CORNELL UNIVERSITY LIBRARY FROM Tiie \athor Date Due APR 4 1960 E 3* ■Xc J > V »..£<•* :'•« ! ^-^'L^ ' 1 sgsi "" ■-' ^ Tilf l^L' J^-^ \ fiWr 1; ;i'!?® rtlBRAf?^ Tmim > ^ysiLi^ (x*. J ''^^■■, ' ^- -wn^ PRINTED IN U. =>. H. (t*f NO. 23233 Cornell University Library HF1754 .B46 Tariff controversy in the United States, Clin 3 1924 032 403 341 The original of tliis book is in tlie Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924032403341 A THESIS Presented to the Faculty of Cornell University FOR THE Degree of Doctor of Philosophy May 8, 1S90 The Tariff Controversy IN THE UNITED STATES 1789-1833 With a Summaky of the Period before the Adoption OF THE Constitution "^^ ^ ORRIN LESLIE ELLIOTT, Ph. D. 0/ the Leland Stanford Junior University PALO ALTO, CALIFORNIA PUBLISHBD BY THE UnIVEESITT SSFTEMBEB, 1892 PRICE ONE DOLLAR LELAND STANFORD JUNIOR UNIVERSITY MONOGRAPHS HISTOKY AN"D ECONOMICS i\ro. 1 The Tariff Controversy IN THE UNITED STATES 1789-1833 With a Summary of the Period before the Adoption OF THE Constitution 1^^ ' ' ORRIN LESLIE ELLIOTT, Ph. D. • 0/ the Leland Stanford Junior University PALO ALTO, CALIFORNIA Published by the Univbkbitt Sepiembeb, 1892 PRICE ONE DOLLAR eCGHNElL'^ nuNivEm-:rrYl LfSRARV A. Lf^yss COPYEIGHT, 1892, By 0. L. ELLIOTT. P3 CONTENTS. PAGE. I. THE COLONIAL PEEIOD, 5 II, THE TARIFF OP 1789, AND HAMILTON'S EErOET ON MANUFACTURES, 67 III. COMMERCE versus MANUFACTURES, - - 113 IV. THE AMERICAN SYSTEM, 163 V. THE TARIFF AND NULLIFICATION, - - 215 The Tariff Controversy CHAPTER I. THE COLOKIAL PERIOD. The American colonies naturally inherited the polit- ical economy of Europe, and of one phase of it they were the unfortunate victims. The colonial system has supplied material for endless harangue and denunciation, and writers of a certain class have exhausted the vocab- ulary of invective in endeavoring to characterize the tyranny of the mother country toward her defenceless colonies. That England's policy was one of " deliberate and malignant selfishness," as even Lecky affirms,* may be granted, if the words be not understood too severely. Judged by modern standards it was so. The interests of the colonies were made strictly subordinate to those of the mother country, and her legislation bore with irritating severity upon the expanding industrial life of the New World. But it is not necessary to suppose a malignant intention on the part of English statesmen * 2 Lecky's Hist, of 18th Century, 8, 11. (8) 6 THE TAKIFF CONTEOVEESY. to oppress the colonies. In the political economy of the time, the prosperity of one nation seemed to demand the pulling down of others, and self-aggrandize- ment had almost universal sway, in home not less than in colonial administration. Yet the English govern- ment was as generous toward its colonial subjects as toward its home subjects, when such generosity did not run counter to generally accepted economic doctrines.* Indeed, in applying economic principles common to the age, England was far less oppressive than other powers; and the favor of princes — sometimes for selfish purposes, sometimes from indifference — lefb the colonies a compar- atively free field for development. And in the general economic notions which underlay the policy of the mother country, the colonies in the main acquiesced. The economic system which dominated England dur- ing the colonial period was the natural and perhaps necessary outgrowth of the time. Broadly speaking, it was an assertion, in legislation, of the new national life which marked the transition from mediaeval to modern times. Abnormal as it was, it realized, though crudely, what was most potent in the new industrial movement. Medisevalism had not been favorable to trade or com- merce. The church sternly repressed the desire for riches, and accounted worldly activity an evil. Neces- sary exchanges must conform strictly to the justum pre- tium, or cost price, and commerce for gain was held to be wrong, f But the growth of an industrial and commer- cial spirit was encouraged in various ways. The Cru- sades, the revival of classical learning, especially the * See Cunningham's Politics and Economics, 54, 66; also, Adam Smith's Wealth of Nations, Bk. 4, Oh. 7. + See Ashley's English Economic History, 126 et seq. THE COLONIAL PERIOD. 7 new discoveries and inventions, stirred the blood of all Europe ; and gradually out of feudalisrn emerged a num- ber of powerful states whose rivalries extended to com- merce. In the pettiness of these rivalries, industry was saved from being plundered by the recognition of its immense importance in the new political struggles. To build up manufactures as the great resource of the state became the object of rulers, and a long series of restric- tions, wise and foolish, was the fruit of their activity. These new movements, the first fruits of national self- consciousness, came in time to be bulwarked and ex- tended by certain economic doctrines known as the " mercantile system." * The application of this system to the English colonies implied no feeling of unfriendli- ness toward them. The action was purely commercial, though at the same time determined by self-interest and with no recognition of the colonies as independent factors, politically or industrially. Regulations affect- ing them were determined upon with regard to their effect upon the commerce and industries of the mother * The economic errors of this system have been summarized as fol- lows : It over-estimated the importance of gold and silver, often con- founding them with wealth, and m.eaauring the prosperity of a country by the excess of gold imported over that exported. It unduly exalted foreign over domestic trade, and manufactures over agriculture ; this involved the balance-of-trade error, leading to what Hamilton styled "the vain project of selling everything and buying nothing." It placed too high an estimate on the value of a dense population as an element of national strength. It invoked too readily state aid for commercial purposes, filling the statute books with vexatious restrictions, and the borders of every little state with petty and hampering custom-houses. See Encyc. Brit, (ninth ed.), article Pol. Econ. (enlarged and reprinted as Ingram's History of Political Economy). The spirit of the mercan- tile system is admirably illustrated in 23 George II., Ch. 13, Laws of 1750, enforcing heavy penalties for enticing artificers out of Great Brit- ain, or for exporting utensils of the woolen and silk manufactures. See especially the preamble. 20 Statutes at Large, p. 14. 8 THE TARIFF COKTEOVEE«Y. country.* They were chiefly valued for the market they afforded for British manufactures, the carrying trade of which accrued to British seamen, and for what they could produce to supplement the agri- culture of England, or as raw materials for her man- ufactures. This was considered the natural and proper function of colonies, and the general theory held that natural obstacles were sufficient to prevent the colonies from engaging in trades or manufactures prejudicial to the interests of the mother country. Labor was dear and scarce, and machinery and skill almost entirely lacking. Fabrics could be obtained from England much cheaper than the colonies could make them, and there seemed little danger of collision. Yet British interests were not content with these general safeguards. In spite of the poverty of the colonies and their manifest dependence upon England, there was constant fear lest manufactures should somehow take root in them. Long before parlia- ment was aroused to the political dangers lurking in colonial charters and customs, English merchants and * The Navigation Act of 1660 begins : " For the increase of shipping and encouragement of the navigation of this nation, wherein under the good providence and protection of God, the wealth, safety, and strength of this kingdom is so much concerned." The preamble to the Wool Act of 1699 defines its purpose as follows: "Forasmuch as WooU and the woollen manufactures of cloth, serge, bayes, kerseys, and other stuffs -Blade or mixed with wooU, are the greatest and most profitable commod- ities of this kingdom, on which the value of lands and the trade of the nation do chiefly depend; and whereas great quantities of the like manufactures have of late been made, and are daily increasing in the kingdom of Ireland, and in the English plantations in America, and are exported from thence to foreign markets heretofore supplied from England, which will inevitably sink the value of lands and tend to the ruin of the trade and the woollen manufactures of this realm ; for the prevention whereof, and for the encouragement of the woollen manu- factures within this kingdom, be it enacted," etc. 10 Statutes at Large, 249. THE COLONIAL PERIOD. 9 manufacturers were alive to the possibilities of colonial competition. Everything except this they might forgive ; but wherever an incipient manufacture showed itself, they were swift, through parliament, to strike at it with restrictive or prohibitive legislation. " The greatest and most general fear, and, indeed, what the colonies of late seem to threaten us with," wrote Cunningham, " is their going into manufactures, and thereby supplying them- selves with what they now take from us. If this was likely to happen, the vigilance of our legislature would doubtless take measures to prevent it. . . . Nothing, certainly, would create greater heart-burnings and dis- content in Great Britain, than her colonies going into manufactures. On the other hand, nothing can be so agreeable, or so much for the interest of both, as the colonies turning their whole thoughts and powers to the cultivation of their lands." * The beginning of commercial legislation which bore upon the colonies was the famous Navigation Act of 1651. t This act, passed in no spirit of hostility to the colonies, was in pursuance of Cromwell's far-reaching policy to secure the commercial and maritime supremacy of England, and was aimed particularly at the Dutch, who were then monopolizing the carrying trade of the world. I The commerce of the colonies, until then too * Essay on Trade and Commerce, by J. Cunningham ( 7), pp. 194, 197 : London, 1770. t The Ifavigation Act is usually dated from 1660, for when the Com- monwealth was overthrown the laws of Cromwell were declared invalid. The Navigation Act was re-enacted with the addition noted in the text. i The Navigation Act was not, of course, a new departure in English legislation, nor was it the first assertion of English control over colonial commerce. A statute of Kichard II, in 1381 (cited in Chalmers' Polit- ical Annals, p. 257), enacted " that to increase the navy of England, no 10 THE TARIFF CONTROVERSY, slight to attract much attention, was becoming import- ant, and rapidly increasing. The Act provided that all commerce between England and the rest of the world should be conducted in English or colonial ships.* The Act of 1660 further provided that certain enumerated articles of colonial production should not be exported, even in English ships, to the general markets of the world, but only to England itself, f The supplementary act of 1673 provided that articles of European growth or manufacture imported into the colonies should first pass goods or merchandise shall be either exported or imported, but only in ships belonging to the king's subjects." The patents granted by Henry VII to the Cabots provided that whatever commerce was the result of their discoveries must be brought to England. In his instructions to Berkeley in 1639, Charles I directed him "to oblige the masters of vessels, freighted with the productions of the colony, to give bond before their departure to bring the same into England ; and to forbid all trade with foreign vessels, except iipon necessity," (Chalmers' Political Annals, p. 120). Bancroft (vol. I, p. 146) gives the date aa 1641. * " The Act was leveled against Dutch commerce, and was but a pro- tection of British shipping ; it contained no clause relating to a colonial monopoly, or specially injurious to an American colony. Of itself it inflicted no wound on Virginia or New England." 1 Bancroft, 145. t The enumerated articles were of two kinds. 1. Those not produced in the mother country at all. This was intended to enable English merchants to purchase cheaper in the colonies and sell with more profit at home, and also to make Britain the center of an important carrying trade. 2. Those produced in England, but not in sufficient quantities to supply the demand. These were to be so managed by proper duties as to be always dearer than the home product, thus preventing compe- tition with home producers, but cheaper than the same articles imported from foreign countries. Other articles were not enumerated because they would interfere too much with home industries. See Adam Smith's Wealth of Nations, Bk. IV, Ch. VII. The most important of the enumerated articles were sugar, tobacco, cotton, wool, indigo, ginger, fustic, and all other dyeing wood. This affected the West Indies and southern colonies more than New England whose great staples, lumber, fish, oil, ashes, and furs, were free. See 6 Winsor, 7. THE COLONIAL PERIOD. 11 througli England, thus subjecting all colonial importa- tions, not the product of England, to double charges in the interest of British merchants. Still there was a loophole, and English merchants began to complain of the intercolonial trade, which had hitherto been permitted on the supposition that it would be confined to local demands. A profitable trade, how- ever, had grown up between New England and the South- ern colonies, and Eastern merchants, shipping to Boston tobacco and certain other colonial products in excess of local demarwl, sent the surplus to continental Europe without the payment of British or colonial duties, thus underselling the British trader who had paid heavy duties.* Accordingly, it was enacted, in 1672, that cer- tain specified articles of intercolonial traffic should first go through England and be landed on English docks, or if trade were direct (and this was the practical clause of the act,) equivalent duties should be paid.f Later acts were intended to supplement the general navigation acts, and especially to secure their more vig- orous enforcement. But the measure which bore heav- iest upon the northern colonies was the Molasses Act of 1733. A considerable trade grew up between these col- onies and the French and Dutch West Indies, consisting of the exchange of lumber, fish, and horses for sugar, rum, and molasses. The British Islands protested and de- manded the prohibition of this trade between the colo- nies and foreign islands. The Molasses Act was nominally a compromise, but the duties levied on importations from the foreign islands amounted to prohibition.! * See 6 Winsor, 8. + 8 Statutes at Large, 398. t 9d. per gallon on rum and spirits and 6d. on molasses and syrup. 16 Statutes at Large, 374. See also 2 Bancroft, 242 et seq. 12 THE TARIFF CONTEOVEESY. The Navigation Laws were passed in the interest of commerce, mainly through the influence of British ship- owners and merchants. The manufacturing interest was not less prompt in appealing to the government, and with even greater success. On this point the nation was practically united, and from 1698 onwards stringent laws were passed designed to forestall any development of colonial manufacturing. In 1696 a Board of Commis- sioners for Trade and Plantations was created, with instructions to inquire into the means of making the colonies most useful and beneficial to England, and especially as to how they might be diverted from trades likely to prove prejudicial to England.* Through inquiries of special agents and by letters, re- ports, and statistics from colonial governors, the board kept well informed in regard to colonial affairs and from time to time urged upon parliament legislation in the interest of home manufacturers. In 1699 measures were taken to crush out what seemed the beginning of woolen manufactures in some of the colonies. The household manufacture of coarse fabrics could not well be inter- fered with, but anything further was prohibited by de- claring it unlawful to load wool upon any horse, cart, or other carriage, f In 1732 hats were added to the pre- scribed list, and hat-makers were forbidden to have more than two apprentices each. An attempt to prohibit the manufacture of pig iron was temporarily defeated through the influence of the colonial agents; but the production became so important that, owing to the abundance and cheapness of fuel, the colonies were able to undersell * See 2 Bancroft, 73. t In part an extension to the colonies of the law of 1660 directed against Scotland and France (Charles II, Chap. 32, Laws of 1660.) THK COLONIAL PEEIOD. 13 their English competitors. The matter again coming up in parliament, the iron makers succeeded in placing heavy duties on American pig iron imported into Eng- land. But when the colonies thereupon turned their attention to the manufacture of steel and bar iron for their own use, they interfered with another and more powerful group of English manufacturers, who in turn appealed to the government. Parliament then prohib- ited the manufacture of steel in the colonies, even for their own consumption. All furnaces were ordered to be destroyed as nuisances, but as some sort of compensa- tion, the free admission of pig and bar iron into England was provided for.* Presently the colonies found that * Pig iron could be imported free of duty into all parts of Great Brit- ain ; bar iron only into the port of Lqndon, and it must not be taken more than ten miles from London, nor re-exported. The preamble reads : " Whereas the importation of bar iron from his Majesty's colonies in America, into the port of London, and the importa- tion of pig iron from the said colonies, into any port of Great Britain, and the manufacture of such bar and pig iron in Great Britain, will be a great advantage, not only to the said colonies, but also to this king- dom, by furnishing the manufacturers of iron with a supply of that useful and necessary commodity, and by means thereof large sums of money, now annually paid for iron to foreigners, will be saved to this kingdom, and a greater quantity of the woolen, and other manufactures of Great Britain, will be exported to America, in exchange for such iron so imported, be it therefore enacted," etc. The ninth and tenth sec- tions of the Act read as follows : "And, that pig and bar iron made in hie Majesty's colonies in America may be further manufactured in this kingdom ; be it further enacted that from and after the twenty-fourth day of June, 1750, no mill or other engine for slitting or rolling of iron, or any plateing forge to work with a tilt hammer, or any furnace for making steel, shall be erected, or after such erection, continued in any part of his Majesty's colonies in America. • . , And it is hereby enacted . . . that every such mill, engine, forge, or furnace so erected or continued contrary to the directions of this Act, shall be deemed a common nuisance," and "within thirty days must be abated." 23 George II, Ch. 29 of the Laws of 1750; 20 Statutes at Large, 97 et seq. See also 2 Bancroft, 356. 14 THE TARIFF CONTKOVEESY. they could manufacture certain kinds of nails cheaper than they could import them, and parliament again interposed with a prohibition of mills for the manufac- ture of spikes and nails. Yet although these restrictions bore with great sever- ity upon the colonies, there was for a long time no con- siderable protest against the economic system which gave them force. Many causes conspired to this result. In the first place, under this system the trade and manufac- tures of the mother country had so developed as to make her the wealthiest and most powerful of European states. The colonists were Englishmen -with English feelings and prejudices. For British prosperity and British glory their hearts were as warm as any Englishman's.* As Franklin put it, to be an " old England man" was of itself a character of some respect and gave a kind of rank among the colonies. f In all movements looking toward a better understanding between Great Britain and the colonies they insisted that the colonies need not cease being useful to the mother country. They were so many countries gained to Britain. Their interests were the same, J and for generations, and even centuries, the Americans would continue to buy what Britain wanted to sell, and sell what Britain wanted to buy. * 1 Political Writings of John Dickinson, 119. + See 3 Franklin's Works, 416. Thomas Pownall said, in 1764, that "nothing could eradicate from the hearts of the Americans their natural, almost mechanical affection to Great Britain, which they conceive under no other sense, nor call by any other name than that of home." The Ad- ministration of the Colonies, by Thomas Pownall, p. 25 : London, 1764. i ' ' For one hundred years to this time there has not been an American to whom Ln the genuine feelings of his heart, the interest, welfare, and happiness of Great Britain was not as dear as that of his own colony, having no other idea but that they were always one and the same." Pownall's Considerations on Taxing the Colonies (1766), p. 2. THE COLONIAL PERIOD, 15 Nor was the colonial system wholly one-sided. A large and profitable trade with the "West Indies and with Asia and Africa was left untouched, and enjoyed the protec- tion of the English naval power. Besides, there was a powerful appeal to British self-interest to encourage the colonies in those trades and industries which did not interfere with the home market. Governor Hunter of New York, in urging the Board of Trade, in 1715, to vigorously set on foot the production of naval stores, declared that there was no other way to prevent the poorer people from wearing homespun. ' Few that can afford it wear homespun,' said he, 'and a law to compel others would be equivalent to a law to compel them to go naked.' * The Lords Commissioners for Trades and Plantations, in 1721, concluded that it was necessity and not choice which sent the colonies to manufacturing, and if proper encouragement were given to naval stores and minerals, they could be diverted from thoughts of setting up any manufacturing of their own.f In re- sponse to these and many similar appeals British legis- lation constantly favored colonial enterprise of the kind just mentioned. Discriminations in favor of colonial produce were made in English markets, and this was supplemented by bounties from the English government, and by premiums from private societies for the importa- tion into England of silk, hemp and flax, indigo, naval stores, timber, and other articles. And in the case of tobacco, the growers were given the exclusive possession of the English market.J * 1 Doc. Hist, of New York, 713. + 5 Doc's Eelating to Colonial History of New York, B98, 604. The same recommendation was repeated in the Eeport of 1732; see 3 Mac- pherson's Annals of Commerce, 186 et seg. i 7 Statutes at Large, 503, (Charles 11, Chap. 34, Laws of 1660). See alfco 23George II, Ciiap. 20 ; 24 George II, Chap. 51 ; et passim. 16 THE TARIFF CONTEOVEESY. But of far more moment was the practical nullity of the laws of trade. The English government at first attempted no vigorous enforcement, and the feeling re- garding these regulations rendered evasions easy and widespread. Thus the Molasses Act of 1733, which was a nominal prohibition upon all lawful trade with the foreign West Indies, merely replaced this with a clandes- tine trade nearly as large. The Board of Trade was constantly reminded of this state of affairs, and con- certed measures for securing the enforcement of the laws. But between the dissensions at home and the dif- ficulties of dealing with colonial assemblies and charters, nothing effective was undertaken until after 1750. In a word, the colonies 'manufactured whatever they found to be for their advantage, and sent, ships wherever they pleased, in spite of all navigation acts and laws of trade.'* In their own internal affairs the colonies followed the example of England.f The royal veto generally pre- vented any legislation which would interfere with Eng- lish interests, but within the narrower sphere mercantile principles had free play. Export bounties were granted, to encourage trade, manufactures, and agriculture, on linen and woolen cloths, silk, flax, pitch, hemp, yards, and other articles. Manufactures were promoted by bills of credit, exemptions from taxation, bounties, and premiums from private organizations.J Drawbacks were * See 6 Winsor, 9, 10. t See American Trade Regulations before 1789, printed in vol. iii of the publications of the American Historical Association. i In 1682 Virginia passed a law for the encouragement of domestic manufactures. In 1706 Maryland encouraged the manufacture of linen and even of woolen cloth, the assembly pleading in excuse of the weavers that they were driven to their task by absolute necessity. 2 Bancroft, 18, 22. In 1718 Massachusetts imposed a duty of one per cent on English manufactures and gave a small discrimination in favor of its own ship THE COLONIAL PEEIOD. 17 frequently given, though the opposition of the South prevented their incorporation in the proposed tariffs under the Confederation. Bounties on imports were as freely resorted to. Virginia at times remitted the export duty on tobacco to encourage the importation of salt and negroes. Rhode Island, in 1777, granted a conditional bounty on the importation of salt. South Carolina, in 1716, granted ic bounty of from £22 to £30 on imported servants. Maryland and Virginia allowed an abatement of from 10 X to 25 X on duties paid in imported gold or silver. Export duties were resorted to for revenue. In general they were low, but prohibitions both of importa- tions and exportations were not unknown. Scarcity was sure to lead to such prohibitions, especially with regard to grain, flour, meats, salt, and military stores. In import duties there was great diversity, but with a general tendency to higher rates. The early tariffs, in contrast to those of England, had a large free list, and even where the list was extended few articles were enum- erated. In 1661 Virginia put a tariff on rum on the ground of its injurious effects. Massachusetts began by taxing beaver skins and wines. In 1703 South Caro- lina levied a general tariff of three per cent on certain specified articles. In 1698 Maryland resorted to a tariff to secure funds for the erection of a capitol. During the disputes between Virginia and Maryland, hostile dis- criminations, embargoes, and three-fold duties were adopted to cut off inland trade to the northward.* building. This was vetoed by the king. lb. 239. The report of 1732 complained that Massachusetts had encouraged the manufacture of paper and other articles. * [n 1676 New York was discriminating against Boston. See Ran- dolph's report to the Council of Trade, 3 Doc's relating to Colonial Hist. of New York, 241. 18 THE TARIFF CONTBOVEKSY. The Declaration of Independence threw off all re- straint, but the war itself was such a barrier to commerce that there was little incentive to tariGf legislation. The Continental Congress had no power to regulate trade, and the cause of the colonies had, by this time, become, in some sense, a protest against the restrictive system of England. Before the final rupture various attempts were made by non-importation agreements and otherwise to break off trade with England and encourage home man- ufactures; such encouragement the war more effectually provided. On the return of peace the new republic sought reciprocity with all nations, and the failure to secure this, added to the commercial complications at home, brought the newly united states to the verge of dissolution. The desperate financial straits of the Confederation, and the impossibility of raising money by requisitions on the states, first turned the attention of the country to the question of intrusting Congress with the power of regulating trade.* New Jersey, in 1778, soon after the Articles of Confederation were approved by Congress, laid before that body a proposition that, inasmuch as state control would lead to unavoidable confusion, Con- gress alone should have the power to regulate commerce and dispose of the resulting duties. In 1780 Hamilton, in a letter to James Duane, maintained that Congress * Very slowly and reluctantly the prejudice against this step waa overcome. The -whole struggle of the century had been to secure the sole right of taxation to the local assemblies, and so little national feel- ing was there that the intrusting of any part of this power to Congress seemed like surrendering the chief result of the long struggle. The clause in Franklin's plan of 1754, giving the general Congress power to collect a revenue, insured its rejection by every colony. See letter of Governor Shirley to Secretary Robinson, Dec. 24, 1754, criticising the Albany plan; 6 Doc's relating to Colonial Hist. New York, 930. THE COLONIAL PERIOD. 19 should have the power of regulating trade, determining with what countries it should be carried on. The same idea found expression in the address of the Hartford Convention of 1780. In December of that year Penn- sylvania instructed its delegates in Congress that im- posts on trade were absolutely necessary, and in order to prevent one state taking advantage of another, Congress should recommend to the several states a system of imposts.* In 1781 Congress itself asked for authority to levy an impost duty of five per cent, the revenue to be applied only to war expenses, and to continue until the debts were paid. One by one the states replied until all had consented, with more or less reservations, except Georgia and Ehode Island. Congress again called upon these states to act. Bat Georgia made no response, and Ehode Island refused outright, alleging that such a duty would bear most heavily upon commercial states like herself, objecting to collectors appointed by Congress, and insisting that it was far too much power to intrust to Congress.f In 1783 Congress returned to the same plan, and a bill was drawn up calculated to meet the objections to the former measure. The concurrent right of taxation was still retained by the states, and the grant of power to Congress was limited to twenty-five years. Collectors of revenue were to be chosen by the states, and the grant was to take effect only when all the states had given their consent. This bill, approved by the almost unanimous vote of Congress, was sent out to the states accompanied by a solemn appeal, drawn from the des- perate condition of the finances, written by Madison, « 6 Bancroft, 14. 1 6 Bancroft, 33. 20 THE TARIFF CONTEOVERSY. and an elaborate answer to Rhode Island's former objec- tions, written by Hamilton. After many delays and a second appeal from Congress, conditional acceptances were received from all the states except New York. In this refusal New York persisted, reiterating her position so late as February, 1787. In 1784 Congress called upon the states for a grant of power to regulate commerce for fifteen years, by prohibitions and discriminations against unfriendly powers. But the response to this request was even less favorable than to the other.* Meanwhile the states, with different tariff and tonnage acts, began to make commercial war upon each other. When three New England states virtually closed their ports to British shipping, Connecticut threw hers wide open, and then laid duties upon imports from Massachu- setts. Massachusetts retaliated by imposing heavier duties on imports from Connecticut than from Great Britain.! Pennsylvania discriminated against Delaware. New Jersey paid tribute to both her neighbors. New York exacted the same entrance fees and custom-house regulations from the sloops of Connecticut and New Jersey as from foreign vessels, and these states promptly retaliated. Articles which Connecticut and New Jersey excluded by heavy tonnage duties, entered New York virtually free. What Massachusetts encouraged, Virginia restricted. Virginia even proposed to impose enormous duties without regard to the action of the other states. J New York was indifferent to the trade in indigo and pitch, South Carolina to that in furs. New England's * See John Fiske's Critical Period of American History, 144. For the animus of the opposition to these grants, see Van Buren's Political Parties in the United States. + See 1 Madison's Works, 216. t See 1 Madison's Works, 271. THE COLONIAL PEEIOD. 21 revenues came from lumber, oil, and potash ; Pennsyl- vania's from corn and grain ; and neither was concerned as to the interests of the other.* Pending the action of the states on the five per cent impost, Madison wrote : " In this suspense, the more suffering states are seeking relief from political efforts which are less likely to obtain it than to drive their trade into other channels and to kindle heart-burnings on all sides." f And six months later: " The states are every day giving proof that sep- arate regulations are more likely to set them by the ears than to attain the common object." J Inevitably the states drifted out towards anarchy and disunion, their credit daily sinking, and internal dissen- sions becoming more and more serious. The need of a stronger government and of a uniform revenue system came to be generally recognized, but the helplessness of the legislature prevented the adoption of any adequate measure. The Convention of 1787 gave the new govern- ment full powers in this respect, and prepared the way for a comprehensive tariff act. Yet this movement toward restrictive legislation, nec- essary as it was, indicated a decided reaction from the position which had been reached ; and to understand its significance it will be necessary to glance at the course of economic thought. While colonial legislation reproduced much that was characteristic of the mercantile system, the logic of events had, in fact, emancipated American thought from the fetters of mercantilism much faster than either the col- onies or England were aware. The voices of the new * See John Fiske's Critical Period of American History, 144-147 • and 1 McMaster, 206. t Madison to Jefferson, Aug. 20, 1785 ; 1 Madison's "Works, 197. t Madison to Jefferson, March 18, 1786; 1 Madison's Works, 225. 22 THE TARIFF CONTBOVEESY. economic speculations were first heard in England, but the response was much readier in the colonies. Even while submitting to the part which mercantilism assigned them in building up the power of England, the colonies were not forced to believe that her infallibility extended to all details. They claimed all the rights of English subjects, resented the petty annoyances with which the mother country sought to fetter their trade, and reached out after that larger liberty and more generous treat- ment which, they stoutly insisted, was not inconsistent with the prosperity of England. In all measures which they asked for they labored to make plain that they were not running counter to the interests of England. Yet they had other ideas of destiny than the narrow exis- tence Great Britain proposed for them, and when Brit- ish folly went so far as to force the fundamental issue of taxation without representation, the bond which con- nected them to the mother country was rudely snapped asunder.* * The self-interest which impelled the colonies to revolt from the 3ommercial fetters of England was powerfully reinforced by the writings Df Petty, North, Locke, Dean Tucker, and Hume, in England, and of ;he economists in France, Quesnay, Turgot, and others, — the latter, es- aecially, bulwarked in a social philosophy which took deep root in American soU. A hundred years before Adam Smith, Sir Wm. Petty showed that value originates in labor, and pointed out some of the idvantages of a division of labor. He anticipated Eicardo's iron law of pcages, and strongly opposed governmental interference with industry. Sorth maintained that as to trade the whole world were as one nation, md no trade was unprofitable to the public — if it were, it would be given ip ; and that no people could become rich by state regulations. All this was mostly negative, but it set the current of economic think- ag in a direction opposite to mercantilism. Then came the physiocrats ivith their positive ideas and syBtem—fhe jus naturse— which called for ;he abolition of all prohibitions on exports and imports, in the interest )f agriculture. Then followed Dean Tucker and Hume in England, and Itially, in the same year that Independence was declared, appeared idam Smith's Wealth of Nations. THE COLONIAL PERIOD. 23 No one did more to establish tlie idea of a natural relation between the colonies and the mother country than Franklin.* In a pamphlet written in 1751, and reprinted in England, he pointed out that notwithstand- ing the rapid increase of population in America, so vast was the territory that it would require many ages to settle it fully. Labor never would be cheap, where no man continued long a laborer for others, but got a plan- tation of his own\ Labor, he declared, was no cheaper in Pennsylvania than it had been thirty years before, though many thousand laboring men had been imported. The danger, therefore, of the colonies interfering with the mother country in trades that depended on labor was too remote to require the attention of Great Britain. " But in proportion to the increase of the colonies, a vast demand is growing for British manufactures, a glor- ious market wholly in the power of Britain, in which * The idea of the natural dependence of the colonies on the mother country was, of course, fundamental (cf. supra, p. 8), and at the basis, even, of the navigation acts and laws of trade. But the fear that their increasing numbers and wealth, joined to their great distance from Great Britain, would lead them to throw off their dependence, found constant expression. Some of the acts of the earlier assemblies were, indeed, tantamount to a renunciation of allegiance. But wiser men, while yielding none of the rights they believed themselves entitled to as British subjects, sought, with infinite tact and patience, to secure these libe»ties in the broad line of constitutional development. And preliminary to all it was necessary to show that the colonies had no inducements to set up for themselves. Jeremiah Dummer, in his de- fense of the colonial charters in 1721, declared that it was "not more . absurd to place two of his Majesty's beef-eaters to watch an infant in the cradle that it don't rise to cut it's father's throat, than to guard these weak infant colonies to prevent their shaking off the British yoke." The most constant argument was the one drawn from the dearness and scarcity of labor. See, for instances, Doc. Hist, of New York, vol. i, pp. 714 et seq. ; Doc's relating to Colonial Hist, of New York, vol. viii, p. 66, et passim. 24 THE TARIFF CONTROVERSIT, foreigners cannot interfere, which will increase in a short time even beyond her power of supplying, though tier whole trade should be to her colonies." * " They svho understand the economy and principles of manu- factures," he asserted in another pamphlet written in England, in 1760, " know that it is impossible to estab- lish them in places not populous; and even in those that are populous, hardly possible to establish them to the prejudice of the places already in possession of them. , . . A manufacturer is part of a great system of commerce which takes in conveniences of various kinds; methods of promoting materials of all sorts, machines for expediting and facilitating labor, all the channels of 3orrespondence for vending the wares, the credit and con- Bdence necessary to found and support this correspond- ence, the mutual aid of different artisans, and a thousand other particulars which time and long experience have gradually established." f The occasion of the pamphlet just cited was the ques- tion before the British Cabinet as to whether Canada or Guadaloupe should be given back to the French. It was arged that Canada should be sacrificed, among other reasons, because its possession by the French would tend to keep the colonies in check. Franklin was alarmed at the idea of parting with Canada and strongly lyged the commercial necessity of retaining it. Speaking now as an Englishman, he argued that the blood and treasure spent in American wars, was not spent in the cause of the colonies alone; nor did he omit to hold up the alter- * Observations concerning the Increase of Mankind, etc. ; 2 Franklin's Works, 223 et seg. t The Interest of Great Britain Considered, etc. ; 3 Franklin's Works, 100. Cf. John Dickinson, infra, p. 40. THE COLONIAL PERIOD. 25 native of colonial manufactures. "A people spread through the whole tract of country on this side of the Mississippi, and secured by Canada in our hands, would probably for some centuries find employment in agricul- ture, and thereby free us at home effectually from our fears of American manufactures. Unprejudiced men well know that all the penal and prohibitory laws that were ever thought on will not be sufficient to prevent manufactures in a country whose inhabitants surpass the number that can subsist by the husbandry of it. That this will be the case in America soon, if our people remain confined within the mountains, and almost as soon should it be unsafe for them to live beyond, though the country be ceded to us, no man acquainted with political and commercial history can doubt. Manufac- tures are founded in poverty. It is the multitude of poor without law in a country and who must work for others at low wages or starve, that enables undertakers to carry on a manufacture and afford it cheap enough to prevent the importation of the same kind from abroad, and to bear the expense of exportation. But no man who can have a piece of land of his own sufficient by his labor to subsist his family in plenty, is poor enough to be a manufacturer and work for a master. Hence while there is land enough in America for our own people, there can never be manufactures to any amount or value." * It was not necessary, he insisted, that the American colonies should cease being useful to the mother country. It had been urged that finding no check from Canada, the Americans would extend them- selves almost without bounds into the inland parts and increase infinitely from all causes. But that would take * 3 Franklin's Works, 86. See also ib. v, 1 et seq. 26 THE TARIFF CONTEOVEESY. some centuries, and " in the meantime this nation must necessarily supply them with the manufactures they consume ; because the new settlers will be employed in agriculture; and the new settlements will so contin- ually draw off spare hands from the old that our present colonies will not find themselves in a condition to man- ufacture even for their own inhabitants. Thus our trade must, till that country becomes as fully peopled as England (that is, for centuries to come) be continually increasing, and with it our naval power." * The exports to Pennsylvania, he said, had increased in twenty-eight years in the proportion of 17 to 1, while the population had increased only 4 to 1. "In fact, the occasion for English goods in North America, and the inclination to * 3 Franklin's Works, 93. Of. Views of Jefferson, Ellsworth, Adams, Washington, and Hamilton — infra, pp. 38 et seq. How these manufactures were to be paid for, Franklin explained by saying it was well-known that the inland parts of Araerica were fitted for the production of hemp, flax, potash, and silk; the southern parts, olive oil, raisins, currants, indigo, and cochineal, as well as horses and sattle. In his examination before the House of Commona in 1766, he ex- plained how the balance 6f trade was adjusted. Pennsylvania, he said, imported from England £500,000 a year, and exported to England 640,000. The balance was paid by produce carried to the West Indies md sold to the English, French, Spaniards, Danes, and Dutch ; by the jame produce carried to other colonies in North America, as to New England, Nova Scotia, Newfoundland, Carolina, and Georgia; by the iame carried to different parts of Europe, as Spain, Portugal, and Italy. [n all these places they received either money, bills of exchange, or commodities, suitable for remittance to Britain ; which together with ill the profits on the industry of merchants and mariners arising in ;hoae circuitous voyages, and the freights made by their ships, centered lually in Britain to discharge the balance and pay for British manufac- ;ures continually used in the provinces or sold to foreigners by traders. ;3 Franklin's Works, 417.) Franklin was here arguing that the Amer- cans would be utterly unable to pay the Stamp duty, and it may be n'csumed that he made the case as strong as possible. THE COLONIAL PERIOD. 27 have and use them, is, and must be for ages to come, much greater than the ability of the people to pay for them." * It must not be supposed, however, that Franklin adopted the English view with regard to colonial man- ufactures. He had a sincere preference for agricultural pursuits, and shared the common opinion that for a long time manufactures must be very slight. But the neces- sity for allaying the fears of English interests naturally led him to emphasize unduly the dependence of the col- onies on the manufactures of England, as well as their supreme devotion to agriculture. The economic basis of England's policy he came more and more to question, and keeping well abreast of current criticism of mercan- tilism he lost no opporLunity of cautiously enforcing a more generous policy. As far back as 1729, in arguing for paper money, Franklin appealed to those who wished to see manufac- tures encouraged.f In 1747 Connecticut proposed a tariff of five per cent on imports. In answer to an inquiry as to the advisability of this duty, Franklin said that un- doubtedly, on the whole, the duty would be paid by the consumer ; so that it would be another mode of taxing their own people, though perhaps meant to raise money on their neighbors. Yet if they could make some of the goods heretofore imported, the advanced price might encourage their own manufacture and in time make im- portations unnecessary, which would be an advantage. But he reminded them that their tariff might not only encourage smuggling, but also offend their neighbors, who by heavy counter duties might leave Connecticut's * 3 Franklin's Works, 109. See also ib. 417. t See 1 Franklin'H Works, 359 ei seq. 28 THE TARIFF CONTEOVEKSY. own exports a drug in the market.* Even when speak- ing most extravagantly of colonial dependence, he shrewdly inserted arguments tending to a less severe repression of colonial manufactures. In a pamphlet already cited.f after referring to the vast and growing demand for British manufactures in the colonies — " a glorious market wholly in the power of Britain " — he added: "therefore, Britain should not too much restrain manufactures in the colonies. To distress is to weaken, and weakening the children weakens the whole family." A.gain, in the Oanada-Guadaloupe pamphlet, after insist- ing that for ages to come the colonies would want more English manufactures than they could pay for, he con- iinued: " And thus, if at any time they should manufac- ture some coarse article, which on account of its bulk or 3ther circumstance cannot so well be brought to them 'rom Britain, it only enables them the better to pay for iner goods that otherwise they could not indulge them- selves in." J Regarding the proposed representation of the colonies n the British parliament, he declared that such a course vould be very acceptable to the colonies, provided they lad a reasonable number of representatives allowed ihem; and that all the old acts of parliament restraining he trade or cramping the manufactures of the colonies )e at the same time repealed, and the British subjects on ,his side of the water put, in those respects, on the same boting with those in Great Britain, till the new par- iament representing the whole, shall think it for he interest of the whole to re-enact some or all ' * Franklin to Jared Eliot, July 16, 1747; 2 Franklin's Works, 78, 79, + Supra, p. 23. i 3 Franklin's Works, 110. THE COLONIAL PERIOD. 29 of them. . . . "I should hope, too, that by such a union the people of Great Britain and the people of the colonies would learn to consider themselves as not belonging to different interests, but to one community, with one interest; which, I imagine, would contribute to strengthen the whole and greatly lessen the danger of future separation. ... I look on the colonies as so many countries gained to Great Britain and more advan- tageous to it than if they had been gained out of the seas around the coasts and joined to its" lands; for being in different climates, they afford greater variety of prod- uce and materials for more manufactures, and being separated by the ocean they increase much more its shipping and seamen. . . . And if through increase of people two smiths are wanted for one employed before, why may not the new smith be allowed to live and thrive in the neiu country." * Six years later he wrote to Hume: " I have lately read with great pleasure, as I do every- thing of yours, the excellent essay on the Jealousy of Commerce. . . . But I hope particularly from that essay an abatement of the jealousy that reigns here [i. e. in England] of the commerce of the colonies." f But what Franklin regarded as the normal course of development for the colonies, he by no means believed to be the only course open to them; and in his examina- tion before the House of Commons in 1766, pendingjthe repeal of the Stamp Act, his attitude was one of defiance. He defined the difference between external and internal taxes by saying that an external tax was a duty levied ■* Franklin to Governor Shirley, Dec. 22, 1754; 2 Franklin's Works, 384 et seq. Franklin's more mature ideas on the proper relations of trade are given in a letter to Pownall in 1768; see infra, p. 33. t Franklin to Hume, Sept. 27, 1760; 3 Franklin's Works, 127. 30 THE TARIFF CONTEOVEESY. on commodities imported and added to the cost; people could buy or not as they chose. But the Stamp Act proposed to force the people to pay whether they wished or not. When asked whether external taxes levied on necessaries of life would not be the same as an internal tax, he replied that he did not know a single article imported into the northern colonies, that they could not either do without or make themselves. Even English cloth was not absolutely necessary, for with industry and good management they might very well supply them- selves with all they wanted. He was asked if it would not take a long time to establish the woolen manufac- ture, the Americans meanwhile suffering greatly. He thought not. They had made surprising progress al- ready, and he was of the opinion that before their old clothes were worn out they would have new ones of their own making. "Can they possibly find wool enough in North America ? " " They have taken steps to increase wool," he replied. " They entered into general combin- ations not to eat any more lamb; and very few lambs wore killed last year. This will soon make a prodigious difference; and the establishment of great manufactories like those in England are not necessary because the people will all spin and work for themselves." " But is it their interest to make cloth at home ? " " They may a.t present get it cheaper from the British," was the reply, " but when one considers other circumstances, the restraints on their trade and the difficulty of making remittances, it is their interest to make everything." ' Supposing the Stamp Act continued and enforced, do you imagine that ill-humor will induce the Americans to give as much for worse manufactures of their own, and use them, preferable to better of ours ?" " Yes, I THE COLONIAL PERIOD. 81 think so," Franklin answered. "People will pay as freely to gratify one passion as another, their resentment as their pride." * In this examination Franklin asserted that the respect for parliament was greatly lessened among the colonies, but if the Stamp Act were repealed he thought their at- tempts to force manufactures would be given up. In 1767, after the repeal, the people of Boston, still smarting under the injustice of England's policy, passed resolu- tions recommending that all prudent and legal measures be taken to encourage the produce and manufactures of the province, to lessen the use of superfluities, and to refrain from purchasing a great number of imported articles, f These resolutions created no little commotion in England. The newspapers were in full cry against America, Franklin wrote. " Colonel Onslow told me in court last Sunday," he continued, " I could not conceive how much the friends of America were run upon and hurt by them, and how much the Grenvillians triumphed. I have just written a paper for Tuesday's Chronicle to extenuate matters a little. ... If our people \i. e. Pennsylvania] should follow the Boston example of entering into resolutions for frugality and industry, full as necessary for us as for them, I hope they will, among other things, give this reason, that it is to enable them the more speedily and effectually to discharge their debts to Great Britain. This will soften a little, and at the same time appear honorable and like ourselves." J This was very adroitly turning the edge of the weapon, but Franklin soon found an even better means of moUi- * ii Franklin's Works, 422 et eeq. t See 4 Franklin's Works, 59 et seg. t 4 Franklin's Works, 59-61. 32 THE TARIFF CONTROVERSY. fying the outraged Englishman. Happening to hear Grenville complain in the House of Commons, that some of the colonial governors had not reported, as they had been directed, regarding the manufactures of their re- spective colonies, it occurred to him to look at those which had been sent in. They were all to one effect — that there were no manufactures of any consequence in the colonies, — and Franklin lost no time in making the public acquainted with their contents. " These accounts are very satisfactory here," he wrote, " and induce par- liament to despise and take no notice of the Boston resolutions." * In these representations Franklin reflected fairly *4 Franklin's Works, 132, 133. In his Chronicle letter, Franklin insisted that the Americans complained justly of the action of the nail- makers and hatters of England in getting a prohibition of slitting mills md hat manufacture in the colonies. But a remonstrance against the English trade regulations, which he quoted from an American news- paper, he apologized for as " the wild ravings of the at present half- Jistracted Americans." The clipping, which at that time seemed to Franklin worthy of such epithets, is in part as follows : "Our people have been foolishly fond of their [English] superfluous nodes and manufactures to the impoverishing of our own country, larrying off all our cash, and loading us with debt; they will not suffer IS to restrain the luxury of our inhabitants, as they do that of their )wn, by laws ; they can make laws to discourage or prohibit the impor- ation of French superfluities ; but though those of England are as ruin- )us to UB as the French ones to them, if we make a law of that kind, hey immediately repeal it. Thus they get all our money from us by rade ; and every profit we can anywhere make by our fisheries, our iroduce, or our commerce, centers finally with them ; but this does not ignify. It is time, then, to take care of ourselves by the best means n our power. Let us unite in solemn resolution and engagements fith and to each other, that we will give these new oflScers as little rouble as possible, by not consuming the British manufactures on fhich they are to levy duties. Let us agree to consume no more of heir expensive gewgaws. Let us live frugally, and let us industriously aanufacture what we can for ourselves." lb,, 109. THE COLONIAL PERIOD. 33 enough the temper of the coolest headed Americans, a temper, indeed, which he was doing much to form and direct. Loyalty to England — to larger England, — but resentment of injustice; submission to the general colon- ial policy as loyal subjects of the realm; a willing prefer- ence for agriculture, but the . insistence on certain necessary exceptions to the general rule; an opposition to oppression, firm and uncompromising where colonial action was possible, but wary and cautious in all con- flicts with the British ministry — such was, in general, at the time, the dominant feeling of the colonies. All this involved little economic thinking, though it did imply a practical denial of some of the cherished principles of mercantilism. But the more eager minds in America, and Franklin's among the first, were coming in contact with ideas which were wholly revolutionizing their theories of trade and commerce, and undermining their abstract justification of the policy which all Europe was pursuing. Almost insensibly, but firmly, the new ground was taken until as the struggle went on in the conflict of arms the smaller question seemed swallowed up in the larger one of the vindication of the principles of free commerce. We have already noted the cordiality with which Franklin greeted Hume's essay on Commerce, in which it was maintained that the prosperity of one nation, instead of being a hindrance, was a help to that of its neighbors, and which condemned the " numberless bars, obstruc- tions, and imposts which all nations of Europe, and none more than England have put upon trade." " If the colonies are fitter for a particular trade than Brit- ain," Franklin wrote Pownall, "they should have it, and Britain apply to what it is more fit for. The whole 34 THE TARIFF CONTEOVEESY. empire is a gainer. And if Britain is not so fit or so well situated for a particular advantage, other countries will get it, if the colonies (Jo not. Thus Ireland was forbid the woolen manufacture and remains poor; but this has given to the French the trade and wealth Ire- land might have gained for the British Empire. . . . Advantageous situations and circumstances will always secure and fix manufactures." * Franklin's contact with the physiocrats colored his economic thinking to the end of his life.f Their exalta- tion of agriculture accorded with his own tastes, and confirmed him in his distrust of manufactures, except in a narrow and very subordinate way. | To Joshua Bab- cock he wrote, in 1772, of a tour he had made through Ireland and Scotland, and of the sad contrast between * 4 Franklin's Works, 64. t From London he wrote to Dapont de Nemours, July, 1768, acknowl- edging the receipt " of your Physioeratie, which I have read with great pleasure. . . . Am perfectly charmed with the principles of your new philosophy, and wish I could have stayed in France for some time to have studied in your school that I might hy conversing with its Eounders have made myself quite a master of that philosophy. . . . [ am sorry to find that that wisdom which sees the welfare of the parts in the prosperity of the whole seems yet not to be known in this coun- bry. We are so far from conceiving that what is best for mankind, or even for Europe in general, may be best for us, that we are even study- ing to establish and extend a separate interest of Britain, to the preju- iice of even Ireland and our own colonies. . . . It is from your philosophy only that the maxims of a contrary and more happy conduct ivre to be drawn, which I therefore sincerely wish may grow and increase till it becomes the governing philosophy of the human species." (4 Franklin's Works, 194.) t " After all," he wrote, echoing the physioeratie dogma, " this coun- try [i. e. England] is fond of manufactures beyond their real value, for the true source of riches is husbandry. Agriculture is truly productive of new wealth ; manufactures only change forms, and whatever value they give to the materials they work upon, they in the meantime con- sume an equal value in provisions, etc." (4 Franklin's Works, 120.) THE COLONIAL PERIOD. 35 the few noblemen living in the highest affluence and the bulk of the people living in the most sordid wretched- ness. "I thought often of the happiness of New Eng- land," he continued, " where every man is a free-holder, has a, vote in public affairs, lives in a tidy, warm house, has plenty of ^ood food and fuel, with whole clothes from head to foot, the manufacture perhaps of his own family." Comparing this condition with that of Eng- land, Ireland, and Scotland, he declared that if any should envy thd trade of these countries, they could have a share of it if they would go barefoot and shirtless, be content to wear rags, and live the year round on potatoes and buttermilk.* In 1776, before departing for France as one oi the special commissioners from Congress, Franklin sketched an outline of the terms upon which he supposed a peace might be made with Great Britain, in case opportunity for negotiation should be offered. Free trade was to be the basis of all commercial arrangements. Peace, he maintained, was as necessary to England as to the states, and although England would no longer have a monopoly her share of the growing trade would soon be greater than the whole had been before, f When peace was made it seemed that the opportunity had come to begin a new and better system. " Restraints on the freedom of commerce and intercourse between us," Franklin wrote Hartley, " can afford no advantage equivalent to the mischief they will do by keeping up ill-humor and pro- moting a total alienation." | The failure to secure reci- procity he attributed to the want of united action on the * 4 Franklin's Works, 440. ■t See 6 Franklin's Works, 18. t 8 Franklin's Works, 337. 36 THE TARIFF CONTROVERSY, part of the states,* and consoled himself with the thought that the United States could do as well without a commercial treaty as England.f Franklin favored the five per cent impost, and ac- quiesced in the probable existence of tariffs under the constitution. But his tone was one of apology, and he had no notion that the new republic would re-enact the foolish policy of England. To Mr. Small he wrote, in 1787: "I have not lost any of the principles of public economy you once knew me possessed of, but to get the bad customs of a country changed and new ones, though better, introduced, it is necessary first to remove the prejudices of the people, enlighten their ignorance, and to convince them that their interest will be promoted by the proposed changes, and this is not the work of a day. Our legislators are all landowners, and they are not yet persuaded that all taxes are finally paid by the land. Besides, our country is so sparsely settled, the habitations, particularly in the back countries, being perhaps five or six miles distant from each other, that the time and labor of the collector in going from house to house, and being obliged to call often before he can recover the tax, amounts to more than the tax is worth, and there- fore we have been forced into the mode of indirect taxes —that is, duties on importation of goods, and excises." I '■' We shall, as you suppose," he wrote M. Le Veillard, " have imposts on trade and custom-houses, not because other nations have them, but because we cannot at pres- Bnt do without them. We want to discharge our public debt occasioned by the late war. . . . When we are * 8 Franklin's Works, 349. + 9 Franklin's Works, 279. X 9 Franklin's Works, 414. THE COLONIAL PERIOD. 37 out of debt we may leave our trade free, for our ordinary charges of government will not be great." * In this response to the new and stirring thought of the age, Franklin by no means stood alone. Many years the senior of most of the Kevolutionary statesmen,! with large experience and renown, familiar with the thought and refinement of Europe, himself an important contrib- * 9 Franklin's Works, 460; see also ib. 471. In a pad&phlet published in Europe, in 1782, for the information of those who thought of emigra- ting to America, Franklin pointed out that legislative aid to manufac- tures had been rare in America and of little eucness in establishing a manufacture which the country was not yet so ripe for as to encourage private persons to set up; labor being generally too dear and hands difficult to be kept together. And when the governments had been solicited to support such schemes by encouragements in money, or by imposing duties on importation, it had been generally refused on the principle that if the country was ripe for manufacturing it would be carried on by private persons to advantage, and if not, it would be folly to think of forcing nature. (8 Franklin's Works, 179 el seg.) Franklin's " Wail of a Protected Manufacturer," written in 1789, may be quoted as his parting word on the protective system : ' ' Messrs. I am a manufacturer and was a petitioner for the act to encourage and protect the manufactures of this state. I was very happy when the act was obtained, and I immediately added to the price of my manufactures as much as it would bear so as to be a little cheaper than the same article imported and paying the duty. By this addition I hoped to grow richer. But as every other manufacturer whose wares are under the protection of this act has done the same, I begin to doubt whether, considering the whole year's expenses of my family, with all these separate additions which I pay to other manufacturers, I am at all a gainer. And I confess I cannot but wish that, except the protective duty on my own manufacture, all duties of the kind were taken off and abolished. This, however, I must submit to the better judgment of our legislators. Yours, etc., Q." (10 Franklin's Works, 118.) See also 4 Franklin's Works, 21, in more serious vein, on how protective duties work. t Franklin was twenty-six years older than Washington, and fifty-one years older than Hamilton. He was seventy when the Declaration of Independence was adopted, and eighty-one when he sat in the Consti- tutional Convention of 1787, 53 THE TAUIFF CONTEOVERSY, itor to the scientific progress of his tiilne, he first, per- tiaps, caught the new spirit, and in large measure, no ioubt, imparted it to his countrymen. Yet the younger men were hardly less keen than the sage and philosopher, rhey too had something of a vision of " manifest des- tiny," and in their thought for the future of America they laid hold of those fresh ideas of human life and buman society which characterized the philosophers of the eighteenth century, and became the severe though sober critics of the old economy and old civilization. The A.dames, Otis, Jefferson, Madison, Dickinson, Jay, Morris, Fisher Ames, and others, were all, more or less, born into this newness of life, and all, with more or less agree- ment, felt the Revolution to be a protest against the Restrictive system of the Old World. All shared in the distrust of manufactures and labored and hoped for a commercial relation with Europe free from the barriers that had so long existed. Yet all were too patriotic to be willing to purchase commercial peace on the terms of a tame submission to British arrogance, and at last reached practically the same standpoint? in the persua- sion that their theories were, for the time at least, im- possible of realization. Madison, eminently a conservative, at twenty-three eagerly read Dean Tucker's tracts,* and a casual allusion to the Wealth of Nations, in 1785, shows him familiar with that great work. In a letter to Jefferson, in 1784, he argued for the free use of the Mississippi, holding that the settlement of the western country depended upon it, §nd that by the free expansion of the people the establishment of internal manufactures would not only * See letter from Madison to Wm. Bradford, July 1, 1774; 1 Madison's Works, 17. THE COLONIAL PERIOD. 39 be long delayed, but the consumption of foreign man- ufactures increased, creating in turn an increased demand for American products of the soil.* In acknowledging the receipt of a book on the commerce between France and the United States, Jefferson wrote, in 1786: " Were I to select any particular passages as giving me particular satisfaction, it would be those wherein you prove to the United States that they will be more virtuous, more free, and more happy, employed in agriculture than as car- riers or manufacturers. It is a truth, and a precious one for them, if they could be persuaded of it." f Two years later he wrote: " In general it is impossible that man- ufactures should succeed in America, from the high price of labor. This is occasioned by the great demand of labor for agriculture." J In his " Notes on Virginia," published in 1781, Jefferson stated his position more strongly. The political economists of Europe, he said, had established it as a principle that every state should endeavor to manufacture for itself ; and this principle like many others was transferred to America without calculating the difference of circumstances which should often produce difference of results. In Europe the lands were either cultivated or locked up against the cultivator. Manufacture must therefore be resorted to of necessity, not of choice, to support the surplus of their peoples. But in America there was an abundance of land courting the industry of the husbandman. " Those who labor in the earth are the chosen people of God, if ever he had a chosen people. . . . "While we have land to labor, * 1 Madison's Works, 96. t Jefferson to M. De Warville, Aug. 15, 1786; 2 Jefferson's Works, 11. t Jefferson to Thomas Digges, June 19, 1788 ; 2 Jefferson's Works, 412. 40 THE TARIFF CONTKOVBRSY. then, let us never wish to see our citizens occupied at a work-bench, or twirling a distaff. Carpenters, masons, smiths, are wanting in husbandry; but for the general operations of manufacture, let our workshops remain in Europe." * Washington, whose partiality for American manufac- tures was always pronounced, hardly looked for more than the employment of women and children, f In regard to the prospect of a closer commercial union with France, he wrote Lafayette, in 1786: "There are many articles of manufacture which we stand absolutely in need of, and shall continue to have occasion for, so long as we remain an agricultural people, , . . that is to say, for ages to come." I As population increases, im- ports will necessarily increase, argued Ellsworth of Con- necticut, urging the advantage of an indirect revenue, in the debate on the adoption of the Constitution, " because our citizens will choose to be farmers, living independ- ently on their freeholds, rather than to be manufacturers and work for a groat a day." § " The American conti- nental colonies," wrote John Dickinson in 1765, in his arraignment of the Stamp Act, " are inhabited by persons of small fortunes who are so closely employed in subduing a wild country for their subsistence, and who would labor under such diflBculties in contending with old and populous countries which must excel them » 8 Jefferson's Works, 405. t "Though I would not force the introduction of manufactures by axtravagant encouragements, and to the prejudice of agriculture, yet I conceive much might be done in the way by women, children, and others, without taking one really necessary hand from tilling the earth." Washington to Lafayette, Jan. 29, 1789 ; 9 Washington's Works, 464. i 9 Washington's Works, 192. § 2 Elliot's Debates, 192. THE COLONIAL PERIOD. 41 in workmanship and cheapness, that they have not time nor any temptation to apply themselves to manufac- tures.* John Adams, minister to Holland in 1780, in correcting certain misconceptions regarding America, declared that agriculture ever was, and ever would be, the dominant interest in America. Manufactures in general had never flourished in America. They em- ployed only women and children who could not work in the field, and men at certain seasons when they could not be' employed in agriculture. Labor upon land was more profitable than in manufactures, which they could import and purchase with the produce of the soil, cheaper than they could make them. " Since the war, however, freight and insurance have been so high that manufactures have been more attended to. . . . But these, for the reason before given, will last no longer than the war or than the hazard of their trade. Amer- ica is the country of raw materials, and of commerce enough to carry them to a good market ; but Europe is the country for manufactures and commerce. Thus Europe and America will be blessings to each other, if some malevolent policy does not frustrate the purposes of nature." f i * 1 Political Writings of John Dickinson, 48. t 7 John Adams' Works, 309 et seq. Jefferson wrote in his "Notes on Virginia" (1780): "Our, external trade has suffered very much from the beginning of the present contest. During this time we have man- ufactured within our families the most necessary articles of clothiDg. Those of cotton will bear some comparison with the same kinds of man- ufacture in Europe ; but those of wool, flax, and hemp are very coarse, unsightly, and unpleasant : and such is our attachment to agriculture, and such our preference for foreign manufactures, that, be it wise or unwise, our peo?'e will certainly return as soon as they can, to the raising of raw materials and exchanging them for finer manufactures than they are able to execute themselves." (8 Jefferson's Works, 404.) 42 THE TARIFF CONTEOVEESY. But as time went on and the ' purposes of nature' were frustrated by the ' malevolent policy ' of both France and England, as Britain resumed complete and insolent control of commerce, and embarrassments mul- tiplied at home, the American temper underwent a great change. Much of the faith in the beneficent workings of free commerce vanished. To some, at times, it seemed better to cut off all intercourse with the rest of the world. In this mood Jefferson wrote: " Were I to indulge my own theory, I should wish [the states] to practice neither commerce nor navigation, but to stand, with respect, to Europe, precisely on the footing 'of China." * In the same strain Adams expressed himself to Jay: " If all intercourse between Europe and America could be cut- off forever, if every ship we have were burnt, and the keel of another never to be laid, we might still be the happiest people upon earth, and in fifty years the most powerful." t Neither, however, meant to be taken seri- ously. This is theory only, Jefferson said. Our people have a decided taste for navigation, and would like to throw open all doors of commerce, but cannot unless others will do it for us ; therefore it is necessary to shackle them as they shackle us. ' Our people,' confessed Adams, ' are as aquatic as the tortoises and sea-fowl, and the love of commerce, with its conveniences and pleasures, is a habit in them as unalterable as their natures. It is in vain, then, to amuse ourselves with the thought of annihilating commerce, unless as philosophical specula- tions. \Vd are to consider men and things as practical statesmen, and to consider what our constituents are, * Jefferson to Hogendorf, Oct. 13, 1785; 1 Jefferaon'B Works, 465. Df. Jefferson's credo in 1799; 4 Jefferson's Works, 268. t Adams to Jay, Dec. 6, 1785; 8 John Adams' Works, 357. THE COLONIAL PERIOD. 43 and what they expect of us. We shall find that we must have connections with Europe, Asia, and Africa ; and therefore, the sooner we form those connections into a judicious system the better for us and our children.' The retaliation here suggested soon became dominant in the policy of American statesmen. The effort to plant com- merce on new and higher grounds, the belief that in commerce old things ought to pass away and a new era come in, was sincere, and the disappointment at the failure to secure reciprocity was keen. Adams, Frank- lin, and Jay pressed the matter diplomatically, and in the belief that they were acting for the advantage of England as well. Shelburne, one of the earliest disci- ples o»" Adam Smith, and a firm friend of America, was inclined to meet them half way. But upon the over- throw of the Shelburne ministry and the advent of the younger Pitt, a different tone was adopted. Nor was England's coolness toward reciprocity without reason. The fear of losing the American trade at first inclined the commercial interest to liberal treaty relations. But as time went on the English merchants gradually re- sumed their old trade, and with it came back the old supremacy. Exaggerated reports of the disorders and weakness of the Confederation found willing acceptance in England until it seemed hardly worth while to respect very rigidly the provisions of the treaty of peace, much less to go to the trouble of negotiating new treaties with a government so imbecile and doomed to speedy dissolu- tion. The belief that the states must inevitably split apart and most likely be glad to get back under the protection of England, was almost universal. At any rate, a trial had been made, and English merchants had easily carried off the American trade. The Americans 44 THE TARIFF CONTEOVEESY. were not slow to perceive this change of front, and to understand that commercially the war had availed them nothing. Their offer of reciprocity. was not only scorn- fully rejected, but the West India trade which they had formerly enjoyed was now snatched from them. There seemed nothing to do but to meet restriction with restric- tion, and an eager inquiry arose as to what could be done to secure decent recognition. The proposal to give Congress power to lay a five per cent impost and to reg- ulate trade, as well as the more complete grant of author- ity in the Constitution, received its backing largely from this cause. "Will it not be good policy," Madison ventured to inquire, in 1784, " to suspend further treaties of com- merce till measures shall have taken place in America which may correct the idea in Europe of impotency in the federal government in matters of commerce ? " * " Much indeed it is to be wished, as I conceive," he wrote a year later, announcing a position which to the end of his life he scarcely varied from even in phraseology, "that no regulations of trade, that is to say, no restric- tions on imposts whatever, were necessary. A perfect system is the system which would be my choice. But before such a system will be eligible, perhaps, for the United States, they must be out of debt; before it will be attainable, all other nations must concur in it. Whilst any one of these imposes on our vessels, seamen, Btc, in their ports, clogs from which they exempt their own, we must either retort the distinction or renounce, Qot merely a just profit, but our only defence against the danger which may most easily beset us. Are we not at this moment under this very alternative? The policy * Madison to Jefferson, April 25, 1784; 1 Madison's Works, 79. THE COLONIAL PEKIOD. ' 45 of Great Britain (to say nothing of other nations) has shut against us the channels without which our trade with her must be a losing one; and she has consequently the triumph, as we have the chagrin, of seeing accom- plished her prophetic threats, that our independence should forfeit commercial advantages for which it would not recompense us with new channels of trade." The only means of redress, he held, were retaliating regula- tions of trade, adopted by Congress.* The same month he wrote again: "The machinations of Great Britain with regard to commerce have produced much distress and noise in Northern states. . . . The sufferers are everywhere calling for such augmentation of the power of Congress as may effect relief. ... If anything should reconcile Virginia to the idea of giving Congress a power over her trade, it will be that this power is likely to annoy Great Britain, against whom the animosities of our citizens are still strong." f Of the proposed Annapolis Convention he wrote Jefferson: "If it should come to nothing, it will, I fear, confirm Great Britain and all the world in the belief that we are not to be respected nor apprehended as a nation in matters of commerce." J Jefferson, then in France, noted the new tendency and its wholesome effect. " I am well informed," he wrote Madison, "that the late proceedings in America have produced a wonderful sensation in England in our favor. I mean the disposition which seems to be becoming general, to invest Congress with the regulation of our commerce, and, in the meantime, the measures taken to * Madison to Monroe, Aug. 7, 1785 ; 1 Madison's Works, 170 et seq. t Madison to Jefferson, Aug. 20, 1785 ; 1 Madison's Works, 173. t Madison to Jefferson, March 18, 1786 ; 1 Madison's Works, 226. i6 THE TARIFF CONTROVERSY. iefeat the avidity of the British government grasping at our carrying business. I can add with truth, that it was not till these symptoms appeared in America that I have been able to discover the smallest token of respect towards the United States in any part of Europe." * "I do not know," wrote Washington at almost the same time," that we can enter upon a war of imposts with Great Britain or any other foreign power ; but we are certain that this war has been waged against us by the former; professedly upon a belief that we never could unite in opposition to it; and I believe there is no way of putting an end to it, or at least of stopping the increase of it, but to convince them of the contrary. Our trade, in all points of view, is as essential to Great Britain as hers is to us; and she will exchange it upon reciprocal and liberal terms, if better cannot be had." f In no one of the statesmen of the Revolution was this change of temper more marked than in John Adams. He went abroad as one of the commissioners to negotiate the treaty of peace, and became the first American min- ister to England. Like Franklin and Jay, he felt him- self thoroughly cut loose from the mercantile system, and confident that the new order of things was inevit- able, went jauntily forward prepared to accept provision- ally almost anything in regard to trade, " I said to my brothers," he wrote in his diary, April 28, 1783, " I shall be very ductile about commerce. I would agree at once to mutual naturalization, or to the article, as first agreed on, by Dr. Franklin and Mr. Jay, with Mr. Os- wald; or I would agree to Mr. Hartley's propositions, to • JefiFerson to Madison, Sept. 1, 1785; 1 Jefferson's Works, 413. Cf. 4 Jefferson's Works, 106. t Washington to James McHenry, Aug. 22, 1785 ; 9 Washington's Works, 123. THR COLONIAL PERIOD. 47 let the trade go on as before the war, or as with Nova Scotia; I could agree to any of these things, because that time and the natural course of things will produce a good ■ treaty of commerce. Great Britain will soon see and feel the necessity of alluring American commerce to her ports by facilities and encouragements of every kind." * But this state of feeling did not last. Reciprocity not secured at first became less and less probable as England began to experience a decided re-action toward the treaty itself. Adams was received at court, but treated coldly or with studied neglect, and England sent no minister in return. The feeling against America was still very bitter, and now much heightened by the appearance of loyalist refugees who gained the ear of the government. Of the proclamation of July 2, 1783, cutting off at one stroke the whole American trade with the West Indies, except in British vessels, Adams wrote from Paris: "A jealousy of American ships, seamen, carrying trades and naval power, appears every day more and more conspicuous. . . . This proclamation is issued in full confidence that the United States have no confidence in one another; that they cannot agree to act in a body as one nation; that they cannot agree upon any naviga- tion act which may be common to the thirteen states. Our proper remedy would be to confine our exports to American ships." \ " The British proclamation of * 3 John Adams' Works, 363. See also his Diary, May 21 and 22, 1783; 3 John Adams' Works, 371 et seq. + 8 John Adams' Works, 97. Adams immediately had a conversation with Vergennes, the French minister, and learning that in the French West Indies the United States had two free ports, he wrote to Living- ston: "Upon the whole, I was much pleased with this conversation and conclude from it that we shall do very well in the French West India Islands ; perhaps the better in them, the worse we are treated by the English ;" Ih., 100. 48 THE TARIFF CONTBOVEESY. July 2," he declared, " is the result of refugee politics; it is intended to encourage Canada and Nova Scotia and their fisheries, to support still the ruins of their naviga- tion act, and to take from us the carriage even of our own productions. A system which has in it so little respect for us, and is so obviously calculated to give a blow to our nurseries of ships and seamen, could never have been adopted but from the opinion that we had no com- mon legislation for the government of commerce. . . . I hope the thirteen states will unite in some measures to counteract this policy of Britain, so evidently selfish, unsocial, and I had almost said, hostile." * Two years later, after his experience in London, he could write still more strohgly: " The popular pulse seems to beat high against America. . . . Their attachment to their navigation act, as well as that of all other parties here, is grown 'so strong, and their deter- mination to consider us as foreigners, and to undermine our navigation, and to draw away our seamen, is so fixed . . . that I despair of any equal treaty. ... It cannot therefore be too earnestly recommended to all the states to concur with the state of New York, in giving to Congress full power to make treaties of com- merce, and, in short, to govern all our external com- merce, for, I really believe, it must come to that. Whether prohibitions or high duties will be most politic is a great question." f A little earlier he had written Jay concerning the outlook: " The Britons boast that all the prophecies of the loss of the American trade from the independence of the United States have proved false; that the experiment has been tried and the contest decided; that there was at the peace a competition of * 8 John Adams' Works, 101 ; see also letter to Livingston, ib. 105. t Adams to Jay, July 19, 1785 ; 8 John Adams' Works, 282. THE COLONIAL PKEIOD. 49 the commercial nations of Europe for the prize; that the superior abilities of the British manufacturers, and the greater capital of their merchants, have enabled them to give our traders better bargains and longer credit than any others in Europe; that, as we love our interests and have small fortunes, we must come to them who can furnish us with goods of the best qualities at the cheap- est rates, and allow us the longest time to pay. . . ; You will negotiate for reciprocity in commerce to very little purpose, while the British ministers and merchants are certain that they shall enjoy all the profits of our commerce, under their own partial regulations." * Three months later he wrote again : " I find the spirit of the times very different from that which you and I saw when we were here together, in the months of November and December, 1783. . ; . Now the boast is, that our commerce has returned to its old channels, and that it can follow in no other; now the utmost contempt of our commerce is freely expressed in pamphlets, gazettes, coffee-houses, and in common street talk. I wish I could not add to this the discourses of cabinet counsellors and ministers of state, as well as members of both houses of Parliament. The national judgment and popular voice is so decided in favor of the navigation acts, that neither administration nor opposition dare avow a thought of relaxing them further than has already been done. This decided cast has been given to public opinion and the national councils by two facts, or rather presump- 1 tions. The first is, that in all events this country is sure of the American commerce; the second is, that the j American states are not and cannot be united." f * Adams to Jay, May 5, 1785 ; 8 John Adams' Works, 240 el seq. Of. letter of June 26, ih. 274. + Adams to Jay, Aug. 6, 1785 ; 8 John Adams' Works, 289. 50 THE TARIFF CONTEOVEBSY. As to ways and means Adams turned more and more to retaliation as the only effective remedy. Among indirect methods he suggested measures for encouraging the growth in the United States of West India articles, the encouragement of manufactures, especially of wool and iron, export and import duties on British ships, and the immediate sending of ships to China. The states, he told Jay, might lay such discouragements on British ships and manufactures, as would not only benefit them- selves but show England her own weakness. Heavy duties might be laid on luxuries from Great Britain which would discourage the extravagant use of them in America, place other nations upon as good or a better footing than the English, " and raise a revenue for the public out of that enthusiasm for England which has been, and is still, so unwise in itself, and so hurtful to our country." * The refusal of the states to grant Con- gress power to levy a five per cent duty and to regulate commerce was rather bewildering to Adams, who was persuaded, however, that the objections could be only technical. He could not conceive that there could be opposition to the policy itself, and felt sure the states individually would readil};^ comply with a recommenda- tion of Congress wholly to prohibit British vessels and merchandise. " If Congress should enter in earnest into this commercial war," he declared, " it must neces- sarily be a long one." But he would not stop at half measures. They must take higher ground than the British. They must take measures by which the in- crease of shipping would be not only encouraged but rendered inevitable. They must adopt in all the states the regulations that were once made in England. He * 8 John Adams' Works, 242. THE COLONIAL PERIOD. 51 should be sorry to adopt a monopoly; but driven by necessity, he would not do things by halves.* August 10, 1785, Adams wrote to Jay, referring to the recent arret of Louis XVI advocating liberality in trade: "As the French court has condescended to adopt our principle in theory, I am very much afraid we shall be obliged to imitate their wisdom in practice, and exclude from the United States, or suffer to be imported by our nation only, and in their own ships, those foreign goods which would be hurtful to the United States and their manufactories, make the balance of trade to be against them, or annihilate or diminish their shipping or mar- iners. We have hitherto been the bubbles of our own philosophical and equitable liberality; and, instead of meeting correspondent sentiments, both France and England have shown a constant disposition to take a selfish and partial advantage of us because of them, to turn them to the diminution or destruction of our own means of trade and strength. I hope we shall be the dupes no longer than we must. I would venture upon monopolies and exclusions, if they were found to be the only arms of defence against monopolies and exclusions, without fear of offending Dean Tucker or the ghost of Doctor Quesnay." f Adams told Pitt that the most ' judicious men in America had been long balancing in their minds the advantages and disadvantages of a com- merce perfectly free on one side, and of a navigation act on the other, that the present time was a critical one, and that the balance was inclining toward a navigation act. " But," he wrote Jay, " I do not expect any answer at all before next spring, nor then unless intelligence * 8 John Adams' Works, 241, 274, 291, 292. t 8 John Adams' Works, 299. 52 THE TARIFF CONTEOVEESY. should arrive of all the states adopting the navigation ict, or authorizing Congress to do it; and even in that 3ase, I am inclined to think they will try the experiment md let our navigation acts operate, to satisfy themselves i\'hich people will first roar out with pain." * " Patience ander all the unequal burdens they impose upon our commerce," he wrote a few days later, " will do us no ^ood; it will contribute in no degree to preserve the peace with this country. On the contrary, nothing but retaliation, reciprocal prohibitions and imposts, and put- ting ourselves in a posture of defence, will have any sffect. . . . Confining exports to our own ships, and laying on heavy duties upon all foreign luxuries, and sncouraging our own manufactures, appear to me to be our only resource." f Adams' attitude toward the doctrines of free com- merce, which he had once so thoroughly embraced, took on something of bitterness as America's condition be- came more and more alarming. " If the United States would adopt the principle of the French economists," he wrote Jay, " and allow the ships and merchants of all nations equal privileges with their own citizens, they need not give themselves any further trouble about treaties or ambassadors. The consequence, nevertheless, would be the sudden annihilation of all their manufactures and navigation. We should have the most luxurious set of farmers that ever existed, and should not be able to defend our sea-coasts against the insults of a pirate." I The general trend of all these utterances is sufficiently evident. They were the expressions of men who, among • Adams to Jay, Aug. 25, 1785; 8 John Adams' Works, 302-310. t Adams to Jay, Aug. 30, 1785 ; 8 John Adams' Works, 313. t Adams to Jay, Feb. 26, 1786 ; 8 John Adams' Works, 381. THE COLONIAL PERIOD. 53 other fruits of independence, counted the abolition of shackles upon trade as one of the most important. In their own achievement of independence and in the phil- osophy which environed it, they thought they saw the beginning of the new heavens and new earth in social and political relations. They put their hand to the work in full readiness to accept the most altruistic con- ception of human society. But their social philosophy was more securely grounded than their economic. Ab- stract laissez-faire as law in political economy they hardly got a glimpse of, or perceived the full bearing of its crit- icism upon mercantilism. And they were pre-eminently Americans and of heroic mould. When they found that commercial shackles were not to be struck off at their bidding, the effect varied with their several tempera- ments and the abandon with which they had given themselves to the new gospel. Conservatives like Mad- ison retained their ideal unchanged, but resolutely sep- arated it from the practical problem in hand. Timid republicans like Jefferson involuntarily shrank back from any foreign intercourse whatever. Sturdy, impet- uous patriots like Adams never recovered from the shock to their vanity in the discovery that their youthful theories would not work, and in the re-action a feeling of resentment led them to go even beyond Europe in their advocacy of restrictions.* All this is easily under- stood, and, under the circumstances, perfectly natural. However, it was not a very scientific or logical position, and in itself was a rather inadequate support for the policy of a nation. While many of the old errors might creep back and become intrenched again, the mercantile * Of course, the larger and more important result — free trade and commerce among the states — was secured. 54 THE TARIFF CONTBOVEESY. system as a whole was too strongly cfiscredited to be ever again accepted as the basis of a great public'policy. For the present, indeed, the problem was comparatively simple, and never was a measure more completely sanctioned by common consent than the first tariff under the Constitution. What was needed was the placing of the inevitable policy on broader and stronger grounds, — a need which in due time was to be supplied by Hamilton. Hamilton's position agreed in the main with that out- lined by Madison and Adams, though it was not reached from the same starting-point. Of the notion of giving Congress power to regulate commerce he was one of the earliest and most persistent advocates, but he was not driven to this by the failure of other ideals of commer- cial policy. Unlike Madison and Adams he wasted no regrets for what was at best a policy impossible of reali- zation. Unlike them he was feeling his way toward a system based not on the injustice of other nations, but springing from national needs and conditions. Already he was working over in his mind an American policy, and in his attitude toward the new powers of Congress in the proposed Constitution, he stood at the farthest re- move from the apologetic tone of Franklin. He failed to escape from some of the errors of mercantilism, but his essential position was not founded in them. He borrowed from Hume and Adam Smith and physiocrats alike, but criticised all in the free and easy, thoTigh sympathetic, fashion of a man who did his own think- ing, and by none was led away from practical problems from the American standpoint. He recognized, as all did, the supremacy of agriculture, but he had no predi- lection for workshops in Europe. More than this, and THE COLONIAL PERIOD. 55 what made him essentially the leader in the new eco- nomic policy of America, he believed in the inherent usefulness, for the time at least, of restrictive legislation. " The vesting Congress with the power of regulating trade," wrote Hamilton, in 1782, " ought to have been a principal object of the Confederation. . . . It is as necessary 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. . . . [This is] contra- dicted by the numerous institutions and laws that exist everywhere for the benefit of trade, by the pains taken to cultivate particular branches and to discourage others, by the known advantages derived from those measures, and by the palpable evils that would attend their dis- continuance. ... 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 account in pursuing channels of traffic prejudicial to that balance, to which the government may be able to oppose effectual impediments. There may, on the other hand, be a possibility of opening new sources, which though accompanied with great difficulties in the com- mencement, would in the event amply reward the trou- ble and expense of bringing them to perfection. The undertaking may often exceed the influence and capitals of individuals. . . . The contrary opinion,which has grown into a degree of vogue among us, has originated in the injudicious attempts made at different times to effect a regulation of prices. It became a cant phrase among the opposers of these attempts, that trade must regulate itself; by which at first was only meant that it had its fundamental laws, agreeable to which its general opera- 56 THE TARIFF CONTBOVEESY. tions must be directed, and that any violent attempt in oppositions to these would commonly miscarry. In this sense the maxim was reasonable, but it has since been extended to militate against all interference by the sov- ereign." The rapid progress of trade in England, he declared, was due, in great measure, to the fostering care of the government, and Dutch prosperity was due to the strictness of their commercial regulations. Owing to a different spirit in the government, France was much later in commercial improvements; " nor would her trade have been at this time in so prosperous a condition, had it not been for the abilities and indefatigable endeavors of the great Colbert. . . . The establishment of the woolen manufacture in a kingdom where nature seemed to have denied the means, is one, among many proofs, how much may be effected in favor of commerce by the attention and patronage of a wise administration." f One of the objects Hamilton kept in the foreground was the raising of a revenue, and for this he insisted + The Continentalist, No. 5, April 18,1782; 1 Hamilton's Works, 254- 263. Hamilton was only twenty-five, and in his maturity would hardly have subscribed to so much mercantilism. Still he was essentially a special pleader even when he argued most nobly and with most signal ability. In this same number of the Continentalist he asserted that the maxim that the consumer pays the duty had been admitted in theory with too little reserve, and was frequently contradicted in practice. True, he said, the merchant would be unwilling to let the duty he deducted from his profits, if the market permitted ; but this often was not practicable, for price was determined by demand and supply. But in the report drawn up by Hamilton, Madison, and Fitzsimons, in 1782, in answer to Rhode Island's objections to ike proposed impost, it was stated that the "concurrent opinions of the ablest commercial and polit- ical observers, have established beyond controversy , this general principle that every duty on imposts is incorporated with the price of the com- modity and ultimately paid by the consumer, with a profit on the duty itself as a compensation to the merchant for the advance of his money." (2 Hamilton's Works, 2.) THE COLONIAL PERIOD. 57 that no mode could be so convenient as an impost. There would be no temptation to abuse this power, he argued, because experience showed that moderate duties were more productive than high ones. In his resolu- tions in Congress, June, 1783, for a general convention, he named, among other defects in the Confederation, that of not vesting in Congress a general superintend- ence of trade, " equally necessary in the view of revenue and regulation ... of regulation, because by gen- eral prohibitions of particular articles, by a judicious arrangement of duties, sometimes by bounties on the manufacture or exportation of certain commodities, in- jurious branches of commerce might be discouraged, favorable branches encouraged, useful products and manufactures promoted." * In No. 11 of the Federalist, he declared that Europe was uneasy about the adventurous spirit which seemed to distinguish the commercial character of the United States, and therefore would naturally attempt to foster divisions among them, in order to deprive them, as far as possible, of an active commerce in their own ships. " By prohibitory regulations extending, at the same time, throughout" the states, we may oblige foreign coun- tries to bid against each other, for the privileges of our markets. This assertion will not appear chimerical to those who are able to appreciate the importance [to any manufacturing nation] of the markets of three millions * 1 Hamilton's Works, 292. Hamilton saw the obstacle which the dearness of labor put in the way of manufactures, and in No. 6 of the Oontinentalist he frankly declared that it ought to be a capital object of their policy to reduce the price of labor. (1 Hamilton's Works, 264-273.) He was too tactful, however, to continue this line of argument, and in his Eeport on Manufactures he endeavored to show that the dearness of labor was not an obstacle to manufacturing. 58 THE TAEIFF CONTROVEESY, of people . . . for the most part exclusively addicted to agriculture, and likely from local circumstances to remain so." * All this was doubtless vague enough and loosely ar- gued. But it illustrates the general bend of Hamilton's mind toward a practical solution of the question. " Gen- eral principles in subjects of this nature," he had said in a pamphlet already quoted, " ought always to be advanced with caution; in an experimental analysis there are found such a number of exceptions as tend to render them very doubtful; and in questions which affect the existence and collective happiness of these states, all nice and abstract distinctions should give way to plainer interests and to more obvious and simple rules of conduct." t The picture commonly given of the period from 1783 to 1789, between the close of the war and the adoption of the Constitution, is one of demoralization and almost total collapse. The effective background which such a representation gives to a glowing canvas of the United States under the Constitution, affords a temptation that few historical artists can resist. The times were bad enough and critical enough, it is true'. They were cer- tainly more critical than some of the statesmen of that time realized. Jefferson could see in Shay's rebellion nothing but a sign of healthful vitality, and Patrick Henry, and George Clinton, and Benjamin Harrison found a constitution which gave Congress power to leg- islate for all the states far more unbearable than the disorders of the Confederation. Yet those who saw most clearly the gravity of the crisis saw also the inherent * 9 Hamilton's Works, 60, 61. t The Oontinentalist, No. 5, April 18, 1782; 1 Hamilton's Works, 262. THE COLONIAL PERIOD. 59 soundness of the body politic and the strong recupera- tive forces which would be at work could its organs once be gotten into healthy action. Washington, Madison, Jefferson, and even Franklin at times despaired and could see only gloom in the future. But the stronger possibilities of success nerved them for action, and kept firm, for the most part, their faith in the destiny of the Republic. Want of unity and the weakness of the government had lost the states their great opportunity of pressing reciprocity to a successful issue. The advantage of cap- ital and credit firmly re-established English commercial supremacy, and now the West Indian trade was snatched from them. At home matters were in some respects worse. The states launched into reckless experiments with paper money, adopted hostile regulations against one another, and discontent not infrequently broke out into internal discords. Not a single state complied with the requisitions of Congress, not enough money could be coaxed out of the states to meet ordinary expenses, and the best men resigned and went home to their own legislatures.* " No morn ever dawned more favorably than ours did," wrote Washington, " and no day was ever more clouded than the present." f Yet ■ all this expressed at most a vivid prophecy of what might happen if things did not begin to mend. But things were not past mending, and this the best men strongly felt. The harvests were generally good, prices satisfactory, labor employed, and the country rap- idly growing. In these circumstances it needed only a cure for political ills to start the states on that career of * See 1 Madison's Works, 155, 227, 233, 246. t Washington to Madison, Nov. 5, 1786;. 9 Washington's Works, 206. 60 THB TARIFF CONTROVEESY. prosperity -which Franklin and Washington and their compeers so strongly believed to be in store for them. Even Madison did not fail to note that they were at times tasting some pleasant industrial fruits of inde- pendence, in better prices and more favorable trade.* Adams, in his optimistic letters from Holland, written in 1780, declared that as to poverty there was hardly a beggar in the country. The greatest source of grief and affliction was in the fluctuations of the paper money; but this, he said, although it occasioned unhappiness, had no violent or fatal effects, f In 1785, while noting the discouragement to shipping, seamen, and the carry- ing trade, he cited the high prices of American produce and the low prices of foreign merchandise, as proof of the prosperity of the preceding year.| He told Lord Carmarthen that the people were nineteen-twentieths of them farmers; that these had sold their produce dearer, and purchased the manufactures of Europe cheaper, since the peace, than ever; but that the situation of the merchants both in America and in England, had been, and continued to be, very distressing." § For the Chevalier de la Luzerne, Washington drew, in 1786, a hopeful picture. After referring to the proposed grant to Congress of the power to regulate trade, he wrote: " In other respects our internal governments are daily acquiring strength. The laws have their fullest energy, justice is well administered ; robbery, violence, or murder is not heard of from New Hampshire to Geor- gia. The people at large, as far as I can learn, are more * See letter to Jeflfarson, Aug. 20, 1781; 1 Madison's "Worke, 92. + See 7 John Adams' Works, 305. i 8 John Adams' Works, 245. § 8 John Adams' Works, 270. THE COLONIAL PERIOD. 61 industrious than they were hefore the war. Economy begins to prevail, partly from necessity and partly from choice and habit. The seeds of prosperity are scattered over an immense tract of western country. In the old states, which were the theatres of hostility, it is wonder- ful to see how soon the ravages of war are repaired. Houses are rebuilt, fields enclosed, stocks of cattle, which were destroyed, are replaced, and many a desolated ter- ritory assumes again the cheerful appearance of cultiva- tion. In many places the vestiges of conflagration and ruin are hardly to be traced. The arts of peace, such as clearing rivers, building bridges, and establishing con- veniences for traveling, are assiduously promoted. . . . I am sensible that the picture of our situation which has been exhibited in Europe since the peace, has been of a very different complexion; but it must be remem- bered that all the unfavorable features have been much heightened by the medium of the English newspapers." * To Lafayette he wrote, with prophetic instinct, after the ratification of the Constitution had become a cer- tainty: " And then, I expect that many blessings will be attributed to our new government, which are now taking their rise from that industry and frugality into the practice of which the people have been forced from necessity. I really believe that there never was so much labor and economy to be found in the country as at the present moment. If they persist in the habits they are acquiring the good effects will soon be distinguishable. When the people shall find themselves secure under an energetic government, when foreign nations shall be disposed to give us equal advantages in commerce from dread of retaliation, when the burdens of war shall be * Washington to Luzerne, Aug. 1, 1786; 9 ■Washington's Works, 184. 62 THE TARIFF CONTEOVEESY. in a manner done away by the sale of western lands, when the seeds of happiness which are sown here shall begin to expand themselves, and when every one, under his own vine and fig tree, shall begin to taste the fruits of freedom, then all these blessings (for all these bless- ings will come) will be referred to the fostering influence of the new government. Whereas many causes will have conspired to produce them." * To Jefferson he wrote: "We may perhaps rejoice that the people have been ripened by misfortune for the reception of a good government. They are emerging from the gulf of dissi- pation and debt into which they had precipitated them- selves at the close of the war. Economy and industry are evidently gaining ground. Not only agriculture, but even manufactures, are much more attended to than formerly. Notwithstanding the shackles under which our trade in general labors, commerce to the East Indies is prosecuted with considerable success. . . . This year the exports from Massachusetts have amounted to a great deal more than their imports. I wish this was the case everywhere." f " What has been considered at the moment as a disadvantage," he wrote Samuel Han- son, " will probably turn out for our good. While our commerce has been considerably curtailed, for want of that extensive credit formerly given in Europe, and for default of remittances, the useful arts have been almost perceptibly pushed to a considerable degree of perfection. . . . No diminution in agriculture has taken place at the time when greater and more substantial improve- ments in manufactures were making than were ever * Washington to Lafayette, June 18, 1788 ; 9 Washington's Works, 382. t Washington to Jefferson, Aug. 31, 1788; i) Washington's Works, 427. THK COLONIAL PERIOD. 63 before known in America. ... I hope it will not be a great while before it will be unfashionable for a gentleman to appear in anj' other dress [than home- spun]. Indeed, we have already been too long subject to British prejudices. I use no porter or cheese in mj' family, but such as is made in America." * Jefferson's opinions were not less pronounced, though they perhaps exhibited faith rather than knowledge. To Baron Geismar he wrote, Sept. 6, 1785: "From the London Gazettes, and the papers copying them, you are led to suppose that all there [^. e. in the United States] is anarchy, discontent, and civil war. Nothing, however, is less true. There are not on the face of the earth, more tranquil governments than ours, nor a happier and more contented people. Their commerce has not as yet found the channels which their new relations with the world will offer to best advantage, and the old ones remain as yet unopened by new conventions. This occasions a stagnation in the sale of their produce, the only truth among all 'the circumstances published about them." f " With all the defects of our Constitution, whether general or particular,-" he affirmed two years later, " the comparison of our governments with those of Europe, is like a comparison of heaven and hell." I Franklin, like Jefferson, was in France the greater part of this period, and therefore may not have been so keenly alive to the distresses among the states as those at home. But he had a juster appreciation of their resources and of the nature of their troubles. In a * Washington to Samuel Hanson, Jan. 18, 1789; 9 Washington's Works, 464. + 1 JeflFerson's Works, 427. t 2 Jeflferson's Works, 249. 64 THE TARIFF CONTEOVEESY. pamphlet, issued in 1784, on " The Internal State of America," he examined the complaints of American newspapers regarding hard times, deadness of trade, scarcity of money, and the like. Admitting these, he could not believe the prospect was so gloomy as had been imagined. The great business of the country, he said, was agriculture. For one artisan or merchant there were at least one hundred farmers, most of whom were cultivators of their own fertile lands, from which they obtained not only food but materials of their cloth- ing, so that they needed very few foreign supplies. Although the crops of the year before had been gener- ally good, never was the farmer better paid for his sur- plus. His land was continually rising in value with increase of population, and he was enabled to give such good wages to those who worked for him that in no part of the old world were the laboring poor so well fed, well clothed, well lodged, and well paid, as in the United States. In cities since the Kevolution houses and lots had vastly increased in value. Rents had risen to an astonishing height, which encouraged building, thus giving employment to abundance of workmen. These workmen demanded and obtained better wages than any other part of the world afforded them, and were paid in ready money. As to the fisheries, they were not worse paid than before the Revolution. Merchants might calculate amiss and import too much, but they would learn by experience. If artificers and farmers would turn shopkeepers with the idea of leading easier lives, the business might very well be too small for so many, and they might complain that trade was dead. As to the growth of luxury which alarmed so many, if the impor- tation of foreign luxuries could ruin a people the states THE COLONIAL PERIOD. 65 would have been ruined long ago; for the British nation had claimed a right and practiced it, of importing among them, not only the superfluities of their own products, but those of every nation under heaven. The states bought and consumed them and yet flourished and grew rich. At present these independent governments might do what they could not then — discourage by heavy duties or prevent by heavy prohibitions such importa- tions and thereby grow richer. Let the states attend to agriculture and the flsheries, and the power of rivals with all their restraining and prohibiting acts could not much hurt them.* To Hartley he wrote: "All the stories in your papers relating to their divisions are fictions, as well as those of the people being discontented with Congressional gov- ernment. Mr. Jay writes to me that they were at no time more happy or more satisfied. ... In truth, the freedom of their exports to all nations has brought in a vast plenty of foreign goods, and occasioned a demand for their produce, the consequence of which is the double advantage of buying what they consume cheap and selling what they can spare dear." f To the Amsterdam banker, Mr. Grand, he wrote after his return to Philadelphia : " By their accounts [i. e. in English papers] you would think we were in the utmost distress, in want of everything, all in confusion, no government, and wishing again for that of England. Be assured, my friend, that these are all fictions, mere English wishes, not American realities. ... I never saw greater and more indubitable marks of public prosperity * 9 Franklin's Works, 35 el seq. See also 10 Franklin's Works, 69. + Franklin to David Hartley, Jan. 3, 1785; 9 Franklin's Works, 74. See also Letter of Feb. 24, 1786, ib. 294. 66 THE TARIFF CONTEOVEESY. in any country. The produce of our agriculture bears a good price, and is all paid for in ready hard money, all the laboring people have high wages, everybody is well clothed and well lodged, the poor provided for or assisted, and all estates in town or country much increased in value." * ♦Franklin to Mr. Grand, March 5, 1786; 9 Franklin's Works, 299. See also ib. 300, 348 ; vol. x, 63-70, et pastim. " In the Hist. Mag. March, 1871, there is a letter by H. B. Dawson to J. L. Motley, in response to some statements of that historian in the London Times in 1861, in which most of the symptoms of content during the Confederation days, which could be gleaned, are grouped together to point an argument." 7 Winsor, 221, note. CHAPTER II. THE TARIFF OF 1789, AND HAMILTON'S REPOET ON MANUFACTURES. The first Congress of the United States under the Constitution met in New York City, March 4, 1789. A quorum of the House did not appear, however, until April 1, and of the Senate not until April 6. April 8, three weeks before Washington was inaugurated, the House took up, as the first business of the new govern- ment, the subject of an impost. The matter was brought forward by Madison, who introduced the measure of 1783 in blank, with the suggestion of an additional clause for discriminating tonnage duties, and recommended a gen- eral adherence to that plan. After a debate lasting five weeks, a bill was passed, May 16, retaining the five per cent ad valorem rate of 1783 for the great majority of articles, but considerably enlarging the enumerated list. The specific duties were materially reduced in the Senate, and after numerous conferences, the House for the most part yielded. The bill received the President's signature July 4, 1789. The bill on its final passage in the House, seems to have been agreed to without a division, though after a sharp struggle over many of the items. The Senate (67) 68 THE TARIFF CONTEOVEBSY. debates have not been preserved,* but the duties pro- posed by the House were modified on the general prin- ciple of securing as much revenue as possible, and on the ground that too high duties would encourage smug- gling. In the House the debates ranged over the whole ground of tariffs and protective duties, and almost every question that has since come up in tariff discussion was touched upon. There was little of the intensity which marked later tariff struggles, and the rates which were fought over were small as compared with more modern tariffs. The responsibility of launching the new gov- ernment, in the face of confident predictions of failure, and the pressing need of a revenue, moderated to an unusual degree the zeal of opposing interests. The dif- ferences between sections of the Union did not prove so great or so formidable as had been anticipated. This first Congress, which it was freely predicted would strangle the new government, really breathed into it the breath of life,t and the tariff of 1789, which foreshad- owed the policy of a hundred years to come, was launched with astonishingly little friction. The senti- ment for free trade, and the desirability of planting the nation on the principles of greater freedom from com- * But Bee " Sketches of Debate in the First Senate of the. United States," by William Maclay ; edited by George W. Harris. (Enlarged edition published byAppletoninl890under title of "Journal of William Maclay.") Maclay was the short-term senator from Pennsylvania, and his journal, covering a period of two years, contains the only connected account of the Senate discussions that has come down to us. He reports no speeches, but gives a strong picture of the tone and general drift of discussion. Maclay was a rather extreme republican, with little faith in the new Constitution, who abhorred Adams and Hamil- ton, disparaged Washington, distrusted Madison, and apparently saw no signs of leadership in Jefferson. + See Annals of Congress, vol. i, page 309. THE TARIFF OF 1789. 69 mercial restrictions, was voiced by Madison, who took his argument, as Fisher Ames said, direct from Adam Smith.* Yet these views, cautiously as they were ex- pressed, had little effect other than to give their author a reputation for bookishness and want of practical sagacity, f But even Madison had little conception of laissez-faire as a principle of economic life, and in its application he stopped far short of the conclusions of the school of Ricardo and Mill. Reciprocity he earnestly advocated, but he did not conceive that one nation, particularly the United States, could adopt free trade independently of other nations. Indeed, it remained for him to give the only broad argument for protection heard during the debate. Madison was eminently a conservative. He spoke with power, vigor, and directness, but rarely with enthusiasm or abandon. His theories never led him far away from practical considerations, and he stood ready to have his position modified by new facts and phases; and for this he was termed vacillating by those who understood him least. He expressed himself strongly at times against what he considered a speculative rage for manufactures, and in favor of a larger commercial free- dom. But he never ventured to base the offer of free trade upon other terms than reciprocity. While some- what jealous of manufactures, he freely conceded their necessity to a certain extent, and stoutly maintained the propriety and duty of Congressional assistance and direction. Under changed conditions he would have been the sturdiest opponent of a protective tariff, but « 1 Life of Fisher Ames, 49. 1 1 Life of Fisher Ames, 35. 70 THE TARIFF CONTEOVEESY. the logic of events made him more and more a defender and advocate, though he never ceased to retain his theo- retical feeling for free trade.* The argument for protection was blunt and practical. Manufactures already established should not be allowed to go down; especially in those states where legislative aid had been granted. These states, argued Madison, had surrendered this power to the general government in the confident expectation that the protecting arm would not be withdrawn. The country ought to be independent of foreign countries for supplies, and this could be accomplished by extending the aid of the gov- ernment to certain industries for which the country was well adapted. The general answer was equally blunt and innocent of abstract reasoning. ^ Certain sections of the country, particularly the south, were not interested in manufactures and were interested in foreign markets for their produce; protective duties would bear heavily and unequally against them. Madison's maxims regard- ing an ideal commercial relation probably found little response; no more did the opponents of the tariff grant that in the end all parts of the country shared equally in the benefits of protective duties. Tucker and Smith of South Carolina, and Bland, Parker, and the Lees of Virginia, t who mainly represented the Southern hostil- ity to impo/ts for other than revenue purposes, con^ tented themselves with pointing out the depression of agriculture in their respective states, and the burdens which protective tariffs would impose upon them. How- ever, they expressed themselves as willing to stand their share of loss, and to grant some encouragement to the * See his annual message, 1815 ; also 3 Works, 158-161, et pansim. t Senator Eichard Henry Lee and Eepresentative Richard Bland Leo. THE TARIFF OF 1789. 71 manufacturing interests, though protesting that it was a clear concession on their part, and that the burdens would be unequally distributed.* They were by no means consistent free-traders, as the term would have been understood later, and were quite willing that their own local productions should share in the protection accorded to the industries of the North. There was as yet no organized movement on either side and no pow- erful interest, save that of commerce, needing to be conciliated. There was no union of protected interests whereby all should stand or fall together, and in the dis- cussion over details, local interests had a pretty free expression. Fitzsimons of Pennsylvania did, indeed, urge Tucker of South Carolina to get rid of local consid- erations, declaring that unless such considerations were dropped every State would feel itself oppressed by the duty on particular articles, whereas when the whole system was perfected the burden would be equal on all. f Yet Fitzsimons, who especially wanted candles pro- tected, was quite indifferent in regard to nails, a dis- tinctively Eastern manufacture, and positively opposed * See remarks of Tucker, Annals of Congress, vol. i, p. 308. Not all were so moderate. Thus in the Senate, Grayson of Virginia declared against all impost as the most unjust and oppressive mode of taxation ; and Pierce Butler of South Carolina, who did not take his seat until June, signalized his appearance by arraigning the whole impost law and charging Congress with a design of oppressing South Carolina. In the debate on drawbacks, "Butler flamed away," says Maclay, "and threatened a dissolution of the Union, with regard to his state, as awe as God was in the firmament. He scattered his remarks over the whole impost bill, calling it partial, oppressive, etc., and solely calculated to oppress South Carolina . . . His State would live free, or die glori- ous, etc., etc." See Sketches of Debate in the First Senate, pp. 64, 75, 77. t H. R., April 15, 1789; Annals Of 1st Congress, vol. i, p. 155. 72 THE TARIFF CONTEOVERSY. to any tax on hemp, though the only one which seemed directly to favor the South. Ames of Massachusetts, who expressed himself as uniformly desirous of encour- aging manufactures, persistently fought the tax on molasses, and, in general, the New England members united to oppose duties bearing against their section. Bland and Parker of Virginia were quite willing to have a duty on coal, because Virginia had mines that might be worked to advantage, and they asked for three cents per bushel. Hartley of Pennsylvania, one of the leading advocates of protection, grudgingly conceded one cent per bushel, but for hemp he would have a bounty rather than a tariff. After all, the debate followed other lines than those of protection and free trade.* Various sections were alive to the interests of various manufactures, but these inter- ests were neither large nor powerful. Agriculture was tacitly assumed to be the great and controlling occupa- tion of the people, and perhaps no one looked to see any very extensive manufacturing in the country. Fisher Ames' picture of the children making nails around the household forges on long winter evenings, perhaps sug- gests correctly enough the prevailing conception of the kind of manufacturing activity protection would foster, f Manufactures were treated with respect and consider- ation, and the constitutional question seems not even to have been suggested. J Manufacturing interests were * " If the duties should be raised too high, the error will proceed as much from the popular ardor to throw the burden of revenue on trade as from the premature policy of stimulating manufactures." Madison to Edmund Pendleton, April 19, 1789; 1. Madison's Works, 465. + See infra, p. 84. % The constitutional question, however, appeared in another form. Some of the members, notably the senators from Virginia, had been THE TARIFF OP 1789. 73 allowed to monopolize a good part of the debate, but it was not supposed that they were speedily to become very large, or seriously to interfere with importations from abroad. Revenue was the principal consideration; and the powerful commercial interest, while not un- friendly to manufactures, instinctively and successfully opposed any tendency toward rates which would seem to threaten a diminution of foreign trade.* In opening the tariff discussion, Madison reminded the House that the subject was one of the greatest mag- nitude, and required their first and united exertions. Every one knew the impotency of the last Congress. The Union, by establishing a more effective government, and having recovered from its former imbecility, ought, in its first act, to revive those principles of honor and honesty that had too long'lain dormant. The deficiency in the treasury was too notorious to need mention. Let Congress content itself with remedying the evil. To do this a national revenue must be obtained, and by a elected by the anti-federal party and rather in the spirit of continuing the opposition. These, hardly as yet accepting the new government as a finality, denounced the Constitution itself rather than its interpreta- tion. Thus in the later debates on the assumption of the state debts, Maclay reports Bland of Virginia as supporting assumption with the avowed design, as he said, of showing to the world, that the present constitution aimed directly at consolidation, and the sooner everybody knew it-the better. See Sketches of Debate in the First Senate, p. 17y. * " The senators from Jersey, Pennsylvania, Delaware, and Maryland, in every act, seemed desirous of making the impost productive, both as to revenue, and effective for the encouragement of manufactures ; and seemed to consider the whole of the imposts (salt excepted) much too low. Articles of luxury, many of tLem would have raised one half. But the members both from the North and, still more particularly, from the South, were ever in a flame when any articles were brought forward that were in any considerable use among them." Sketches of Debate, 77. 74 THE TAEIFP CONTEOVEKSY, system which, while securing revenue, should not be oppressive. Two points concerned them: First, the general regulation of commerce, which, in Madison's opinion, ought to he as free as the policy of nations would admit; and secondly, revenue. Since they were without the necessary data on which to base a perma- nent system, and as the situation would admit of no delay, he would propose such articles only as would occasion the least difiBculty. The proposed measure of 1783 had received the assent of all the states in some form, and should he taken as a basis for a new tariff.* It is barely possible that, had the government been fully organized, the tariff of 1783 would have been immediately enacted as a temporary measure, though no doubt against the protest of those states which were then collecting considerably higher rates, f The failure of the Confederation to secure the adoption of its pro- posed tariff in any acceptable form had discouraged further efforts to raise a revenue. After putting the machinery in motion for action upon the proposed Con- stitution the old Congress practically ceased to exist, though its sittings were continued even after the new Congress had met. The interval was one of great trial and uncertainty. When the ratification of the Consti- tution by the requisite number of states was known, the necessary steps were taken as promptly as circumstances would permit, and the first meeting of Congress ap- pointed at this unfavorable season of the year in order, * 1 Annals of 1st Congress, 107. t That Congress would lay an impost was well understood. The North Carolina Convention, in adjourning without action on the Constitution, in August, 1788, declared that as the new Congress would probably lay an impost, they recommended North Carolina to lay a similar impost and to appropriate the proceeds to the use of Congress. (7 Winsor, 251.) THE TARIFF OP 1789. 75 as Madison explained, to take advantage of the spring importations.* But as the time dragged wearily by, first without a quorum in either House, then waiting for the inauguration of Washington, the prospect of getting any revenue from the spring trade vanished,! and the debate once launched was soon under such headway that it could not be readily stopped. J When Madison concluded his opening speech by pro- posing the measure of 1783, Boudinot of New Jersey promptly moved that the blanks be filled up with the rates of 1783. Objection followed from various quarters. Lawrence of New York objected to any specific duties at that time because they had not materials for even the basis of a system. Fitzsimons would go further than a temporary system, and adopt one adequate to the sit- uation regarding agriculture, manufactures, and com- merce. White of Virginia feared such a course would consume too much time and lose a greater sum than the additional impost would yield. Tucker of South Car- olina thought a permanent system would be most likely to be satisfactory to their constituents, but a temporary system might be expedient and he would have no objec- tion to an ad valorem rate as proposed in 1783. As to * 1 Madison'a Works, 459 ; see also ib., 453. + The impatient Fisher Ames wrote to Minot, March 25, 1789 : " We lose £1000 a day revenue. We lose credit, spirit, everything. The public will forget the government before it is born. The resurrection of the infant will come before its birth. Happily, however, the federal interest is strong in Congress. The old Congress still continues to meet and it seems to be doubtful whether the old government is dead, or the new one alive." 1 Life of Fisher Ames, 32. t " The plan of a hasty and temporary impost loses ground daily from the apparent impracticability of reaping the spring harvest from impor- tations;" Madison to Randolph, April 12, 1789 (1 Madison's Works, 463;. Even Madison was obliged to admit that the plan of 1783 was inadmissible without alteration on some points ; ib. 467. 76 THE TARIFF CONTEOVERSY, tonnage, he asked for delay until other representatives from the South should arrive. At this point Hartley of Pennsylvania made the first appeal in behalf of manufactures. He objected to enter- ing into the subject in a limited and partial manner, but would do it on as ' broad a bottom as practicable. Tucker's point regarding tonnage might have some weight, but no argument of that sort should discourage the House from taking such measures as would tend to protect and promote domestic manufactures. " I think it both politic and just that the fostering hand of the general government should extend to all those manufac- tures which will tend to national utility. I am there- fore sorry that gentlemen seem to fix their mind to so early a period as 1783; for we very well know our cir- cumstances are much changed since that time. We had then but few manufactures among us, and the vast quantities of goods that flowed in upon us from Europe, at the conclusion of the war, rendered these few almost useless; since then we have been forced by necessity and various other causes, to increase our domestic manufac- tures to such a degree as to be able to furnish some in sufficient quantity to answer the consumption of the whole Union, while others are daily growing into im- portance. Our stock of materials is, in many instances, equal to the greatest demand, and our artisans suflScient to work them up even for exportation. In these cases 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." * * 1 Annals of Ist Congress, 114, 115 (April 9). For confirmation of statement as to progress of manufactures, see remarks of Madison, ib., 248. THE TARIFF OF 1789. 77 Madison again urged immediate action from consid- erations of revenue. The general interest, he declared, must be considered, and any system must be founded on the principles of mutual concession. Those states most advanced in population and ripe for manufactures, ought to have their interests attended to in some degree. By adopting the Constitution they had thrown the power of regulating trade out of their hands, and doubt- less with the expectation that these interests would not be neglected by the national government. " I own myself," he- said, " the friend to a very free system of commerce, and hold it as a truth, that commercial shackles are generally unjust, oppressive, and impolitic. It is also a truth that if industry and labor are left to take their own course, they will generally be directed to those objects which are the most productive, and this in a more certain and direct manner than the wisdom of the most enKghtened legislature could point out. Nor do I think that the national interest is more promoted by such restrictions than that the interests of individuals would be promoted by legislative interference directing the particular application of its industry. . . . For example, it would be of no advantage to the shoemaker to make his own clothes to save the expense of the tailor's bill, nor to the tailor to make his own shoes to save the expense of procuring them from the shoemaker. It would be better policy to suffer each of them to em- ploy his talents in his own way. The case is the same between the exercise of the arts and agriculture, between the city and the country, and between the city and the town; each capable of making particular articles in abundance to supply the other; thus all are benefited by exchange, and the less this exchange is cramped by gov- ^8 THE TARIFF CONTROVERSY. 3rnment, the greater are the proportions of benefit to sach. The same argument holds good between nation and nation, and between parts of the same nation." To this unequivocal enunciation of the conclusions of the Wealth of Nations, Madison hastened to add that there were exceptions, important in themselves, and which claimed the particular attention of Congress. "If my general principle is a good one, that commerce ought to be free, and labor and industry left at large to find its , proper object, the only thing which remains will be to discover the exceptions. . . . Although the freedom of commerce would be advantageous to the world, yet in some particulars one nation might suffer to benefit others, and this ought to be for the general good of society. If America were to leave her ports perfectly free and make no discrimination between vessels owned by her citizens and those owned by for- eigners, while other nations make this discrimination, it is obvious that such a policy would go to exclude American shipping altogether from foreign ports. . . . By encouraging the means of transporting our prod- ucts, we encourage the raising of them. . . . Duties on imports may have an effect which comes within the idea of national prudence. It may happen that mate- rials for manufacture may grow up without encourage- ment for this purpose; it has been the case in some of the states, but in others, regulations have been provided and have succeeded in producing some establishments which ought not to be allowed to perish. ... It would be cruel to neglect them and divert their industry to other channels; for it is not possible for the hand of man to shift from one employment to another without being injured by the change." Another exception, Mad- THE TAEIFF OF 1789. 79 ison said, would be an embargo in time of war. Another which had been argued with great plausibility, namely, that each nation should have within itself the means of defence, independent of foreign supplies, he thought had been carried too far, although there might be some truth in it.* Later in the debate, in reply to Lawrence of New York, who insisted that the United States was not in a condition to engage in commercial war, and who wanted commerce let alone,t Madison committed himself more unreservedly to government interference with industry. ' I am a friend of free commerce,' he said, ' and at the same time a friend to such regulations as are calculated to promote our own interest, and this on national prin- ciples. ... I wish we were under less necessity than I find we are, to shackle our commerce with duties, restrictions, and preferences ; but there are cases in which it is impossible to avoid following the example of other nations' in the great diversity of our trade. . . . Although interest will, in general, operate efiectually to produce political good, yet there are causes in which certain factitious circumstances may divert it from its natural channel, or throw or retain it in an unnatural one. Have we not been exercised on this topic for a long time past ? Or why has it been necessary to give encouragement to particular species of industry, but to turn the stream in favor of an interest that would not otherwise succeed ? But laying aside the illustration of these causes, so well known to all nations where cities, » 1 Annals of Ist Congress, 115-118 (H. E. April 9, 1789). t See 1 Annals of 1st Congress, 211, 243. The question was as to a discriminating tonnage duty. Madison had no fears, he said, as to the results of entering into a commercial war with Great Britain, ib. 248. 80 THE TARIFF CONTROVERSY. companies, or opulent individuals engross the business from others, by having had an uninterrupted possession of it, or by the extent of their capitals being able to destroy a competition, let us proceed to examine what ought to be our conduct on this principle, upon the present occasion. Suppose two commercial cities, one possessed of enormous capitals and long habits 6f bus- iness, whilst the other is possessed of superior natural advantages, but without that course of business and chain of connections which the other has; is it possible in the nature of things, that the latter city should carry on a successful competition with the former ? Thus it is with nations; and when we consider the vast quanti- ties of our produce sent to the different parts of Europe and the great exportations from the same places, that almost all of this great commerce is transacted through the medium of British ships and British merchants, I cannot help conceiving that from the force of habit and other conspiring causes, that nation is in possession of a much greater portion of our trade than she is natur- ally entitled to. Trade, then, being restrained to an artificial channel is not so advantageous to America aa a direct intercourse would be; it becomes, therefore, the duty of those to whose care the public interest and wel- fare are committed, to turn the tide to a more favorable direction.' * The debates as reported give little evidence of further abstract discussion of the general principles of protec- tion and free trade, f In the arrangement of details, however, great diversity of views was discovered, rang- ing from Fitzsimons' maxim that whatever operated to • 1 Annals of the 1st Congress, 192, 193 (H. B. April 21, 1789). t But see supra, 71 (note). THE TARIFF OF 1789. 81 benefit one part of the Union would eventually benefit the whole, to Bland's assertion that in the then condi- tion of manufacturing in America they would certainly be laying a tax upon the whole community in order to put money into the pockets of the few. The items which occasioned most difficulty were molasses and rum, wines, salt, steel, nails, candles, hemp, and tonnage. On molasses a tax of eight cents per gallon was pro- posed. Ames, who violently opposed this, explained that his constituents exchanged for molasses the fish which they could not dispose of anywhere else, It would be scarcely possible to maintain their fisheries if the market for summer fish were injured, and a tax of eight cents would carry devastation throughout all the New England States, and would ultimately afiBct all the Union. "Will gentlemen who declare themselves the friends of manufactures," he exclaimed, " support the opinion that a raw material ought to be saddled w^ith an excessive duty, that the imposition should be at a higher rate than what is laid upon manufactured articles ? " He would have a low duty on molasses and an excise on rum. He insisted that not much more than three- fourths as much rum was distilled in Massachusetts as formerly, that the nations which used to supply them with raw material were becoming their rivals, and that even the home market was not secured to them. He reiterated his belief that the proposed tax would ruin the rum manufacturing industry. Thatcher of Massa- chusetts declared that six cents on molasses would be as great a burden on Massachusetts as fifty dollars a slave would be in the South. Parker thought a higher tax on rum would be a good thing because it would dis- a THE TARIFF CONTROVERSY. ourage its use; Lawrence wanted a low duty because it ras a necessity to the poor. Fitzsimons brought for- i^ard his maxim that each particular duty must be egarded as a part of a system bearing equally upon 11. He would support the molasses tax, but moved a orresponding drawback on all distilled rum exported, ladison opposed this as opening the door for frauds on he revenue; but Fitzsimons insisted that otherwise the fianufacturer would be greatly injured. Bland predicted hat if a duty of fifty cents were laid on Madeira wine not , gallon would be imported. Lawrence affirmed that it ^ould encourage smuggling, but was willing to allow wenty cents a gallon. Sinnickson of New" Jersey wanted , prohibitive duty on beer because he thought the mate- ials could be easily produced in the United States, and dth such encouragement enough would be supplied, nd this would tend to advance the agricultural interest.* Fitzsimons moved a duty of two cents a pound on andles. Tucker objected that while some states made nough for their own consumption others were obliged import, and the tax would burden particular states, 'itzsimons replied that the manufacture was an import- nt one and far on the way toward perfection. In a few ■ears they could supply the continent. Pennsylvania ad a tax of two cents, and the manufacture had been reatly encouraged. Boudinot declared that if a small * 1 AnnalB of Ist Congress, 134, 139, 140, 143, 145, 180, 231. On lolasses the amount finally fixed in the House was five cents. The enate gradually reduced this to two and a half cents. Ames wrote to [inot, April 14: "Another molasses battle has been fought, LikB lodern victories it was incomplete, but we got off one cent;" (ILife E Fisher Ames. 37). Jamaica spirits were finally rated by thfe Senate at sn cents per gallon ; all others at eight. Madeira wine was reduced from lirty-three and one-third cents to eighteen cents ; all other wines from venty cents to ten. THE TAEIFF OF 1789. 83 encouragement were held out by the government candles would soon be made cheaper than they could be im- ported. Lawrence thought that in any event they should be taxed for revenue.* A duty of 66 cents per 112 pounds was proposed on steel. Clymer of Pennsylvania admitted that the man- ufacture was in its infancy, but as the materials were produced in almost all the states, and the manufacture was already established with considerable success, he deemed it prudent to emancipate the country from the manacles of foreign manufactures. A single furnace in Philadelphia would, with a little encouragement, supply enough for the consumption of the Union, Lee objected to any duty, as the consumption of steel was large and essential to agricultural improvements. Tucker thought it impossible for some states to obtain steel except by importation, and that it was more deserving of a bounty than a tax. The smallest tax would be a burden on agriculture, and he was at a loss to imagine with what propriety gentlemen could propose a measure big with oppression and tending to burden particular states. The situation of South Carolina was melancholy. The state was deeply in debt, and produce was daily falling in price. However, he would be willing to grant a five per cent ad valorem tax. Madison agreed with Tucker, that as the object of the tax was solely the encouragement of manufactures and not revenue, it would be more proper to give a bounty on the manufacture. The duty would tend to depress many mechanic arts in the pro- portion that it protected this, and he thought it best to include it in the five per cent list. Fitzsimons main- »1 Annals of 1st Congresa, 151, 152 (H. R. Aprill5,1789). Two cents was agreed to and remained the rate until doubled in the war of ISli;. 84 THE TARIFF CONTEOVEESY. tained that the evils of a small duty would soon be over- balanced by the establishment of such an important manufacture.* Fisher Ames wanted nails protected. The manufac- ture, he said, had grown up with a little encouragement to an astonishing degree of perfection. It had become usual for the country people in Massachusetts to erect small forges in their chimney corners, and in winter and on evenings when little other work could be done, great quantities of nails were made even by children. Perhaps enough 'might be manufactured in this way to supply the continent. The business could be prosecuted in a similar manner in every state. Fitzsimons was not solicitous about a duty. The manufacturer would have little to fear, he thought, if the legislature should decide against him. The fact was, nails were at that moment made cheaper and, in the judgment of some, better than those coming from England. Before the Revolution the Americans were not permitted to have slitting mills. Now they had several and were independent of all the world for materials necessary for carrying on the bus- iness in the most extensive manner. Yet he was willing to allow a small duty because it conformed to the policy of the states which thought it proper thus to protect their manufactures. Madison feared the tax would in- crease the cost of ship-building. Bland deemed the tax unequal, burdening the South but not the North. Tucker observed that from what had been admitted regarding the little expense and great facility of man- * 1 Annals of 1st Congress, 154. In the bill as it finally passed un- wrought steel was rated at 56 cents per 112 pounds, ■which, as Hamilton pointed out the next year, was less than five per cent ad valorem (2 Hamilton's Works, 110). THE TARIFF OF 1789. 85 afacturing nails, it stood in no need of encouragement; at least, five per cent ad valorem would be sufficient. Ames warned the House against jumping to such a con- clusion as Tucker's. The commerce of America, he said, particularly the southern parts, had by force of habit and English connections, been setting strong upon the British coasts; it required the aid of the general government to divert it to a more natural course. Lay- ing a small duty on foreign manufactures might induce, from motives of interest as well as inclination, one cit- izen to barter with another what he had long been ac- customed to take from strangers. In Europe the artisan was driven to labor for his bread; stern necessity, with her rod of iron, compelled his exertion. But in America invitation and encouragement were necessary; without them the infant manufacture would droop, and its patron seek with success a competency from the cheap and fer- tile soil.* Madison doubted the propriety of taxing cordage, because ship-building itself was a worthy object of leg- islative attention. If, however, it was necessary to lay a duty on cordage in order to make the United States independent of the world as to that article, it was also politic to endeavor to become alike independent of the raw material. A large portion of western land was peculiarly adapted to the growth of hemp, and Congress ought to pay as much respect to the encouragement and protection of husbandry as they did to manufactures. Boudinot said that hemp was a raw material necessary for an important manufacture and ought not to be sub- ject to a heavy duty. If it were the product of the * 1 Annals of Ist Congress, 163, 164 (H. E. April 16, 1789). In the tariff act nails were rated at one cent per pound. 36 THE TAKIFF C0NTE0VEE8Y. country in general a duty might be proper, but he con- sidered the soil of the country ill adapted to the cultiva- tion of hemp. Partridge of Massachusetts thought a duty on hemp would tend to discourage American nav- igation, trade, and fisheries, without any good resulting to warrant such an injury. He was in favor of encour- aging agriculture, but not at the expense of ship-build- ing. Ames doubted the propriety of taxing either cordage or hemp because, while tending to encourage agriculture or manufacturing, it would discourage the maritime interest. Lawrence said, regarding the pro- posed duty on hemp, that the manufacture would be annihilated unless the duty on cordage was correspond- ingly raised. Hartley would give a small bounty to hemp growers, because the existence of the manufacture and of ship-building also was involved in the price of the raw material; he hoped America would soon become what nature desired her to be — a maritime nation. White of Virginia said that what might be good policy for Great Britain, a maritime nation, might be bad policy of the United States, an agricultural country. If the legislature took no notice the people would be led to believe that hemp was not an object worthy of encourage- ment, and the spirit of cultivation would be damped. Moore of Virginia declared that the southern states were well calculated for the cultivation of hemp, and well inclined thereto. Congress should pay as much attention to the encouragement and protection of hus- bandry as they did to manufactures. Burke liked the idea of encouraging hemp, as the present productions of South Carolina hardly paid, and the State was well adapted to raising hemp. Scott, who represented west- ern Pennsylvania, granted that manufactures were use- THE TARIFF OP 1789. 87 ful establishments, but the circumstances of the United States did not admit of their becoming an extensive manufacturing country. They could not expect to ex- port manufactures to foreign nations; they could not, on account of the demand for labor, vie with Europe. He was as well acquainted with the western country as any member of the House. The lands along the frontier were well calculated for the cultivation of hemp. If encouragement were given vast quantities would soon be brought at little expense to Philadelphia. Fitzsimons supposed there was a clear distinction between taxing manufactures and raw materials well known to every enlightened nation. He had no doubt that enough hemp could be raised, and was unable to see why enough was not raised. If eight dollars a hundred was not sufficient inducement to farmers, it was proof that they directed their labors to more profitable productions, and why should legislative authority be exercised to divide their attention ? No duty which they could agree to lay could give encouragement to the cultivation of hemp, if the present price was insufficient.* The duty on salt occasioned an animated discussion. Lawrence favored a tax because it was an article in such general use that it could be much depended on for rev- enue, but would grant a draw-back on salted fish and provisions- Burke opposed any duty, because salt was a necessity of life, and a tax would be particularly odious to the inhabitants of South Carolina and Georgia, to * 1 Annals of 1st Congress, 156-161, 217, 219 (April 15, 16, and 27). In the tariff act cordage was rated at 75 cents and hemp at 60 cents per cwt. The following year cordage was raised to $1.00 and hemp reduced to 64 cents; but in 1792 hemp was placed at $1.00, which, according to Gerry {ib. 217), would just neutralize the protection to cordage. lO THE TARIFF CONTBOVEESY. vhom the price was already oppressively great. Moore iharacterized the tax as both unpopular and unjust. Tucker declared that it would bear harder on the poor ban on the rich. Every one should contribute to the lupport of the government in proportion to the value of lis property; but the poor man consumed as much salt IS the rich and more of salted provisions. The duty vould enter into the price and the consumer would pay .he retailer a profit on the tax. Scott was decidedly igainst the duty. The old argument in favor of man- ifactures did not apply, for no duty would be sufficient establish it. If a high duty were laid on such an ndispensable necessity of life, it would be bad policy md go nigh to shipwreck the government. He feared t would have a tendency to shake the foundations of heir system, which he looked upon as the only anchor )f their political salvation. Smith said it was under- ;tood that the inhabitants of the interior of South Oar- )]ina were opposed to the new government, and he varned the House that no stronger impulse for opposi- ,ion could be given than this tax. Madison remarked .hat while it might be just to lay a considerable duty generally on imported articles, yet it would not be pru- lent or politic to do so then. In order to determine vhether a tax on salt was just or unjust it must be con- , iidered as part of a system; so considered the equilibrium vas restored. He would make the duty moderate. Hunt- ngdon of Connecticut promised that when his constitu- !nts found that the tax was imposed from principles of ustice and to promote the public good, they would pay vithout reluctance.* * 1 Annals of 1st Congress, 165 et aeq. (April 16, 17). In the tariff act alt was rated at ten cents per bushel. THE TARIFF OF 1789. 89 Two points were under consideration regarding a ton- nage duty, first, as to the rate on foreign vessels, and secondly, as to whether there should be a discrimination against nations not in treaty relations, that is, against England as compared with France. Baldwin of Georgia said the expectation of the country was that there should be a discrimination. This sentiment was believed to be the cause of the Revolution. The selfish policy of Great Britain gave rise to an unavailing clamor and excited the feeble attempt of several state legislatures to coun- teract the detestable regulations of a commercial enemy. These ineffectual- efforts led to the Annapolis Conven- tion, and then to the Constitution. Lawrence questioned the statement that public sentiment favored discrimina- tion. No privileges worth mentioning were accorded the United States by France. He acknowledged the propriety of discriminating between their own citizens and foreigners, but saw no good reason for establishing a preference between foreign nations. Perhaps England might be disposed to adopt a similar discrimination and destroy what carrying trade still remained to the United States. On the whole he thought it good policy to let commerce take its own course. The United States were not in a condition to enter into a commercial war, and in the present condition of the country they ought not to express satisfaction or dissatisfaction with foreigners. Fitzsimons had no doubt that the nation should meet the commercial regulations of foreign powers with reg- ulations of its own. The idea that the tax would fall upon the United States was founded in the presumption that foreigners could draw their supplies from other parts of the world. This was not true; they could not be obtained any where else than from America. But it 90 THE TARIFF CONTEOVEKSY. would not be prudent to lay a duty so high as to deprive the United Statea of foreign shipping. Virginia had a duty of one dollar and found no difficulty in getting British ships to. carry its produce. He did not think sixty cents much, if any, above the average laid by the state governments.* Madison said that, in the first place, public sentiment favored discrimination, and in the second place, while France had relaxed considerably her rigid policy. Great Britain had not. He instanced Vermont, Pennsylvania, and Maryland as examples of state that had laid discriminating duties. He believed with Fitzsimons that foreigners must receive American tobacco, rice, etc., in American shipping if they could not get it in any other way. Tucker thought there ought to be some discrimination, but the proposed rate was too high. He would vote for thirty cents and twenty cents. Madison suggested a gradually increasing duty. Tucker did not want the burdened citizens of South Carolina to get the idea that their burdens were to be increased at a later time. He hoped gentlemen who wished for national encouragement to ship-building would be moderate, as they plainly saw that it must be at the expense of their neighbors. Madison admitted that laying fifty cents on foreign vessels, and but six cents on American, would put a considerable part of the difference into the pockets of American ship owners. This he considered a sacrifice of interest to policy; and were it not for the necessity of having some naval strength, he would advocate throwing wide open the * In the larger party conflicts between Hamilton and Jefferson which aoon followed, Fitzsimons retreated from this position and opposed diacrimination'between foreign nations. (See Annals of Congress, H. R. Jan. 15, 1794.) THE TARIFF OF 1789. 91 doors of our commerce to all the world and making no kind of discrimination even in favor of American cit- izens.* Although the bill as amended passed the House with- out opposition, there was much dissatisfaction with some of its provisions. Some were disappointed because the rates were not higher, but there was a more general fear lest the duties should prove so high as to defeat the objects of the bill, and many were quite willing that the Senate should exercise a pruning hand. Ames, who rather voiced the commercial feeling of the East, wrote under date of May 27: " The Senate has begun to reduce the rate of duties. Rum is reduced one-third. Jamaica, ten cents, common, eight. Molasses from five to four. I feel as Enceladus would if Etna was removed. The Senate, God bless them, as if designated by Providence to keep rash and frolicsome brats out of the fire, have demolished the absurd, impolitic, mad discriminations of foreigners in alliance from other foreigners." f The House as a whole, however, was irritated at the manner in which its work had been overhauled, and was inclined to assert its right to dictate, as it constitutionally had to originate, revenue measures. Especially was this true as regarded the tonnage bill, into which political divi- sions of a far-reaching character had crept. But in the * 1 Annals of Ist Congress, 189-246 (April 21-May 4). For a more elaborate speech of Madison in the same connection see supra, p. 79. The provisions regarding tonnage were incorporated in a separate bill which received the President's signature July 20, 1789. The Senate struck out the diacrimination between foreign nations, the rates being 6 cents on American vessels, 30 cents on American built vessels owned wholly or in part by foreigners, and 50 cents on all others. 1 1 Life of Fisher Ames, 45. For Senate amendments, see Senate Journal, vol. i, pp. 32-35. 32 THE TARIFF CONTEOVEESY. 3nd moderation and good sense triulnphed, and the Eouse agreed to the best terms it could get.* By the Constitution the power of originating financial legislation was lodged in the House of Representatives. But the starting of the new government was of such moment that upon the appointment of Hamilton to the aewly created department of finance, the House was c[uite willing to turn over to him the work of initiation. f Resolutions were accordingly passed calling upon the Secretary for plans in various directions. The reports in answer to these resolutions were made the bases of bills, which were introduced into Congress. The great questions thus brought to the front were regarding the funding system, the assumption of the state debts, and the establishment of a national bank. On these party lines were drawn, and the issue sharply defined. The opposition, led by Madison and inspired by Jefferson, alarmed at the centralizing character of Hamilton's measures and suspecting his good faith toward republi- can principles, represented him as aiming to overthrow the constitution and establish a monarchy. Backed by state jealousies, they attacked his measures as dangerous and unconstitutional. The struggle became more and more acrimonious, and Washington who had reluctantly obeyed the call to the presidency in the first instance. * See H. R. June 15, 1789 ; 1 Annals of 1st Congress, 472. For work- ings of the first tariff, see 2 Hamilton's Works, 110, 161. t Not without opposition, however. Bemonstrance was made at the outset against surrendering this power to the executive departments, and as party divisions developed the objection became more pronounced. The suggestion undoubtedly came from Hamilton. He considered that his office carried with it the prerogatives which belonged to an English minister of finance, and Hamilton was pre-eminently the party leader of the Federalists. EEPOET ON MANTJFACTTJEES. 93 and who confidently looked for release at the expiration of his term of office, was moved from his resolution by the solemn assurance of both Jefferson and Hamilton that his continuance in office was essential to the stabil- ity of the government. In these party struggles Hamil- ton won, and the great state papers in which he laid down the fundamental principles which should govern the financial administration of the country became the model and standard of all future finance ministers. The tariff policy of the government stood in a somewhat different relation to the Treasury Department. The ques- tion most pressing when the government was established, and the one admitting of no delay, was that of revenue; and this, as we have seen, received the first attention of Congress. The Treasury Department was not estab- lished until September 2, 1789, and by this time the new tariff was in operation. The question, therefore, did not engage Hamilton's attention until his other meas- ures were disposed of. The resolution of Congress under which the report on manufactures was prepared was adopted January 15, 1790; and when his hands were somewhat freed from other duties, Hamilton turned with deliberateness to the preparation of his reply, which was not transmitted to Congress until December 5, 1791. At this time there was no pressing demand for action on the part of Congress. The tariff of 1789 was in operation, was yielding already more revenue than had been anticipated, and the limit of duties, even for pro- tection, had, on most articles, Hamilton judged, been reached.* But although it launched no new policy, this third report of Hamilton was not less enthusiastically * See hia Report on Public Credit, Deo. 13, 1790; 2 Hamilton's Works, £_ 161. __ 94 THE TARIFF CONTEOVERSY. wrought out than the other two, and perhaps fell behind neither in the influence it was to exert upon the policy of the nation. Hamilton felt the ebb tide of that new economic thought which, starting from English and French criticisms of mercantilism, had reached its cul- mination in Adam Smith's great work on the Wealth of Nations, and whose reasoning had so strongly tinctured the thought of Franklin, Jefferson, Adams, Madison, Washington, and others of the first group of American statesmen. We have seen how eagerly the American diplomatists grasped after reciprocity, and how easily the freedom of commerce might have been secured, had not the selfishness of England interposed. But that time had gone by, and the current had set in the other direction. Already the tariff of 1789 had broken with laissez-faire and re-asserted mercantilism. Yet the sen- timent for freedom of trade, the distrust of bungling interference on the part of the government, the feeling that tariffs were partial and oppressive, was by no means silenced, and Hamilton felt the insufficiency of the old basis and the in part illogical character of the reasoning behind the first tariff legislation. Something more was aeeded to disarm the opposition of the South and to jounteract the jealousy of the commercial interests, and [le set about to make the encouragement of manufactures I part of his great national policy of strengthening the general government and binding together the interests jf the various sections. In pursuance of this he ac- cepted and enforced Adam Smith's refutation of the nore obvious physiocratic and mercantile errors, but jhallenged his laissez-faire conclusions in the name of lational defence and national welfare. As to details, Hamilton had little to suggest in the BEPOET ON MANUFACTURES. 95 way of addition to the tariff of 1789. lu the main the rates were satisfactory both for revenue and protection. Experience had shown, he said, that some articles would bear a higher rate. Some objects demanded more pro- tection, and new industries might soon invite the atten- tion of Congress. And from revenue considerations alone the whole ad valorem list should be advanced a step. But in general things were working well, and his immediate recommendations were not specially signifi- cant.* What gave the report unity and significance was the broadly national ground on which the argument for protection was based, and the scope which was given to the powers of the government in its application. Hamilton began by defining the scope of his inquiries as relating particularly to the means of promoting such manufactures as would tend to render the United States independent of foreign nations for military and other essential supplies. The opening sentence is significant: " The expediency of encouraging manufactures in the United States, which was not long since deemed very questionable, appears at this time to be pretty generally admitted." The obstructions to commerce and the re- strictions upon the foreign market for agricultural pro- ductions had turned attention, he said, to the desirability of encouraging domestic trade and markets. The com- plete success of some manufactures and the promising beginning of others justified the hope that the obstacles were less formidable than had been thought, and that the further extension of manufactures would fully make up for any external disadvantages, and also add to the re- sources favorable to national independence and safety. * The increase which he aaked for was Bubstantially granted, though Buetained and opposed as a party measure. 96 THE TAKIFF CONTROVERSY. Yet there were those who still objected to the encourage- ment of manufactures, and their objections he first pro- ceeded to answer. The first objection, as Hamilton stated it, was the notion that agriculture was the most productive in- dustry, especially true in the United States with its immense tracts of uncultivated lands; and that to en- deavor to accelerate the growth of manufactures would be to endeavor to transfer the natural current of indus- try from a more to a less beneficial channel. Govern- ment, it was held, could not wisely undertake to give direction to the industry of its citizens. Private interest, if left to itself, would infallibly find its own way to the most profitable employment for itself. This principle again, had special force in the United States. The small population and large territory, the constant allure- ments from the settled to the unsettled parts of the country, the ease with which the artisan became a farmer — these, and similar causes, must occasion for a long time to come a scarcity of labor for manufacturing, and dearness of labor generally. Add to these the want of capital, and the prospect of successful competition with the manufactures of Europe became little less than desperate. And if, contrary to the natural course of things, an unreasonable and premature development of certain manufactures could be brought about by heavy duties, prohibitions, bounties, and the like, this would only be to sacrifice the interests of the community to those of particular classes. Monopolies would be created, and the enhancement of price, the inevitable conse- quence of every monopoly, would fall upon the other parts of society. It would be far preferable that those persons should be engaged in the cultivation of the EEPOKT ON MANUFACTUEES. /'"97 earth, and that the country should procure, in exchange for its productions, the commodities which foreigners were able to supply in greater perfection and upon better terms. In reply, Hamilton conceded the pre-eminence of agriculture, but maintained that its interests would be advanced rather than injured by the due encouragement of manufactures, and that the expediency of such en- couragement was urged by the most cogent and persuasive motives of national policy. Of the general physiocratic doctrine that agriculture is the only productive industry, he entered into an elaborate refututation along the famil- iar line of reasoning of the "Wealth of Nations.* He then proceeded to enforce the general argument for manufacturing as a wealth producing factor, summar- izing its benefits under the following heads: the division of labor, the extension and use of machinery, the addi- tional employment to persons not ordinarily engaged in business, the promotion of immigration from foreign countries, the greater scope for diversity of talents and dispositions, the more ample field for enterprise, the new and more certain and steady demand for the sur- plus produce of the soil. As to the benefits of a division of labor, Hamilton merely repeated Adam Smith's analysis.f Regarding the additional employment which would be afforded, he had in mind, he said, the industrious farmers, their wives and daughters, and persons who would otherwise * The only form, probably, in which the physiocratic objection met Hamilton was in a lingering hostility to manufactures as being of lower grade than tilling the soil. However, the question was quite aside from his main line of argument. t Cf. Wealth of Nations, Bk. 1, Ch. 1. 98 THE TARIFF CONTKOVEESY. be idle and a burden on the community. Four-sevenths of all the persons employed in the cotton manufactories of England were women and children, mostly children of tender age. Again, manufactures would promote immigration. If they could be assured of encourage- ment and employment, foreign manufacturers would be tempted by the prospect of belter price, cheaper provis- ions and raw materials, exemptions from taxes, burdens, and restraints endured in the old world, greater personal independence and consequence, more equal government, and religious liberty. Thus manufactures could be pur- sued without interfering with agriculture; and even if some hands were drawn from agriculture, their places would be supplied by others who had come over as man- ufacturers. If it were true, he said, as had often been remarked, that there was in the United States a peculiar aptitude for mechanical improvements, this was a forcible reason for encouraging manufactures. To cherish and stimulate the activity of the human mind by multiplying the objects of enterprise, was an important means by which the wealth of the nation was promoted. Every new scene opened to the busy nature of man to rouse and exert itself, was the addition of a new energy to the general stock of effort. It was by means of the home market, he declared, that the establishment of manufactures principally increased the produce and revenue of a country. It had an imme- diate and direct relation to agriculture, since the pursuit of farming was vigorous or feeble in proportion to the steadiness or fluctuation of th^ market for surplus pro- duce. A domestic market was greatly preferable to a foreign one because in the nature of things it was more reliable. Every nation tried to supply itself with pro- EEPOET ON MANUPACTtjaES. 99 "Visions from its own soil, and hence a foreign demand for agricultural products was casual and occasional; and as regarded tlie United States, even independently of artificial impediments, there were natural causes, such as the increase of agricultural products consequent upon the progress of new settlements, which rendered the foreign demand too uncertain for reliance. Such heing the case the only way to secure a home market was to promote manufactures ; for manufacturers were the principal consumers of the surplus productions of the soil. These considerations, Hamilton observed, seemed suf- ficient to establish the general proposition that it was the interest of nations to diversify industry. But it might be further objected, that, while a state possessing large tracts of fertile lands and secluded from foreign commerce would find its interest to divert men from agriculture to manufactures, it did not follow that the same reasoning would hold where all that was needed could be procured on good terms from abroad. This latter condition would at least secure the great advan- tage of a division of labor, and leave the farmer free to pursue exclusively the culture of his land. If the system of perfect liberty to industry and com- merce were the prevailing system of nations, Hamilton replied, the arguments which dissuade a country like the United States from the zealous pursuit of manufac* tures would doubtless have great force. He would not affirm that they might not, with few exceptions, be per- mitted to serve as a rule of national Conduct. Each country would then have the full benefit of its peculiar advantages to compensate for its deficiencies or disad- vantages; and though nations merely agricultural would 100 THE TARIFF CONTEOVERSY. not enjoy the same degree of wealtli in proportion to numbers, yet the progressive improvement of lands might in the end atone for this; and when considera- tions were pretty equally balanced, the option ought always to be in favor of leaving industry to its own direction. But the opposite was the general policy of nations ; consequently the United States were to a cer- tain extent in the situation of a country excluded from foreign commerce. They could, indeed, obtain without difficulty the manufactures they wanted; but numerous and very injurious impediments interfered with the export of their own commodities. The United States could not exchange with Europe on equal terms; and the want of reciprocity would render them the victim of a system which should induce them to confine their views to agriculture and refrain from manufactures* The constant and increasing necessity on their part for the commodities of Europe, and the only partial and occasional demand for their own in return, could not but expose them to impoverishment. Americans did not complain of this state of affairs; nations must judge for themselves. It only remained for the United States to consider by what means they could render themselves least dependent on foreign policy. It was no small consolation that already measures which had embar- rassed the trade of the country had accelerated internal improvements, and, upon the whole, bettered the condi- tion of affairs. To diversify and extend these improve- ments was the surest and safest'method of indemnifying the country for its inconveniences. If Europe would not take our agricultural products upon terms consistent with our interest the natural remedy was to contract as fast as possible our wants of Europe. Though the EEPOET ON MANUFACTURES. 101 settlement of the country might be retarded by manu- factures, this did not countervail the powerful induce- ments for encouragement. Besides, it was better that a smaller quantity of land should be well cultivated than that more should be poorly cultivated.* But it was said that industry if left to itself would naturally find its way to the most useful and profitable employment. Manufactures without the aid of govern- ment, would grow up as soon and as fast as the natural state of things and the interest of the community re- quired. Hamilton enumerated as objections to this: The strong influence of habit, and the spirit of imita- tion; the fear of failure in untried enterprises; the in- trinsic difficulties of first attempts in competition with business already perfected; and the bounties, premiums, and other artificial encouragements which foreign man- ufactures enjoyed. The simplest and most obvious improvements were adopted with hesitation, reluctance, and slow gradations. Spontaneous transition to new pursuits was even more difficult, and the apprehension of failure still more serious. To inspire confidence there must be prospect of countenance and support from the new government. The superiority of nations whose manufactures were already perfected, was still more formidable, the greatest obstacle being the bounties, premiums, and the like, enjoyed by foreign manufac- * Thus far Hamilton's argument, while both adroit and able, was but incidental, and added nothing to the modifled mercantilism generally current. Had he stopped with this his report would have inspired no system and had no currency beyond the ordinary circulation of Con- gressional documents. It is interesting to note how much the modern tariff position is thrown back on this general preliminary argument, as the powerful reasons which Hamilton next proceeded to urge have one by one ceased to exist. 102 THE TARIFF CONTKOVEESY. turers, and the combinations to crush out new enter- prises by temporary sacrifices. To enable new enterprises to contend with success against these disadvantages and to fortify them against the dread of such combinations, the assurance of interference and aid from the govern- ment was indispensable. Manufacturing could not succeed in the United States, it was further claimed, because of the scarcity of hands, the dearness of labor, and the want of capital. The first two obstacles, Hamilton admitted, were to a certain extent real; but various considerations lessened their force. Certain parts of the country were pretty fully peopled, with flourishing and increasing towns,, and these were fairly mature for manufacturing establish- ments. Furthermore, a much greater use could be made of women and children, and a vast extension had been given to the employment of machinery. Besides, arti- sans would transport themselves to the. United States as soon as the serious prosecution of manufactures was encouraged. So far as dearness of labor might be a consequence of large profits, it was no obstacle to suc- cess ; the undertaker could afford to. pay the price.. Undertakers could afford to pay higher wages than in Europe. The cost of materials on the whole favored the United States; in the expense of buildings, tools, and the like, there was perhaps an equality; but commissions, transportation across the Atlantic, insurance, taxes, duties, and fees — amounting to from 15 per cent to 30 per cent — were all in favor of America, and this more than coun- terbalanced the difference in labor. As to the alleged want of capital in the country, aside from the fact that no one knew how much capital there was or how much was wanted, Hamilton looked to the introduction of BEPOET ON MANUFACTURE 3. 103 banks, the aid of foreign capital, and the funded debt, to remove all disquietude in this regard.* Finally this whole objection was disposed of by the flourishing manufactures already established. These Hamilton classified under seventeen heads, including leather, iron, ships, cabinet wares, flax and hemp, bficks, ardent spirits and malt liquors, paper, wool and fur hats, refined sugars, oils, soaps, candles, copper and brass wires, tin-ware, carriages, snuff, tobacco, starch, lamp- black, gunpowder, and many others, besides great quan- tities of household manufactures. As to the objection that the encouragement of manu- factures would create a monopoly to particulaf classes at the expense of the rest of the community, Hamilton admitted that in some cases there was an enhancement of prices. But in several instances' a reduction of price had immediately succeeded the establishment of a domes- tie manufacture; and even were it true that the imme- diate effect was an increase of price, the contrary was the ultimate effect with every successful manufacture. Free from the heavy charges which attended the impor- tation of foreign commodities, it could be afforded cheaper, and internal co^mpetition soon did away with everything like monopoly. It was therefore the interest of the community to suffer an increased price with a view to eventual and permanent economy. This had a direct and very important tendency to benefit agricul- ture, enabling the farmer to procure with a smaller quantity of labor the produce of manufacturing. Certain general considerations which HamiltOTi' ad- vanced as supporting his main argument were, the * For a criticism of this last point, see Sumner's Hamilton, pp. 150, 174. 104 THE TARIFF CONTEOVEESY. moral certainty that the trade of a country both manu- facturing and agricultural would be far more lucrative than that of a country merely agricultural, the greater attractions which a diversified market offered to foreign customers and the greater scope for mercantile enter- prise, and the greater danger of stagnation in the trade of a nation which brought few articles to market. From these facts Hamilton drew two inferences: First, that there was always a higher probability of a favorable balance of trade in countries having a diversified indus- try; and secondly, that these countries were likely to possess more money than agricultural couiitries. Cor- roboration of this theory Hamilton affected to find in the fact " that the "West India Islands, the soils of which are the most fertile, and the nation which, in the great- est degree, supplies the rest of the world with the prec- ious metals, exchange to a loss with almost every other country," and in a comparison of the monetary condi- tion of the colonies with that of the states in which since the Revolution manufactures had most flourished.* As to the supposed conflict of interests between the North and the South, Hamilton reiterated the idea that the aggregate prosperity of manufactures and the aggre- gate prosperity of agriculture were intimately connected. Everything tending to establish substantial and perma- nent order in the affairs of a country, to increase the total mass of industry and wealth, was ultimately bene- ficial to all. Even if manufactures should be chiefly established in the northern and middle states, the South would be immediately benefited by the increased de- mand for its productions. * See Sumner's Hamilton, 180. EEPOET ON MANUFACTURES. 105 The present moment, then, Hamilton concluded, was a critical one for entering with zeal upon the encourage- ment of manufactures. Owing to the disturbed.state of Europe her citizens were inclined to emigrate, and the money of foreigners was at the disposal of the United States. There was, too, a certain fermentation of mind, a certain* activity of speculation and enterprise, which if properly directed, might be made subservient to useful purposes, but which, if left entirely to itself, might be attended with pernicious effects. As to means, Hamilton named eleven ways which had been successfully employed in other countries: (1) pro- tective duties, (2) prohibitions or prohibitive duties, (3) prohibition of the exportation of raw materials, (4) pecu- niary bounties, (5) premiums, (6) exemption of raw materials from duty, (7) drawbacks on raw materials, (8) encouragements of new inventions and discoveries, (9) regulations for the inspection of manufactures, (10) the facilitating of pecuniary remittances from place to place, and (11) the facilitating of transportation; and indirectly, by avoiding certain kinds of taxation, such as poll and income taxes, which were apt to be oppres- sive and unfriendly to manufactures. Protective duties were a virtual bounty on the domes- tic fabrics, since by enhancing the charges on foreign articles they enabled the home manufacturers to under- sell all foreign competitors; in addition they were a source of revenue. Prohibitive duties were an efficacious means of encouraging manufactures, but in general were only fit to be employed when a manufacture had made such progress and was in so many hands, as to insure a due competition and an adequate supply on reasonable 106 THE TARIFF CONTROVEESY. terms.* The prohibition of the exportation, of raw materials was, an encouragement to manufactures which, Hamilton thought, ought to be adopted with great circumspection and only in very plain cases. Yet although its immediate operation was to abridge the demand, and keep down the price of the produce of some other branch of industry — generally speaking', of agri- culture — if it were really essential to the prosperity of any very important national manufacture, those injured in the first place might be eventually indemnified by the superior steadiness of an extensive domestic market. Still in a matter in which there was so much room for nice and difficult combinations prudence seemed to dic- tate that the expedient in question should be indulged with a sparing hand — a perfectly safe conclusion, since the Constitution specifically prohibited export duties 1 Of all forms of encouragement Hamilton declared bounties to be one of the most efficacious and, in some views, the best. They acted more positively and directly than any other, and for that reason had a more imme- diate tendency to stimulate and uphold new enterprises. * Laissez-faire champions have been asking ever since, why in such cases, even on protectionist reasoning, a prohibitive or even protective duty would be necessary. The dlfl9ctilty in answering is that the justi- fication of protection under such circumstances seems to involve a prac- tical denial of the 'young industries' argiinlent, or at least of the statement that the ultimate efiect of protection is a permanent reduction of prices. The best answer which the early controversy could give was perhaps that made by McLane in 1820, who> having in mind the foolish prejudice for imported goods as well as the many advantages in taste, experience, and capital, of foreign manufacturers and merchants,, de- clared that ' the American manufacturers did not ask to be allowed to Bell at higher prices, but to sell at all.' Modern protectionism, with what President Andrews calls its " theory of nutrient restriction," is, of course, not embarrassed by the question. BEPOET ON MANBFACTTJEES. 107 They avoided the inconvenience of a temporary aug- mentation of price. Even if the fund for the bounty was derived from a protective d"uty, the increase of price was less, for one per cent, duty converted into a bounty was equal to^ a duty of two per cent. If the bounty were drawn from another source it was calculated to reduce the price, because without laying'any new charge on the foreign article it served to introduce a competition with it and to increase the total quantity of the article in th>e market. Again, bounties, unlike high protecting duties, had no tendency to produce scarcity. Bounties would settle the vexed questioBi of raw materials. The true way to conciliate the interests of the farmer and the manufacturer was to lay a duty on foreign manufactures of the material, the growth of which was desired to be encouraged, and to apply the produce of that duty, by way of bounty, either upon the production of the mate- rial itself, or upon its manufacture at home, or upon both. The prejudice against bounties from the appear- ance of giving away public money without an immediate consideration, and from the supposition that they served to enrich particular classes at the expense of the com- munity, would not bear serious examination. In no way could money be better employed than in gaining a new industry, and the further objection would bear equally against other modes of encouragement. As to the constitutional right of the government to grant bounties, Hamilton thought there could be no question. Congress had express authority " to lay and collect taxes, duties, imposts, and excises, to pay the debts, and pro- vided for the common defence and general welfare." The latter term was as comprehensive as any that could have been used, because it was not fit that the constitutional 108 THE TARIFF CONTEOVERSY. authority of the Union to appropriate its revenues should have been restricted within narrower limits than the " general welfare," and because this necessarily embraced a vast variety of particulars, which were sus- ceptible neither of specification nor of definition. Premiums also were very economical means of excit- ing the enterprise of a community. Much had been done in this way in England, mostly by voluntary asso- ciations. From a similar establishment in the United States, supplied and supported by the government, vast benefits might reasonably be expected.* To the general rule that raw materials should not be taxed, Hamilton noted certain exceptions, as where a raw material was an object of such general consumption that it might properly be taxed for revenue, and where by encourage- ment the material could be produced in the country in sufficient abundance to furnish a cheap and plentiful supply to the manufacturers. As to the encouragement of inventions and discoveries, there might be some con- stitutional question. But it was customary for manufac- turing nations to prohibit the exportation of implements and machines which they had either invented or im- proved, and already there were objects in the United States to which a similar regulation should be applied. This was not very much in accord with the spirit of the country, he admitted, but while other nations pursued their selfish and exclusive policy, the United States could do no better than to follow their example. An- other thing much needed was the improvement of roads * A species of protection of which lavish use has been made, though ■without the interference of the national government. Witness the bonding of towns for railroads, granting free right of way, exempting corporations from taxations, and other like favors. The River and Harbor bills and various educational and other grants of public money, may perhaps be regarded as national subsidies to the same purpose. KEPOET ON MANDFACTUKES. 109' and canals, and it was much to be wished thai there was no doubt of the constitutional powejc of the govern- ment to lend its direct aid on a comprehensive plan. As articles proper for encouragei^ent Hamilton named iron, copper, lead, coal, wood, sklyis, grain, flax and hemp, cotton, wool, silk, glass, gunpo|rder, paper, printed books, refined sugars and chocolate. '>0f these lead and sugar were already sufficiently protected. Iron should be protected because it was found ik great abundance and the fuel used in its manufacture was cheap and plenty. Iron works had greatly increased, and the man- ufacture was prosecuted with much more advantage than formerly. The duty on steel could be safely ad- vanced from 75 cents to 100 cents per cwt., and a duty of two cents per pound should be put on nails to stop the importation, which had amounted to 1,800,000 pounds in 1790.. The ad valorem duty on all manufac- tures of iron should be extended to 10 per cent. Free pig and bar iron would certainly favor manufactures and probably not interfere with home production. As to copper, the material not being a product of the coun- try, it ought to be put on the free list, while the duty of 6 per cent on brass wares and 7i per cent on tin, pewter, and copper ware might be raised to 10 per cent. Coal being important for manufactures, bounties on home production and premiums on the opening of new mines were suggested. Wood used in ship-building and cab- inet-making should be put on the free list. The abund- ance of timber afforded no objection to this, for the United States should commence and pursue systeuiaiic measures to preserve their forests.* Tanneries were * Unfortunately the interested lumbermen, while obliged to Hamil- ton for his general argument, could not then, nor at any time after- wards, be brought to take so broad a view of national welfare. 110 THE TARIFF CONTBOVEESY. important, and an increase of duty on leather, togethe with a prohibition of the exports of bark, was suggestec Glue should be raised from 5 per cent to 15 per ceni Exclusive possession^ of the home market should b secured for spirits s^nd malt liquors by an additions duty, and perhaps l^ an abatement on home-made spii its. Molasses had Aeen rising in price for some years and the duty of three cents might make it diiRcult fo distillers to compels with the West Indies. A high dut; on hemp would be objectionable as a tax on raw mate rial, were there not great facilities for raising it in th United States. However, bounties and premiums war considered by many a more direct method of encourag ing the growth of both flax and hemp. Sail-cloth shouli be raised to 10 per cent, with a bounty of 2 cents pe yard on the domestic manufacture to counteract th English export bounty. For the same reason the dut; on certain linens should be raised to 7^ per cent, i counteract an average English export bounty of 12i pe cent. As to cotton, the duty of three cents per pound wa undoubtedly a very serious impediment to manufactures Cotton had not the same pretensions to protection a hemp because not being a universal product of th country it afforded less assurance of adequate supplj Besides, foreign cotton was considered to be of bette quality, and it was certainly wise to let the infant maja ufacture have the fall benefit of the best materials oi the cheapest terms. For the success of these manufac tures the repeal of the duty was indispensable, and bounty of one cent per yard would be an expense we' justified by the magnitude of the object. As to woo! household manufactures were carried on to an interestin KEPOKT ON MANUFACTUKES. Ill extent. The branch of hat-making had reached maturity, and nothing hut an adequate supply of mate- rials was needed to render the manufacture commensur- ate with the demand. It was certainly most desirable to encourage the raising and improving of sheep, but it was yet a problem whether American wool was capable of being made fit for the finer fabrics. Premiums would probably be found the best means of promoting the domestic, and bounties, the foreign supply. The silk manufacture might well be encouraged by free raw material and premiums on production. The materials for the manufacture of glass were found everywhere. The existing duty of 12i per cent was a considerable encouragement, and if anything more were needed it should be supplied by a direct bounty on window glass and bottles. Sulphur should be included with saltpetre in the free list, in the interest of the manufacture of gun- powder. As to printed books, there was no need of being indebted to foreign countries, and the duty should be raised from 5 per cent to 10 per cent, with free im- portation for seminaries and public libraries. In conclusion, Hamilton recurred to the subject of bounties, urging that in some cases at least they were indispensable. He indicated ways in which they could be guarded from excess, and assuming that a surplus could be counted on from the existing revenue system, he advocated the setting aside of a fund for paying bounties to be granted by Congress, and another fund to be under the control of a board created for promoting the arts, agriculture, manufactures, and commerce. This board should be composed of not less than three com- missioners, who should have power to apply the fund, to assist the immigration of artists and manufacturers in 112 THE TAEIFF CONTKOVEESY. particular branches of extraordinary importance; ti promote useful discoveries, inventions, and improve ments, by rewards judiciously held out and applied; t( encourage special exertions in promoting certain objects by premiums; and to afford various other aids. " I may confidently be affirmed," he said, "that there ii scarcely anything which has been devised, better calcu lated to excite a general spirit of improvement than th( institutions of this nature. ... In countries when there is great private wealth, much may be effected bj the voluntary contributions of patriotic individuals; bu in a community situated like that of the United State! the public purse must supply the deficiency of privatf resource. In what can it be so useful, as in promoting and improving the efforts of industry ? " * * For full text of the Report, see 3 Hamilton's Works, 294-416. CHAPTER III. COMMERCE VERSUS MANDFA.CTUEES. Hamilton's Report on Manufactures could hardly have failed of having an immediate and important effect in strengthening and solidifying the protective system. Its strong Americanism and admirable temper must have insensibly but powerfully reinforced and directed the general sentiment in favor of legislative encourage- ment to industry. Not free from economic errors of a serious kind, these, even if perceived, would not have vitiated the appeal to national consciousness and national independence. Yet on its main lines the report pro- voked no discussion in Congress. With the tariff of 1789 in successful operation, Congress had come to a state of rest in the matter, and inertia was hard to over- come. Even Hamilton had little disposition to meddle with the schedule save for revenue purposes. He meant to lay down a policy far-reaching and adequate to the growth and needs of the country; but it was hardly for immediate action that he prepared. He had already admitted that in the great majority of cases the rates were as high as the articles would bear,* and a little later, in asking for additional rates (which he hoped would be temporary,) to defray the expenses of the Indian war, he declared that he did so with reluctance, * See supra, p. 93. (113) 114 THE TARIFF CONTROVERSY. for the reason already given, and because changes in the rates of duties by the uncertainty they cai^sed in mercantile operations were injurious to commerce.* He did not fail, however, to note the beneficial effects which su(5h increase might have on the " industry, wealth, strength, independence, and substantial prosperity oi the country." He aimed to create a feeling toward manufactures so friendly that no needed encourage- ment would be withheld, but further action at the time was not essential to his general policy, and he was per- fectly aware that his system must wait the slow ripening of events. The manufacturers were not wholly satisfied with the status quo, as was manifested by the frequent petitions which found their way into Congress; but to these there was no one to listen, for other and more ex- citing questions were absorbing public attention. The great wheels of government had hardly got into motion when the storm of factional controversy burst forth. The background of the drama presently to be enacted was the old struggle between the friends and foes of the Constitution — between those, at the one ex- treme, with whom democracy was still synonymous with anarchy, and who saw success in the new government only as it should make itself felt as supreme and guiding instead of as an agent of discordant state governments; and those, at the other extreme, who looked with jeal- ousy upon every exercise of power by the general gov- ernment, and who, at first attacking the Constitution itself, presently rested their case on a strict construction of that instrument. Moderate men who approached neither extreme were finally drawn into taking sides as * Report on Additional Supplies, H. E. March 17, 1792; 2 Hamilton's Works, 223. COMMERCE V£ieSI7S MANUFACTURES. 115 party divergence became more marked. The demo- cratic element took alarm at the very organization of the government. John Adams began his official career as vice-president with a vainglorious display of pomp which disgusted and alarmed the Kepublicans. While waiting for the arrival of Washington the Senate toyed with the forms of monarchy in the etiquette it proposed to adopt in its relations with the Executive and the House. Even the dignity which Washington deemed essential to the executive office was offensive to the rad- ical element in the country. Jefferson returned from France on the eve of her great democratic upheaval to find, " with wonder and mortification," the table conver- sations filled with sentiments in favor of royalty and kingly government.* Hamilton, in particular, was so unguarded in his approval of the English Constitution as to convince Jefferson that he was not loyal to the new Constitution and only waited an opportunity to overturn it.f "His system," Jefferson complained to Washington, "flowed from principles adverse to liberty, and was cal- culated to undermine and demolish the republic." J In Hamilton's financial policy Jefferson professed to see only two things — a puzzle to exclude popular under- standing and inquiry, and a machine for the corruption of the legislature. § Matters were all going wrong, and all the evil machinations were traced to the sinister mind of Hamilton. He had deceived Washington and moulded him to his will, and by cabals with members of the legislature, and high-toned declamations, was forcing * See Jefferson's Anas ; 9 Jefferson's "Works, 91 ; also ib. vii, 367, 390. t See 3 Jefferson's "Works, 450. i September 9, 1792 ; 3 Jefferson's "Works, 461. § Jefferson's Anas; 9 Jefferson's "Works, 91. 116 THE TAKIFF CONTEOVEESY. his system down the throats of the people. As Secretarj of the Treasury he had assumed the aristocratic positioc of an English prime minister and usurped the functions of the House of Representatives. A morbid sensitive- ness to the letter of the Constitution began to manifesi itself. Already a sectional turn was given to the strug. gle. The South, it was said, had been chiefly opposed to the Constitution, and Congress had done nothing tc allay its fears, but, on the contrary, whenever Northerr and Southern prejudices had come into conflict, the latter had been sacrificed and the former soothed.* The national sentiment was still feeble, and it was not then to the interest of the Republicans to discourage this out- burst of State jealousy. " We hear incessantly from th( old foes of the Constitution," wrote Fisher Ames, " ' this is unconstitutional, and that is'; and indeed, what is not' I scarce know a point which has not produced this cry not excepting a motion for adjournment. . . . The fishery bill was unconstitutional; it is unconstitutiona' to receive plans of finance from the Secretary; to give bounties; to make the militia worth having; order is unconstitutional; credit is tenfold worse." f Washing ton's proclamation of neutrality was bitterly denounced not only for its hostility to France, but as violating th« forms and spirit of the Constitution. J • See letter o£ Washington to Hamilton, July 29, 1792; 10 'WashiDg ton's Works, 249 et seq. t Ames to Minot, March 8, 1792; 1 Life of Fisher Ames, 114. i See 1 Madison's Works, 584. June 12, 1789, Senator Maclay wroti in his journal : " My mind revolts in many instances against the Con fititution of the United States. Indeed, I am afraid it will turn out th vilest of all traps that ever was set to ensnare the freedom of an unsus pecting people. . . . Mem. Get if I can the Federalist withou buying it. It is not worth it. But being a lost book, Izard or some on 117 COMMERCE r^iJSra MANUFACTURES. ^^' Soothingly as Hamilton's Report on Manufactures fell upon the general discussion regarding protection, it was a firebrand in these wider political struggles. The tariff of 1789, passed before party lines had been sharply drawn, had, seemingly at least, a distinctively non-par- tisan character. But some features of the first debate had revealed more than cursory differences and dis- closed for a moment the party divisions and angry struggles of the near future. Then came the plans of Hamilton, the resistless sweep of whose measures filled the Eepublicans with terror. His extension of the pro- tective system, his proposal of bounties and premiums, his assumption that the general government had power to do whatever would promote the general welfare, seemed almost like treason. " [It] -broaches a new con- stitutional doctrine of vast consequence," wrote Madison with more than usual feeling, " I consider it myself as suliverting the fundamental and characteristic princi- ples of the government; as contrary to the true and fair, as well as the received construction, and as bidding defiance to the sense in which the Constitution is known to have been proposed, advocated, and adopted." * Jef- ferson tried to put Washington on his guard against plans which would draw all the powers of government into the hands of the general legislature; f but what was else will give it to me. It certainly was instrumental in procuring the adoption of the Constitution. This is merely a point of curiosity and amusement, to see how wide of its explanations and conjectures the stream of business has taken its course" (Sketches of Debate in the First Senate, p. 79.) * Madison to Edmund Pendleton, Jan. 21, 1792; 1 Madison's Works 546. t Jefferson to Washington, Sept. 9, 1792; 3 Jefferson's Works, 461 463. ' 118 THE TARIFF CONTROVERSY. more to the purpose, now thoroughly alarmed, with tir less energy he knit together the opposition into a con pact body waging relentless war upon every detail of Han ilton's insidious policy. Haii Hamilton's report precede the adoption of a revenue system the question concernin the constitutionality of protective tariffs might ha\ been tested a half century earlier than it really wa But there was a tacit agreement not to disturb the exis ing system; and such changes as Hamilton recommende( including his excise system, which Jefferson pronounce " an infernal tax," were adopted as strict party meai ures. The disastrous ending of St. Clair's Indian campaigi in November, 1791, made new demands upon the Treai ury. Hamilton's proposals included a general advanc of 2-^ per cent ad valorem and some few changes in th enumerated list. In the debate that ensued the pes tions of 1789 were re-affirmed with somewhat moi sharpness. The proposal to remove the duty froi cotton was opposed by the South, while the enhance duty on hemp was as generally supported. Page c Virginia, while favoring the duty on cotton, denounce the bill as not really intended for the protection of th frontiers, but as a compromise for the assumption c the State debts and as an encouragement of the mam facturers and the fisheries. Encouraging manufacture he thought foreign to the business of Congress, and : not so, a mere taking from one hand, and giving t another.* Mercer of Maryland declared that a manufac ture which would not after a sufficient stimulus suppoi itself, ought not to be encouraged; and when it n longer needed aid the tax ought to be withdrawn. Th * Quoted in Young'B Customs-Tariff Legislation, pp. xxi, xxii. COMMERCE VERSUS MANUFACTUEES. 119 bounties on certain articles were in fact paid from the staples of the Southern States by producing retaliating regulations in their only markets abroad.* But the stress of opposition did not fall upon the protective character of the bill. Madison, arguing that the pro- posed bounty on fish was unconstitutional, took occasion to define again the limits of the federal power. This was not an indefinite government, he said, deriving its powers from the general terms prefixed to the specific powers, but a limited government tied down to the spec- ified powers which explain and define the general terms. Were the power of Congress to be established in the latitude contended for it would subvert the very founda- tion, and transmute the very nature of the limited gov- ernment established by the people of America, f The Administration, Mercer declared, would not even permit Congress to defend the helpless women and chil- dren of the frontier from the brutal ferocity of a savage foe, but on condition that they surrender up forever the sacred trust of the Constitution and place in the power and under the control of the Executive and Senate a perpetual tax. The Treasury department, he complained bitterly, was the really efficient legislature of the coun- try, so far as related to revenue, which was the vital principle of government.! But aside from the general political struggles which forbade any further application of the protective system, there was a much stronger reason for not disturbing the existing arrangement. The industry which thrust itself forward, and on which legislation so often turned during * H. R. January 27, 1792; 1 Annals of 2d Congress, 352. t H. R. February 6, 1792; 1 Annals of 2d Congress, 386, 389. ; H. K. January 27, 1792; 1 Annals of 2d Congress, 350, 351. 20 THE TARIFF CONTEOVEEEY. tie years that followed, was not manufactures but com- lerce. Commerce was the controlling interest of the fortheast, and its international character gave it an xceptional importance. That the Constitution origi- ated in a commercial necessity * was a truism at the last, and the commercial and mercantile interests, ather than either agriculture or manufactures, had raced the limits of the tariff of 1789. Of all these ndustries commerce was destined to the most rapid ;rowth; and the extraordinary condition of European ,ffairs which was first to make the United States com- non carriers for all the world, and then to involve that yhole commerce in ruin, prevented, while it prepared he way for, that peculiar national feeling out of which he American system was to emerge. Upon this mer- lantile and commercial interest Hamilton planted his vhole policy. That the moneyed interest of the country hould support the new government, he considered a )rime necessity, and he strained every nerve to bind it o the new order of things. Though demanding a gen- irous policy toward manufactures, not flinching when his seemed opposed to the selfish ends of commerce, he vas careful to antagonize no real interest of the mon- syed classes. When he called for additional duties, as in ,he bill for the protection of the frontiers, his opponents mdeavored to make capital out of the apparent hostility * See Speech of Fisher Ames, H. R. May 5, 1789 ; 1 Annals of Ist Dongress, 265. ' The vital interests of the Union depend upon the iommercial prosperity of the country. The Federal government was ishered into existence with almost a single eye to it ' ; Maine memor- al against the Tariff, 1820 (Annals of the 16th Congress 2d Session, ippendix, p. 1493). See also Massachusetts remonstrance in 1813; 1 \.nnals of 13th Congress, 338. COMMEECE VERSUS MANUFACTURES. '''^3^ to commerce;* but in all this an immense advantage lay with Hamilton whose advocacy of protection was frank, cordial, and unaffected. To Madison, indeed, belonged the chief credit for the tariff of 1789, but Mad- ison could never separate his advocacy of protection from an avowal of preference for free trade, and besides he represented a constituency as indifferent to commerce as it was averse to further legislation in favor of man- ufactures. However, a turn in foreign relations gave an oppor- tunity to antagonize Hamilton's anglicism, which man- ifested itself in a steady promotion of trade with England. Hamilton had not objected to a discrimination in favor . of American shipping as against all the world, but since nearly all their commerce was with the British Empire, he regarded the attempt to discriminate between France and England in favor of the former as a piece of folly and commercially disastrous. Outside of the commer- cial centers, however, this rebuke to England chimed in with popular feeling. Madison had made it a special feature of the first tariff bill, and it had been adopted by the House with practical unanimity. Its rejection by the Senate, Madison charged, was due to the deep angli- cism in which New York was steeped, f and their excuse that they wanted something more efiScacious he regarded as the evasion it undoubtedly was. Early in 1791, in a special message to Congress, Wash- ington recounted the steps he had taken in endeavoring * In the debate on the bill just referred to, Mercer called attention to the petitions from the great commercial capitals of America, which rep- resented that the ImpositionB on commerce were already oppressive and intolerable. H. E. January 27, 1792 ; 1 Annals of 2d Congress, 351. + 1 Madison's Works, 472, 467 ; see also Sketches of Debate in the First Senate, p. 94. 122 THE TARIFF CONTROVERSY. to come to au understanding with England on several points, particularly regarding reciprocity, and stated that as a result of informal conferences with British ministers he did not infer any disposition on their part to enter into such an arrangement.* The message was referred to a select committee, whose action in turn was referred to the Secretary of State with instructions to report to Congress the privileges and restrictions of commercial intercourse with foreign nations, with such measures as he deemed proper to be adopted. Jefferson noted, as he thought, an unfriendly design on Hamil- ton's part, and as he set about his report to Congress he tested Hamilton's views by mentioning that he should recommend a commercial retaliation against Great Brit- ain. Hamilton strenuously objected, and this action Jefferson regarded as an invasion of his own prerogative as Secretary of State. " My system," he complained to Washington, " was to give some satisfactory distinctions to the French, of little cost to us, in return for the solid advantages yielded us by them; and to have met the English with some restrictions, which might induce them to abate their severities against our commerce. I have always supposed this coincided with your senti- ments; yet the Secretary of the Treasury, by his cabals with members of the legislature and by high-toned declamations on other occasions, has forced down his own system, which was exactly the reverse." f Jefferson felt this interference the more keenly because of his ardent sympathy with the French Revolution, then in its greatest promise. The beginning of that * H. E. February 14, 1791 ; 2 Annals of let Congress, 2015. t Jefferson to Washington, Sept. 9, 1792 ; 3 Jefferson's Works, 459 et Beg. ; also 10 Washington's Works, 517 et seq. COMMERCE VERSUS MANUFACTUKES. 123 Revolution had stirred the blood of American patriots as it had not been stirred since their own great struggle. Not only was it a revolt against tyranny and oppression, but it held aloft the banner of liberty and equality. Besides, France had borne toward the struggling Repub- lic the only sympathetic and generous countenance in all Europe, and had brought timely aid in its dire ex- tremity. Every sentiment of self-respect as well as of gratitude seemed to demand that France in turn should be aided in every way consistent with national honor. A considerable portion of the country would have responded to a declaration of war against England, and the whole French party would barely have come short of such a proceeding. The coolness of the government under these circumstances, the determination to main- tain strict neutrality and avoid all foreign complications, seemed to the Republicans the basest ingratitude. Wash- ington's proclamation of neutrality w^s offensive because of its discourtesy and unfriendliness toward France rather than because of its alleged unconstitutionality. Jefferson had given a reluctant consent to its issuance, but he privately explained that its form and spirit had been totally changed.* For a time it seemed likely that the Federalists would be overthrown; but the reckless extravagance of the French faction and the insolence of Citizen Genet soon turned the scale. This episode, how- ever, while temporarily discrediting the French party, cleared the atmosphere of much foolish sentimentalizing and prepared the way for a more rational attempt to express sympathy with France, f « 4 Jefferson's Works, 29. + See 1 Schouler, 259, 260. 124 THE TARIFF CONTEOVERSY. Meanwhile the situation was becoming complicated by the growing carelessness, not to say insolence, of Great Britain regarding American trade. Not only was there no indication of granting any commercial privi- leges with the West Indies, but in June, 1793, the British ministry issued orders for the seizure of all vessels car- rying provisions to France. In the irritation which this act produced came Jeflferson's opportunity to strike, and Dec. 16, 1793, just before retiring from the Cabinet, he submitted his Report on the condition of trade with foreign countries. The report consisted of an exhaust- ive examination of the restrictions upon American trade and a discussion at length of the principles upon which the United States should proceed. Jefferson found that American bread-stuffs were at most times under prohib- itive duties in England, and considerably dutied on re-exportation from Spain to her colonies. Tobacco was heavily dutied in England, Sweden, and France, and prohibited in Spain and Portugal. Rice was heavily dutied in England and Sweden and prohibited in Portu- gal. Fish and salted provisions were prohibited in England and under prohibitive duties in France. Whale oils were prohibited in England and Por- tugal; and American vessels were denied naturaliza- tion in England and France. In the West Indies all intercourse was prohibited with the possessions of Spain and Portugal. Salted provisions and fish were prohibited by England, and salted pork and bread- stuffs, except maize, were received under temporary laws only in the dominions of France, salted fish even there paying a high duty. As to navigation, American carriage of their own tobacco was heavily dutied in Sweden and France, no article not of home COMMEECB VERSUS MANUJTACTUEES. 125 production could be carried to the British ports in Europe, and not even American produce could be car- ried to the British West Indies in American ships. Turning to remedies, Jefferson declared that of the two methods of dealing with such restrictions he would prefer that of a friendly arrangement. Instead of em- harassing commerce under piles of regulating duties and prohibitions, he would have it relieved from all its shackles in all parts of the world, with every country em- ployed in producing that which nature had best fitted it to produce, and each free to exchange with others mutual surplusses for mutual wants. Would even a single nation begin vrith the United States this system of free commerce, it would be advisable to begin it with that nation. But free commerce and navigation were not to be giVen in exchange for restrictions and vex- ations; and should any nation continue its system of prohibitions, duties, and regulations, it behooved the United States to protect its citizens by counter-prohibi- tions, duties, and regulations. Following closely in Hamilton's footsteps, Jefferson saved himself from in- consistency by referring to the State governments those forms of encouragement to manufactures which, in his opinion, the general government had no power to offer. He would select such manufactures as were obtained from the offending nation in greatest quantities, and could be soonest developed within the United States or obtained from other foreign countries, and by gradually increasing duties, endeavor to draw the foreign manu- facturer to America. He would have the State govern- ments open their resources and extend them liberally to those manufactures for which their soil, climate, pop- ulation, and other circumstances had matured them, 126 THE TAEIFF CONTKOVEESy. especially fostering the precious efforts and progress of household manufactures. So far Jefferson seemed but echoing Hamilton's own ideas of reciprocity; but the drift of his report was made sufficiently evident in the concluding statement that while France of her own accord had proposed negotia- tions for a new treaty of commerce, England had rejected all such proposals on the part of the United States. However, no positive deductions were drawn, and there was no deviation from the judicial tone which charac- terized the report. But this was only the first step, and in the House Madison promptly introduced * a resolu- tion proposing, among other things, to lay additional ad valorem duties on various manufactures of countries not in treaty, additional tonnage duties, to the same purpose, countervailing regulations and restrictions, and providing for the payment from such duties of losses sustained in consequence of the illegal regulations of other countries, f The debate which followed is interesting as fore- shadowing a struggle which was to bring the Union to the verge of dissolution, but more particularly as mark- ing the limits of protective legislation and the strong forces which held the tariff to its original moorings. January 13, William Smith of South Carolina, in an elaborate speech prepared by Hamilton, combatted the conclusions of Jefferson's report, and opposed Madison's resolutions. Their ears were accustomed, he said, to a panegyric on the generous policy of France, and to as constant a philippic on the unfriendly, illiberal, and * Jan. 3, 1794. t For Jefiferson's Report, see Annals of 3d Congress (Appendix) pp. 1290 et aeq. ; also 7 Jefferson's Works, 637 et seq. COMMEECE VERSUS MANUFACTURES. 127 persecuting policy of Great Britain. The reverse was really the case, England granting far more substantial advantages than France. From Jefferson's report it appeared that three-fourths of the imports of the country came from Great Britain and her dominions. This was considered by some a grievance, but to an unbiased mind it demonstrated the great importance and utility of the trade with Britain. Nor could an alteration be made but by means viojent and contrary to the interests of the country, except in one way, which was not the object of the report, namely, an efficacious system of encouragement to home manufactures. Imports from Great Britain were large because England was the first manufacturing country in the world and could supply them on the best terms, and because her merchants had large capitals and could give extensive credit. Man- ifestly it was the interest of the United States to be supplied with the manufactures it wanted, of the best quality and o"n the best terms, and to take them from that country which was most able to furnish them. The Navigation Act was deemed by England the pal- ladium of her riches, greatness, and security, and would not be surrendered without a struggle, — a war of arms or of commercial regulations. While three-fourths of our trade was with Great Britain, only one-sixth of her trade was with us. That our supplies were more neces- sary to her than hers to us was a position which our self- love gave more credit to than facts would authorize. Well- informed men in other countries affirmed that Great Britain could obtain a supply of most of our productions as cheap and of as good quality elsewhere. On the other hand, where should the United States find a sub- stitute for the vast supply of manufactures which it got 128 THE TAEIFP CONTROVERSY. from that country. No one would say that the United States could suddenly replace them by their own man- ufactures, or that this, if practicable, could be done without a violent distortion of the natural course of industry. The prosperity of the nation was not a plant to thrive in a hot bed. It was agreed on all hands that our great natural interests, our population, agriculture, manufactures, commerce, and navigation, were in a thriving and progressive state, and were advancing faster than was to have been expected, and as fast as could be reasonably desired. The additional duties were objectionable because the existing duties, averaging nearly twenty per cent, were already, generally speaking, high enough for the state of mercantile capital and the safety of collection. To reciprocity, on the solid basis of treaties, there was unting almost to prohibition. Congress had not been advised of the expenses of establishing manufactories, of the price of labor, of the cost of raw material, of the profits now enjoyed, or necessary in order to outlive th* storm. In a word, all articles foreign and domestic were to be made dear to the consumer merely. th.at the raanufacttirer might have a profit upon his capitel. Was the agricul- ture of tha country, he asked, in a condition sufficiently thriving to make this sacrifice ? After having advanced in prosperity and improvement far beyond the march of any other nation on the globe, in the same period of time, they were now called upon to reject the admon- itions of experience, and adopt a part of the very policy which was congenial to the people of Europe because it denoted the absence of all ideas of self-government. They were about to ahjure that principle which was peculiarly their own, and the offspring of freedom, of leaving industry free to its own pursuit and regulation. - The extent of territory, exuberance of soil, genius of the people, principles of their political institutions, had decreed, as a law of nature, that for years to come the citizens of America should obtain their subsistence from THE AMEEICAN SYSTEM, 175 agriculture and commerce. Their circumstances were totally different from the crowded countries of Europe. '' Because monopolies have for ages become familiarized to them, are we to disregard the evidence iu favor of an unshackled pursuit of our own interest, and in despite of the warning voice of these very nations, which attests the ruinous effects of such a policy upon every principle held sacred by the friends of freedom, are we to give aid to a favorite class of the community by a tax upon th^ rest ? " Manufactures, like banks, had grown up while war gave a feverish heat to the political atmosphere. How would they control the mighty combination to which such a policy as had been advocated would give rise ? Would they open the flood gates and let in the ocean of foreign goods threatening to overwhelm them ? Certainly not; and yet this would be the only corrective left them.* Much of this was too foreig^n to the general current of discussion to receive any consideration at the time. There was no very close examination of schedules, but various points were emphasized by Webster, then of New Hampshire, Ward of Massachusetts, and others— mostly in the way of a running fire upon what appeared most vulnerable in the argument of the majority. In the debate on the repeal of the embargo in 1814, Web- ster had declared himself a friend to manufactures, but as not in haste to plant Sheffields and Birminghams in America. He was not anxious, he had said, in grandiose phraseology, " to accelerate the approach of the period when the great mass of American labor shall not find its employment in the field; when the young men of the country shall be obliged to shut their eyes upon * H. K. April 3, 1816. 176 THE TARIFF CONTEOVEESY. external nature, upon the heavens and the earth, and immerse themselves in close and unwholesome work- shops; when they shall be obliged to shut their ears to the bleatings of their own flocks, upon their own hills, and to the voice of the lark that cheers them at the plow, that they may open them in dust, and smoke, and steam, to the perpetual whir of spools and spindles, and the grating of rasps and saws." It was the true policy of the government to suffer the different pursuits of society to take their own course, and not to give exces- sive bounties or encouragements to one over another.* In the present discussion, however, he confined himself closely to the details under consideration, seeking to modify and restrain the more pronounced features of the bill. The manufacturer's position, carefully stated by Dallas, had been more vigorously urged in a special report from the Committee on Commerce and Manufactures, Newton of Virginia chairman, submitted the same day as Dallas' report. Emphasis was laid upon the foreigner's recog- nition of the importance of what was at stake, and the special and redoubled efforts he would make to crush American manufactures. Once struck down, the gov- ernment might indeed relent, but could it raise the dead to life ? Competition would make the price low, and the extension of manufactories in the United States would secure such competition, f Eichard M.Johnson of Kentucky emphasized the statement that citizens had turned their capital into domestic manufactures not subject to the control of foreign nations, and hence there was a moral obligation upon the government to * H. E. April 6, 1814; Annals of 13th Congress, pp, 1971-1973. t H. B. Feb. 13, 1816; Annals of 14th Congress, pp. 960-967. THE AMERICAN SYSTEM. 177 give reasonable protection to them. Upon this subject, he said, the mind must expand and act upon a policy enlarged and liberal.* Ingham of Pennsylvania, afterward Jackson's first Secretary of the Treasury, declared that revenue was only an incidental consideration and ought not to have any influence in the decision upon the bill, which in- volved a great principle of national policy, and was not a mere contrivance to collect taxes from the people in the easiest way without their knowing it. As to the notion that protection ought to be confined to articles indispensable in time of war and of first necessity in time of peace (referring to Madison's annual message), it was a plausible theory, but not founded upon sound policy. In the first place, no two persons would agree as to the articles. Besides, the great object of the gov- ernment ought to be to promote the prosperity and happiness of the people, because it surely promoted in soipae degree its own prosperity and durability. The doctrine about first necessity was fallacious. He advo- cated high duties because the more powerful the stim- ulus the sooner there would be a supply and a competition at home. There were difiiculties to be overcome, he urged, inde- pendent of mere cost. European fabrics of the same material had the advantage in appearance though not in durability, which gained them a preference, and prejudice against domestic fabrics pervaded the coun- try. It was a fact that the paper used by the members of the House to enclose their newspapers in, had the water mark of the British crown upon it, though the paper was made in the District of Columbia. He thought * H. R. Feb. 2, 1816; Annals of 14th Congress, p. 862. 178 THE TARIFF CONTEOVERSY. it a bounden duty of Congress to protect the industry of the country from such discouragements. As to the demand for estimates and calculations to show the precise amount of duty that would enable the American manufacturer to come into the market upon equal terms with the importer, such demands were in their nature unreasonable and unfair, because it must be obvious that they could not be answered with any kind of cer- tainty.* The mercantilism of the argument was furnished mainly by Gold of New York, who, after dismissing Adam Smith with Madison's favorite formula, quoted liberally from Sir James Steuart f to the effect that a nation ought to restrain by a duty on importation that which might be produced at home, and to manufacture as much as possible of the raw material, that a new manufacture could not be established without such en- couragement, and that if the balance of trade was against a nation, it was her interest to put a stop to it. He invoked Hamilton as " one of the brightest stars in our political hemisphere," and quoted Brougham and others to show the continued hostility of Great Britain to the manufactures of the United States. No friend of his country, he said, could look at the enormous importation of goods the past year without concern; a hundred and thirty million of imports from Great Britain and only twenty-one millions of exports to her ! Instead of there being a concert among manufacturers to raise prices, competition and the spirit of underselling prevailed to such an extent that sales were often made without a * H. R. March 22, 1816; Annals of 14th Congress, pp. 1239-1247. t The last systematic expounder of mercantilism, whose treatise was published nine years before the Wealth of Nations. THK AMEEICAN SYSTEM. 179 profit. Finallj^, it was not a distinct class of manufac- turers who had petitioned for relief, but almost all classes, and principally the farmers, had embarked in the manufacture of woolen and cotton. Let no one be alarmed that a general system of manufactures was about to be introduced; that this country was now to attempt the manufacture of the almost endless list of goods contained in the importer's invoice. The question was simply as to whether they would uphold the present manufactures of woolen and cotton against the inunda- tion of foreign goods.* Most noteworthy was the utterance of Calhoun as showing the broadly national ground on which these young Southerners based their support. In advocating the loan bill in 1814, Calhoun had taken the opportunity to call attention to the amazing growth of manufactares, which of itself, he said, would more than indemnify the country for its losses. He believed no country, however valuable its staples, could acquire a state of great and permanent wealth without the aid of manufactures.! His advocacy of the tariff of 1816 was not without cer- tain reserves which showed that he partook of none of the enthusiasm for manufactures that pervaded the North. He based his argument upon the cautious foun- dation Madison had laid, and with a steady insistence that the navy, manufactures, and internal improvements were alike objects of national importance and must * H. R. April 3, 1816. t H. B. Feb. 25, 1814; Annals of 13th Congress, p. 1694. In support- ing the repeal of the embargo, however, Calhoun declared that the infant manufacturing institutions of the country would not be embar- rassed, and that during a state of war too great a stimulus was naturally given to manufactures— a stimulus which they could not expect to be continued in a time of peace (H. B. April 7, 1814). 180 THE TAEEFF CONTBOVEESY. advance with equal step. Yet within these limits his support was not halting or restrained, but full of the generous fervor of youthful Southern blood fired with national patribtism, and as yet showing not the slightest taint of the leprosy of Nullification. " The question relating to manufactures," he said, " must not depend on the abstract principle that industry, left to pursue its own course, will find in its own interest all the encour- agement that is necessary. I lay the claims of the manufacturers entirely out of view, but on general prin- ciples, without regard to their interest, a certain encour- agement should be extended at least to our woolen and cotton manufactures." * Later, in opposing Randolph's motion to strike out the minimum on cottons, Calhoun committed himself more unreservedly. The debate heretofore, he said, had been as to the degree of protection which ought to be afforded to the cotton and woolen manufactures, all professing to be friendly to those infant establishments and to be wil- ling to extend to them adequate encouragement. But Randolph's motion was introduced on the ground that manufactures ought not to receive any encouragement whatever, thus leaving our cotton establishments exposed to the competition of the East Indies, which everyone acknowledged they could not successfully meet without the proposed minimum duty. He favored protection on the broad ground that it was connected with the security of the country. War interrupted commerce and agricul- ture, both depending on foreign markets. Without commerce, industry would have no stimulus; without manufactures, it would be without the means of produc- tion; and without agriculture neither of the others could * H. E. Jan. 31, 1816; Annals of 14th Congress, p. 837. THE AMERICAN SYSTEM. 181 subsist. "When our manufactures were grown to a cer- tain perfection, as they soon would be under the fostering care of the government, we would no longer experience these evils. The farmer would find a ready market for his surplus produce; and what was almost of equal consequence, a certain and cheap supply of all his wants. To give perfection to this state of things, it would be necessary to add as soon as possible a system of internal improvements, and at least such an extension of the navy as would prevent the cutting off of the coasting trader To the objection that the country was not prepared for manufactures, he could not yield for a moment; on the contrary, he firmly believed that the country was prepared even to maturity. A prosperous commerce had poured an immense amount of commercial capital into the country, which until lately had found occupation in commerce; but the state of the world which brought this about had passed away never to return. This capital would not be idle, it must find a new direction, and what channel could it take but that of manufactures? Besides, the greatest difficulty had already been sur- mounted. The restrictive measures of the war, though not intended for that purpose had, by the necessary operation of things, turned a large amount of capital to this new branch of industry. He had often heard it said, both in and out of Congress, that this effect alone would indemnify the country for all its losses. What then was the necessity of protection ? It was to put manufactures beyond the reach of contingency. Besides, capital was not yet, and could not for some time, be adjusted to the new state of things. There was, in fact, from the operation of temporary causes, a 182 THE TAKIFF CONTEOVERSY. great pressure on these establishments. They had extended so rapidly during the late war that many, he feared, were without the requisite capital or skill to meet the present crisis. Should the present owners be ruined, and workmen dispersed and turned to other pursuits, the country would sustain a great loss. He denied that manufacturing, with the aid of machinery, destroyed moral and physical powers. He could perceive no such tendency in manufacturing districts, but the exact contrary, as they furnished a new stimulus and means of subsistence to the laboring classes of the community. Another objection, and one better founded, was that capital employed in manufacturing produced a greater dependence on the part of the employed, than in commerce, navigation, or agriculture. This was certainly an evil and to be regretted; but it was not a decisive objection to the system, especially when it had incidental political advantages which, in his opinion, more than counterbalanced it. It produced an interest strictly American, as much so as agriculture, and in this it had the decided advantage of commerce or navigation. Finally, it was calculated to bind together more closely the widely separated Republic, greatly increasing mutual dependence and intercourse. Hq regarded the fact that it would make the parts adhere more closely, and that it would form a new and most powerful cement, as far outweighing any political objections that might be urged against the system. In his opinion the liberty and union of the country were inseparably united. He had critically examined into the causes that had destroyed the liberty of other States. There were none that applied to the United States or applied with a force to cause alarm. The basis of the Republic was too broad THE AMERICAX SYSTEM. 183 and its structure too strong to be shaken by them. But let it be deeply impressed on the heart of the House and country, that while they guarded against the old they exposed themselves to a new and terrible danger, — disunion. This single word comprehended almost the sum of their political dangers; and against it they ought to _be p erpetually guarded.* Only a few articles occasioned any discussion, and these were items like sugar, cottons, and woolens, which had been reduced in the Ways and Meang Committee from the rates proposed by Dallas. Dallas had fixed the duty on cottons at 33^ per cent, which was reduced to 30 per cent in Lowndes' bill. Clay moved to restore the original rate, in order, he said, to see how far the House was willing to go in protecting domestic manufactures — there being no difference of opinion as to the propriety of the policy itself, f After some maneuvering, during which Lowndes firmly defended the amount of protection afforded by the bill, Clay's motion was rejected by a vote of 68 to 61. Later Webster proposed a sliding scale on cottons, the rate to be 30 per cent for two years, then 25 per cent for two more, and then 20 per cent. Clay moved to amend by making the first period three years and the second one year. The present, he said, was the time for encouragement, and his amendment would give an adequate protection at the time of the greatest difii- culty. Lowndes assented to the motion. He rejoiced to see the strongest friends of the manufacturing interest the advocates of a proposition which would, in prospect, produce a return to correct principles. He was satisfied * H. R. April 4, 1816 ; Annals of 14th Congress, Ist Session, pp. 1329-1336. i H. R. March 21, 1816. 184 THE TAEIFF CONTEOVEKSr. that 25 per cent or even 20 per cent was a sufficient pro- tection, but he would support the motion, persuaded that it would eventually produce the state of things he thought most desirable. Root of New York thought this proposition was worse than any other; the manufactur- ing establishments would be sustained for two years and then left to their fate. Hulbert of Massachusetts had consulted with the manufacturers and found them satisfied with Clay's proposition. Webster was informed that the manufacturers would be satisfied with 30 per cent for one year. He was not prepared to say that the government was bound to adopt a permanent protection. From the course pursued by the government for some years back the community had a right to expect relief from the danger to which a sudden change of circum- stances exposed manufactures. Yet the government had a right to say whether that protection should be permanent or not, and to reduce protective duties if it thought proper. But he was opposed to a changing and fluctuating policy, and the object of his motion was to impose a duty so moderate as to insure its permanency and still be an adequate one. Calhoun opposed Clay's amendment. He believed 20 per cent was ample protec- tion. Webster repeated that his object was permanent protection. Twenty per cent would exclude India cot- tons forever. Manufacturing establishments could now be erected at two-thirds the cost of those first erected. Clay said the object of protection was to eventually get articles of necessity made as cheap at home as abroad. In three years they could judge of the ability of their establishments, and could then legislate with the lights of experience. Eoss of Pennsylvania thought 20 per cent enough. He did not believe in the rage for THE AMERICAN SYSTEM. 185 fostering manufactures to the exclusion of every other pursuit. Manufacturing had a tendency to degrade and debase the human mind, and the only kind of manu- factures he wished to see flourish were those in families. Clay's amendment was negatived, 61 to 47, and Web-- ster's motion agreed to by a large majority.* Considerable friction was experienced in fixing the rate on sugar. Huger of South Carolina, seconded by Shefiey of Virginia, proposed to reduce the committee's rate of 4 cents on brown sugar to 2i cents. This was resisted by Robertson of Louisiana, Forsyth, Lowndes, and Calhoun. Forsyth demanded 5 cents, declaring that sugar would be extensively cultivated in Georgia if the government gave sufficient protection, and protesting with much warmth against the injustice of taxing the South to support the manufactures of the East, and yet denying the South any security in return. Gaston of North Carolina in opposing the duty entreated the House to consider those unfortunate states which were burdened, on the one hand, to encourage the manufactures of the East, and taxed, on the other, to protect the products of the South. The 4 cent rate was stricken out, 62 to 55, and on motion of Clay 3i cents substituted, 64 to 58. f Dallas proposed 28 per cent on woolens. The com- mittee reduced this to 25 per cent, and following the example set in the case of cottons, Lowndes moved that after two years the rate be fixed at 20 per cent. He believed, he said, that the manufacture of woolens, and particularly of blankets, required a decided present * April 3, the rate on cottons was reduced to 25 per cent for three years, dropping then to 20 per cent. The war duty was 35 per cent. t H. R. March 23, 1816. The rate was finally reduced to 2 cents, but raised by the Senate to 3 cents, the House concurring. The war duty was 5 cents. 186 THE TARIFF CONTKOVEESY. encouragement; and after receiving that support his amendment would produce the reduction of duties to the correct standard. After some debate the first period was made three years, and Lowndes' amendment agreed to.* The tariff of 1816 was a substantial victory for the manufacturers. Their interests were for the moment the concern of all, and the unanimity with which the measure was received indicated the general feeling that the problem had been settled for all time by the conser- vation and exaltation of manufactures. Possibly, under ordinary circumstances, this hope might have been fulfilled, though in any event the self-interest of man- ufacturers would have prompted them to a continual extension of the system. But what was necessary for the conservation of the manufactures raised up by the war was but vaguely realized, and in its working out the tariff of 1816 proved a bitter disappointment to the manufacturing interest. The causes, however, were widely varied, and the result could hardly have been foreseen by the most unequivocal protectionist. A part of the failure was due to a miscalculation of the obstacles to be overcome. The abnormal conditions during the war had not been favorable to careful bus- iness methods. Such was the demand for home man- ufactures, and such the sudden expansion of prices, that as Dallas put it, the American market seemed for a while to be converted into a scene of gambling and extortion. Manufacturers were warned that these extra- ordinary profits could not last, that they must be careful and build their reputations on substantial goods, f * The reduction never took place, the act of April 20, 1818, continuing the rate on both cottons and woolens at 25 per cent, t See 6 Niles, 217. See also 34 Niles 337-339. THE AMEEICAN SYSTEM. 187 These warnings were unheeded. Manufactories went on increasing even beyond the home demand. Many- were sanguine enough to believe that even without protection they were beyond the reach of competition. Cotton and woolen manufactures, it was boastingly said, would not be affected by the peace, and the United States could even undersell Great Britain.* In the nature of things neither this sanguine prospect, nor anything like it could be realized. Any considerable loss of market meant the immediate destruction, at least of those manufactories built up on insufficient capital and lacking trained workmen and supervision. Nothing short of absolute prohibition could have prevented at that time large importations of British goods. The long wars had pressed heavily upon the English man- ufacturer and the return of peace found enormous quantities of goods on his hands which must be sold at any price. Nor could advantage in price even have saved, temporarily, the home market. The old prefer- ence for foreign goods reasserted itself. American goods which in quantity and price compared favorably with imported goods seemed to have little chance in the open market. Even inferior English goods crowded out their American competitors, f American merchants were eager to import and American fashion to buy. Indeed, the first shiploads from England were to supply long outstanding orders. J » See 5 Niles, 368. t See 11 Niles, 386. t Of. Speech of Ingham, supra p. 177. Niles tells a story of how the Duponts, extensive cloth manufacturers of Brandywine, were unable during the war, to dispose of their very superior cloths because of the prejudice against American cloths. They thereupon arranged with an English agent to sell for them as though their goods came from England. 1S8 THE TABIFF CONTKOVERSY. Yet it would be easy to exaggerate the distresses of the country. The years from 1816 to 1820 especially, were years of depression and hard times, but the steady growth of the country was hardly interrupted. In the main the tariff did not fail of its legitimate object. For the most part the new manufactures were conserved. True, many establishments went to the wall, but, owing perhaps to the expected operation of the tariff, the number of manufacturing plants rapidly increased. Home competition became sharp and disastrous to those unfavorably circumstanced. There was a considerable fall in prices due partly to over-competition and partly to the application of improved machinery, and so rapid was the progress of invention that establishments which could not afford a constant replacement of machinery were soon hopelessly distanced. Nor were manufactures alone affected. Two successive years of bad harvests in Europe kept agriculture prosperous, but in 1819 there was a corresponding fall in the price of agricultural products, and this following close upon a financial crisis, due largely to mismanagement of the United States Bank, made the stagnation complete.* These were quickly sold and at large prices. Niles makes the story into an idyl by having the Duponts so patriotic and eager for an Amer- ican reputation that they persisted in selling their best cloths under their proper name, though at a lower price (18 Niles, 401). Of. also 15 Niles, 244, (supplement) 87; 16 ib. 106; 24 16. 243; 36 ib. 283. * Some years afterwards Niles gave this recollection of the years succeeding 1815 : Thousands of persons forsook their farms and work- shops to become merchants. Whoever could raise a few himdred dollars in caahj hastened to expend it in the eastern cities, as well as to exhaust all the credit that he could obtain, in ill-advised purchases of foreign goods. These were hurried into the interior with as much promptitude as if every day's delay on the road was the loss of a little fortune — and so the cost of tiransportation was doubled, to be added THE AMERICAN SYSTEM. 189 The recovery, though necessarily slow, was seen to be certain. The United States Bank was righted, and under the presidency of Langdon Oheves of South Carolina started on a new career of usefulness. The tendency to hold the tariff accountable for all the ills of the country was resisted, especially by the non-manufac- turers who had firmly sustained, though with some misgivings, the tariff of 1816. They pointed out - the temporary nature of the causes of depression, the sub- stantial resources and recuperative forces of the country, and the indications of reviving prosperity. In his last annual message, December, 1816, Madison noted that the depression in manufactures resulted from an excess to [the originally imprudent expenditure. As tte goods were bought on credit, they could be sold on credit — and who would wear an old coat when he might so easily obtain a new one at " the store," — he conld get credit and pay " when convenient." The hum of the spinning wheel was banished and the sound of the shuttle no longer disturbed speculative minds. There was plenty of everything because there was plenty of credit ! The needless debts thus created amounted to millions! — but " pay day " came at last. \e city merchants pressed the country dealers, and they pressed their customers — every one pulled and hauled. In this state of things it was found out that the whole difficulty was caused by the want of money ! A " circulating medium " was required. Banks must be established, and there wag nothing wanting for them but acts of incorporation and paper mills. The people called for banks and banks were made ; they loaned money freely, and for a little season the oppressed, having by new credits paid off some of their old debts, rejoiced at the " relief " afforded. . . . But this did not last long. The bills of the new-made banks would not " pass "—it was discovered that they were paper — mere paper. . . . Brokers and shavers jumped up like mushrooms, and they gave " relief," out of sheer kindness to suffering people. They began at 10 per cent discount and ended at 95 per cent ! —shaving away the greater portion of the little means that were left for the honest payment of debts. Banks by this time had obtained judgments— sheriffs as busy as " Old Nick in a gale of wind," — and a general sweep of ruin was threatened in several of the states. (See 28 Niles, 81, 82.) 190 THE TARIFF CONTEOVEESY. of importation which could not last very long, and in 1819 he declared that the evil, though severe, must gradually cure itself, and that the root of it lay more particularly in the multitude and mismanagement of the banks.* The season of 1820 he noted as an abund- antly fruitful one and predicted that even if the man- ufacturers failed entirely in their hopes from Congress, they would experience much encouragement from the cheapness of food, materials, and labor, f Monroe, whose opening message had been so friendly, J when times were worse, had no specific recommendations to make, and in 1821 was convinced that under the exist- ing tariff the United States would soon become a man- ufacturing country on a large scale. His tone, however, continued friendly, and in 1823 he felt the pressure of the manufacturing interest sufficiently to recommend " a review of the tariff for the purpose of affording such additional protection to those articles which we are prepared to manufacture, or which are more immedi- ately connected with the defence and independence of the country;"! but his Secretary of the Treasury, Crawford, discussed the tariff wholly with reference to revenue, and the influence of the administration was generally counted as indifferent, if not unfriendly to the interests of manufactures. || Governors in their mes- * Madison to Rush, May 10, 1819 ; 3 Madison's Works, 128-131. See also ib. 265, 266. t 3 Madison's Works, 181, 195. t And whom Senator Morrill calls by " precept and example, almost a fanatic as to the policy of encouraging American manufactures" (Senate, December 8, 1881.) § 1 Statesman's Manual, 458. II See 20 Niles, 370-374; 21 ib. 325, 326; also speech of Clay, 1824: "The executive government, if any, affords us but a cold and equivocal support" (5 Clay's Works, 294.) THE AMERICAN SYSTEM. 191 sages, while complimenting manufactures, were often as non-committal; * and Judge Koss struck a popular chord when he declared to a Pennsylvania grand jury that the cure for hard times was not in a loan office, internal improvements, or the tariff, but in simple habits and the curtailing of the extravagance and foolish pride of sons and daughters.! But the movement was the other way. More and more there was a growing impatience with the tariff of 1816, and a tendency to lay the bad times upon its shoulders, a tendency heightened by the success of coarse cottons, protected by the minimum rate, which eventually, owing to a fall in price due to the progress of inventions, etc., acted as a complete prohibition. At first there was merely a note of alarm sounded at the continued depression of manufactures after the new tariff had gone into operation, with a blind groping about for reasons. In 1816 Governor John Cotton Smith of Connecticut declared that the advantages confidently expected from a restoration of peace had not been fully realized. Governor Galusha of Vermont referred to the depressed state of manufactures as of serious concern. Governor Dickerson of New Jersey was more explicit. The imprudence of merchants, he said, had plunged the country into new distress by a ruinous importation of European goods, greatly exceed- ing the means of payment. Many manufactures had received a protection, which, while not affording imme- diate relief, gave hope of final success; but this was not the case with all, notably bar iron, and many establish- * See 12 Niles, 268; 15 ib. (supplement) 45, 61. 1 18 Nilea, 321 ; see also 11 ib. 129, where Niles comments on the alarming progress of luxury. 192 THE TARIFF CONTEOVERSY. merits were already involved in ruin. Governor and Vice-President-elect Tompkins of New York deplored the fact that establishments for domestic manufactures should have been suffered to be suspended or even to languish. The appeal to the general government had produced partial relief; but the utmost exertion of the state legislature was necessary to yield such, further encouragement as would place the domestic manufac- turers on an equal footing with the importers of foreign merchandise.* Gradually the feeling became more intense. Lord Brougham was quoted as saying in Parliament that it was " well worth while to incur a loss upon the first exportation in order by the glut, to stifle in the cradle those rising manufactures in the United States which the war had forced into existence, contrary to the nat- ural course of things"; and this bumptious saying was passed up and down as gauging the economic attitude of the English government and English capitalists toward America. While all the nations of Europe, it was bitterly said, were alive to their interest, and Inaking the most powerful efforts to encourage their own man- ufactures and to create a home market among themselves, the United States were calmly looking on, talking about independence and quietly bending their necks to the yoke, being tributary to England and relieving her wants at the cost of their own distress, f At the session of Congress, 1816-1817, more than forty memorials were received setting forth the distresses of manufacturers. A petition from merchants of New York City pointed out the sinking condition of the * See 11 Niles, 132, 150, 174, 181. + 11 Niles, 297 (editorial). THE AMERICAN SYSTEM, 193 commercial interest and declared that nothing short of the protecting arm of the government could rescue it from riiin. And the same causes, they said, were fast precipitating their manufacturing brethren to the same abyss. They admitted that Congress ' had bestowed upon this subject a wise and liberal consideration, and had granted such encouragement as was by many then deemed sufficient'; but this had proved inadequate, and they suggested making permanent the higher rates, more stringent revenue laws, a duty of ten per cent on all auction sales of foreign goods, and that the army and navy and all civil officers use American fabrics.* Simkins of South Carolina admitted that the tariff of 1816 meant well, but declared himself sick of the unnecessary foreign predilections and thought they should learn a lesson from England, f It was the true policy of every state, he said, to encourage and buy of its own citizens every essential article, as thereby it added to its riches by keeping its money at home. This was the true and unvarying policy of England, who well knew that capital laid out abroad for foreign productions which could be as well produced at home was forever lost, both principal and interest. J The memorial of the inhabitants of Oneida County, New York, adduced the testimony of Hamilton and Sir James Steuart that no new manufacture could be established in the present state of the world, without government aid. It also laid down as a principle of political economy that any nation which should open its ports to foreign importations, » H. B. Feb. 4, 1817; Annals of 14tli Congress, 2d Session, pp. 848- 851. t H. R., April 14, 1818. i See also 20 Niles, 178. Thia was a favorite maxim of NUes. 194 THE TAEIFF CONTKOVEESY. without a. reciprocal privilege, would soon be ruined by the balance of trade.* The legislature of Pennsylvania was more explicit. It declared that there was no exam- ple in history of a manufacture being left to take care of itself, or of success unaided by government. The Com- mittee did not believe, the report added sarcastically, that every maxim of national policy was reversed by crossing the Atlantic, and they could see no good reason why the United States should not follow in the path lighted by the experience of others, f These were but beginnings. Under stress of misfor- tune language became bolder, the tariff of 1816 was proclaimed a failure, even intentionally so, and system- atic efforts were put forward to obtain a tariff in accord- ance with what their interests demanded. December 31, 1816, the American Society for the Encouragement of Domestic Manufactures issued an address to the people of the United States advocating the prompt establish- ment of societies for correspondence with itself and with each other, and urging Upon manufacturers, agricultur- ists, merchants, men of science, soldiers, and women everywhere, to unite in upbuilding American manufac- tures. J Niles noted, in 1817, the ' great and simultan- eous exertions ' then making to awaken public attention to the subject of home manufactures. § A Pittsburg committee on manufactures announced the utter failure of the new tariff, and disdaining what it called the ' subtleties of abstract speculatists,' declared it sufficient to refer to the practice of the most wealthy and powerful * Senate, Jan. 7, 1818; Annals of 15th Congress, 1st Session, pp. 84- 89. (13 Niles, 398-401.) + 12 Niles, 39, 40. i 2 Bishop, 230. 5 12 Niles, 75. THE AMERICAN SYSTEM. 195 nations in the world as a test of the utility of protective tariffs.* A joint committee of the New York legislature complained that the cotton and woolen manufactories of the state were in a precarious condition, some prostrated and others tottering to the ground, and that the duty of 25 per cent, even if sufficient, was not of long enough duration to produce confidence in men of capital, f Baltimore manufacturers affirmed that the object of the tariff had been entirely frustrated. | Iron manufacturers of Pennsylvania and New Jersey reported their interests as in a deplorable condition. § Three-fourths of the cotton and woolen factories of Oneida County, New York, were said to be closed permanently. || From forty to sixty thousand workmen were estimated as having been thrown out of employment, seven thousand in Philadelphia alone. "f There was never such commercial embarrassment, Niles reported in 1821, and in 1822, when manufactures were depressed and commerce was reviving, it was asserted that the years, 1820, 1821, were years of convalescence, and that while the country was gradually recovering and felicitating itself on the favor- able prospect of its affairs, this eulogized freedom of commerce had once more come into operation and dashed the cup from its lips, renewing the scenes of 1815-16.** If manufactures had been fostered and pro- tected in 1816, it was said, we should have drawn from * 12 Niles, 129-135. 1 12 Niles, 236. 1 13 Niles, 332. 5 14 Niles, 105. II 13 Niles, 398-401 . t 2 Bishop, 250 ; 17 Niles, 116-120. «* 20 Niles, 34; 23 i&. 42, 274. 196 THE TARIFF CONTHOVEESY. England tens of thousands of her best workingmen.* The policy hitherto pursued in the United States, which had exposed their manufactures, excluded from nearly all the markets of Europe, to an unavailing struggle with all the manufactures of that quarter, was the prin- cipal cause of the present calamitous state of affairs. This system was in direct hostility to that of every wise nation in Europe, and the tariff of 1816 had been fixed so low that it required but little sagacity to foresee the ruin of manufactures, f Finally, it was baldly asserted that the duties under the tariff of 1816 were laid for the sole purpose of raising a revenue. J Such a current could end logically only in prohibition or prohibitive duties, and this point protectionist thought soon reached. Jefferson's predilection for a * 15 Niles, 420. ■f 17 Niles, 87-92. J 18 Niles, 170 (Editorial, May 6, 1820). Baldwin made the same statement in the House, April 21, and Dickerson in the Senate, May 4, 1820. Later protectionists have been much puzzled as to how to characterize the tariff of 1816. Mallary of Vermont, chairman of the committee which prepared the tariff bill of 1828, declared (H. R. Jan. 31, 1823) that ' considering the circumstances of the times, the unsettled state of public and private concerns, the countless interests involved, a more prudent measure could not have been expected from human wisdom.' More recent protectionists have generally followed Henry C. Carey, ■who referred to ' British free trade as established in 1817, 1834, 1846, and 1857', — a characterization which would have been gratifying to Calhoun and the other Southern democrats, who were only too glad t» have the tariff of 1816 regarded as a revenue tariff. As seen through the medium of a presidential campaign this tariff assumes a very queer appearance: "In 1816 the Democratic party came to the front and, with its cranky ideas of economy, repealed the law of 1789 and 1812,> very low duties only being allowed. Great dis- tress followed everywhere" (Chas. E. Buell, in the New Haven Palla- dium—quoted in New York Weekly Press, Aug. 9, 1888). THE AMEEICAN SYSTEM, 197 Chinese Wall is well known; and Ricbard M. Johnson had declared at the beginning of the war that it would be only a temporary evil to cut off intercourse with England forever.* It had not yet been the policy of the United States, Niles wrote in 1817, either to prohibit the import or export of anything as a permanent regula- tion, and so far perhaps, that policy had been a wise one. But circumstances altered cases, and they had the unanimous sanction of all the statesmen of Europe that a contrary course was best adapted to the situation of their several countries, f Rich of Vermont, in 1820, submitted to the House the ' propriety of prohibiting the importation of sundry commodities then allowed to the prejudice of a free and vigorous employment of the skill and capital of our citizens, and of fixing upon some future period beyond which the American manufacturer shall enjoy the benefit of the markets of his own country uninterrupted by foreign competitors who owe no allegiance to the country, and who will neither fight its battles nor contribute to the support of its institutions.' | An examination was made of the English system of prohibitions and heavy tariffs, of Russian and German protection, and of Spanish and Portuguese free trade. The English tariff of 85 per cent on cotton, 79 per cent on earthenware, 142i per cent on leather, and other * H. R. Dec. 3, 1812. 1 12 Kiles, 292. } 19 HileB, 331. There were the usual ' resolutions ' indicating a tense period, like that of the Lycurgam Society of Yale College pledging itself to wear only cloth of domestic manufacture; of the ladies of Washington, Penn., to confine their apparel to articles manufactured in the United States; and the grim parody of the young men of Cross Creek (near Washington, Penn.), who resolved, in paying addresges to the young ladies, to give the most marked preference to those clothed in homespun (19 NUes, 43; 21 ih. 337; 22 ib, 195.) 198 THE TARIFF CONTKOVEESY. high rates, were compared with the low rates in the United States, and it was declared that were England to abandon her system and adopt that of Adam Smith she could not fail in a few years to be reduced to the level of Spain and Portugal. "On a fair examination," wrote Matthew Carey, " we shall bestow the most unequalled plaudit on the English Parliament for the admirable and incomparable system it has devised. We may fairly assert without the least danger of contradiction, that there never existed a legislative body which bestowed more attention on the solid, substantial, and vital inter- ests of its constituents, so far as respects industry in all its various forms." Great Britain, he said, although possessing machinery which increased her powers of manufacture at the rate of two hundred for one, did not rely on that for the protection of her domestic industry, but interposed the powerful shield of prohibi- tion and enormous duties, to preserve them from danger; while the United States, which had at the close of the war, a great number of important and extensive man- ufacturing establishments, and invaluable machinery, erected and advantageously employed during its contin- uance, and although blessed by a bounteous Heaven with a boundless capacity for such establishments, had, for want of adequate protection, suffered a large portion of them to go to decay, and their proprietors to be involved in ruin, the helpless victims of a misplaced reliance on that protection.* Russia, Mr. Carey affirnied, completely fulfilled the indispensable duty of fostering and protecting domestic industry, for she prohibited, under penalty of confisca- tion, nearly all the articles with which her own subjects * 16 Niles, 169-172. THE AMEEICAN SYSTEM. 199 could supply her. It was painful to state that so far as respected this cardinal point, she was at least a century in advance of the United States, and Americans must look with envy at the paternal and fostering care bestowed by the Emperor of Russia upon industry. The contrast was immense, striking, and decisive, and how the United States sank on the comparison 1 It could never have entered into the mind of Hancock, Adams, Franklin, Washington, or any of those illustrious men who in the field or cabinet achieved the independ- ence of their country, that before the lapse of half a century, American citizens would be forced to make invidious comparisons between their own situation and that of the subjects of a despotic empire; and that the protection denied to their industry was liberally afforded to the subjects of Russia. The American manufacturer, Mr. Carey went on, was the victim of a policy long scouted out of all the wise nations of Europe, and which only lingered in, and blighted and blasted the happiness of Spain and Portugal.* A system of prohibitive duties would of course antag- onize the revenue policy of the country, and as protec- tionism became more and more convinced that its interests were sacrificed on the altar of revenue, it came to denounce this element in tariff legislation and to hold up excise and direct taxes as infinitely preferable.! But prohibitive duties were too bald and too undis- guised class legislation to win any conservative support, and the recoil was so severe that even protection- ism hastened to disclaim any purpose of interfering with revenue. The ' American system ' built itself up y / * 16 Niles, 181-185. t See 20 Niles. 3C6, etpaisim. 200 THE TAEIFF CONTROVERSY. around a logic that made no quarrel with Madison's " if," nor with the theory that protection was a tempor- ary sustenance for infants ; but practically it widened more and more its range of industries, demanded higher and higher rates, and showed less and less disposition to consent to any lowering of protective duties. The grounds on which protection had hitherto rested were essentially different from the old mercantile foundation. Much of this reasoning was undoubtedly involved, but the arguments that were really powerful were those addressed to the need of independence, the implied pledge of government assistance, and the expediency of helping manufacturers, in time of special peril, to do what it would ultimately be' their advantage to do independently of governmental interference. There was apparently no very clear idea that protection would sometime be withdrawn because the need of it was out- grown; for free competition, whose international reg"-" ulating power was so vociferously denied, was implicitly relied on to produce all beneficial effects within the closed circle of the nation. When that time came it could scarcely matter whether the tariff were taken off or left on, and the question would take care of itself. It was promised, however, that in the end the consumer should not be harmed, for the invariable effect of pro- tection was to make the price lower than it would other- wise have been. The various reasons urged as to why manufactures could not succeed in the existing condition of the country, were the very reasons, it was said, why they should be encouraged.* * With one notable exception ; the validity of the argument that the jbjgh price ,of labor was an obstacle, was not admitted. THE AMERICAN SYSTEM. 201 All this did very well so long as protection was given as alms, or as food for infants. But when manufactures became extensive and under thorough organization, when they appealed for aid as the recognized promoters among all nations of independence, prosperity, and happiness, and when manufacturers in their own person confronted the representatives of other interests, the old basis would no longer do. The old arguments were not withdrawn, but they were supplemented by an exposition of political economy which squarely antagonized Adam Smith and planted itself firmly on the doctrines of the old mercantilism. Of this new protectionism Matthew Carey and Hezekiah Niles were the principal expounders, the one through pamphlets and books, the other in his newspaper essays; while in Congress Clay's eloquence played upon it, softening its asperities and baptizing it anew under the alluring title of " the American System." -"■ Early in 1819, through the Philadelphia society for the Promotion of American Industry, Matthew Carey began the issue of a series of pamphlets designed to overthrow the political economy of Adam Smith, and to establish the ' plain and clear ' principles of the science as understood by all the wise nations of Europe, and as suited to the situation and circumstances of the United States. The preliminary task of Mr. Carey was "to establish the utter fallacy of two maxims, supported by the authority of the name of Adam Smith, but pregnant with certain ruin to any nation by which they may be carried into operation": First, ' that to give the monopoly of the home market to the produce of domestic industry was to direct private people in what manner they ought to employ their capitals, and must therefore in all cases be either a useless or a hurtful regulation'; aud secondly, 202 THE TARIFF CONTBOVERSY. that a workman could easily transfer his industry from one branch of manufactures to some collateral branch, or to agriculture, and that 'the capital of the country remaining the same, the demand for labor will likewise be about the same though exerted in different places and occupations.' Part of Mr. Carey's reasoning on these points was keen, and anticipated later criticism upon the defects of laissez-faire. He pointed out some of the difficulties in the transference of industry, which Adam Smith had imagined so easy, denied that there were any collateral manufactures, and that if there were, the workman would find them not merely full but with supernumaries in abundance, insisted that artisans were wholly unfit for agricultural labor, and if not, there would be no chance of market for their surplus, and finally, that in the reorganization of industries it was impossible for capital to remain the same — arguments, indeed, which if valid, for Mr. Carey's purpose would prove altogether too much. Regarding Adam Smith, there was in his criticism a mixture of playful sarcasm and severity which showed that the lion felt sure of his prey. This Delphic Oracle of political economy, with his unsound reasoning and verbiage, he said, was like other visionaries and doubt- less failed to see the hideous result to which his theories would lead. Adam Smith's statement, that the mer- chants of England, in pursuing the mercantile system, had not understood how foreign commerce enriched the country, he could not forbear to cover with the ridicule which in his opinion it justly deserved. A merchant's apprentice of six months could answer the question — by the simple process of selling more than was bought I The THE AMEBICAN SYSTEM. f.2Q"3i principle was well understood by the merchants of Tyre three thousand years before Adam Smith was born ! Any plowman could understand it in fifteen minutes ! Hamilton's Report on Manufactures he called " one of the most luminous and instructive public documents ever produced in this, or perhaps in any. other country," and in respect to this point, " so essential to insure ' the wealth of nations,' " " light and darkness are not more opposite to each other than Adam Smith and Alexander^ Hamilton." But Mr. Carey's main reliance was upon what he called history, — supplemented by a series of highly colored conjectures. Adam Smith's statement that " if a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage," he proposed to test by its effects. Look at the prosperity of England, he said, with more than a million people employed in the woolen and cotton manufactures and affording a market for a million agriculturists. From this cheering prospect turn the startled eye to the masses of misery which Dr. Smith's system would produce. Suppose France, where labor and expenses were much lower, had gone into the woolen manufacture and thus enabled herself to sell at half price, or even threefourths or seven-eighths of the price in England. Suppose also that manufactured leather could be obtained from South America and iron from Russia, below the rates of England. Then apply Adam Smith's doctrine a,nd open the ports freely. France and Flanders would supply the English with superior and cheaper woolens and linens, Sweden with iron and cbpper, Italy and 204 THE TARIFF C0NTE0VEE8Y. China with silks, and so on. Who could contemplate the result without horror ? What a wide-spread scene of ruin and desolation would take place; the wealth of the nation swept away to enrich probably hostile nations, the laboring and industrious classes at once bereft of employment, reduced to a degrading state of dependence and mendicity, and through misery and distress driven to prey upon each other, all for the grand purpose of procuring broadcloth and muslins a few shillings per yard, or piece, or pound cheaper ! Continuing his illustration, Mr. Carey supposed the United States, ' pursuing Adam Smith's sublime system — buying cheaper bargains of wheat or flour, from one nation, cotton from another,' etc., etc., ' while the coun- try was rapidly impoverished, its industry paralyzed, laborers reduced to beggary, and farmers, planters, and manufacturers involved in one common mass of ruin ! ' To this simple-minded and melodramatic exposition of political economy, were added a detailed examination of the protective system of Russia and of Frederick the Great, in comparison with that of Spain and Portugal, where the doctrines of Adam Smith were said to have had free course for centuries,* and an answer to the various objections to a protective policy difi"ering but slightly from the summary of Hamilton. The common notion that to secure a home market is merely to allow home manufacturers to prey upon and oppress their fellow citizens, was sufficiently disproved by the fact that no country in the world carried prohibitions and protective duties farther than England, and yet she was able to undersell all the other nations of Christendom. * Already referred to; supra, 193 et seq. THE AMERICAN SYSTEM. 205 The maxim that trade will regulate itself ought to have been consigned to oblivion centuries ago, by the consid- eration that no trading or commercial nation had ever prospered without ' regulation of trade.' Number Six of these essays, which was addressed to the President and asked for an extra session of Congress, recited how agriculture was kept out of foreign markets, that the home market was deluged with foreign goods, while thousands of citizens were out of employment and manufacturing languishing or wholly abandoned, that the balance of trade was ruinously against the United States, real estate everywhere depreciated from 15 to 60 per cent, and concluded with the warning that nations, like individuals, which buy more than they sell, must be reduced to bankruptcy. But this huge inverted pyra- mid was unconsciously given a severe push in the eleventh essay, where Mr. Carey declared that were he the agent for the promotion of English interests, and had supreme power over the tariff, he would have it so modified as to protect national industry ; for even if carried to double or treble its present extent, there would be, as stated in the Oneida memorial, ample room for the importation of as much goods as the country could pay for.* These essays in political economy were printed and reprinted, reproduced and reinforced in Niles' Register, in the publications of the great number of societies called into being by the action of the American Society for the Promotion of Industry, by larger gatherings of manufacturers, by petitions to Congress, and in the arena of congressional debate. Especially was Mr. * 16 Niles, 134, 153, 169, 181, 197, 215, 219, 250, 263, 283, 299, 348, 373, 409. 206 THE TAEIFF CONTEOVEKSY. Carey's statement regarding the high price of labor, that the industry where manual labor was most used had succeeded best, repeated in memorials and speeches almost in his identical words. It was admitted by every one, it was said, that coarse cottons had thoroughly succeeded. Why then should the duty on coarse cottons be 83 per cent, while on linens, worsteds, stockings, silk, and iron, it was only 15 per cent ? Why leave glass at a rate of duty which did not equal the foreign bounty ? Why make a nominal duty of 25 per cent on cotton efficient for 83 per cent, and leave a nominal duty on paper of 30 per cent efficient for only 15 per cent or 20 percent? In introducing the tariff bill of 1824, Tod, chairman of the Committee on Manufactures, declared that no new principle was proposed; nothing but to extend and equalize the system, giving a protection to manufactures equal to that accorded to agriculture. Although it was denied by the Pennsylvania Society that the prohibition of cottons and woolens had ever been intended, it was claimed that total p"rohibition would cause no monopoly, for any body in the country could engage in manufactures. The United States exchanged raw materials for finished manufactures — the labor of from two to thirty persons for that of one. The last five years of European peace had taken more from the resources of the people than was acquired in the twenty-two years of European war. Baltimore mer- chants and citizens, petitioning for cash duties, declared tbat foreign credit took the wealth out of the country, and that from the practice and habit of using foreign goods in such abundance an unwarrantable prejudice had been created in their favor, to the great moral injury of the American community, who were disposed to consider THE AMERICAN SYSTEM, 207 many of those articles, not only as matters of conven- ience and comfort, but also as the test of importance among their fellow citizens. They recommended cash duties also with a view to turn the balance of trade and thereby bring back a portion of the precious metals. *Our extravagance in the importation and consumption of foreign luxuries must be checked,' was the solemn warning of Niles, ' or we are a ruined people.' ' Let the reformation go on,' he said in the hard times of 1819, with something of heresy toward Mr. Carey's economy and indulging a suspicion that, after all, nations do not lift themselves wholly by their bootstraps, — ' let the reformation go on, that economy may be forced upon us, the " days of leather breeches " come into fashion, and a hardy, high-souled yeomanry take the place of petty shop-keepers, and retailers, and speculators, and manufacturers of paper money.' The defeat of the Tariff bill of 1820 had, after all, he thought, rendered a permanent benefit to the country. The extreme pecun- iary pressure was rapidly curtailing the importation and consumption of foreign goods and bringing about a home trade of incalculable advantage to the country, by rendering the importation of such goods less and less necessary; these habits once established from necessity would be continued from choice. On the other hand, he emphasized the folly of America's policy by declaring that if England permitted free importations the wheels of her government would be stopped in less than a twelve-month. * * 15 Niles, 243, 244. ' ' Free trade is a pretty thing to talk about, but it cannot exist. What if England were to agree to receive American bread-stufifs? The taxes on land could not be paid, nor the poor rates, nor the bellies of the 208 THE TARIFF CONTEOVEKSY. These doctrines and appeals reached Congress in many forms and from all quarters. A convention of the " Friends of National Industry " at New York, with delegates from nine states, recounted to Congress the great natural advantages of the United States in soil, climate, industries, intelligent and enterprising popula- tion, contrasting thesie with the great enabarrassment in all branches of industry, — real estate decreased one-half in value, farmers reduced to bankruptcy, a great portion of the mechanics and artisans unemployed, and the country deeply indebted to foreign nations. There was something unsound in their policy, the memorial said, which required a radical remedy, and wisdom dictated to the United States to profit by the experience of other nations. Portugal had exchanged her prohibitive tariff for a protective one of 23 per cent, and in three or four years her manufactories were destroyed, her manufac- turers ruined, her workmen idle and beggars, and her raw materials sold at low rates to foreigners. For cen- turies Spain had nourished the industry of other nations, while the mass of her own subjects, unpro- tected in their industry, were in a state of abject distress and misery. Russia and Austria, on the other hand, protected their industry and were prosperous, while England, which protected with the most care, had amassed the most wealth. The return of peace had been attended with ruinous consequences to America. Their infant manufactures were blighted in the bud, priests be filled with the product of the labor of others " (30 Niles, 36 [1826]). And again (1831): "all the mighty capital of England — all her skill, industry, and scientific power, could not maintain an open trade with France for two years" (40 Niles, 289). THE AMEEICAN SYSTEM, 209 and the spirit of speculation spread abroad.* The specious idea of Adam Smith of buying goods where they could be had the cheapest had been given a fair trial and its pernicious tendency clearly demonstrated : the United States were buying cotton, wool, and muslins in Hindoostan, and there was good reason to believe they would soon have large importations of wheat from Odessa. The memorials from Ehode Island, Pittsburg, Baltimore, and Oneida County, N. Y., were pronounced in a Pennsylvania memorial, to be 'masterpieces of eloquence.' f The Pennsylvania Society for the Encour- agement of Manufactures, in a second memorial to Congress, undertook to answer the "vainglorious and cavalier statement " of the agricultural societies of Vir- ginia, that agriculture asked for no protection. They were astonished, the memorialists said, at such " utter un acquaintance with the real state of the case." The average of duties on such agricultural products as were usually imported, had been from the commencement of the government, they pointed out, far higher than those on manufactures. For example, the duty on cheese in 1789 was 57 per cent, on indigo 16 per cent, on snuff 90 per cent, on manufactured tobacco 100 per cent, on coals 15 per cent, on hemp and cotton 12 per cent; while seven-eighths of all manufactures including cottons, woolens, and iron, were subject to only 5 per cent. At present hemp was rated at 26 per cent, cotton at 30 per cent, cheese at 90 per cent, spirits at 80 per cent, snuff at 75 per cent, tobacco at 100 per cent, coal at 38i per * H. R. Dec. 20, 1819 ; Annals of 16th Congreas, let Session (Appen- dix), pp. 2286-2293, + Senate, January 17, 1820; Annala of 16th Congress, 1st Session, (Appendix) pp. 2311-2323. 210 THE TARIFF CONTROVEBSY. cent, sugar at 37^ per cent, potatoes at 15 per cent — averaging 58 per cent.* March 22, 1820, Baldwin of Pennsylvania, chairman of the newly created Committee on Manufactures, intro- duced a tariff bill embodying the general demand of the protected interests for the abolition of credits on duties, for a tax on auctions, and for increased duties. After a week's debate beginning April 21, the bill passed the House by a vote of 90 to 69; it was defeated in the Senate by one vote. In opening the discussion Baldwin stated that the first intention of the Committee had been to report a bill relating only to manufactures. But in reply to a resolution of the House, the Secreitary of the Treasury had reported that an increase of duty on woolens, cottons, and iron would impair the revenue, and tend to introduce smuggling. They had then called upon the Ways and Means Committee regarding plans for filling the Treasury, and received the reply that nothing would be adopted by that Committee except a recommendation for a loan of four million dollars. Baldwin did not approve of asking the Secretary of the Treasury to take part in this great national controversy, and thought it not right to call in the influence of that great depart- ment against a large portion of the nation, struggling against what they conceived to be the indifference of their own and the efforts of foreign governments. Therefore, called upon by petitions of thousands of individuals, the Committee had no alternative but to go to the extent of their jurisdiction and report a •Senate, April 15, 1820; Annals of 16th Congress, lat Session, (Appendix) pp. 2411-2423., THE AMERICAN SYSTEM. 211 system, whicli, while it would not injure commerce, should aid revenue and save the maaufaetures of the country. The general attempt was still to keep strictly within the bounds of moderation, although the thrusts of the other side and the exhibition of laissez-faire economy pushed the protectionists farther out than they had ever gone before. Baldwin granted that if other nations would adopt the maxims of free trade the industry of the country would regulate itself ; all that was asked was to meet regulation by regulation and thus make competition fair and equal. The tariff of 1816, he said, was a revenue bill, reported by the Ways and Means Committee more to aid the Treasury than to protect the industry of the country. A nation which relied for revenue solely on imposts must encourage the importa- tion, and not the manufacture, of its articles of con- sumption. With decreased importations revenue must diminish, and this had been the reason all attempts to promote home manufactures had failed. This system must be changed; either perpetual loans must be made, or new sources of revenue opened by giving a new turn to the labor of the nation. The minimum on coarse cottons had excluded the coarser cottons of India; yet every one admitted that coarse domestic^ cottons were now made cheaper than they were ever imported. This was equally true of nails and of every other article of which the country commanded the consumption ; and domestic competition would have this effect on every article. He advocated an additional duty on cottons from beyond the Cape of Good Hope, because those countries consumed none of our raw materials, afforded 212 THE TAEIFP CONTEOVEEST. no market for our produce, employed none of our labor, and exhausted the specie of the country.* The ablest and keenest speech in support of the bill was made by McLane of Delaware, afterwards Secretary of the Treasury under Jackson, who continued the tra- ditions of Madison, and pointed out some of the errors of laissez-faire. The object of the tariff, he maintained, was purely national, not sectional. Laissez-faire was a plausible theory founded upon a state of things which, in fact, had no existence. Labor and Capital would not of themselves become immediately or extensively em- ployed in manufactures without the fostering aid of government, especially in seasons of great distress. Manufacturers did not ask to sell at higher prices, but to sell at all. The profit of the manufacturer depended not less on the quantity sold than upon the price. Give the American his own market and he desired no increase of price, f The comprehensive, and indeed, the eloquent presen- tation of the ' American System ' was made by Clay. He, too, professed himself a friend to free trade, but it must be the free trade of a perfect reciprocity. If the governing consideration were cheapness, if national inde- pendence were to weigh nothing, if honor nothing, why not subsidize foreign powers to defend us. As to revenue, could any one doubt the impolicy of government resting *H. E. April 21, 1820; Annals of 16th Congress, 1st Session, pp. 1917-1936. Gross of New York was satisfied that manufactures would be established whether the bill was passed or not ; but if the govern- ment did nothing years of suffering and embarrassment might pass away before the evil would be completely cured ^H. K. April 24, 1820 ; Annals of 16th Congress, 1st Session, p. 1965). + H. E. April 28, 1820; Annals of 16th Congress, Ist Session, 2105 et teq. THE AMERICAN SYSTEM. 213 solely upon the precarious resource of a tariff. It was constantly fluctuating. It tempted by its enormous amount, at one time, into extravagant expenditure; then, by its sudden and unexpected depression, into the opposite extreme. It was a system under which there was a perpetual war between the interest of the government and the interest of the people. Large importations filled the coffers of the government, and emptied the pockets of the people; small importations implied prud- ence on the part of the people, and left the treasury open. On such a system the government would not be able much longer exclusively to rely. By encouraging home industry a basis would be laid for internal taxation which, when it got strong, would be steady and uniform yielding alike in peace and in war. " We do not derive our ability, from abroad to pay taxes. That depends upon our wealth and our industry; and it is the same whatever may be the form of levying the public contri- butions." It had been urged that to sustain manufac- turers was to tax other interests of the state. But the business of manufacturing was open to all. If true that the price of the home fabric would be somewhat higher in the first instance than the rival foreign articles, that ought not to prevent a reasonable protection to the home fabric; prices would be ultimately brought down to a level with that of the foreign commodity. Our foreign trade must be circumscribed by the altered state of the world. But it was not necessary or desirable to cut off all intercourse with foreign powers. Yet if we had adopted the policy of China, we should have no external wars. The late war would not have existed if the counsels of the English manufacturers had been listened to by their government. The tendency of 214 THE TAKIFF CONTEOVEKSY. a reasonable encouragement would be favorable also to the preservation and strength of the confederacy. Now, the connection was merely political. There was scarcely any of that beneficial intercourse, the best basis of polit- ical connection, which consists of the exchange of the produce of our labor. There was too much stimalus on our maritime frontier, while in the interior was perfect paralysis. Encourage fabrication at home, and there would instantly arise animation and a. healthful circula- tion throughout all parts of the Republic. He agreed with the other side that things would ultimately get right; but not until after a long period of disorder and distress, terminating in the impoverishment, and per- haps ruin, of the country. As to the maxim of "let alone," it was everywhere proclaimed, but nowhere practiced. It was truth in the books of European political econoraists, but error in the practical code of every European state. It might work in Europe, but the policy of the American States was otherwise — everything was new and unfixed. The maxim would require perpetual peace, and to be univer- sally respected. He would not give unreasonable encour- agement by protective duties. Their growth ought to be gradual, but sure. He believed all the circumstances of the present period were highly favorable to their success; but they were the youngest and weakest interest of the state.* * H. R. April 26, 1820 ; Annals of ICth Congress, Ist Session, pp. 2040-2049 ; also 5 Clay's Works, 2] 9 et leq. CHAPTER V. THE TARIFF AND NULLIFICATION. Both sides had strained a point over the tariff of 1816, but the South far more than the North. Had there been no South the commercial hostility of New England would not have been considered for a moment. The rates proposed by Dallas, or even higher ones, would have been accepted unquestioningly. Had there been no North there would have been no manufacturing establishments to conserve, and the tariff would have been placed on a strictly revenue basis. The South was traditionally jealous of manufactures, and opposed the tariff encouragement as partial and oppressive. The argument which had won success in 1789 — the national argument — was still more powerful in 1816; and for the sake of national independence, to keep an implied pledge to capital, and to conserve the results of the war, the Southern leaders sank their local prejudices and generously, though with some misgivings, held together to give the manufacturers of the North such protection as was thought necessary to enable them to withstand the shock of competition from abroad. The steady advance of the protected interests toward a systematic and permanent form of government encour- agement, and the elaboration of an economic philosophy, founded in considerable part upon the old mercantile (215) !16 ^ THE TARIFF CONTEOVEESY. loctrines, was met by a no less rapid crystallization of thought in the opposite direction. The patriotic senti- nent which had appealed so strongly in 1816 was leasing to be«felt. The North still addressed itself to he national argument, but no longer merely to secure he results of the war ; the ' American system ' proposed he creation of industries, and of all possible industries, n the country. We must naturalize the arts in our iountry, affirmed Clay, and by the only means which he wisdom of nations has yet discovered to be effectual, 'n 1816 the economic aspect of the tariff had been prac- ically waived. It could be no longer so, for the stand if protection was arrogant and aggressive. What the south hoped, rather than had reason to expect, namely, he gradual dropping off of the protective features of the ariff, had now no prospect of being realized. On the ;ontrary, the demand for better protection was growing harper and more uncompromising, and was backed by I compact, determined phalanx arguing from premises phich the followers of Adam Smith everywhere regarded s exploded errors. The very home competition which he protectionists lauded, in true laissez-faire fashion, as he regulator of all internal derangements, was indeed loing its work only too well, and creating an appeal or further government assistance which could not be esisted. At first there was merely a firm resistance to any ,ttempt to advance the tariff of 1816. About the pro- ective features of that measure, the South raised no [uestion. The falsetto of protectionism, that manufac- ures had been betrayed in 1816 and the tariff of that 'ear enacted solely in the interest of revenue, passed without challenge as the hysterics of demagogy. There THE TARIFF AND NULLIFICATION. 217 was no disposition even, to escape responsibility for the protective features of that act, although this charge furnished an easy chance. Not yet had the South come to regard the tariff of 1816 merely as fulfilling the im- plied pledges of war by letting the manufacturers down gradually, and without shock, to the former condition of things. Calhoun and Crawford were in the cabinet, but they were suspected of no hostility to the abstract prin- ciple of protection, though the growing coolness of Monroe's administration in the cause of protection was indirectly connected with the Southern predominance in it. As to the question of further protection, the South, and a large part of New England as well, was substan- tially unanimous. The government had already gone as far as sound policy would warrant or permit. The tariff of 1816 had been framed with a view not only to revenue, but to enable manufacturers to meet the importer in the home market, on terms of fair competi- tion. Further than this Congress ought not to go. To commercial enterprise, to the keen sagacity of the bus- iness class of the community, sharpened by the sense of self-interest and enlightened by long experience, it should be left to explore the old, or seek new channels.* Opposition to the increase of duties on iron, in 1818, brought out more sharply the point of departure. The complaints, it was said, came from New York and Phil- adelphia where iron directly competed with undersold imported iron. There wood was scarce, labor high, and provisions higher. The works had grown up during the war and under the restrictive system; it was not to be expected that they could flourish at any other time. * Talbot of Kentucky, Senate, Jan. 25, 1819. i/ 118 THE TAEIFF CONTEOVEESY. The legislature had given no pledges, and was not bound io sacrifice the great interests of the country to prop such fungus establishments. Like other speculators ;hey expected to profit by the necessities of their neigh- bors. If the present basis was not sufiicient, let them JO down; it was not the interest of the country to mcourage the production of inferior iron. The works n th« interior of the country asked no protection. Seven new states and two territories must get their iron Tom the North and interior, or from abroad. All had ron ore of the best quality and in the greatest abund- luce. Wood was inexhaustible, pit coal abundant, jroTisions cheaper than in any other part of the world, md the price of labor low. These people would soon lupply themselves. The proposed duty on bar iron was axing the raw material of our extensive domestic man- ifactories contrary to the explicit advice of Hamilton, 3ut the wiseacres of the day, the new political econo- nists of the North, had found out that Hamilton was f rong, and that the " Wealth of Nations " had been a surse to the country. The great agricultural interest nust bend before these mercenary few — ^these fat cap- talists. It had been said that the country could not )rosper unless manufactures were encouraged. Had my country ever equalled the United States in the ame time ? When the population became dense, when migration had ceased in a great degree, when the fine ands of the West and South were disposed of, then nanufactures would raise their heads. It was not true )olicy or true economy to force this by bounties and »rotective duties.* * Smith of South Carolina, H. E. April 14, 1818. THE TARIFF AND NULLIFICATION. 219 Holmes of Massachusetts brought out more pointedly the conventionalisms of laissez-faire. Nine-tenths of the evils upon mankind, he saidy came from governing too much, " let alone " was the sound legitimate doctrine, every man understood his own interest and would pursue it. He admitted, however, as exceptions, the necessity of aiding young industries, of supporting those essential to national supply, and of using countervailing restric- tions wherever there was a prospect of success. He recalled Clay's melancholy picture of the ruined cotton factories of New England, " with the glass broken out of the windows, the shutters hanging in ruinous disorder, without any appearance of activity, and enveloped in solitary gloom." He, too, he said, had passed by several dwelling-houses of very industrious farmers that never had any windows in them; and the reason was that the Boston and Pittsburg manufacturers had been so well protected that these farmers could not afford to purchase glass. The whole country was distressed, yet the facil- ities of manufacturers had never been greater. Clay had admitted that there was redundancy of capital in the United States, inactive and lifeless, and that the capitalists of Philadelphia had offered the government a loan of twenty millions at five per cent. Yet it was said that manufacturers could not succeed for want of capital; and as though nothing had been done, they asked for a little relief I Was the last tariff nothing? Was the modification made two years before to the full sat- isfaction of the manufacturers, nothing? Pa&s the present bill, and in two years more this would be nothing. The manufacturers had caused the deficiency in the revenue, because the tariff had been regulated more with a view to the protection of manufactures than to the protection of !20 THE TARIFF CONTROVEESY. •evenue. The deficiency would have to be made up by I direct tax on land, and he would never agree to tax he land to support manufactures. "Create a motive, 'orce a necessity, and sailors,'merchants, and farmers nust become manufacturers or quit their country. Pass his bill and it is the winding sheet of the navy." For iWenty years the manufacturing industry had flourished md improved more than other branches, and was naking progress sufficiently rapid. He hoped never to vitness the period when manufactures should hold the )re-eminence.* When the bill of 1820 reached the Senate, Otis declared limself prepared for a moderate measure, but Con- gress was not prepared on such short notice to decide ipon the great controversy between the school of Adam Smith and the economists and encyclopaedists of France, ile wanted more time to ascertain in what degree the iecline of manufactures had been accelerated by other iauses. Should the bill be passed, no matter what its (fifect on the revenue, or its reception by the country, it jould not be repealed without a breach of the public aith. It would be regarded as the foundation of a )ermanent structure, and as a pledge that the manufac- uring interest should be supported whatever the sacri- ice and expense. \ Silsbee of Massachusetts was also a friend to manufac- ures and disposed to afford every aid consistent with a lue regard to the other great interests of the country. 3ut in a time of general depression, he could not con- ent to build up any one interest upon the ruins of mother. As to the alleged balance of trade against the » H. K. AprU 27, 1820. t Senate, May 4, 1820. THE TARIFF AND NULLIFICATION. 221 United ' States, the custom-house returns were very- imperfect. The East India trade was certainly profit- able.* It was not a question, Lowndes declared, as to whether manufactures were useful; nobody denied that. Nor was it even a question whether it was the policy of the government to encourage them by duties upon foreign importations. The idea of raising the value of '^ labor and capital employed in every pursuit was very patriotic, but impracticable. "We could not create capital — could only produce a change in the distribution of labor among the diflferent employments. The notion that a bounty could be given without at least a tempor- ary sacrifice was utterly illusory. Admitting that it was "^ the interest of the United States to manufacture articles which it could procure cheaper abroad, it must be still more its interest to manufacture such as should prove themselves adapted to its circumstances by being able to bear foreign competition. The statesman could not v/ raise the wages of the laborer, estijnated in the produce of the earth, and by high duties must lower his wages, estimated in the manufactures which he must consume. Even if all nations admitted a free trade, the arguments for restriction on the part of the United States would be just the same. Suppose England admitted American bread-stuffs when the price was low; would any friend of the bill avow that this policy, which would make the establishment of manufactures a matter of somewhat more difficulty, would incline him to dispense with protective duties ? Whatever had been the encourage- ment which should be afforded to manufactures, it had always hitherto been supposed that these were required to be greatest at their first establishment. Hamilton it— ■ * H. B. April 24, 1820. !22 THE TARIFF COKTBOVEESY. listinctly said that -where any branch of industry con- inued long to require a boxinty, it afforded proof that here were obstacles to its establishment which would' nake it unwise to persevere in it. Yet our system was lot only to persevere but to increase.* Tyler of Virginia declared that if any one believed his bill would secure the permanent interests of the nanufacturers, that this was all that would be required rom Congress, he was most grossly deceived. This was )ut the incipient measure of a system. No principle of >olitical economy was more true thaji that capital would low into those employments from which it could derive he greatest profits. Suffer things to take their own lourse and the time would come when manufactures rould flourish without the factitious aid of government. vTatural causes would produce this result. The duty on otton and tobacco he characterized as pure deception, f It was this supposed unerring instinct &f capital, and he idea that protection was a tax on one indiastry for he benefit of another, that was more and more relied in. Active as the manufacturers were in sending peti- ions to Congress, the opponents of the tariff were hardly ess so. From the commercial classes of Philadelphia, Tew York, Boston, and Maine, and from the agricul- ural societies of Virginia, a multitude of memorials eiterated to Congress these laws of political economy nd the injustice of further raising the tariff. A memor- al from Maine declared that the vital interests of the Jnion depended upon the commercial prosperity of the ountry, that the Federal government was ushered into xistence with almost a single eye to it. Even the »H.R. April 28, 1820. t H. B. April 24, 1820. THE TARIFF AND NULLIFICATION. 223 present rate of duties was embarrassing to commerce and injurious to revenue. There was a premature growth of manufactures during the war, and the gov- ernment was compelled to protect them by the imposi- tion of duties, well known at the time to be injurious to the revenue, and adding to the already appalling pros- pects of the merchant. The celebrated essay of Hamil- ton had been pressed into service. The pioteetionists had adopted his principles, but disfegaided their appli- cation. Duties were now nearly treble what they were when he wrote. Hamilton could never have imagined that the time would come when it would be deemed good policy to make the people pay from thirty to a hundred per cent more for good^. Besides, duties were now fully adequate for the protection of manufactures, and steadi- ness in government regulations was highly essential. At present there was a perfect acquiescence in relation to what had already been done to favor manufactures.* The merchants of Salem and vicinity professed them- selves free to admit that the manufacturing interests of the country deserved the fostering care and patronage of the government, but the interests of commerce were not less vital, and it was never sound or safe policy to build up one at the expense of the other. No manufac- tures ought to be which could not grow up under ordin- ary duties. The attempt to increase duties was not only repugnant to those maxims of free trade which the United States had hitherto so forcibly and perseveringly contended for as the sure foundation of national pros- perity,, but they were pressed at a moment when the statesmen of the old world, in admiration of the success * Memorial from Maine, Oct. 19, 1820; Annals of 16th Oongresa, 2d Session (Appendix), pp. 1493-1498. 224 THE TARIFF CONTROVEESy. Df the policy of the United States, were relaxing the (rigor of their own system and yielding themselves to the rational doctrine, that national wealth is best pro- moted by a free interchange of commodities upon prin- ciples of perfect reciprocity. It was a strange anomaly in America to adopt a system which sound philosophy in Europe was exploding.* An elaborate and inflated memorial from Philadelphia Jeclared that it was impossible to compete with Sheffield, Birmingham, and Manchester, whose workmen were ■breed to labor from fourteen to seventeen hours, to live ilmost exclusively on a vegetable diet, in order to earn I miserable pittance of wages scarcely sufficient to keep jody and soul together, f A memorial from Charleston, 3. 0., after declaring the maxim that labor and capital ;hould be free to seek and find their own employment, 00 evident to permit of controversy, added that if jounties were to be given to fill Northern cities with nanufactories to furnish articles with which they could veil dispense — if this was necessary to independence, squally so would it be to cover the pine barrens of the 5outh with hot houses to raise sugar, coffee, tea, pepper, md the like. The Southern states were not, and could not or a long series of years become a manufacturing nation, )ut must raise articles of first necessity. Therefore it fas peculiarly their interest that interchange with the rorld should be free, and equally their interest that the * Memorial from merchants and inhabitants of Salem and vicinity jwns, H. R. January 31, 1820; Annals of 16th Congress, 1st Session Appendix), pp. 2335 et seq. t Memorial of merchants and others of Philadelphia, Senate, Nov. 27, 820 ; Annals of 16th Congress, 2d Session (Appendix), pp. 1498 et seg. his, of course, was urged as an argument against protection, not in its Ivor, as would have been the case even a decade later. THE TARIFF AND NULLIFICATION. 225 I articles they were compelled to consume should be pro- cured on the most advantageous terms. The United States could only calculate to manufacture for the supply of its own wants, and this would not consume half the cotton crop. A duty of 30, 50, and 100 per cent was called for on all foreign manufactures, a virtual ad- inission that the productions of the foreign artisan could be sold in the American market at one-half or two-thirds of the home price. In conclusion, the Charles- ton citizens had no hostility to manufactures, but wished them to rise, flourish, and attain a vigorous and perma- nent maturity. But it was unwise to force them into premature being.* Various agricultural societies of Virginia "invoked the protection of Congress against the wild speculations and ruinous schemes of an association denomirwating themselves friends of national industry." f The Roanoke Agricultural Societies quoted liberally from Adam Smith, and from the Edinburgh Eeview against the proposed tariff of 1820, contrasted the freedom and independence of agriculture with the hireling manufacturer, and declared that the identity of feeling and interest which was the cement of the Union, would be destroyed by a rigid system of prohibitive duties. J Fifteen agricul- tural societies of Virginia united in a remonstrance against the proposed tariff of 1820. Agriculture, they said, solicited not the fostering care and patronage of •Remonstrance from citizens of Charleston, S. C, Senate, Dec. 8, 1820 ; Annals of 16th Congress, 2d Session (Appendix), pp. 1505 et seq. t Petition of various Agricultural Societies of Virginia, Senate, Dec. 18, 1820; Annals of 16th Congress, 2d Session (Appendix), pp. 1517- 1522. t Senate, Dec. 22, 1820 ; Annals of 16th Congress, 2d Session (Appen- dix), pp. 1522-1524. 226 THE TAKIFF CONTROVERSY. government to alleviate by bounties, monopolies, or protective duties, calamities inevitable in their nature. The tariff plus the freight already averaged 40 per cent, and the necessaries of life were much cheaper than in Europe. The favorite argument that home manufac- tures were necessary to keep the great body of people firm in time of war was so offensive that indignation would not suffer them to pass it unnoticed.* A remonstrance from Petersburg turned the historical tables by declaring that the advantages of a free trade were fully demonstrated in the commercial history of the nations of Europe, from the unexampled prosperity of the Hanse towns, under the influence of an unre- stricted system of commerce, to the commercial ruin of Great Britain, under the most complete prohibitive system that had ever been devised. From Great Britain the remonstrants learned that a nation might become so deeply involved in the protective system as to be unable to extricate herself, though aware of the ruin to which it led. The tendency of protective duties, the remonstrance went on, was to ruin every one engaged in commerce direct or indirect, necessitating heavy internal taxes to make up the deficiency in revenue, and forcing our seamen to emigrate to commercial countries. As to the home market argufiers, they had not calculated how many manufacturers one agriculturist could feed, nor how immense an addition to the products of the soil and the number of its cultivators half a century of unrestricted agricultural enterprise would make. The evils of the prohibitive system were obvious, universal, and highly oppressive; its advantages limited to a few * H. R. Jan. 17, 1820 ; Annals of 16th Congress, Ist Session (Appendix), pp. 2323 et set/. THE TARIFF AND NULLIFICATION. 227' great capitalists. In conclusion, by adding to tlie aver- age tariff of 25 per cent, 15 per cent for freight, 33^ per cent for taxes paid by the British artisan, and the increased value of money in the United States, the remonstrants were able to figure out a protection of over 100 per cent.* The report of the Committee on Agriculture, through Thomas Forest of Pennsylvania, to which had been referred the petitions and remonstrances of the Virginia Agricultural Societies, while dealing somewhat in laissez- faire abstractions, was yet an admirably tempered argu- ment. The petitions were considered, the Committee said, from the point of view of the threatened interests of agriculture. The only way in which the government could render agriculture any service was to remove the restrictions which oppressed it. The question was not as to the desirability of manufactures, but as to the expediency and legality of the means of promoting them. It was not possible to buy of foreigners unless they bought of us in return. As long as capital contin- ued to be employed in the foreign trade, it could only be because it was more profitably employed than it could be if withdrawn. If we could pay for what we bought, well and good; if we could pay only at a sacri- fice, then we would cease to trade. The whole fallacy of the balance of trade proceeded from the fatal error in political economy that the commodity called money was regulated by different laws from all other commodities; or from the no less fatal error that a nation, in order to become rich, must sell more than it buys. Among sources of loss in the restrictive system was the constant * Senate, April 15, 1820 ; Annala of 16th Congreas, 2d Session (Appen- dix,) pp. 1490 et aeq. 228 THE TARIFF CONTEOVEKSY. tendency to diminish production, to drive commercial capital abroad and capital from one kind of manufac- tures to another, and population from one state to another. The restrictive system not only diminished the amount of national wealth, but must distribute it very unequally, which was by far the worst effect. England was prosperous not in consequence of this system, but in spite of it. The present low price of cotton goods was ascribed by the manufacturers to competition, by their opponents to the fall in price of raw material and of labor, the greater facility in production, and the general stagnation in trade. The fall had been general all over the world, and coarse cottons would be still lower if the duty were taken off.* The demand for additional protection was in no way checked by the failure to pass the bill of 1820, though for a time the momentum was lost and all efforts were fruitless. Business slowly revived, interrupted indeed by occasional reverses, but the improvement was so marked as to deprive the arguments of 1820 of much of their force. Niles noted especially, in 1822, the prosper- ity of Baltimore and Philadelphia. In spite of continued importations at Baltimore he rejoiced to see the market amply stocked with domestic goods and sales continually increasing. Great building activity was noticed in Philadelphia, and the city, Niles declared, owed much of her prosperity to the amount and success of her manufactures, f The growth of the cotton manufactures • H. R. Feb. 2, 1821; Annals of 16th Congress, 2(i Session, pp. 1653- 1681. t 23 Niles, 1, 17. Cf. statement by the Hon. W. D. Kelley, Forum, February, 1888. THE TABIFF AND NULLIFICATION. 229 was especially rapid, and in 1823 a general revival of business set in.* Except the iron industry, ' which was still languishing and imperiously demanded the protec- tion of the government,' domestic manufactures, Niles declared in 1822, were prosperous. The legislation of necessity and the balance of trade against us, he said, had given to several branches of business a large portion of that spirit which Mr. Baldwin's projected tariff was designed to afford. The woolen manufacturers were looking up, and great improvements were making in the quality of their cloth. Many farmers had more than a thousand head of sheep, some three to four thousand. The cultivation of flax was extending rap- idly. American coarse cottons were better than the British, though extensively imitated and the flimsy English fabrics imposed on the ignorant, f The country in 1821 and 1822, he said, was in a state of convales- cence. And such were her resources that no policy, however injudicious, could permanently depress her. Her native energies would enable her to rise with, or, as in the recent case, without the aid of government. | In his annual message, December 2, 1823, President Mon- roe recommended a revision of the tariff in the interest of further protection, but evidently without sharing Matthew Carey's envy of Russia. " If we compare the present condition of our Union with its actual state at the close of our Revolution," he wrote, " the history of the world furnishes no example of a progress in improvement, in all the important circumstances which • 2 Bishop, 268, 281 ; for further details see 2 Bishop, years 1821, 1822, 1823 ; Bee also 5 J. Q. Adams' memoirs, quoted in Taussig, p. 74 (note). + 22 Niles, 225 ; see also 24 Niles, 243. i 23 Niles, 42. 230 THE TARIFF CONTEOVERSY. constitute the happiness of a nation, which bears any resemblance to it." * In his annual report, December 21, 1821, Secretary Crawford advocated a general advance of duties in the interest of revenue, adding, however, ' that the increase on some articles might eventually cause a reduction of revenue, but only where similar articles were manufac- tured in the United States, in which event domestic manufactures would have been fostered and the general ability of the community to contribute to the public exigencies would have been proportionately increased.' But Congress showed little disposition to act upon the Secretary's mild suggestion. The election of a new speaker, f opposed to further protection, brought about a re-arrangement of the Committee on Manufactures, and although Baldwin was still chairman, a major- ity of the Committee voted it inexpedient at that time to legislate on the subject of manufactures. Bald- win immediately introduced a resolution to add to all duties the amount of bounties granted in their own countries, increasing the rates on various articles, and instructing the Committee on Manufactures to prepare a bill accordingly. This failing, Eich of Vermont, relying on the saving clause in the Treasury report, introduced a similar resolution with regard to the Committee of Ways and Means. | March 12, the Com- mittee reported a bill, but it was never taken up. Already intrigues regarding the next presidential election had begun and were engrossing the time and * 1 Statesman's Manual, 461. For adverse statements, see 23 Niles, 41, 97; 24 16., 161 ; Memorials to Congress; 5 Clay's Works, 256 et seg., 440; and nearly all later protectionist literature. t P. P. Barbour of Virginia, Clay having retired to private life. i H. E. Jan. 7, 1822. THE TARIFF AND NULLIFICATION. 231 attention of Congressmen. Niles characterized this sessifin as a " do nothing Congress," some members looking for an early adjournment to escape taking up certain important subjects, others because hopeless of accomplishing anything.* The following year Crawford repeated his recommen- dations regarding the tariff, and January 9, 1823, Tod of Pennsylvania, the new chairman of the Committee on Manufactures, reported a measure somewhat milder than the bill of 1820. This too was smothered in Committee, because, as Niles insisted, so many members had embarked in president-making; f but it was confidently claimed that the next Congress, which under the new apportionment would contain a considerable accession of members from the agricultural and manufacturing states of the North and West, would surely come to the rescue of the manufacturers. J The tariff measure of 1824, introduced by Tod from the Committee on Manufactures, January 9, was dis- cussed on substantially the old grounds. The protec- tionists leaned more heavily on the doctrines of mer- cantilism. Clay especially holding up the example of England, declaring that " a people better fed, and clad, and housed, are not to be found under the sun than the British nation." The national argument, however, was continually emphasized. Tod declaring that no new principle was proposed — merely extending and equalizing a system, giving other departments of domestic industry, and other oppressed portions of the community, something of that protection which the laws • 22 Niles, 20. t See 23 Niles, 146. i 23 Niles, 401. 232 THE TARIFF CONTEOVEBSY. had so liberally and wisely given to the cultivators of cotton, of sugar, and to all the interests of navigation. Clay, who made the principal argument for the bill, invested protection with the name " American System," and in general elaborated and amplified his argument of 1820. He referred to previous tariff legislation as a fatal policy, inevitably leading to impoverishment and ruin, dwelt upon the widespread distress of the country, denied that wages were in any considerable degree higher in the United States than in England, justified the English Corn Laws, quoted as in favor of the restric- tive and prohibitive system, the Edwards, Henry the Eighth, Elizabeth, and the Colberts of Europe, and Franklin, Jefferson, Madison, and Hamilton, at home, and as a still higher authority that " master spirit of the age, Napoleon Bonaparte." The opposing arguments showed how deeply the laissez-faire theory had impressed itself upon the South, though the specific points made by protectionists were answered in detail and generally in good temper. McDuffie of South Carolina took the ground that each item should stand on its own merits, and made his protest almost in the language of Tucker in 1789. Modify the measure as they might, he said, the South must sustain from its passage a vast and heavy pecun- iary loss. But regarding the general interest of the Union, if it could be shown that the proposed duties were connected with the independence of the country, this consideration would always have great weight; and a system of protection to manufactures tending to these objects, although it might bear heavier on the Sotith than on the North, would not be disapproved.* Garnett * H. R. February 12, 182i. THE TARIFF AND NULLIFICATION. 233 of Virginia declared, regarding the proposed duty of twenty-five cents per bushel on wheat, that this attempt to raise the price of wheat was one of the most remark- able examples of the progress of the American legisla- ture in the science of political economy which had ever been exhibited.* He insisted that the bill was for the benefit of capitalists only, and if persisted in would drive the South to ruin or resistance. The policy of the general government from the commencement had been, as respected the South, one of unabating exaction. The South had as yet, he verily believed, derived no ad- vantages whatever from the Constitution, and the conse- quence was a degree of distress altogether inconceivable, f Webster, who bore the brunt of argument, sneered at Clay's " American System " as a purely foreign policy, denied that the country was not generally prosperous, enumerated many causes of the present evils, pronounced the balance of trade argument "jargon and non- sense," and the doctrine of prohibitions preposterous, reaffirmed the statement that the high price of labor hindered domestic manufactures, especially iron, and in general made a keen and exhaustive exposition of laissez-faire. He explained, however, that there were parts of the bill which he highly approved, others in which he should acquiesce, and that he should vote for increased duties on woolens because asked for by his constituents. J As the protectionists gradually lost the sense of economic law, their opponents sank deeper and deeper * H. R. February 27, 1824. t H. R. April 2, 1824; Annals of 18th Congress, let session, p. 2098. X H.' R., April 2, 1824; Annals of 18th Congress, Ist session, pp. 2026-2068. 234 THE TARIFF CONTEOVEESY. into the bog of abstract laissez-faire. In general the lesson it taught the latter was that the amount of duty was always added to the price, at least of the foreign article, that protection meant merely the taxing of the many for the benefit of the few, and finally that the tariff was a partisan measure deadly hostile to the South. This outburst of sectional jealousy coming up again and again was the most , significant and ominous feature of the debate. The struggle over the admission of Missouri had roused an intense sectional feeling and slowly convinced the South that its peculiar institution was in danger from the manufacturing states of the North.* Madison was quick to see the close connection between the two, but not the danger. "The tariff," he wrote, " is another question not a little pregnant with animated discussion. But it divides the nation in so checkered a manner that its issue cannot be very serious, especially as it involves no great constitutional Question." f To Jefferson, however, the Missouri strug- gle came like a firebell in the night sounding the knell of the Union and awakening him from his complacent dream of normal constitutional growth and of the infallibility of republican counsels. J Once more aroused * In the debate on the Missouri bill the growing sectionalism was often commented upon. See, for instances, H. R. January 26, February 17 and 19, 1820. + Madison to Bush, December 4, 1820; 3 Madison's Works, 195. t "I had for a long time ceased to read newspapers, or pay any attention to public affairs, confident they were in good hands, and content to be a passenger in our bark to the shore from which I am not distant. But this momentous question, like a firebell in the night, awakened and filled me with terror. I considered it at once as the knell of the Union. ... A geographical line, coinciding with a marked principle, moral and political, once conceived and held up to THE TARIFF AND NULLIFICATION. 235 to the importance of the constitutional doctrines he had so freely violated, he strove with what energy yet remained to stir up the old republican feeling. The administration of John Quincy Adams with its federal ideas regarding construction, and its bold attitude toward questions of the day, only deepened his terror until he died in profound gloom for the future of the Republic* In the debate on the tariff bill of 1820, Alexander of Virginia took occasion to warn those who thought by means of that or any other injustice to mount upon the backs of the Southern people, that they would find their seats neither pleasant nor entirely secure, f But the Southern temper did not stop with the con- viction that the interests of the South were being sacri- ficed. Nor was this to have been expected considering the broad-cast way in which Madison and Jefferson, in the Virginia and Kentucky Resolutions, had once sown the seed of the whirlwind. The constitutional question, timidly broached, and by a Massachusetts member, in 1820, 1 and as timidly enforced in the Salem and Maine Memorials, was taken up in earnest by societies and local leaders in the South, who, as yet far in advance of public sentiment, prepared the way for and hastened the approach of nullification. The Virginia Eemonstrance of November 21, 1820,§ reasoned that to force a people the angry passions of men, will never be obliterated, and every new irritation will mark it deeper and deeper" (Jefferson to John Holmes, April 22, 1820; 7 Jefferson's Works, 159.) * See letter to Giles, December 26, 1825; 7 Jefferson's Works, 426. t H. E. April 26, 1820. t See Clay's Speech, H. E. April 26, 1820; Annals of 16th Congress^ Ist Session, p. 2049; also ib. p. 1998. § Supra. 236 THE TARIFF CONTROVERSY. to manufacture what they could purchase abroad at a lower price was equally repugnant to justice, to policy, and to the principles of the Constitution, and declared that the powers necessary to execute such measures were too despotic to have been delegated by the Amer- ican people to their government. The Charleston Memorial of December 8, 1820, merely called attention to the fact that every system of restriction, of monopoly, of particular privilege, was hostile to the general spirit of the Constitution; while a committee of the South Car- olina legislature, though denouncing the restrictive system in unmeasured terms, deprecated any factious resistance or mischievous assertion of state rights. * After the enactment of the tariff of 1824 excitement gradually died out. The country continued generally prosperous and was rapidly growing. In the partisan exaggeration of Clay it was the beginning of the seven most prosperous years in the history of the United States up to 1832. Little was heard of the tariff,' but unfortunately the sectional and states rights feeling grew daily in intensity. The bitter feelings engendered by the presidential struggle of 1824-25 forbade all fur- ther idea of party harmony, and foretold the desperate opposition to the administration, though " pure as the angels." But it was Adams' frank and bold adoption of the federalistie principles of constitutional interpretation, * 19 Niles, 346. This was quite the prevailing tone until after the passage of the tariff of 1824. Occasionally some one more irresponsible than the others ventured to announce, as did Smyth of Virginia, with all the ecldt of a new discovery, that the Committee on Manufactures itself was an unconstitutional committee. Congress, he said, had nothing to do with manufactures, but to pass a law for giving up runaway apprentices ; and nothing to do with agriculture, but to pass a law for giving up runaway slaves (H. K. January 20, 1823.) THE TARIFF AND NULLIFICATION. 237 long practiced indeed, and almost without compunction, by the Jeifersonian republicans, and his vigorous asser- tion of a national policy such as Calhoun had clung to in 1816, that crystallized Southern sentiment and veered it swiftly around to the point of the Virginia and Ken- tucky Eesolutions. Once more John Randolph and sther malcontents of JeflFersonian days found themselves in favor and installed as schoolmasters of a willing 3outh.* Issue was joined upon the very first acts of the administration, the Jackson campaign was started almost immediately, and soon opposition presses and Drators were ringing changes upon ' the alarming encroachments of the general government upon the rights of the states.' The prominence of the tariff in this campaign of hysterics was almost accidental. The tariff bill of 1824, modified as it had been in Congress, was almost satisfac- tory as a revenue measure, and although the South freely denounced the tariff as unconstitutional along with other federalistic abominations, no special emphasis seemed likely to be laid upon it. But amid the general pros- perity one emphatic plaint was heard. The arrange- ment of schedules with regard to wool and woolens had not proved satisfactory to the manufacturers. They pointed out that while the tariff of 3824 had increased the duty on wool 15 per cent, it had added only 8 per cent to that on woolens, and declared that a measure better calculated to ruin the manufacturers of woolens could not easily have been devised. More than a third of the wool manufactured in the United States was im- ported from Europe. Wool sold in Europe at 50 per cent lower than in the United States. The low rate of wool * See Henry Adams' John Eandolph (American Statesmen Series). 238 THE TARIFF CONTEOVEESY. and labor abroad and the inefficiency of the home tariff enabled foreigners to persevere in their system. Besides there was always a surplus of manufactures in a country like England, so it was profitable to the English at whatever price they sold it. The woolen manufacturers at Boston, September 14, 1826, proposed to ask Congress for either an increase of duties on woolens or a decrease on wool. But tbeir memorial to Congress was more wily, and expressing the hope that the supply of domestic wool would soon be equal to the demand, declared that there was but one resource left, a square yard duty and the establishment of a minimum rate.* By their own confession the manufacturers had expected too much from the tariff, and capital had been over-venturesome, so that even domestic competition had unduly depressed prices. To cap the climax, England practically removed her duty on the raw material, — as the protectionists hotly maintained, for the express purpose of breaking down the American manufacturer. At any rate, while wool growers prospered and the number of sheep rapidly increased, the manufacturers found themselves with nearly half their machinery idle. The appeal to Congress resulted in the introduction of a bill, January 10, 1827, by Mallary of Vermont, chairman of the Committee on Manufactures, in con- formity with the desires of the manufacturers. The ad valorem rate on woolens was not touched, but four minimums were established. All woolens whose actual value at the place whence imported was 40 cents or less per square yard were to be dutied at 40 cents; between 40 cents and $2.50, at $2.50; between $2.50 and $4.00, at * See 31 Niles, 105 ; ih, 185 ; ih. 200. Another proposition was to introduce the principle of the English Corn Laws (31 NilSs, 217). THE TARIFF AND NULLIFICATION. 239 the latter figure. Raw wool was to be advanced to 35 per cent after June 1, 1828, to 40 per cent one year later, and wool costing between 10 cents and 40 cents per pound was to be dutied as costing 40 cents.* At first the bill seemed likely to pass without decided opposition. The majority in the House was eleven, but in the end, owing to political intrigues, it was defeated in the Senate by the casting vote of Vice-President Calhoun, f So far the appeal had been on the old grounds and solely for the relief of the woolen manufacturers. The very next movement showed the juggler's art and dis- closed the fact that the tariff controversy had been swept into the whirlpool of partisan politics, from which it could never be rescued. Concealed by the cloud which they presently raised, men like Van Buren managed to display a double front, combining Northern protectionists on non-partisan lines for one purpose, and Southern free traders aiid Jackson protectionists for another, btit in all cases, with an eye single to political supremacy and the escape of unpleasant responsibilities. Simple minded protectionists like Niles were quite unable to comprehend the rapid evolutions which fol- lowed, and unconsciously played more or less into the hands of the intriguers. The Harrisburg Convention which met in June, 1827, iisclosed the silent opposition that had proved fatal to the woolens bill. The call for this convention, made by the Pennsylvania Society, was addressed to all manufac- turers and farmers, and friends of both, and the woolens bill cautiously denounced because it had included only * 31 NUes, 319. 1 See 31 NileB, 393; 32 ib. 23; 34 ib. 187. 240 THE TARIFF CONTEOVERSy. one class of manufacturers. This sentiment was voiced by the Pittsburg Convention to choose delegates to Harrisburg, which under the guidance of Baldwin, author of the tariff bill of 1820, and presently to be made a judge of the Supreme Court by Jackson, declared that every description of American manufactures wher- ever located, was an object of national concern, and earnestly recommended that the woolens bill be so amended as to include any other article which needed protection.* The attempt to procure from the Harrisburg Conven- tion a recommendation for a general advance in duties on protected articles was most puzzling to the uninitiated. The stories of distresses among manufacturers in general Niles pronounced to be pure British inventions designed to console British workmen for their own distresses, and he was not aware that any other than the manufacturers of wool desired the intervention of Congress, f The iron manufacturers, he declared afterwards, when he had become reconciled to the tariff of 1828, privately begged of the Harrisburg Convention to be let alone, as they were doing very well and feared the effects of further home competition. J While the bill of 1828 was under discussion Niles declared that it would not benefit either wool or woolens; that while it would do no harm to try an increase on iron, no increase was desired; that they ought to make hemp at home, but did not, and an increased duty might destroy the manufacture of cotton bagging and interfere with cordage; that the « 32 Niles, 294. See also 33 Niles, 391 , 431 ; 34 ib. 290-294. t 31 Niles, 55, 153. i 38 Niles, 350-352. " But," added Niles, " they magnanimously con- sented, for general purposes, that an increased duty on hammered bar iron might be asked for." THE TAEIFF AND NULLIFICATION. 241 proposed increase on molasses would destroy the market with the West Indies, while that on distilled spirits would simply increase the home brewing of French brandy and the like; and finally that the glass makers did not ask for further encouragement.* A general bill was, however, drawn up by the Conven- tion, and for the most part undoubtedly in perfect good faith. The bait was temptingly displayed, and protec- iionist logic could not detect the slightest flaw in such a scheme. Nor would its adoption in toto have been, probably, of very serious concern one way or the other ;o the manufacturers. But it formed a famous cover inder which the intrigues of a particularly unsavory presidential campaign could be worked out. Van Buren ippeared in the New York Convention for choosing ielegates to Harrisburg, but presently retired from ictive sympathy in the movement with solemn warnings igainst mixing politics with the measure; while later le kept himself easy with the South by having instruc- ;ions prepared in the New York legislature directing ;he senators from that state to vote for the bill of 1828. Simultaneously the Senate of New York lashed Pres- dent Adams for his apathy in the cause of protection, .hough bis Secretary of the Treasury had, cordially indorsed the Harrisburg bill and elaborately argued the !ause of protection. Baldwin denounced the President )ecause he had never recommended protection in his tnnual messages, and even Niles found himself scored IS hostile to the American System, f * 33 Niles, 431 et seg. t 33 Niles, 351 , 352 ; 34 ib. 75, 290-294. For Secretary Eush's Report, 827, see 33 Niles, 247 et seq. 242 THE TARIFF CONTKOVEESY. The Harrisbtirg bill, however, in recognizable shape was hot destined to appear before Congress. A Penn- sylvania-Southern combination in the interest of Jack- Son, and through Van Buren's influence, it was said, placed Andrew Stevenson of Virginia, an anti-tatiff member, in the speaker's chair. He in turn, continued Mallafy as chairman of the Committee on Manufactures, but with a hostile majority to preside over. The first indication was given December 31, 1827j when the Committee, against the protest of the chairman, voted to send for persons and papers to examine int6 the condi- tion of manufactures. This movement was considered hostile to th« Harrisburg bill and was opposed by pro* tectionists, who objected to delay and insisted that the facts were well known. But the resolution was sustained in the House, 102 to 88, by the same Pennsylvania- Southern combination. The protectionists were greatly startled. "It is manifest," Niles declared editorially, " that any proposed alteration in the tariff with a view to the protection of the agriculturists and manufacturers of our country, is to be defeated— ^without reference to the merits of the question at issue, and by the default of individuals hitherto counted upon as fast friends of the systeni. ... If they succeed, if the friends of domestic industry shall not rally themselves and speak in a voice that must be regarded,-^our country will meet with a shock from which it will «i6t easily recover itself, prom fifty to sixty millions of dollars will be instantly sacrificed in the reduced value of lands and sheep and the manufactories of wool. Already the farmers stand with whetted knives to kill off these useful animals. . . . The proprietors of woolen manufactories will be generally ruined." * ; * 33 JS ilea. 329. THE TARIFF AND NULLIFICATION. 243 The next move on the part of the anti-tariff men was even bolder, though less fortunate in the end, A bill was prepared which, while modifying somewhat seriously the woolen schedule, admitted without discrimination items and rates obnoxious to ail rational protectionists. The result was astounding. The bill as reported, Niles aflftrmed, could not pass, and if it did, it ought to be amended to read: '* An act to prohibit the manufacture of certain woolen goods in the United States, and to prevent the increase of sheep, and for other purposes." * This was precisely what the enemies of the tariff wished to bring about, and with the aid of Pennsylvania they succeeded in retaining all the more objectionable fea- tures of the biU. The " tariff of abominations," as it was popularly called, they hoped to make so bad that enough tariff votes could be got to secure its final defeat. But here they were at fault. Pennsylvania was consistent to the last, and parted company with the South on the final vote ; and although a number of tariff men refused to accept it, the bill, abominations and all, passed and received the approval of President Adams. The discussion brought out little that was new. The protectionists had so much trouble with the Committee's bill, which proved, even after considerable amendment in the Senate, a very bitter draught, that they had little heart to expound the American System. The British spectre appeared with the old doleful threatenings, though looking even worse from the point of view of the new tariff than from the old. Extra shiploads of goods would be sent to the United States, and the hammer of the auctioneer would hardly descend rapidly enough to force them upon the consumption of the * 33 5iles, 385. 244 THE TARIFF CONTEOVEESY. l/country. The busy hum of industry would cease at the factories, and the beautiful villages which they had built up would be deserted. The markets for the farmer must cease, and flocks of sheep no longer be preserved except for family purposes. It was fearful to calculate, Niles exclaimed, the depreciated value of property which would result.* "^The overwhelming error of the Commit- tee, he said, was the protection of the raw material rather than the making of a market for it. He had no doubt that the effect would be to cut the throats of the sheep and delapidate the woolen factories, f On the other side, the formulation of the extreme laissez-faire argument was left principally to the Ways and Means Committee, which, through McDuffie, submitted an elaborate report against the proposed tariff. J In debate, however, ardent free traders like Cambreleng of New York City and the Southern leaders gave a firm though indecorous support to the abominations of the bill, derisively seconded by the leading laissez-faire news- paper, the New York Evening Post. — At the South indignation was intense, heightened perhaps because there was no good answer to the taunt that the South itself was responsible for the worst pro- visions of the bill. Even before the Harrisburg Con- vention the extremists were discussing the question in no conciliatory mood. At an anti-tariff meeting in Columbia, S. C, July 2, 1827, President Thomas Cooper of the South Carolina College declared that the time had come to calculate the value of the Union, and to inquire of what use to them was this most unequal alliance by * 34 Niles, 33. t 34 Niles, 24, 33. t See 34 Niles, 81-95, 138. THE TARIFF AND NULLIFICATION. 245 which the South had always been the loser and the North always the gainer. " Is it worth our while," he asked, " to continue this union of States, where the North demand to be our masters, and we are required to be their tributaries ? " * " It is the principle we object to; it is the right we deny; it is the usurpation we complain of," ran the South Carolina Circular. " If we do not at once seize upon the strong ground of principle, with a determination never to quit it, our cause is lost. . . . ProtectioiL. was. never ■ meant to become a permanent tax upon _the^ consumer, but to give a start to a new undertaking for a few years ; on the implied and understood provision that it would soon be capable of maintaining itself. . . . 4'rfijiur-doinestic manufactures to continue in perpetual infancy ? . . . We exist as a member of the Union merely as an object of taxation. . . . Our national pact is broken." f At a public dinner, MeUaffle, in a speech wildly applauded, drew a gliKmijz-f>ictf nnngfifnt.innal i nterpretation.* The majority of South Carolina's leaders, however, refused to be reassured by the message which gave so much hope to even her representatives in Congress. The Cheraw Republican declared that the reduction of duties on tea, coffee, salt, and molasses was intended as a propitiatory sacrifice to those states whose disaffection had increased, and was a plausible pretext for continuing the existing duties; while the Newburn (N. C.) Sentinel professed to regard the reduction as a specimen of * Polk of Tennessee declared that Jackson " had planted himself npon the ramparts of the Constitution and had taken the high responsi- bility upon himself to check the downward march," etc. P. P. Barbour of Virginia said that Jackson had done the state some service before ; but in his opinion it was but dust in the balance compared with the good he had done now. Senator Hayne declared at Charleston, in a Fourth of July speech, that " General Jackson in putting his veto upon the Maysville road bill has opened to the Southern states the first dawning of returning hope." The Georgia Journal declared that by this veto " the American System has received a blow which it is hoped will prostrate it forever." And Senator Blair of South Carolina wrote to his constituents three days after the veto: "Since writing my address our political prospects have, I think, become much better- Two days ago, we passed in our House a bill reducing the duty on salt, another reducing the duty on molasses. The Senate a few days ago laid on the table a bill authorizing subscription for stock to the O. & B. E. E. Co., and to cap the climax, our worthy President has put his veto on a bill authorizing a subscription of stock to the Lexington and Maysville road bill. ... I should be better pleased with his mes- sage if it were a little ' tight-laced ' as regards the power of Congress to make roads, etc. But for political purposes, as regards the South, it is quite eflScient. Thus I regard the system of internal improvements as completely overthrown — and with that the prohibitive system must soon go down. South Carolina has ample cause for gratulation and rejoicing, and every reason to hope that by continuing to exercise a little forbearance all things will right come in a year or two." (38 Niles, 308-315 ; 319-321 ; 379.) THE TARIFF AND NULLIFICATION. 253 Nerther-n-jaigglery.* Niles explained the matter by- saying that it was not a triumph for free trade, as the New York Evening Post put it, but_ arLUJxdoing of what t\e free trade folks had done in 1828. The increased j duty on molasses, for instance, had been crammed into ; the bill against the consent of three-fourths of the V avowed friends of the tariff, and retained by the almost unanimous vote of the South, f J Both sides were becoming aroused. Niles admitted the imminent danger, and was the more alarmed, as all his predictions regarding the tariff of 1828 had been unfulfilled. The respective forces were drawn up in line of battle, and considerable skirmishing was done in Congress. But the signal for action was given by JacksjDn's third annual message, December, 1831. He congratulated the country upon its great prosperity, and calling attention to the prospective extinction of the public debt, advocated a horizontal reduction of tariff T-ates. In three years the debt would be paid, leaving a fiurp^p^ of more than eleven millions a year. The lull in fEe tariff controversy was over. The Southern oppor- tunity had come, and the South sprang at once to the attack. Public meetings and dinners gave pccasion for anii-tariff and aullificatiqnjitter-ances, and resolutions and remonstrances began pouring in upon Congress. On the other hand, the near approach of a necessary reduction of duties aroused the manufacturers to the necessity of placing the protective system on grounds which could not be shaken by revenue considerations. • South Carolina was by no means unanimous in sup- porting the nullification doctrine, but on one point the * 38 Niles, 340, 341. t 38 Niles, 321, 322. According to the Charleston Mercury these reductions would benefit only the tariff states. 254 THE TARIFF CCCTTBOVKESY. State was thoroughly united. "While the Union party deplored the angry political excitement and blamed the nuUifiers for attempting to force their dangerous polit- ical measures upon the State, they were no less outspoken in regard to the tariff itself. The tariff of lrS28, they /agreed, was unequal and unjust in its operation and \ burdensome to the South, unwise and impolitic, and Wust be repealed.* And this position was substantiaHy taken by Virginia, North Carolina, and Georgia, in Governors' messages, legislative resoluti©n8, and public -~~.Tiagetings.'^~In South Carolina, in response to numerous '^petitions. Governor Hamilton appointed a day of fasting, humiliation, and prayer, f This feeling of unbending hostility on the _gart^ of the Union men of the South was most ominous. ' *' One of the most alarming features of the controversy," wrote Matthew Carey, " is the fact that a large portion of the most decided supporters of the Union and enemies of nullification, and its counterpart, a dissolu- ; tion of the Union, with all its attendant horrors, are I firm believers in the unconstitutionality of the protec- j tive system, and appear to require its total aboli- \ tion." ~l Yet to the demands of the South there was no response. " Let Congress repeal the tariff — abandon the principles of protection, abolisli internal improve- ments — enact none but bona fide revenue laws, and Southern excitement will instantly cease," was the lan- guage of the South. " What happened in the days of the Hartford ConTention so immodest and outrageous ! " was the Northern comment.§ Nor were the tariff men » 41 Niles, 13. + 41 Niles, 65. i 41 Niles, 89. « See 41 Niles, 101. UI THE TARIFF AND NULEIFICATION. 255 less active than their enemies. "Jjfoif^^ tp.r mBPt.^' pgrs wAr^ held at Boston, New York, Philadelphia, Albany, Pitts- lanrg, Louisville, and elsewhere, to enforce in strongest t&r-ms-the-Be&essi.t y oL maintainin gthe American System intact; —Th© tariff position was substantially defined at a tariff convention held in New York, October, 1831, following closely a similar meeting of free traders at Philadelphia. In _the^ Philadelphia convention nearly all the delegates were from the South; in the New York convention the South had scarcely a representative. The Philadelphia convention, first suggested by the New York Evening Post, presented two papers to the country — an a ddress to jtl^TTp.o,pla_o f the United S tates. written by Jackso.n/^._fiXi4ttorneyf \General, John M. Berrien of Georgia, and a memorial to Congress, the work of Albert Gallatin. The address i^clared that they came in faith that if their grievances were under- stood they would be remediied. The discontent with the tariff could not be overlooked. It was of long standing. A nunierpus and respectable portion of the United States did not merely condemn the system as unjust, they utterly denied its constitutionality. Then followed a long exposition Of extrerhe laissez-faire, the demand for free trade being based on the " unques- tionable righj^f every individual to apply his labor and capital in tl^mode which he .may conceive best calcu- lated to prclpote his own interest." The memorial of Gallatin, avoiding the constitutional question,, was a fax abler and iJMbretenr perate defence of free tra de.* * For the Address, see 41 Niles, 136 et seg. Gallatin's memorial is printed in U. 8, Documents, 22d Congress, 1st eession, Senate Docu- ments vol. i., No. 55. Gallatin's motion to strike out the part relating to the constitutional question was rejected by a decided vote. Maine, 256 THE TAEIFF CONTEOVEESY. The New York address declared the American System" to be national in its character. It was to rescue the labor of the American people from an inferiority, a subjection dishonorable, burdensome, and degrading^ that protective laws were originally passed and still existed. To give up this power would be to give up the ^Constitution. The American System invited the appli- cation of Anaerican capi tal to stimula^ ;!; American industry. It proposed a restriction, in the form of an impost duty, on certain products of foreign labor; but so far as related to American capital or American labor, it simply offered seeurity-andr-lad-Heemeiit- to_the one, and gave energy and vigor to the other. The funda- mental principle of the opposite school was totally erroneous. It considered profits of capital as the only source of national wealth. It assumed that the wages of labor were barely suflBcient to supp«rt the laborer, leav- ing him nathing for accumulation. Whether true or not in Europe it was totally false in the United States. America had no class corresponding to the human machines of Europe. There was no question as to the advantages of free trade as a municipal principle. But as between foreign nations there was no free trade, never had been, and never could be. It would contra- vene the arrangements of Providence. Nations were adversary to each other. An unrestricted intercourse between two nations reduced the labor of one to the same scale of compensation as the other. In conclu- sion, after dwelling at length upon the bengficent op.eratlQn„_o f__protectio n in the United States, it was Massachusetts, New York, New Jersey, and Pennsylvania, cast 35 votes against Gallatin's motion to 29 in its favor. Gallatin and twenty-six others voted against the final adoption of the address (41 Niles, 156, 157). THE TARIFF AND NULLIFICATION. 257 affirmed that iu.redu.cin.g~the-reYejxufi^ilifijtajiS_stould Ije, taken off of _ articles^ .not.-Cjainpetijjg.-witfe---A-Baerican .JLndustries.* " Our other manufacturers," it was said, in the convention, " require a like protection. If re- fused they will be underworked by the half-starved miserable labor of foreign countries. We are not to place our population in comparison with the English and Asiatic laborer who works sixteen or eighteen hours a day. They cannot and will not be degraded to a level with such men." f A crisis had arrived ;iB©ttthern jargricultu ie and Northern navig ation had united_agai.nst the tariff. People were being tempted by the prospect of low prices, while in point of fact, the repeal of the tariff would result in the great and permanent enhance- ment of prices. J Every one knew that a desperate struggle was coming. The prot fi P^-^'^nif i tf i p t i l l hnH n n nnqnPFi t innfd-mfljfrrity I P , fiop gresa, but as a reduction must be made some- where, there could not help being a disposition on the part of conservative men to yield somewhat to the undoubted deep feeling of the South. Compromise and conciliation were undoubtedly in the air. Even Mies began to talk of compromise as to the quantum of protection, though the system itself could not and would not be given up. For its abandonment, he said, would produce general ruin among the Middle, Eastern, and Western States. § But the firm and dictatorial tone of Mr. Clay refo^-med Once more back in CongressTand « 41 Niles, 204 et aeq. t 41 Niles, 181. t 41 Niles, 186. § 41 Niles, 61-66, 73-76, 105-110. 258 THE TARIFF CONTEOVEESY, looked to as the Ieajder-a:gainst_Jacksonism, he was in no compromising mood in this flood tide of a current which was bearing him, as he believed, straight to the chair of Washington. His enemies were alert and vindictive, but he felt able to cope with them, and he soon subdued much of the conciliatory spirit which the desperate earnestness of the South had infused into the protec- tionist ranks. But he entirely underestimated the strength of the Southern feeling, and here, as pointed out by Adams, was his great error. The- tariff. _must be reduced, and Adams inquired if in the gracious oper- ation of remitting there would not be a mixture of harshness in extending the protective system, and a danger of increasing the discontents of the Southern States. ii]lay!s_reply was characteristic. Slk adiscontent . hp. fia.id, was fllmo st all, if not en tirely, imaginary or fictitious, and in almost all the states iiad iii~great measure subsided.* The-taxifL ^scussion b egan as soon as Consress met. If a reduction must be made the struggle could not be avoided. Clay, indeed, was inclined to oppose the fur- ther payment of the debt, but in this purely tactical move he was overruled by Adams, who felt that the country was against it. January 9, l^-32i. Clay i ntro- duced a resolution to the effect that^du_ties upon imports, not,jcomin^ jnto corqpHetition with articles produced in the. United States,^ ought -to -be forthwith abolished, except upon wines and silks, and tha,t these should be reduced. This resolution he supported in a two hours' speech, January 11, which Niles pronounced decisive as to, the maintep arine nf the protective policy and that of internal improvements. February 2, 3, and 6, he * 8 J. Q. Adams' Memoirs, 443. THE TARIFF AND NULLIFICATION. 259 followed this witii an exhaustive exposition and defence of protection, in what is usually called his " gr^jit speech in dfifRnp-e. nf t.TiA AmoTJ o.a.n Ryste m." He claimec ^^tS ' the tauff : the people out..oi__deb.t, land i^sin^ in yalue, re^dj„ though not extravagant market; inn-umerable flockaand herds hrowsing and gamboling on ten thou- sand hills and plains covered with rich and verdant grasses, Q^ities expanded and whole villages springing up as it were by enchantment, exports and imports in- creased and increasing, the publifi,_i[.aht of two wars nearly redeemed; and to crown all, the. public treasury overflowing, embarrassing Congress, not to find subjects of taxation, but to select the objects which should be liberated from the impost.* January 19, the House called upon the Secretary of the Tiieaaury for in"iQxmation_regarding manufactures and forthe plan, of a tariff bill. "Without waiting for this report, Mp. pnffi pi, chairman of the Ways and Means Committee, introduced, February 8^ a_kUl ^^^"''iP5-.g®'^" exally_and by degrees the protective duties to a level of 12±,.per cent. April 27, McLane presented his report and tariff measure reducing the average rate of duty from 44 per cent to 27 per cent, xepsaJing, ..the ... tar jff , of — 3r828, reducing -da.ty_Q.n_ wool to 5 per cent and on woolens to 20 per cent, abolishirLg.ih.e..minimum system on woolens except as to the lowest qualities, and lower- ing " at one fell swoop," to quote Niles, the rates on a large number of articles, f McLane's idea was to har- monize opposing interests by preserving protection somewhat after the law of 1824, while conceding not a little to Southern feeling. .£u.i„ nf ii, t hft r . p fli rty ^was * 41 Niles, 361 ; 42 Niles, 2-16 ; also 5 Clay's Works, 437-486. t 42 Niles, 182-184; 188-192. 260 THE TARIFF C0NTE0VEE3Y, satisfied, and in this extremity conservatives of all classes turned to the Committee on Manufactures, of which Adams was chairman. ^ila.ms felt himself unable, or at least unwilling, to cope with the difficulty, and having been appointed a member of the select committee to investigate the United States Bank, had asked to be excused-irom further service on the Committee onMan- ufactures. This d isposition was viol ently opposed. The Jackson members crowded around him in tbe House begging him to withdraw his request. Cambreleng declared that the harmony, if not the existence, of the confederation depended upon the arduous, prompt, and patriotic efforts of a few eminent men, of whom Adams was one. Bates of Maine declared that Adams was the only man in the Union capable of taking the high stand of umpire. Other members spoke quite as em- phatically, and Southern papers began referring to him in cordial terms.* Thus impelled Adams threw himself into the sub- ject with great vigor, drew up an elaborate repo,ii, and on the 23d of May introduced a -modlfijtLatkffl^of the ,MjcLane_bill, which, while not impairing its main fea- tures, was •Biorfi-.acceplahle to the manufacturing inter- est. The report was an able and unprejudiced attempt to bring together the opposing arguments and to get at their real value. The protective system he planted on the broad ground of national defence and natjojial wel- fare. He rejected the favorite protectionist doctrine that duties lowered prices, as opposed to common sense, declared that it had always been assumed, never proved, « See 42 Niles, 70, 87. On the other hand, the extreme protectionists feared that Adama was not fully enough committed to the American System and wished to take him at his word.. THE TARIFF AND NULLIFICATION. 261 that duties were the cause of a fall in prices, and asserted that the same competition, and__hen..Cfi-.lhe- same fall, would havaiaken. j>lac&.had_ the tariff of 1828 not, been passed. _ On the other hand, he denied as positively the equally extravagant statement of the South that the producer of the exported artiele,.. instead of the con- sumer, paid the duty. The doctrine of an irreconcilable opposition of interest between North and South, he declared could not be true; it would make union impos- sible. Re presenting as they did the maauiacturing inifiifiaL-o£_ilia_cQu..a±i:y, the committee had anxiously desired to adapt their provisions, not only to the interests, but to the feelings of that portion of the country which had considered, itself most aggrieved by the existing tariff; but at the same time, they had been equally anxious to make all concessions required without any essential sacrifice of the interest entrusted to them.* The temperate and unpartisan nature of Adams' report doubtless did much to win acceptance of his bill.f South Carolina refu sed to accept it. and various tariff "meetings .denounced it because it sacrificed too"Thuch.J * 42 Niles, 244 et seq ; 232 et seg. + J. S. Barbour of Virginia declared that it seemed far more objec- tionable to Soutbern views than McLane's bill, but under all circum- stances he thought it better to accept it than to hazard the acceptance of far greater evils (42 Niles, 247.) t A tariff meeting at Philadelphia, opposed to both the McLane bill and the Adams' bill, adopted the following resolution: " That the free American workman, who lives well, and commands all the com- forts and many of the luxuries of life, cannot be expected to manufac- ture as cheaply as the ill-fed operative of Europe; that much as we deprecate any legislation that shall equalize the value of our free labor ■with that of foreign paupers, we deprecate still more the pauper morals that must necessarily follow such a course, and we hold any man or party of men who seek to reduce our working classes to this state of poverty, dependence, and immorality, to be enemies of their welfare especially, and hostile to the prosperity of our common country " t42 Niles, 277.) 262 THE TAEIFF CONTKOVEESY. But in the midst of renewed excitement it finally gassedj^July JA^1832, opposed by the great majority of Southern members and by a section of extreme protec- tionists.* The MoDjoffia.Jaill had been regarded by South Car- olina as a sort of jalti^mjjaim. Its rejection was clearly foreseen from the first, and the anger of the State rose hot against the -gigantic oppression which they imagined the tariff to be. They had been, they affirmed, absolutely denied a hearing -by. the protectionists of the North, who had met them in a spirit that proposed, in the words of Clay, " to defy the South, the, PrBgident, and the Devil." t Before the fate of the McDuffie^U was settled a great meeting of the Union and State Rights party at Charleston had agreed upon the calling of a goi^thPTn nnnvfipt.i on. in casgCongress should adjourn without a satisfactory adjustment of the tariff.j After the passage of the. Adams' bill, meetings were held at which it was resplyed i4q -_resist-~-the— law_^t- .e-Very hazard. Immediately upon the passage of the measure, the senators and representatives from South Carolinadrew up, in Washington, an address to the people of their state, in which, while no remedy violent or otherwise was suggested, it was declared that all hope of redress was irrecoverably gone, and that it only remained for the sovereign State of South Carolina to determine whether its rights and liberties should be maintained.! Temperate discussion, however,was impossible. South Carolina in her resentment refused to listen to reason. * For vote in the House, see 42 Niles, 336. + Pee Sumner's Jackson, 222. i 42 Niles, 300. § See 42 Niles, 385, 412. THE TAEIFF AND NULLIFICATION. 263 Nullification and disunion were everywhere and openly preached. A Southern Convention, to which project Virginia, North Carolina, Georgia, and Alabama, had given favorable consideration, was altogether too slow and feeble a mode of expression, and_S,guth_Ca,rolina^ without waiting for co-operation or approval, proclaimed, by the solemn declaration of a sovereign State, the nul- lity of the new tariff law. * ^ But the precipitancy of South Carolina isolated her from all the rest of the Union. Attention was drawn from the enormities of the tariff to the enormity of the proposed remedy. Tennessee, Kentucky, Alabama, Virginia, North Carolina, Mississippi, and Louisiana, hastened to disavow all sympathy, and even Georgia drew back and returned to the proposal of a Southern Convention, f When Congress met in December, the presidential election was over. Clay was defeated, and in his ruin seemed involved the' ruin of the projects he had * ToaBts drunk at Edisto, S. 0. : 1. Andrew Jackson— his example when a boy has taught the youth of Carolina to despise his threats when a man. 2. Nullification is the rightful remedy— South Carolina will never submit to a Yankee tariff while there grows on her soil a pal- metto tree. 3. Let us hesitate no longer— we ought, we must, and will resist the encroachments on our rights at any and every hazard. 4. Governor Hamilton— wherever there are on this day two or three gathered together in the name of nullification, would to God he could be in the midst of them. A seven striped flag was hoisted at Oglethorpe, Georgia,- in allusion to the seven Southern States. Among the toasts were the following: 1. Self-redress— the only remaining remedy for the oppressions of the South. 2. The present crisis— let us have no more of the sickly cant about brotherly love and sacredness of the Union ; they who shook off the tyrannical oppression of their mother country will not hesitate to resist that of their sister States. See 43 Niles, 77 et seq. t See 43 Niles, 209, 219, 220. 264 THE TAEIFF CONTEOVEESY. announced as at stake in the contest. Still there was hope that between the Northern democratic support of protection and the general horror of nullification, the tariff would come through unscathed. Ja,ci:a.cui_m.&t_the crisis with a mixture of firmness and concession. A few days after his annual message, which barely alluded to the. South Carolina troubles, he issued a proclamati on denouncing -nuHifieflftioBr-aBd-^aEning the people of South Gaxoliira- that the. laws would be enforced. South Carolina answered with spirit and defiance, while the North rang with applause for Jack- son. The President had echoed the^ constitutional doctrines ot Webster, and asked Congress to enforce them. Meanwhile his annual message had discussed the tariff problem at length, arguing that protection should be confined to articles of necessity in time of war. The G»mmittee onjManjjfactures being unable to agree on a measure, (yerpl anck,) from the Ways and Means Committee, brought ToTWard a bill for generally -reducing ...duties t o -^ihe reve nue standpoint, which was understood to have the appiroval of the President — a measure, Niles declared, marked Fy~cbTd""blo6ded insen- sibility or reckless cruelty, whose passage would seal the fate of the Union.* The winter was one of feverish excitement. Webster r.nrdially supported the Fojce billT but resolutely resisted any changes in the tariff; and this .was the general protectionist attitud e. The South Carolina Convention solemnly daaQ.unjced-the^-Er6sid&nt-B -proclamation, b_ut_ pjQstponed, in view of the..tajciff.-dis.cus.sion, the execution of the ordinance of nullification. Protectionists stood firm, believing that the Verplanck tariff would be the * 43 Niles, 313. THE TARIFF AND NULLIFICATION. 265 death blow to the American System,* and looking to Jackson to make good his proclamation. On the other side, South Carolina was sullen and determined, and without a reduction of the tariff could count on the active sympathy of Virginia, North Carolina, Georgia, and Alabama. While affairs were in this unsettled state, ClajL.aib.. peared, three weeks before the end of the session, with his compromise tariff. It hardly differed from the Verplanck bill except in postponing the evil day and gradually letting all protected articles down to a general level of . .20~^'r ' cehT V'ie wM^pWeTj^ff omTtsnecohomi c side the measure was sound enough and could have no serious results. But it came J flg lat e and too much asa forced, measure to have its full and healthful eflfeqt. It was introduced without the approval or even knowledge of his party, and came to most of its members like thunder out of a clear sky. Webster denounced it to the last, and when it finally passed it was mainly by Southern votes and against the almost solid front of Clay's own party. Clay was naturally a partisan and fond of political strife; but in moments of real or sup- posed national peril his mind took the easy but not always clear course of compromise. In this case .he fi pr.]arc^^ f.^iat. t.h p moggnrq y^as nfififissa.ry to save any part of the American System . But Webster's logic was unanswerable : " The honorable member from Ken- tucky says the tariff is in imminent danger ; that if not destroyed this session it cannot survive the- next. This may be so, sir. This may be so. But if it be so, it is because the American people will not sanc- tion the tariff ; and if they will not, why then, sir, it * 43 Niles, 297. 266 THE TAEIFF CONTEOVERSY. cannot be sustained at all." * But all lie could do was to insist that the Compromise 'bill should not pass until ^ after the Force bill, and that Calhoun, bitter as it was to him, should first vote for the Force bill. As to who really won was long a rnatter of dispute. The flame of nullification blazed out fiercely at dinners and Fourth of July celebrations, but it had no present meaning. South Carolina exultantly cla,imed the vic- tory, while the North applauded to the echo Jackson's bold vindication of the Constitution. Clay and Calhoun long after wrangled over the -matter "In the Senate. fCalhoun declared that Clay, flat on his back, had per- ceived in the Compromise the only chance of saving his Dolitical future, and but for Calhoun, would have B^imk to rise no more. Clay retoriedtKat it was he who iad kept the rope from Calhoun's n««k7 which Jackson had ready for him. The truth is that both sides wavered when the crisis came, and to the^ majority in- Congress, Clay'aCqmpromise seemed, a happy issue out of all their afilictions. The tariff question was made quiescent and postponed to a more convenient season, when, at least, it might be dissociated from the irrelevant and dangerous question of constitutional interpretation. * 43 Niles, 417. ._ The compromise tariff provided that one-tenth of the excess of all duties above 20 per cent should be struck off Sept. 30, 1835, and so on each alternate year until 1841 ; then one-half of the remaining excess ; and in 1842 the remainder, leaving a horizontal rate of 20 per cent. The bill was very loosely worded, and much difficulty was experienced in administering it. LIST OF AUTHORITIES CITED. Adams, Henry. History of the TJnited States, 1801-1817. 9 vols. New York, 1890-91. — Life of John Randolph. (American States- men Series.) Boston, 1882. Adams, Henj-y Carter. Public Debts. New York, 1887. Adams, John. Works, edited by C. F. Adams. 10 vols. Boston, 1850-56. Adams, John Quincy. Memoirs, etc., edited by C. F. Adams. 12 vols. Philadelphia, 1874-77. Ames, Fisher. Life, edited by S. Ames. 2 vols. Boston, 1854. Annals of Congress, 1789-1824. 42 vols. Washington, 1834-56. Bancroft, George. History of the TJnited States. 6 vols. New York, 1888. Bishop, J. Leander. History of American Manufactures, 1608-1860. 3 vols. Philadelphia, 1861-1868. Chalmers, George. Political Annals. Book I. Lohdon, 1770. Clay, Henry. Works, edited by C. Colton. 6 vols. New York, 1857. Cunningham, J. (?). Essay on Trade and Commerce. London, 1770. Cunningham, W. Politics and Economics. London, 1885. Dickinson, John. Political Writings. 2 vols. Wilmington, 1801. Documents Eelating to the Colonial History of New York. 10 vols. Albany, 1856-58. Elliot, Jonathan. Debates on the Adoption of the Federal Constitution. 5 vols. Philadelphia, 1861. Fisher Willard Clark. American Trade Begulations before 1789. Printed in vol. iii of Publications of the American Historical Associ- ation. New York, 1889. Fiske, John. The Critical Period of American History. Boston, 1888. 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INDEX Adams, John, on apiculture, 41; manu- factures, 41; non-intercourse, 42, 43; free trade, 46, 51, 52, 53; reception in England, 47; on proclamation of July 2, 1783, 47; on retaliation, 48, 60, 52; antl-repnblicanism, 115. Adams, ,T.. Q. , federalistlc principles, 236; approves " tariff of abominations," 243; attitude toward tariff in 1832, 258; report on tariff, 260. Agriculture, 25; Franklin on, 25, 34, 65 ; Jeflferson on, 39; Washington on, 40, 62; EDsworth on, 20, 40; Adams on, 41; pre-eminence of, 60, 72; Hartley on, 128 ; petitions of agricultural societies, 225, 227. American Society for the Encouragement of Domestic Manufactures, 194, 201, 209. American system, 201, 212 ; Clay on, 232 ; necessity of maintaining, 255. Ames, Fisher, 69; on tariff of 1789,72, 81, 86, 91; on loss of revenue, 76; on pro- hibition of nails, 84; on constitutional question 116; on protection, 129. Balance of trade, 26, 65. Baldwin on tariff of 1824, 210. Bidwell on tariff, 143. Board ot Trade, 15, 16. Boston resolutions regarding manufac- tures, 31. Bounties on Colonial productions, 15; granted by colonies, 16 ; on salt, 17 ; proposed by Gallatin, 149; favored by Jefferson, 145; Dallas on, 170 ; favored by Hamilton, 106, 111. See also pre- miums. Calhoun, John C, on tariff of 1816, 179; defeats tariff bill of 1827, 239; on nml- liflcatiou, 250; votes for force bill, 266; tilt with Clay, 266. Candles In tariff of 1789, 82. Capital, creation of, 149; lack of, 102, 148. 219. Carey, Matthew, on protection, 198, 201, 254. Charleston Memorial, 1820, 236. Clay, Henry, on protection, 143, 184 ; on tariff of 1816, 183, 185; on the American system, 201, 212; on tariff of 1824, 231; on effect of tariff, 236, 259; on South- ern discontent, 258, 262; compromise tariff, 266; tilt with Calhoun, 266. Clinton, George, on the Constitution, 68. Clothing, household manufacture of, 147. Colonial System, general characteristics, 6, 10; feeling of colonies toward, 14; not wholly one-sided, 15. Colonies, growth of industrial spirit in, 6; function of, 8 ; useful to England, 14; commerce of, 9, 10; manufactures of, 12, 25, 27, 30; Industries of, en- couraged, 15; legislation of, 17, 56; see also under Bounties, Embargo. Commerce, importance of, 119, 120, 162; growth of , 130; blows directed against, 133; commercial war between States, 20, 59 ; with England, SO ; see also Trade. Commercial legislation, effect of Decla- ration of Independence upon, 18. Commercial supremacy of England, 49, 59. Competition, how regarded, 200. Compromise tariff, 265. Confederation, regulations of trade un- der, 18, 20; weakness of, 68, 59; hope- ful conditions, 60, 61, 63, 64. Congress, first meeting of under the Constitution, 67, 74. Constitutional question, 72, 116, 117, 119, 254. 270 INDEX Continental Congress, 18; weakness of, 59. ConTention of 1787, 21. Cordage in tariff of 1789, 85. Cotton, proposal to remove duty from, 118; manufacture of, 147, 160; debate ontariffof 1816, 183. Crawford, W, H., on tariff, 190, 230, 231. Dallas, tariff bill, 165, 167, 185 ; debate on tariff bill, 170. Dickinson, Jobn, on colonial feeling toward England, 14; on manufac- tures, 40. Discrimination lu favor of colonial produce, 15. Diversification of Industry, Hamilton on, 104. Division of labor, Hamilton on, 97. Dummer J., on dependence of colonies on England, 23. Economic thought in colonies, 22. Ellsworth, Oliver, on manufactures, 40. Embargo, 130, 133; hostility towards Jef- ferson's, 134; of 1812, 169. England, feeling regarding American trade, 48, 124 ; devotion to Navigation Act, 49 ; commercial supremacy of, 59; reciprocity with, 44, 122; embargo against, 130. Eppes, on Non-Importation Act, 142. Federalists, hatred of Jefferson, 134. Fitzsimons, on tariff, 71, 80, 82. Franklin, B., colonial feeling toward England, 14; relation between colo- nies and England, 23, 25, 29 ; on manu- factures, 24, 26, 27, 30, .S5: on agricul- ture, 25, 81; examination of, in House of Commons, 26, 29; plea for freedom, 28 ; on Boston resolutions, 31 ; on tariff, 33, 36, 39 ; on the physiocrats, 34 ; on reciprocity, 43 ; prosperity under confederation, 64, 65. Free Trade, basis of Franklin's terms of peace, 35 ; general feeling of Ameri- cans, 38, 42, 53, 94, 216 ; Adams on, 46, 61, 52; Hamilton on, 54, 65, 68; Madl- Bonon,69,70,77; argument for in 1789, 70; in tariff debate, 72. French Revolution, Jefferson's sympathy with, 122; sympathy of Americans with, 123. Furnaces destroyed as nuisances, 13. Gallatin, on tariff, 137, 138; on manu- factures, 147, 149; memorial of, 255. Georgia, rejects tariff of 1781, 19. Gold, on tariff of 1816, 178. Hamilton, A., on regulation of trade, 38, 55; on freedom of trade, 54, 55, 58; American policy of, 54, 56, 94; wisdom of commercial regulations, 56, 57 ; on price of labor, 67. Hamilton's report on manufactures, 95- 112; characterization of, 113; effect of on politics, 117; attitude of toward commerce, 120; promotes trade »ith England, 121; denounced by Jeffer- son, 115, 122. Harrison, B., on constitution, 58. Harrisburg Convention, 239. Hartley, on manufactures, 76, 95; on tariff, 128 Hats, manufacture of, 12. Hemp, in tariff of 1789, 85. Home market, Hamilton on, 98; monopoly of, 134. Hunter, report to board of trade, 15. Ingham, on tariff of 1816, 177. Intercolonial trade, 11. Iron manufactures, 12, IS, 217. Jackson, A., campaign of, 237; equivocal position on tariff, 250 ; union feeling, 251 ; proclamation against nullifica- tion, 264. Jay, efforts for reciprocity, 43. Jay treaty, 130. Jefferson, T., on agriculture, 40; on "Chinese Wall," 42; on regulation of trade, 45; on free trade, 53; on the period of confederation, 58, 63; on Hamilton's report, 115, 122; report on condition of trade with foreign coun- tries, 124; debate on report, 126; re- port on commerce, 122; sympathy with French Revolution, 122; preju- dice against commerce, 131; attitude toward commerce at beginning of his administration, 131; attitude toward England and France, 132; Louisiana purchase, 132; on surplus revenue, 134; Ideas during retirement, 136 ; on Missouri struggle, 234. INDEX 271 Labor, price of, 57 ; hindrance to manm- faotures 8, 25, 87, 39, 57, 102, U2, 156 ; not a hindrance, 145, 151, 208. ZaUsez-faire, 63, 69, 94, 101, 106, 129, 166, 172, 202, 214, 216, 219, 232, 255. Laws of trade, 10, 11, 12; nullity of, 16. Lecky, W. E., colonial policy of Eng- land, 5. Lexington memorial on tariff, 157. Lords commissioners of trades and plan- tations, 15. Lowndes, Introduces bill of 1816, 167; debate on, 183; on manufactures, 221. Lousiana purchase, 132. Lyon, on tariff, 154. McDuffle, report in 1828, 244; on tariff, 245; bill of 1832, 259, 262. McLane, on tariff of 1824, 212; report of 1832, 259. Maolay,W., extreme views, 68; on tariff debate, 71, 73. Macon, on non-Importation act, 142. Uadison, J., on free-trade, 38; on trade, 44, 63, 69, 70, 77; condition under confederation, 60; Introduces tariff of 1789, 67; advocates pro- tection, 69, 78; opens tariff discus- sion, 73; on tonnage duties, 90; on lim- its of federal power, 119; responsible for tariff of 1789, 121; on tariff, 77, 137; on manufactures, 165, 189. MaUary, on tariff, 238. Manufactures, fear of colonial, 8, 9; encouraged In colonies, 17, 31; Franklin on, 23, 24, 25, 27, 30, 84, 85, 39; conditions and extent of In colonies, 32, 41; Dickinson on, 40; progress of, under Consti- tution, 62; Hartley on, 78; Hamilton on, 95-112; stimulated by decline of commerce, 134; demand of country for protection of, 138. 141, 144, 158, 164, 166, 192, 206, 208; sentiment of coun- try in favor of, 143; household manu- facture of clothing, 147, 171 ; rel ation of land to growth of, 147; causes retard- ing, 148, 149; Gallatin on, 147, 149; de- bate on Gallatin's report, 160; state of, 158; growth of, during war of 1812, 160; attitude of country after war of 1812, 163, 171; effect of tariff of 1816 on, 186, 188; commercial depression, 194; state of after 1820, 228. See also under American Society for the Encouragement of DomeBtIo Manufactures; Boston resolutions; bounties; candles; clothing; colonies, cotton; furnaces; free-trade; hats, hemp, iron; nails; paper; protection; prohibitive duties; premiums; tariff; trade. Marsters, on embargo, 143. Markets, American, 57. Maryland encourages manufactures, 16, 17. Massachusetts encourages manufactures' 16, 17, 20. Mercantile system, 6, 7, 10, 21; Hamilton on, 66. Molasses act, 11, 16; In tariff of 1789, 81. Monroe, J., on tariff, 190. Nails, manufacture of, 14; In tariff of 1789, 84. Napoleon, dealings with Jefferson, 132. Navigation acts, 8, 9, 10, 11, 12, 127. New England opposes Increase of tariff, 217, 219. New York, early tariffs, 17; refuses assent to bill of 1783, 20. New York Convention, 255. Niles, H., on crisis after 1815, 188; on protection, 201, 207; on Harrlsburg Convention, 240; on tariff of 1828, 240. Non-importation act, debate on, 142. North, Hamilton on conflict between north and south, 104. Nullification, 235, 251, 263, 263. Oneida memorial on tariff, 193. Page, on tariff, 118. Paper, manufacture of, 147. Paper money, experiments In, 59. Philadelphia Convention, 255. Physiocrats criticised by Hamilton, 54, 97. Pig-iron, 12, 13. Pownall, T., colonial affection for Eng- land, 14. Premiums, Hamilton on, 108; Gallatin on, 149; Dallas on, 170. Prohibitive duties, 196, 199; Hamilton on, 105. Protection, Franklin on, 33,39; Hamilton on, 56, 67; Madison on, 69, 70, 72; Hartley on, 76; period from 1783 to 1789, 58; Ames on, 72, 128; demand of 272 INBEX country for, 138, 141, 144, 1S7, 158, 164, 166, 192, 206, 208; sentiment of country regarding, 143, 201; growtli of, 215, 216; Gallatin's report and debate on it, 149; Hamilton on articles proper, to be protected, 109. See also under American system; bounties; Carey, M.; free trade; Niles.H.; manufactures; tariff. Quincy, J., on repeal of salt tax, 141. Eaudolph, J., on tariff of 1816, 172. Beciprocity, 18, 99; not secured, 47; im- possible, 49, 69; Franklin on, 43; Jay's effortsfor. 43; Hamilton on, 125; Clay on, 212. Eegulatiou of trade, 18, 19, 20. Eestraints on trade, disadvantages of, 35. Retaliation, 43; suggested by Madison, 45r by Washington, 46; by Adams, 48, 50. Bhode Island, early tariff legislation, 17; rejects tariff of 1781, 19. Eevenuo, kept In mind by Hamilton, main consideration in 1789, 73; atti- tude toward, 199. Salt, In tariff of 1789, 87. Sectional feeling, 68, 92, 234, 238, 246. Seybert, on protection, 160. Smith, A., Hamilton on, 54,94; Carey ou, 202. Smith, W., on tariff, 126. South, attitude towards tariff of 1789,71; Hamilton on, 104; on manufactures after 1812, 164; relation of to tariff of 1816,216; attitude after 1816, 215, 217; toward tariff of 1824, 224, 232 ; of 1828, 244; Union feeling in, 246,249; see also NulUfloation. South Carolina, feeling toward tariff, 244, 246, 247; refuses compromise, 252, 261, divided as to nullification, 253; vio- lence offeeling, 262; nullifies tariff law, 263. Steel in tariff of 1789, 88. Sugar, debate on Dallas bill, 183. Tariff, legislation of the colonies, 17; ef- fect of Declaration of Independence, 18; under the confederation, 19, 20; Franklin on necessity of under the Constitution, 36; South hostile to, 142; Gallatin on, 137, 138. TarifS, 1781; Georgia and Ehode Itiand refuse assent to, 19; 1783, 19; Frank- lin on, 27; 1789, 67; character of de bate on, 68, debate, 71-91, dissastisfaO' tion with, 91, working of, 93; 1792, 118; 1812, 159; 1816, 167; opposition to, 172, disappointment to manufac turers, 186, 191, 195, 196; result of, 188 216, 1820, 210, debate on, 220; 1824, 206,231,237; 1824, 288; 1827, 238; 1828, 243,254; becomes a partisan question 239; 1832,259,262; 1833,265. Tariff of abominations, 244. Telfair, on tariff of 1816, 172, 174. Tobacco, 15. Tod, on tariff, 231. Tonnage duties, discriminating, 89; re- jected by Senate, 121. Trade, regulations of under confedera- tion, 18, 20; Congress given power to regulate, 21; Hamilton on, 18, 55; dis- advantages of restraints on, 35. See also commerce; balance of trade; Board of Trade; free trade. Tucker, on tariff of 1789, 75, 88. Tyler on tariff of 1820, 222. Van Buren, on tariff, 241. Virginia encourages manufactures, 16, tariff, 17, 20; remonstrance of 1820, 225, 235. Virginia and Kentucky resolutions, 235. Wages, 57, 64, 66, 102. War of 1812, 159; effect of on manufac- tures, 160. Washington, G., favors agriculture, 40; adopts policy of retaliation, 46; on weakness of the confederation, 59; hopeful conditions under the con- federation, 60, 61; propheoyof theCon- stitutlon, 61, 62; tries to secure reci- procity, 121. Webster, D., on tariff of 1816, 175, 184; on tariff of 1824, 233; on compromise tariff, 265. West Indies, trade with colonies, 11. Wool, manufacture In colonies, 12; in tariff of 1816, 183; want of, an obstacle to home manufacture, 147; In tariff of 1821, 237; In tariff of 1827, 238. a.