thrown out of employment" The year 1841 was another disastrous one for banks. Fifty-five banks, with an aggregate capital of $67,000,000, became insolvent. The following year twenty-six, with capital of $31,500,000, were closed. On January 1, 1842, the States of Pennsylvania, Illinois, Indiana, Michigan, Maryland and Arkansas failed to meet the interest on their debts. During the years 1840, 1841 and 1842, when the lowest rates of duty provided by the Compromise Act were reached, when the last vestige of protection was disappearing, and when the revenue standard so much lauded by the enemies of protection became operative, the greatest suffering and hardship were experienced. It was at this time that the largest number of laborers were out of employment; that the industries were in a state of collapse; that the credit of the government was at its lowest point and the suspension and failure of banks were renewed. Mr. Colton, in his life of Henry Clay, gives the following account of the deplorable condition to which affairs had been reduced : The revulsion of 1837 provided a far greater havoc than was experienced in the period above mentioned [the free trade period of 1820 and 1824]. The ruin came quick and fearful. They were few that could save themselves. Property of every description was parted with at prices that were astounding, and as for cur- rency, there was scarcely any at all. In some parts of Pennsylvania the people were obliged to divide bank notes into halves, quarters, eighths, and so on, and agree from necessity to use them as money. In Ohio, with all her abundance, it was hard to get money to pay taxes ; the sheriff of Muskingum County, as stated by the Guernsey Times, in the summer of 1842 sold at auction one four-horse wagon at $5.50, ten hogs at 6J4 cents each, two horses (said to be worth $50 to $75 each) at $2 each, two cows at $1 each, a barrel of sugar at $1.50, and a store of goods at the same rate. In Pike County, Missouri, as stated by the Hannibal Journal, the sheriff sold three horses at $1.50 each, one large ox at I2j4 cents, five cows, two steers and one calf, the lot at $3.15; twenty sheep at 13% cents each, twenty- four hogs, the lot at 25 cents; one eight-day clock at $2.50, a lot of tobacco, seven or eight hogsheads, at $5 ; three stacks of hay, each at 25 cents, and one stack of fod- der at 25 cents.2 Unable to borrow money at home, the government sent commis- sioners to Europe in 1840 with instructions to place a loan of $12,000,000. The effort failed. The government then advertised for a popular loan, and only $250,000 was offered by different parties at rates of interest ranging from 28 to 32 per cent per annum. In 1841 the Speaker of the House of Representatives borrowed on his personal credit $100,000 to loan to Congressmen in order that they might receive their salaries. At this time 34,000 merchants went into bankruptcy with debts of $440,- ilron Trade of the United States, p. 65. aColton's Life of Henry Clay, Vol. I. Oovern- ment's bad credit; widespread bank- ruptcy. Digitized by Microsoft® 35S SEGTIOyAL OPPOSITIOV TO TEE AMERICAN SYSTEM. Differing opinions. 000,000, and whose property was so reduced that only $40,000,000 was realized for their creditors. At the same time 50,000 merchants settled with their creditors who sustained losses of $250,000,000. The American Almanac estimates the loss during this panic in six leading lines of trade at $785,000,000. Thomas H. Benton, in Vol. 2, p. 413, of his "Thirty Years in Congress," relates the condition of the government in 1842 as follows: Never were the coffers and credit of the treasury — not even in the last year of the war with Great Britain (1814) — at a lower ebb, or a more pitiable point than at present. A deficit of $14,000,000 — a total inability to borrow, either at home or abroad, the amount of a loan of $12,000,000 authorized the year before; the treas- ury notes below par; $1,500,000 protested demands; a revenue from imports inade- quate and decreasing — such was the condition of the treasury caused by the com- promise tariff of 1833. Mr. Benton further said: The United States, unable to make a loan to the amount of one-fourth of its revenue; unable to borrow $5,000,000; unable to borrow anything, while the over- loaded governments of Europe could borrow as much as they pleased. It was, indeed, a low point of depressed credit — the lowest that the United States had ever seen since the Declaration of Independence. The causes which brought about this state of affairs have been the subject of controversy and widely differing opinions. Those who sup- ported the free trade policy have contended it was purely a financial panic resulting from wild and reckless speculation, overtrading, too liberal credit and the natural and unavoidable result of financial over- reaching. The enemies of General Jackson's administration contend that the panic was brought on by the failure to renew the charter of the United States Bank, which stimulated the organization of private and State banks throughout the country, with their excessive issues of paper money, and the " treasury circulation," requiring all purchases of public lands to be made in coin, thereby forcing the withdrawal from circula- tion of the gold and silver held by the local banks. Free trade writers have attempted to disprove the contention of Henry C. Carey and other protectionists, that the depression in business resulted from the Compromise Act, by quoting expressions of Daniel Webster and Henry Clay, apparently to the contrary. On January 27, 1837, Henry Clay in a short speech delivered in the Senate protested against the proposal to change the Compromise Act. He said: I have risen at once promptly to declare that I shall oppose so far as my voice and my vote can go, this disturbance of the Compromise agreement made in March, 1833, under which the country has flourished with an unparalleled degree. It should be noted that this speech was delivered in the midst of a period of speculation and prosperity which existed before the panic of 1837 had struck the country. The suspension of the New York banks Digitized by Microsoft® HARD TIMES, 18!,0 TO 18J,2. 359 and the financial depression did not break upon the country until May 10 following. Daniel Webster, who had strenuously urged the recharter- ing of the United States Bank and opposed the issuance of the " specie circular," attributed the panic to a " tampering with the currency and an attempt to stretch exclusive power over a subject not constitutionally within its reach." He said in the Senate on March 12, 1838, that he " should not be disposed to interfere with it [the tariff] until a case of clear necessity should arise." This necessity arose in 1842, when Mr. Webster was one of the leading advocates of the act of 1842. Advocates of free trade have attributed the panic of 1837 to cur- rency inflation and speculation in public lands, and have endeavored to dissociate it from the reduction of the tariff. The fact that the reduc- tions in import duties preceded the crisis by several years, and that as a necessary result of such reductions the country was inundated with foreign merchandise which induced overtrading, liberal and unsafe cred- its, cannot be ignored in determining the cause of the bank suspensions and the financial crisis of 1837. In 1841 the deposits had fallen off to $57,081,393; the specie to $25,826,547, and the circulation was $74,332,050. The restoration of protection in 1842 restored the banks to a sound condition. The specie rose to $46,910,650 in 1844, a gain of $21,084,103, and the deposits increased to $88,303,631 in the same year, an increase of $31,222,238. Comparative View ot the Condition of Ai.e Banks in the United States, Near the Commencement oe Each Year, from 1834 to 1840, Inclusive. Whole number of banks and branches In operation Capital paid In Loans and discounts Specie Circulation Deposits Net circulation 1834. 506 $200,005,944 324,119,499 94,839,570 75,666,986 72,684,651 1838, 829 $317,636,778 485,631,687 35,184,112 116,138,910 84,691,184 91,174,653 1841. Circulation $74,332,050 Deposits 57,081,393 Specie 25,826,547 Whole number of banks and branches in operation Capital paid in Loans and discounts Specie Circulation Deposits Net circulation 1837. 788 $200,772,091 525,115,702 37,915,340 149,185,890 127,397,185 112,652,363 1835. 704 $231,250,337 365,163,834 43,937,625 103,692.495 83,081,365 82,606,194 1839. 840 $327,132,512 492,278,015 45,132,673 135,170,995 90,240,146 107,798,029 1836. 713 $251,875,292 457,506,080 40,019.594 140,301,038 115,104,440 108,185,900 1840. 901 $318,442,692 462,896,523 33,105,155 106,968,572 75,696,857 86,170,687 1844. $44,806,414 88,303,631 46,910,650 The hanking business. Digitized by Microsoft® 360 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. The causes of the panic of 1837. The life of the institutions depended then, as at all times, upon the value of their loans and discounts. The sliding scale of reductions in import duties crippled all manufacturers and ruined many. This was the first step in undermining the securities held by the banks. The ability of the manufacturers to meet their obligations and to obtain new credit was diminished year by year until relieved by the restoration of protection in 1842. While the attack on the United States Bank undoubtedly tended to cause alarm in financial circles and the specie circular operated to check the sale of public lands and to draw from circulation a quantity of specie, neither alone precipitated the financial panic of 1837 nor caused the hard times which held the country in its grip until 1842. It is said banks failed and their circulating notes were reduced. Was it strange that banks should fail when the stocks and capital of those whose obligations they held were swept away by the leveling processes of approaching free trade? Why should the currency not be reduced when there was no employment for it? Henry C. Carey was right. It was a free trade panic. Had the protective policy remained undisturbed the prosperous condition of the country would have continued and the speculation in importations of foreign merchandise and in public lands would have been curtailed. A great part of the $35,000,000 distributed among the States would have been invested in productive industries, and the banks would have been strengthened and become sound and useful institutions. The disastrous effect of a withdrawal of the support of protective duties from established industries is conceded by the most eminent free trade writers. The Right Hon. H. Fawcett, a distinguished English economist,^ said: However great may be the ultimate advantages which free trade would confer, it is too often forgotten that when a great number of different manufactures have been artificially fostered, and have been forced into a kind of unnatural existence through protection, much suffering and loss may be caused to those who are engaged, either as employers or employed, in these particular industries, if the support they have derived from protection is withdrawn. Our industries were leveled down by foreign competition; wages were reduced and production diminished. Thousands of laborers were forced into idleness and many factories suspended operations and never recovered. This, the conceded result of free trade, continued and grew worse until 1842. The losses as assumed by free traders were, however, not confined to those directly employed in manufacturing pursuits, but brought ruin to every branch of business. The people became so poor that the market for foreign wares was depressed, and finally even the profits of the importer ceased. 1 Free Trade and Protection, pp. 6, 7. Digitized by Microsoft® CHAPTER XIV. Return to Protection — Act of August 30, 1842 — Revenues— Ex- ports AND Imports — Return of Prosperity — Prices — Expan- sion OF Industries and Trade — Failure to Overthrow Protection in 1844. The tariff of 1842 has wrought wonders for the purposes for which it was enacted — the procurement of an adequate revenue, and of protection for the na- tive industry and free labor of the land. It has fully performed its promise in the production of revenue. It has restored the palsied credit of the nation, filled the coffers of the treasury, provided ample means for defraying the current ex- penses of the years 1842, '43, '44 and '45, and already paid off a large proportion of the heavy debt contracted by the preceding administration. But the tariff has also afforded protection to the free labor and native industry of the country; and this, strange to say, is the source of the strongest opposition to the enactment of the tariff when it was carried through, and is now the most efficient for forcing its repeal. Protection is the price of allegiance. Protection is the object for which all government is instituted. When a government ceases to protect, it must cease to claim obedience or submission. Protection was the great and all embracing cause. — John Quincy Adams. Address to his constituents. The tide of public indignation rose against Van Buren's policy, and the Whig Party carried the country in 1840, elected William Henry Har- rison President, and John Tyler of Virginia Vice-President. President Harrison immediately upon his inauguration called a special session of Congress for the purpose of making provision for the relief of the coun- try, but died before it convened. The Whigs nominated Tyler to show that theirs was not a sec- tional party. The selection of the man proved to be a serieus mistake. Tyler turned out to be a second Van Buren, an enemy of the industries of the country and imbued with the Southern idea that the tariff act of 1833 was a permanent compact between the two sections of the coun- try and could not be changed. Although the last two reductions of the duties under the act of 1833 were to take place within a few months, and conditions were growing worse, the President said, in his first mes- sage, "An intelligent constituency will without hesitancy submit to all necessary burdens," and stated that "the Compromise Act should not be altered except under urgent necessities which are not believed at this time to exist." In 1841 he tried to place a loan abroad, but failed. The government was offered a paltry million at from 8 to 10 per cent. The condition of the government was deplorable indeed, but the condi- (361) John Quincy Adams on the tariff oj l&]fi. President Tyler and the tariff. Digitized by Microsoft® 362 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Tyler against protection Tlie tariff law 0} 18J,t tion of the industrial interests was far worse. Though no change w thought of by Tyler during 1841, in March, 1842, he sent a special me sage to Congress wherein he said : The diminution in the revenue arising from the great diminution of duti under what is called the Compromise Act, necessarily involves the treasury in er barrassments, which have been for some years palliated by the temporary e: pedient of issuing treasury notes — an expedient which, affording no permane; reHef, has imposed upon Congress, from time to time, the necessity of replacii the old by the new issued. The condition of affairs could continue no longer. Free trade wi a failure, and worse than a failure. Yet when Congress passed a tari bill it was rejected by the President. Again a tariff bill was passed an again it was vetoed. One reason given by the President for his refus; to sign the bills was the provision providing for a distribution of th proceeds from the sale of public lands among the States. The propos: was debated at great length. The fact was that Tyler, if possibl( desired to avoid the signing of any bill which restored protection. Thi; however, was insisted upon by Congress, and the state of the publi revenues was such that the President could no longer resist the demand of the people and their representatives, although he disliked very muc to give his approval to protective measures. In another message to Con gress he was compelled to admit that duties must be increased. H said : In the exercise of a sound discrimination, having reference to revenue, but a the same time affording incidental protection to manufacturing industry, it seem equally probable that duties on some articles of importation will have to be ad vanced above 20 per cent. On December 16, 1841, Mr. Fillmore offered a resolution to refe that portion of the President's message relating to the tariff, to the Com mittee on Manufactures. Mr. Atherton of New Hampshire, upon thi theory that the duties were to be levied solely for revenue purposes moved an amendment referring it to the Committee on Ways and Means Mr. Atherton's amendment was lost by a vote of 95 to 104. On March 31, 1842, the Committee on Manufactures made it: report and presented a bill to the House. The committee, through Mr. Saltonstall of Massachusetts, chair man, expressed, at great length, their views in relation to the encourage- ment of domestic industry. A few extracts from the report are hen given : All the great interests of the country are now in an extremely depressed condi tion; every branch of industry is paralyzed. How is it that, in a time of profounc Digitized by Microsoft® RETURN TO PROTECTION. 363 peace, with a country abounding in natural resources, and blessed by Heaven be- yond any other people that ever existed, the voice of complaint should come up from every part of the land? There are several causes for the present depression of property, and general stagnation of business, one of which will be admitted to be the large amount of our importations over the amount of exports. This depresses our home industry, and draws from the country annually large balances in specie, crippling our banks and depriving them of the power to grant the necessary facilities. Those opposed to discriminating duties, with reference to the preservation of particular interest however important, object that the system taxes the public for the benefit of one class, or the many for the benefit of the few. Is it so? Every other great branch of business has a direct interest in the prosperity of the manufacturing and mechanic arts. The commercial interest is intimately con- nected with the manufacturing; the exports of the manufactured articles having become an important item in the whole amount of exports. That national policy which encourages enterprise, which protects every branch of industry, and which develops the resources and increases the productions of the country, must increase our commercial prosperity. Manufactures are also of immense importance to the coasting trade. . . . We call it coasting trade. It is a great commercial and navigating interest. It is such an internal commerce as was never before enjoyed by any nation, now employing an immense tonnage and many large ships, like those between Boston and New York and New Orleans — making voyages equal in length, and of equal importance, to those across the Atlantic The report further says : A well-regulated tariff, on a scale sufficient for the wants of this government, is the only effectual remedy for the evils the government and the people are now suffering. It will inspire confidence throughout the country. It will again set every wheel in motion. It will improve and enlarge the currency. It will send out its life-giving influence to the extremity of the Union, and give vigor and activity to the whole system. The bill provides for a duty on sales at auction. This will yield something to the revenue; but the great object is to check the flooding of our markets with goods, the surplus and often the refuse of foreign manufactures, sent here on foreign account, to be sold at once for what they will bring, to the injury of our own importers and manufacturers, with orders to remit the proceeds in specie immediately. This evil has long been a subject of complaint and a duty on auction sales has heretofore been recommended as a remedy. In 1832 Mr. McLane, Sec- retary of the Treasury, sent a draft of a bill to the House for that purpose. In the opinion of many persons who have testified to the Committee, or communi- cated with them in writing, it is of the utmost importance. Mr. Schenck says : " It IS the surplus of the foreign manufactures thrown suddenly into our market, and disposed of at auction, that does the greatest injury to our cotton and other manu- factures." The report then reviewed the history of the exports, and imports under the Compromise Act; called to the attention of Congress the protective policy of Great Britain and other countries, and concluded with a general description of the bill and of the rates of duties pro- Several causes. Auction Digitized by Microsoft® 364 SECTIONAL OPPOSITION TO THE AMERICAN S7STEM. Evert/ branch of iusiness paralyzed. Botoshould duties ie leviedT posed to be enacted. In moving the adoption of the report Mr. Salto; stall addressed the House. He spoke of the condition of the treasur and of the state of the credit of the country. Who could think of without mortification? This vast country, with its boundless resource found it diiificult to hire money at 6 per cent, while Great Britain, encun bered with a debt of thousands of millions of dollars, with an annu: expenditure of $300,000,000 and the interest of her debt near $150,000 000, was able to hire money at 3J/2 to 4 per cent. As to the cause of thi it was unnecessary to remark. The wants of the treasury and of tl: people alike required a thorough revision of the tariff. Mr. Saltonstall referring to the condition of the country, said: "It was di pressed. Every branch of industry was paralyzed, and every kind of business w; in a state of stagnation. The whole country felt the depression. Their tables wei laden with hundreds of petitions; and they came not from any one interest alont they were from the manufacturing, the great mechanical, the commercial and tli agricultural interests. This very morning a petition had been presented, signed b six or seven hundred citizens of old Virginia, asking for a tariff which migl operate incidentally for the protection of domestic industry. With respect to the operation of that act (1833) upon the industr of the country, Mr. Saltonstall also said: Owing to a state of things that did not exist at the time of its passage, it effects had been most unfortunate and disastrous. It appeared from many of th petitions from various interests, that they were in the last trial in the crucible t show whether they could live or not. They showed the manner in which the iro: establishments had gone out; that the glass works had been reduced two-thirds and so we might go on through the different branches. What interest was more important than that of coal, which, by the blessing o Heaven, we found from one end of the country to the other? Should it remai; in the earth because coal could be imported cheaper? Let me show a statemen from Virginia on this subject. In 1822 there were sent to market 1,350,000 bushel; In 1833 it had increased to 4,000,000 bushels. And in 1841 it had been reduced t 2,000,000 bushels. In another column it is shown that the importation of foreigi coal had swelled from 966,644 bushels to 5,000,000 a year, under the operation o the deductions of this Compromise Act. And it was stated that if the duties wer brought down to 20 per cent, it would be impossible to continue the business. / 20 per cent duty would be wholly insufficient to produce sufficient revenue, am fatal in its effects upon many of the great interests of this country. In what manner, then, should duties be levied? To avoid the frauds prac ticed under the ad valorem system, and the consequent injury to the manufacture: from their being deprived of the protection which the laws were intended t( afford them, specific duties were to be preferred. The manufacturers generall; preferred a specific duty equivalent to 30 per cent to an actual ad valorem duty 0: 30 per cent. In this our merchants concurred. [Mr. S. here read from a repor of persons who had been authorized to make an examination at the New Yorl Customs House.] In assessing duties by any system of valuation, so much depends upon th( erring judgment of men; so great and frequent are the changes in the character description, and value of goods, and so liable are men to be misled by local in- Digitized by Microsoft® PROTECTIVE ACT OF 18J,t. 365 terest, partiality, prejudice, or intentional deception, that any system of ad valorem duties seems to be liable to insuperable objections. The question naturally presents itself : " What system can be adopted which will obviate these objections, and better accomplish the great objects of establish- ing uniformity and preventing fraud in the collection of import duties ? " To this question we unhesitatingly answer : " A system of specific duties on all articles susceptible of being so described and classified as to render the duty certain, and the rate of duty approaching to uniformity in reference to the value of different articles, so far as such uniformity may be considered important." The experience of other nations was not to be slighted on a question like this. Their duties, it was well known, were specific In Sir Robert Peel's bill lately introduced into parliament, the duties were almost entirely specific This was the result of the experience of the greatest commercial nation on the globe. The mode prevailed in France, Russia, Germany and everywhere. Should we then run atilt with an experiment contrary to the experience of the Secretary of the Treasury, the collectors of customs, the manufacturers, and every one conversant with this subject? The advanced period of the session, and the pressing wants of the treasury, rendered immediate action necessary. A bill, the same as that before passed, but without the clause which required distribution, and with a provision admitting, free of duty, tea imported in American ves- sels from beyond the Cape of Good Hope, and coffee, was hastened through the House and passed (August 22) 105 to 103. It was sent to the Senate, where, having received some amendments (afterwards con- curred in by the House), it passed, August 27, by a vote of 24 to 23. Mr. Wright of New York, who had voted against the first bill, voted for this measure with the Whig Senators, and saved the bill. One reason assigned by Mr. Wright for voting in favor of the act, was "that this measure would root out the germ of distribution." The bill was approved by the President, and became a law. No tariff law, more minute in its details, or more effectively pro- tective in its operation, as some suppose, had ever been passed by Con- gress than this act of 1842. Mr. Calhoun said, as the vote on its passage was about to be taken, that " if the Whigs have lost the distribution measure, they have gained another in this bill which is more protective, and lays duties more unequally than any bill for protection which has ever been passed by this body." The following is the vote on the passage of the law containing the distribution provision : Maine, yeas 4, nays 3. New Hampshire, nays S. Massachusetts, yeas 11. Connecticut, yeas 6. Rhode Island, yeas 2. Vermont, yeas 5. New York, yeas 18, nays i& New Jersey, yeas 6. Pennsylvania, yeas 12, nays 13. Delaware, yea I. Maryland, yeas 6, nays 2. Virginia, yeas 7, nays 13. North Carolina, yeas 4, nays 8. South Carolina, nays 9. Georgia, nays 8. Alabama, nays 5. Mississippi, nays 2. Louisiana, yeas 2, nay I. Arkansas, nay I. Tennessee, yeas 3, nays 9. Ken- tucky, yeas 10, nays 2. Missouri, nays 2. Ohio, yeas 12, nays 7. Indiana, yeas S, Other nOr tions and specific duties. The vote on the tariff act of ISiS. Digitized by Microsoft® 366 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. nay i. Illinois, nays 2. Michigan, yea I. For the bill, IIS Whigs, i Democrat. Against the bill, 15 Whigs, 97 Democrats. The Whigs who voted against the bill were, from North Carolina, 3; South Carolina, 1; Georgia, 6; Kentucky, 4; Illinois, 1. The Democrat who voted for the bill was from Massachusetts. Of the Southern Whigs, 33 voted in favor of the bill and 14 against it. Mr. Casey of Illinois was the only Northern Whig who voted against the measure, and he assigned as a reason, not his objection to the pro- tective system, but because the retaliatory provision against such foreign countries as would not admit our wheat, was left out of the bill. In the Senate, on the passage of the first bill, the vote was as follows : Yeas: Maine, Evans. Massachusetts, Bates, Choate. Rhode Island, Simmons, Sprague. Connecticut, Huntingdon. Vermont, Craft, Phelps. New York, Tall- madge. New Jersey, Dayton, Miller. Delaware, Bayard, Clayton. Maryland, Kerr, Merrick Virginia, Archer. North Carolina, Mangum. Louisiana, Barrow, Conrad. Kentucky, Crittenden, Morehead. Indiana, Smith, White. Michigan, Porter, Woodbridge. Total, 25. Nays : Maine, Williams. New Hampshire, Woodbury, Wilcox. Connecticut, Smith. New York, Wright. Pennsylvania, Buchanan, Sturgeon. Virginia, Rives. North Carolina, Graham. South Carolina, Calhoun, Preston. Georgia, Cuthbert. Ohio, Allen, Tappan,. Illinois, McRoberts, Young. ^lississippi. Walker. Ala- bama, Bagby, King. Missouri, Benton, Linn. Arkansas, Fulton, Sevier. Total, 23. On the passage of the bill, after the vetoes, and without the distri- bution provision, Messrs. Williams, Wright, Buchanan and Sturgeon, Democrats, voted in its favor; and Messrs. Archer, Clayton, Mangum and Merrick, Whigs, who had voted for the first bill, now voted in the negative. So in the House, on the second vote, the provision for distribution having been left out of the bill, several members on both sides changed their votes. The increase of the public debt in time of peace to pay the ordinary expenses of the government, the depressed condition of the industries, and the state of financial embarrassment from which all business was suffering were given much attention in the debates. The condition was similar to that existing in 1824, when the country sought relief in a protective tariff. The act of 1833 had proved a failure in so many respects that the free traders were put to a great disadvan- tage. The tariff laws of 1824, 1828 and 1832 had worked so well and the low tariff bill had proved so disastrous that the protectionists could now appeal to the experience of the people under both to justify their contentions. The debates added nothing new to the discussion of funda- mental principles. The representatives of the low tariff party appeared less aggressive and not so eager to laud the doctrine of free trade as they had in 1832. They had received a stinging rebuke at the hands of the Discomfl- ture of the free traders. Digitized by Microsoft® PROTECTION RESTORED. 367 people and their tariff policy had proven a miserable failure. The state of the treasury and the depressed condition of business were stubborn facts which could not be removed by indulging in prophecies or free trade assumptions. The new tariff bill was thoroughly a protective measure as it was intended to be, restoring the rates of duty substantially as they existed under the act of 1832. (For rates of duties imposed see Tables 8 and 9 at end of Chapter XL) Mr. Calhoun opposed the act, contending that it was more pro- tective than the act of 1828, notwithstanding that the rates were 10 per cent lower. And that it gave better security to the manufacturers be- cause of the substitution of cash payments for bonds or long credits, and of specific for ad valorem rates on articles which were sold at greatly reduced prices in the home market. The home valuation and the fact that it was to take effect immediately on its passage and would suddenly cut off importations, he asserted, were all objectionable features. The law contained a provision designed to prevent fraud and under- valuation, which provided for a home valuation of imports and author- ized the collectors of customs to ascertain the actual value of the article in the principal markets of the country from which it was exported. To this value should be added costs and charges, including commissions and the aggregate to be the value on which the duties were to be levied ; that all goods of wool imported in an unfinished state, to be valued as if entirely finished at the place of export. The customs officers were given power to examine parties under oath to determine such value. These provisions were all strenuously objected to by the opposition. It was charged that the duties were high. They were high. They were intended to be high, or at least it was intended that the duties should be high enough to secure American capital and labor the entire home market in their production and to prevent a deliberate attempt on the part of foreign rivals to undermine or destroy them by a system of "dumping" such as had been practiced to the great detriment of our industries under the revenue tariff. In this respect, and as to many of the ad valorem rates which were re-enacted for the protection of indus- tries which were still carried on partly by handworkmanship at home as well as abroad, and in which the American producers had acquired great skill and efficiency and did not require that high degree of pro- tection which would be secured by specific duties, the bill was well designed to secure adequate protection to the industries selected for legislative aid. The following table exhibits the specific rate of duties imposed by the Act of 1842, and the ad valorem equivalent of such rates, based on the report of the Committee on Ways and Means, Twenty- Eighth Congress, first session, document 306, House of Representatives, as follows: Mr. Cal- houn's oTi- iecUona. Provision against undervalu- ation. Digitized by Microsoft® 368 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. id valorem Equiva- lents. Rate of Specific Duty. Articles. Amount. Carpets. Wilton, per square yard $o.6s equal to Saxony, per square yard 65 Treble ingrain, per square yard 65 Common ingrain, per square yard 30 Flannels except cotton, per square yard o .14 Bockings and baizes, per square yard 14 Silks. Manufactures not enumerated, per pound 2.50 Sewing silk, per pound 2.00 Pongee and plain white, per pound 1.50 Hemp. Unmanufactured, per ton 40.00 Used for cordage, per ton 25.00 Tarred cables and cordage, per pound 05 Untarred cordage, per pound 045 Yarn. Per pound 60 Cotton bagging, per square yard 04 Gunny-cloth, per square yard 05 Iron. In bars or bolts, wholly or in part manufac- tured by rolling, per ton 25.00 Railroad iron, per ton 25.00 Pig iron, per ton 9.00 .025 .025 .025 .025 11 08 f. "J .08 Hollow and castings, per pound Sad irons, per pound Hatters' and tailors' irons, per pound Cast iron bolts, per pound Iron and steel wire not exceeding No. 14, per lb. Over No. 14, and not over No. 25, per pound. . . . Over No. 25, per pound Round or square iron, brasiers' rods, of 3-16 to 10-16 of an inch in diameter, per pound Iron in sheets, per pound Hoop iron, per pound Scroll iron, or casement rods, per pound Iron cables and chains and parts thereof, per lb. Cut nails, per pound Wrought nails, per pound Iron wood screws, per pound Pins, solid headed, per 5000 Pound pins, per pound Coal, per ton 1.75 Glass. Plain, moulded, pressed, or cut, per pound lo to .40 .025 .025 .025 .025 .025 •03 .04 .02 .40 .20 I The same duty reduced to Ad Valorem. Per cent. 31 to 34 3S to 37J^ 89 to 99 75 to 76 40 to 100 55 to 60 22 to 40 to 30 to 42 44 80 27 to 35 49 to 83 76 to 78 85 to 130 92 to 115 39 to 70 80 to 90 75 to 120 75 to 120 74 to 90 32 to 40 80 to ISO 80 to 150 21 to 66 267 to 270 220 35 to 170 100 to 186 256 100 89 50 to 12 to 96 137 60 to 70 62 to 160 152 to 389 Digitized by Microsoft® DUTIES UNDER ACT OE 181,2. The same duty Rate of reduced to Ad Specific Duty. Valorem. Articles. Amount. Per cent. Window or plate glass, per square foot 02 to .12 " 30 to 198 White and red lead, per pound 04 " 100 Linseed oil, per gallon 25 " 49 to 54 Sugar. Brown, raw, per pound 025 " 65 to 120 Sirup of sugar, per pound 025 " Brown, clayed, per pound 025 " 71 to 190 Clayed or clarified, per pound 04 " 77 to 1 14 Refined, per pound 06 " 100 Sugar candy, per pound 06 " Molasses. Per pound 0043 " 35 to 170 Muscatel or bloom raisins, per pound 03 " 70 to 100 Raisins, all other kinds, per pound 02 " 70 to 100 Salt, per bushel 08 " 106 to 170 Some of the coarser and more ordinary articles were protected by very high duties; for instance, the lower grades of flannels costing 14 cents per square yard were subject to a specific duty of 14 cents per square yard, which was equivalent to 100 per cent ad valorem. The duty on brown sugar was two and one-half cents per pound. It cost in Cuba from less than two to about three cents a pound, which was equiva- lent to from 80 to 100 per cent. In many instances the same article made in American factories by American labor was being sold for the same price as the duty or slightly above it. The variations in the above table in the amount of the ad valorem equivalents shown in the last column, arose from the various grades of articles to which the duty was made ap- plicable. Hence, it was very high upon some of the lower grades of articles and scarcely sufficient to give adequate protection to others. The system of minimum valuations was restored for the protection of cotton fabrics, although the minimum valuation was somewhat reduced. The bill provided as follows : That on all manufactures of cotton not dyed, colored, printed or stained, not exceeding in value 20 cents per square yard, shall be valued at 20 cents per square yard, and if dyed, colored, printed or stained in whole or in part, not exceeding in value 30 cents per square yard, shall be valued at 30 cents per square yard, except- ing velvets, cords, moleskins, fustians, buffalo cloths or goods manufactured by napping or raising, cutting or shearing, not exceeding in value 35 cents the square yard, shall be valued at 35 cents the square yard, and duty paid thereon accord- ingly. Upon such established valuation a duty of 30 per cent ad valorem was imposed. The purpose of the restoration of the method of minimum valua- 369 Hates un- der the new law. Digitized by Microsoft® 370 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. tions was to enable American cotton manufacturers to advance to the production of many of the finer grades of fabrics. The restoration of many of the specific duties would have enabled our manufacturers to engage in the production of a great variety of the finer and more com- plicated articles and wares. Considering the state of the prices of com- modities at this time, the act of 1842 was the most thoroughly protective measure and the most decided advance in the cause of protection which had been taken. The act immediately went into operation. It excluded from the American market many competing imports, and as soon as the large stock of importations then on hand was worked ofif, the American manu- facturers again had the home market to themselves, as they had during the prosperous times from 1824 to 1834. Farthest point reached 'by protection. The law self-vindi- cating. "The law of 1842," says Andrew Young ("National Economy"), "was sup- posed to be as effectually protective as any that preceded. Its provisions were probably on the whole as objectionable to the South and to the anti-tariff men generally as those of any other, and its injurious effects were as confidently pre- dicted." The law, both as a revenue and as a protective measure, fully an- swered the purpose of its authors and friends and disappointed the fears of its enemies, as had former acts of similar character. It was based, so far as it went, on protective principles, and stands as a monument to the wisdom and patriotism of those who placed it on the statute book. It immediately restored confidence and brought about a revival of business. Henry Carey Baird said : The tariff of 1842 was as self-vindicating a law as throughout all time was ever enacted by any government. The effect of this law was instantaneous, and is well illustrated in the business of a great hotel, the then greatest in the country, when within ten days of the receipt of the news in New York City, the number of guests increased to over 300 per cent of that of the date on which came this great news; and, in the words of one of the proprietors, "business never flagged from that hour." In his annual message of December, 1844, President Tyler said : Commerce and manufactures, which have suffered in common with almost every other interest, have once more revived; and the whole country exhibits an aspect of prosperity and happiness. Andrew Young (National Economy) gives a-number of quotations from articles which appeared in the press of the country shortly after the passage of the act, which indicate a sudden restoration of confidence. He says: Digitized by Microsoft® OPERATION OP: TEE ACT OF 18Ji2. 371 Within a few days after the act was passed, a New York paper announced that the Matteawan factory had set to work 400 hands; and that the proprietors of a factory at Haverstraw had put the same in operation. Another New York paper said : " Confidence in a better state of things is be- coming more general, and most business men begin to feel that we have seen the worst. We cannot anticipate a very large business, nor, if it were practicable, do we consider that it would be desirable. The means of the community have been materially reduced. The circulation of the banks is at a very low point; and, al- though they could safely expand, and would gladly do so, yet an increase of dis- counts must take place with the general restoration of confidence, and founded upon the legitimate wants of the community." Said another paper of the same city : " The tariff is felt already. We have seen gentlemen from New Jersey who inform us that, up to the present time, more than forty mills that have been closed are to be speedily opened. In the iron regions, the ore which has been on the banks of the canal as quiet as stones, and almost of as little value, is contracted for. In this city there is an evident improve- ment on trade; confidence begins to increase, particularly among manufacturers." A Boston paper said : " Since the passage of the tariff bill, the business of this city has taken a new start. The transportations for the last two days have been on an extensive scale." A Baltimore paper said : " Since the passage of the tariff bill a better state of things has succeeded to the previous depression in almost every department of business. The general feeling in the community is more cheerful and lively than it has appeared to be at any time within the last few years. The gradual return to the full floodtide of enterprise and prosperity is to be desired in preference to any sudden movements. " If party politics can be kept from subverting the firm foundation now laid for the establishment of national interests on the basis of home industry and do- mestic resources, the most salutary results may be anticipated, as time advances, and opportunities are offered for the resuscitation of the prostrate energies of the country. We hope that party violence will not be permitted to overthrow this well-begun system. The people cannot fail to sustain it, if they fully understand the issue that is made up on this question, and begin to realize the benefits that flow from this domestic and genuinely American policy." These are but specimens of public sentiment expressed in the papers through- out the Northern States. But there were not wanting indications of an early effort, even in these States, to disappoint the hopes expressed by the Baltimore editor in the paragraph quoted above, that " Party violence would not be permitted to overthrow this well-begun system." Opposition to it was soon manifested by the Democratic party as such. But it was at the South that it received the most violent opposition. The press of France and England exulted on receipt of the intelli- gence of President Tyler's veto. A Paris paper said: Our manufacturers are safe for some months, perhaps forever, from the hostile projects of the Whigs. We advise the French mercantile houses who trade with ^he United States, not to neglect to improve the present state of things. But when the bill was finally passed and signed the foreign press, especially the British, was loud in its denunciation of it. One British paper said: Business takes a new start. British dissent. Digitized by Microsoft® 372 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Treasury surplus. At no period of our history, except during the ascendency of Napoleon, has such an alarming succession of blows been struck by foreign governments at the commercial prosperity of England, as since the entrance of Robert Peel upon office. Within the last ten months no less than six hostile tariffs have been published by other countries, and it is possible that the year may not conclude without adding a seventh. We state these facts with a view of calling the serious attention of government of parliament, and of the country to the events themselves, and to the considerations they suggest as to the future commercial policy of England. The establishment of rival manufactories in the United States and continental countries by protective legislation was greatly restricting the sale of British wares. It was this menace to Great Britain's foreign trade that brought about an abandonment of protection by that country four years later. The free trade party was not discouraged by the suc- cess of the protectionists in regaining control of the government in 1840 and restoring the protective policy by the act of 1842. In the fall elec- tion of 1842 there were large Democratic gains in the States of New York, Pennsylvania and Ohio and in some of the smaller States. The bill had been passed by small majorities in both houses of Congress; hence, the Democratic gains greatly encouraged the opposition to increase their attack on the protective system. The revival of business, the flourishing state of the industries which immediately followed, however, encouraged the friends of the measure to believe that the policy of pro- tection would be sustained by the people in future elections. A New York paper in November, 1842, said: Prices not in- creased. When the tariff bill was passed, imposing a greater duty on foreign goods, it was alleged by most men that it would increase the price of foreign articles nearly or quite to the amount of the duty, and then it would be an indirect tax on the people. Contrary to this prediction, the fact has turned out differently. The influence of a protective tariff in stimulating foreign as well as domestic trade is illustrated by the operation of this act. The flourishing condition of the country which immediately followed enabled the people to increase their purchases of all kinds of commodities, domestic as well as foreign. Although the importation of protected articles diminished, those of the non-protected classes upon which the duties operated simply for revenue so increased that the treasury soon held a surplus. The act of 1842 at once brought to the treasury a surplus, and before it was superseded by the act of 1846, $15,000,000 was paid on the national debt. The receipts of the treasury under the act were as follows: Digitized by Microsoft® BUSINESS UNDER ACT OF 18J,2. 373 Receipts Under the Act of August 30, 1842. Total net or- dinary re- ceipts, not in Year. \ Customs. eluding loans. 1843*. 1844- • . 1845- -. Total $7,046,843.91 26,183,570.94 27,528,112.80 26,712,667.87 7,471,195.52 $8,231,001.26 29,320,707.78 29,970,105.80 29,699,967.74 EXPENDITURES. \ Total net or- dinary, not ' including Interest. interest. $523,583.91 $11,256,508.60 1,833,452.13 20,650,108.01 1,040,458.18 21,895,369.61 842,723.27 26,418,459.59 $4,240,217.49 $80,220,445.81 • Nine months. When James K. Polk was inaugurated on March 4, 1845 he found an available surplus in the treasury of $9,300,000. Exports and Imports. During the nine months of 1843, on account of the deficient crop in England our exports of wheat were so large that the balance of trade in our favor was $40,000,000, securing a favorable balance of $28,000,000 at the end of the four-year period named. The free imports increased about $3,000,000 and the dutiable imports from $83,000,000 in 1844 to $96,000,000 in 1846. The increase in dutiable imports indicates the consumption of non-competitive commodities or those articles upon which the effect of the duties was to produce revenue rather than to afford protection. The exports and imports were as follows: Year. 1843* .. 1844. ... 1845. ... 1846. .. Total.. Exports. Domestic. Foreign. $77,686,354 99,531,774 98,455,330 101,718,042 $5,139,335 6,214,058 7,584,781 7,865,206 $377,391,500 $26,803,380 Total. Imports. $82,825,689 105,745,832 106,040,111 109,583,248 $42,433,464 102,604,606 113,184,322 117,914,065 $404,194,880 $376,136,457 Excess of Exports. Imports. 40,392,22s 3,141,226 $7,144,211 8,330,817 $43,533,451 $15,475,028 * Nine months. Imports, Free and Duitable. Free ..., Dutiable Total. 1843. $13,254,249 29,179,215 $42,433,464 1844. $18,936,452 83,668,154 $102,604,606 1845. ' 1846. $18,077,598 95,106,724 $20,990,007 96,924,058 ;i 13,184,322 $117,914,065 financial improve- ment. Digitized by Microsoft® 374 SECTIONAL OPPOSITION TO THE AMERICAN S7STEM. Manufac- turing activity. The tariff of m» and Brit- ish traie. The financial condition of the country was also improved by the increase of the precious metals from $62,000,000 in 1843 to $75,000,000 on June 30, 1846. This increase of specie by $13,000,000 operated to strengthen the banking institutions of the country, and to give stability to their circulating notes. In the New York Express, April, 1845, we find the following remarks on the progress of manufactures in America: The manufacturing interest of this country, at the present time, is extending itself faster than at any period since we have begun to manufacture for ourselves. From Maine to the extreme West and Southwest, every spindle and loom is at work — many of the mills with orders for their works for months ahead. Water is no longer the sole motive power of factories, and, in the most favored localities at the East, for manufactories this power has long been exhausted, and the never- failing power of steam has been resorted to. In Newburyport and Boston fac- tories of this class are now in course of erection, and even Lowell has now more factories building which are to be propelled by steam than by water. At no time have there been more new mills building, or the old ones more active than at the present; four new mills, of the largest size, are to be erected this Summer, and large additions made to the old ones — in all, not less than 25,000 looms. At the new " City of Looms," on the Merrimack, at Haverhill, active preparations are making to commence their dam, which, when completed, will furnish a waterpower that will not be exhausted in half a century of prosperous manufacturing. In New Hampshire and Maine there is the same tendency to invest capital in manufacturing; cotton mills are the favored stocks, but other articles are not forgotten or neglected. In Maine charters have been granted for thirteen cotton and woolen mills, and two iron factories; the old companies have also added largely to their capital stocks; and at no time has Maine been so decidedly in favor of manufacturing as at present. At Buffalo there has been a large mill started, with every prospect of success. At St. Louis and numerous other points in the West, in Mississippi and Georgia new mills are erecting. At Baltimore and Georgetown several flour mills have been altered to cotton mills; and all through the country there is seen a general wish to make investments in this way.i The London Times, of the 19th of July, 1843, less than one year from the passage of the tariff law, in an article on the " Decline of the Trade with America," said the exports of British goods to the United States had been only about one-half of the average annual amount ex- ported from 1833 to 1841, both years inclusive. Instead of about $38,- 000,000, as during those years, the exports for 1842 were only about $17,000,000. The exports of numerous articles were given. Among them we find manufactures of cotton, of iron, of silk, and of wool, of some of which the amount exported to this country had diminished more than two-thirds. The Times said: After making every allowance for the more than usual embarrassment of trade in the United States in 1842, the first of the above returns cannot be re- 1 MacGregor's Commercial Statistics, Vol. 3, p. 595. Digitized by Microsoft® BRITISH TRADE DOWN; AMERICAN UP. 375 garded as being otherwise than most unfavorable to the prospects of Engh'sh in- dustry, while the second shows that the balance of trade is turning against this country in a manner which renders it doubtful whether we shall not shortly have to pay for American cotton in specie instead of goods. Nothing but a very great revival of the demand for English manufactures can save us from this evil; and without a reform of the American tariff, there is very little hope of any revival at all equal to the necessities of the case; but we must consent to make liberal con- cessions if we wish or hope to receive them.'' Many other articles from British papers might be given, deprecating the effects of our new tariff upon the trade between the countries; a trade which, owing to the divided state of public sentiment in this coun- try, the British government had been enabled hitherto to dictate on her own terms. " A Merchant " in New York city, says Andrew Young (National Economy) in the summer of 1843, spoke in a city paper of the new tariff as follows : " Under the influence of this tariff, every interest of the country is rising from a state of unparalleled depression quite as rapidly as could be desired; and what will greatly disappoint the opponents of the measure, the importation of foreign goods the present year will be somewhat beyond the wants of the country, pro- ducing a revenue from customs of some 2 or 3 millions more than the estimate of the last Committee on Ways and Means. A good Fall trade is anticipated; and the orders that have gone forward for goods to arrive in July and August will be found quite large enough. " Nor has the South so much reason to complain of the present state of things. No section of the country is recovering more rapidly from the terrible revulsion of 1836 and 1837 than the States of the South and Southwest. Cotton, at the present price, pays the planter better than the agricultural products of the Northern and Western States remunerate the farmers of those States. The consumption of cot- ton in this country the present year will not vary much from 400,000 bales; and thus far it has been taken by our manufacturers at prices that have paid the planter 10 or 15 per cent more than that shipped to Liverpool or Havre. "And so of bread-stuffs. For years past the safest and best market for Western flour has been the district of our country in New England devoted to manufactures; and although our merchants have occcasionally felt authorized, by accounts from the other side, to ship flour to Europe, the result has invariably shown that the home market is more to be relied upon than the foreign. " During my experience in trade — and it extends back more than twenty-five years — all our commercial revulsions have had their origins in excessive importa- tions from abroad. It is in vain to say the country will take no more goods than it actually requires. Nine times out of ten all the goods brought here will be sold. If the importer finds that there is a large surplus in the first hands, he will offer to the jobber inducements, either in price or time, to take them off from his hands; and when the jobber finds he has accumulated a stock beyond the demands of his regular customers, he will be sure to place a portion of that stock where he ought not, by taking up men of doubtful credit. And so of the retailer in the country. Preserve the present rate of duties, and all these evils will be avoided. "The present tariff excludes from our market Manchester prints — an article American business under the new tariff. Vicious business methods go with low tariffs Digitized by Microsoft® 376 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. the importation of which has heretofore taken a large amount of specie out of the country; and what has been the consequence? Why, within the last eight months there have been improvements in this country in the machinery connected with this branch of business [printing] such as were never made in England during the same number of years; and the consumer is now furnished with domestic calicoes at 6 to IS cents a yard, superior to the imported goods, for which he used to pay from i8 to 27. And this will be the case with numerous other articles. Wherever for- eign competition is excluded, there will always be such an application of capital and skill as will favor the consumer. "Who, past middle life, has forgotten the large amounts of specie formerly sent from this country every year for the purchase of East India cotton goods? The tariff of 1816 imposed duties upon these goods that amounted to a prohibition. Within two years thereafter their place was supplied by a domestic article superior in texture, and at a reduced price; and from that time to the present the manu- facture of brown and bleached cottons has steadily advanced, until New England now spreads her heavy fabric in the Canton market, side by side with the Calcutta goods, and challenges a comparison. "For the present, leave the tariff where it is, with perhaps some slight modifi- cations, and a career of prosperity is in store for this country, such as it has not experienced." Wool un- der the tariff of Of the favorable effect of the tariff of 1842 tipon the production of wool in this country, by keeping out foreign wool, a Vermont paper, in August, 1843, furnished an important item of evidence. It gave the following facts: Prices not in- creased^ In 1840 the amount of foreign coarse wool imported was 14,000,000 pounds; in 1841, a little upwards of 10,000,000. From a statement received by Mr. Slade from the Register of the Treasury, it appeared that, during the first half of the fiscal year which commenced the ist of October, 1842, one month after the new tariff went into operation there was imported : Wool costing 7 cents or under $881,368 Wool costing over 7 cents 175,962 Which being doubled for the entire year, would stand as follows : Wool costing 7 cents or under 1,762,736 Wool costing over 7 cents 351,924 The importations of the year ending September 30, 1842, were as follows : Wool costing 8 cents or under $10,538,998 Wool costing over 8 cents 751,384 This vast falling off in the importation of foreign wool must have greatly in- creased the demand for domestic wool, and shows that the wool grower as well as the manufacturer was benefited. Prices. The prediction made by the enemies of the measure, that monopolies would be created and prices would greatly advance to the injury of the consumers, was disproved as soon as the bill became effective and busi- Digitized by Microsoft® PROTECTION AND PRICES. 377 ness revived. The immediate effect, of course, upon many articles, was an advance in prices from the depressed bargain-counter rates to which they had been forced during the period of bankruptcy and ruin of a glutted market. As soon, however, as the American market was restored to the American manufacturer and increased production ensued, the law of supply and demand became operative, as it had been during the former protective period; prices reached a normal rate under the com- petition between home producers and between foreign rivals who were struggling to hold a part of our home market. Mr. Andrew Young (National Economy), a reliable and capable writer on the subject, who lived during these years and was a witness to the events which he narrated, gives the following: Prices of domes tie cottons fall. The prices of bleached goods had changed in the same ratio. Cloths and cassimeres and satinets, reduced not less than 33 1-3 per cent. The effect of the tariff on calicoes, or prints, these merchants said, was prob- ably as great as on any other article. During the year 1840 large quantities of British prints were imported that cost from 22 cents to 28 cents per yard; and in 1843 prints of as good quality were produced in this country as low as 15 cents, which entirely excluded British prints from our markets. The tariff also had a tendency, they said, to reduce the price of foreign goods. For example : Irish linens were imported in 1841, duty free ; in 1843 they paid a duty of 25 per cent, and, with the duty added, were 20 per cent lower than in 1841. English and French cloths and cassimeres in 1841 paid a duty of 38 per cent, and in 1843 paid 40 per cent, and were 20 per cent lower than in 1841. The list embraces many other articles of domestic and foreign dry goods, without a revival at all equal to the necessities of the case; but we must consent which had fallen in about the same proportion. It should be remembered, too, in the comparison of prices of goods, that in 1841 money was scarce, and the rate of interest high, and in 1843 money was more plentiful, and the rate of interest low. A member of Congress from the State of Indiana stated, at Washington, in the Winter of 1843-1844 that "the tariff had reduced everything the West had to sell, and had increased that of everything that section had to buy," and having been repeatedly challenged to name one article, said salt had been increased 100 per cent. This led to an inquiry, by the editor of a New York City paper, who re- ceived statements of prices at three different points in that State, on January i, 1844, The statements came from unquestionable authority. Foreign prices fall. Domeslic prices. Statement Showing the Relative Prices of Leading Styles oe Dry Goods on January 1, 1841, and on January 1, 1843. Jan., 1841. Jan., 1843. Cents. Cents. Cotton osnaburgs, yard 8 to 10 6H to 75^ Three-quarter brown shirtings, yard 6J4 to 8V2 AVi to 6yi Three-quarter brown shirtings, yard wide 8% to 11 6j4 to 8^ Domestic prints, staple styles 12Y2 to 18 8% to 12 J4 Digitized by Microsoft® 378 8E0TI0NAL OPPOSITION TO TIIE AMERICAN 8TSTEM. Indiana prices. At Indianapolis, the capital of the State, prices were as follows: Jan., 1842. Jan., 1844. Salt, per bushel $1.00 $0.50 Iron, per pound 06 .05 Brass kettles, per pound 75 .62 Cotton shirtings, per yard 12% .08 to .09 Hardware and cutlery had fallen since 1842 10 per cent. Nails were cheaper by ij^ cents per pound. Buttons had fallen 100 per cent. Pins remained the same. At South Bend the prices were, according to the statement from that place, as follows: Jan., 1842. Jan., 1844. Mackinaw blankets, per pair $10.00 $8.00 Nails, cut, per 100 pounds 9.50 to 10.00 7.00 Heavy sheetings, wide, per yard I2j4 .10 Three-quarter brown shirtings 08 .o6j4 Inch wood screws, per gross 81 .62% Pins, per pack 875^ .80 Bar iron, domestic, per 100 pounds 5.50 to 6.50 4.00 to 5.50 Swedes and English had fallen in same ratio. Steel, American, per hundredweight 12.50 lO.oo Round rolled iron, under V2 inch 10.00 to 12.50 9.00 The average on satinets, about 40 per cent less than in 1842. On jeans, from 40 to 50 per cent less. Domestic and foreign goods generally, 25 per cent less. The goods were transported from New York, in both years by the same route. At Lafayette the current prices of the following articles were: Jan., 1842. Jan., 1844. Onondaga salt, per barrel $5.25 $1.87 Kanawah salt, per barrel 3.75 2.25 Bar iron, per pound 09 4/4 to 5 Cotton sheeting, good, per yard 12 to .16 .09 to .10 The opening of the Wabash canal from Lafayette to Toledo reduced the cost of transportation on Onondaga salt, and consequently its price; but it did not affect the Kanawah salt and bar iron, as they came down the Ohio River to the mouth of the Wabash, and thence up that river to Lafayette. The following named articles and their prices were published in the New York Price Current for March, 1842, and March, 1844: March, 1842. March, 1844- Coal, Liverpool $9.00 $7.00 to $8.25 Coal, Newcastle $7.50 to 8.50 6.00 to 6.75 Coal, Scotch 6.00 to 6.50 6.00 to 6.50 Coal, Sidney and Pictou 6.50 to 7.00 6.00 to 6.25 Coal, anthracites, 2,000 pounds 6.00 to 7.50 4.75 to 5.50 Cloths, common woolen, by the piece, per yard 1.37 to 1.75 1.20 to I.SS Digitized by Microsoft® D0ME8TW PRICES. 379 Domestic goods. Shirtings, brown, three-quarter 045 to .053 .045 to .06 Shirtings, bleached 07 to .09 .05 to .08 Shirtings, brown, wide 055 to .07 .06 to .07 Shirtings, Sea Island 10 to .12 .07 to .11 Calico, blue 10 to .14 .07 to .12 Plaids 07 to .10 .09 to .11 Stripes, fast colors 07 to .10 .08 to .10 Satinets 4° to 1.25 .35 to .70 Cotton yarn. No. 5 to 13, pound 15 to .17 .14 to .16 Cotton yarn, No. 14 to 19, pound 19 to .20 ... to .17 Glass, Eng. crown, per 50 ft., 6 x 8 to 10 x 13.. 4.00 to 4.50 3.50 to 4.00 10 X 14 to 12 X 17 S-oo to 5.50 4.50 to 5.00 12x18 to 16x26 6.00 to 7-00 5-50 to 6.50 N. Y. cylinder 7 X 9 to 8 X 10 2.75 to 3.00 2.75 to 3.00 N. Y. cylinder, 10 X 12 to 10 X 14 3.25 to 3.50 3.25 to 3.50 Several other kinds are quoted, showing a reduction of about 10 per cent. Brass kettles, imported from England, cost 37 cents per pound in 1842. In 1844 a domestic article of a better quality was sold at the same price. Smoothing irons, sometimes called sadirons, in 1843, 4% to 4% cents per pound; in 1844, from 3% to 354 cents. Mr. Andrew Young further said: The friends of the tariff professed entire satisfaction with its practical work- ing. Manufacturing continued to increase. Among other manufactures, that of woolen carpets had received a new impetus, and the market was mainly supplied by the domestic fabric, and at prices as low as those of even an inferior article formerly imported. For example : Brussels and three-ply, in 1841, under the re- duced duty imposed by the Compromise Act, of about 33 cents per square yard, cost $1.60 to $1.65 a yard. In 1844 the duty was 65 cents on three-ply, and the price $1.50. The duty on Brussels was 55 cents, and the price was $1.25. Ingrain and Venetian, under the reduced duty of 27 cents, cost 80 cents. In 1844, when the duty was 35 cents on ingrain and Venetian, the price was 65 cents. What ren- dered the contrast more striking is the fact that, in 1841 and 1842, trade was de- pressed, and mechanical labor in comparatively little demand. Wool also had been favorably affected. The importation had largely fallen off, and the home production increased both in quantity and price. In the Eastern markets the price of Saxony in 1844 was 50 to 55 cents ; of full blood, 45 to 47 ; one- quarter blood and common, 37 to 40; being an average of about 30 per cent. Hemp had been little cultivated, except in Kentucky; and nearly the whole production had been used in the manufacture of cotton bagging and bale rope. The country had been dependent mainly on Russia for supplies for ships' cordage and other purposes. Our imports in 1840 were $686,777; in 1841, $600,201; in 1842, $267,849; in 1843 (nine months), $228,882. In 1844 the cultivation had been ex- tended to Illinois and Missouri. The rapid increase of the cultivation of this article appears from the following statement of hemp received at New Orleans : in 1842, 1,214 bales; in 1843, 15,000 bales; in 1844, 38,000 bales, or about 5000 tons; the increase being almost exclusively from Illinois and Missouri. Under a protective duty of $40 per ton, the price was at one time reduced to $55 a ton, Woolen carpets. Wool. Bemp. Digitized by Microsoft® 3S0 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Cotton bagging. Iron. Southern dissent. Iron and the Tariff of 18iZ. Tumblers. The price of scarcely any article experienced a greater reduction than that o cotton bagging, an article used only at the South. The price of Louisville, Ker tucky, was, in 1841, 26 cents, which was 4 cents higher than in 1840; in 1842, i cents ; in 1843, 13 cents ; in 1844, 10 cents ; and yet a proposition was made in Con gress to take off the duty on cotton bagging and gunny bags. The manufactur had been greatly increased by the protection afforded by the tariff of 1842. The iron business increased with a rapidity never before known in this or an other country. The price of iron, which had considerably fallen, advanced con siderably in 1845, in consequence of the unprecedented demand occasioned by thi European railroad mania and other causes. In the State of Pennsylvania the num her of manufactories was very greatly increased. From Hunt's Merchants' Maga zine it appeared that, in 1845, there were in tfie United States 540 blast furnaces producing 450,000 tons of pig iron; 951 bloomeries, forges, rolling mills, etc, yield ing 291,600 tons "of bar, hoop and sheet boiler and other wrought iron, 30,000 torn blooms, 121,500 tons castings. The consumption of iron in the crude state was esti- mated at $42,000,000 per annum. The amount produced in all continental Europe was only about 700,000 tons. The quantity imported into the United States in 184^ was 99,384 tons, valued at $3,484,499. While the people of the Northern States were rejoicing in the benefi- cent effects of the tariff upon the industries of the country, the Soutt complained as bitterly as ever of oppression and unequal taxation. The tariff was denounced in public meetings in several of the districts in South Carolina, and anti-tariff associations were formed, with a view tc a more systematic and effective opposition. While the act remained in force only four years and three months (until December 1, 1846), and was the last protective measure in oper- ation until the Republican party restored and ex;tended the policy in 1861, it operated to so strengthen established industries and to give others a firm foothold, that they were able by retrenchment, the practice of great economy, the reduction of wages and the working of their em- ployees during long hours, to better withstand the severe competition to which they were subjected from 1846 to 1860. William D. Kelley said in his great speech before Congress, January 3, 1866: When the tariff of 1842 went into effect our country was being flooded with British manufactures of every variety, from a tenpenny nail to a circular saw and from table cutlery to butt hinges, thumb latches, etc. But when 1847 came around four years of adequate protection had so stimulated the skill and ingenuity of Americans and had brought from Great Britain so many skilled workmen that our own market was ours for at least an infinite variety of hardware, and we have held it, in many departments of the business from that day to this, no one being able to undersell us in our own streets. Most of our glassware was formerly imported, and among the rest, the cheap, common tumbler from Germany, at a cost of 50, 44, 41 and, a1 Digitized by Microsoft® B08TILITT TO PROTECTION ACTIVE. 381 the lowest, 37j^ cents a dozen, at which price the importers barely made the freight on them, declaring that they brought them merely to fill up their cargoes. The tariff of 1842 imposed a heavy duty on them — 10 cents a pound. With this encouragement the manufacture was at- tempted, and in 1843, these tumblers were sold at 27/^ cents a dozen. So we might give instance after instance of the beneficial effect of the act of 1842. Failurh; to Overthrow PROTiiCTiON in 1844. Although the Democrats had elected a majority in the House of Representatives in the previous election, they failed to command their entire vote against protection. Mr. McDuffie on December 19 proposed a bill for the restoration of the rates of the Compromise Act, and Mr. Rhett, of the same State, on January 3 offered a resolution instructing the Committee on Ways and Means to report a bill of like character. Upon a vote being taken on this resolution it was rejected by 67 to 112. Other attempts of the same nature met a like fate. The debate in the Senate continued from Janu- ary 9, from time to time, until May 31, the Senate standing 25 to 18 in favor of protection on the resolution of Mr. Allen of Ohio. While the speeches delivered in the Senate displayed great talent and ability, nothing new in principle was developed. Those who mainly participated in the discussion were Messrs. Evans of Maine, Huntington of Con- necticut, Phelps of Vermont, Bates and Choate of Massachusetts, Simons of Rhode Island and Berrien of Georgia, in support of protection, and those in opposition were Messrs. McDuffie of South Carolina, Benton of Missouri, Bagby of Alabama, Wright of New York and Woodbury of New Hampshire. The effort to restore the Compromise Act met with strong opposi- tion from Northern Democratic members. The existing tariff was working so well, the industries were becoming so prosperous, and the general business conditions were so satisfactory that the sentiment of Congress was decidedly against a change. Senator Berrien of Georgia, in opposition to the attack which McDuffie made against the tariff, said : There had been, since August, 1842, a sensible improvement in the condition of the country; whether because of that tariff, or in spite of it, was not a subject of his present inquiry. He stated the following facts : i. The credit of the gov- ernment was prostrate, and has been redeemed. Its stock is again above par. 2. The treasury was empty ; it is now replenished. 3. The commerce and navigation of the country have increased. 4. Its agricultural condition has improved. 5. There has been a marked improvement of our great staples. 6. A reduction in the prices of almost all, if not absolutely of every article of consumption. 7. To crown the whole, every branch of industry has been stimulated to increased Attempt to restore the Com- promise Act. Ac- tion in the Senate. A Georg- ian de- fends the tariff. Digitized by Microsoft® 382 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. In the House. Achieve- ments oj the tariff of mi. Sugar. activity, and confidence has been restored. These things, I apprehend, are true. The tariff of 1842 has been in efficient operation but Httle more than a year, and these effects have follovired. Looking to this state of things, I ask, is this a time for excitement, for agitation, for interfering with the pursuits of industry? Is this a time for change, for such a change as the adoption of this bill would bring us? Action in the House. On March 8 Mr. McKay, from the Committee on Ways and Means, reported a bill for a revision of the act of 1842. It provided for ad valorem rates and formed the basis of the act which was subsequently passed in 1846. The debate on the bill lasted until the 8th of May, when it was laid on the table by a vote of 105 to 99. Twenty-eight Democrats from the following States voted to sustain the act of 1842, of which were from Massachusetts, 2 ; Vermont, 1 ; Connecticut, 2 ; New York, 10; Pennsylvania, 8; Kentucky, 1. Only one Whig, Mr. Chappell of Georgia, voted in the negative. Congress adjourned on June 17, 1844, and the controversy was continued before the people in the Fall elections. Before going on to the Walker tariff, or tariff of 1846, and its con- sequences, a glance at the benefits of protection will be instructive. The year 1842 found us a bankrupt people. A large portion of the iron fur- naces were closed, and the product was only a little more than 200,000 tons. In 1846 and 1847 the production was estimated by the Secretary of the Treasury at 800,000 tons, having quadrupled in four years. Till 1843 not a single ton of railroad iron had been made in this country, yet in 1845 under protection we made 50,000 tons, and in 1847, 100,000 tons. The consumption of coal in 1841 was less than 1,000,000 tons; in 1847 it was over 3,000,000 tons, nineteen-twentieths of which was domestic mining. The average production of lead from 1835 to 1841 was 298,000 pigs; in 1846 the production was 785,000 pigs. The shipping built in 1842-43 amounted to 91,000 tons; in 1848 it had increased to 316,000 tons. From 1835 to 1841 the average number of steamers annually built was 92; in 1846 we built 225. The productions of certain staples can be seen from the following figures for 1840, being from the census re- turns, those of 1847 being estimates: 1840 — Wheat, 80,000; barley, 4,161,000; oats, 123,071,000; rye, 18,645,000; buck- wheat, 7,291,000; Indian corn, 377,531,000. Total, 615,522,000. 1847 — ^Wheat, 114,- 245,000; barley, 5,649,000; oats, 167,867,000; rye, 29,222,000; buckwheat, 11,673,000; Indian corn, 539,350,000. Total, 868,006,000. L,et us look a moment at the sugar crop of Louisiana. In 1841 the number of pounds produced was 77,000,000; in 1848, 240,000,000. Digitized by Microsoft® YEARS OF PLEXT7 AND TEARS OF DEARTH. 383 The period since 1816 embraces the complete operation of six general tariffs; the incomplete act of 1816, the protective acts of 1824, 1828 and 1832, the revenue tariff of 1833 and the protective tariff of 1842, covering a period of thirty years. During this time two of the most destructive panics in the history of the country occurred, the first following the act of 1816 for seven years and the second following the operation of the low duties under the Compromise Act from 1839 to 1842. Each panic had its inception in the inundation of the country with competing foreign commodities which displaced domestic produc- tions, brought bankruptcy and ruin to the manufacturing interests of the country, created a large adverse balance of trade, drained the coun- try of its precious metals, paralyzed all business, and continued unabated until security was given to the industries of the country by increased protective duties. The years when the people enjoyed prosperity, when industries extended, labor was well employed, the financial and com- mercial interests in a flourishing condition were the years following the enactment of the act of 1824, and continuing until protection was over- thrown by the Compromise Act of 1833, and again under the restoration of protection by the act of 1842. Another significant fact in connection with this history is found in the influence of protective duties on imports. In consequence of each increase in protective duties competing imports have been checked in a marked degree. The immediate effect of the exclusion of competing imports was the revival and expansion of domes- tic industries and general prosperity. The prosperous condition of the country thus brought about operated to increase the importations of non- competing commodities, thereby augmenting instead of diminishing for- eign trade. Another significant fact disclosed by the operation of the tariff laws mentioned was the decline in imports of all sorts arising from the exhausted condition of the country during the low tariff periods. Hence, the operation of the opposing policies demonstrates that a pro- tective tariff brings universal prosperity to all branches of trade, com- merce and industry, and that a revenue tariff inflicts injuries upon all alike. Manufactures for the production of the coarser fabrics and of tools, implements and utensils had been placed on a firm foundation. The production of iron in its first stages of manufacture, a supply of wool, flax and many necessary raw materials was promoted by protective legislation. The United States had become independent of other nations for the necessary articles of subsistence and defence in time of war. The establishment of a system of manufactures had given employment to labor, stimulated the inventive genius of the people, augmented and diffused wealth in every part of the nation. Moreover, one of the most prominent and conspicuous benefits derived from placing manufacturing The les- sons of the tariffs. y Vibration of pros- perity with tariff laws. Manufac- tures firmht es- tablished. Digitized by Microsoft® 384 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Census of 1850. beside agriculture was the creation of the marlcet for the home produce of the farm. Every prediction made by Washington, Hamilton and the great statesmen who laid the foundation of our government was verified by actual experience. It was through the protective legislation that the industries were established and maintained and the market for farm produce created, and the monopoly of our markets was wrested from foreigners, and prices reduced to a fair and just standard. In 1850 the government for the first time ascertained, with an approach to accuracy, the state of the industries and productions of the country. The material for the census of 1850 was gathered in 1849 at a time when the industries were very much depressed and the returns were not so complete and accurate as those taken at the close of later decades, yet most gratifying results are shown, as follows: Capital invested in manufactures $533,245,351 Cost of raw material 555,123,822 Male hands employed 73i,i37 Female hands employed 225,922 Wages paid 236,755,464 Value of product 1,019,106,616 Summary statement of the value of manufactures of the following named States in 1850 : Connecticut $47,114,585 Rhode Island 22,117,688 Massachusetts 157,743,994 New York 237,597,249 Pennsylvania 155,044,910 Delaware 4,649,296 Maryland 33,043,892 Maine 24,661,057 Ohio 62,692,279 Indiana 18,725,423 Illinois 16,534,272 Michigan 11,169,002 Vermont 8,570,920 Iowa 3,551,783 California 12,862,523 Per cent. 15 States produced 86 21 States and Territories produced.. 14 New York, of the whole, produced.. 23 Massachusetts 15 Pennsylvania 15 Connecticut 5 New Jersey 4 Maryland 3 Virginia 3 Rhode Island 2 Maine 2 New Hampshire 2 Kentucky 2 Massachusetts made 85 per cent of the bonnets and straw goods; 46 per cent of the boots and shoes; one-third of the cottons; Connecticut made one-third of the hardware, including guns and 40 per cent of the India rubber goods; Pennsyl- vania produced 80 per cent of the coal; one-half of the hosiery, one-third of the iron and two-thirds of the perfumery; Delaware produced one-third of the gun- powder; Rhode Island 40 per cent of the chemicals; Vermont 40 per cent of the scales ; North Carolina 90 per cent of the turpentine ; Ohio 60 per cent of the lard oil; Missouri, three-fourths of the castor oil, and Wisconsin one-half of the lead. Digitized by Microsoft® YEARS OP PLENTY AND YEARS OF DEARTH. 385 A table made up from the census returns enumerating the various industries, showing the number of laborers employed, amount paid in wages, value of the raw material worked up, and of the total product will be found in table 10, page 533. That the results shown in the table were not achieved without en- countering the opposition of powerful, selfish influences from within our own country as well as from abroad, fully appears from the preceding chapters. During the first quarter of a century of our history the im- porting and shipping interests acted in harmony with foreign manufac- turers to continue the monopoly of the American market which had so long been enjoyed by Great Britain. The great statesmen of our Re- public, however, those who had been leaders in the cause for the independ- ence of the colonies in the organization of the government under the Constitution, and the formulation of those policies which placed the Re- public on a firm foundation, were substantially united in the opinion that the future growth, prosperity, independence and power of the United States depended upon the planting of the industrial arts on our soil and the prosecution of all branches of trade, commerce and industries by the people. It was, however, most unfortunate that the sectional controversy, although unavoidable, should have arisen to retard and stifle the progress of the industrial development of the country. But in this controversy, as in all others, the sober second thought and good judgment of the American people have prevailed. Without the support of the mercantile interests of the Northern cities, the slave-holders could have made but little headway against the American system, but the results of the protective policy, however, were so favorably felt throughout the North; manufactories had been estab- lished in so many States ; the industrial cities had become so large and influential; the laborers dependent for subsistence upon these industries were so numerous, and the home market for the products of the farm had become so valuable, that to entirely overthrow the protective policy and establish free trade would have created such havoc and ruin through- out the free States, that the Whig party would have been kept in the ascendency and the great object which the slave-holders were endeavoring to accomplish, would have been defeated. Hence, every factory built in the country tended to strengthen and make more permanent the protective policy. To prevent the establishment of new competing industries and to gradually curtail the power and influence of those already set up, was the well-defined policy of the Democratic party, both as a representative of the special commercial interests indicated, and as a political organization defending the institution of human slavery. Results of the pro- tective policy. Digitized by Microsoft® 3S6 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. The census of 1850 gives no returns on the value of the commerce and navigation of the country. The census of 1840 estimated the capital invested in these branches at $390,972,000, and the income from these sources, including transportation, at $169,000,000. This does not include the income from banking and insurance. Mr. Seaman estimated the income from all of these sources at $270,000,000 in 1850. The census returns of 1850 were also deficient in giving the product of the forests and fisheries, which Mr. Seaman estimated at $50,000,000. TablS No. 11. Statement of the various classes of agricultural capital in the United States, and the value thereof, June 1, 1850, as reported in the census.^. Articles Quantity.^ Value. Indian corn, bushels 592,071,104 $296,035,552 Wheat, bushels 100,485,944 100,485,944 Cotton, bales of 400 pounds 2,445,793 98,603,720 Hay, tons 13,838,642 96,870,494 Oats, bushels 146,584,179 43,975,253 Butter, pounds 3i3,34S,3o6 50,135,248 Home-made manufactures 27,493,644 Potatoes, Irish, bushels 65,797,896 26,319,158 Potatoes, sweet, bushels 38,268,148 19,134,074 Wool, bales of 400 pounds 52,516,959 i5,755,o87 Tobacco, pounds i99,7S2,6s5 13,982,686 Cane sugar, hogsheads of 1,000 pounds 236,814 12,378,850 Rye, bushels 14,188,813 7,803,847 Orchard products 7,723,186 Buckwheat, bushels 8,956,912 6,969,838 Peas and beans, bushels 9,219,901 5,762,436 Market garden products 5,280,030 Cheese, pounds 105,535,893 5,276,795 Hemp, tons 34,871 5,247,43° Rice, pounds 215,313,497 4,000,000 Barley, bushels . ; 5,167,015 3,616,910 Molasses, gallons 12,700,991 2,540,179 Beeswax and honey, pounds 14,853,790 2,376,606 Clover seed, bushels 468,978 2,344,890 Maple Sugar, pounds 34,253,436 1,712,671 Hops, pounds 3,497,029 1,223,960 Flaxseed, bushels 562,313 843,468 Grass seed (other than clover), bushels 416,831 833,662 Flax, pounds 7,709,676 770,967 Wine, gallons 221,249 442,498 Silk cocoons, pounds 10,843 5,42i I/ive stock over one year old, annual product 175,000,000 Animals slaughtered 55,000,000 1 The Tariff Question, Bigelow. 2 Seaman's Progress of Nations, Second Series, p. 569. Digitized by Microsoft® AORICDLTURAL STATISTICS 1850. 387 Articles. Poultry, on the basis of 1840 Feathers Milk (not included in butter and cheese) . Quantity. Eggs Cord wood, on the basis of 1840 Home-made manufactures — one-half for agricultural part Small creeps — ^basis of Rhode Island for onions, carrots, etc Residuum of crops not consumed by stock — corn, fodder, cotton, seed, straw, rice, flour and manure (Patent Reports) Cattle, sheep and pigs under one year old Value. 13,000,000 2,000,000 7,000,000 5,000,000 20,000,000 13,746,822 5,000,000 100,000,000 50,000,000 Total .$1,311,691,326 Add for orchard and garden products of cities (not included in above) milk butter, poultry, horses, cows, etc., in cities and towns 15,000,000 .$1,326,691,326 $3,271,575,000 151,587.000 Total agricultural products, 1849, 1850 Improved lands in farms, acres 113,032,614 Unimproved lands in farms, acres 180,528,000 Lands in farms 293,560,614 Value of farms Farming implements and machinery Horses and colts, number 4.336,719 Asses and mules, number 559.331 Milch cows, number 6,385,094 Working oxen, number 1,700,744 Other homed cattle, number 10,293,069 Total $4,749,853,326 We need not explore the history of the nations of the Old World in search of facts to support the protective policy. The evidence is found in the experience of our owrn people. We need only to compare the growth and progress of the tvi^o sections of our country to shovvr the relative importance to a nation of a system of manufactures. The free States practiced the industrial arts, and under the influence of protective tariffs diversified their industries, developed their native resources, estab- lished manufactures, built roads and canals to improve the means of transportation, employed and dignified labor, provided a home market for the produce of the farm, utilized water powers and the steam engine, made inventions and discoveries and utilized every device "that would increase the productive power of man. They grew rich and powerful by increasing the wages of labor and the value of farm produce. Their success was not achieved by cheapness, but by increasing the rewards of labor and ability. The slave States listened to the advice of the college professor, the British manufacturers and importers; repudiated the teachings of history ; and with their supposed cheap labor devoted all JUStiftCOr Hon of protection. Digitized by Microsoft® 388 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. The pUgM of the South without diversified industries. of their energies to the cultivation of cotton, tobacco and rice. With greater advantages and opportunities, they fell behind the free States year by year. Chapter XII is concluded vifith quotations from " Cotton is King," giving the pro-slavery side of the economic aspects of the sectional con- troversy. It is novif proposed to present the view^s of an able and dis- tinguished Southerner who gives the results in the planting States of a failure to diversify their industries. Hinton R. Helper, a native of the South, in contrasting the indus- trial and commercial conditions of the planting and Northern States in 1857, said: It is a fact well known to every intelligent Southerner that we are compelled to go to the North for almost every article of utility and adornment, from matches, shoe pegs and paintings up to cotton-mills, steamships and statuary; that we have no foreign trade, no princely merchants, nor respectable artists; that, in compari- son with the free States, we contribute nothing to the literature, polite arts and inventions of the age; that, for want of profitable employment at home, large num- bers of our native population find themselves necessitated to emigrate to the West, while the free States retain not only the larger proportion of those born within their own limits, but induce, annually, hundreds of thousands of foreigners to settle and remain among them; that almost everything produced at the North meets with ready sale, while, at the same time, there is no demand, even among our own citi- zens, for the productions of Southern industry; that, owing to the absence of a proper system of business among us, the North becomes, in one way or another, the proprietor and dispenser of all our floating wealth, and that we are dependent on Northern capitalists for the means necessary to build our railroads, canals and other public improvements; that if we want to visit a foreign country, even though it may lie directly south of us, we find no convenient way of getting there except by taking passage through a Northern port; and that nearly all the profits arising from the exchange of commodities, from insurance and shipping ofiices, and from the thousand and one industrial pursuits of the country, accrue to the North, and are there invested in the erection of those magnificent cities and stupendous works of art which dazzle the eyes of the South, and attest the superiority of free insti- tutions ! The North is the Mecca of our merchants, and to it they must and do make two pilgrimages per annum — one in the Spring and one in the Fall. All our com- mercial, mechanical, manufactural and literary supplies come from there. We want Bibles, brooms, buckets and books, and we go to the North; we want pens, ink, paper, wafers and envelopes, and we go to the North; we want shoes, hats, hand- kerchiefs, umbrellas and pocketknives, and we go to the North; we want toys, primers, school books, fashionable apparel, medicines, tombstones and a thousand other things, and we go to the North for them all. Instead of keeping our money in circulation at home, by patronizing our own mechanics, manufacturers and laborers, we send it all away to the North, and there it remains ; it never falls into our hands again. In one way or another we are more or less subservient to the North every day of our lives. In infancy we are swaddled in Northern muslin; in childhood we are humored with Northern gewgaws; in youth we are instructed out of Northern books; at the age of maturity we sow our "wild oats" on Northern soil; in middle Digitized by Microsoft® FREE AND SLATE STATES OOMPAUED. 3S9 life we exhaust our wealth, energies and talents in the dishonorable vocation of entailing our dependence on our children and on our children's children, and, to the neglect of our own interests and the interests of those around us, in giving aid and succor to every department of Northern power; in the decline of life we remedy our eyesight with Northern spectacles, and support our infirmities with Northern canes; in old age we are drugged with Northern physic; and, finally, when we die, our inanimate bodies, shrouded in Northern cambric, are stretched upon the bier, borne to the grave in a Northern carriage, entombed with a Northern spade, and memorized with a Northern slab ! ^ Mr. Helper continues as follows: All the world sees, or ought to see, that in a commercial, mechanical, manu- factural, financial and literary point of view, we are as helpless as babes; that, in comparison with the free States, our agricultural resources have been greatly exaggerated, misunderstood and mismanaged; and that, instead of cultivating among ourselves a wise policy of mutual assistance and co-operation with respect to individuals, and of self-reliance with respect to the South at large, instead of giving countenance and encouragement to the industrial enterprises projected in our midst, and instead of building up, aggrandizing and beautifying our own States, cities and towns, we have been spending our substance at the North, and are daily augmenting and strengthening the very power which now has us so com- pletely under its thumb. It thus appears, in view of the preceding statistical facts and arguments, that the South, at one time the superior of the North in almost all the ennobling pur- suits and conditions of life, has fallen far behind her competitor, and now ranks more as the dependency of a mother country than as the equal confederate of free and independent States.^ The following summaries, compiled from the census returns of 1850, show the value of the farm produce of the Northern and Southern States. The sixteen States of California, Connecticut, Illinois, Indiana, Iowa, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont and Wisconsin produced : Hay 28,427,799,680 lbs. @ %c $142,138,998 Hemp 443,520 lbs. @ Sc 22,176 Hops 3,463,176 lbs. @ ISC 519.476 Flax 3,048,278 lbs. @ IOC 304,827 Maple sugar 32,161,799 lbs. @ 8c 2,572,943 Tobacco 14,752,087 lbs. @ loc 1,475,208 Wool 39,647,211 lbs. @ 3SC 13,876,523 Butter and cheese 349,860,783 lbs. @ iSc S2,479,i I7 Beeswax and honey 6,888,368 lbs. @ 15c 1,033,255 valued as Total 28,878,064,902 lbs. above. $214,422,523 The fifteen States of Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Virginia produced: 1 Impending Crisis of the South, pp. 21, 22, 23. 2 Ibid, pp. 23, 24. Value of farm pro- duce of the TJorih and Bouth com- pared. Digitized by Microsoft® 390 SECTIONAL OPPOSITION TO TEE AMEBIOAN SYSTEM. Hay 2,548,636,160 lbs. Hemp Hops Flax Maple sugar Tobacco Wool Butter and cheese . . Beeswax and honey Cotton Cane sugar Rice (rough) 77,667,520 lbs. 33,780 lbs. 4,766,198 lbs. 2,088,687 lbs. 185,023,906 lbs. 12,797,329 lbs. 68,634,224 lbs. 7,964,760 lbs. 978,311,600 lbs. 237,133,000 lbs. 215,313,497 lbs. Total 4,338,370,661 lbs. @ Vzc ® Sc @ 15c @ IOC @ 8c @ IOC @ 3SC @ ISC @ ISC @ 8c @ 7c @ 4c valued as above. $12,743,180 3,883,376 5,067 476,619 167,094 18,502,390 4,479,06s 10,295,133 1,194,714 78,264,928 16,599,310 8,612,539 $155,223,415 The value of the hay crop of the Northern States alone in 1850, at an average price of $11.20 per ton, being the value fixed by the United States Agricultural Department, was $142,138,998, or $3,633,275 greater than the value of all the cotton, tobacco, rice, hay, hemp and cane sugar produced in the fifteen States of the South in the same year. The value of the butter and cheese produced in the North of $52,479,117 was nearly three times greater than the tobacco crop of all the planting States, which was $16,599,310, and the value of the butter and cheese produced in New York alone of $19,426,126 was greater than the tobacco crop of all the Southern States. In real and personal property the industrial States stood the highest: Ohio 504,726,120 Connecticut I55,707,98o New Hampshire 103,652,835 New York $1,080,309,216 Massachusetts 573,304,286 Pennsylvania 729,144,988 Rhode Island 80,508,794 The value of the real and personal property of Pennsylvania and New York combined was $1,809,454,204, or $253,499,067 greater than the entire value of such property, exclusive of slaves, of the fifteen slave States. Mr. Martindale in his speech before Congress in 1830, said: What then remains for the Southern cotton growing States? The inevitable consequences of an absolute adhesion to their favorite maxims of policy, to the exclusive occupation of agriculture. Comparative poverty and decay, a meager and sparse population, deficient markets and languishing agriculture. The conse- quences are inevitable and invariable. They never did fail, and they never will fail. A mere agricultural community was never yet a populous and wealthy com- munity. They never will be wealthy and populous. It is morally and physically impossible that they ever should be. Had the Southern people heeded the admonitions of such broad- minded, patriotic statesmen as Mr. Martindale, what a different history would have been made ! Digitized by Microsoft® CHAPTER XV. Election of James K. Polk in 1844 — Secretary Robert J. Walker's Report Analyzed — Principles of Protection and Free Trade Contrasted. " Now look on this side and then on that." "The speculator, he who robs industry under the pretence of freedom." If we should order from Great Britain in one year, additionally, half the quantity of iron we now manufacture, prices would go higher than they have for over a century in England or America. The British iron market is cheap when you refrain from it, not when you press it. — Memorial of the Convention of Ironmasters of Pennsylvania to Congress in 1849. What folly it is, then, for the free trade advocate to sit down with pencil and paper and calculate our savings, in buying foreign iron or steel after the tariff is removed, on the basis of the present prices of a severely glutted foreign market, which prices would cease to exist if our tariff were removed. — David Hall Rice. The productive powers of man were never exhibited before the days of the protective duties as they have been since. Commerce was free when Tyre, Car- thage, the Grecian cities, Alexandria, Venice, Genoa, the Hanse towns, Holland, at their several periods of prosperity usurped the trade of the world. The mer- chants were then all in all — the merchants vrere princes, the producers slaves. Free trade would rapidly tend to the same results now. — Stephen Colwell. The Presidential Election of 1844. In 1844 Henry Clay was the candidate of the Whig party which supported the protective policy. James K. Polk was the nominee of the Democratic party, and James G. Birney of the Abolitionists. The rise of the Abolition party greatly complicated matters. A large number of electors who otherwise would have supported Mr. Clay had assumed an attitude independent of both of the old parties and laid the foundation for an increasing and uncompromising opposition to the institution of slavery. With them all other political questions were eliminated, re- gardless of the immediate commercial, financial and industrial welfare of the country. While the tariff was the chief issue between the Whigs and Democrats, other important questions brought support to the Demo- cratic party in the free States. The laborers of the North were led to (391) Digitized by Microsoft® Clay defeated ly Folic for the Presi- dency. 392 SEOTIOTfAL OPPOSITION TO THE AMERWAJf SYSTEM. believe that the abolition of slavery would seriously affect their inter- ests; that the free States would be overrun with black men, and the toilers of the Northern States would be subjected to a competition in their own country tenfold worse than any competition from the Old World which might result from a low tariff. Moreover, the Demo- cratic party under Jackson, in 1834, by an act of Congress revised the ratio between gold and silver and placed the country on a gold basis. It was the hard or sound money party of the country. This fact up to 1860 secured to it the co-operation and support of many business men. The Democratic party made a favorable impression on many substantial people by avowing its respect for contracts and the sacred- ness of property and property rights. It had annexed Texas and was the party of territorial expansion. The great names of Jefferson and Jackson gave to the party a standing and name worth many votes. Again, the course of the Whig party on the slavery question was weak and vacillating, and had it not been for its adherence to the cause of protection it would have expired long before it did. The abolition movement was looked upon by the great majority of the people at this time with distrust and as a menace to the peace and perpetuity of the Union. It was in the midst of these antagonistic elements that the Whig party made the struggle in 1844 for the election of Henry Clay and the perpetuity of the American System. The Democratic party started in the race with a united South, the importers and traders of the North, and the other elements of strength mentioned. Mr. Clay was a protectionist, though his connection with the Com- promise Act lost him many friends who thought he had conceded too much in 1833. But he had now fully realized his mistake and was an earnest advocate of the principles of a protective tariff. In a speech made during the canvass he said: Advantaaes of the Democratic part!/. Protec- tionist in the North, Free- Trader in the Bouth. Let the amount which is requisite for an economical administration of the government, when we are not engaged in a war, be raised exclusively on foreign imports ; and in adjusting a tariff for that purpose, let such discrimination be made as will foster and encourage our domestic manufactures. All parties ought to be satisfied with a tariff for revenue, and discrimination for protection. On the other hand, Mr. Polk was a free trader, though not an out- spoken opponent of protection. George M. Dallas of Pennsylvania, a professed protectionist, was the nominee of the Democratic party for Vice-President. In the North was heard the cry, " Polk, Dallas and the Tariff of '42." In the South it was changed to " Polk, Dallas and Free Trade." The campaign and election of Polk was the greatest fraud, the most stupendous imposition ever perpetrated in American politics. First, Polk entered into an intrigue with the Southerners, Digitized by Microsoft® " THE GREATEST WANT OF CIVILIZED SOCIETY IS THE MARKET FOR THE EXCHANGE AND SALE OF ITS SURPLUS PRODUCE- THIS MARKET MAY EXIST AT HOME OR ABROAD, BUT IT MUST EXIST SOMEWHERE IF SOCIETY PROSPERS. THE HOME MARKET IS FIRST IN ORDER AND PARAMOUNT IN IMPORTANCE." HENRY CLAY (Speech before Congress, 1842). Digitized by Microsoft® Digitized by Microsoft® PENN8TLTANIA CARRIED BY FRAVD. 393 satisfying them that he would carry out their wishes; in Pennsylvania and other parts of the North he posed as the friend of protection. Such a course could not succeed in these days, but it must be remem- bered that 1844 was not in an age of the telegraph, railroad and means of quick communication as they exist to-day. It took weeks for infor- mation to travel long distances, and the fraud was not discovered until too late. In 1843, when a candidate for Governor of Tennessee, he issued a circular letter addressed to the people of that State in which he said: I have steadily, during the period I was a Representative in Congress, been opposed to a protective policy, as my recorded vote and public speeches prove. Since I retired from Congress, I had held the same opinion. In the present can- vass for Governor I have avowed my opposition to the tariff act of the late Whig Congress, as being highly protective in its character, and not designed by its authors as a revenue measure. Early in the campaign the people of Pennsylvania were much con- cerned on the subject of Mr. Polk's views on the tariff. The fact that eight Democratic members of that State had voted to sustain the act of 1842, its large electoral vote, its vast interests dependent for their pros- perity on protective legislation, and the known protective sentiments of its people, was a condition with which the Democratic party must reckon, for without its support Polk must be beaten. So every en- deavor was made by the Democratic party to capture the State. In June, 1844, Judge Kane of Pennsylvania addressed a communication to Mr. Polk asking for his views on the tarifif question, and Polk replied in a letter which was published and widely circulated by the Democratic party throughout the State, expressing views materially different from that of other communications on the same subject intended for publica- tion in other States, and especially from those opinions set forth in the circular mentioned of the year before. Polk said to Judge Kane: In adjusting the details of a revenue tariff, I have heretofore sanctioned such moderate discriminating duties as would produce the amount of revenue needed, and at the same time afford reasonable incidental protection to our home indus- try. I am opposed to a tariff for protection merely, and not for revenue. Acting upon these general principles, it is well known that I gave my support to the policy of General Jackson's administration on this subject. I voted against the tariff act of 1828. I voted for the act of 1832, which contained modifications of some of the objectionable provisions of the act of 1828. As a member of the Committee on Ways and Means of the House of Representatives, I gave my assent to a bill reported by the committee in December, 1832, making further modifications of the act of 1828, and making also discriminations on the imposi- tion of the duties which it proposed. That bill did not pass, but was superceded by the compromise bill, for which I voted. In my judgment, it is the duty of the government to extend as far as it may Polh posing in Pennsyl- vania as Protec- tionist. Digitized by Microsoft® 394 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. be practicable to Jo so, by its revenue laws and all other means within its power, fair and just protection to all the great interests of the whole Union, embracing agriculture, manufactures, commerce and navigation. This letter, which received a general circulation through the State of Pennsylvania, was supposed to have aided essentially in securing to him the vote of that State. That the Kane letter was designed, written and circulated for the sole purpose of perpetrating a political fraud on the people is unques- tioned. The two letters quoted show the man fully. But a Presi- dency was at stake, and to be honest meant defeat. The Kane letter was a mass of ambiguity, skillful evasions and meaningless assertions. Not satisfied with this, however, reports were circulated in the North by Democrats to the effect that Clay was not as sound a protectionist as Polk, and if elected would advocate the repeal of the tariff act of '42. Mr. Mcllvaine of Pennsylvania, in addressing the House at the next session, read the following circular which was issued by the Dem- ocrats and extensively circulated throughout Pennsylvania during the campaign : Democratic trick to defeat Clav. The Tariff Whig Deception. — Henry Clay, by his introduction and support of the Compromise Act arrayed himself in opposition to Potts, Heister, Denny (members of Pennsylvania) and all the representatives in Congress from the manufacturing States, and was considered as having abandoned the protective policy. Henry Clay, from the passage of the Compromise Act down to the pres- ent hour, has never uttered a word in opposition to the principles of that anti- protective measure. James K. Polk has ever pursued a straightforward and consistent course upon the tariff, as well as upon other questions of national policy, and he is now most decidedly and unequivocally committed in favor of a tariff which shall afford fair and just protection to agriculture, manufacture, commerce, etc It was a Democratic Congress that passed the tariff act of 1816, the tariff act of 1824, the tariff act of 1828, which Henry Clay, to please his Southern friends, denounced. It was a Democratic Congress that passed the tariff act of 1832; it was by Democratic votes that the tariff act of 1842 was passed; and it was a Democratic House of Representatives that refused, in 1844, to disturb the present tariff law. In the face of these facts, the Whigs have continued to misrepresent the Dem- ocratic party and their candidate during the whole campaign. " In this manner," said Mr. Mcllvaine, " was Mr. Polk represented throughout Pennsylvania as the tariff candidate, and the Democratic party as the tariff party, while Mr. Clay and his friends were held up as the bitterest enemies of protection." Daniel Webster, in the debate on the Walker tariff of 1846, said: I happened to be in Pennsylvania in October, 1844, in divers villages and counties. I saw the preparations that were going on for the then approaching Digitized by Microsoft® THE PERFIDY OF POLE. 395 elections; and it appeared to me that the Democratic party in Pennsylvania had three prominent, eminent, distinct party favorites. These three favorites were often borne on their flags and banners. I saw them emblazoned in Chester county, and in Schuylkill county, and in other places. The three favorites borne on these banners were, " Polk," " Dallas," and " The Tariff of 1842." I am inclined to think that of the favorites the last mentioned is at this present moment most in favor. I would ask the honorable member from Pennsylvania, himself, whether he has not seen these same banners floating in various places. Mr. Cameron said: I answer the Senator with great pleasure. I attended, perhaps, every Demo- cratic meeting within my reach in that State — and some of them were at places one hundred and fifty miles distant from my home — in order to support the great cause of Democracy; and at all these meetings, the watchwords and the mottoes were "Polk," "Dallas" and (before his lamented death) " Muhlenburg," and "The Tariff of 1842." And after the death of our candidate for the gubernato- rial chair, they were "Polk," "Dallas," " Shunk," and the "Tariff of 1842." Neither of the three, sir, would have got the vote of Pennsylvania without the last— the tariff of 1842. Much as we disliked Mr. Clay, and sincerely as we were attached to the Democratic party, all would have gone for him before we would have relinquished the tariff of 1842. The result was very close, Polk having a popular plurality of only 38,185 votes in a total of 2,698,611. If a portion only of the votes given to James G. Birney had been cast for Clay, the electoral vote of New- York would have been counted for the Whig candidate, and Henry Clay would have been elected. It is by such narrow margins that the fate of the nation has more than once been decided. However, Polk and Dallas were elected, and we paid the cost. The perfidy of Polk cannot be too emphatically stated. He was fully aware of the intentions of the Southern leaders should they come into power. He knew they had abandoned no part of their free trade desires. That Mr. Polk gained his seat by dishonest methods cannot be gainsaid. His own historian admits as much, and of course his party friends and leaders were not ignorant of the deceit that was being perpetrated upon the people. The campaign has been dwelt upon for the reason that it was fraught with consequences most disastrous to the nation. A large majority of the people in 1844 were protectionists, and yet the free traders won. The attack upon our protective policy, under which the country was then in a most prosperous condition, was now be- gun with new vigor. The Overthrow of Protection by the Act of 1846. James K. Polk, in his inaugural address of March 4, 1845, gave Plauina tariff for oolitlcs only. Clav beaten 61/ the atoli- tlonist vote. Digitized by Microsoft® 396 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. Committed to the doctrines of Free Trade. Encouraae imoorts : suvvress home man- ufactures. his full approval to the free trade program. He rejected every principle of protection, repudiated his letter to Judge Kane, and showed himself ready to aid in the consummation of the fraud by which his election was secured. Mr. Polk chose as his Secretary of the Treasury the dis- tinguished free trader, Robert J. Walker, of Mississippi. His Attorney General and Postmaster General were also Southerners and free traders. The administration became, as it was intended it should be- come, a sectional one, and hostile to the manufacturing interests of the country. " Cotton was King." The Democratic party now became committed to the doctrines of free trade, and in applying them to the conditions in the United States was in perfect harmony with the British economists and statesmen of that school. Professor W. G. Summer of Yale '■, a recognized authority on the subject, gave the following definition of free trade: The term " Free Trade," although much discussed, is seldom rightly defined. It does not mean the abolition of custom houses, nor does it mean the substitu- tion of direct for indirect taxation, as a few American disciples of the school have supposed. It means such an adjustment of taxes on imports as will cause no diversion of capital from any channel into which it would otherwise flow, into any channel opened or favored by the legislation which enacts the customs. A country may collect its entire revenue by duties on imports and yet be an entirely free trade country, so long as it does not lay those duties in such a way as to lead anyone to undertake any employment, or make any investment he would avoid in the absence of such duties ; thus the customs duties levied by England, with a very few exceptions, are not inconsistent with her profession of being a country which believes in free trade. They either are duties on articles not produced in England, or they are exactly equivalent to the excise duties levied on the same articles if made at home. They do not lead anyone to put his money into the home production of an article, because they do not discriminate in favor of the home producer. The great principle underlying the policy of free trade as embraced by the Democratic party was to fix the duties on imports at such a rate as would encourage the importation of competing commodities and sup- press the manufacturing of the United States. The"duties were to be so low that no one would be led " to undertake any employment or make any investment he would avoid in the absence of such duties,"( knowing full well that without discriminating protective duties no one would undertake the establishment of manufactures or invest capital in them in the United States. The free trader, then, holds that foreign manufacturers should be permitted, without restrictions, and with perfect freedom, to ship all manufactured articles into the United States and sell them in competi- tion with American manufactures, even though such competition would 1 Protectionism, p. 17. Digitized by Microsoft® FREE TRADE AND PROTECTION DEFINED. 397 result in permanently supplanting the manufacturing interests of the United States, or in reducing the rate of wages and cost of production to the level of competitors in foreign countries. This principle applies also to the imports of farm produce, as well as all raw materials, al- though it would have a like effect on sheep raising, mining and agricul- ture. It is contended that all articles should be manufactured and everything grown in those countries where the greatest facilities for cheap production exist, in order that everything may be produced at the lowest possible cost, regardless of the effect on wages and the social conditions of the masses. No favoritism should be shown to labor by legislation, securing to it the advantage of higher wages than those paid in other countries. This policy regards labor as an economic tool, to be utilized in the production of cheap commodities in the same way as raw materials, a fertile soil and a favorable climate. It will be observed that this policy does not necessarily involve the removal of all duties on competing imports. So long as the duty is so low that it does not discriminate in favor of the home producer ; so long as it does not (under existing conditions) secure to domestic labor and capital an advantage over foreign rivals; so long as it does not encourage the building of factories or the employment of labor, it is a free trade duty. A duty of 20 per cent may produce revenue, but if the foreign manufacturer of an article can pay this duty and still sell the article in our market cheaper than we can make it at our present wage rate, it is a free trade duty. Protectionism is the very opposite of free trade. Senator George F. Hoar gave the following concise definition of protection: Protection, as used in our political and economic discussion, is the imposing of such duties on the importation of foreign products as will prevent a domestic producer of the same article from having his business destroyed by the competi- tion of the foreign import, while he establishes it; or will enable him to maintain the production, without its being destroyed or rendered unprofitable by the com- petition of the foreign article after it is established, when he could not otherwise so establish or maintain it; or the enabling him to pay larger wages in such production than he could pay if he were subject to the foreign competition. The protectionists of the United States were striving first to pro- vide for the welfare of their own people. They believed it to be the first duty of our government to promote the moral, intellectual and ma- terial welfare of the American people. They make war on no one; they are not trying to undermine and destroy the civilization and indus- tries of other nations, by flooding their markets with wares made by de- graded and half-paid labor. The protective barriers are erected as a means of defence to maintain industrial peace and tranquillity, to pre- vent attacks from vicious combinations, and to guard against inequality and injustice. When duties are Free Trade duties. Digitized by Microsoft® SECTIONAL OPPOSITION TO TBE AMERICAN SYSTEM. To guard aaainst ineaualitu and in- justice. The essence of protection, then, is, that by such duties on imports, capitalists are induced to invest their money in the establishment of a greater variety of industries, which give employment to a large number of people at higher wages than otherwise would be paid, thereby pro- viding the masses of the people with greater incomes, and making it possible to sustain a larger population, procure a wider diversity of industries, a more perfect division of labor, and the attainment of a greater degree of industrial development than otherwise could be se- cured. The agriculturist exchanges his products for home manufac- tured goods, saving waste in transportation and securing to domestic trade the full advantage of the exchange. The result attained by this policy is the greatest triumph of political economy. By increasing the spendable income of the people, much wider fields of business are opened, a more equal distribution of wealth is assured, and the people, as a whole, in the end are enabled to accumulate more property and receive greater returns for their exertions than through the narrow and restricted development of resources permissible under free compe- tition. President Polk, in his inaugural address and in his message to Congress in December, 1845, placed the Democratic party squarely within the principles of free trade as subsequently defined by Professor Sumner, and as stated by Secretary Walker in two elaborate reports to Congress, in which he defended the cause of free trade with great skill and ingenuity. President Polk, in his inaugural address, said: Reoentw the ohiect: tirotection the inci- dent. 4 In expressing this power (of taxation) by levying a tariff of duties on im- ports for the support of government, the raising of revenue should be the object and protection the incident. To reverse this principle and make protection the object and revenue the incident, would be to inflict manifest injustice upon all others than the protected interests. Who were the " all other interests " not protected ? They were the planters who refused to avail themselves of the opportunities secured to them equally with all other citizens, and the importers and distribu- tors of foreign wares who thrived by trade and marketing foreign wares. This was a reassertion of the principle announced by the free trade convention of 1831 and the plan of tariff revision proposed by Mc- Duffie and Hayne in 1832. It was a declaration that the protective policy must be overthrown. Both in the President's message and in the Report of Secretary Walker the administration had given its own definition of what, accord- ing to its understanding, was a "revenue standard" of duty; and this was the language of the President's message; Digitized by Microsoft® THE RE7ENVE STANDARD DEFINED. 399 The precise point in the ascending scale of duties at which it is ascertained from experience that the revenue is greatest, is the maximum rate of duty which can be laid for the bona fide purpose of collecting money for the support of government. To raise the duties higher than that point, and thereby diminish the amount collected, is to levy them for protection merely, and not for revenue. So long, then, as Congress may gradually increase the rate of duty on a given article, and the revenue is increased by such increase of duty, they are within the revenue standard. When they go beyc/nd that point, and, as they increase the duties, the revenue is diminished or destroyed, the act ceases to have for its ob- ject the raising of money to support government, but is for protection merely. Mr. Stewart of Pennsylvania, in discussing the effects of the revenue standard on those engaged in competing industries, said : ^ Here was the rule by which duties were to be laid. The moment an American manufacturer had succeeded in supplying our own market, and began to thrive in his business, that would be a proof that the duty was too high for revenue. It was no longer a revenue duty, but a protective duty, and it must forthwith be reduced. As the American furnished more goods to the country, less foreign goods would be imported, revenue would be diminished, and the duty must come down; that was the rule. And now, Mr. Stewart would ask, under such a rule as this, what man in his senses would invest a dollar in manufactures? What was the prospect before him? The moment when, by industry and enterprise, he would succeed in getting the better of his foreign competitor, down with the duty. If a shoemaker or a hatter, by making better or cheaper hats or shoes, had got possession of the market, the eye of this free trade system was fastened on him like a vulture. The Secretary found he was doing too well, and the duty must be reduced to let in the foreigner. Such was the plan of this administra- tion. The mechanic, finding his protection thus diminished, and having no other resource but his business, would go on to work longer and to work harder than before, and when, by working out of hours, he had contrived to get over the opposition of his own government, and began to get together a little profit, the same doctrine would repeat the process; the duty would be evidently too high; down with it! The "poor man" would now take his children from school and bring them into the shop. They, too, would now work, while the man himself worked harder and harder. But what would be the result? It would only bring him under the Secretary's rule; the duty must be again lowered, and still go on to be lowered, more and more, till at last this free-born American must be ground down by the action of his own government to the degraded and wretched condi- tion of an English pauper or Russian serf. The moment an American laborer succeeded by his exertions in shutting out foreign competition, the foreigner must be let in and put over him. What sort of rule was this? For whom would one suppose it to be made? For the American manufacturer, or the European? Clearly it was a rule for the benefit of the foreigner. And could an independent and intelligent American consent to live under such a rule? The moment the American rises to his feet, in this struggle with foreigners for the American market, he is to be knocked down by this executive poker. And this was their American system. Mr. Stewart insisted it was a British system. It was just such a system as Sir Robert Peel would have recommended, could he have spoken through President Polk as his trumpet; its practical, its universal opera- l Dec. 9, 1846, First session 29th Congress, 1846, p. 34. The revenue standard of duties. The ven- altu of ioina too well. Digitized by Microsoft® 400 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Bow he did love the moor mant tion would be what he had just now described. And would the House endorse a system like this ? This was the far-famed " free-trade " system, now for the first time promulgated by an American fiscal officer. Oh how this tender-hearted Secretary did love the " poor man " ! His love was so great that he would bring him down to a level with the British paupers I Since the improvements in steam, the cost of transportation is comparatively nothing. Take off the duty, and the British workshops would be brought to our door. Suppose these British laborers were in Alexandria, working at twenty-five cents; was any man so blind as not to see that they must soon break down the workmen of Washington? The employer would soon begin to talk to them in a very intelligible language : " My competitors in Alexandria get labor for twenty- five cents a day, and you must take the same or quit." Now, where was the difference, whether the distance was a little greater or a little less? The prac- tical operation of the system would be just the same. And this was the blessed system of free trade ! The workmen of England and France would work cheaper than ours, and free trade doctrine held that we must buy wherever we could buy the cheapest. Down went the duty, in came foreign goods, out went American money; and out and out it went till we had no more money to send, and the people and their government became bankrupt together. And now Mr. Stewart would ask the members of this committee, and his countrymen generally, whether the adoption of such a plan would not be equivalent to passing a law that hence- forth no further capital should be invested in manufactures? It was of the nature of a notice beforehand, and it ran in this wise : " Gentlemen, you may invest your money in such a way as you deem best; but we here notify you that, as soon as you shall have supplied the American market, and we find that, in consequence of your success, imports begin to diminish, the duties must be re- duced, and foreign goods must be let in, until we get revenue enough to pay all government oflScers." With such a notice before him, who would engage in manufactures? Who would invest the capital he had received by inheritance, or had accumulated by his own enterprise and toil, with the certainty before his eyes that, just as soon as he began to gather a little strength, to acquire greater skill to improve the modes of labor, and to realize its reward by getting the better of foreign competition, he must be knocked down, and the foreigner let in to ruin him ? The doctrine was this : we must have revenue ; our salaries must be paid, and revenue must be had; and you (the people) must not manufacture, because, if you do, we shall not get as much revenue. He put it to gentlemen to show him whether this would not be the plain operation of the rule. Who would enoaae in manufao- turing. President Polk said further, not as a qualification, but to strengthen the principle enunciated, that : In levying duties for revenue it is doubtless proper to make such discrimina- tion within the revenue principle as will afford incidental protection to our home interests. It was urged by many Democrats that duties imposed according to the revenue standard would incidentally, or to the extent of the duties, aiford a degree of protection. In defining the standard for fixing duties, President Polk also said: It is conceded, and experience proves, that duties may be laid so high as to Digitized by Microsoft® TEE REVENUE PRINCIPLE. 401 diminish or probihit altogether the importation of any given article and thereby lessen or destroy the revenue which, at lower rates, would be derived from its importation. Such duties exceed the revenue rates and are not imposed to raise money for the support of the government. This is a repudiation of the idea that duties imposed according to the "revenue standard" may afford some incidental protection. How could incidental protection or any protectiorf whatever exist unless the duties were high enough to check or restrict importations? As soon, however, as they operated to diminish imports a loss of revenue would result, and the essential principle of a free trade or revenue tariff is violated. The suggestion of incidental protection was a deception practiced in the discussion of the question to relieve the enemies of our industries from the odium attached to " free trade," and was made to deceive and mislead the people to secure partisan ends. What was the revenue principle? No better expression of it has been given than that heretofore quoted from John C. Calhoun. A reve- nue duty encourages imports, and a protective duty diminishes them. The one stimulates purchases abroad ; the other stimulates purchases at home. The one is unfriendly to home industries; the other promotes and fosters them. The one closes mills in America, and the other opens and keeps them in operation. The one forces the home manufacturer to reduce wages, and, if low enough, to discharge his help altogether ; the other enables the home manufacturer to give full employment and to increase the wages of labor. Moreover, a revenue tariff such as President Polk advocated is a tax pure and simple. It is imposed for no other purpose and yields no other benefits to the people. A duty on tea and coffee which are produced abroad, and are not affected by the competition of a similar article of domestic growth, costs the consumer the foreign price, with freight and commissions and duty added. The same was true of a duty on for- eign silks, linens, fine woolens and cottons and all other manufactured fabrics and articles, the like of which were not then made in the United States. President Polk then reiterates the proposition that " to tax one branch of our home industry for the benefit of another would be unjust " ; thus showing that it was proposed to remove every vestige of protection from the labor and capital of the country, and assuming that the public welfare would be promoted and injustice avoided by reducing the people of the United States to the industrial level of the Old World. McDuffie and Hayne, the most brilliant and talented advocates of free trade who had participated in the debates up to this time, stated their propositions and urged their reasons against the protective policy with a degree of frankness and honesty which commands the admiration To deceive and mis- lead the people. Revenue 'ariif a tax pure and simple. Digitized by Microsoft® 402 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Must Se guarded in their expres- sions. "Walker a snecial pleader tor importers. of their critics. They boldly advocated the policy of free trade upon undisguised free trade principles. They conceded that protection was necessary to develop the resources of the country, to establish a system of manufactories, and to secure the prosperity of the free States, and that such prosperity could not be secured and continued without pro- tective duties. They contended, however, that free trade was better for the peculiar and especial interests of the Southern people, and upon sectional grounds based their opposition to protection. The revulsion of public sentiment in the election of 1840, the repeal of the Compromise Act, the restoration of protection, and the fact that 28 Northern Democratic representatives in 1844 voted to sustain the act of 1842, taught the leaders of the Democratic party that they must be guarded in their expressions; that they must cease to use the term "free trade"; and instead of openly and frankly avowing their real purpose they must resort to false assumptions, deceptive arguments, mis- represent the facts of history, and indulge in a liberal use of prophecies and appeals to prejudices. This work was most admirably performed by Mr. Walker in his famous Report made to Congress December 3, 1845. The Report was a plea for agriculture and for a removal of all so- called restrictions. He made the idea look plausible to some that we were to feed the world with our foods and clothe them with our cotton. England was to repeal her duties on agricultural produce and buy our farm produce ; we were to repeal our protective laws and buy her man- ufactures. Secretary Walker performed the double task of presenting the propositions underlying the free trade program and at the same time of attempting to enlighten the American people on the subject of pro- tection and its alleged ruinous effects on the country. His criticisms of the protective policy were so unfair and contained so many misrepre- sentations of its purposes and objects, and of its operation and effects on revenue, wages, prices and the general welfare of the country, that it called forth at once a storm of criticism both in Congress and in the press which laid bare its partisan character, and instead of revealing the economist and the statesman, the special pleader for the importers, foreign manufacturers and sectional interests was exposed. The following general principles as a basis for the revision of the tarifif were stated: 1. " That no more money should be collected than is necessary for the wants of the government, economically administered." The wants of the government, as here used, had a distinct signifi- cance in the Democratic program. It was employed to express their hostility to appropriations for internal improvements designed to aid in the development of the country. Digitized by Microsoft® SECRETARY WALKER'S REPORT. 403 2. " That no duty be imposed on any article above the lowest rate which will yield the largest amount of revenue." The " lowest rate " was that rate which would give the greatest en- couragement to competing imports and inflict the greatest injury on domestic manufactures. 3. " That below such rate, discrimination may be made, descending in the scale of duties; or, for imperative reasons, the article may be placed in the list of those free from all duty." If more revenue is produced than is required to accomplish the ends stated, duties are to be reduced or articles placed on the free list, but in no case are the duties to be increased and importations checked. 4. " That the maximum revenue duty should be imposed on lux- uries." The idea of placing the highest duties on luxuries was in harmony with their hostility to industries; besides, it enabled them to practice the deception so liberally indulged in, that necessaries of life should bear the lowest rate of taxation, when in fact this method of imposing duties would transfer the manufacture of all ordinary articles of neces- sity from the United States to the Old World and give employment to foreign instead of American labor. 5. " That all minimums and all specific duties should be abolished, and ad valorem duties substituted in their place, care being taken to guard against fraudulent invoices and undervaluation, and to assess the duty upon the actual market value." The substitution of ad valorem for specific duties was the most effectual method of encouraging that system of false invoices and under- valuations which operated to still further reduce duties and bring about a closer approach to absolute free trade. 6. " That the duty should be so imposed as to operate as equally as possible throughout the Union, discriminating neither for nor against any class or section." This proposition announced the very essence of free trade. Pro- tective duties were held to discriminate in favor of the so-called pro- tected classes. The suggestion of any degree of protection is inconsistent with the essential principles embodied in Secretary Walker's Report. The least element of discrimination in favor of American labor and capital was held to work an injustice to those employed in other occupations and in violation of the alleged principle of equality said to be secured by the Constitution. The slightest tendency to increase wages, to enhance the price of farm produce, or to foster the establishment of industries in the United States, was condemned. The Democratic party now openly avowed its purpose to act in A method of encour- aging under- valuation). Digitized by Microsoft® 404 SECTIONAL OPPOSITION TO TBE AMERICAN SYSTEM. Co-operat- ing with British Free Traders. False in- ducements to farmers. harmony with the free trade policy which was then being formulated in Great Britain. In 1846 England, under the leadership of Richard Cobden and Sir Robert Peel, abandoned the system of protection which had been vigorously adhered to since the reign of Queen EHzabeth, by repealing all duties on farm produce and many manufactured articles. Other duties on manufactured articles were removed in 1853, and by 1860 the fiscal regulations of the government were made to conform to a consistent free trade policy. All that now remained for England to do in order to monopolize the markets of other nations was to induce them to repeal their protective duties and open their ports to the ad- mission of her manufactures. Richard Cobden and his associates well understood the inability of the American manufacturers to resist the British competition. The free traders of the United States joined hands with foreign manufacturers, and were carrying out the very schemes Mrhich brought about the abandonment of protection in England. The leaders of the free trade movement in Great Britain had precise infor- mation upon the situation and were able to definitely predict just what would happen when the protective barriers of the United States were removed. They knew they would get the lion's share of the trade and that they would be able to suppress our manufactures. This is proven by the many statements of Englishmen which have been quoted in a preceding chapter, and especially by Mr. McCulloch's declaration that "nothing but the aid derived from restrictive regulations and prohibi- tions will be effectual to prevent the total destruction of their establish- ment in the countries where they are set up. . . . It is ludicrous^ indeed, to suppose that a half-peopled country like America . . . should be able successfully to contend in manufacturing industry imth an old-settled, fully-peopled and very rich country like Great Britain." Secretary Walker knew, as other free traders well knew, that the removal of protective duties in the United States would result in busy factories in England and idle factories in America. This, however, was the purpose sought to be accomplished by both the free traders in Eng- land and their allies in the United States. Secretary Walker endeav- ored to win the support of the farmers of the Mississippi valley by hold- ing out the inducement that a great market was to be opened abroad for their produce. He argued that : We have more fertile lands than any other nation, can raise a greater variety of products, and, it may be said, could feed and clothe the people of nearly all the world. The home market of itself is wholly inadequate for such products. They must have the foreign market, or a large surplus, accompanied by great depression in price, must be the result. The States of Ohio, Indiana and Illinois, if cultivated to their fullest extent, could of themselves raise more than sufficient food to supply the entire home market. Missouri or Kentucky could more than Digitized by Microsoft® SECRETARY WALKER'S REPORT. 405 supply it with hemp; already the State of Mississippi raises more cotton than is sufficient for all the home market; Louisiana is rapidly approaching the same point as to sugar; and there are lands enough adapted to that product in Louisi- ana, Texas and Florida to supply with sugar and molasses nearly all the markets of the world. If cotton is depressed in price by the tariff, the consequence must be a comparative diminution of the product. . . . Agriculture is our chief employment; it is best adapted to our situation, and if not depressed by the tariff would be the most profitable. We can raise a larger surplus of agricultural products and a greater variety than almost any other nation and at cheaper rates. Remove then from agriculture all our restrictions, and by its own unfet- tered power it will break down all foreign restrictions, and, ours being removed, would feed the hungry, and clothe the poor of our fellow men throughout all the densely peopled nations of the world. That Secretary Walker was in close touch with the free trade party in England and had definite information as to what was then going on in parliament is shown by his statement that If we reduce our tariff the party opposed to the corn laws of England would soon prevail and admit all our agricultural products at all times freely into her ports in exchange for her exports. And if England would now repeal her duties upon our wheat, flour, Indian corn and other agricultural products, our own re- strictive system would certainly be doomed to overthrow. If the question is asked, who shall begin this work of reciprocal reduction? it is answered by the fact that England has already abated her duties upon most of our exports. She has repealed the duty upon cotton and greatly reduced the tariff upon our bread- stuffs, provisions and other articles; and her present bad harvest, if accompanied by a reduction of our tariff, would lead to the repeal of her corn laws and the unrestricted admission at all times of our agricultural products. The manufac- turing interest opposes reciprocal free trade with foreign nations. While Secretary Walker was holding out to the American farmer the alluring prospect of a great market in England, Richard Cobden was endeavoring to allay the fears of the British agriculturists by con- tending that wheat brought from Russia and America would be subjected to such high charges for transportation and cost of marketing that they would, except in years of short crops, continue to supply their own market. Secretary Walker devotes much of his report to a criticism on the protective policy. He at first argues against its constitutionality, but in no way attempts to answer the interpretation placed on the instru- ment by James Madison and those who participated in its adoption. He states the object of the protective system as follows : A protective tariff is a question regarding the enhancement of the profits of capital; that is its object, and not to augment the wages of labor, which would reduce those profits. It is a question of percentage and is to decide whether money invested in our manufactures should, by special legislation, yield a profit The work of recip- rocal re- duction. Walker's hatred of protection. Digitized by Microsoft® 406 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Vigorous reply to Walker report. of 10, 20, or 30 per cent, or whether it should remain satisfied with a dividend equal to that accruing from the same capital when invested in agriculture, com- merce or navigation. Shortly after the Report was presented to Congress the National Intelligencer published a review of the document by " a member of the twenty-second Congress," from which we copy in a condensed form a few paragraphs. In answer to the above quotation from the Secretary's Report the writer stated: It is difficult to say whether the above paragraph betrays a greater degree of ignorance of the objects for which the protective principle was adopted and in- grafted into our revenue system, or of the most common and universally admit- ted principles of political economy. The protective system was not introduced or advocated by the possessors of capital, nor for their benefit. It is a well- known fact that they were, with few, or any exceptions, opposed to it. It was the patriotic democracy of the country which advocated and introduced the sys- tem. What was the argument? The country is wholly agricultural and com- mercial. In the existing policy of the world, we produce more than we can sell, except at prices miserably low. We have to buy our clothing and foreign productions from abroad, at their own prices; in payment of which we are constantly being drained of our specie, to the derangement of our circulating medium and the paralysis of all business. The proposition is to hold out induce- ments to the merchants to withdraw a portion of their capital from foreign trade, and employ it in manufactures and the domestic trade of their distribution. We shall thus withdraw a portion of our labor from agriculture, and convert pro- ducers into consumers. We shall thus furnish ourselves with at least a portion of the manufactures which we require, by the labor of our own citizens, and pay for them with those productions which we now find no market for, or a poor one. We apprehend the question was never stated in these discussions, whether there was not danger that those who should be drawn into the new occupations would make too much money; because in those days it was considered a settled princi- ple, confirmed by all experience, that any business yielding profits above the average rates is sure to attract capital and labor into it, until the profits fall to the general level, or more usually for a time below it. At any rate, the protective policy was adopted, and men of business employed their earnings in the new occupations to which they were invited by the policy and laws of the country, doubtingly and hesitatingly at first, but afterwards more freely and confidently. The most successful branch, and the one which has absorbed the greatest amount of capital, is the manufacture of cotton. The possession of the raw material on the spot, and the peculiar adaptation of ma- chinery to produce great results in this manufacture, soon made it evident that the cotton manufacture was rapidly to become one of the leading interests of the country. Capital went into it freely and confidently. Its rapid extension has no parallel, and is only equalled in the corresponding reduction in the price of its fabrics. Its success furnishes the only ground of its denunciation. The manufacturers are growing too rich. That is the burthen of the report. Special legislation in their favor! "Another form of privileged orders." We regret to see a high officer of the government descending to use the stereotyped slang of the party newspapers. Digitized by Microsoft® SECRETARY WALKER'S REPORT. 407 The Secretary spoke from the standpoint of the planters who, blinded by sectional prejudices, were unable to comprehend the benefi- cial influences of protection. The objections of the planters urged against the American System sprang from partisan and sectional zeal engendered by the absorbing interest they had in the perpetuity of the institution of slavery. It was not a time for a calm and rational con- sideration of great economic principles formulated to promote national welfare. Even the policy of free trade, which they showed such haste in supporting, was at that time untried and a departure from the practice of the world's great nations. The principles of free trade were first advocated by those engaged in foreign trade, the vendors and distributors of the productions of all countries; men engaged in what Adam Smith called the round about trade; that trade which is the least profitable of any to a nation. They planted themselves in our seacoast cities, allied themselves with the mer- chant princes and shipping interests, and held an absolute monopoly of our markets for the supply of all manufactures. It mattered not to them what country the goods they sold came from. The foreign manu- facturers, favoring protection at home for themselves, made common cause with the traders for the supply of our markets and joined in the circulation of free trade literature published solely for foreign con- sumption. The Secretary's statement of the essential purpose of the protective system is disproved by the history of his own country, with which he must have been familiar. The statement is a reflection on the patriotism and high purposes of Washington, Hamilton and the great statesmen who established our constitutional government. Protection was adopted at the formation of our government in re- sponse to a universal demand of a united people to promote the general welfare of the people of every State and section of the nation, North, South, East and West. It inspired the patriots of the Revolution to resist British oppression. It was written into the Constitution by a na- tion of farmers, and embodied in tariff laws as a means of promoting the material welfare of the whole people. It never had the slightest sectional purpose or aspect, although by reason of local conditions the people of certain States more readily availed themselves of its great benefits than others. Moreover, the protective policy arose from the experience of England and the nations of western Europe in their en- deavor to cultivate the industrial arts, utilize their native resources ; to advance the civilization and well-being of their people. It was by this policy that England achieved her industrial supremacy. It was sanc- tioned by centuries of experience and supported by the greatest states- men and economists of the Old World. It was simply applied by the From the standpoint of the planters and im- porters. In responst to a uni- versal de- mand. Digitized by Microsoft® 408 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. people of the United States with the same motives which induced them to adopt the common law of England and many other beneficent institutions of that enlightened nation. Another assertion of Mr. Walker's is that "The wages of labor have not augmented since the tariff of 1842, but they have in some cases diminished." The reason assigned by the Secretary for his sup- posed fact is entitled to some notice. He says: An illogi- cal appeal to labor. When the number of factories is not great the power of the system to regu- late the wages of labor is inconsiderable; but as the profit of capital invested in manufactures is augmented by the protective tariff there is a corresponding in- crease of power, until the control of such capital over the wages of labor be- comes irresistible. As this power is exercised from time to time we find it resisted by combinations among the working classes by turning out for higher wages or for shorter time ; by trades unions ; and in some countries, unfortunately, by violence and bloodshed. But the government by protective duties arrays itself on the side of the manufacturing system, and by thus augmenting its wealth and power soon terminates in its favor the struggle between man and money — between capital and labor. That is to say, that by diminishing the inducement to build facto- ries; by reducing the amount of capital invested in industries which employ labor; by destroying the demand for labor; by creating a situa- tion in which two men are competing for one job, the more independent labor will become and the more likely it will be to get full employment and good wages. As one protectionist said, " If a greater solecism was ever put upon paper we should be glad to see it." And yet the report containing such economic errors was reprinted by order of the House of Lords, and by free traders is held to rank with Hamilton's Report on Manufactures. Mr. Rockwell of Connecticut, in addressing the House of Repre- sentatives on the act of 1846, replied to the contentions of the Secretary that the manufacturers made exorbitant profits ; that the wages of labor had not advanced under the act of 1842, and the reasons assigned there- for. He said: Competi- tion sure to reduce prices. The outcry is often made against the capitalists engaged in the manufacturing business; and the Secretary of the Treasury joins in and encourages the idle clamor. It is true, that for two years the profit of the cotton manufacturers has been large, but not as large as in Great Britain itself, during the same time; and the result has been what it always will be, that a large number of persons are now rushing into business (cotton manufacturing), and before this Congress shall cease to exist — if there could be any security that the tariff would be undis- turbed — the number of spindles in operation would be so per cent more than there were a year since. Does not everybody know that, with the enterprise, and skill, and energy of the people of this country, no one branch of business can for any length of time exceed in profits the average of the profits of other Digitized by Microsoft® MR. ROCKWELL'S SPEECH. 409 branches? Competition is sure to reduce prices, and profits. The result is an inevitable one; and to contend the contrary is to show the grossest ignorance, not only of the operations of trade, but of the operations of the human mind, and of the motives which govern it. How absurd, then, is it to contend that the object and effect of protection is mainly to benefit capitalists, or that such has been the result in the protection to manufacturing and mechanical labor incidentally afforded. Mr. Rockwell also maintained that the laboring classes had been greatly benefited and the wages of labor had been thereby increased at the same time that the expenses of subsistence had been diminished. He said: Everyone would know beforehand that this must be the result. If increased activity is given to manufacturing or mechanical business, and there is conse- quently an increased demand for laborers, does not every child know that this has a direct tendency to enhance the price of wages? And, on the contrary, if by the reduction of the tariff, or any cause, the business is rendered unprofitable, that the employer must, as a matter of course, close his mill or his workshop, or reduce the price paid to persons employed? But the reckless assertion of the contrary by the Secretary is not only unsound in principle, but untrue in fact. It is not true that the wages of male or female labor have diminished in conse- quence of the protective system; but precisely the contrary is true. [Mr. Rock- well here referred to prices taken from manufacturers' books at different periods, showing that wages had increased.] What the effect would otherwise have been of the opening of the fertile West upon the prices of the productions of the old States, and consequently the wages of labor, anyone can form his own opinion. And it is one of the most surprising and beneficial results of the introduction of manufactures, that a market has been afforded in the neighborhood of the fac- tories for the products of the farmer, and the price has remained nearly the same for the last forty years. On the other hand, every article of clothing has declined in price; so that the dollar now paid to the laborer will purchase from 30 to so per cent more of all the necessaries of life than in 1816, and of the ordinary cotton cloth and calicos, more than three times as much. Now we find on inquiry of the different agencies in Lowell that the average earnings of the operatives have increased full one-third since the disastrous year 1842. But even this does not present a fair view of the full effect of the tariff of 1842 upon labor. At that time the proprietors were receiving no divi- dends and waiting for the action of Congress before deciding to stop the mills. Had Congress adjourned without enacting the tariff more than one-half of the mills in New England would have stopped at once. These facts are well known to persons residing in the manufacturing sec- tions of the country. There is not on the face of the globe a class of laborers so well paid, or who, from their high moral character, education, intelligence and industry, deserve to be so well paid, as those engaged in the various branches of labor in this country. There are no paupers in any of them ; and they are, as a class, unusually free from all forms of vice. You see a thriving, industrious, happy population. The accumulations of labor in the factories are deposited in savings banks, which are now everywhere to be found. The following statement shows the amount of the deposits in the savings banks of Massachusetts, and the income from year to year: Laboring classes greatly beneflted. tabor's savings de- posited in banks. Digitized by Microsoft® 410 SEOTIONAIj opposition to TBE AMERICAN SYSTEM. Untrue that wages of labor have Umin- i^hed. Who have received the money disbursed by capital t Date. 1841 1842 184s Number Depositors. 30.832 41,103 54,256 Amount. $6,485,424 6,675,878 9,214,964 Similar has been the result in my own State, with the operatives of which I am familiar, although I have not in possession the precise amount of deposits or numbers of depositors. If it is said, as it is, that the wages of labor have diminished since the tariff of 1842, I know, personally, from the manufacturing regions from which I come, that it is not true. The same testitmony is also furnished from Lowell, and the same facts exist in every part of the country. Why, sir, there is not a girl in one of those mills who would be guilty of such folly as to suppose for a moment that when the demand for laborers is increased the price of labor will be thereby diminished, or will not be, on the contrary, increased. Some of these political philosophers, these closet politicians, these wise custom-house officers, and learned Secretaries, could learn some very useful lessons in political economy and common sense, too, from the women and children in a cotton mill. I beg to ask these men, after deducting the very moderate profit received by the capitalists, who have received the enormous sums which have been expended in the erection of mills and machinery and the annual prosecution of the work? It is found in the various forms of labor. The brick maker and brick layer, the carpenter, the lime burner, the nail maker, the painter, the glass blower, the stone mason, the common laborer, the farmer who raises the food to feed these men, are first employed; and these, together with the makers of machinery, the builders of the dam and the water wheel, or steam engine, receive what is called the capital paid in and permanently invested; and the laborers in the mills, and the grower of the raw materials, the transporter, and the other intermediate laborers receive as their pay the sum received from the sale of goods after de- ducting a profit, if there is one, to the capitalist. If there is no profit, they receive the whole, and receive something in addition. Yet it is said the poor laborer is enormously taxed for the necessaries of life — especially his clothing— and is thereby grievously oppressed. I do not know a laborer, sir, who would not laugh in the face of any man who should address him with such language. He might be mistaken ; but he would consider such person either very foolish or not very honest. The truth is, the fact is not so. There is no country in the world where the laboring classes can be clad as cheaply and as well as in this country. I make the declaration understandingly; and the most rigid scrutiny will sustain the correctness of it. It is not true that the tariff of 1842 is oppres- sive to the poor. The duties are almost entirely raised from articles which are luxurious. So far as the duties are apparently high upon the coarser cloths, they are entirely inoperative, because we can make such articles cheaper than they can be made abroad; and a conclusive proof of that is that we could under- sell Great Britain herself in China, South America and India, until a duty was imposed to protect English goods. If there is any exception, it is sugar, where the duty is a heavy one; but as tea and coffee are free, it is not oppressive; and the competition in the sugar culture, as in everything else, will soon reduce the price. The Report contains nothing new or original, unless originality may be said to consist in an ingenious and plausible presentation of old theo- Digitized by Microsoft® MR. STEWART'S SPEECH. 411 ries. The criticisms on the system of protection generally and of the law of 1842 and the misrepresentations of the operation of that law had appeared in free trade newspapers and been used by stump speakers to deceive and prejudice the people against the protective system in pre- ceding campaigns for years. The Report, in fact, presents the attitude of the Democratic party upon the tariff question, its criticisms upon the policy of protection, and its reasons for advocating a revenue tariff, as they existed in 1846 and as they have been advocated by members of the Democratic party to this day. Hence a more extended examination of the Report is re- quired. Concerning the rate of duties which would produce the largest amount of revenue the Secretary said: Experience proves that, as a general rule, a duty of 20 per cent ad valorem would yield the largest revenue. Mr. Stewart of Pennsylvania, replying to this erroneous statement, said: But the Secretary of the Treasury had made other very wonderful discov- eries in finance. What did he tell us ? " Experience proves that, as a general rule, a duty of 20 per cent ad valorem will yield the largest revenue." Yes, experience proved that an ad valorem duty of 20 per cent would yield the greatest amount of revenue. Why, what was the great, broad, universally-known experience of the country? We had a tariff of 20 per cent in 1841, '42; and what was our revenue? Not one-half of what it was now. The whole amount of revenue from imports was then about thirteen millions, and this year it was twenty-seven millions. And what was the effect of their 20 per cent horizontal duty? Under its operation the country was prostrated, the government itself was bankrupt, and the people were little better. Yet this man could say, in the face of these well-known facts, and of the American people, any one of whom knew better, that an average duty of 20 per cent yielded the highest amount of revenue ! The Secretary had even gone further yet than this : in his famous circular he had assumed that twelve and a half per cent horizontal was the true revenue standard. The truth was, that the revenue resulted from the tariff, and then followed it. When the tariff was low, the revenue was low. When the tariff is high the revenue is high. That had been the uniform experience of the country, and he challenged gentlemen to show the contrary. It must be so; it could not be other- wise. And why? Because the result of protection was to make the people rich, and taking off protection made them poor. When the people were rich the treasury was full; as the country became poor the treasury was impoverished. The condition of the treasury was, in fact, a political thermometer, to test the prosperity of the country. According to the national prosperity, so would the revenue ever be found. When men were impoverished, could they purchase goods freely? Certainly not. When prosperous, their wives and daughters could purchase costly clothing and rich furniture, and then many g5ods were always imported. But when the country was impoverished, men would wear their old coats, their wives and daughters stayed at home, and mended them, merchants could not get money to import goods, and the treasury was impoverished. Plausible presenta- tion of fallacious theories. When the tariff is high the revenue is higher. Digitized by Microsoft® 412 SECTIONAL OrPOSITION TO TEE AMERICAN SYSTEM. In our great humiliation and distress the tariff of 1842 came in hke a dehv- ering angel; it raised and restored the revenue; it replenished a famished treas- ury; it brought repudiation into disrepute; it made a bankrupt law useless; in a word, it struck the whole country as with the wand of an enchanter, and brought back plenty, and credit, and enterprise, and hope, and public character. Why, then, disturb it? What mischief had it done? The Secretary deprecated agitation; but who agitated the country? It was the Secretary himself and his friends. The friends of protection everywhere cried out, " Give the country re- pose; give the country prosperity and peace under the tariff as it is " Discrimin- ation against aliens complained Oh Increasing the spend- Ible in- come 0/ Americans. The Secretary could not have referred to the experience of other nations, because they furnished no examples of the operation of an ad valorem duty. The laying of specific duties was their universal practice. Referring to the act of 1842, he said: It is unjust and unequal. . . . On some articles the duties are entirely prohibitory and on others there is a partial prohibition. That is, the duties on some articles, such as coarse cottons, afforded adequate protection and were fixed at a higher rate for the sole purpose of accomplishing that end, while on the finer fabrics they were much lower and operated simply to raise revenue. The prohibited fabrics were made in America and sold at a price per yard less than the duty. The others were made by foreign labor. The inequality complained of was between foreign and native labor; the injustice consisted in a dis- crimination against aliens. The Secretary further says : It discriminates in favor of the manufacturer and against the merchant by injurious restrictions upon trade and commerce. The merchants referred to were the importers who were prevented by the duties imposed from flooding the American market with foreign wares to the ruin of our home industries. While the protective policy operated to restrict the importation of certain articles by encouraging their production at home, the ultimate efi^ect, as has been shown in previous chapters, was to so increase the spendible income of the Ameri- can people that their purchases of other commodities would greatly aug- ment the importation of non-competing commodities and ultimately re- sult in fostering and enlarging commerce, and instead of its being an injury to the merchant or importer, it provided a better market for the sale of certain importations. The apparent interest taken in the welfare of free labor by the Democratic party at this time deserves more than a passing notice. In Chapter XII it has been shown that one of the specific objections to the protective policy made by Mr. Walker's party was that it secured to free labor a so-called "legislative privilege" by creating opportunities for Digitized by Microsoft® SECRETARY WALKER'S REPORT. 413 better employment and increased wages. It was boldly asserted that to secure to the free labor of the North a wage rate above that of the cost of slave labor imposed a burden on the planters, who became the con- sumers of the productions of the Northern factories, and granted a bounty to the free labor of the North. The references in the Report to the " poor man " and the solicitude shown for the wage earner were a part of the new political program of the free trade party to prejudice and mislead the laborers of the free States against the protective policy. The Secretary presented the following ingeniously worked out theory to convince the " poor " that they were being taxed by the tariff much higher than the " rich." He said : It discriminates in favor of the rich and against the poor by high duties on nearly all the necessaries of life and by minimums and specific duties, render- ing the tax upon the real value much higher on the cheaper than upon the finer article. Minimums are a fictitious value, assumed by law, instead of the real value; and the operation of all minimums may be illustrated by a single example. Thus, by the tariff of 1842, a duty of 30 per cent ad valorem is levied on all manufactures of cotton; but the law further provides that cotton goods "not dyed, colored, printed, or stained, not exceeding in value twenty cents per square yard, shall be valued at twenty cents per square yard." If, then, the real value of the cheapest cotton goods is but four cents a square yard, it is placed by the law at the false value of twenty cents per square yard, and the duty levied on the fictitious value — raising it five times higher on the cheap article consumed by the poor than upon the fine article purchased by the more wealthy. Indeed, by House Document No. 306, of the first session of the twenty-eighth Congress, this difference, by actual importation, was 65 per cent between the cheaper and the finer article of the 20 cent minimum, 131 per cent on the 30 cent minimum, 48 1-2 per cent on the 35 cent minimum, 84 per cent on the 60 cent minimum, and 84 per cent on the 75 cent minimum. This difference is founded on actual importation, and shows an average discrimination against the poor on cotton imports of 82 per cent beyond what the tax would be if assessed upon the actual value. The operation of the specific duty presents a similar discrimination against the poor and in favor of the rich. Thus, upon salt, the duty is not upon the value, but it is eight cents a bushel, whether the article be coarse or fine — showing, by the same document, from actual importation, a discrimination of 64 per cent against the cheap and in favor of the fine article; and this is to a greater or less extent the effect of all specific duties. The 60 and 75 cent minimums mentioned by Secretary Walker re- lated to cotton yarns; the others to cotton fabrics. That is, on plain white cotton cloth the duty was 30 per cent ad valorem on a minimum valuation of 20 cents per yard, which was equal to six cents per yard, or equivalent to an ad valorem duty of 100 per cent. The consumer purchased the fabric for six cents per yard. It was made in American mills by American labor. The duty was so high that not a yard was imported. Instead of the poor man being taxed 100 per cent, he pur- Inslncere solicitude for the poor. The con- sumer paid neither duty nor tax. Digitized by Microsoft® 414 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. chased the cloth at a price equal to the duty and paid neither duty nor tax. The " rich," as Secretary Walker chose to call a person who purchased the finer grades of these fabrics not made in America, paid a duty of 30 per cent ad valorem if the cloth cost more than 20 cents per yard. Hence the " rich " alone paid " the tax." If discrimination existed, it was in favor of the "poor." The facts demonstrate that if the act of 1842 had remained in force the finer grades of cotton fabrics would soon have been manufactured in American mills by American labor and sold at greatly reduced prices. In a subsequent part of the Report the Secretary distinctly objects to the policy of imposing duties for the purpose of protecting our labor against the competition of the poorly paid labor of the Old World, upon the ground that it levies a tax " on consumers for the benefit of the pro- tected classes." The " protected classes " being the free labor of Amer- ica. He said: To de- grade American laioTi The great argument for the tariff is that, foreign labor being cheaper than our own, the cost of foreign production, it is said, is lessened to that extent; and that we must make up this difference by an equivalent duty and a corresponding enhancement of price in our own market both of the foreign article and of its rival domestic product — thus rendering the duty a tax on all consumers for the benefit of the protected classes. The Secretary did not dispute the contention of the protectionists that wages were lower in Great Britain than in the United States, nor that by protective duties the wages of American labor would rise and be maintained above the wage scale of that nation. He treated American labor as a privileged class securing through legislation a favor to which it was not entitled under the planters' view of that equality guaranteed by the Constitution. It was the purpose of the Democratic party to re- duce American labor to that state of dependence and degradation which held the toiling masses of the Old World in a state of ignorance, pov- erty and subjugation. The Walker Report reiterates the contention of Senator Hayne that the duty is added to the price of the domestic as well as of the imported article upon which it is collected, and that the cost to consumers of the entire consumption of dutiable articles is increased to the full amount of the duties provided by law to be paid. He said : At least two-thirds of the taxes imposed by the present tariff are paid not into the treasury, but to the protected classes. The revenue from imports last year exceeded twenty-seven millions of dollars. This in itself is a heavy tax; but the whole tax imposed upon the people by the present tariff is not less than eighty-one millions of dollars— of which twenty-seven millions are paid to the government upon the imports and fifty-four millions to the protected classes m enhanced prices of similar domestic articles. Digitized by Microsoft® PROTECTION AND PRICES. 415 This estimate is based upon the position that the duty is added to the price of the import and also of its domestic rival. If the import is enhanced in price by the duty, so must be the domestic rival; for, being like articles, their price must be the same in the same market. The merchant advances in cash the duty on the import, and adds the duty, with a profit upon it and other charges, to the price— which must therefore be enhanced to that extent. This proposition as applied to articles of domestic production, al- though disputed by Mr. McDuffie and other representatives of the plant- ers in 1832, and refuted by an overv^helming mass of evidence in the discussion of the subject in the debates of 1828, 1830 and 1832, as showm in Chapters XI and XII, has been constantly urged with great force and ability by the advocates of free trade since 1824. This argument is presented to convince the American people that if the protective policy was abandoned they would obtain their supply of manufactures from the Old World at much lower prices than they are obtained from the do- mestic manufacturers, and thus save many millions of dollars annually. Secretary Walker placed the amount which would have been so saved in 1846 at $54,000,000. This proposition, when confined solely to the subject of prices, involves many erroneous assumptions. It assumes that if the American people had continued to rely upon the Old World for manufactures the prices to American consumers would have been less than those paid to domestic manufacturers in 1846. It also assumes that prices had not been reduced by the introduction of domestic competition. The real question is, not what the American con- sumers were paying in 1846 for domestic articles produced under pro- tection, so much as what they would have paid had no home manufac- tories been created. Had they saved or lost money as the result of the protective policy? What were the facts? Since the adoption of the protective policy they had consumed two distinct classes of manufac-, tures ; one of foreign and the other of domestic production. One class was non-competitive and the other competitive. The prices of both classes of articles had to a greater or less extent fallen in every country. In which class of articles had the greatest decline in prices taken place? It is a most important fact that from 1816 to 1846 a very small decline occurred in the prices of those manufactures which did not come into competition with similar domestic articles, and that a great decline took place in the prices of articles made in America under protection which displaced foreign goods under competition. It has been pointed out that the duties levied on many of the finer fabrics and more complicated arti- cles and wares did not afford a sufficient degree of protection to enable Americans to undertake their manufacture. In 1846 the imports into the United States of the principal non- competing manufactures which under adequate protection could have been manufactured in the United States were as follows : The duty not added to the price. Protection and com- petition reduced ■prices. Digitized by Microsoft® 416 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. Bystematio undervalu- ation iy importers. Cotton goods $i3i530,62S Clocks, watches and parts 1,296,887 Copper and manufactures of I47,iil Linen 5,098,505 Furs 796.311 Glass 686,229 Iron and manufactures of iron and steel 7,835,832 Leather and manufactures of 1,130,064 Silk 12,470,320 Steel, cast, shear, German and other 1,234,408 Wool, manufactures of, except carpets 9,830,307 Total $54,056,599 The amount, however, represents the foreign valuation as stated in the invoices which, under the system of undervaluations so systemat- ically practiced by importers, was at least 25 per cent, or $13,289,144, below the actual foreign value of $67,445,743. These articles, being non- competitive and subject to duties which operated simply for revenue pur- poses, were increased in value when imported by the amount of the duties which averaged approximately 30 per cent, or $16,246,979. To this must also be added the cost of ocean transportation, the commissions of consignees, and the profits of the importers, which, estimated at 15 per cent on the actual foreign value, would amount to $10,116,860. Hence the above importations, entered at $54,056,599, actually cost when placed on the American market $93,809,582. These importations consisted almost exclusively of the finer grades of fabrics and articles the manufactures of which had not been undertaken in the United States because the duties imposed were not sufficient to afford protection. The foreign manufacturers had at all times held the exclusive monopoly of our market for this class of merchandise. They fixed the prices and charged whatever they desired. There was no domestic competition to force down prices. The American consumers were at the mercy of the foreign producers and were compelled to pay exorbitant prices to sup- port foreign labor, foreign agriculturists and foreign capitalists. The evidence presented in Chapters XI and XII shows that the prices of this class of non-competing articles had declined since 1816 only from 15 to 25 per cent, while the prices of those articles produced in American mills under protection during the same period were from 100 to 400 per cent higher in 1816 than in 1846. The facts presented in preceding chapters conclusively prove that if protection had in 1824 been extended to the finer grades of articles and fabrics, capital would have been invested in mills for their manufacture in the United States, skilled artisans would have come from the Old World to engage in their production ; their importation would have been reduced by more than one-half, and the foreign rivals in the struggle Digitized by Microsoft® PROTECTION AND PRICES. 417 which would have ensued to hold a part of the American market would have reduced prices the same as they did in their endeavor against the domestic competition set up to retain the American market for the sale of those coarser articles. If domestic competition had been estabHshed in the finer grades of goods mentioned, the foreign monopoly of our market would have been broken, prices would have been driven down, and the American consumers vi'ould have been saved each year the cost of transportation, importers' profits and commissions. It is safe to con- clude that prices would have been reduced at least 30 per cent. On the basis of the importations of 1846 the annual gain would have been on Importers' profits, etc $io,ll6,86o By reduced prices 20,337,229 Total $30,454,089 That such would have been the result is proven by the great decline in the prices of silks and linens, of the finer grades of woolens and cot- ton fabrics and chemicals, steel rails, cutlery, hardware, pottery and all articles which became protected for the first time in our history after 1861. The history of the subject shows that foreigners have maintained exorbitant prices on all articles until forced to yield by the domestic competition created by protective tariffs. Secretary Walker recognized the distinction here pointed out be- tween competing and non-competing dutiable manufactures. He said that by reason of the tariff of 1842, $54,000,000 was paid to the pro- tected classes in enhanced prices of "similar domestic articles," and that " this estimate is based upon the position that the duty is added to the price." So he assumed that if protection was removed all articles of domestic manufacture would be reduced in price by an amount precisely equal to the duties fixed by law. The contention was that by reason of the protective duties the American consumers were compelled to pay the American manufacturers $54,000,000 more for the articles of do- mestic production than they would have paid if the goods had been man- ufactured abroad and imported under free trade. This is based on the assumption that the foreign manufacturers would have voluntarily re- duced the prices of these articles to the same extent which they were reduced when brought into competition with similar domestic articles. The experience of the people of the United States for more than thirty years proves that this would not have occurred. The reductions in prices which took place occurred only as factories were set up in the United States and prices were forced down by the struggle of foreigners to hold the market. Even when they were compelled to withdraw from the struggle competition was continued between the domestic rivals, and prices fell still lower. Table No. 10, showing the statistics of our manu- Eote prices would have been driven down. Argument based upon incorrect assump- tion. Digitized by Microsoft® 413 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Oases wTiere duty and prices were the same. factures in 1850, gives the extent to which American manufacturers had gained control of the home market. To illustrate, in 1846 we were making about $60,000,000 worth of cotton fabrics, all of the coarser grades. Similar foreign articles were not imported. On some of these fabrics the duty was nine cents a yard, and they sold for nine cents ; on others the duty was six cents per yard, and they sold for six cents. In every country where the English manufacturers sold their fabrics with- out meeting domestic competition they charged much more than the American consumer paid for our domestic goods. Is it reasonable to assume that if the foreign manufacturers had continued in the undis- puted possession of our markets they would have sold at a lower rate to our consumers, or that they would have departed from their practice of maintaining high prices as they did on the finer articles which met with no competition here? That has not been their policy. The history of the course of trade proves that if the American people had abstained from setting up cotton manufactures of their own, and obtained their supply from abroad, it would have cost them at least $120,000,000 for the same quantity of similar domestic goods which they obtained for $60,000,000. Hence the American consumer, by reason of the protective policy, has been provided with domestic articles much cheaper than he could have obtained similar foreign articles under a revenue tariff. This applies to cottons, woolens, iron and every article enumerated in the whole list of domestic productions. Protection, when considered from the standpoint of prices to consumers alone, had saved the American people hundreds of millions of dollars. Mr. Stewart of Pennsylvania, in a speech before the House on De- cember 9, 1846, exposed the deception involved in the Secretary's state- ment, as follows: The gentleman and his friends held the doctrine that the consumer always paid the duty, and the Secretary told the nation that the poor man was taxed 82 per cent on cotton goods over the rich man. Yes; this poor man seemed a special favorite of the honorable Secretary. He had introduced him ten times in the course of tvi^o paragraphs of the Report. His sympathy was greatly ex- cited that this unhappy "poor man" was taxed 150 per cent on his cotton shirt, because there was a specific duty on imported cotton goods of nine cents a yard. Now, if this specific duty of nine cents amounted to 150 per cent ad valorem, that fixed the price of the cotton to the " poor man " at but six cents a yard, for nine cents was just 150 per cent on six cents. So the practical effect of the horrid tax was, that this " poor man " got a good shirt at six cents a yard. And Mr. Stew- art would tell the gentleman another thing. When those most abominable min- imums, which so excited the wrath of the Secretary, had first been introduced in 1816 by William Lowndes— one of the purest patriots and most intelligent states- men that had ever graced these legislative halls — and sustained, too, by John C. Calhoun, scarcely less distinguished, India cotton goods, of the very coarsest quality, known to every lady at the time by the name of hum-hums, cost thirty- three cents a yard; so that the "poor man" would then have had to pay four TTie poor man a special favorite. Digitized by Microsoft® MB. STEWART'S SPEECH. 419 dollars for twelve yards of it, and the effect of the infamous minimums had been that every "poor man" in the country could now get a better article for six and a quarter cents. That was the way the people were taxed and oppressed by the protective system; and this was the manner in which the "poor man" was ground down to the dust to benefit the rich monopolist! The Secretary persuaded this "poor man" that he was taxed 82 per cent more than the rich man, and this was quite insufferable; yet he paid only six cents for what for- merly cost him thirty-six cents, and of an inferior quality at that. These dreadful minimums had, in their practical consequences, given the farmers a market, given their children employment, made their cattle profit- able, filled the country with the hum of contented industry, and had brought down the price of the poor man's clothing from thirty-six cents a yard, down — down— down, as the system proceeded, till at last it gave it to him at six cents a yard. Now the Secretary cried out that the duty on these cottons was 150 per cent ad valorem 1 And why? The duty had not changed, but the price had. As the price went down the duty went up. At thirty-six cents per yard, nine cents duty would be 25 per cent; at six cents a yard, the duty would be 150 per cent; and if the price descended to one cent a yard, then the duty would be goo per cent ! The poor man robbed, plundered and oppressed by a duty of 900 per cent, simply because he gets a yard of cotton goods for one cent a yard ! Let the manufacturer run up the price to thirty-six cents again, and the oppression is all over; the duty of nine cents a yard falls instantly to 25 per cent, a mod- erate revenue duty. No more complaint; these friends of the "poor man" are perfectly satisfied. Such was the practical operation of these odious minimums which had re- duced the poor man's cotton goods from twenty-five and thirty cents per yard to six and eight cents. Yet this was the system which must be given up; this was the operation which was so oppressive and so unconstitutional that it must be suffered to exist no longer upon our statute book! The duty was to be taken off the foreign goods, and put upon American manufactures. Such was the doctrine of this report. Mr. Johnson, of Tennessee, here again asked Mr. Stewart if the tariff brought down the prices of articles taxed, what was it that brought down the price of the other goods in the same proportion? Mr. Stewart replied that such was not the fact. Other goods not manufac- tured here — silks, velvets, etc. — had not declined in the same ratio, nor had wages or agricultural produce; because the protective tariff had increased the supply of domestic goods by increasing competition, and had sustained wages and agri- cultural produce by creating an increased demand for both. If the gentleman could comprehend that demand and supply regulate price, it would be all plain. When interrupted, he had been controverting the doctrines put forth by the Secretary in his Report. He had referred to a table which had been reported to the House last session by the Committee on Ways and Means, for the purpose of showing the enormous tax which was imposed by the system of minimums ; but when the Secretary, by the assistance of the honorable chairman of the Com- mittee on Ways and Means, was preparing with great labor and pains this document, he seemed to forget that he was at the same moment furnishing mathematical proof of the exact extent to which protection had reduced prices. By converting specific into ad valorem duties, the duty runs up precisely as the price runs down; so, by showing an increased rate of duty, the gentlemen have only shown reduced prices. The duty is fixed, and cannot vary; the ad valorem duties are always the How the people were " Taxed and Op- Sustained wages tty increasing the de- mand. Digitized by Microsoft® 420 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. same. None were imposed by the tariff of 1842 above 50 per cent. How, then, does the President, in his message, get duties of 200 per cent? This can only be done by converting the specific duties into ad valorem duties; and, when this is done a high duty only shows a low price. If the duty is 200 per cent, the price must be one-fourth of the duty. Thus we are told that glass pays the enormous duty of 200 per cent; and why? Because the duty is $4 per box, and the price $2 per box, and if the glass went down to $1 per box, the duty would be 400 per cent. Thus we are told by the Secretary of the Treasury and the Chairman of the Committee on Ways and Means that the people paid in all a tax of eighty- four millions, of which but twenty-seven went to the government, and fifty-seven to the manufacturers; and he gave a list of sixty or seventy articles on which the duty amounted to more than 100 per cent. Very well; and what did this prove? Why, simply that the prices of those articles had been greatly diminished, as in the case of cottons. The same duty which, when levied, had been but 25 per cent, had now become 150 per cent, simply because the price had gone down to one-fourth part of what it was. So the main result of all the labor and ciphering of the chairman of the Committee on Ways and Means had been to furnish to the whole country official demonstration that prices had been reduced by a protective tariff to one-fourth or one-fifth of what they had been in 1816. Take a plain illustration : the tariff imposed a duty of four cents per pound on nails; the price of nails in 1816 had been 16 cents per pound; so that the duty was then 25 per cent on the price; but the same duty, we are told in this Report, is 100 per cent; and how so? Because the price had fallen from sixteen cents to four cents per pound. Very oppressive on the "poor man," who has thus now to pay 100 per cent on nails ! The explanation of all this was perfectly plain and easy. The effect of competition and of American industry had in- creased the supply, and by an increased supply, in this as in all other cases, had reduced the price of glass, cotton, etc., while it had rendered the whole neigh- borhood prosperous by the increased demand for all the productions of the farmers. Mr. Stewart thanked the chairman of the Committee on Ways and Means for this document; it had furnished to him and to the country undeniable proof, from the highest authority, to what an extent prices had been reduced, inso- much that the duty on one article, though reasonable at first, had now risen to 389 per cent ad valorem, brought about solely by the reduction of the price. Mr. Stewart defied escape from this position. Let any gentlemen take the re- port and examine it, and the more they examined the more they would be con- vinced that this was a true explanation of the whole matter. Yet this was held forth for the purpose of exciting alarm; it furnished a topic for popular declama- tion ; it might persuade the " poor man " that he was greatly oppressed, because he paid a tax of 200 per cent on his window-glass; and he perhaps would not understand that if glass fell to a dollar a box, he would be taxed 400 per cent, or if by any improvement in the manufacture he could be enabled to get his glass at fifty cents a box, why then he would be paying the enormous, un- heard-of tax of 800 per cent. How a duty is figured as 100 per cent. It is conceded that for a short time we would buy at lower prices, but this state of things would be of brief duration. Immediately upon the removal of our protection foreign manufacturers would inundate our markets with goods offered at prices lower than we could produce them, for the sole purpose of extinguishing the American rivals. As Digitized by Microsoft® FREE TRADE FALLACIES. 421 soon, however, as the domestic concerns were ruined and driven out of business, prices would advance and our consumers would be compelled to respond to the exactions of the foreign rivals and to pay prices at least 50 per cent higher than they were required to pay for the protected articles. The policy of the British manufacturers of ruining the indus- tries of other countries by a system of underselling for the purpose of ultimately seizing and monopolizing the whole trade was set forth in a report of a commission to parliament in 1854, as follows : The laboring classes generally, in the manufacturing districts of this country, and especially in the iron and coal districts, are very little aware of the extent to which they are often indebted for their being employed at all to the immense losses which their employers voluntarily incur in bad times in order to destroy foreign competition and to gain and keep possession of foreign markets. Authentic instances are well known of employers having, in such times, carried on their works at a loss amounting in the aggregate to three or four hundred thousand pounds sterling in the course of three or four years. If the efforts of those who encourage the combinations to restrict the amount of labor and to produce strikes were to be successful for any length of time, the great accumu- lations of capital could no longer be made which enable a few of the most wealthy capitalists to overwhelm all foreign competition in times of great depres- sion, and thus clear the way for the whole trade to step in when prices revive, and to carry on a general business before foreign capital can again accumulate to such an extent as to be able to establish a competition in prices with any chance of success. The large capitalists of this country are the great instru- ments of warfare against the competing capital of foreign countries, and are the most essential instruments now remaining by which our manufacturing su- premacy can be maintained; the other elements — cheap labor, abundance of raw materials, means of communication and skilled labor — being rapidly in process of being equalized. To Buy in the Cheapest and Sell in the Dearest Market. To buy in the cheapest and sell in the dearest market was urged as one of the chief advantages to be derived from the free trade policy. It was contended that by the abandonment of protection and the purchase of manufactured articles abroad the American people would buy in the cheapest market, and by selling their agricultural produce and raw materials to the foreign manufacturers they would sell in the dearest market, or receive the highest possible prices therefor. This was one of the most deceptive and misleading dogmas promulgated by the ene- mies of protection, and was very influential in turning many of our Western farmers against the protective policy. Up to this time the produce of the farmer was excluded from the British market ; hence he must sell at home or not at all. In order to fully appreciate the applica- tion of this proposition it must be viewed from the standpoint of the British market under free trade, where it originated. The law of sup- ply and demand is the great force in regulating wages and prices. The Lower prices would 6« 0} trief duration. One of Free Trade's deceptive dogmas. Digitized by Microsoft® 422 SECTIONAL OPPOSITION TO TEE AMERICAN 878TEU. Would ie tuying in the dear- est market. policy of free trade contemplated that England would become the great manufacturing nation of the world; supply all other countries with fabrics, wares, tools and implements of every description; and would take in exchange or buy from other nations their food products and certain raw materials (England possessed at home an abundant supply of coal, iron, clay and many other raw materials). Hence, the people of other nations, having abandoned their protective policies and ceased to engage in manufacturing, would at all times be pressing the British market for manufactures, and the universally worldwide demand thus created would at all times be greater than the British supply. Inter- national competition in manufactures would be destroyed. The world- wide demand for British goods thus created would operate to secure to the British manufacturers enhanced prices and great profits. The people of other nations, and especially of the United States, would in fact be buying in the dearest market (the British market, the only market). Again, other nations being producers of raw materials and food prod- ucts, each having a surplus for sale, and the market being in England, the supply would at all times be greater than the demand, the market would be overstocked, prices would be fixed in Liverpool, and the Eng- lish people would be able to obtain their food products and raw materials at the lowest possible prices, and would buy in the cheapest market. Hence, under this beautiful theory the English people would be buying in the cheapest and selling in the dearest market, while the people of the United States and other countries would be selling their raw ma- terials and food products in the cheapest market and buying their manu- factures in the dearest market. The idea that we could sell everything for a good price and buy everything very cheap was most fascinating. " To buy in the cheapest market " — what does that mean ? It means that the American people are to buy their glass, earthen and china ware, cottons, woolens, silks, linens, all tools, machinery, hardware and cut- lery, iron, steel, and in fact every manufactured article, in Europe; that they shall entirely cease buying of the home producers, unless our manu- facturers will sell these articles cheaper than they can be purchased from any other people on earth. It means, also, that our consumers of food will buy farm products in Canada, the Argentine Republic, or wherever they can be bought at the lowest price. It means that the purchasers of all countries shall also buy where they can buy the cheap- est ; hence the purchasers of the world will not come to the United States to buy either manufactured goods or farm products, unless they can buy them cheaper here than in any other country. Instead, then, of selling dear, we must also sell cheap or not at all, excepting, of course, as we produce a superior article or something that cannot be obtained else- where. This, from the universality of growth of farm products and Digitized by Microsoft® FREE TRADE FALLACIES. 423 the wide extension of manufactures and the application of machinery and scientific methods, would confine our exports within narrow limits. We can only become sellers by selling for a lower price than anybody else. That this involves a reduction in the cost of production below the rest of the world, necessarily follows. But under the law of " the sur- vival of the fittest," those industries which cannot withstand the struggle must perish, and the capital, if there is any left after the wreck, must seek investment, and the laborers thrown out of work must find employ- ment in some other industry ; but that other industry must always be one in which commodities can be produced cheaper than elsewhere. To sell in the best market, then, necessarily means to undersell all competitors. The so-called tariff for revenue policy proposed by Secretary Walker in his reports and so ingeniously defended was born in a spirit of hostility to American manufactures and American free labor. It was designed to promote the supposed interest of the planters and to consum- mate the alliance between them, the importers and British manufacturers, while detrimental to the manufacturing and agricultural interests of the free States. It was followed by a new tariff bill drafted in harmony with the free trade policy then adopted by the Democratic party. The experience of the American people since the adoption of the Constitution, and in fact the whole history of the subject, demonstrates the falsity of the proposition that by enhancing prices the tariff is a bur- den upon the consumer. It has been shown beyond question that pre- cisely the contrary is true; that by enlarging production and increasing the domestic competition, the constant tendency and operation of a pro- tective tariff has been to greatly lower prices. The history of the protective tariff in Europe confirms this proposition. M. Thiers, president of the French Republic, lived during the whole time of the free trade experiment of France, and witnessed its indus- trial effects. He said, in a speech before the Corps Legislatif, on Jan- uary 22, 1870 : If England were the only country to produce certain products, could you have them at the same price? Certainly not. It is competition, sustained by a just protection, which destroys foreign monopoly. A kilogram of cotton yarn was worth as high as fourteen francs. We created a competition with England (by protection), and it fell to three francs. Every time you protect a national product you cause the price of the domestic product to fall, and you prevent monopoly. After the linen industry was destroyed in France by the English production by power, a kilogram of thread was worth seven francs. We protected the linen industry in France. This protection produced competition, and the French product compelled the English manufacturers to lower their prices to three francs fifty centimes. The committee of the New York convention in its memorial to Congress, replying- to the free trade assertion that protective duties Would have to undersell all com- petitors. Protection prevents monopoly. Digitized by Microsoft® i2i SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. enhance prices, presented the following argument in proof of the con- tention that if such were the case, still the nation would gain by the wealth produced and benefits derived from the system : If the annual product of the manufactures is $150,000,000, and if in order to effect the establishment of these manufactures we have paid an average duty of 20 per cent on the whole amount of manufactures, foreign and domestic, con- sumed in the country, estimated as about $200,000,000, there has been an actual loss of $40,000,000. Deducting this from the actual gain of $150,000,000, there re- mains an ultimate profit of $110,000,000 as the final result of the whole transaction. When It is profitable to pay Tiiflher prices. Here is stated a great economic truth. Hence it is easily demon- strated that it is profitable for the people of a nation to pay higher prices for commodities made at home than they could be purchased for abroad. When the cost of domestic products is enhanced by a higher wage rate, it operates not only to elevate the toiling masses to a higher plane of civilization, but is a most effectual means of bringing about a more equal distribution of wealth among the people. It reduces the number of dependents and saves poor rates ; it diminishes the number of idle and criminal classes ; it makes possible the American home, which is the basis of stable government and good morals. But when considered solely from the standpoint of the accumulation of wealth, it results in national gain. In the early history of our country, especially up to 1860, the question of high wages was not so much considered as that of employment. The higher cost of production while in the infancy of our industrial development arose largely from lack of capital, ex- perienced business men and untrained laborers, yet while going through these stages of development and before bringing our industries to a state of efficiency, the domestic competition was breaking foreign monopoly and forcing our rivals to reduce prices. It was not until after the great advance in wages which took place during our civil war that the cost of production was so increased by the high labor cost that the wage question became so vitally connected with the protective policy. The attention of the reader is now invited to a consideration of other propositions which have been constantly urged by the advocates of free trade with great force and skill in defence of their policy. The address of the Philadelphia convention, in 1831, announced cer- tain free trade dogmas intended more expressly to influence the public sentiment in the free States, as follows : We are advocates of free trade. It is the unquestioned right of every in- dividual to apply his labor and capital to the mode which he may conceive best calculated to promote his own interest. It is the interest of the public that he should so apply it. He understands better than it can be understood by the gov- ernment. Let it be remembered that the question relates exclusively to the appli- Digitized by Microsoft® FREE TRADE FALLACIES. 425 cation of capital. It cannot be generated by an act of legislation. The power of the government is limited to its transfer from one employment to another. Laws which protect by bounty any particular species of labor cannot be said to encourage American industry. Those laws favor only a single class. It cannot be doubted that the prices of all commodities, the domestic pro- duction of which is forced by the imposition of a duty on a foreign article of similar description, are raised by the amount of duty necessary to effect the ex- clusion of the foreign article, or that this increase of price is paid by the con- sumer and that the loss to the nation which is occasioned by this system of protection is nearly equal to such difference of price. The first proposition following the declaration " We are the advo- cates of free trade " contains the erroneous inference that protection pro- hibits individuals from applying their labor and capital in the mode which they may conceive best calculated to promote their own interests. Under protection the individual exercises the utmost freedom of action in all the pursuits of life. The government does not attempt to direct the individual nor compel him to engage in any pursuit which he does not desire to undertake; neither does it in the least restrict him in the occupation which he may pursue. It simply, by shielding its own citizens from the injurious effect of the unfair and unequal competition of aliens, enables them to improve their condition and enlarge their oppor- tunities for employment in the field of their enterprises. It is not pro- tection to individuals, but protection to opportunities for individuals. It is like security of title and possession of property; the certainty of peace and order in a community. "The distinction between paternalism and protection," says Gunton, "is that a paternal policy implies doing the maximum for the individual, while a pro- tective policy implies providing the individual with the maximum opportunity to do for himself." The only restriction imposed by a protective policy upon the indi- vidual consists in requiring the payment of a duty for the privilege of importing competing commodities from foreign countries. This right is exercised under the power of the government, conferred by the people through the Constitution, to regulate commerce with foreign nations and to provide for the general welfare of the country. There are no restrictions upon exports; the markets of the world are as open and accessible, so far as legislation is concerned, to the citizens of the United States as they are to those of any other country. The dogma that capital cannot be generated by legislation is inap- plicable, because it must be admitted that capital can be generated by labor if labor is only given an opportunity to work. As Mr. Crawford of Pennsylvania said in his speech before Congress in 1830: The ap- plication 0/ capital. Paternal- ism and protection- ism. Digitized by Microsoft® 42G SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. The " Goods for Goods " theory. \ A tact to he remem- bered. Ivabor is the element of wealth. Ingenuity, skill, professed ability, etc., may occasion its transfer, but labor in the field, in the mechanic arts, in manufactures, is the source of it and lies at the bottom of all our prosperity; it is the common stock and does not belong to the North or South, the East or the West, bat to all. But the free traders insisted that the whole question simply in- volved one of prices, or of buying and selling, and that the subject of production, or the influence of high or low tariff on the employment of labor and the industrial development of a nation, should be ignored ex- cepting as production of certain commodities may be stimulated by for- eign trade, the increase of trade and commerce being the essential object to be attained and production an incident. As the free trade convention declared, " Let it be remembered that the question relates exclusively to the application of capital." It was urged that international trade is a barter of commodities between nations; that merchandise imported is paid for with merchandise exported; that for every import of a com- modity there must necessarily follow a corresponding export of a com- modity. This is called the " goods for goods " theory. Hence it was urged that if the people of America did not import they could not export; that if they did not buy of the manufacturers of England they could not sell to her their food products and raw materials. The proposition that if we do not buy we cannot sell was so ably answered by Mr. Thomas H. Dudley, for many years Consul General from the United States to Eng- land, in a paper read before the American Philosophical Society, October 1, 1886, that we give the following extract therefrom: One of the chief arguments used by the free trader against the protective system in the United States is that of reciprocity in trade. Indeed, it may be re- garded as one of the chief cornerstones upon which their free trade theory is based. Their formula is that if I do not buy of you, you will not buy of me; and they argue that if the people of the United States continue their protective system and refuse to buy their manufactured commodities of England, the English people will refuse to buy anything of them. The doctrine, when carried to its legitimate conclusion as they contend for it, is this : We are to repeal our protective laws, so as to enable the English to bring into our markets their manufactured commodities and sell to our people free of duty; and to this extent at least giving the English manufacturer, who pays no taxes in the United States, the right to supplant our manufacturer with his com- modities, made in England and by English workmen; leaving our own people to pay their taxes and to live as best they can without work. If we do not do this, they say, the English people will not buy our surplus agricultural products. It must be noted here that every dollar's worth of manufactured goods brought from England and sold in the United States, takes just one dollar's worth of work from our people. If it is made or produced in England, the workman there gets the benefit ; that is, the wages for its production. If made in this country, the workman here gets the benefit, the wages for making it. When it is remembered that, if it is extended to all our industries it will Digitized by Microsoft® FREE TRADE FALLACIES. 427 Trade is between in- dividuals. amount to hundreds of millions of dollars, and to hundreds of thousands of working people who will be affected by the transfer of our manufacturing to England, the importance and magnitude of the question is seen, especially upon the working people of this country, the men who have to earn wages by labor in order to live. But the subject we are considering is that of reciprocity; and as so much stress has been laid upon it by the free traders in England, as well as by those who sympathize with them in this country, it is of some importance to learn whether as a principle it is true or untrue. In other words, whether it has the effect upon trade that is claimed for it. The foreign commercial relations or dealings between nation and nation are never carried on by the government, that is, one government dealing with an- other government, but by individuals. The individuals of one nation deal with the individuals of another nation. If it were the English government dealing directly with the American govern- ment, then she might say to us : If you do not repeal your tariff laws and buy your manufactured commodities of us instead of making them yourselves, we, the English, will not buy of you what we may require in agricultural products or anything else. But unfortunately for the argument, it is not the English gov- ernment dealing with the United States government, or with our people, but it is the English merchant dealing with the American merchant, and the whole transaction is business with both. It is a question of price that governs all their transactions. The English merchant, whether it is provisions or cotton, buys wherever he can purchase what he requires the cheapest. He never looks, con- siders or cares about the balance of trade, whether it is on the one side or the other. His object in doing business is to make money; and all his contracts and dealings are based on this idea, and he buys wherever he can buy to the best advantage without regard to reciprocity. If it is ten thousand bushels of wheat that he requires, and he can buy it cheaper in New York than he can in Odessa, he buys it in New York; if, on the other hand, he can buy it cheaper in the Crimea or India, he buys it there, and not in New York. It is price, and it alone, that controls the matter. And so with every other product or commodity that the English merchant or American merchant deals in. And as a rule this will apply to every commercial transaction in the United States, in England or in any other civilized country. And with reciprocity falls another favorite doc- trine of the free traders closely allied to reciprocity, to wit, barter — that for every import there must be an export. Mr. Mongredien, in his writings for the Cobden Club of England, states it in this way: "The increased imports which abolition of customs duties would bring about, would necessitate increased ex- ports to the same amount to pay for them, for there can be no additional import without a corresponding export." The theory of the free trader is that when you buy a bill of goods in a foreign country and import them, they must be paid for by an export of some product or commodity from the country into the one from which the import came; that an export will follow the import; that it is a mere barter or trade of one product for another product. This theory of the free traders has been asserted so often and insisted upon with so much persistency for such a period of time that they seem to regard it as admitted, and not even open to criticism, much less contradiction; and they demand that the whole world shall assent to and admit it; and of course to all the pernicious and false assumptions and arguments which are based upon it. I have had occasion to comment upon this subject before, in my reply to Mon- Digitized by Microsoft® 43S SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. gredien, and pronounced it a fallacy. I repeat it again, and say no greater fallacy has ever been attempted to be palmed ofif upon an intelligent people. It is neither true in theory nor in practice, and never has been. However beautiful it might be in theory, that if for every import there v^as a corresponding ex- port, in practice it never has been true, and the trade of the civilized nations of the world for the last hundred years, if we examine it, proves it to be untrue. An export of a product does not follow every import of a product. In the deal- ings between merchants, whether at home or abroad, whether between each other here in the United States or with those who live in England or in any other country, the contracts or transactions in their dealings with each other are based upon money or cash, and not upon barter or trade; that is, are to be paid for in money, and not in barter of one commodity for another commodity; and this applies whether the contract is for cotton, wheat, steel rails or woolen goods; the one who buys agrees to pay for it in cash or money, and a trade of one commodity for another commodity is quite exceptional and out of the common or ordinary mode of mercantile transactions. If Mr. Vanderbilt should want a thousand tons of steel rails, and he should buy them of Naylor, Benson & Co. of London, he would pay for them in cash or money and not in merchandise; and there would be no obligation, either expressed or implied, on the part of the London house or anybody else, that because of the purchase of the rails they should buy grain or other merchandise from Mr. Vanderbilt or any other person in the United States. If there were millions of bushels of wheat piled up in every seaboard city of this country, they would not take it. If you were to appeal to them they would tell you that their business was confined to tin plates and metals, etc., and that they did not deal in grain. If Naylor, Benson & Co., who have sold the steel rails, are not under obligations to reciprocate, and take a corresponding quantity of merchandise in value to the amount for which they sold the rails, in order to make an export follow the import of the rails, who are under obligations to do so? The answer is, no one. And though our granaries may be full and running over with grain, the corn merchant of Liver- pool or London will only buy it when they can purchase it cheaper than they can elsewhere, and then they will take only the quantity which they require and no more. As has been stated, if they can buy it cheaper in Russia or India than they can of us, they will buy it there, and that without the least regard to the fact that Mr. Vanderbilt bought his steel rails in England; and it would be the same if we were to stop manufacturing steel rails in the United States and buy all we require in England, even if it should be to the extent of their whole production. This will apply with equal force to every other manufactured com- modity made, or product which the earth yields. As has been remarked, it is not the nations, as governments, dealing with other nations, but individuals; and each anxious to make out of every transaction or contract, whether domestic or foreign, all that can be made legitimately, and that without regard to the interests of nations or other individuals. If we examine the statistics of every civilized country on the globe, this will be verified. And permit me here to say, that while every writer upon political economy in England is proclaiming and asserting that for every import there must be an export, and claiming the doc- trine of reciprocity in trade as I have stated it — the last named of which has been so often used to frighten our people, and especially the farmers of our country, that if we do not buy of them they will not buy of us — there is no country in the world where the fallacy and falseness of these doctrines are shown by their own published trade reports more fully than they are in England. Their aggregate imports for the last thirty years, without one single exception. There is no such obligation. Digitized by Microsoft® FREE TRADE FALLACIES. 429 have every year exceeded their exports. They have not shown in any of their writings or reports that in one single instance the export has followed the im- ports. It is not pretended, in these published reports of their trade, that there has been an export for every import. So far from this, they show right the con- trary. They give us the total value of all their exports of British and foreign and colonial produce, and all their imports every year, and they show that their exports fall short of their imports by more than five billion five hundred millions of dollars in the last ten years of their trade. And it has been the same for more than thirty years in their dealings. Mr. Dudley then supports his contention by showing the exports and imports of the United Kingdom for a period of years, and also cites statistics of the trade between other nations. He says: In all the above instances in the trade between England and the nations mentioned, the export has not followed the import, but England has bought, each and every year, largely in excess of what these nations have bought of her. The people of these nations, in their dealings, have followed the usual course of business, each taking from the other what they required, and nothing more, and that without regard to the balance of trade or the import from or export to, proving fully the untruthfulness of the doctrine that an export always follows an import. In the case of Russia, where the excess of the imports over the exports has been going on for so many years, this excess of imports has been made up, in almost every instance, of agricultural products. England has been buying breadstuffs and other agricultural products of Russia without any regard to what Russia bought of her. And so long as the Russian farmer can sell his wheat cheaper than it can be bought in the United States or India, so long will the English corn merchant continue to buy it of Russia, and that without regard to whether the Russian merchant buys his woolen goods or hardware of the English merchant or not. And what has been said with regard to wheat applies with equal force to every other commodity that enters into the trade or dealings between man and man in every civilized nation of the world. A man may trade a handsaw for a jack-knife — and no doubt this is sometimes done— but it is not the ordinary course of business be- tween merchants; as a rule they buy what they require and pay for it in cash, and sell it to others in the same manner for cash. If we examine our own trade reports, or those of France, Germany or any other civilized country, we will find the same disparity between the imports and exports, the figures of their dealings confirming what I have said about the imports and the exports, and that one very rarely, if ever, follows the other. An export does not always follow an import. And there is no reciprocity in trade between nation and nation, each buying from the other what it requires and nothing more, and that without regard to which side the balance of trade is on in their dealings. Between 1864 and 1893 the balance of trade against England in- creased from $312,000,000 to $637,000,000. Their own experience has forced the English free trade economists to abandon the "goods for goods" theory. They now admit that the balance of trade against England is settled by the export of specie, or offset by the interest on foreign investments and the sale of securities. That this state of trade They show rigM the contrary. "No reci- procity between nation and nation. Digitized by Microsoft® 430 SECTIONAL OPPOSITION TO THE AMERICAN ST8TEM. "Not op- posed to foreign trade. is undermining the accumulated wealth of the country and constantly sapping its very industrial life, is now recognized by its greatest finan- ciers as a most alarming symptom of national decay. So long as the in- comes from foreign investments are sufficient to pay the excess for imports over exports, the precious metals are measurably protected. Imports are increasing and exports relatively declining. What, then, is to happen when there is still a balance left to be paid after adjusting all such dealings? Foreign Tradb vs. Domestic Trade. The protectionists are not opposed to foreign trade per se. They favor creating conditions by protective legislation which confines im- ports to those articles the like of which cannot be produced in the United States, such as tea, coffee and other foreign food products, as well as raw silk, rubber, other raw materials, articles of luxuries, etc. These are called non-competitive commodities because their importation does not displace anything produced by our own labor. On the other hand, they assert that we should, by the labor and industry of our own citi- zens, produce at home every article to which our soil and climate is adapted and which is within the capabilities of our own people. Simi- lar foreign articles are called competitive because, when imported, they take the place of those which are or might be produced at home. Hence the controversy between the protectionists and free traders arises over foreign trade in this class of commodities. When the protectionist, therefore, objects to free imports or when the free trader favors free imports, competitive articles are referred to. The free trader contends that free imports of competitive commodities stimulate domestic produc- tion — not of the competitive class but of other kinds; that is, that if we import manufactured articles we must export or give in payment an equal value of raw materials and food products. Hence it is argued that the importation of foreign commodities stimulates the production for export of domestic commodities. Conceding for the sake of argu- ment that all of this is true, the question arises upon the relative value to a nation of foreign and domestic trade. It is a contention of the protectionist that domestic trade is more than twice as valuable to a nation as foreign trade. In reply to the proposition of the free trade convention that foreign trade promotes domestic industry, the memorialists of the Protectionist Convention of 1831 said:^ The friends of the protective policy are told that "if we buy, we must pay for what we buy; if we import foreign goods, we must export domestic products or something for which domestic products are exchanged, to pay for these foreign goods," and it is candidly added that "these truths are every day denied by men 1 Report of the New York Convention of 1831. An addi- tion to; not a deduction from. Digitized by Microsoft® DOMESTIO 78. FOREIGN TRADE. 431 who have an interest in imposing upon the public" We are told again on high authority that "as every article imported must be purchased and cannot be paid for by any possible means other than the products of American industry, it neces- sarily follows that whatever may be the amount of imports and foreign industry, by which they may have been produced, an equal value of American products and an equal amount of corresponding American industry is employed by the foreign trade." "The error of the restrictionists," as a majority of the people of the United States are politely and elegantly styled, " is said to consist in not per- ceiving that the foreign and domestic trade promoted [put in motion] two equal amounts of foreign and domestic industry, and is supporting the American indus- try which, in the establishment of a new manufacture, is substituted [for] the foreign industry, is an addition to instead of being a deduction from the American industry, which was, or might have been, otherwise employed." In reply to this the memorialists further said: The friends of the protective policy know very well that foreign trade puts in motion two equal amounts of industry, one foreign and the other domestic; but though emphatically charged virith blindness, they cannot help seeing that the internal trade puts in motion two equal amounts of industry, both domestic; and that it employs, of course, twice as much domestic labor and capital as the other. That internal trade supported wholly by domestic industry employs twice as much domestic capital and labor as foreign trade and is the most profitable trade in which a nation can engage, was announced by Adam Smith in his " Wealth of Nations." It was by adhering to this great economic truth that Great Britain acquired her industrial supremacy. It has been by internal trade and domestic industry that the United States has become the greatest in manufactures and the richest and most prosperous nation in the world, and in fact that the world has ever known. Announced iy Adam Bmith. Home Trads the Basis oe Industrial Prosperity. Abraham Lincoln said: When an American paid twenty dollars for steel rails to an English manu- facturer, America had the steel and England had the twenty dollars. But when he paid twenty dollars for the steel to an American manufacturer, America had both the steel and the twenty dollars. The free trade maxim, "Take care of the consumer and let the producer take care of himself; don't tax the nation for the benefit of a producing class," will now be contrasted with the protectionist maxim, "Whatsoever you do be sure to take care to develop the producing forces of your own country." The eminent economist and jurist. Sir John Barnard Byles, said: Digitized by Microsoft® 432 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. Supreme policy of nations. Elucidated t>y Sir John Bar- nard Byles. A nation, whether it consumes its own products or with them purchases from abroad, can have no more value than it produces. The supreme policy of every nation, therefore, is to develop the producing forces of its own country. What are they? The working men, the land, the mines, the machinery, the water power, etc. This proposition was announced by Adam Smith. He said : ^ The capital which is employed in purchasing in one part of the country in order to sell in another the produce of the industry of that country, generally replaces by such operation two distinct capitals that had both been employed in the agriculture or manufacture of that country, and thereby enables them to continue that employment. . . . When both are the produce of domestic in- dustry, it necessarily replaces, by every such operation, two distinct capitals, which had both been employed in supporting productive labor, and thereby enables them to continue that support. The capital which sends Scotch manufac- tures to London, and brings back English manufactures and corn to Edinburgh, necessarily replaces, by every such operation, two British capitals, which had both been employed in the agriculture or manufactures of Great Britain. The capital employed in purchasing foreign goods for home consumption, when this purchase is made with the produce of domestic industry, replaces, too, by every such operation, two distinct capitals, but one of them only is employed in supporting domestic industry. The capital which sends British goods to Portugal, and brings back Portuguese goods to Great Britain, replaces by every such operation only one British capital. The other is a Portuguese one. Though the returns, therefore, of the foreign trade of consumption should be as quick as those of the home trade, the capital employed in it will give but one-half the encouragement to the industry or productive labor of the country. A capital, therefore, employed in the home trade, will sometimes make twelve operations, or be sent out and returned twelve times, before a capital employed in the foreign trade of consumption has made one. If the capitals are equal, therefore, the one will give four-and-twenty times more encourage- ment and support to the industry of the country than the other. The economic principle which forms the basis of the advantage de- rived from the policy of protection stated by Adam Smith, was eluci- dated and developed by Sir John Barnard Byles, in 1849, in the follow- ing able and comprehensive discussion : ^ What does Adam Smith mean by the expression, "replace capital"? It is an expression not to be passed over in haste, but well deserving to be attentively considered and analyzed. He means that the whole value of a commodity is spent in its production, and yet reappears in the shape of the new product. That in its production there is an expenditure not of the profit merely, but of the entire value, and that the whole of that expenditure not only maintains landlords, tenants, tradesmen and workpeople, but furnishes an effective demand and market for other productions. He means that the clear gain, the spendable revenue, the net income of the pro- ducing nation, is increased by the amount of the entire value of the domestic 1 Wealth of Nations, Book 2, Chapter 5. 2 Sophisms of Free Trade, Chapter 4. Digitized by Microsoft® DOMESTIC VS. FOREIGN TRADE. 433 product and that the nation is so much the richer; for while producing, it spends the entire gross value, and, nevertheless, after it has produced, it yet has the .en- tire gross value left in another shape. He then goes on and says that if with British commodities you purchase British commodities you replace two British capitals; but if with British com- modities you purchase foreign commodities you replace only one British capital. That is to say, you might have had the entire gross value of two industries to spend, and thereby also to create and sustain markets; but you are content to have the value and the market of one industry alone. These observations of Adam Smith, though demonstrably true, derive addi- tional weight from the quarter from which they come. They are the admissions of the founder of the existing school of political economists, on a point of vital importance, so vital that it affects the entire theory of free trade. At the risk, therefore, of being charged with prolixity and repetition, I ven- ture to invite the candid and serious attention of the reader to a further con- sideration of this problem. The entire price or gross value of every home made article constitutes net gain, net revenue, net income to British subjects. Not a portion of the value, but the whole value, is resolvable into net gain, income or revenue maintaining British families, and creating or sustaining British markets. Purchase British articles with British articles and you create two such aggregate values and two such markets for British industry. Change your policy — purchase foreign articles with British articles, and you now create only one value for your own benefit instead of creating two, and only one market for British industry instead of two. You lose by the change of policy the power of spending the entire value of one industry, which you might have had, as well as the other, and you lose a market for British industry to the full extent of the expenditure of that superseded industry. A small difference in price may cause the loss, but will not compensate the nation for that loss. For example, suppose England can produce an article for £ioo and can import it for igg. By importing it instead of producing it she gains li; but though she pay for it with her own manufactures, she loses (not indeed, by the exchange itself, but by the collapse of the suspended industry) iioo of wealth which she might have had to spend by creating the value at home; that is to say, on the balance she loses igg which she might have had in addition by producing both commodities at home. Nor can it be said that what the producer loses the consumer gains. The producer loses iioo, the consumer gains £i. The nation, moreover, loses the markets which that superseded industry supported. It should be borne in mind that directly and indirectly 90 per cent of the value of every commodity produced, represents labor distributed among producers from the first human effort until the product is finished. In its distribution a commodity is packed, shipped, handled and sold by labor which must be rewarded for its efforts at every step that is taken until it is delivered to the consumer. And labor does not stop here. Effort is required to cook and prepare food for the table. To trace to the bottom the cost price of every commodity, to the consumer, we find that it constitutes net spendable income. This great economic principle goes to the root of the controversy. Affects the entire theory oj free trade. Ooes to the root of the con- troversy. Digitized by Microsoft® 434 SECTIONAL OPPOSITION TO TUE AMERICAN SYSTEM. It was by the exchange of the produce of the American farm for domes- tic manufactures that the American people had accumulated their wealth and reached the stage of development which they then enjoyed. It was by such internal trade that the State of Massachusetts alone, in 1840, consumed of the food products and raw materials of other States an amount worth $40,000,000. Five million dollars' worth of raw cotton produced by the State of South Carolina, exchanged for $5,000,000 worth of manufactured goods made in the State of Virginia, would have added $10,000,000 to the spendable incomes of the people of the two States, but $5,000,000 worth of cotton exported to England and ex- changed for a like value of manufactured goods made there would have added $5,000,000 to the spendible income of South Carolina and $5,000,- 000 to the spendable income of England; but this is not all. England by converting the $5,000,000 worth of cotton into fabrics would have increased its value fourfold, and exported it to other countries for $20,- 000,000. The wealth and spendable income of the English people would have been increased by $15,000,000; besides, her merchants, who im- ported the cotton and marketed the fabrics, would have received com- missions and profits ; her insurance companies would have assumed the risks and received premiums ; further, her ships would have made a profit by the cost of carriage both ways. Apply this principle to all of the productions of our country and we find the great underlying cause of England's commercial greatness and the reasons why Americans should have fabricated for themselves and turned the profits tb their own account. Moreover, another great lesson may be drawn from the above ex- ample. Had the $5,000,000 worth of cotton been converted into cloth in the United States by the two operations, the spendable income of our people would have been increased by $20,000,000; and American mer- chants, railroads and insurance companies would all have been supported. A nation which exports raw materials and crude products to a dis- tant market, there to be converted into finished productions by the addi- tion of the labor and enterprise of foreigners, subjects the people to a still greater loss. Thomas B. Reed, in his great speech in opposition to the Wilson bill on February 1, 1894, illustrated this proposition when he said : Another great loss to be drawn. The profits me might tnahe. Let me give one item, and the figures shall be furnished by the gentleman from Alabama (Mr. Wheeler), who told me in your presence that the value of all the cotton raised in the United States was only $300,000,000, while the finished product of that cotton was $1,750,000,000. When cotton leaves the field it is worth $300,000,000; when it leaves the mill it is worth six times as much. On our own cotton crop alone we might in time make the profits on a billion and a half of manufactured goods. Nor is there anything to prevent such a result in a pro- tective tarifT. Digitized by Microsoft® A PROTECTED MARKET. 435 All of the great economic principles upon the application of which the development and prosperity of the United States rested were vio- lated by the tariff for revenue only policy of Secretary Walker. The policy inaugurated by Washington and Hamilton was now abandoned, and the United States was to become committed to the system of free imports of competitive commodities and the export of food products and raw materials. The history of the world teaches that every nation which pursued this policy has remained poor, backward and dependent. Every nation which has excluded by protective tariffs the productions of foreign countries, employed its own labor, developed its own native resources, and cultivated the industrial arts, has become rich, independent and prosperous. It was under the American System that our industries had been established, and now the whole power of the government was directed to their destruction. A Protected Market. The mistaken idea has long prevailed that protection is not neces- sary and that the system is not applicable when the cost of production is the same between nations. That the discussion of this phase of the subject has been neglected in the United States is due to the great differ- ence in such cost between the United States and the nations of the Old World, arising from the higher wages paid here. Hence, many are unable to appreciate the necessity of protection in Germany, France and other Continental countries where the wage rate is low, and the manu- facturers are possessed of abundant capital, modern machinery, dex- terous and highly skilled artisans, and have acquired great efficiency in production. The question was raised in the discussions of 1842, 1846 and 1857, especially concerning the coarser grades of cotton fabrics which were then being manufactured in the United States almost as cheaply as in England. Our manufacturers were selling to the home market at prices lower than the British were selling the same class of goods in foreign markets. We were even exporting, to some extent, to the West Indies and South America. The industry was on a firm foundation. Our mills, largely moved by water power, were equipped with the best machinery, and we had the raw materials at home. Those who are familiar with the course of trade in times of depres- sion, with the methods practiced by the British manufacturers to invade foreign markets, scale tariff walls and destroy competitors, need no light on the subject. The system of what is known as "dumping" has no regard for the cost of production. In fact, the cost of production is not the basis upon which prices are fixed in a great struggle to beat down rivals. Moreover, a manufacturer who has his home market secured may sell When pro- duction cost is the same. Digitized by Microsoft® 436 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Great Britain now a dumping firound. Conflict In periods of depret- his disposable surplus at cost, or for less than cost, to keep his mill hands fully employed, and in the end suffers no loss. Great Britain, with her open ports, is now the dumping ground for the surplus products of Continental countries, especially Germany. Her industries are so seriously menaced that a great movement has been organized for a return to protection, which it is thought cannot be de- layed many years. Stephen Colwell, of the Philadelphia Bar, submitted a very able paper on the subject of " A Protective Market " with the memorial of the ironmasters of Pennsylvania to Congress in 1849. He said: There is great misapprehension on the subject of the protection asked for industry. The term is ill-chosen, because it implies special favors granted to particular branches of manufacture. But it is far from being a mere concern of individuals ; it can be shown to be equally a matter of public policy. Suppose the makers of iron in Great Britain and the United States to have equal ad- vantages, and that the manufacture is carried to the utmost extent, and the lowest point of remuneration by the home competition in each country; and that the average price in each is the same. If any state of industry could, with advantage, dispense with protection, it would be the case supposed. But it would be clearly the interest of both countries to protect their home markets, even in this case of perfect equality. It would be sound policy to keep the manufacture of an article so important as iron in prime vigor and progress, that the quantity might be increased, and the price reduced by the gradual process of home compe- tition, which, in a protected market, is a severe but sure operation. One of the greatest trials the manufacturers encounter in such cases is that fluctuation which occurs every few years in all mercantile communities. To bear up under all these and maintain the full vigor of production is a hard trial upon makers of iron, the more so, as in their case their expenses do not admit of being abridged, nor can their manufacture be diminished under a limited demand without heavy loss. Seasons of depression must come in both countries in the case supposed — periods when the markets of each would reject and be unable to consume the ordinary quantity. It must be thrown somewhere, for neither makers nor mer- chants are able nor willing to hold the surplus of iron until business recovers its tone and makes its usual demand. If the iron thus remaining on hand in Great Britain is thrown into our markets, it will wholly break them down if firm, and increase and continue the depression if already down. Between the two countries, while prices were up, there would be no transactions in iron, but the conflict would be incessant in periods of depression. It may be safely assumed, however, that without help the manufacturers could never recover from such a conflict; a few years would end the struggle by prostrating a large portion of those engaged. The business would have to be reorganized. It would be sound policy, therefore, to protect each of these markets from the irregularities of the other. This course is best for the makers of iron, as well as for those who are special consumers, to whom it insures, in the long run, the cheapest supply. Foreign Iron — Its Influence on Prices. As every country is dependent mainly on its own industry for its supplies, Digitized by Microsoft® AN UNPROTECTED MARKET. 437 it is important that the industry which furnishes these supplies should be suitably sustained. The prices of the nine-tenths furnished at home should range at such rates as to keep the production active and increasing. Unless it can be demon- strated that the whole supply could be permanently imported cheaper, it would be suicidal to extinguish the industry on which we are dependent for nine-tenths, in a vain experiment to purchase cheaper elsewhere. The prices in the home market should be such as are made by fair competition in the home market, in which all parties interested can take care of themselves. If our iron is made at home, all the labor which goes into the cost should be adequately compensated; the farmer who furnishes food for man and horse, the manufacturer who furnishes raiment, the laborer and operative who are immediately employed in the production — all these and the consumers must settle the price; the elements are among them, and their combined action must maintain a result the nearest to justice, because they all look to their own interests. It is unjust and unwise to disturb and change this result by introducing a new element in a supply derived without restriction or regulation from foreign trade. Upon that trade we are not in any sense dependent for pig and bar iron ; we should, indeed, at this time, be makers and consumers of a much larger quantity than we have yet used, if we had not imported a ton of iron the last twenty years. We make the quantity we consume much cheaper than we could import it. Is it just that the tenth of our consumption which we import should regulate, to the injury of the makers of the other nine-tenths, the prices of iron in this country? Yet the price is for the most part controlled by the movements of foreign trade. It happens that our seaports are also the chief markets for distribution of our domestic iron. The prices of every country or district are made at its chief markets. If the consumption of iron on the seaboard is 300,000 tons per annum, the import of 50,000 of foreign iron will control the prices, be- cause it comes in to be sold for what it will bring. It is at once offered below the domestic article, and consumers, seeing a disturbing cause in the market, pause until the effect is seen. A pause in the purchase of iron produces a fall, because some sellers must realize, and buyers take the advantage and keep it. The whole mass of the domestic iron is brought to market to keep pace with consumption, and the price demanded is a remunerating rate, and unless this is obtained the business must perish. The quantity imported is a mere overplus —a remnant from British markets, the sale of which at high or low rates is not a very important or vital matter to the manufacturers who sent it. At most, it is but 10 per cent of their product, and may be considered as their profit, greater or less, as sold. What is vital to them is their home price; if that is fair on the average, they can afford to risk 10 per cent of their production in our market. Let anyone who knows how prices are made to vary, not only by actual events, but by rumors and suspicions, reflect upon the effect of an additional 10 per cent of a foreign article thrown in upon a previously balanced market, and he will perceive not only the necessary depression, but the injustice of it to the industry affected. But there is a feature in foreign trade which greatly increases the mischief of leaving the market under its control. It is, to a most extraordinary degree, uncertain and fluctuating. The importing merchants are governed in some de- gree, doubtless, by the actual demand, and their imports might, if exhibited separately, show some regularity. But a large portion of the imports are sent upon speculation, and the quantity depends on markets abroad and the thousand contingencies which may determine a larger or less export to our shores. The irregularity of our imports of iron from Great Britain is so striking as to dera- An unjust and un- wise sys- tem. Digitized by Microsoft® 438 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. The fits and starts of com- merce. Evils of price jluciuaiion. onstrate the impolicy and injustice of making the prices of the domestic product subservient to it. Mr. Colwell here exhibits statistics showing the fluctuations in the imports of iron into the United States from Great Britain each year from 1820 to 1849. He further said : These figures show a variation in the supply of iron derived from Great Britain of from lo to upvi^ards of 200 per cent, between one year and the next. Small as this quantity appears, compared with our whole consumption, it would always control the prices in New York, and thence those in the country. How little these fits and starts of commerce are like the sober pursuits of industry at home, where the annual product only varies to increase with the gradual increase of labor, capital, and consumption ! How can it be just to make the laborer's wages depend upon the variable movements of foreign trade? Mr. Colwell then shows the great fluctuations in prices and the periods of prosperity and depression which had visited the industry since 1782. He said: It is such prolonged depressions as these (1841 to 1843) which seriously injure, if they do not ruin, the maker of iron in the United States. He cannot meet such exigencies, either by reduction of his expenditures, by reducing wages, or by diminishing the amount of his produce. He must continue his business at a serious loss for years, or he must stop and be ruined. It cannot be doubted that these periods of low prices have hindered the progress of this branch of industry to a very important extent. It is scarcely extravagant to say that with the same comparative protection which has been enjoyed in Great Britain, the product here would not have been scarce less than that of that country. If the home market had been equally secure to the makers here, as that of Great Britain was to the makers there, the consumption of iron here might now be 1,500,000 tons. The higher price would have been no ob- stacle, for where all labor receives a corresponding compensation, the price is no obstacle in the exchange of labor. These fluctuations in prices, introduced from Great Britain, have proved an incalculable evil to the whole industry of the country. The fact that a portion of our annual supply has been imported at a very low cost, much lower than it could be produced for here, is no alleviation. Instead of consuming more, we have consumed less. Our consumers say that they work up far less iron at the low rates than when business is proceeding on the basis of home prices. If, owing to the low prices of British iron, we consume 200,000 tons less of domestic iron, we prevent the circulation of a value of $10,000,000, which, at $50 as the average per ton of pig and bar, would be its cost in food, labor, clothing, etc. All who are concerned in this great exchange are thrown out of their usual routine of employment. The farmer loses his market, the laborer his wages, the manufacturer his living — all are made less able to consume, and of course others who are dependent on them feel and suffer by the change, until the $10,000,000, by endless ramifications of the channels in which its benefits would have been felt, becomes hundreds of millions in its consequences. The effect of stopping the Digitized by Microsoft® PROTECTION FREEDOM T8. FREE TRADE SLATER7, 439 domestic manufacture is to throw business entirely out of the usual channels. It is too absurd to be held by anyone that the elements which would go to make 200,000 tons of iron in the United States, could be made available to import that quantity and pay for it. If imported, it must be paid for in something else than iron ore, coal, wood, veal, mutton, potatoes, turnips, oats, rye, corn, and Ameri- can labor. The principle so ably presented by Mr. Colwell applies with equal force to the textile and all other industries. Protection was given to agriculture by duties on imports of competitive foods, breadstuff s and grains, not because of unequal advantages in production, but to secure to the American farmer the full benefits of the home market. Moreover, as a means of furthering the development of the country, it has been a great inducement to immigrants to settle and become citizens of the United States. The duty of twenty-five cents per bushel was the de- termining factor in the minds of many to make them settle in the United States instead of in Canada, as they would have done if the American market had been open to the free admission of their grains. The so-called revenue policy proposed by Secretary Walker in his reports and so ingeniously defended was born in a spirit of hostility to American manufactures and American free labor. It was designed to promote the supposed interest of the planters and to consummate the alliance between them and the importers and British manufacturers, which was equally detrimental to the manufacturing and agricultural interests of the free States. It was followed by a new tariff bill drafted in concurrence with the free trade policy then adopted by the Democratic party. Why pro- tection for the Jarmert Digitized by Microsoft® CHAPTER XVI. Economic Discussion. Nations pay little regard to the rules and maxims calculated in their very nature to run counter to the necessities of society. — Alexander Hamilton, The Federalist, No. 25. Perhaps the best argument I can make for protection is to state what it is and the principles on which it is founded. Man derives his greatest power from his association with other men, his union with his fellows. Whoever considers the human being as a creature alone, by himself, isolated and separated, and tries to comprehend mankind by mathematically adding these atoms together, has utterly failed to comprehend the human race and its tremen- dous mission. Sixty millions even of such creatures without association are only so many beasts that perish. But sixty millions of men welded together by national brotherhood, each supporting, sustaining, and buttressing the other, are the sure con- querors of all those mighty powers of nature which alone constitute the wealth of this world. The great blunder of the Herr professor of political economy is that he treats hrmian beings as if every man were so many foot-pounds, such and such a frac- tion of a horse-power. All the soul of man he leaves out. Think for a moment of the foundation principles involved in this question, which I now ask. Where does wealth come from ? It comes from the power of man to let loose and yet guide those elemental forces the energy of which is infinite. It comes from the power of man to force the earth to give her increase, to hold in the bellying sail the passing breeze, to harness the tumbling waterfall, to dam up the great rivers, to put bits in the teeth of the lightning. Foot-pounds and fractions of a horse-power will never do this. It takes brains and the union of foot-pounds and fractions of a horse-power working harmoniously together. To grasp the Ml powers of nature, to reap the richest wealth of the world, we must utilize the full power of man, not merely muscles and brains, but those intan- gible qualities which we call energy, vigor, ambition, confidence and courage. Have you never remarked the wonderful diflference between a sleepy country village, lying lazily alongside an unused waterfall, where more than half the energy of the people was lost for lack of the kind of work they wanted to do ; where, whenever three men met together in the road, the rest looked out of the windows, idly wondering what the riot was about, and that same village after the banks were lined with workshops and the air was noisy with the whir of the spindles, and every man was so eager to work, that there never seemed hours enough in the day to tear from the powers of nature their imprisoned richness ? If you have, you have also seen the contrast between men left to themselves, so many foot-pounds and fractions of a horse-power, and men incited by hope, spurred on by ambition, and lighted on their way by the confidence of success. For a nation to get out of itself or out of the earth all the wealth there is in both it is not necessary for the nation to buy cheap or sell dear. That concerns individuals alone. What concerns the nation is how to utilize all the work there is in man, both of muscle and brain, of body and of soul, in the great enterprise of setting in motion the ever-gratuitous forces of nature. How shall you get out of the people of a nation (440) Digitized by Microsoft® ECONOMIC DISCUSSION. 441 their full powers ? Right here is precisely the dividing line. The let-alone school say leave individual man to his own devices. The protectionist school say let us stimulate combined and aggregated man, to united endeavor. — Speech of Hon. Thomas B. Reed, in the House of Representatives, May ig, 1888. The Mbrcantii^b System. The economic policy pursued by nations prior to the nineteenth cen- tury was known as the Mercantile System. From the history of nations given in the preceding chapters of this work, it has been shown that it embraced a mixture of ordinances and decrees for the accomplishment of two purposes: (i) the development of domestic industries ; (2) the raising of revenues for the support of the governments. To accomplish these ends, subsidies, bounties, premiums, duties on imports and exports were resorted to, as well as special privileges (or monopolies), which were granted to individuals, both to induce them to engage in and carry on industries, and as a means of raising revenues. It is from these licenses granted to favored individuals, which excluded all others from partici- pating in a particular trade or industry, that the claim originated that protection builds up monopolies. While it is true that monopolies were increased and fostered under the Mercantile System the charge is unfounded when applied to protection as now advocated and practiced. The legal definition of monopoly, as given by the Standard Dictionary, is as follows : An exclusive license from the government for buying, selling, making or using anything; called also artificial monopoly. From this sense are excepted patent and copyright laws, for the encouragement of art and letters, and restrictions for the bene- fits of the community on the sale of liquor. Hence it follows, that in earlier years when the exclusive privilege was given to the East India Company to engage in the trade with India ; when the sole right was conferred upon an individual to carry on the business of smelting iron by the use of pit coal ; when the French Gov- ernment, to induce a Hollander to establish the woolen industry in France, gave him the exclusive rights to carry on the business and con- trol the market in certain districts, monopolies were created. That this policy, which was first introduced for the purpose Of encouraging trade and industry, was afterwards grossly abused by being used as a means of enriching the king, has been pointed out. It should be noted tha as capital increased and the commercial classes became more numerous and the necessity of resorting to such extreme measures as an inducement to the establishment of industries and commerce, passed away, the mercan- tilists abandoned the granting of monopolies, the extinction of which has not been due to the influence of free trade writers, but to changed condi- tions. Understanding what constitutes a monopoly, we must admit that the policy of protection, which gives no exclusive privilege to particular Nature of the Mer- cantile System. Monopolies, Digitized by Microsoft® 4i2 TARIFF QUESTION IN THE UNITED STATES. False basis of modern free trade criticism of the Mer- cantilists. individuals and excludes no citizen from availing himself of its advan- tages, should not be classed as favoring or promoting monopolies. The use which the advocates of free trade are making of this expression, is not justified, but is simply the misapplication of the term for the purpose of arousing prejudice. In treating of the Mercantilists it is common among free trade writers to attempt to convey the idea that their main purpose was to encourage exports and discourage imports for the sole purpose of creating a favorable balance of trade, and thereby to keep bullion and specie in the country, under the mistaken notion that the precious metals alone constitute wealth. The most important end sought to be secured by the Mercantilists during the seventeenth and eighteenth centuries was, to encourage the development of domestic manufactories ; for this purpose imports were restricted to prevent ruinous competition from foreign rivals. Exports were often prohibited to aid in the development of home industries. For instance. Great Britain prohibited the export of wool in order to force its consumption in domestic woolen factories, while at the same time, imports of woolen goods were prohibited and the people were compelled, by parliamentary enactments and royal decrees, to wear domestic fabrics. While it was necessary to resort to severer measures to promote the industries of a country in those times than are required now, as a means of advancing the material prosperity of nations the policy was successful. The criticism which modern free traders make on the Mercantilists for prohibiting the export of bullion is found to be unjustifiable when the conditions under which trade was then carried on, are understood. It has been pointed out that prior to the Middle Ages the Roman Empire, in carrying on trade with Asia, had little which the Asiatic people desired, to give in exchange for the luxuries and fabrics of the East; hence, the settlement of balances each year resulted in a constant drain of the precious metals from the Roman Empire, to the extent, as Mr. Merivale informs us, of $800,000 a year. During the Middle Ages the same conditions existed between Western Europe and Asia. When the trade was opened by waj' of the Cape of Good Hope with India, the imports of tea, spices, and luxuries of the East greatly exceeded the exports thereto from Western Europe, and it was not until the cotton manufactories became extensive and the people of England and Western Europe began making fine furniture and other articles for which there was a demand among the wealthy classes of the East, that an exchange of products could be made sufficient to prevent a constant drain of the precious metals from the West by the East. The Asiatic peoples have ever been noted for their desire for the precious metals and for the practice of hoarding gold and silver. Digitized by Microsoft® ECONOMIC DISCUSSION. 443 Up to the discovery of the new world the annual supply of the precious metals was very limited. According to Humboldt, the annual average of the supplies of gold and silver from America from 1492 to 1805 was as follows: Dollars a year at an average. From 1492 to 1500, 270,000 " 1500 to 1545 3,258,000 " 1545 to 1600, 11,945,000 " i6ootoi7oo, 17,375,000 " 1700 to 1750 24,435,000 " 1750 to 1805, 38,335,000 He also estimated that the annual production of the world at the beginning of this century was, $43,500,000 from America, and about $5,000,000 'from the mines of Hungary, Saxony, etc., and those of Northern Asia. The proportion of gold to silver in America was i to 46, and in Europe and Asia i to 40. The supply of the precious metals which had hitherto been limited, although augmented by the mines of Mexico and South America, was greatly increased upon the discovery of gold in California in 1 849, and in Australia in 1 85 1 . The constant absorp- tion of the precious metals by Asia up to the early part of the nineteenth century, continually tended to embarrass the commercial nations of Cen- tral and Western Europe. Humboldt estimated that of the production of the American mines at the beginning of this century, amounting, as is shown, to $43,500,000, no less than $25,500,000 went to Asia. Another writer has said : But some years ago this immense drain began to diminish, and in 1832 and 1833 it actually set in in an opposite direction. Then for a time it fluctuated, sometimes inclin- ing to the one side and sometimes to the other. With the exception, however, of the bullion received in payment of the J21, 000,000 due to us by China under the treaty of 1842, there was not for some years any very decided movement of bullion from Europe to the East, or from the East to Europe, though, on the whole, the imports into the latter appear to have exceeded the exports ; at least this was certainly the case during the five years from 1844-45 to 1848-49, both inclusive. But more recently, or since 1850, the drain of bullion for the East set in with renewed force ; and for seven years down to the crisis of 1866, the average was only ;^io,ooo,ooo.' In speaking of India and China he says: "Taking India and China together, the imports from them into this country have greatly exceeded the exports, leaving a heavy balance to be discharged by shipments of bullion." Hence, it is apparent that the condition of trade between Asia and Western Europe made it necessary to impose restrictions on the export of the precious metals, and thereby force an exchange of goods. As, however, the trade of Great Britain increased with the United States and South America, the balance existing in favor of Great Britain was settled 1 Hugh J. Reid, editor of McCuUoch's Dictionary, edition of 1871, p. 1129. The precious metals. Necessity of prevent- ing a drain of the precious metals. Digitized by Microsoft® 414 TARIFF QUESTION IN TSE UNITED STATES. Protection and free trade. with a supply of the precious metals, with which to meet the demands of the East. Again, as England had become the distributer of tea, coffee and Asiatic commodities among the nations of the world, her merchants were able to exchange the commodities themselves, for the precious metals of the United States and other countries, with which to pay for the Eastern wares and to buy more. Understanding these conditions, the criticism of the free traders upon the means resorted to by Great Britain and other European nations, to prevent the precious metals from being drawn off, is shown to be fallacious and unwarranted. The centre of trade and commerce has, through centuries, been shifted from Eastern to Western nations. As long as Western Europe depended on Asia for its commodities, the bullion was taken from it. As long as England depended on the Flemish and Dutch for their wares, she suffered from a drain of her precious metals. So it has been with South America, the United States and the countries of the western hemisphere. As long as they have purchased more of British, Continental and Asiatic commodities than they were able to sell commodities to pay for, the balance of trade has been against them and it has been settled by shipments of the precious metals. Instead of prohibiting the export of bullion as did the Mercan- tilists, the protectionists seek to avoid such results by building up domestic industries, encouraging trade at home, and thereby buying less of the foreigners, and maintaining a favorable balance of trade. The foregoing are the principal features of the Mercantile System which call for an explanation. Protection and Free Trade Defined. It was not until the early part of the nineteenth century, that eco- nomics were presented in the form of a science. " The Wealth of Nations" was followed by the works of J. B. Say, Malthus, Ricardo, James Mill, McCulloch, John Stuart Mill, and others. In 1848 John Stuart Mill collected those assumptions and alleged economic principles which had been announced by former writers, and embodied them in an economic code which embraced the principles contended for by the free trade school. The Mercantilists had held extreme and radical views of the means by which industries could best be developed and promoted, as well as upon the system of taxation by which the public treasury should be sup- plied with funds. On the other hand, it should be noted that those advo- cating free trade carried their views to an opposite extreme. The Mercantilists and free traders represent the two extreme radical wings of economic parties, while the protectionists occupy the middle ground between the two, discarding tho.se practices of the Mercantilists which were found to be unnecessary and injurious, and preserving and Digitized by Microsoft® ECONOMW DISCUSSION. 445 perpetuating those principles which the experience of the past have demonstrated to be wise, just and beneficent. The treatment of economic c^uestions contained in this chapter sup- plements the discussion presented in preceding chapters, especially Chap- ter XV. The policy of free trade is defined at page 404, and an exposition of its principles as applied in the United States may be found in the preced- ing chapter, in the analysis of Secretary Walker's report. Protection is defined at page 405, and the method of applying it at pages 131 and 132 as summarized from Alexander Hamilton's report on manufactures. The origin and distinctive features of a tariff for revenue only are shown at pages 309 and 310. The systems of imposing duties on imports to carry out the opposing policies of protection and free trade, were stated by Henry Clay, Mr. McDuffie and Senator Hayne, in 1832, and may be found at pages 228 to 231. For a discussion of the revenue standard as laid down by President Polk in his message, see speech of Mr. Stewart of Pennsylvania, at pages 407 and 408. In about 1846 the system of free trade was reduced to what its advo- cates believed to be a science. In the following pages of this chapter is presented a statement of the chief propositions and assumptions upon which the claim that free trade is a science was based. These maxims have been examined, their errors exposed, and at the same time they are contrasted with the underlying scientific principles which support the pro- tective policy. The free trade plan as applied to the United States was unmasked by Chairman Wilson, who, at a banquet given in his honor in England by British manufacturers shortly after the passage of the Gorman-Wilson law, said: "Our protectionists have been building defences to keep you and other nations from competing with us in our home market. The tariff reformers are breaking down these defences." Method of Treatment. The first important contention which arose between the protectionists and the free traders is found in the mode of treatment and investigation. The plan adopted by those believing in the policy of protection, was the " inductive or historical method " of inquiry. They treated the subject not only from a broader standpoint than the free traders, but with a greater de- gree of certainty of arriving at the truth. Every practical proposition was required by them to be estabhshed by facts. This involved full inquiry and acreful investigation. It was held that " a sound and trained rea- son is possessed by one who has made a wide and careful survey of facts The free trade plan un- masked. Digitized by Microsoft® 446 TARIFF QUESTION IN THE UNITED STATES. Historical metkod. The deductive method. The fundamental ideas of the historical Roscher, the German philosopher, as fol- which justify the reason.' method are laid down by lows: (i) The aim is to represent what nations have thought, willed and discovered in the economic field, what they have striven after and attained, and why they have attained it. (2) A people is not merely a mass of individuals now living. It will not suffice to observe contemporary facts. (3) All the peoples of whom we can learn anything must be studied and compared from the economic point of view, especially the ancient peoples whose development lies before us in its totality. (4) We must not simply praise or blame economic institutions ; few of them have been salutary or detrimental to all peoples and at all stages of culture; rather it is a principal task of science to show how and why out of what was once reasonable and beneficent, the unwise and inexpedient has often gradually arisen.^ This method was pursued by Adam Smith in his "Wealth of Nations, ' ' by Henry C. Carey, and his followers in America, by the German econo- mists and the more recent English and American writers. This is the practical method pursued by statesmen, lawyers, physicians, business men and scientists in reaching conclusions in all affairs brought within the domain of their work. One result of the teachings of this school has been to turn the minds of students of economic questions not only to the history of what has been said upon this subject, but also to a critical investigation of those trans- actions and occurrences from which all economic thought springs. We have passed from a period of speculation to one of scientific investigation of facts. On the other hand, those believing in the system of free trade have a plan known as the "deductive or metaphysical method, " which has been briefly defined as "a theory based on assumption." Professor Ingram, in his "History of Political Economy," says: "Its deductions are based on unreal, or at least one-sided assumptions, the essential of which is that of the existence of the so-called 'economic man,' a being who is influenced by two motives only; that of acquiring wealth and that of avoiding exertion. ' ' Relying on assumptions as the basis of their creed, they refuse to enter the domain of historical research in order to prove their soundness by the experience of nations. This mode of treatment has proven so unsatisfactory to statesmen, scholars and men of experience in ordinary affairs of life, that it has brought the metaphysical school into disfavor and it may now be said that the economic discussion which has followed, has resulted in the repudiation of this mode of investigation by nearly all economists, and even many advocates of free trade have been compelled practically to abandon it. ' See Ingram's History of Political Economy, p. soi. Digitized by Microsoft® ECONOMIC DISCUSSION. 447 lylMITATIONS OF THB SUBJECT. At the outset we meet with a controversy over the scope of the inquiry. The subject of political economy is defined by an advocate of the doctrine of protection to native industry, as follows : Henry C. Carey: "The science of the laws which govern man in his efforts to secture for himself the highest individuality and the greatest power of association." It is apparent then, that the controversy arising between the advo- cates of protection and free trade, embraces not only the subject itself, which is to be considered, but the scope and extent of questions relating to it. By protectionists man is regarded as "a unit of society, a worker in business and a citizen of the state." His moral, intel- lectual and material welfare is taken into account. The interests of individuals are looked upon as insigniiicant when they conflict with the public good. This school is broad enough to comprehend those differ- ences which appear in the races of men, as well as in the destiny and capabilities of societies and nations. It also recognizes the geo- graphical divisions of the earth with those natural resources which may by proper direction of human effort, be utilized for the benefit of mankind. Those advocating free trade attempt, in the first place, to limit the functions of governments to the power of preserving order and enforcing contracts. Man is treated of as a commodity for sale in the market, or as a machine of a certain horse power. Bastiat says : "To political economy is left only the cold domain of personal interest. ' ' McLeod defines it as "the science of exchange of values." Free traders persistently attempt to limit inquiry and treatment solely to the subject of money-getting b}' individuals. It is from this method of dealing with the subject, arising from their conception of man as governed wholly by selfishness and animal instincts in the affairs of life, that the free trade school has been accused of advocating cold- blooded, unsympathetic rules for the government of trade and commerce. That this accusation was well founded appears in every line of their litera- ture, in every assumption made. They persistently refuse to consider man in his relation to other men as a member of society, as well as an individual. The effort to limit the scope of the subject has brought down upon the school the condemnation of the broadest minded statesmen and philosophers of the world, and has confined its advocates to a sect of professors who, without practical experience in business, were unable to form a just estimate of human life, and to those manufacturers who, being able to manufacture cheaper than anybody else, would profit by a system which secured to them perfect freedom to carry on a warfare of destructive competition against Protection- ists^ view of the scope of the subject. Free trade opinion. Digitized by Microsoft® 448 TARIFF QUESTION IN THE UNITED STATES. The sur- vival of the fittest. all rival producers of other countries, and thus perpetuate a monopoly based on cheap labor, to the injury of others. Scientific Basis of Protection and Free Trade. The essential difference between the two systems of economics lies at the very foundation of civilization, and forms the basis of the moral, intellectual and material development of man. It is asserted by the metaphysical school that the doctrine of free trade is a science founded on a "great truth' ' or "natural law" or "scientific principle" of universal application. This claim has been so persistently urged that it has made a profound impression on the world. While the professional advocates of free trade constantly refer to the "great truths" and "principles" upon which their theory is founded, yet it rarely occurs that they definitely point them out. When the student of economics understands that the doc- trine of free trade has its "scientific" basis in the principle of "natural selection' ' upon which the Darwinian theory of the origin and development of species is founded, he is then able to comprehend the subject from a scientific point of view. Freedom of trade between nations is but an application to trade, commerce and industries, of the law of "the sur- vival of the fittest" or "struggle for existence" which Charles Darwin contended has raged since the beginning of time, in the formation of the earth and among plants, animals and men. It is contended that in this ever raging and ceaseless warfare, in which many perish and few survive, nature orders every man to his place and preserves the "fittest" and the best, and that ultimately, through this constantly recurring "survival of the fittest, ' ' advancement and progress are more surely attained. Hence, the advocates of free trade are constantly reminding the world that it should "let nature take its course," that "freedom of action" is "the natural law." Under this principle, which is more politely known as "free competition," the industries of a country which are able to "sur- vive" the warfare, are called "natural" industries; and the wage rate which prevails when the laborers of the world contest with each other and fight out the battle of place, however low it may be or however inadequate, is the "natural" wage rate. This is true of profits, and mode of living as well. Edward Clodd says :' When the weeding process has done its utmost, there remains a sharp struggle for life between the survivors. Man's normal state is therefore one of conflict; further back than we can trace, it impelled the defenceless bipeds from whom he sprang to unity, and the more so because of their relative inferiority in physique to many other animals. The range of that unity continued narrow long after he had gained lord- ship over the brute; outside the small combinations for securing the primal needs of life the struggle was ferocious, and, under one form or another, rages along the line 1 story of Creation, pages 211-12. Digitized by Microsoft® ECONOMIC DISCUSSION. 449 to this day. ' ' There is no discharge in that war. ' ' It may change its tactics and its weapons; among advanced nations the military method may be more or less super- seded by the industrial — a man may be mercilessly starved instead of being mercilessly slain; but be it war of camp or markets, the ultimate appeal is to force of brain or muscle, and the hardiest or craftiest win. In some respects the struggle is waged more fiercelv than in olden times, while it is unredeemed by any element of chivalry. It is through their adherence to this principle that the believers in the doctrine of free trade deny to society the right to attempt by positive law, through its directing and controlling power, to set limits upon the free exercise of the animal instincts and the greed and selfishness of man in this struggle. They hold that this eternal warfare should be per- mitted to go unbridled and rage with all its destructive fury; the weak to become supplanted and wiped out and the cunning and crafty to "survive" under the assumption that this is nature's process of evolution and progress. When applied to international competition in trade and commerce, the weapons of attack and defence are capital, skill, ability, machinery, low wages and long hours. Every means by which the cheapest production can be attained, that through a system of underselling, markets may be won and held, must be resorted to in order that one may supplant the other. This is more especially so to-day than at any other time in the history of the world, since so many competitors have entered the contest selling the same wares, and all provided with abundant capital and a high degree of skill, and the latest and best appliances and machinery, as well as with an army of trained and efficient artisans. The party to the struggle which would make fabrics the cheapest would control and hold the markets. The party to the struggle whose labor, everything else being equal, would submit to and stay in the fight on the lowest wages, and the capitalists who would submit to the smallest profits, or in fact could endure it the longest without any profits, would triumph over the others. The masses of the United States would be brought down to the level of foreign competitors ; every one in the struggle would be reduced to the circumstances of the strongest and best fitted for the contest; the struggle would still be carried on, with wages and profits reduced to a minimum and the sur- vivors would not necessarily be those who for the good of humanity ought to survive. ' ' The survival of the fittest, ' ' says Drummond in his " Ascent of Man , " " of course does not mean the survival of the strongest; it means the survival of the adapted— the sm-vival of the most fitted to the circumstances which surround it. A fish survives in the water, when a leaking ironclad goes to the bottom, not because it is the stronger but because it is better adapted to the element in which it lives." Professor Huxley says that those survive who "are best fitted to cope with circumstances. ' ' T/ie let- alone policy. Digitized by Microsoft® TARIFF QUESTION IN THE UNITED STATES. Scientific basis of protection. Artificial selection. While conceding that such a struggle has been raging it is denied by many able economists and scientists that the best types of plant and animal life are necessarily produced by it. It is contended that such warfare has perpetuated the existence of many inferior forms of life and prevented the development and growth of those most beneficial to man. If it should be conceded, however, that free trade is based on this "natural law," or that the "laws of nature" are given full force under free com- petition, it does not follow that it should be accepted as a basis of an economic policy, or that it affords to man the best means of promoting the material development and progress of the world or of separate nations; neither does it follow that protection is unscientific and therefore to be rejected. This brings us to a consideration of the scientific basis of pro- tection. While the scientific world recognizes the principle of "natural selection," that is selection brought about by purely physical laws, yet there is another principle known as "human selection," called by some "artificial selection," accomplished through the intellectual forces of man which is no less natural because it is human. History teaches that the progress of the world has not been secured through the let-alone policy contended for by the advocates of free trade, but that all advancement in civilization and all improvements for the benefit of man, have been made in proportion as man himself has exercised dominion over the forces of nature. Diu-ing the age of man the same animals and plants have been found to exist with no perceptible change under the law stated by Mr. Darwin. We have the wild horse, the wild goat, the wild boar and the buffalo. In plant life we find the crab-apple, the wild berries, the wild grapes and wild flowers. But when we come to consider the rapid improvements and development of plant and animals, we find that it has been due not to "natural selection," but to "human selection," which is defined by the Century Dictionary as follows: Artificial selection which means agency in modifying the principles and so chang- ing results of natural selections. . . . This has been going on, more or less sys- tematically, since man has domesticated animals or cultivated plants for his own benefit. Such selection may be unconscious or methodical. It has constantly tended to the latter, which is now systematically conducted on a large scale, and has resulted in numberless creations of utility or of beauty, or of both, which would not have existed had the animals and plants, thus improved, been left to themselves — that is, to the operation of natural selection. Examples of artificial selection are seen in the breeding of horses for speed, bottom or strength, or for the combination of these qualities; of cattle for beef or milk; of sheep for mutton or wool; ... in the cultivation of cereals, fruits and vegetables, to improve their respective qualities and increase their yield; and of flowers, to increase their beauty and fragrance. The most beautiful and fragrant fiowers, the richest fruits, the most valuable and useful animals, the best varieties of wheat and grain, and all improvements which we know in plants and animals, have come from Digitized by Microsoft® ECONOMIC DISCUSSION. 4:1 artificial selection. Withdraw the care, protection and influence of man from any one of these, and subject them to the influences of the law of "the survival of the fittest, " and they would either perish or return to their original and wild state. It matters not whether we call the efforts of man so exerted, of a "natural" or "artificial" character. It is found that the evolution of man — his education, development and improvement — has arisen from the protecting, controlling and governing power of man himself. It has been through ordinances of man that societies have been formed, governments established, peace preserved, persons and property protected, and the brutal propensities of man softened or eradicated. Professor Huxley, in his article on "Struggle for Existence," said: Society like art is a part of nature, but it is convenient to distinguish those parts of nature in which man plays the part of immediate cause as something apart ; and, therefore, society, like art, is usefully to be considered as distinct from nature. It is more desirable and even necessary, to make this distinction, since society differs from nature in having a definite moral object ; whence it comes about that the course shaped by the ethical man, the member of society or citizen — necessarily runs counter to that which the non-ethical man — the primitive savage, or man as a member of the animal kingdom — tends to adopt. The latter fights out the struggle for existence to the bitter end, like any other animal ; the former devotes his best energies to the object of setting limits to the struggle. The history of civilization — that is of society— is the record of the attempts which the human race has made to escape from this position {i. e., the struggle for existence in which those who were best fitted to cope with their circumstances, but not the best in any other sense, survive). The first men who substituted the state of mutual peace for that of mutual war, whatever the motive which impelled them to take that step, created society. But in establishing peace, they obviously put a limit upon the struggle for existence. Between the members of that society, at any rate, it was not to be pursued d Voutrance. And of all the successive shapes which society has taken, that most nearly approaches perfection in which war of individual against individual is most strictly limited.' History teaches us that the development of man from barbarism to civilization ; the growth of society from the family and tribe to organized governments; the control of man over man, from the exercise of brute force to an intelligent and patriotic obedience to positive law; the growth of language from rude words to beautiful and harmonious speech; the development of reading, writing and those means by which man expresses to others his ideas, sentiments, feelings and affections; the growth of religious sentiment and ideas from idolatry, to a belief in the inspiration of the Scriptures and devotion to the Christian religion, are all phases of that system of evolution which, through fluctuating periods, mark the moral and intellectual development of man. Whatever may be the great moving cause which has impelled man to attain the high eminence which he now occupies, it is quite certain that it has not been by yielding to the blind fate of nature and permitting iNineteentli Century, February 18, 1888. Civiliza- tion modi' fies the struggle for exist-* ence. Digitized by Microsoft® 452 TARIFF QUESTION IN TEE UNITED STATES. Progress of mankind due to con- scious selec- tion. tmconscious selection to shape his destiny and work out the problem of development; but it has been by conscious and intelligent selection, by refusing to let things take their own course. This is found to apply to every department of human life. The stigma which is attempted to be cast upon the policy of protection by defining it as an "artificial" means of developing industries, and as placing restrictions on "natural law, " should be a reflection on the intelligence of any economist who resorts to such distinctions. Under the principle involved in this distinction the wild horse is the "natural" horse; he is as nature made him, but when tamed, domesticated and broken he passes to an "artificial" state. The savage man, in his barbarous condition, is the "natural" man, but when educated, Christianized, socialized and developed by training, culture and refining influences, he becomes the "artificial" man. So our whole fabric of society and civilization is "artificial," yet still, it is not to be con- demned or rejected. This distinction has formed one of the chief humbugs of the Man- chester school in its efforts to claim for its creed the dignity of a "science" and to command the endorsement of scholars and teachers. The question whether or not protectionists are obstructing the free opera- tion of "natural laws," or preventing the occurrence of what would hap- pen if they kept their hands off, is entirely irrelevant. The sole measure of the wisdom or folly of protective legislation, must be found in its effect on the social and material welfare of nations. Protectionists have not permitted the question to be determined by dogmatic assumptions, but they point to the experience of nations to demonstrate the wisdom of their policy. History teaches that the material development and prosperity of nations, and the elevation of the masses, have been attained through those fiscal regulations which have placed limits and restrictions on the warfare of competition, through which one nation is able to supplant and destroy the industries of another. Since it has been made possible through economic conditions for one nation to maintain and build up a system of manufacturing by undermining and supplanting the industries of another, it is found that the wide extension and development of domestic resources and industries throughout the world have resulted from those barriers which have shielded them from invasion and attack, fostered, encouraged and stimulated industrial life, and afforded opportunities for emploj'ment and the investment of capital which otherwise could not have existed. The Mai,th0Sian Theory op Population. It should be noted in tracing the origin of the "scientific" basis of free trade, that it did not arise from a study of the Darwinian theory of "the survival of the fittest" by the British economists; but that Charles Digitized by Microsoft® ECONOMIC DISCUSSION. 453 Darwin discovered the essential principle of his law of "natural selection' ' by reading the economic writings of Thomas Robert Malthus. He says : In October, 1838, that is, fifteen months after I had begun my systematic inquiry, I happened to read for amusement "Malthus on Population," and being well pre- pared to appreciate the struggle for existence which everywhere goes on, from long continued observations of the habits of animals and plants, it at once struck me that under these circumstances favorable variations would tend to be preserved and unfavor- able ones to be destroyed. The result of this would be the formation of new species. Here, then, I had at last got a theory by which to work.^ The writings of Dr. Malthus exerted a wider influence in formulating the theoretical principles of free trade, than those of any other English- man. In 1798 he published his first essay on Population, in which he announced the principle that population te?ids to increase faster than the means of subsistence. He said : This constant effort as constantly tends to subject the lower classes of society to distress, and prevents any permanent amelioration of their condition . The num- ber of laborers also being above the proportion of the work in the market, the price of labor must tend toward a decrease ; while the price of provisions would at the same time tend to rise. They [the laborers] must at all events be reduced to live upon the hardest fare and on the smallest quantity." Speaking of the ability of society to elevate the condition of the masses, he said : ' 'To remove the wants of the lower classes of society is indeed an arduous task. The truth is that the pressure of distress on this part of the community is an evil so deeply seated that no human ingenuity can reach it. " ' In his second essay published in 1803 he states the general checks that tend to keep down population. These he divides into two classes: (i) preventive checks, which include those restraints which man imposes upon himself to prevent the propagation of the species; (2) positive checks, which he enumerates as "all unwholesome occupations, extreme poverty, bad nursing of children, great towns, excesses of all kinds, the whole train of common diseases, epidemics, wars, pestilence, plague and famine. ' ' * Despite the kernel of truth that this theory contains, it has proved a fruitful source of error. While the growth of population, if unrestrained, may tend to press on the means of subsistence, the preventive check consequent upon the high standard of living has been so effective among civilized races and the increase of productive power has been so great that the pessimistic forebodings of Malthus and his followers have been proved by experience to be without foundation. As a statement of a tendency which if not counteracted by opposite tendencies may produce certain 1 Life of Darwin, Vol. I., p. 83. 2 Malthus on Population, Macmillan &, Co.'s edition, 1895, PP- 14 and 37, s Id., p. 35. * Id., cli. ii. Population and the means of subsistence. Digitized by Microsoft® 4G1 TARIFF QUESTION IN THE UNITED STATES. Limited application of the Malthu- sian theory. results, the theory of Malthus properly has a place in economic science, but as a description of actual conditions it is utterly misleading. Malthus himself exaggerated its importance and subsequent writers by misap- plications and unwarrantable deductions obscured the element of truth that it contained. The question at the beginning of the nineteenth century, with a certain school of theoretical writers was, how to prevent the increase in population, while at the close of the same century the question is, how can man be distributed over the earth ; how can the natural resources and richness of the world best be utilized and developed ; how can he most surely be provided with the means of employment, through which to purchase the necessaries and comforts of life? That the world is large enough, and its resources sufficient if properly utilized, to furnish an abundance for all, there cannot be the slightest question. This principle has been fully recognized by the school of protectionists, which seeks to elevate the masses of humanity, to dignify labor and to provide for the wants and necessities of life, by the opening of mines, the building of factories, the cultivation of the soil, diversifying industries and all of those means by which nature is made to give up her treasures in response to the industry of man. Thk Kconomic Man. The charge has often been made by protectionists that the theory of free trade had its origin in unreal and imaginary conditions, while the doctrine of protection was drawn from the experience of nations and from the actual practice of man. Free trade has been conceded by eminent economists advocating its principles to be a theory based on assumptions. Attempting to prevent the social side of the question from being con- sidered, by confining their discussion wholly to the subject of sales, they contended that the only problem to be dealt with in the science of eco- nomics was the system of buying and selling and its influence on the accumulation of wealth. The political economy of the Manchester school was written wholly in the interest of, and from the standpoint of, the British manufacturer and trader; labor was regarded as a tool or commodity to be bought and sold in the market, to be discarded as soon as its use became unprofitable. In support of the theory, the Manchester economists refused to enter the domain of historical research, and to gather facts from the actual experience of man for its support. In fact, at the time the doctrines of free trade were announced, it had been wholly untried, and its effect on the trade, commerce and industries of great commercial nations, when put to the test of sharp competition, was unknown. Hence, the results which were claimed for it rested wholly in prophecy, conjecture and predictions. Not only the results which were to follow were assumed, but the reasoning was predicated on imaginary and unreal Digitized by Microsoft® ECONOMIC DISCUSSION. 465 conditions. This is now conceded by the ablest economists of the world. Mr. Bagehot, one of the most eminent of recent free trade writers, and for a long time editor of the I^ondon Economist, conceded that the " economic man " was an imaginary being. He says: Political economy deals not with the entire real man — a man answering to a pure definition, from which all impairing and conflicting elements have been fined away. The abstract man of this science is engrossed with one desire only — the desire of possessing wealth; not, of course, that there ever was a being who always acted as that desire would dictate, any more than any one thinks there is in nature a world without friction or entirely elastic planes, but because it is found convenient to isolate the effects of this force from all others. The effect of the abstract hypothesis on the necessary basis of statics and dynamics, to enable us so see the efi^ect of the single agent " pressure," in a simple way and free from the repressing and obscuring condi- tions which exist in actual nature; and in the same way the use of the primitive assumptions of political economy is to show how the greatest of industrial desires — the desire to obtain wealth — would operate, if we consider it as operating as far as we possibly can by itself.' The advocates of protection not only refuse to confine the subject within the narrow limits laid down by the Manchester school, but to accept the mode of treatment prescribed, holding that, it being impossible to separate man from his social conditions and those causes which influ- ence his action and contribute to his success or failure, correct conclusions could not be reached without considering him in his relation to others and as a member of society. The protectionists dealt with man as they found him in society and business, considering all of his hopes, aspirations, and all of the elements which necessarily contribute to his elevation and improvement. Instead of a science in which commodities and money transactions were alone to be dealt with, the protectionist school held to that time-honored policy which made man the chief factor, and the best means of improving and advancing his social, intellectual and material welfare the prime object. The application of free trade assumptions to actual practice in England during the past third of a century furnishes convincing proof of the errors which mere visionary theorists committed when they formulated an economic policy for an imaginary man in an unreal world. Personal IvIberty. A careful examination of the scientific phase of the theory of free trade, reveals the fact that the law of the "survival of the fittest" is very far reaching and is the controlling principle underlying the doctrine. It was a belief in this principle which attracted them to the "personal liberty' ' ideas of the French economists. To limit the powers of govern- ment simply to the office of preserving order, punishing crime and enforcing contracts and leaving man to exercise the largest possible > Bagehot's writings. Vol. V, p. 313. The " economic many Freedom of contract. Digitized by Microsoft® 456 TARIFF QUESTION IN TEE UNITED STATES. Applica- tion of the principle of freedom of contract. individualism, that he might fight out the battle of life with the least possible restrictions, in order that the strong might survive and the weak perish, was in harmony with their dogmas. In this connection arose their idea of "the freedom of contract," holding that a man should be left free to make whatever contracts he saw fit, to sell where he desired and to buy where he desired, and also to hire labor as cheaply as possible or upon whatever terms he could get it, and to run his own business in his own way ; while, at the same time, this applied equally to labor, which should be left free, but without the right to resort to artificial means, such as labor unions and combinations, to obtain the market rate of wages. Under the principle contended for, the hours of labor should not be restricted, there should be no interference by society with the individual in running his business. The manufacturer should be permitted to run his factory all night if he desired, to hire none but women and chil- dren, to work them at long hours, and at whatever wages they could be obtained; he should also be permitted to provide his own place of employment, however dangerous, insanitary or unwholesome, leaving the question to be regulated by "natural law," personal interest and humane and philanthropic instincts. Under this same principle, the utmost freedom should be accorded to emigration and immigration. For a nation to place restriction upon the natural flow of population from one country to another, would be to resort to "artificial" means. Again, under this great "natural law" no industries were to be carried on unless they could survive the warfare of competition. Those which could survive this struggle were regarded as existing under conditions imposed by nature, and therefore were called "natural" industries; while on the other hand, those which were brought into life and maintained by protec- tive tariffs or artificial means, were called "unnatural" or "artificial" industries. The same was true of the wage rate. It was held that the law of supply and demand for labor imposes a natural wage rate below which wages cannot fall and above which they cannot rise; and that it is unwise to attempt to interfere with the "natural law" which controls and fixes wages. Under this theory the miserable and degraded condition of the masses is justified by an appeal to the ordinances of nature. Under the opera- tion of this doctrine of the "survival of the fittest," out of a population of about 38,000,000 in Great Britain, there are less than a million and a half of taxpayers. "Ninety per cent of the people," says Frederick Harrison, "have not property enough to load on a cart;" while the shippers, bankers and importers have been growing rich in foreign trade, the agricultural interests have been destroyed, industries have been sup- planted, and the army of unemployed and beggars has yearly increased; and yet the hard and miserable life of nearly 30,000,000 of their people is claimed to be in harmony with "the laws of nature." It is most Digitized by Microsoft® ECONOMIC DISCUSSION. 457 fortunate for the world that Great Britain, through its blind adherence to free trade, has afforded during the past thirty years an example of the practical operation of this barbarous policy. Yet, it is persistently urged that to attempt to remedy the evils resulting from such a policy, by fiscal regulations, is a restriction of individual liberty and an infringement on the natural rights of man. Under protection the individual exercises the utmost freedom of action in all the pursuits of life. The government does not attempt to direct the individual nor to compel him to engage in any pursuit which he does not desire to undertake; neither does it in the least restrict him in the occupation which he may pursue. It simply, by shielding its own citizens from the injurious effects of unfair and unequal competition, improves their conditions and enlarges their opportunities for employment and the field of their enterprises. It is not protection to individuals, but protection to opportunities for individuals. It improves and makes more certain of prosperity the conditions under which the industrial life of a nation is carried on. It is like security of title and possession of property; the certainty of peace and order in a community. "The distinction between paternalism and protection is," says Gunton, "that a paternal policy implies doing the maximum for the individual, while a protective policy implies providing the individual with the maximum opportunity to do for himself. ' ' The only restriction imposed by a protective policy upon the indi- vidual consists in requiring the payment of a duty for the privilege of importing competing commodities from foreign countries. This right is exercised under the power of the government, conferred by the people through the Constitution, to regulate commerce with foreign nations and to provide for the general welfare of the country. There are no restric- tions upon exports; the markets of the world are as open and accessible, so far as legislation is concerned, to the citizens of the United States, as they are to those of any other country. David A. Wells says : The highest right of property is the right to exchange it for other property. . . Both slavery and artificial restrictions or prohibitions of exchanges deny the individual the right to use the product of his labor according to his own pleasure, or what may seem to him the best advantage. . . Free exchange between man and man, or what is the same thing, free trade, is therefore action in accordance with the teachings of nature.' Although this proposition, which is a fair statement of free trade, is laid down as of general application, it applies only to international or foreign exchanges. The fallacies involved in the foregoing proposi- tions are found in an erroneous conception of civil liberty, natural rights of individuals, the true functions of governments, and what constitutes 1 Article ou Free Trade, Johnson's Universal Encyclopedia. Protection to oppor- tunities. Digitized by Microsoft® 458 TARIFF QUESTION IN THE UNITED STATES. justice. In every proposition stated, the interests and rights of two parties must be considered, in order to arrive at a sound conclusion: (i) The individuals; (2) the public. The rights of every citizen of a free government must be considered in his relation to others. He is not only, in his participation in the affairs of the community, one of the governors, but he is also one of the governed. His condition as a member of society is one of dependence and obligation. Free traders in presenting the proposition stated, fall into error by considering only the individual and ignoring the public. What then is "liberty?" We are able to define "civil liberty" (Century Dictionary) as that: Whicla implies the subjection of an individual member of the community to laws imposed by the community as a whole, but it does not imply the assent of each indi- vidual to those laws. An individual has civil liberty if he is a member of a community which possesses such liberty and is in the enjoyment of such rights which the laws of the community guarantee him. This is the only kind of liberty a man in society can enjoy. I,iberty in the abstract or absolute freedom of action, cannot be exercised by man either in society or in nature. From the very nature of things re- strictions arising from physical or positive laws, place limits on his actions. Restrictions, then, are in accord with physical laws and are necessary under the laws of society and governments. Hence, it follows that, as an abstract principle, restrictions on the acts of indi- viduals in society are not necessarily to be associated with human slavery. A citizen of a free government necessarily lives under a system of restrictions upon his actions, and yet, he enjoys civil liberty. He is a free man ; he is a sovereign ; he is a law maker ; he is clothed with the highest and most exalted authority of citizenship, and enjoys the most enlarged private rights, yet the liberty he enjoys is liberty regulated by law. The independence he exercises is an independence in certain things and within a circle and bounds which cannot be overstepped. He is free to do only that which is permitted by law. Freedom to assail the property, employment and occupations of others with impunity, has never been contended for by any excepting anarchists and free traders. Liberty is, then, the right to do that which is permitted by the law of the land. Free moral action consists in doing that which is permissible by divine law. We are living in a reign of human and divine law. Our interests, rights and property rest upon these laws for their existence and perpet- uity. Forms of government are instituted for the benefit of man as an individual, and for man as a member of society ; consequently two interests at once arise; the interest of the individual himself, and the interest of all the people in common, known as the public welfare. When the interests of the individual come in conflict with the public, the public Digitized by Microsoft® ECONOMIC DISCUSSION. 459 welfare must prevail. The science of government and jurisprudence, as recognized by the greatest philosophers, statesmen and jurists of modern times, is based upon the maxim, "Salus Populi Suprema Lex." ■ "That regard be had for public welfare, is the highest law." There is an implied assent on the part of every member of society that his own individual welfare shall, in cases of necessity, yield to that of the community; and that his property, liberty and life shall, under certain circumstances, be placed in jeopardy or even sacrificed for the public good.' This maxim is of such universal application, and is so necessary to the existence of republican institutions, that it has become the basis upon which the whole social fabric of modern civilization rests. It is under this and by this, that the private rights of individuals are meas- ured and determined. When we speak of the private rights of individ- uals, we mean rights which they possess and enjoy in obedience to this higher law. Private rights, then, are simply relative rights to all those spoken of as absolute rights. A citizen may be required to surrender his life through the performance of military duty, in defence of his country. The right of personal liberty to move about and go where he wills, is restricted by compelling him to serve in the army, respond to subpoenas, perform jury duty and other services for the benefit of society. The right to possess, exchange and enjoy private property implies obedience to the same higher law. It does not help the matter to assert that the exchange of private property is necessary for man's existence. An exchange of property is not prohibited. A citizen is simply required to make exchanges in conformity with a public policy and in such a way as not to conflict with the best interests of society. It is the sheerest nonsense to contend that there is an inherent right existing in a citizen to do with his property as he sees fit, regardless of the public good. The possession and existence of property is made possible by society. Man in a savage state, making his way under the "natural law," was compelled to defend his possessions by sheer brute force. When he becomes a member of society, not only his person, his liberty, but his property is protected and its possession and enjoyment are made secure. Man neither in a savage state nor in society is permitted to hold property excepting by the consent of his fellows. The right to property, then, is enjoyed only under conditions imposed by the power which protects and makes its existence and enjoyment possible. Its disposition at home is regulated by the government. This could not be less so, simply because a citizen desired to exchange it in a foreign country for property the bringing of which into his own country might be detrimental to the interest of the whole people. • Bacon's Max., Reg. 12. a Broom's Legal Maxims, Chap. 1. The gen- eral wet- fare the highest law. Digitized by Microsoft® 460 TARIFF QUESTION IN THE UNITED STATES. ProtectiortT a matter of public policy. The very reverse of the proposition contended for by free traders is true. Instead of the right of free exchange being an "inherent right or necessary adjunct to the right of property, ' ' it would be much more nearly correct to say that an inherent quality of all property is its liability to taxation. The "inherent right" exists in society to place such limitations on the exchange of property as the public good requires. Neither does the security of private property necessarily consist in the right of the freedom of exchange. It is the conditions and circum- stances under which men live, brought about by the operation of wise laws that make life and liberty more secure. It is also the conditions under which the business operations of the people are carried on, which bring the greatest security to industry and property. If the market in which a person sells his goods is handed over to strangers and he is deprived by unjust and unequal competition of for- eigners of the opportunity to sell ; if in order to meet and combat such competition, the producer is compelled to work for less than sufficient wages to provide the necessaries and comforts for himself and family ; if by such competition, producers are driven out of business, their fortunes wrecked, and they become reduced to bankruptcy and are left to carry on an unequal and unjust struggle against the pauper and degraded labor of foreign countries, how can it be said that security of private property exists, although the utmost freedom in exchange of commodities is per- mitted? Instead of freedom of exchange bringing security to private property, it may result in its destruction. It is then, through protective tariff legislation, by a restriction being placed on foreign exchanges, that the greatest security to private property is attained. The security of private property, then, must consist in those economic conditions under which capital and labor are most permanently, uninterruptedly and projQtably employed, and under which the largest industrial development of a country can be secured and the greatest wealth, progress and pros- perity attained. What right has a consumer living on a fixed income, or engaged in an occupation, or so situated that he would profit by the system of free trade, to demand that the government repeal its protective laws and sub- ject the labor and industries of the country to the ruinous competition of foreigners, until he first shows that it would be justified by public policy, and that the greatest good would come to the greatest number by the adoption of free trade? Unless this is established, he plays the part of a highwayman who seizes a team by the bits and demands the driver's pocket-book. The doctrine of the right of free exchange, or to buy where one can buy the cheapest, rests upon the same principle of individual liberty as the right to commit any other act affecting the property and rights of others. This brings us to a justification of the proposition so long Digitized by Microsoft® ECONOMIC DISCUSSION. 461 contended for by protectionists, that protection is not to be decided by dog- matic assumptions, but is a question of public policy to be determined by each government in accordance with those economic conditions under which their material welfare can most surely be promoted. CoSMOPOIvlTANISM . Another error which the Manchester school committed, is found in the assumption that the nations of the world are one family; that a nation in framing its economic policy should not only consider what is good for its own people, but that which is beneficial to other nations as well. Contending that a destructive warfare is constantly raging between nations in the efforts of the strong to supplant the weak, they advise nations to submit themselves to the inevitable and raise no defences to preserve their industries from destruction. It also involves the assump- tion that the highest destiny of man can most surely be reached through world, instead of national development. To say the least, this is a very kind and beautiful doctrine to be put forth by Englishmen, especially when they have vigorously attempted for centuries to cripple ana destroy the commerce and industries of all other countries, by every method possible. A very able refutation of this contention may be found in "Political Science and Constitutional I,aw, ' ' by John W. Burgess, as follows : The state cannot, however, be organized from the beginning as world-state. Mankind cannot yet act through so extended and ponderous an organization and many must be the centuries, and probably cycles, before it can. Mankind must first be organized politically by portions before it can be organized as a whole. I have already pointed out the natural conditions and forces which direct the political apportionments of mankind. I have demonstrated that they work towards the establishment of the national state. The national state is the most perfect organization which has yet been attained in the civilization of the world for the interpretation of the human conscious- ness of right. It furnishes the best vantage ground yet to be attained for the contem- plation of the purpose of the sojourn of mankind upon earth. The national state must be developed everywhere before the world-state can appear.' Speaking of the duty which the people of one government owe to those of another, he says: Every state has, of course, a duty to the world. It must contribute its just share to the civilization of the world. In order to discharge this duty it must open itself as fully as is consistent with the maintenance of its own existence and just interests to commerce of intercourse, ingress and egress; but it is under no obligation to the world to go beyond these limits. It cannot be demanded of a state that it sacrifice itself to some higher good. It cannot fulfil its mission in this way. It represents itself the highest good. It is the highest entity. The world has as yet no organization into which a state may merge its existence. The world is as yet only an idea. It can give no passports which a state is bound to accept. The duty of a state to a world is a duty of which the state itself is the highest interpreter. The highest duty of a state is to preserve its own existence, its own healthful growth and development. " 1 Vol. I., pp. 85-6. 2 Id. pp. 43-4. National Lvterests not to be sacrificed in the in- terest of a ''world- state.*^ 51 Digitized by Microsoft® 462 TARIFF QUESTION IN THE UNITED STATES. vation. Natural advatf iages.. If then it is found that the end to be attained can more surely be reached through the policy of protection, it becomes the duty of every citizen to subscribe to this policy and aid in its maintenance. lyittle can be added to the above quotation, so ably has its author met and over- thrown this free trade assumption. The present means of advancing the vpelfare of man is by societies acting through organized governments. ' 'Self-preservation is the first law of nature, ' ' so the right of defence with nations to preserve and perpetuate their existence, is the highest law. It was under this theory that Adam Smith defended the navigation laws of England, as a means of stimulating and encouraging ship building, the training of seamen, and the mainten- ance of a powerful navy to guard and protect the interests of the realm and the rights of citizens in all parts of the world. The advantage which a nation would acquire by being industrially independent in time of war, was one of the reasons put forth in the early history of the United States, to justify the establishment of industries under protection. It is also maintained that the development of diversified industries which increase the wealth and promote the happiness of the people, also add to the opulence and independence of the nation. It certainly requires an indul- gence in very extravagant assumptions to establish the negative, that a nation should not discriminate in favor of its own citizens, in legis- lating to advance their commercial and industrial interests, as well as to protect their persons and property. Artificial Industries. It is a common complaint of the advocates of free trade that the policy of protection forces into existence "artificial" and "unnatural" indus- tries. Understanding the law of "the survival of the fittest," as being their conception of "natural law," we are better able to understand the meaning of this charge which is so frequently urged against the protec- tive policy. A "natural" industry is one which can exist only under free competition. An "artificial" industry is one which is established by, and owes its continuance to fiscal regulations which protect it from destruction. If our industries are "artificial" and exist only because of this support or protection which they receive, they would certainly dis- appear when subjected to the ' 'natural" forces of free competition. It is only in this sense that our industries are "unnatural" or "artificial." That there are certain natural conditions which determine in advance the industries which shall be pursued by different. countries, there is no ques- tion, and so far as they exist, apart from the principle contended for by the Manchester economists, they are fully recognized by protectionists. Agriculture is carried on under conditions of soil and climate favor- able to the growth of a great variety of fruits, vegetables and cereals. These conditions determine for a nation the produce of the soil to which Digitized by Microsoft® ECONOMIC DISCUSSION. 463 their energies must be confined. Those products like tea, coffee, sugar, spices and tropical fruits, which may be classed as luxuries, are confined to a few favored localities, while those necessary products of involuntary consumption upon which man relies for his subsistence, and from which the masses of the world must always' derive their food supplies, are universally distributed and grow luxuriantly in almost every soil and climate between the frigid zones. The products of tropical regions grow in great abundance with little human effort. The excessive heat unfits those regions for great industrial enterprises requiring arduous and inces- sant toil. The working of mines, the prosecution of manufacturing enter- prises requiring great physical exertion, seek temperate regions where great results can be accomplished with least physical exhaustion. These natural causes determine in advance the industrial life of nations, and have an especial application to those products which depend for their profitable growth upon the elements over which man has no control. The question, however, which arises between protectionists and free traders, relates wholly to the rewards of industry. For instance, the State of Louisiana, so far as soil and climate are concerned, is as well adapted to the production of sugar, as Cuba or Brazil. The States of Kansas and Nebraska are as well fitted by nature for the production of sugar beets, as Germany and France. Cuba and Brazil can produce cane sugar cheaper than it can be produced in Louisiana only by paying less wages to the labor employed, while France and Germany can grow beets and convert them into sugar at less cost than similar raw sugar can be produced in Kansas and Nebraska, only by paying the agricultural laborer less wages than the farmers of Kansas and Nebraska. Rice can be pro- duced cheaper in China than in South Carolina, for the same reason. The imposition of protective tariffs by the United States upon the natural products of soil and climate is not to force or stimulate the growth of products in the United States unsuited to natural conditions, but solely to provide for a difference in wages arising from conditions of civiliza- tion. If considered from the standpoint of the design of the Creator of the universe, such protective legislation is fully justified upon the ground that it results in an improved condition of man, enabling labor in the United States to be better rewarded, better educated, better housed and clothed, and to reach a higher state of civilization. If such condition of humanity is the purpose of the Supreme Ruler of the universe, protective legislation is in harmony with divine law. The metals, iron, copper and lead, are found in abundance on every continent and in almost every country. Coal beds for fuel are as widely distributed. Fuel and raw material are universally accessible to the people of all countries. The United States has iron and coal distributed from the Atlantic to the Pacific. To prevent our Eastern sea-boards from being supplied with these materials from abroad, is not for the purpose Pi oteciion is for the purpose oj prevent' ing reduc- tion of wages. Digitized by Microsoft© 464 TABIFF QUESTION IN THE UNITED STATES. Protection and so-called *' natural lawsy The dan' gers of competi- tion. of opening industries in the United States of an artificial character, but for the sole purpose of making it possible for the American miners to receive higher wages than are paid to the miners of foreign countries, and to contribute to the general prosperity of this country. This is the util- ization of natural products. Mining and manufacturing, in so far as they are pursuits in which the capital and labor of a country may be employed, depend wholly for their existence and conduct upon the direct efforts of man, uninfluenced by soil and climate, excepting as to those special localities of the tropics in which excessive physical exer- tion is practically prohibited by the intense heat. Through the entire temperate zone, in the United States, Europe and Asia, the region most densely populated, having the highest civilization and the greatest industrial activity, all branches of manufacturing are equally favored by nature, and in this respect, can as well be carried on in one place as in another. The free trader continues to harp upon obedience to the laws of nature in manufacturing pursuits, and yet, no Englishman has favored the building of silk factories where raw silk is produced or the removal of their woolen mills to Australia and the Argentine Republic, in the neighborhood of the great sheep ranches of the world. Neither have they suggested the removal of their cotton mills to cotton growing districts of the United States. English manufacturers have never paid the slightest attention to these "natural laws" that their economists have so much to say about, but have based their industrial supremacy upon superior machinery, skillful and efficient labor and the low wages of their artisans. England by nature is no more fitted for the manufacture of cotton, linen, woolens, the metals or anything else, than the United States. Whatever advantages she possesses are wholly acquired. A superiority based on the degradation of humanity, a condition of com- mercial slavery to which a population is reduced and to which it is eternally chained, is a violation of the laws of God, and revolting to the better sense of civilized man. There is no country in the world more favored and set apart by the laws of nature, for an extensive diversity of industries, than the United States. With a soil and climate for the pro- duction of cotton, flax, hemp, jute and all vegetable fibres; with agricul- tural regions adapted to the raising of sheep and growing of the finest wool; with coal and iron universally distributed from coast to coast; with the greatest water powers in the world; with every variety of agricultural products which grow in temperate and semi-tropical regions, it cannot be said that to utilize these rich possessions is a violation of natural law. Competition. Although blessed beyond measure with natural resources for indus- trial prosperity, the people of the United States labor under one great dis- advantage. Through nearly a century of industrial evolution and Digitized by Microsoft® ECONOMIC DISCUSSION. 465 civilization they have acquired a mode of living and a wage rate which are more expensive than those of any other people on the face of the globe. It costs them more to live, because they live better. They cannot pay double the wages paid by foreign competitors and expose themselves to the warfare of international competition. In such a conflict they would be the weaker party, and under the law of "the survival of the fittest" their civilization would be destroyed and their industries supplanted — unless they adopted the weapons used by their competitors, namely, less expensive modes of living, lower wages and cheaper productions. This brings us to the gist of the whole controversy between protectionists and free traders. There is no dispute over what would happen in a conflict between such unequal combatants. The real question is, would it be wise, would the welfare of humanity be best promoted by jielding to the consequences and inevitable results which are unquestionably involved in such a struggle ? The advantages to a people of healthy competition are not involved in the question, as pointed out by Professor George Gunton : The chief fallacy underljring the doctrine of laissez faire is a mistaken notion regarding the nature of competition. Because competition is rivalry between con- tending units, it is assumed that all rivalry is competition, and hence that free competition is simply an unrestrained struggle for existence. As vre have already seen, unrestrained struggle may and often does mean repression and despotism instead of development and freedom. It is entirely true that competition is indispensable to development, but in order to have competition that develops, instead of a struggle that destroys, rivalry must take place under conditions which make the object sought reasonably possible to either contestant. There can be no advantageous competition where the prize is impossible to one and certain to the other. Such an unequal strug- gle, instead of developing the highest possibilities of both competitors, inspires neither contestant to do his best. To have effective competition, the contest must be of such a character as to compel the winner and inspire the loser to the maximum degree of effort. This can only occur when the contest takes place between approxi- mately equal competing units. Competition between unequals necessarily tends to crush rather than develop the weaker, although he possesses all the potential possi- bilities of superiority.^ This proposition is so ably presented by Professor Gunton" that the writer takes the liberty of incorporating the following quotation, to enable the reader to be further enlightened by this distinguished econo- mist: Whenever a struggle for industrial supremacy takes place between producers in countries of differing degree of civilization, one of two things must necessarily occur ; either the higher must descend to the plane of the lower, or the lower must ascend to the plane of the higher. If the higher-paid producer descends to the plane of the lower, it will not be economic competition, because in that case, the low-wage products will be sure to undersell the high-wage products, and thus enable the inferior to succeed against the superior. In such a struggle there is nothing to » Principles of Social Bcouomics, p. 293. ' Id., pp. 333-5- Covipeti- iion be- tween unequals. Digitized by Microsoft® 466 TARIFF QUESTION IN THE UNITED STATES. The remedy. Population and sub- sistence. develop the best in the higher, but everything to repress it. The cheap-labor com- petitor does not succeed through his economic superiority, but solely because of his social inferiority. Such a contest, therefore, is contrary to all conditions of economic competition. Instead of being a contest between approximately equal competing units, which tends to develop the best in both, it is an unequal struggle in which the inferior is sure to prevail against the superior. When competition takes place on the plane of the higher-wage level, the result is very different. In such a contest, whoever succeeds is compelled to do so by employ- ing superior machinery, and that reduces the cost of wealth by saving instead of cheapening human labor. Every effort of the lower to succeed against the higher by such means necessarily tends to develop better methods of production, cheapen wealth and promote social progress in the less advanced country, even if it fails to undersell competitors in a foreign market. On the other hand, in every such struggle the high-wage producer is compelled to make efforts to still further develop the wealth-cheapening methods in the most advanced countries. Therefore the contest on the higher plane is supremely economic, because it stimulates the best in both competitors, guarantees that only the superior shall succeed, and in so doing, helps rather than injures the inferior. As a means of preventing the injuries resulting from the competition stated in the first paragraph and preserving the healthful rivalry- described in the second. Professor Gunton recommends a resort to and very clearly points out the necessity of protective legislation : In order, therefore, to apply the doctrine of opportunity laid down in the previous chapter, and to establish international trade upon a strictly economic basis, it is necessary for the higher-wage country to discriminate against the products of the lower-wage producer to the full extent that the lower wages affect the cost of produc- tion, as this determines the competitive status of the commodity. Thus we have a truly economic basis for a tariff policy that shall be protective y^i'Cao-at hsing paternal. A tariff policy based upon this principle would protect the superior against injury from the inferior, without affording the slightest monopolistic impediment to eco- nomic rivalry. Instead of restricting wholesome competition, this would simply pro- tect the competitive opportunity for the " fittest to survive," the test of fitness always being the ability +o furnish low-priced wealth without employing low-priced labor. Under such conditions the products of foreign countries could never undersell those of home industry, except when the lower price of the foreign product is due to the use of superior lahot-saving and not to labor-cheapening methods. Wages. Understanding the principles involved in the foregoing propositions, the reader will readily discover how protection increases wages. The old theories contended for by the dogmatic free traders have quite univer- sally been discarded. The writers of the Manchester school whose opinions were influenced by the Malthusian theory of population, believed that in the struggle for existence wages must always be low and the con- dition of the masses most miserable. John Stuart Mill, in discussing the question, said: After the truths brought out by Mr. Malthus were understood, it was then seen that the capabilities of increase of the human species as of animal nature in general Digitized by Microsoft® ECONOMIC DISCUSSION. 467 (being far greater than those of subsistence under any except unusual circumstances), must be, and are, controlled everywhere else by one of two limiting principles— starva- tion or prudence and continence. That under the operation of this conflict, the reward of ordinary unskilled labor is always and everywhere (saving temporary varia- tions, and rare conjunctions of circumstances), at the lowest point to which laborers will consent to be reduced, the point below which they will not choose to propagate their species. . . These considerations furnish a sufficient explanation of the state of extreme poverty in which the majority of mankind had almost everywhere been found without suffering any inherent necessity in the case.^ Francis Wayland said: "When the wages of parents are barely sufficient to rear two children, but two will be reared ; the rest will die in infancy. ' ' ^ Ricardo, one of the chief apostles of free trade, in stating his "Iron lyaw of "Wages, ' ' said : If the shoes and clothing of the laborer could, by improvements in machinery, be produced by one-fourth of the labor now necessary to their production, they would probably fall 75 per cent.; but so far is it from being true that the laborer would thereby be enabled permanently to consume four coats or four pair of shoes, instead of one, that it is probable that his wages in no long time would be adjusted by the effects of competition and the stimulus to population to the new value of the neces- saries on which they were expended. If these improvements extended to all the objects of the laborer's consumption, we should find him probably, at the end of a very few years, in the possession of only a small, if any, addition to his enjoyments.' The theory advanced by free trade economists which was known as the "wage fund theory," held that wages were paid out of the capital of the country seeking investment, out of which there was a predetermined amount known as the "wage fund," which alone would be distributed among the laborers ; that of this capital a certain portion must in the outset be deduced for profits, rent, materials and expenses, and what was left constituted the "wage fund," which would be distributed among the laborers in proportion to their number. If the fund was large and the laborers few, wages would be high, while if the laborers were numerous and the fund small wages would be low. It was purely a question of arithmetic. Assuming that population increases faster than the means of subsistence, the labor market would at all times be overcrowded, and people to save themselves from starvation, would be willing to work for what they could get; jobs would be put up at auction, to be struck off to the lowest bidder. While the free trade professors may have erred in the theory which they formulated, the recent experience of Great Britain when subjected to sharp, free competition of strong rivals, proves that they were accurate in estimating the ultimate effect on the wage earners of a country, under the "struggle for existence" imposed by free trade. The strongest and 1 Claims of I,abor, in Dissertations and Discussions, Vol. 2, pp. 264-5. ' Elements of Political Economy, p. 298, 3 The Works of David Ricardo, London : John Murray, p n. theory. Digitized by Microsoft® 468 TARIFF qVESTION IN THE UNITED STATES. Wage fund theory exploded. Advantage of protec- tion. most powerful labor unions and combinations have failed in resisting reductions in wages and have been utterly powerless in securing advance- ments, while the army of the unemployed has increased as productive indus- tries have decayed and been supplanted. The wage fund theory which had been accepted as one of the cardinal principles of the gospel of free trade by all of its adherents, was repudiated by John Stuart Mill in 1869, when its fallacies were exposed by Mr. Francis D. Longe, an English barrister, who pointed out that the amount of wages which an employer could afford to pay was limited by the amount of money for which he could sell the product. This theory has since been accepted by General Francis A. Walker and many others who contend that: Tt is the prospect of a profit in production which determines the employer to hire laborers ; it is the anticipated value of the product which determines how much he can pay them. The product, then, and not capital furnishes at once the motive to employment and the measure of wages. If this be so the whole wage fund theory falls, for it is built on the assumption that capital furnishes the measure of wages; that the wage fund is no larger because capital is no larger, and that the only way to increase the aggregate amount which can be paid in wages is to increase capital.^ Applied to international competition the principle stated by l,onge, and recognized by General Walker, becomes an important factor in deter- mining the wage rate. The production of the world has become so large that not only the British manufacturers, but those of the Continent have constantly on hand a surplus of competing commodities which are seek- ing for customers, and being crowded into the markets of the world. This has reduced the selling price to the lowest possible point and made large profits impossible. Through their open ports the English people have made their home market a part of the market of the world to be contested for. The producers of the United Kingdom and Continental countries are struggling to undersell each other and to acquire and hold the markets. This means cheap goods, and every nation which relies on foreign markets for the sale of its wares, must submit to this condition. So long as the Germans, the Belgians, the French and the Swiss rely on foreign countries for the sale of their surplus products, it will be impos- sible for them to increase the wage rate of their artisans to a point which enhances the cost of production above their competitors. It is for this reason that, although Germany, France, Switzerland and Belgium pursue policies of protection, high wages are impossible. Should the United States enter the markets of the world as a competitor, it could only do so under the same conditions of trade. While Continental countries are thus unable to advance wages to as high a point as those paid in the United States, the chief advantage derived from protection has been found in the devel- opment of their domestic industries, and the preservation of their home » Wages, by Walker, p. 144. Digitized by Microsoft® ECONOMIC DISCUSSION. 469 markets, which have given increased employment to labor in the diversi- fied industries which by this means have been established and main- tained. Protection with them has increased the opportunties for employ- ment, through which the masses have been greatly improved ; while the excessive competition in Great Britain, through open ports, has resulted in the destruction of domestic industries, diminished opportunities for employment, increased idleness and the misery and degradation of the masses. This brings us to the principle which fixes the rate of wages under protection in the United States. It is urged by many protectionists that the wage rate is determined by the mode of living, the habits, tastes and desires which the wage-earner is seeking to satisfy. It must, of course, be conceded that the degree of civilization which prevails indicates the desires which are sought to be satisfied, and that the higher the order of civilization attained the greater becomes the demand for comfortable homes, good clothing, luxuries, comforts, hours of leisure, entertainments and pleas- ures of life. The higher the order of civilization enjoyed, the more expen- sive becomes the mode of living ; it costs more to produce an educated man or woman, to build homes and furnish them decently, than it does to produce uneducated people and maintain them half fed, half clad and shelter them in hovels. A laboring man earning $2 a day will live better and possess for himself and family more of the comforts and luxuries of life than would be possible if he earned only $1 a day ; hence, the mode of living and high wages paid in the United States increase the cost of pro- duction and add to the selling price of every product of human effort. This additional cost must be paid by the consumers of the commodities pro- duced. It is a conceded fact that the wage-earners of the United States receive far higher wages than are paid in any other country on the face of the globe. If, then, the consumers of the United States pay more for their necessaries and comforts of life than they would under a low wage scale, they are simply contributing to the maintenance of that civilization, degree of intelligence, comfort and happiness which make the people of the United States conspicuous among the nations of the world. The question whether the people of the United States pay more for commodi- ties made by American labor, than they would be called upon to pay if the same articles were made by the poorly paid labor of Great Britain and Europe, is wholly immaterial. The real question at issue is, does it pay them to do it? Is it a good investment? It is not so much a question of accumulation of wealth as it is one for the elevation of humanity. It is a well-known fact that poverty and degradation arising from low wages, breeds discontent, immorality and vice. Children raised in comfortable homes, educated and enlightened, make better men and women and better citizens. Hence, the whole economic problem, instead of being a ques- tion of cash payments, merely a matter of dollars and cents, involves the What fixei the wage rate. Digitized by Microsoft® 470 TARIFF QUESTION IN TBE UNITED STATES. Tncreasi the oppor- ititiities for employ- ment. Improve the home market. moral, social and intellectual development and improvement of man- kind. The steady increase in wages in the United States since i860, has not been brought about by a voluntary increase in wages by manufacturers as soon as tariff laws were enacted. When manufacturers go to Congress and ask that duties be imposed or increased, it is not necessary that they should have in mind a corresponding increase in wages immediately extended as soon as the tariff laws are enacted. Tariff laws enable capitalists to open mines, build factories and establish industries which could not exist or be established were it not for the tariff barriers which shield them from foreign competition. The opening of mines, and the building up of industries, afford opportunities for employment. They create a demand for home labor. A protective tariff, then, becomes a protection to oppor- tunities. The more varied and greater opportunities become, the more employment is found. It is in employments thus created that wages are earned which go to build homes, fill them with furniture, clothe and feed families, and provide the means of satisfying wants, tastes and desires. If the mode of living, tastes and desires measure that which is necessary to satisfy them, the opportunities for employment afford the means. Give a people the opportunities for employment, and they will fix their own wage rate under their own conditions of civilization. Destroy these opportunities, and whatever the desires of a people may be, to satisfy them is impossible. Hence we find the basis of the whole social fabric of all progress and prosperity, the means of satisfying wants, to be the prime economic factor. The importance, then, of stimu- lating and fostering the various branches of industry such as agriculture, manufacturing, mining, transportation, trade and commerce, becomes apparent. The wants of man are satisfied through the fruits of labor. As opportunities increase, earnings become greater, consumption is enlarged and increased production follows. The Hon. Thomas B. Reed, in discussing this question in the House of Representatives on the sixteenth of January, 1894, in opposing the passage of the Wilson bill, said: Now, let me come for a moment to this question of wages. The gentleman says that it depends upon supply and demand. I say that is an utterly exploded doctrine. Wages depend upon the amount of the market, and also upon the nature of the workingman himself. I anticipate what the gentleman is going to say in response to the suggestions of other gentlemen on his side, that what they need is a more extensive market ; that what they need is to go forth to the rest of the universe and obtain a market ; and the method they propose is to obtain a market somewhere else by giving up the market that we have here. But we on our side believe in enlarging the market in a diflFerent fashion. We do not mean to go to the ends of the earth and struggle with the cheaper labor of the whole world. What we mean to do is to elevate the market of this country by giving higher wages to the laborers, and thereby constituting a market as broad as ova production. ... So that it is not the Digitized by Microsoft® ECONOMIC DISCUSSION. 471 arbitrary fixation of wages, but it is the growth in intelligence, the growth in desires and wants of the laborer that forces a rise of wages. What is the direct means by which the laboring men reach this result ? By labor unions, by combining, by making manufactvurers understand that they must give higher wages. How are the manu- facturers enabled to give higher wages ? By increasing their product, which increase can only take place by the larger market which comes of these larger wages. That is the secret of this matter. But there are limitations in this case just as there are to all human tendencies. The laboring man is struggling to supply his wants. He makes his demand on the manufacturer. The manufacturer is set to work to devise new inventions, and by the assistance of these he is able to supply these wants. But there is a limitation to inventions ; there is a limitation to the capacity of the employer to enlarge his market. And those two things struggle together. In this country, with the laborer seeking to obtain higher wages and fewer hours of work and the demand of the public for lower prices, there is going on a tremendous struggle ; and that is all the struggle that the inventive power of this country can sustain. Now you propose, by bringing us in contact with a lower civilization without protection, to make the success of that struggle an absolute impossibility. You are crushing down the laboring man by your eflforts ; and you are thereby intensifying this struggle between the employer and his employees, which is liable to be fought out as long as selfishness reigns in this world. But thank Heaven, the success, the good fortune, and the prosperity of the laboring man does not depend on these men who rend the heavens with their shouts of praise, but upon the laws of the Lord God Omnipotent. And among the laws of Omnipotence is the use of human brains by aid of law to provide the laborer with opportunities for work. International Competition and Foreign Trade. This brings us to a consideration of the advantages which the advo- cates of free trade contend would arise, from a practical application of international competition between the higher civilization of the United States and the lower civilization of Great Britain and Europe, This involves a discussion of the relative importance to a nation of home trade as against foreign trade. It is conceded by the free traders that under protection a vast industrial system becomes established and is main- tained; and that the home trade of a country is secured to its own people. Yet it is contended that the industrial prosperity of a nation may more surely be attained by abandoning the production of those commodities which can be made cheaper in other countries, and by confining the energies of the people to those of which superior advantages in produc- tion are possessed ; that even though we should lose a large number of our present industries by importing commodities which we are now making, that the increased importations would occasion a foreign demand for other domestic productions which would be given in exchange for those purchased; and hence whatever loss we sustained through the disap- pearance of established industries and diminished direct trade, would be more than compensated for, in foreign trade; that one of the chief advan- tages arising from such change of policy would be found in the benefits consumers would derive from cheap commodities. This brings up for The rela- tive advan- tage of home and foreign trade— Tht free trade argument. Digitized by Microsoft® 472 TARIFF QUESTION IN THE UNITED STATES. Buying in the cheapest market. The goods for goods theory. consideration the conditions and circumstances under which we would be able to sell our wares in foreign countries and compensate ourselves for the loss sustained by surrendering domestic productions. Under the "natural law" of trade contended for, it is urged that both venders and purchasers would derive an advantage by "buying in the cheapest and selling in the dearest market. ' ' The idea that we could sell everything for a good price and buy everything very cheap, is most fascinating. "To buy in the cheapest market," what does that mean ? It means that the American people are to buy their glass, earthen and china ware, cottons, woolens, silks, linens, all tools, machinery, hard- ware and cutlery, iron, steel, and in fact every manufactured article, in Europe; that they shall entirely cease buying of the home producers, unless our manufacturers will sell these articles cheaper than they can be purchased from any other people on earth. It means also, that our con- sumers of food will buy farm products in Canada, the Argentine Repub- lic, or wherever they can be bought at the lowest price. It means that the purchasers of all countries shall also buy where they can buy the cheapest ; hence the purchasers of the world will not come to the United States to buy either manufactured goods or farm products, unless they can buy them cheaper here than in any other country. Instead, then, of selling dear, we must also sell cheap or not at all, excepting, of course, as we produce a superior article or something that cannot be obtained else- where, which from the universality in the growth of farm products and the wide extension of manufactures, is unlikely to occur. We can only become sellers by selling for a lower price than anybody else. That this involves a reduction in the cost of production below the rest of the world, necessarily follows. But under the law of "the survival of the fittest," those industries which cannot withstand the struggle must perish, and the capital, if there is any left after the wreck, must seek investment, and the laborers thrown out of work must find employment in some other industry ; but that other industry must always be one in which commodities can be produced cheaper than elsewhere. To sell in the best market, then, necessarily means to undersell all competitors. In order to increase our sales in foreign markets, we must make our country a good country to buy in before foreign purchasers will seek our market, hence while this leveling process is going on, we should be buy- ing more than we could sell. The free trade economists, however, hold that while exports of domestic produce equal to imports of foreign produce would not immediately arise, ultimately and in the long run, exports must balance imports, and trade must be carried on by an exchange of commodities. It is important to understand the practical operation of this theory, the reasons why it must be sound, in order that we may measure its effect upon our industrial system when put to the test. Digitized by Microsoft® ECONOMIC DISCUSSION. Under a system of free trade, our merchants would buy in the cheapest markets of the world, and no foreign nation would buy of us till our prices were reduced to at least the level of other countries. Assum- ing that our prices are higher than in any other country, instead of buy- ing at home our purchasers would buy abroad. This would certainly make a heavy balance of trade against us for a time. If our present con- suming power could be maintained, it would not take long to exhaust our present supply of gold in the United States, which is now about $600,000,000. But having shut down our factories and abandoned our laborers that we might seek cheaper goods in foreign markets, the con- suming power of a large portion of our citizens would at once be reduced by cutting off their incomes, so that our foreign purchases after our accumulations were exhausted, would begin to decline and the outflow of coin would in a measure be checked. Free trade authorities admit that the outflow of metals would be the immediate effect, but Mr. Edward North Buxton, in the "A B C of Free Trade," page 13 (published by the Cobden Club), sa5's: "A very small withdrawal of gold from the currency of the country raises the rate of interest, and this at once tempts back what has gone out. ' ' The effect upon the business of a country situated like the United States, of a stringency in the money market, and an increase in the rate of interest, is well known to business men. It would result in the calling in of all short loans, tie up every dollar to procure higher rates of exchange and discount, and plunge the business interests of the country at once into bankruptcy. But it is contended that as the precious metals flow out from a country to settle an adverse balance of trade, money becomes scarce, appreciates in value and prices fall. Through the decline in prices thus brought about, the tendency would be to make the United States a good market to buy in. This process of making money scarce and thereby making commodities cheap, it should be noted, is one of the causes which would aid in reducing the United States to the price level of other countries. But this compensatory goods for goods theory, or exchange of commodities, would not begin to operate till American labor was compelled to accept the lowest rate of wages paid by our com- peting rivals, and until American capital was also compelled to accept an equally low return for its investment. In order, then, to reach the millen- nium of free trade, both labor and capital in America, would be compelled to produce goods cheaper and take less return for their services than in competing countries, in order to turn the tide of commerce in our favor. Having obtained, by this means and through reductions in wages and otherwise, a point below the lowest level in other countries, our merchants would begin to sell abroad and when we reached a point where we sold more than we purchased, gold would come back. The returning current of gold would increase the volume of our money, and make it more plentiful, Equilib- rium of prices. Digitized by Microsoft® 474 MRIFF QDESTION IN TBE VNITUD STATES. Purpose of the free trade move- ment. this it is claimed would depreciate its purchasing power and raise prices again. Should the inflow of gold, on this vibration of the pendulum, raise prices above the level in competing countries, we would again begin to buy abroad. Hence, it follows, that only by reducing our prices below the level of other countries and making our markets the best markets to buy in, can it be said that if we buy abroad we shall be able to sell in return. It should be borne in mind that the great purpose of the free trade movement is the destruction of the manufactories of the United States, that foreign manufacturers may step in and monopolize our markets. The appeal is made to the agriculturist that he would profit by joining hands with the British manufacturers in the destruction of the manufac- tories of his own country. The result of this policy would not only destroy the great industrial centers of the United States, in which the American farmer finds the best market for his produce, but by driving more people into farming it would increase the number of agriculturists, and bring about such over-production in farm produce, that he would find little sale for his commodities in the glutted markets. But this, he should understand, is precisely what the free trader is seeking to accom- plish. The " cheapness " which he advocates is not confined to cheap manufactures, but to cheap bread and vegetables as well. The policy of " cheapness " is aimed at the farmer equally with all producers. Beforg the American farmer should consent to the destruction of his home mar- ket, he should consider the probabilities of his finding a foreign market for his farm produce. Foreigners will only buy his products when he offers to sell them cheaper than they can purchase in the Argentine Republic, in Russia, Armenia and other parts of the world. While the free trader is using the argument of cheap clothing with the farmer, he is talking about cheap agricultural produce to those living on fixed incomes and the masses in the manufacturing districts. " Cheapness " is the bait which the free trader puts on all his hooks. The civilization of modern times is characterized by an industrial development and activity unknown to past ages. Improved methods of cultivating the soil, the development of mining, the perfection of the arts of manufacture, the use of electricity and steam in communication and transportation, the invention of machinery, produtcive industry, the establishment of law and order, the protection and security of property and industries through ordinances of civil government, the education of the masses, the growth of scientific and technical instruction, have so augmented and extended man's dominion over the forces of nature, that his ability to satisfy his wants, and to accumulate wealth, by agriculture, manufacture, mining, trade and commerce is fully secured. These advancements have placed it within the reach and possibility of every civilized community, to produce such an abundance of the necessaries of Digitized by Microsoft® ECONOMIC DISCUSSION. 475 life, that want and misery can exist only through failure to make a jyoper use of these advantages. Man has taken up his abode on every continent, island, and in every clime. Wherever he goes he finds a storehouse of treasure awaiting the magic touch of his genius and industry. There is not a locality between the frigid zones that does not hold within itself those elements which, if properly developed, will produce inexhaustible riches, and in which the highest civilization may be attained. That spirit and enterprise which have ever animated the human race; that confidence in the bounties of nature and in his own capabilities, have impelled him to settle every country. In his development and progress he has not sought after the easy places; those^ where nature is most generous, those where he could satisfy his wants with the least exertion. He has not gathered about the bread tree, nor plucked only the fruits of the tropics where he could live in idleness and ease. Prompted by some great cause, stimulated by some great motive, guided by some great force, he has been obedient to the divine command, to multiply and replenish the earth and exercise dominion over every living creature and every force of nature. With high and lofty aims and indomintable will he has risen step by step from a condition of ignorance to a high state of civilization. At first, in his weak condition, unconscious of his powers, unaided by past experi- ence, and unable to penetrate the darkness of the future, he advanced slowly and with great difficulty. How changed to-day ! With unlimited powers and opportunities the lamp of experience, which has guided his footsteps for centuries, so lights up the world about him, that the future is no longer hidden from his view. Life is no longer an inexplicable mystery. Man now is not sailing an unknown sea without chart or com- pass, but has discovered laws, forces, rules of individual conduct an(^ principles for the government of society and -nations which mark the shoals and breakers to be avoided. It is by a comprehension of the causes and means by which he has reached this high eminence that it becomes possible for man to move on in the same course, and to bring every crea- ture, every country and every locality into that high state which will enable him to accomplish and fulfill his ordained destiny. Society has been slow in forming a just and proper appreciation ojf the importance of labor. In ancient times work was looked upon as menial, degrading and beneath the dignity of a noble citizen. Manual pursuits, in the eyes of the broad and enlightened manhood of the nineteenth century, are held in the highest esteem. The dignity of labor, the honor attached to honest toil and legitimate business enterprises, have elevated industry to a plane of life which has destroyed caste, and raised these pursuits, whether pro- fessional or industrial, to the eminence to which they are entitled. Conclu- sion. Digitized by Microsoft® Wise words of Horace Qreeley. CHAPTER XVII. 1846 TO 1860. Thb Revenue or Free Trade Tariees oE 1846 and 1857 — Supremacy OE THE Democratic Party — Economic Conditions — Rail- road Building — Goed Production — Foreign Trade — Revenues — Depressed Condition oe Manufac- tures — Panic oe 1857. Cast your eyes where you will over the face of the earth, trace back the his- tory of man and of nations to the earliest recorded periods, and I think you will find this rule uniformly prevailing, that the nation which is eminently agricultural and grain-exporting — which depends mainly or principally on other nations for its regular supplies of manufactured fabrics, has been comparatively a poor na- tion, and ultimately a dependent nation. I do not say that this is the instant result of exchanging the rude staples of agriculture for the more delicate fabrics of art; but I maintain that it is the inevitable tendency. The agricultural nation falls in debt, becomes impoverished, and ultimately subject. The palaces of " merchant princes " may emblazon its harbors and overshadow its navigable waters; there may be a mighty Alexandria, but a miserable Egypt behind it; a flourishing Odessa or Dantzic, but a rude, thinly-peopled southern Russia or Poland ; the exchangers may flourish and roll in luxury, but the producers famish and die. Indeed, few old and civilized countries become largely exporters of grain until they have lost, or by corruption are prepared to surrender, their inde- pendence; and these often present the spectacle of the laborer starving on the fields he has tilled, in the midst of their fertility and promise. — Horace; Greecev. Truly, sir, we are this morning in a very strange conjunction of circum- stances. The electric telegraph announces from Boston that the steamer has brought information from England, and among the last words of the late first Minister of England, was the declaration that all eyes were turned to see how the United States would arrange the new tariff, pointing evidently to an expecta- tion or a hope that the new tariff, to which all the English eyes were turned, would be more favorable to English interests, and English business, and English concerns, than the tariff now existing. All eyes are turned hither from Pennsyl- vania, not to see how we may modify the tariff to become acceptable to the English people, but to see whether we will sacrifice her interests — her great and leading interest — and the interests of other portions of the country having interests like hers, by the adoption of this measure so much commended already in Europe — so much the subject of parliamentary recommendation. Is not this, sir, as I said, a singular conjuncture of affairs? — Daniei, Webster, on the passage of the Act of 1846. Suppose England had pursued our policy, and instead of manufacturing for (476) Digitized by Microsoft® ^^^-^ ^^z:^^ THAT IS THE TRUEST AMERICAN POLICY WHICH SHALL MOST USEFULLY EMPLOY AMERICAN CAPITAL AND AMERICAN LADOR, AND BEST SUSTAIN THE WHOLE POPULATION. . AGRICULTURE, COMMERCE AND MANUFACTURES WILL PROSPER TOGETHER OR LANGUISH TOGETHER." DANIEL WEBSTER. Digitized by Microsoft® Digitized by Microsoft® A RETENUE TARIFF. 477 herself and the world, had bought of Holland and France, and devoted herself exclusively to agriculture and commerce. Will any gentleman contend that she would have been half so powerful and rich? Commerce is profitable only as it subserves the two great producing interests: agriculture and manufactures. So far as it interferes with them, it is pernicious. It paralyzes labor, by holding out inducements to buy what our labor might pro- duce; and it exhausts our resources, by tempting us to buy more than we can afford, or have the power to pay for. . . . Can we sustain this immense com- merce? How can we do it? Impoverish the farmer by taking away his market. Sir, this immense visionary fabric cannot be sustained. Our commerce has de- clined. Its decline will be accelerated. An impoverished yeomanry cannot main- tain commerce. Where the farmer is poor, the merchant cannot become rich. The farmer is the substratum of society. There must be a foundation to build the superstructure on. This foundation is the farmers' and mechanics' wealth. Take that away, and your commerce perishes. — Henry C. Martindale, in a speech in the House of Representatives, 1824. T7w true foundation 0I com- merce. Act oif 1846. On April 14, Mr. McKay, chairman of the Ways and Means Com- mittee, reported to the House a tariff bill drafted on the principles em- bodied in Secretary Walker's report. On June IS, the House of Rep- resentatives, by a vote of 120 to 87, resolved itself into a committee of the whole for the consideration of the measure, vi^hich was begun by sections on the 18th. Mr. Seaborn Jones, in the absence of the chair- man of the Committee on Ways and Means, addressed the committee upon the subject of the general provisions of the bill and the policy of the administration under the then condition of affairs. He said that the bill, as originally reported, was a peace measure, but, as amended by the committee, it would be a measure for vigorously carrying on the war with Mexico. The amendments, when presented, would be mainly those recommended by the Secretary of the Treasury in his recent com- munication to the Senate. The duties recommended were generally lim- ited to articles of the lower schedules, but there were a few articles in the schedule of 30 per cent on which the duty was raised. The question, he said, was whether to pass a new law and so modify the tariff of 1842, as to produce the greatest amount of revenue, or to reject our modifica- tions and leave the law of 1842 as it then stood, with all its protective and prohibitory features, when the conditions of the country were such as to require all the revenue that could be produced in any bill for the purpose of defraying the expenses of the war in addition to the ordinary expenses of the government. The great object, under existing circum- stances, was revenue, with which, he argued, protection conflicted. On July 3, the bill passed the House and in the Senate was made the special order for Monday, July 13. The debate in the Senate, which lasted nearly two weeks, turned mainly on the question of whether the Duties limited io lower schedules. Digitized by Microsoft® 478 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. system of imposing specific duties should not be wholly abandoned and give place to ad valorem rates. On July 27 a resolution offered by John M. Clayton, to " commit the bill to a committee on finance with in- structions to restore the specific duties prescribed by the act of the 30th of August, 1842," was rejected by a vote of 26 to 29. The bill was finally referred to the finance committee on the same day by a vote of 28 to 27. The vote on the passage of the bill in the Senate stood 27 to 27, and Vice-President Dallas gave the deciding vote in favor of its adoption, and it was reported back to the House with amendments which were concurred in and passed by a vote of 115 to 92. On June 30 it received the signature of the President and became a law, to take effect on December 1 following. Mr. Dallas, the Vice-President, who was elected as a protectionist, now surrendered the convictions of a lifetime for party regularity and party loyalty. Among the excuses given for his action he said: Dallas abandoned protection. To my mind, ample proof has been furnished that a majority of the people and the States desire to change the system heretofore pursued in assessing the duties on foreign imports. That majority has manifested itself in various ways, as has been attested by its representatives in the other house of Congress, and by whom this bill has been approved, and whose votes undeniably indicate the popu- lar sense in the large proportion of i8 out of 28 States. He then refers to the vote of the Senate and said: Peculiarly situated as I am in my relation to the national legislation, these oppressive facts cannot be overlooked. Hence the industrial growth and prosperity of the country were determined by the Vice-President's opinion of the popular sentiment of the country as expressed in the vote which had been taken, knowing full well that he would never have been vested with the power to cast a de- ciding vote between protection and free trade had it not been for the deceptions practiced on the people of his own State in the election which had just closed, and for the belief of the people of his own State that he was a firm protectionist. Upon receiving news of the passage of this bill the Philadelphia Sentinel remarked : Pennsyl- vania had been 'be- trayed. There was one burst of indignation that Pennsylvania had been grossly de- ceived, and that her best interest had been prostrated, too, by the vote of George Mifflin Dallas, one of her own sons, whom she has fostered and cherished for years, and who, she had a right to expect, would stand by her in the hour of trial. Mr. Dallas has thrown the weight of his influence into the Southern scale against his native State. We are sorry that we have to record this deed of deep ingratitude to the old Keystone State. If Mr. Dallas had, by the remotest hint, given the people of Pennsylvania, in the campaign of 1844, to believe that he would go with the South and for a Southern tariff, he would not have been elected Vice-President. Digitized by Microsoft® PENWSTLVANIA BETRAYED. 479 When George M. Dallas was elected Vice-President the people of Pennsylvania were fully justified in believing that he was a loyal pro- tectionist. In a speech delivered in the United States Senate on Feb- ruary 27, 1832, he gave his personal knowledge regarding the effects of the protective tariffs of 1824 and 1828, in cheapening the price of various articles manufactured from iron and steel, tie said: The reduction of the prices was a necessary consequence of the domestic competition created and excited by the policy. Since l8i8, 1819 and 1820 the implements of husbandry have sunk in price thus: Axes, from $24 to $12 by the dozen; scythes, spades and common shovels, 50 per cent. Iron hoes, at $9 by the dozen, have given way to steel ones at $4. Socket shovels, once sold at $12 a dozen, now sell at $4.50; iron vises, once at 20 cents by the pound, now at 10 cents; brasiers' rods were, in 1821, imported at $313 by the ton and now are made at $130; and steam engines have actually, since 1828, fallen 50 per cent in price, while at the same time the amount of material and labor of which they are composed has nearly doubled. As appears by the statement of Mr. Jones, the rates of the ad valorem duties provided for in the bill as it was presented to the House and finally passed, were somewhat higher than those embodied in the first draft of the measure. The bill, as first prepared, was more in harmony with the revenue standard indicated by Secretary Walker in his report; but the exigencies of the situation made the collection of a large revenue necessary. Hence, the bill was prepared to meet the re- quirements of a war with Mexico, which had already been declared. The act was signed by the President on July 13, and Congress had de- clared war against Mexico on May 13. The duties were also higher than those embodied in the bill supported by the Democratic party during the last session of President Tyler's administration. Still another fact undoubtedly played a part in imposing duties somewhat higher than Mr. Walker's conception of the free trade stand- ard. That the vote in the Senate would be very close (in fact it was a tie) and that 18 Democratic Representatives — 4 from New York, 2 from New Jersey, 11 from Pennsylvania and 1 from Maryland — voted against the bill in the House, would indicate that the Southern wing of the party which was now in control, was having much difficulty in whipping into line enough Northern Democratic Representatives and Senators to in- sure the passage of the bill. The Washington correspondent of the Charleston Mercury said : Wlien he was a pro- tectionist. Opposed 61/ ei(/hteen Democrats. "The tactics of the Democrats were admirable; and to no one is due more than to the venerable editor of the Union. Old Blucher coming in the nick of time, as he did on the fatal field of Waterloo, was not more decisive of victory than the editorial article in the Union, shooting Brinkerhoff as a deserter, and driving back the Ohio Democrats to their duty. I repeat to you, it was that Digitized by Microsoft® 480 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. The ad valorem system adopted. article which secured the victory. It made its appearance in an opportune mo- ment, and was successful; and to the Napoleon of the press rightfully belongs the victory." The vote of the House and Senate was as follows: House of Representatives— Maine, yeas 6, nay I ; New Hampshire, yeas 3 ; Massachusetts, nays 9; Rhode Island, nays 2; Connecticut, nays 4; Vermont, nays 3, New York, yeas 15, nays 16; New Jersey, nays s; Pennsylvania, yea i, nays 23; Delaware, yea i; Maryland, yea i, nays 2; Virginia, yeas 14, nay i; North Carolina, yeas 6, nays 3; South Carolina, yeas 7; Georgia, yeas 6, nays 2; Ala- bama, yeas 7 ; Mississippi, yeas 4 ; Louisiana, yeas 3, nay i ; Virginia, yea i ; Texas, yeas 2 ; Missouri, yeas 4 ; Tennessee, yeas 6, nays s ; Kentucky, yeas 3, nays 7 ; Ohio, yeas 12, nays 8 ; Indiana, yeas S, nays 2 ; Illinois, yeas s ; Michigan, yeas 2. Total yeas, 114. Democratic 113, Whig (Alabama) i. Total nays, 95. Whigs 71, Democrats 18, Native American 6. Of the 18 Democrats there were from New York 4, New Jersey 2, Pennsylvania 11, Maryland i; Natives, New York 4, Pennsylvania 2. Vote in the Senate — Yeas: Maine, Fairchild; New Hampshire, Atherton; New York, Dix, Dickinson; Virginia, Pennybacker; South Carolina, Calhoun, Mc- duffie; Virginia, Culquitt; Tennessee, Jarnagin, Turney; Ohio, Allen; Indiana, Hannegan, Bright; Illinois, Breese, Semple; Mississippi, Chalmers, Speight; Ala- bama, Bagby, Lewis; Florida, Westcott, Yulee; Texas, Houston, Rusk; Missouri, Achinson, Benton; Arkansas, Ashley, Sevier; Michigan, Cass. Total 27. Nays: Maine, Evans; New Hampshire, Cilley; Massachusetts, Davis, Web- ster; Vermont, Phelps, Upham; Rhode Island, Green, Simmons; Connecticut, Huntington, Niles; New Jersey, Dayton, Miller; Pennsylvania, Cameron, Stur- geon; Delaware, John M. CIavtx)n, Thomas Clayton; Maryland, Johnson, Pearce; Virginia, Archer; North Caiolina, Mangum; Georgia, Berrien; Louisiana, Bar- row, Johnson; Kentucky, Crittendon, Morehead; Ohio, Corwin; Michigan, Woodbridge. Total 27. Specific duties and minimum valuations were abolished, and the ad valorem rates, which during the entire history of the country had afforded an opportunity for fraudulent invoices and undervaluations, were adopted. It was under this tariff law that the articles subject to duties were for the first time classified and arranged in schedules. The three chief features of the bill designed to accomplish the over- throw of the protective policy and to place the country on a free trade basis were : First. The substitution of revenue duties for protective duties. Second. The repeal of all specific duties and minimum valuations and the levying of duties according to value. Third. The discrimination against industries by imposing high duties on many raw materials. This was a most infamous feature of the act and one which exposes the enmity which existed in the minds of its framers against the manufactures of the country. Not satisfied with exposing this branch of production to ruinous Digitized by Microsoft® WEBSTER'S SPEECH. 481 competition under low duties, the struggle for existence was made more difficult by placing duties on those raw materials which could not be produced at home or which, in a great part, were necessarily imported. No more definite means could have been adopted to accomplish the destruction of the manufactures of the free States and to aid foreign manufacturers in taking possession of the American market. The policy of admitting non-competing raw materials free of duty has been com- mended by those who have avowed a friendship for our industries. The passage of the tariff bill had been fought at every step. Per- haps the greatest speech made was that of Daniel Webster during the three days July 25, 27 and 28. As the speech so abounds in economic truths, and as free traders delight in quoting from the early speeches of the great Massachusetts statesman, a considerable extract from the speech is here given : Duties placed on raw materials. But, sir, before I proceed further, I will take notice of what appears to be some attempt, latterly, by the republication of opinions and expressions, argu- ments and speeches of mine, at an earlier and a later period of my life, to place me in a position of inconsistencies on this subject of the protective policy of the country. Mr. President, if it be an inconsistency to hold an opinion upon a sub- ject of public policy to-day in one state of circumstances and to hold a different opinion upon the same subject of public policy to-morrow, in a different state of circumstances, if that be an inconsistency I admit its applicability to myself. You indulge in the luxury of taxing the poor man and the laborer ! That is the whole tendency, the whole character, the whole effect of the bill. One may see everywhere in it the desire to revel in the delighi of taking away men's employ- ment. It is not a bill for the people or the masses. It is not a bill to add to the comfort of those in middle life, or of the poor. It is not a bill for employment. It is a bill for the relief of the highest and most luxurious classes of the country, and a bill imposing onerous duties on the great industrious masses, and for taking away the means of living from labor everywhere throughout the land. The in- terest of every laboring community requires diversity of occupations, pursuits, and objects of industry. The more that diversity is multiplied or extended the better. To diversify employment is to increase employment and to enhance wages. And, sir, take this great truth; place it on the title page of every book of political economy intended for the use of the government; put it in every farmer's almanac; let it be the heading of the column in every mechanic's maga- zine; proclaim it everywhere, and make it a proverb, that where there is work for the hands of men there will be work for the teeth. Where there is employ- ment there will be bread. It is a great blessing to the poor to have cheap food, but greater than that, prior to that, and of still greater value, is the blessing of being able to buy food by honest and respectable employment. Employment feeds and clothes and instructs. Employment gives health, sobriety and morals. Con- stant employment and well-paid labor produce in a country like ours general prosperity, content and cheerfulness. Thus happy have we seen the country. Thus happy may we long continue to see it. I hope I know more of the Consti- tution of my country than I did when I was twenty years old. I hope I have con- templated its great objects more broadly. I hope I have read with deeper interest the sentiments of the great men who framed it. I hope I have studied with more We'bster'd condemna- tion of ~e Wl. tm Digitized by Microsoft® 482 BEOTIONAL OPPOSITION TO THE AMERICAN SYSTEM. care the condition of the country when the convention assembled to form it. . . And now, sir, allow me to say that I am quite indifferent, or rather thankful, to those conductors of the public press who think they cannot do better than now and then spread my poor opinions before the public. Great JranrU up- on nic revenue. In favor of specific duties, Mr. Webster cited the then Secretary of State (Mr. Buchanan) who, in the debate on tlie tariff bill of 1842, had declared his opposition to all ad valorem duties whatever, except where, from the nature of the article imported, it is not possible to subject it to a specific duty. Our own severe experience, he said, has taught us a lesson on this subject which we ought not to soon forget. Our ad valorem duties have produced great frauds upon the revenue, while they have driven the regular American merchant from the business of importing, and placed it almost exclusively in the hands of the agents of British manufacturers. Mr. Crawford, while Secretary of the Treas- ury, having recommended various new provisions for preventing frauds, said: Whatever might be the reliance which ought to be placed in the efficiency of the foregoing provisions, it is certainly prudent to diminish, as far as prac- ticable, the list of articles paying ad valorem duties. Again, the next year : The certainty with which specific duties are collected, gives them a decided advantage over duties laid upon the value of the article. It is probable that the most important change which can be made in the system will be the substitution of specific for ad valorem duties upon all articles of that class. Among the cases of fraud recited by Mr. Webster, he read a letter from Benjamin Marshall, written a few days previously, in which Mar- shall said: Unfair ad- vantages at British mtrchants. My brother and myself were brought up in the town of Manchester (Eng- land) and were well acquainted with the manufacturers and the manufacturing. At the age of twenty years, it appeared very evident to me that we could finish goods and import goods into New York about lo per cent lower than the Ameri- can merchant; and with this conviction, I agreed to come out to New York and dispose of the goods, and leave my brother to finish and forward the goods. The result was equal to our expectations. We imported our goods lo per cent cheaper than our competitors, and by the ad valorem duties we paid nearly 5 per cent less duties ; so that, in twenty-two years, we made nearly a million of dollars, while nearly all the American merchants failed. Mr. Webster, continuing, said : " I cannot avoid expressing my decided opinion in favor of specific duties, as then the foreign manufacturer would pay the same duties as the American importer." Another objection was, that several interests would not be sufficiently protected, gome, indeed, seemed to be purposely legislated against. To the foreigner manufac- Digitized by Microsoft® WEBSTER'^ SPEECH. turer of hemp goods, the bill, ineffect, granted a bounty of 20 to 25 per cent. It imposed a duty of 5 per cent more on unmanufactured hemp than on cordage. This, together with the difference of foreign shipping charges, and the difference of freight — more being charged on hemp on account of its bulk than on cordage— would give the foreign manufacturer an advantage of about 25 per cent. Copper, raw or unmanufactured, was subject to duty, while copper sheathing was to be let in free, as if the intention was to prevent the manufacture in this country. Hence, much of the copper we got from Chili would now be sent to England, manufactured into sheathing, and then sent to the United States, thus also giving to English vessels the benefit of the transportation. Upon linseed oil, the bill would probably have similar effect. England, it was shown, imported 3 1-2 million bushels of seed annually, free of duty, and im- posed a prohibitory duty on the oil. The duty, which, by our act of 1842, was 25 cents a gallon on oil, was now proposed to be reduced to 20 per cent, or only about 7 cents a gallon. The British manufacturer, besides, had the advantage of cheaper labor, and got double the price for his oil cake than ours did. Sulphuric acid, or oil of vitriol, used extensively in certain manufactures, was the subject of a duty of only 10 per cent, while other acids were charged 20 per cent, as if to crush the manufacture of the article in his country, for which extensive works had been erected. Brimstone, used for making gunpowder and for other purposes, was admitted in its crude state, free of duty, by the act of 1842; and the refined article was charged with a duty of 25 per cent. The new bill reduced the duty on the re- fined brimstone to 20 per cent and laid a duty on the crude of 15 per cent, making a difference of only 5 per cent. The brimstone for our powder had been im- ported from Europe, chiefly from France and England, and the price was about $7S a ton. The manufacture had been commenced in this country only about four years previously, and the price had been reduced to less than $40 a ton. But among the most important interests to be affected by the bill, was that of iron and coal. The duty on plain bar iron was, by law of 1842, $25 per ton. The proposed duty was 30 per cent, which, the price of iron being then about $40 per ton in Liverpool, would be but $I2 a ton. The bill placed the ore, the bar iron and the manufactures of iron, down to penknives and needles, all on the same level, 30 per cent, making no discrimination in favor of the manufactui;ed articles. Iron and coal seri- ously af' fected. Senator Lewis of the Committee on Finance addressed the Senate in favor of the bill, urging its passage as a revenue measure and con- tending that ad valorem duties were favorable to revenue, and specific duties operated to reduce it by restricting imports and protecting do- mestic industries. He said that specific duties had been imposed " upon the petitions of parties who had asked for the tax for purposes of pro- tection " not because ad valorem duties had been evaded but because protection of particular articles was desired. The highest rate was demanded, and if that was given it could only be by a specific duty. The statistics showing revenues produced under revenue tarififs and protective tariffs by ad valorem duties and by specific duties since 1789 were all presented in the debate on the bill. While this phase of the subject was given great attention, the real purpose of the measure to Digitized by Microsoft® 4.Si SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Democra- tic fea- tures of the Mil. Mr. Mc- Duffie in 18S2 and in lSi6. overthrow protection and introduce free trade formed the chief topic of discussion. Mr. McDuffie in reply to Mr. Webster's question, " Where is the provision intended to operate in favor of the laboring classes of the country ? " said : Now, Mr. President, I will point out to the Senator the democratic features of this bill. It has reduced the duty upon salt from 8 cents to half a cent. It has reduced the duty upon sug'ar from 2 1-2 cents to I cent per pound. It has re- duced the duty on all that class of cotton manufactures which is consumed by the laborers, farmers and mechanics of the United States ; God knows how much ! But I sincerely believe that in this bill, on all that class of manufactures con- sumed by the poor and middle ranks, there is a reduction of duties greater than on any other class of articles contained in the bill; and I have expressed the opinion that the repeal of the cotton minimums alone will enable the people of the United States to consume an increased importation approaching to ten mil- lions of dollars, at prices little more than two-thirds of that which they now have to pay. The attack was on the industries which produced " that class of manufactures consumed by the poor and middle ranks " which consisted of the ordinary grades of cotton and woolen fabrics, hats, wearing ap- parel, implements of husbandry and all articles made of iron in common use; in fact, the very articles and the only articles for the production of which industries had been established by protective duties. American labor was to be driven out of employment by importing this class of goods. The laborer was to be benefited, not by employment, but by being presented with an opportunity to buy the products of foreign labor at assumed lower prices. It was Mr. McDuffie's opinion that the im- ports of this class of cotton goods would be increased by $10,000,000. How could Mr. McDuffie argue that similar foreign made goods would be had " at prices little more than two-thirds of that which they now have to pay," when without an exception the English had raised prices as soon as they gained control of the market? He had conceded in 1832 that the prices of protected articles were not increased to the consumer by the amount of the duty. The fact that by domestic competition prices had been so reduced that the very articles which Mr. McDuffie mentioned were made by American labor, and sold to the "poor and middle ranks " at prices less than the English sold similar articles in other countries and that the same fabrics were being purchased at much less per yard than the 25 cents which they had cost in 1816, had forced Mr. McDuffie to make the concession quoted. Mr. McDuffie, continuing his answer to Mr. Webster's question, said : Well, Mr. President, what are the great reductions so injurious to the labor of the country? They are the reductions upon manufactures, made in large manufacturing establishments carried on by machinery and owned by capitalists, Digitized by Microsoft® WAGE REDUCTIONS INEVITABLE. 4S5 now realizing from 20 to 40 per cent on their capital. The great effect of this reduction will be to reduce the enormous and unjust profits of large capitalists from 20 to 40 per cent down to the moderate profit of 8 or 10 per cent; and I do not believe that the money-price of labor will be reduced half as much as the money-price of the commodities consumed by the laborer. Reductions Injurious to labor. Here Mr. McDuffie involved himself in an inconsistency. Neither the reductions nor the " great reductions " in the duties were confined to " manufactures made in large establishments," etc. He had just stated, as shown by the previous quotation, that the reductions were on " all of that class of articles consumed by the poor and middle ranks." The statement that cotton manufacturers (to which the charge re- fers) made profits of from 20 to 40 per cent was shown in the debates to be unwarranted. It was true, however, that at that time (1846) the industry was in a high state of prosperity and that a small number of concerns, with a comparatively small capitalization and a large business, were declaring exceptional dividends, while the great mass of capital invested in that industry was yielding only an average rate of interest. But how does Mr. McDufiie claim that labor is to be benefited? He concedes that wages will be reduced, but he says he thinks not half as much as the prices of the commodities mentioned. The mill hands then must at least submit to reduced wages, and if the goods are imported, they must seek other employment. For this conceded injury they are to be compensated by relying on the tender mercies of foreign manu- facturers and speculators in the sale of foreign wares for lower prices. As a theory for accomplishing the destruction of American industries and the impoverishment of American free labor it is well conceived. Space will not admit of a complete analysis of the debates on the meas- ure. The principles of the bill were fully set forth in Secretary Walker's report, and were considered in Chapter XV. As soon as it became apparent that Secretary Walker's plan would be adopted by Congress and that protection would be overthrown, manu- facturers began to retrench and prepare for the life-and-death struggle into which they would soon be plunged. Some were farsighted enough to retire from business; others reduced wages or discharged a part of their hands and curtailed production. The expansion of industries, which was so well under way, immediately ceased. The inevitable con- sequences of this proposed legislation, which was so unfriendly to in- dustries, were known before it became a law. Its final passage shocked the entire manufacturing section of the country, and the excitement and indignation created found utterance in the press of the Democratic as well as the Whig parties. The following are extracts from a few of the articles which appeared in the newspapers at the time. The New York Courier and Enquirer, though opposed to the tariff Must sub- mit to re- duced wages. Digitized by Microsoft® 4S6 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Predic- tions fhat came true. Among the effects which it of 1842, reprobated the passage of this law. enumerated were the following: The country will be flooded with foreign goods, imported under false in- voices; many manufactories will be stopped, and others will work at half price; the home market now being built up will be injured; ruinously low prices of agri- cultural products will follow; the day laborer will be required to work for re- duced wages. The consequence of such excessive importations will cause a balance of trade against us exceeding the amount of specie in the country the next year (1847), which must be sent abroad, followed perhaps by a derange- ment of our monetary system. Mr. Greeley's sharp com- ment. The New York Tribune, in its review of the act, said: What can you say, then, of taxing all wool 30 per cent, and letting it in manufactured into woolen or worsted yarn, flannels, bockings or baizes, at 25 per cent? Wool hats or hat bodies, or any kind of blankets, at 20 per cent? Did mortal man ever invent or imagine a system of political economy under which such legislation as this can be justified? Rummage your Adam Smiths and Mc- Cullochs, Messrs. Free Traders, and tell us what you can find that will palliate such direct legislation against long-established and important home interests, and in favor of their foreign rivals? There are millions of American property in- vested in the branches of industry here struck at; there are thousands of our people who live by working at these branches. The raw material of blankets is generally cheap, coarse wool, which both British and American manufacturers obtain from South America. The former pay no duty on their wool, and but 20 per cent on bringing their fabrics into market; the latter must pay 30 per cent on his raw material before he begins to manufacture. Will anyone attempt to justify this? Those who fancy the passage of this bill will damage New England espe- cially, are grievously mistaken. It will injure some branches of Eastern manu- factures, but fall with far greater severity on the younger and less hardy enter- prises of other sections. New England will buy her iron, her coal, her steel, cheaper than she has done. Great Britain and Nova Scotia will profit by the change at the expense of Pennsylvania. The woolen manufacture must suffer, and the wool-grower must suffer with it. Printing cottons will be shaken. We apprehend a reduction of the wages of manufacturing labor, but trust it will be averted if possible. We do not doubt that the capital now embarked in manufactures will generally take care of itself, either in prosecuting those enter- prises or in some other undertakings. But the new States have punished them- selves far more seriously than they have New England. They need manufactures to furnish markets for their vast agricultural surplus, and enable them to give a more profitable direction to their industry than the production of grain and meat for distant consumption. This want had begun to be supplied under the present tariff, and would have been more generally and rapidly, but for apprehensions of its repeal. Every machine shop in the Union has been as full of work as it could desire for three years past; and at this moment a single establishment in this State has orders for $300,000 worth of manufacturing machinery, entirely for the South and West. Does any one believe it will have half so much work on hand at this time next year? The American (Philadelphia) Sentinel, a Democratic journal, after Digitized by Microsoft® THE NEW TARIFF AND THE PRESS, 487 the bill passed the House of Representatives, and while it was pending in the Senate, said: Such, indeed, was the universal distress prior to the act of 1842, that Con- gress had to pass a bankrupt act to extricate thousands of debtors from the embarrassing difficulties that surrounded them. We want no more bankrupt acts. We wish everybody in this great commonwealth to have full employment, which . can only be the case when we encourage home industry. That the tariff of 1842 has proved a blessing to this country, it is only neces- sary to avert to our national credit at home and abroad, ever since its enactment. See, too, how the people have prospered since that time. Why shall members of Congress shut their eyes to the experience that we have been so recently taught on this interesting question ? The Philadelphia United States Gazette said: It is stated that the wages of the laborers in the mining districts of this State will be reduced one-half, when the new tariff comes into operation, in order that something like a competition with the coal mines of Picton and elsewhere may be maintained. The Cumberland (Maryland) Civilian said: We regret to learn that the Lonaconing Company has suspended operations and discharged the hands. The New York Express said: The tariff, more or less, occupies the attention of all the presses. Wherever the news goes, it sounds a death knell in the ear of industry and enterprise. No sadder news, for many a year, has reached many branches of labor; and the outcry therefore is general. It was legislation to promote the growth of the industries of foreign powers. It was the opinion of the British press that the act would injure American industries and benefit those of England; that employment for labor would be reduced in America and increased in England. These were the identical results which protectionists contended would follow; in fact, these were the results which Secretary Walker and American free traders claimed should follow. The bill was skilfully arranged and the rates of duty fixed for the purpose of increasing imports of manu- factures in order that the Southern Democracy might obtain reveiiue with which to wage a war of conquest against Mexico, and by so doing extend slaveholding territory. "It is not strange," said Andrew Young ("National Economy"), " that what produced such effects in this country should cause rejoicing abroad." English papers abounded with articles headed in conspicuous Bemoaratic reproba- tion oj the law. Sound$ a death knell io industry. Digitized by Microsoft® 488 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. type, " Progress of Free Trade ! " " Response from the United States ! " " The Monopolists Floored ! " etc. Said one : The Independence packet ship, which has so often brought important intelli- gence from the United States, has arrived in this port, bringing the best piece of news she has ever conveyed to this country, namely, that of the passage of the new and liberal tariff of duties on imports founded on Mr. Walker's report, through the American House of Representatives, by a majority of 114 votes to 95 votes. Bringing the best piece of news. Fruits of the Demo- cratio triumph. The London Times said : Henceforth the principle of duties for protection must be considered as aban- doned in the United States. The duties which remain insufficient to compensate the objects of protection, are quite high enough to insure a revenue to the State. The alteration in the American tariff can be regarded as a great triumph gained by the principles of free trade. A Liverpool paper spoke of the new tariff thus: It is almost impossible to overrate the effect it will have upon the manufac- turing industry of this country [England] when we take into consideration that, in spite of the previous almost prohibitory tariff, the United States have been the most important outlet for our manufactures for many years past. The reduction of duties on cotton and woolen manufactures will give a great impulse to these branches which have been suffering to some extent for want of a remunerative foreign market for their surplus production. But the interest which will be most materially benefited is the iron manufacture of this country, which will be apparent from the comparative rate of duties under the old tariff and the present. It is expected that the price of pig iron will rise ids. per ton, and bar iron 20s. per ton. The act remained in force from December 1, 1846, to July 1, 1857, when the duties were further reduced to harmonize with the revenue standard. During the entire period, however, covered by the two acts mentioned, the manufacturers of the country were subjected to competi- tion under duties levied according to the revenue standard. It has been urged by free trade writers that the revenue policy of the Democratic party was so satisfactory to the country that the people acquiesced in its continuance and opposition to it substantially ceased. In 1848 the Democratic platform declared that The fruits of the great political triumph of 1844, which elected James K Polk and George M. Dallas, President and Vice-President of the United States, have fulfilled the hopes of the Democracy of the Union ... in the noble impulse given to the cause of free trade by the repeal of the tariff of 1842, and the crea- tion of the more equal, honest, and productive tariff of 1846 ; and that, in our opin- ion, it would be a fatal error to weaken the bands of a political organization by which these reforms have been achieved. Zachary Taylor, however, defeated Lewis Cass, the Democratic candi- Digitized by Microsoft® PRESIDENT FILLMORE'S MESSA&E. 489 date. Taylor lived but a short time and was succeeded by Millard Fill- more. Here is what President Taylor said in his first annual message : I recommend a revision of the existing tariff and its adjustment on a basis which may augment the revenue. I do not doubt the right or duty of Congress to encourage domestic industry. I look to the wisdom and patriotism of Con- gress for the adoption of a system which may place home labor, at last, on a sure and permanent footing, and, by due encouragement of manufactures, give new and increased stimulus to agriculture and promote the development of our vast resources and the extension of our commerce. PrDSidknt Fillmore's Messagb Asking a Ri;storation o^ Protection AS A Means to Revive Prosperity. President Fillmore, in his annual message, dated December 2, 1851, says: The values of our domestic exports for the last fiscal year as compared with those of the previous year, exhibit an increase of $43,646,322. At first view this condition of our trade with foreign nations would seem to present the most flat- tering hope of its future prosperity. An examination of the details of our ex- ports, however, will show that the increased value of our exports for the last fiscal year is to be found in the high price of cotton which prevailed during the last half of that year, which price has since declined about one-half. The value of our exports of bread stuff^s and provisions, which it was supposed the incentive of a low tariff and large importations from abroad would have greatly augmented, has fallen from $68,701,921 in 1847 to $26,051,373 in 1850, and to $21,848,653 in 1851, with a strong probability, amounting almost to a certainty, of a still further re- duction in the current year. The aggregate values of rice exported during the last fiscal year as compared with the previous year also exhibits a decrease amount- ing to $460,917, which, with a decline in the value of the exports of tobacco for the same period, makes an aggregate decrease in these two articles, of $1,156,751. The policy which dictated a low rate of duties on foreign merchandise, it was thought by those who prompted and established it, would tend to benefit the farm- ing population of this country, by increasing the demand and raising the price of agricultural products in foreign markets. The foregoing facts, however, seem to show incontestably that no such re- sult has followed the adoption of this policy. In a subsequent message, President Fillmore urges : In my first annual message to Congress I called your attention to what seemed to me some defects in the present tariff, and recommended such modifications as in my judgment were best adapted to remedy its evils and promote the prosperity of the country. Nothing has since occurred to change my views on this important question. Without repeating the arguments contained in my former message in favor of discriminating protective duties, I deem it my duty to call your attention to one or two other considerations affecting this subject. The first is the effect of large importations of foreign goods upon our currency. Most of the gold of Wconomio results plainly stated. Digitized by Microsoft® 490 SECTIONAL OPPOSITION TO TEE AMEBIOAN S7STEM. Manufac- tures hroken flown by foreign competi- tion. Free Trade platform of 1S56. Tfe ab- sorbing question of slavery California, as fast as it is coined, finds its way directly to Europe in payment for goods purchase'd. In the second place, ^ our manufacturing establishments are broken down by competition with foreigners, the capital invested in them is lost, thousands of honest and industrious citizens are thrown out of employment; and the farmer, to that extent, is deprived of a home market for the sale of his surplus produce. In the third place, the destruction of our manufactures leaves the foreigner without competition in our market, and he consequently raises the price of the article sent here for sale, as is now seen in the increased cost pf iron imported from England. While both Zachary Taylor and Millard Fillmore recommended a return to the protective policy, no relief could be afforded because the legislative branch of the government was under the control of the low tariff party. In 1856 the Democratic party placed in its platform the following declaration: That there are questions connected with the foreign policy of this country which are inferior to no domestic question whatever. The time has come for the people of the United States to declare themselves in favor of free seas and progressive free trade throughout the world. At this time the slavery question had become the one absorbing subject of national importance. Every other question and issue was subordinate and sank into insignificance. Since the passage of the Mis- souri Compromise in 1820, which prohibited slaves from being held in the States and Territories north of the Mason and Dixon line, the con- troversy had grown with increasing interest. While public sentiment was steadily growing throughout the North and West against the insti- tution of slavery, it had not yet become crystallized and the elements entertaining different views upon the best means of restricting its further extension or accomplishing its total abolition, had not been moulded into one party strong enough to carry the country. There were the extreme abolitionists who believed that the question should never be allowed to rest so long as the institution remained. There were those of more moderate views who opposed its further extension and believed that it should be confined in the States where it had existed, and that the nation should wait patiently until the Southern people them- selves became more enlightened on the subject. The fact that the people of the North, who to a greater or less degree were opposed to the insti- tution, were divided into factions and could not unite on a common plat- form, left the pro-slavery party in control of the government. A suffi- cient number of Democrats in the North believing in the institution of slavery united with the South and made it possible for the Democratic party to control the executive and legislative branches of the government. Between 1850 and 1860 the South dominated the country. The vigorous agitation against slavery yvhich was carried on by the abolitionists inten- sified sectional hatred. Hence the Sonthern leaders became more aggres- Digitized by Microsoft® TEE SOUTH IN FpLL CONTROL. 491 sive, bold and defiant. They repealed the Missouri Compromise in 1850, so that slavery could be carried into Kansas, Nebraska and the great Northwest, and in fact, into any State which might adopt it. The Fugi- tive Slave Law was also passed in 1850, which directed the return of slaves who had escaped from their masters and authorized and directed United States Commissioners in the North to compel their surrender without trial by jury, and commanded citizens of the North to aid in making arrests and the enforcement of the law. It has been pointed out by free traders that the acts of 1846 and 1857 were acceptable and satisfactory to the North and supported and concurred in by Northern representatives in Congress from manufacturing districts. The fact that members of the Democratic party of the North voted for these measures, when the political conditions of the times are taken into consideration, affords no evidence of benefits or satisfactory business results arising from this legislation. The South shaped and directed the policy of the Democratic party, made its platforms and dictated the legislation of the country, not only on the slavery question, but upon every other question. They also controlled the patronage, dealt out all offices, and members from the North were compelled to bow to Southern dictation and abide by party caucuses or become ostracized, stripped of political influence and humiliated. The social as well as the political influence of the Capi- tol was exacting and unrelenting in its enforcement of every principle championed by the South. Between 1846 and 1860 the people laid aside the consideration of economic and business questions and directed their whole attention to the discussion of the great moral issue which threatened the life of the nation. The movement against the institution of slavery culminated in the formation of the Republican party; the campaign of 1856 against the further extension of slavery; the overthrow of the Democratic party in 1860; the election of Abraham Lincoln, followed by the Civil War of 1861. That the people of the free States under these circumstances ceased an active agitation in favor of the protective policy is no evidence of the wisdom or beneficial effects of the free trade program presented by Secretary Walker. As before stated, the ad valorem duties were fixed at higher rates by the act of 1846 than Secretary Walker had recommended ; the reason for this being the revenue necessities occasioned by the declaration of war against Mexico. Although the importations of competing manu- factures had greatly increased, yet, by the reduction of wages, the surrender of profits and the practice of great economy, the domestie manufacturers were still making more goods and holdmg a larger share of the American market than Secretary Walker's party laad intended that they should. Notwithstanding the serious depression in business Democra- tic policy shaped iy the South. Formation of the kepuilioan par-ty. Digitized by Microsoft® 492 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. Further Democra- tic tariff reduction. Republican legislation in 186i. and lack of employment which prevailed in the seaboard cities and gen- erally throughout the manufacturing districts of the country, under the pretence of reducing the revenues a revision of the tariff was accom- plished in 1857. The act was passed on March 3, 1857, to take effect on July 1 following. Franklin Pierce became President in 1853, and on the last day of his term, March 3, 1857, he signed the new tariff law. James Guthrie, of Kentucky, was Secretary of the Treasury, and Jefferson Davis, Secretary of War, both free traders, and both having unlimited power and influence in the administration. The bill reduced the duties on imported articles to the extent of 20 and 25 per cent, as to the greater number, retained the ad valorem principle and added to the free list many articles previously subject to duty, especially raw materials. The manufacturers now fully realized that the country was in the hands of the Democratic party, whose policy was absolutely determined by the representatives of the planters and the planting interests, and that the revenue standard must be the basis for fixing the rates of duty in any legislation enacted. Those members of Congress and Senators who believed in the policy of protection were absolutely powerless to prevent whatever legislation the Democratic party might decide to enact. Hence, any advantage which could be gained would be very acceptable. The bill placed nearly all raw materials on the free list. All wool cost- ing less than 20 cents a pound was made free, and a duty of 24 per cent ad valorem was levied on wool costing more than that amount. It has been asserted that many woolen manufacturers were in sympathy with the course pursued by the Democratic party in striking down the wool- growing interests. It should be noted, however, that there was method in the action of the Democratic party in this instance. By depriving the wool growers and producers of raw materials of adequate protection it was thought that they could more easily be arrayed against the manu- facturing interests of the country and their votes secured to the Demo- cratic party. The woolen manufacturers, however, soon discovered that their interests were identical with those of the wool growers, and in 1864 they united on legislation which protected the wool grower and gave compensatory duties to the manufacturers. This policy was em- bodied in the Republican legislation of 1864 and has been continued until the present time. Mr. Covode of Pennsylvania, addressing the House in opposition to the bill of 1857, said: As things are made plainer by an example, I will give one. The tariff of 1846 imposes a duty of 30 per cent on wool, while the duty on blankets is only 20; thus making a discrimination in favor of the foreign manufacturer, and against our own, of 10 per cent, Under this tariff the importation of blankets Digitized by Microsoft® NATION-WIDE PROTECTION OR NONE. 493 ran up the last year to over $6,000,000. Now, who is benefited by this condition of things, but the foreign manufacturer and foreign wool-grower? Probably not one pound of American wool entered into the composition of this enormous amount of goods. Had the duty been so arranged as to enable our own manufacturers to make this article, it would have afforded a market at home for about eight million pounds of wool. Thus it will be seen that the interest of the wool-grower is to have a sufficient protection for the manufacturers to enable them to make all such goods, thereby securing a market for his wool at home; as it is not to be supposed that the American wool-grower will be able to go into the markets of the world in competition with the Russian and Australian producers. Speaking for the woolen manufacturers of Pennsylvania, Mr. Co- vode supported the sound protection doctrine which favors the " protec- tion of all branches of industry alike, that all may prosper alike." This is the Pennsylvania idea which has dominated the protectionists of that State ever since Mr. Fitzsimmons advocated it when the first protective tariff law was passed in 1789. The manufacturers of New England, however, soon discovered their error in grasping a temporary advantage, and saw that the protective policy, if maintained, must be nation-wide in its scope and safeguard the interests of the people of every section of our country, North, South, East and West. Mr. Kennett of Missouri opposed the bill and strongly favored protection to raw materials. He said: It is plain to my mind that the protective system — the true American system — must be preserved as a whole, or else it must crumble and fall to pieces of itself. And that whenever the friends of protection suffer themselves to be beguiled into the sacrifice of any one interest which is in itself important, and which is capable of being fostered and built up so eventually to sustain itself, and furnish labor for a large portion of the population, and employment for the capital of the coun- try, that moment they will have left an opening in their ranks which the watchful enemy from the South will be ready to take advantage of and rush in and scatter them. If our hemp, our lead, our sugar, our salt, our wool, are not to be pro- tected, if protection is to be taken off of every article which is used to any con- siderable extent in any of the manufactures of this country, for the purpose of enabling the manufacturers of the North to make great profits, and eventually to take possession of the foreign markets of the world, why, all we have to say is, that we will not quietly submit to such a policy. If you cannot protect those articles which we produce, it is a very simple process for us to repudiate your protection altogether. We are satisfied with things as they are. We would rather put up with a lesser evil which we know than rush upon others that we know not of. The bill passed the House on February 20, 1857, by a vote of 110 to 84. When the bill reached the Senate it was somewhat modified by the adoption of an amendment proposed by Mr. Hunter. Mr. Hunter's amendment having been accepted by the House, his remarks there, con- taining a general description of the bill, are of interest. He said: Protection of all branches alike. A Free Trader's amendment adopted. Digitized by Microsoft® iH SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. The modification that I propose is this : I propose to reduce the loo per cent schedule to a 30 per cent; to reduce the 40 per cent, the 30 per cent, the 25 per cent and the 20 per cent schedules one-fourth, or nearly one-fourth; that is to say, the 40 per cent to 30, the 30 to 23, the 25 to to 19, and the 20 to 15. The lower schedules, which are comparatively unimportant, I propose to reduce one-fifth. This is the whole scheme of the substitute which I shall offer, except that I make transfers of certain articles in order to accommodate the bill more to the principles which I have been endeavoring to enunciate. The only question which suggests itself is, Will the proposed scheme produce the desired quantity of revenue? Upon that point I am convinced, from the examination I have given it, that the danger is, not that it will produce too little but, too much. For it is obvious that when we come to reduce the duties, the consumption will be increased, and this, again, will have the effect to add to the revenue. I will only say of the substitute which I present, that every change which it proposes tends to cheapen to the con- sumer the price of whatever he uses, and that, at the same time, it offers a com- pensation to the manufacturer by enabling him to diminish the cost of much that he produces. Mr. Hunter's substitute was adopted by the following vote of the Senate : Yeas — Messrs. Adams, Allen, Bell of New Hampshire, Benjamin, Biggs, Brown, Clay, Douglas, Evans, Fish, Fitch, Fitzpatrick, Foster, Green, Gwin, Houston, Hunter, Iverson, James, Johnson, Jones of Iowa, Mallory, Mason, Pugh, Reid, Rusk, Sebastian, Slidell, Stuart, Sumner, Toombs, Toucey and Wilson — 33. Nays — Merrs. Bell of Tennessee, Bigler, Brodhead, Collamer, Durkee, Foot, Geyer, Nourse, Seward, Thompson of Kentucky, Trumbull and Wade — 12. Why the country was pros- perous. It was signed by the President on March 3, 1857, and took effect on July 1. Efi^Ect of the Tariff For Revenue Policy. The reader will be interested in the effect of this policy on the in- dustries and general welfare of the country. It has been claimed by the advocates of free trade that during the operation of the policy the coun- try enjoyed an era of great prosperity; that in the accumulation of wealth, increase in population, growth of agriculture and the expansion of foreign trade it surpassed any similar period in the history of the country which preceded it; that the revenues were ample and the meas- ure met the expectations of its friends. It should be noted that the policy was not adopted for the purpose of establishing new manufac- turing industries nor for the preservation of those already undertaken. The question is, Were the manufacturing industries of the country pros- perous or not? Were the wages of labor advanced or reduced? Were its effects on the nation generally beneficial or otherwise? In answering the above questions it will be necessary at first to indicate certain economic changes and events which appeared for the Digitized by Microsoft® TEE GOLD OF CALIFORNIA. 495 first time in our history and exerted a potent influence on the produc- tion of wealth, the employment of labor, the promotion of agriculture and internal trade and which were in no way due to the tariff legisla- tion. The chief of these history-making events were the production of gold in California, the great extension of railroad building, and the introduction of agricultural machinery. Production o:^ Goto. Gold was discovered in California in May, 1848. Prior to that year and in 1847 gold to the value of $889,085 and silver of the value of $50,000 were produced in the United States. Previous to this time we had relied on importations for our supply of the precious metals. The withdrawal from the country of specie to settle adverse balance of trade had embarrassed our banking institutions and we had at all times suffered from a deficiency. Beginning in 1849 with a production of $40,000,000, a stream of the yellow metal was constantly flowing from the West to the East, reaching $65,000,000 in 1853 and not falling be- low $50,000,000 in any year. The following table gives the production of gold and silver in the United States from 1846 to 1861.^ Tablu No. 12. Year 1847 1848 1849 1850 1851 1852 1853 i8S4 1855 1856 1857 1858 i8S9 i860 Total ^ Gold. Silver. $889,085 $50,000 10,000,000 50,000 40,000,009 50,000 50,000,000 50,000 55,000,000 50,000 60,000,000 50,000 65,000,000 50,000 60,000,000 50,000 55,000,000 50,000 55,000,000 50,000 55,000,000 50,000 50,000,000 500,000 50,000,000 100,000 46,000,000 150,000 $651,889,085 $1,250,000 Total. $939,085 10,050,000 40,050,000 50,050,000 55,050,000 60,050,000 65,050,000 60,050,000 55,050,000 55,050,000 55,050,000 50,500,000 50,100,000 46,150,000 $653,189,085 Increased production of gold. The amount of gold received from the mines of the United States between 1846 and 1857 was $450,889,085. This great quantity of gold not only added to the wealth of the coun- 1 Report of Director of the United States Mint. Digitized by Microsoft® 496 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. Spectal causes of prosperity. Period of great rail- road iuildtng. try but vitalized and stimulated to activity all branches of business. It gave new support and strength to the financial and banking institutions of the country. Its discovery incited a wonderful tide of emigration from the East to the new El Dorado. Fortune seekers poured over the plains and through mountain passes into the new Territory, which soon held sufficient population to claim admission into the Union as a State. This vast supply of gold came in a most fortunate time for the friends of the Walker tariff. The large importations of manufactured commodities made possible by the low duties had just begun. The short crops in England of 1847, which in that year created an abnormal demand for American breadstuffs, were of brief duration, and the large adverse balance which followed would within three years have ex- hausted the country of its precious metals, resulting in financial revul- sion, bankruptcy and a repetition of the industrial disasters of 1819 and 1837. The crisis was averted, not by the Walker tariff, but by the new supply of gold which was immediately exported to pay for the mer- chandise imported. It has been asserted by distinguished economists that the sudden and abnormal accession of gold from California and Australia operated to depreciate its value and cause a worldwide advance in commodity prices. RaiIvRgad Building. The act of 1846 went into operation at a time when the construc- tion of railroads in the United States had just fairly begun. In 1830 forty-one miles had been built. The number of miles of railroad con- structed and in operation at the, close of each period of two years was as follows : ^ Year. Miles. 1846 4,930 1848 5,966 1850 9,021 1852 12,908 1854 16,720 1856 22,016 1858 26,968 i860 30,626 Between December 1, 1846, and December 1, 1860, there were 26,- 340 miles built, at a cost for construction and equipment of $996,025,860. The number of miles in operation and their cost on December 31, 1850, and December 31, 1860, in the several sections of the Union, are as follows : ^ 1 statistical Abstract of the United States. 2 Seaman's Progress of Nations, Second Series, p. 56S. Digitized by Microsoft® RAILROAD BUILDING. 497 New England States Five Middle Atlantic States Southern Atlantic States Four Gulf States Kentucky, Tennessee and Arkansas Eight Northwestern States, including Missouri and Iowa California and Oregon Total Miles. 1850. i860. 2,507 2,724 1,717 287 78 1,276 3,669 6,321 5,454 2,256 1,806 11,212 t 74 8,589 30,792 Cost in i860. $148,366,000 329,528,000 141,739,000 64,943,000 49,761,000 413,541,000 3,680,000 1,151,558,000 That the construction of railroads was a powerful agency in pro- moting the industrial life and developing the resources of the country, in inducing the settlement of new States and Territories, there cannot be the slightest question. It was estimated that " by reason of the in- creased facilities furnished by railroads for the transportation of agri- cultural products and cattle to the Atlantic States, they were worth from 50 to 200 per cent more in the Western States in 1860 than they were in 1840, and lands were raised in value in a corresponding manner." The railroads opened markets in sections of the country which be- fore were inaccessible, developed and promoted settlements in interior and remote districts, and made it possible to utilize forests and mines and to cultivate rich valleys and regions which had laid dormant and were of little value. New cities, villages and towns sprang up in sec- tions penetrated by their lines. During this same period the electric telegraph appeared. The first line of much value was invented by Professor S. F. B. Morse and put in operation between Baltimore and Washington in 1844, and by 1860 it was estimated that there were 50,000 miles in operation in the United States. Comments. Another cause which operated during this period to give employment to labor, stimulate the extension of agriculture and increase the wealth of the country was the perfection of threshing machines, reapers, mow- ers and other agricultural machinery and implements. There is scarcely to be found any previous period in the history of the world when so many powerful agencies appeared and combined to promote the wealth, industrial progress and development of a nation excepting that of the inventions of labor-saving machinery, which occurred in England during the latter part of the eighteenth century. A careful analysis of this period shows that the industrial and commercial prog- Vew markets opened. Digitized by Microsoft® 498 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Supply of gold from OaUfornia. ress made was due to the causes mentioned, that the influences exerted by them were so powerful and they were of such a nature that they operated to carry the country along and for many years avert a business revulsion which must inevitably be caused by the operation of the tariff law of 1846 and of 1857, The supply of gold from Cahfornia prevented the exhaustion of the precious metals by the excessive importations of merchandise. The construction of railroads furnished a tremendous market for iron, steel, lumber and materials for railroad equipment. It brought into existence shops for the building of locomotives, freight and passenger cars, lumber for the construction of depots, buildings and terminals, and during this period $996,025,860 was expended in the con- struction of 26,340 miles of railroad. The money was expended for labor and materials in the New England States, the five middle Atlantic States, the Southern Atlantic States, the four Gulf States, Kentucky, Tennessee and Arkansas, in eight Northwestern States, including Mis- souri and Iowa, and in California and Oregon. This sum was only $13,829,855 less than the entire capital invested in all of the manufac- tories, mining and mechanical arts in the United States in 1860 and only $84,283,356 less than the value of the real and personal property of the State of New York in 1850. The entire value of the farms, farm implements and machinery of the fifteen slave States in 1850 was $1,183,995,274, or only $187,969,414 in excess of the capital invested in railroads during this time. If we add to the amount expended in the construction of railroads the $651,889,085 of gold or new wealth ex- tracted from the mines of California, we have the sum of $1,647,914,- 945 as the sum from these two sources alone, which were brought into requisition during this time to give employment to labor and promote the industrial and commercial progress of the nation. This sum is greater than the assessed valuation of all the real and personal property of the States of Massachusetts and New York in 1850. Moreover, the country by the upbuilding of its resources and the accumulation of wealth which had been brought about largely by the development of a system of manufacturing under the protective policy had been made ready to enter upon the vast undertakings which the perfection of railroad building and the discovery of gold had made pos- sible. When the act of 1846 was adopted the country was in the midst of the most amazing prosperity and business activity it had enjoyed since the formation of the government. The banking institutions had become sound and stable, great cities and industrial centers had been built. Through the organization of factories, mills and various indus- tries located throughout the free States, a domestic trade had been created to support the railroads as soon as they were completed. Digitized by Microsoft® WORLD-WIDE TRADE EXPANSION. 499 ExTERNAi, InfivUe;nce;s on Commerce In considering the causes which stimulated the expansion of for eign commerce at this time, we should not lose sight of the influences which were operating throughout the civilized world. The beginning of this period is mentioned by all writers who have treated of the development of the trade and commerce of the world as an era of great importance. About this time steam was substituted as a motive power for sailing vessels, and the use of iron in the construction of ships was greatly in- creased. This change in navigation greatly reduced ocean freight rates and augmented the international trade of the world. The con- struction of railroads in Continental Europe was prosecuted with great vigor, English bankers furnishing the capital, English ironmasters the iron and English contractors building the roads. Sir Thomas Brassy, the great English railroad builder, is said at one time to have had 80,- 000 men in his employ. England had been the money center of the world since before the Continental wars. Since 1815 she had almost monopolized the carrying trade of the globe. Through her foreign trade she had absorbed nearly all of the gold mined in Australia and California. The sudden and vast addition to the stock of the precious metals of the world at this time is held by many economists to have caused a worldwide advance in prices of commodities. That such sup- ply of the precious metals gave to the business world a new impulse and brought about a great expansion of trade is unquestioned. The Crimean war, which involved Russia, France, England and Turkey from 1853 to 1856, also had its influence in stimulating trade. In ascertain- ing the causes which operated to promote business activity in the United States during the years under consideration, all of these extraordinary economic and business factors must be taken into account. The amazmg thing for Americans to consider is not so much that the American peo- ple enjoyed a brief period of prosperity in certain lines, but that the whole structure collapsed and we were visited by a panic in 1857 no less destructive, although of shorter duration, than the one of 1837. Foreign Trade op the United States. The following tables exhibit the exports and imports of the United States from 1846 to 1861, the adverse balance of trade and the exports of gold and silver coin and bullion. A large foreign trade was made possible by many causes, the chief of which were: (1) The enormous demand for our cotton arising from the great expansion of the manufacture in France, Germany, and especially in Great Britain. An era 0} trade ex- pansion. Extraordi- nary 6usJ- ness factors. Digitized by Microsoft® 500 SECTIONAL OPPOSITION TO TEE AMERICAN SYSTEM. (2) The abnormal production of gold, which provided a means of payment. (3) The decline of domestic production of manufactures. The first two causes mentioned were in no way due to our low tariff policy; the third was in consequence of it. The statistics of the foreign trade of the United States during this period are shown by the following tables: Table No. 13. Imports and Exports of Merchandise of the United States from June 30, 1846, to June 30, 1860 Year. 1847 1848 1849 1850 Total . Year. 1851 1852 i8S3 i8S4 I8SS 1856 i8S7 Total. Year. Total 1846 to 1857, inclusive. Year. 1858 . 1859 . 186a . 1861* Total. Imports. Free. Dutiable. ., $17,651,347 $104,773,002 16,356,319 132,282,325 15,726,425 125,479,774 18,081,590 155,427,936 $67,815,681 $517,963,037 Free. \ $19,653,084/ / Dutiable. $191,118,345 24,187,890 183,252,508 27,182,152 236,595,113 25,760,447 272,043,347 36,430,524 221,378,184 52,748,074 257,684,236 54,267,507 294,160,83s $240,229,678 $1,656,232,568 Free. Dutiable. $308,045,359 $2,174,195,605 Free. Dutiable. $61,044,779 $202,293,875 72,286,327 259,047,014 73,741,479 279,874,640 71,130,351 218,180,191 $278,202,936 $959,395,720 Total $122,424,349 148,638,644 141,206,199 173,509,526 $585,778,718 Total. $210,771,429 207,440,398 263,777,265 297,803,794 257,808,708 310,432,310 348,428,342 $1,896,462,246 Total. $2,482,240,964 Total. $263,338,654 331,333,341 353,616,119 289,310,542 $1,237,598,656 • Three months of the operation of the Morrill Tariff Included. Digitized by Microsoft® FOREIGN TRADE. 501 Exports under the Act of August 30, 1846. Year. Domestic. 1847 ■••• 1848 .... 1849 ■••• 1850 .... $150,574,844 130,203,709 131,710,081 134,900,233 Total.. $547,388,867 Year. 1851 1852 1853 1854 1855 1856 1857 Total.. Year. Domestic. $i78,62o,i;i8 154,931,147 189,869,162 215,328,300 192^51,135 266,438,051 2^8,906,713 51,476,844,646 Domestic. Total .from 1846 to 1857, inclusive $2,024,233,513 Year. 1858 .... 1859 .... i860 .... 1861* ... Total.. Domestic. $251,351,033 278,392,080 316,242,423 204,899,616 $1,050,885,152 Foreign. Excess $6,166,754 7,986,806 8,641,091 9,475,493 $32,270,144 Foreign. Total. $156,741,590 138,190,515 140,351,172 144,375,726 $10,295,121 12,053,084 13,620,120 21,715,464 26,158,368 14,781,372 14,917,047 $113,540,576 Foreign. $579,659,003 Total. Exports. $34,317,249 $34,317,249 Imports. $10,448,129 855,027 29,133,800 $40,436,956 $188,915,259 166,984,231 203,489,282 237,043,764 218,909,503 281,219,423 293,823,760 $145,811,320 $1,590,385,222 Total. Excess Exports. Imports. $21,856,170 40,456,166 60,287,983 60,760,030 38,899,205 29,212,887 54,604,582 $306,077,023 $2,170,044,225 Excess Exports. Imports. $34,317,249 $346,513,979 Exports under the Act of 1857. Foreign. $20,660,241 14,509,971 17,333,634 14,654,217 $67,158,063 Total. Exports. $212,011,274 292,902,051 333,576,057 219,553,833 $8,672,620 $1,058,043,215 $8,672,620 Excess Imports. $38,431,290 20,040,062 69,756,709 Total dutiable imports, 1846-1861 Total free imports, 1846-1861 Total imports, 1846-1861 Total domestic exports, 1846-1861 Total foreign exports, 1846-1861 Total exports of all kinds, 1846-1861 Total adverse balance of trade, 1846-1861 Total adverse balance of trade, 1857 to 1861. $128,228,061 $3,133,591,325 586,249,295 3,719,840,620 3,075,118,665 212,969,383 3,228,087,440 491,753,180 174,160,023 * Three months of the operation o( the Morrill Tariff Included. Digitized by Microsoft® 502 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Coin and huUion imported. How the adverse balance of trade of $431,752,562 was settled is shown by the following statement of the amount of coin and bullion exported and imported each year.^ Coin and Bullion. Excess of Excess of importation exportation over expor- over im- tation. portation. Years. 1847 $22,214,265 1848 $9,481,332 1849 1,246,592 1850 2,894,202 1851 24,019,249 1852 37,169,091 1853 23,285,493 1854 34,522,917 185s 52,587,531 1856 41,537,853 . Total $23,460,857 $225,497,668 X23,46o,857 $202,036,811 1857 $56,675,123 1858 : 33,358,651 1859 56,452,622 i860 57,996,104 $204,482,500 Total excess of exportations over impor- tations $406,519,311 It should be noted that the exports of precious metals correspond very closely to the amount of the balance in our foreign trade to be set- tled each year. It was by the supply of gold from the mines to Cali- fornia that the foreign trade of the country was kept up and the disas- trous effects of the large importations which otherwise would have occurred averted. It was R. W. Thompson in his " History of the Tariff," who said : A man who, in conducting his individual affairs, buys more than he is able to pay for will assuredly reach insolvency in the end, no matter what his wealth. The rule applies equally to the aggregate communities who constitute nations, with regard to their commercial intercourse with other countries. 1 From the report of the Secretary of Treasury on Finances, December 4, ISCO. Digitized by Microsoft® DOMESTIC EXPORTS. 503 d w n < 0) S bo s 'i to s 1-% VU •■s s Q o o 3 •a o Pi O -t! w in -• y o 3 to •a '^ P u rC uS oo" vq" -^ in in vo" *o ro N VO M O\O^00 H-ivo ioO\"^00 ^ to in VO c^ 00 >o ^^ __ O; ro q\ r*2 C> -^ ■ c^ h-T \o" i-T of t<; d\ c^ o o S" fc- ro " ro c^ VO 00 ro N O m 00 o " M O -' M moo fO 00 CO Tf ^ X^ CO '^ ro 01 a> o cs 0\ in O o\ o O 0\ - ■" Oj O^ O; TJ; lO tN lO tN rx -^ in \o fO ■^' d\ in d\ 00 00 » i-H Tt Q' o^ o\ rx 00 OWOVOVOVO TJ-Ttt\ t-C " « o" tF to ■* fn M ;:::::::::::.. . c igvo tNOO 0\0 M N cortmvo WOO QvO ^ T}--<;tTfTS-ioinininininminininvO .CoOOOOOOOOOOOOOOOOOOOOOOOOOOOOO (II„„„M1-.MMMMW1HWMI-.1H ^§« = 00 00 oo" 00 M «4H o n O m « i55 1 Oats 172,554,688 $1,058,304 1 Wheat 171,183,381 4,155,153 Irish potatoes 110,571,201 380,372 Rye 20,976,286 See export of oats. Buckwheat 17,664,914 None. Barley 15,635,119 None. Pounds Pounds. Butter 460,509,854 7,640,914 Cheese 105,875,13s I5,5i5,799 Wool 60,511,343 1,055,928 Hops 11,010,012 273,257 Flax 3,783,079 None. • Provisions of all kinds. t Indian Meal, to the value of ?912,075, was also exported. t This includes Rye and small grains, which are reported at valu*. How much more necessary, then, did it become that the American market should be augmented for domestic provisions and grains and that manufacturing should be extended into the Western States. The low tariff policy forced upon the country by Secretary Walker and his friends, not only greatly diminished our domestic manufactures, thereby reducing the home market for the products of the American farmer, but at the same time did not furnish to him a market abroad. To send our grains and provisions to a market thousands of miles dis- tant with the cost of transportation, commissions and charges of mar- keting deducted, instead of building up and providing a market at home which would secure better prices and greater rewards for the in- dustry of the agriculturists, is a violation of that system of "national economy " under which the greatest prosperity and national develop- ment could be achieved. Free Imports and Domestic Manufactures. As a means of diminishing American manufactures, checking their growth and preventing their extension to the production of the finer Digitized by Microsoft® IMPORTS OF MANUFAGTDRES. 511 Per cent in- 1846. i860. crease 1846 to i860. $ 145,860 $ 231,792 59 1,296,887 2,990,505 130 847,742 2,102,296 148 13,530,62s 32,559,024 141 5,098,505 10,736,335 III 686,229 2,174,493 217 105 173 2,082,643 1,880 7,835,832 18,802,227 140 982,166 4,017,675 309 1,130,064 5,111,748 352 134,374 723,763 439 12,470,320 33,065,820 i6s 240,307 2,551,324 962 1,234,408 2,724,353 121 228,129 5,523,326 2,321 2,525,349 4,407,812 75 554,984 1,212,662 119 9,830,307 35,394,422 260 253,543 2,542,523 904 1,284,086 4,714,284 267 $60,414,890 $173,669,027 grades of many articles, and of making it impossible to establish new competing industries in the United States, the revenue policy was a complete success and accomplished the purposes for which it was en- acted. This is confirmed by the large importations of manufactured goods from Great Britain and other countries from 1846 to 1860 as exhibited by the following tables showing the importations of twenty of the principal articles in 1846 and 1860 from all countries, together with the percentages of the increase of the same; also the table showing the total importations of certain manufactured articles from Great Britain and from other countries during the same years, as follows : Tabids No. 17. Imports oif Twenty Principal Manufactures in 1846 and 1860, with Per Cent Increase Industry. Brass Clocks and time pieces Clothing Cotton goods Flax Glass Gunny bags ( 1847) Iron Laces and embroidery , Leather Paper Silk Soda ash (1847) Steel Tin, copper and zinc Earthenwares, china, etc Wood Wool, except carpeting Wool, carpeting of all kinds Tobacco To show from whom we bought most of the manufactured goods of this period the following table has been prepared: Eow ihe revenue policy worked. Digitized by Microsoft® 512 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Increase of dutiaile imports. Tablb No. 17. — Concluded. Total Imports of Certain Manui^actured Articles i^rom 1846 To 1860, Inclusive. From Great Britain and All Other Countries Articles. Clocks, chronometers, watches, etc Coal Cotton Flax , Glass Iron and steel Indigo Jewelry and plated ware Leather Laces, embroideries, etc Paints, painters' colors, etc Soda ash, carbonate of soda and sal soda. Silk Steel, cast, German and other Tin Wares, earthen, china, porcelain and stone Wool, exclusive of carpeting Wool, carpeting of all kinds The imports of articles admitted free of duty in 1860 amounted to $82,291,614; to $24,767,739 in 1846 under the last year of the act of 1842; and $66,729,306 in 1857. Immediately following the taking effect of the Walker tariff the importations of dutiable articles, mostly of foreign manufactures, in- creased from the amount of $96,924,058 in 1846 to $132,000,000 in 1848; $155,000,000 in 1850; $183,300,000 in 1852 and $236,000,000 in 1853, an increase in one year of $53,000,000. They reached their greatest amount of $294,000,000 in 1857, dropping the next year to $202,000,000, a decline of $92,000,000, and rose to $279,872,327 in 1860. Gold had been flowing out of the country as merchandise came in. The policy of each year — buying more than we were selling— had reached a limit. The country was exhausted and the financial and industrial revulsion came in 1857. The imports of fully manufactured goods reached $166,073,376 in 1860. The total importations of the eighteen classes of articles mentioned in Table 17 for fourteen years was $1,804,480,981, of which $1,239,211,917 came from the United Kingdom, and yet this enormous sum represents only the foreign or invoice valuation. Sim- ilar articles of these importations, under adequate protection, as they were after protection was restored in 1860, might have been made in From Total Great Britain. Importation. $ 21,389,451 $ 40,532,277 6,120,969 8,794,376 274,078,684 335,783,47s 122,375,609 128,213,361 3,282,115 22,368,177 234,198,167 268,771,984 5,651,391 15,048,443 8,577,027 14,216,872 16,620,162 47,609,796 29,135,324 37,416,168 2,730,327 3,659,079 16,133,793 16,638,629 152,380,193 378,280,822 28,084,118 29,337,146 50,416,090 59,705,478 38,726,976 48,242,557 209,709,980 329,992,754 19,611,541 19,869,587 $1,239,221,917 $1,804,480,981 Digitized by Microsoft® TEE COTTON INDUSTRY. 513 American mills by American labor. Even if two-thirds, or articles to the value of $1,203,337,200, had been made here, it would have added at least that amount to the spendable income of the American people, kept more than $200,000,000 of the gold exported at home, averted the panic of 1857, and made the United States prosperous beyond measure and one of the richest and most independent of nations. The Cotton Industry. Our cotton manufactures, which had made rapid progress under the act of 1842, were injuriously affected by the operation of the new law. Henry C. Carey in his letter to David A. Wells of February 12, 1869, shows that the domestic consumption of cotton rose from 110,000 bales in 1824 to 216,000 bales in 1835, having nearly doubled in seven years. During the seven years under the Compromise Act the increase was 23 per cent, or to 267,000 bales of consumption, the last year of this period, while population had increased 25 per cent. The consumption, including the amount South of the Potomac, which had grown from almost noth- ing in 1841 to about 100,000 bales at the closing year of the act of 1842, Mr. Carey says was 668,000 bales, it having more than doubled under the influence of the protection secured by the act of 1842. During the closing years of the Walker tariff the consumption was, in 1857-8, 452,- 000 bales; 1858-9, 760,000 bales; 1859-60, 792,000 bales. During these last mentioned years the average consumption was 668,000 bales per annum, while the population had increased 40 per cent. The value of the product in 1850 was $79,182,492. The imports of cotton goods amounted to $13,530,625 in 1846. They were composed almost exclusively of the finer grades of high- priced fabrics, to the manufacture of which Americans were just turn- ing their attention. The opportunity of a great extension of the indus- try, to include the better grades, was now destroyed. Importations were at once increased by over $5,000,000 and reached $18,421,589 in 1848, $20,108,719 in 1850 and $33,949,503 in 1854. They dropped to $17,- 965,130 in 1858, when business was so depressed, and rose again in 1860 to $32,559,024. The number of yards of cotton goods exported to the United States from England in the three years immediately fol- lowing the enactment of the Walker tariff was: Year. 1846 1847 1848 Plain. Printed and dyed. 10,640,215 41,519,244 16,968,637 13,556,509 44,425,017 39,600,997 Total. 24,196,724 85,944,261 56,569,633 Inlurl- ously af- fected ty ITie Walker policy. Foreigners secured our market. Digitized by Microsoft® 514 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. Lower wages and longer lumra. Production of coarser grades. The total increase was 32,362,909 yards; 26,044,488 yards consisted of printed and dyed fabrics. Under the revenue policy the American market was secured to the foreign manufacturers of English prints and all of the finest and more expensive grades of fabrics. American manufacturers in order to resist the competition of for- eign rivals in their home market were compelled to reduce wages, work their mill hands long hours and carry on a fierce and unremitting strug- gle to continue operations for the production of the coarser grades of goods. The Boston Daily Advertiser, in speaking of the condition of the industry in New England as it existed in 1850, said: The manufacturers of these goods, which comprise by far the greatest part of the cotton manufactures of this country, are in great doubt as to the results of the present state of trade in those fabrics; and they may well indulge some anxious thoughts as to the future when they find themselves running their mills at an absolute loss. It is well known that there have been no profits realized from these goods for the last twenty months.^ The product of the industry as shown by the number of bales of cotton consumed was larger in 1846-7 than in 1850. The decline was due to increased imports under the reduced duties. Hence, the increase in the value of the product of the mills between 1850 and 1860 as shown by the census returns of the latter year should not be taken as evidence of any benefits arising from the ad valorem duties imposed by the Walker tariff. If the product of 1846-7 could be ascertained it is reasonable to conclude that it would be found that the industry made slight progress even in the value of the product during the fourteen years mentioned. The fact that the mills were confined to the produc- tion of the coarser grades of fabrics fully accounts for the small in- crease in the pounds of raw cotton consumed in 1860. The operatives of the cotton mills submitted to reduced wages' and yielded a part of their incomes that importers and foreign manufac- turers might increase their profits and thrive by the invasion of the American market. Carroll D. Wright, who participated in the investi- gation made by the Senate Committee on Finances of the United States, of the change which had occurred in wages in the United States between 1840 and 1891, stated in an article published in the Forum of October, 1893, that the wages of operatives in the cotton mills of Massachusetts were lower in 1860 than in 1840; in 1840 cotton weavers (women) re- ceived 62 cents a day ; in 1860, 54.5 cents ; frame spinners (women) re- ceived 62 cents a day in 1840 and 54.5 per day in 1860. In making such comparison it should be noted that the wages paid in 1840 were very much reduced by reason of the depression in trade which existed at that 1 Hunt's Magazine, Vol. 23, p. 679, 1850. Digitized by Microsoft® THE WOOLEN INDUSTRY. 515 time. It has been shown that a material advance took place in wages between 1840 and 1846 ; hence, if the comparison had been made between 1860 and the last year the protective tarifif of 1842 was in operation, a much greater reduction in wages would have been shown. It is, how- ever, a fact that the cotton industry in the United States was maintained and continued under the operation of the Walker tariff by a reduction of wages which brought them very close to the rate paid in Great Britain, and that it was not until the protective policy was restored in 1861 that this situation was relieved and the wages of cotton operatives were again permitted to advance. Thb Wooio~ oo" c5\ N io~ fC i/ q\ "> " 00 00 n 0\ '^ M VO CO ' ' ^ ^.. ^ *^ fo to 00 d" i£5 (M CS M m" CO in vo O s 8 1 §8 1^ ^ Tf in 00 o 01 in O n ■^ o> lO m N o m ^o' o ■S ^ ^ ht rO to (ShJ ^ M hH CO C CO C N 00, CO M K to CO O VO 00 ■* CO 0) O 00 >3-S 8 fi5§ ^ iN. 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IN 01 CO 01 M Tf Iz; w CO M M 3 J3 c o s E o "§ S 5 " 'C bo c 60 a •3 3 g -^ M m E O . O c/) B O o •V c ca bo c c <;<;<-<S rt OJ .M O O O O I- u i-i pq PQ pq m M m pq Digitized by Microsoft© 534 SECTIONAL OPPOSITION TO THE AMEBIOAN SYSTEM. O ^J rt T) c h J3 VO O IT) to t-" Q w On •-( C<^ Qi Tj- lO VO lO w 1-1 ei (H IT) o to •a rt § J3 in fs vo " t^Ttoo i^o i^comt^rvt^gsN " «^ t^CO comvo OVOVO -^COw -^^^TfVO »£>COCQ NOO mw-^VOtN. CO f^ O 0\ s ■a s o £ S E '00 q 0\iOt%^0 ^O Q JOiOOCOOOOOioO (N_0) ^ Q OO CO iri "^ tx to \0 CO 0^ W rs, to 00 VO VO O O "^ 0< w vo' O" O WVOVO l\I^t^OO 0\ Q O O -rJ-QmOOiO coOn^h rs.io"^vo O wOO O >-' roo\tN.mooc Ojto'^vo o •"L^^'o^'^'^'o'^^oq^'o^ooN^"^^ MiocTfovood'vQ'Hr-ffioTFiovo'cr'^OM' " WOnWCOOVOiocOOn lOMCOCOiH -- •" — M C^ rj- ^v o o t< CO 01 ro 0» <5 cj o ^ Cl w ►J s H MH 1 en o ^ .+^ . S B :z:w.-S ) Q CO tH VD i^ COOOOO O coO\coQ o" "f p< o a O rt O O •-< t^ t-H a lOLorN.)-! 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S§ Digitized by Microsoft® 538 SECTIONAL OPPOSITION TO THE AMERICAN SYSTEM. **-! 4 ^^ ^8|!rI § Kvg 8 in CO 'O O vO 0\ CS 9 9 b O O tN 8^82888^ mmcow mcoo co ° 13 rt 2 fo w ^ 1 M 1-1 O (N in vn 00 d\ fo r< 00* d\ l6 vo' i< d\ i> rC m" go ci vo" CO -^^ CO t>. CO Jbi? 2, "^ 00 \0 VO CO N (< M f^oO 0» M TT CO M3 m in vo 0^ 00 N h-T m" tC t-T r. « 00 d l-« eo CO lo CO > S, o \0 00 \o n N CD M « O CO o Tl- vo Tl- 00 00 Tf ^^R O 00 GO g-^ 00 o o <-M ? rn o 00 1^ Oi 00_ tv. tN. Oj in g'SRcg SS^ CO ^^ Cj^ 'O in gg Ji ? c^ OO" CO '^ of ^ v3 O. 00 vo" J?^^" CO 00 IH in CO IN W vo' oT i-T ih" ?" 9 W M w* ^ m o 00 0\ O w -* Tf • CO • • M N « • a • 00 o « o o . • • *^.5? rt "O fT) t-l M tN 0* • M lO m W m lo • • . vo t-t CO ■ i-t ' • OS C/l ■^ ►1 IN o \p -O tN tx >0 0\ o o t-j <3 tN N ?9,°2. (M vo in cofoiNw Tree ovio TJ tN 00 00 ^s. M 0\ O 0» fO Tl- N M ■* 00 tN o\ XO Tj- ^ i:? 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