^>i^?^^^^p^^>^^p^^^ TUB Mr my S^ CORNELL UNIVERSITY LIBRARY GIFT OF Libbie J. oweetland Date Due •^i fcfcM*i<^'J_l2L^Y_t]L?__^?Jl9JLta:tion of agriculg^; a ., ^JjI^LE'^'^^H^I— -ZJ]^.£?^P°^-^-iPfl-J^9°^ place, so far as thev,;^ northern colonies were concerned, largely to the West "' Indies . From the Wes t India t rade the me ans for pay- ing indirectly for the im ported goods were mainl y ob- tained. There were some important exceptions to this general state of things. Ship-building was carri ed on to a ^ considera ble extent in N ew England, where abundance of inaterial and ^yiejnecessity^ o f t ransp ortati on by water -I I A lO PROTECTION TO YOUNG INDUSTRIES. made su^h ji,njndustixiiaiural. The produ ction of un- manufactured iron was carried on to a consider able extent ; for at that time the production of pig and bar iron tended to fix itself in those countries where wood, the fuel then used, was abundant, and was therefore an industry much more analogous to agriculture than it has been since the employment of coal as fuel. In the main, how ever, the colonies made oniy such manufacture s as could not be im - ported. _ AH manufadiured goods that cou ld be imported were not made at home, but obtained in e xchange for agricultural e xport s. Tjiis state of things was little changed after the end of the^ Revplutionary war and the adoption of th e Constitu - tion . The year 1789 marks no such epoch in economic as it does in political history. Agriculture^ cqmmgrce, and th e necessary mechanic arts, continued to fo rm the main occ u- pations of th e peopl e. Such goods as could be imported continued to be obtained from abroad in exchange for exports, mainly of agricultural produce. The range of importable articles was, it is true, gradually extending. Cloths, linens, and textile fabrics were still chiefly home- spun, and fine goods of this kind were still in the main the only textile fabrics imported. But with the great growth of manufacturing industry in England during this time, the range of articles that could be imported was growing wider and wider. During the N apoleo nic wars the American market was_much_the mo st imp or tant for the newly established Eng lish manu fact ure s. Large quantj- INDUSTRIAL HISTORY OF THE UNITED STATES. U ties of cotton and woollen goods were imported, and the importations of manufactures of iron, in regard to which a similar change in production was then taking place, also increased steadily. Sooner or later the change in the course of production which was going on in England must have had, and did have, a strong influence on the eco- nomic condition of the United States ; but for the time being this influence was little felt, and the country con- tinued in the main to run in the grooves of the colonial period. This abse nce of development was strongly promote d by v''^ the^ peculiar condition of the foreign trade o f the countr y -, up. to 1808. The wars of the French Revolution op ened^^ to_this country profitable markets for its agricultura l productsin the West Indies a.nd in Europe, and profit- '' able, employment for its shipping, both in carrying the increased exports and in a more or less authorized trade betw een the b elligerent count ries and their colonies. For many years the gains arising from t hes e sources, though '"^ not regular orundisturbed, wer e great, and afforded every inducement to j:emajlL in the orrnpetion" that yielded them . The demand for agricultural products for exporta- tion to the belligerent countries and their colonies was large, and the prices of wheat, corn, and meat were corre- spondingly high. The heavy exports and the profits on '' fL^SJ^t? furni shed ab un dant means for paying for im- gorted goods. Impo rtations were therefore large, an d UHP-Orted goods were so cheap as to afford litt le induce - 12 PROTECTION TO YOUNG INDUSTRIES. m e n t ior eng^aging in the production of simi lar good s at home.' The tariff legislation of this period was naturally much influenced by the direction taken by the industries of the ' The following tables of imports and exports show the influence of these circumstances on the foreign trade of the country. The exports of foreign produce show the swelling of the carrying-trade. The price of flour shows the effect on the prices of agricultural produce. The influ- ence of the temporary stoppage of the war in Europe during the time of the Peace of Amiens is clearly seen. Year. Gross Imports. 000 Oniitted. Gross Exports. 000 Omitted. Exports of Fof^ eign Produce. Price of Flour 000 Omitted per Bbl. 1791 29,200 19,000 500 . . . 92 31.500 20,700 1,750 % 5.07 93 31,100 26,100 2,100 6.21 94 34,600 33,000 6,500 7.22 95 69.750 48,000 8,500 12.05 96 81,400 67,000 26,300 12.43 97 75,400 56,800 27,000 9.00 98 68,500 61,500 33,000 8.78 99 79,000 78,600 45,500 9.62 1800 91,200 71,000 39,100 9.85 01 III, 300 94,000 46,600 10.45 Peace of ( 02 Amiens. \ 03 76,300 72,000 35,700 6.75) 6.73 f 64,700 55,800 13,600 04 85,000 77,700 36,200 8.22 05 120,600 95.500 . 53,200 10.28 06 129,400 101,500 60,300 7.30 07 138,500 108,300 59,600 7.00 08 57,000 22,400 13,000 5.60 09 59.400 52,200 20,800 6. go 10 85,400 66, 700 24,40a 9.66 II 53,400 61,300 16,000 •0.00 12 77,000 38,500 8,500 ?.75 13 22,000 27,900 2,800 8-50 i;4 13,000 6,900 150 7.70 The tables of imports and exports are from the Treasury Uepo^ts. The last table, giving the price of flour, is in " American State Papers, Fina"pe," III.. 536. INDUSTRIAL HISTORY OF TH£ VNITED STATES. IJ, country. The peculiarly favorable conditions under w hich' agriculture and commerce were carried on prevent ed the growth of any strong feeling in favor of assisting manufac- t ures. Much has been said in the course of the protective controversy about the views of the fathers of the repub- lic. But for nearly twenty year s after the formatio n of the Union other subjects so absor bed t he attentio n of public Qien that no distinct opinion appears in their utterances for or ag- ainst protective duties . Considering the state of economic knowledge in those days, the example set by European countries, and the application of the colonial system before the Hays of independence, we cannot be surprised that some disposition was shown to impose pro- tective duties. It is curious that in the first session of Congress these were advocated most earnestly by the representatives from Pennsylvania, who took their stand from the first as unflinching advocates of a protective policy. On the other hand, the curren t toward more lib- '^ ejal views, which had set in so strongly af ter the writing s of..jthe French economists and the public ation of the 'M^ealth of Nations," had made its way to the United States. On e might expect to find its influence most strong amo ng the f ollo wers of Jefferson , whose political philosophy led theni in general to oppose governmen t inte rf erence. But both Federalists and Republicans were influenced in their attitude to the question of protection most of all by its bearing on the other more prominent questions on which parties began to be divided. 14 PROTECTION TO YOUNG INDUSTRIES. Madison had maintained the principle of free intercourse is 1789,' and Jefferson in 1787 had extolled the virtues o f a simple agricultural^ State .' But in I7Q.^, when the Fed - \' eralists and Republicans began to differ on ques tions o f foreign policy^^nd^ especially on the attitude t he count ry should take jn _the_wars of the Fr ench Re volution, Jef- ferson advocated vigorous measures of protectio n directed against England, and Madison brought forward a set of resplutiqns based on his recommend ations. ^ On the other hand, Fisher Ames had said, in 1789, that the general gov- ernment should nurture those industries in which the individual States had an interest ; but in 1794, when his political views led him to oppose Madison's resolutions, he called the whole theory of protection an exploded dogma." It h as often been said that the first tariff act. that of 1 789, wa s a protective measure , and that in the debate on it the protective controversy appeared full- grown. Rut such considerations had lit tle to do with the act ; and the discussions on pr otection by no means indi- cate what was the rea l centre of interes t.^ The act was modelled on the five per cent, import duty, which the ' "Annals of Congress," 1789, pp. 112-114. ' " Notes on Virginia, Works," VIII., 404. ' See Jefferson's " Report on Commerce, Works," VII., 637 ; and Madin son's resolutions of 1794, based on Jefferson's Report, " Annals of Con- gress," 1794, pp. 155, 209. * "Annals of Congress," 1789, p. 221 ; 1794, p. 342. ' It is significant, for example, that Madison's letters to Jefferson, then in Paris, about the debates on the tariff act of 1789, make no reference whatever to the protective discussion. Madison's " Works," I., 466, 480. INDUSTRIAL HISTORY OF THE UNITED STATES. 1 5 Congress of the Confederation had tried in vain to im- pose, and ijtg^main object was to secure reve nue for the '^ ilgw^wgrnrnentj whos e successful working was the on e ejid which all the legislation of th e first few years sought ^ to -bring-about. The general level of duties was five per cent, on the value. On certain articles of luxury, higher ad valorem rates were fixed, the highest being fifteen per cent, on carriages. In certain specific duties, on articles '^ l^§_h?-51P!. cordage^ nails, iron manufactures, and glass , there was doubtless an intention of aiding the domestic producers.' Sonle of these articles were selected because it was supposed they would be needed in time of war. On others it is not unlikely that a concession to protective demands was made by those who had at heart the success of the new government, in order to insure the passage of the indispensable revenue act.' The s ame general state of feeling and the same polic y •' continued during t he twenty years following . For a shortv> time after 178Q, it may be p ossible to detect a drift in favor of protective duties,^ w hich doubtless was strength- ' It seems to have been understood that the duties on these articles were made specific with this intention. See a brief report by Hamilton in his "Works," II., 55. ' This suggestion is made in Professor H. C. Adams's essay on " Taxation in the United States," 1789-1816, in the "Johns Hopkins University Studies," vol. II., pp. 29, 30. The reader who wishes further information is referred to this excellent monograph. ' A number of committee reports on petitions for higher duties are printed in "American State Papers, Finance," vols. I., II. After 1794 the reports are generally against the petitions. l6 PROTECTION TO YOUNG INDUSTRIES. en.ed by the powerful advocacy of protection in Hami l- ton's " Report on Manufactures " (1 792). But that famou s' document had Httle, if any, effec t on --legislation . The moderate policy of 178Q was mainta ined. The duties were increased from time to time' as more revenue was needed, but they were in all cases moderate. Those whic h were most distinctly._protectiye airned to assist industries which already had a .good footholdi an d they had no ^preciable influence in diyerting the ind ustry of th e country into new c hanne ls. No action at all was taken for the encouragement of the production of textiles, of crude iron, and of the other articles which later became the great subjects of dispute in the protective controversy. / / The indust rial s ituation changed ab ruptly in 1 808 . The complications with England and France led to a series of measures which mark a turning-point in the industrial history of the country. The Berlin and M ilan ■ decrees of Napoleon^ and the. English orders in Counci l, led, in December, _i_8o2,_ to the Embargo. The Non- Intercourse Act followed in 1809. War wi th England was declared in i8i2. During the war, intercou rse with ^ England was p rohib ited, and all , import d uties were doubled. The last-mentionejd__me_asure was adopted in ^ the hope of JncLeasing the revenue, but had little effec t. ' for foxeign trade practicall y ceased to exist . This series of restrictive measures blocked the^ accusto med channels of exchange _and__productionj and gave an enormous .stimulus to those branches of in_dustry whose products INDUSTRIAL HiSTORy OF THE UNITED STATES. 1) had b efore been i m ported. Establishments for the manufacture of cotton goods, woollen cloths, iron^^g^ss, pottery, and other articles, sprang up with a mushroom gr owth . We shall have occasion to refer more in detail to this growth when -the history of some of these manu- factures comes to be considered separately. It is sufificient here to note that the restrictive legislation of iSoS- i^'- was, for the time being, e quivale nt to extreme p rotection . The conseque nt rise of a considerable class of manufac-'' turers, whose success depended largely on the continuance oi- protectio n, formed the basis of a strong movement f or more decided limitation of foreig n competiti on. Some signs of the gradual growth of a protective feelings appear before the close of the war.' It was natural that the patriotic fervor which the events of the period of re- striction and war called out for the first time in our his- tory, should bring with it a disposition to encourage the production at home of a number of manufactured articles, of which the sudden interruption in the foreign supply caused great inconvenience. Madison, wh ose vi ews on this subject, as on others, shifted as tim e went on and circumstances ch anged, recommended the encouragemen t of^manufactures ; and in some of Clay's earli er speeches we can see_the first signs of the Am erican sy stem of the ' It is curious to note that in 1802-1804, during the temporary lull that followed the Peace of Amiens, the committee reports seem to show a drift toward protection. See " American State Papers, Finance," II., pp. 29, 80, and the report on the Barbary Powers Act of 1804, "Annals of Congress," 1804, pp. 946-950. 1 8 PROTECTION TO YOUNG INDUSTRIES. future.' The feeling in favor of th^jnamjfacturgsjhat had sprung u£ during the time of restr iction ob tai ned some clear concessions in the tariff act of i8i6. The control of the policy of Congress at that time was in the hands of a knot of young men of the rising generation, who had brought about the war and felt in a measure responsible for its results. There was a strong feeling among these that the manufacturing establishments which had grown up during the war should be assisted. There was littl e v feeling, however, either in Congress or among the peopl e, ^"^^i^ as appeared in later years, in fa yor of a permanen t strong protective policy. Higher duties were therefore granted on those goods in whose production most interest was felt, textile fabrics ; but only for a limited period. Cotton and woollen goods were to pay 25 per cent, till 1819; after that date they were to pay 20 per cent. A proviso, intended to make more secure this measure of protection, was adopted in regard to a minimum duty on cotton goods, to which reference will be made in another connection. These and some other distinctly protective provisions were defended by Calhoun, mainly on the ground of the need of making provision for the exigencies of another war ; and on that ground they were adopted, and at the same time limited. The general increase of' ' See Madison's message of l8og, "Statesman's Manual," I., aSg ; and Clay's speech of 1810, "Works," I., 195. Madison never gave up his general acceptance of the principle of free trade, but admitted it to be imapplicable to articles needed in time of v^ar, and in circumstances, to which the young-industries' argument applied. See his " Works," III,, 42, INDUSTRIAL HISTORY OF THE UNITED STATES. 19 duties^ under_t he act of 1816, to a n average of abou t tw^ntY- fi^r cent., \Yas due to the necessity of providing fpr the payment of th e inte rest on the heavy debt c on- tracted during the war. Fp r_ so me t ime_^f t e£_the_ d o se of the war and the' enactment of the tariff of 18 16, there was no pressure for a more vigorous application of protective principles. The general expectation was, that the country would fall back ijito much the same, state of thin gs a s tha t whi ch had ex- is ted before 1808 : that agriculture and commerce would again be as profitable as during t he previous period , and would be as exclusively the occupations of the people. Such an expectation could not in the nature of things be entirely fulfilled, but for a tim e it was encouraged by sever al accidental circumstances. The harvests in Europe for several seasons were bad, and caused a stronger d e- ma nd and higher p rice f or the staple f ood produc ts. The demand for cott on was la r ge, and the price high . Most important of all, the currency was in a s tate of complete disarr angement, and concealed and supported an unsound economic condition . Under cover of the exce ssive issues of pra ctically i rredeemable bank-notes, the prices of all commodities were high, as were the general rates of wage s an d rent s. The prices of bread-stuffs and provisions, the staples of the North, and of cotton and tobacco, the staples of the South, were high, not only absolutely, but relatively, and encouraged cont inued large production pf these articles. The prices of most manufactured 20 PROTECTION TO YOUNG iNbVSTRtES. '. goods were comparatively low. After the war the im- gorts of thesejfrom Eneland were very heavy . The long pent-up stream of English merchandise may be said to have flooded the world at the close of the Napoleonic wars. • In this country, as in other s, imports were carried beyond '• the capacity for cons u mption, and prices fell much below the nor mal rates. The strain of t his over-sup ply and fall of prices bore hard on the domestic manufacturers , especially on those who had begun and carr ied on oper a- tipns during ■diejrestnctive period ; and many of them we re ' compelled^ to cease production and to abandon their works . Th|s abnormal period, which h ad its c ounter part of feverish excitejtientand speculation in Europe, c ame to an end in 1818 -10. The civilized world then settled abwn to recover slowly from the effects of a generation of War and destruction. In the Unite d States the cur- rency bubble was pricked in the latter part of 181 8. Prices.bega n to fall rapidly and heavily , an d continued to fall t hroug h iBiq. The prices of the agric ultural staples of the North and South underwent the gr eatest change , for the harvests in Europe were again good in 18 18, the English corn-laws of 1816 went into operation, and the demand for cotton fell off. A new scale of monetary ex- change gradually went into operation. During the period of transition there was, as there always is in such periods, much suffering and uneasiness ; but gradually the difficul- ties of adjusting old contracts and engagements were overcome, and the habits of the people accommodated INDUSTRIAL HISTORY OF THE UNITED STATES. 21 themselves to the new regime. Within t hree or four years after i8iq the effects of th e crash were no long er felt in. most parts of the country. , Two results which it is important to note in this con- nection followed from the crisis of i8iq : first, a grea t ^?£^^!:i°.5L i n the posit ion and prospects of manufacturing industries; and secon d, the rise o f a strong public feelin g in favor of protecting these .industries, and t he final e n- actment of legislation for that purpose. The fir st o f these results was due primar ily to t h e fact that the fall in prices after 1819 did not so greatly affe ct m ost manufac- tured goods as it d id other articles. The prices of man u- f^?ty.r?d ,S99^^il3:i^£?34z^*-l'![l£4Li'^ consequence of the heavy importations i n the years immediately follow - ing the war. When, therefore, the he avy fall took place in^^8 15 in the prices of food and of raw materials , in the gains of agriculture, in money wages and money rents, the general result was advantageous for the manufacturers. They we re_ put i nto a position to pr oduce with profit a t the. lower prices which had before bee n unprofitable , and to meet more easily foreign cp mpetition . After the first shock was over, and the system of exchange became cleared of the confusion and temporary stoppage which must attend all great fluctuations in prices, this result was plainly felt.' It is easy to see that the whole process ' " The abundance of capital, indicated by the avidity with which loans are taken at the reduced rate of five per cent. , the reduction in the wages of labor, and the decline in the price of property of all kinds, all concur favor- ably for domestic inanufactures. " — Clay, Speech of i8?o. "Works," I., 419. 22 PROTECTION TO YOUNG INDUSTRIES. was nothing more than the evolution of the new state of things which was to take the place of that of the period before 1808. In that earlier period manufactured goods, so far as they could be obtained by importation at all, were imported cheaply and easily by means of large ex- ports and freight earnings. These resources were now largely cut off. Exports declined, and imports in the en d bsd^tq follow them. The tightening of the English. fiomJaWi and the general restri ction of trade and naviga- tiQn_ by England and other countries, contributed to strengthen this tendency, and nece ssaril y se rved to stimu - late the growth of manufactures in the United States. That growth was i ndeed complicated and made more striking b3Lth,e_re vo luti Qn_ which was then taking place in many departments of manuf acturing indus try. Especially in the production of textile fabrics, machinery was rapid ly djspAs.ciSSzr'ii^ England had already largely displaced — production by hand o n a small scal e. Home-spun textiles were gradually making room for the products of the spin- ning-jenny and the power-loom. The state of thing s that ' foljowed^the crisis of 18 18-19 was favorable to the rise o f m^ufactures ; but the change took place not so much by an increase in the relative number of persons engaged in such occupations, as in the substitution of manufactures in the modern sense for the more simple methods of the previous period.' ' According to the census returns of 1820 and 1840, the only two of the earlier returns in which occupations are enumerated, there were engaged INDUSTRIAL HISTOIiY OF THE UNITED STATES. 23 The . second effect of the change that followed th e financial _crigis_oL 18 19, was t he s trong protectiv e move - ment which exercised so important an influence on the political history of the next generation. The diminution of th e forei gn demand, an d the fall in the jjrices, oX-Staple p r o d u cts, naturally ga ve rise to a cry for a home market . The absence oj_reci2rocity and the restricti ve regulation s of. England, especially in face of the comparatively liberal importjdutiesof this country, furnished an effective argu - ment to the advocates of protection . Most effectiv e, how- £yer, was the argument for protection to youn g industries , which was urged with persistency during the next ten or in manufactures and the mechanic arts in 1820, 13.7 per cent, of the work- ing population ; in 1840, 17. 1 per cent. In New England 21 per cent, were so engaged in 1820, 30.2 per cent, in 1840 ; in the Middle States 22.6 percent, in 1820, 28 per cent, in 1840. Mac Gregor, " Progress of America," II., lOl. There are no census figures before 1820. In 1807 it was loosely estimated that out of 2,358,000 persons actively employed, 230,000 were engaged in mechanics and manufactures — less than 10 per cent. Blodgett, " Thoughts on a Plan of Economy," etc. [1807] p. 6. The fluctuations in the exports of wheat flour, which was the most im- portant article of export among agricultural products during the early part of the century, tell plainly the story of the country's foreign trade. They were as follows, the figures indicating millions of dollars : Yearly average, 1803-7 (expanded trade) . . . .8.2 " " .1808-10 (restriction) 4.0 " " 1810-12 (restrictions removed) . . . 13.5. " •' 1813-15 (war) 5-5 " " 1816—17 (temporary revival) , . . 14.5 Year 1818 6.o- " 1819 5-0 " 1820 4-3 During the decade 1820-1830, when matters settled down to a normal state, the yearly export was between four and five millions of dollars. See "Quarterly Reports of the Bureau of Statistics," 1883-84, No. 4, pp. 523, 524. 24 PROTECTION TO YOUNG INDUSTRIES. fifteen years. The character and history of this early pro- tective movement will be discussed elsewhere.' Here it is sufificient to note that its elTect o n le gi slation was not merely to maintain the protective provisions of the tariff o_f_ 1816, but much to exte nd the protective element in tariff legislation. Already in 18 18 it had been enacted that the duty of 25 per cent, on cottons and woollens should remain in force till 1826, instead of being reduced to 20 per cent, in 18 19, as had been provided by the act of 1816. At the same time the duty on all forms of unman- ufactured iron was considerably raised ; a measure to which we shall have occasion to refer in another connec- tion. In 1820, while the first pressure of the economic revulsion bore hard on the people, a vigorous attempt was made to pass a high protective tariff, and it barely failed of success, by a single vote in the Senate. In 1824 the protectionistssucceeded .in pa_ssing_th^e Janff_oi_that year, which increased all duties considerably.. Four years ^' laterj^.in the._tariSLpf -I828, the protective m oveme nt reached its highest point . The measures w hich followe d in 1832 and 1 83^3 moderated the pec uli arly offensive pro- Y.isions of the_act_of_i828, but retained the essential par ts of_protection for some yea rs longe r. On the whole, from ' 1.8 1 6 on, there waa-appUfid-ior-aomp twenty years a rnn- t m u ou s p o.Hcy of protection ; for the first eigh t years with much moderation, Jbut after 1824 with high duties, and ' stringent measures for enforcing them. ' In the next essay, pp. 68-75. III. THE COTTON MANUFACTURE. We turn now to the history of some of the industries to which protection was applied during this long period, in order to determine, so far as this is possible, how far their introduction and early growth were promoted or rendered possible by protection. We shall try to see how far and with what success protection to young industries was applied. The most important of them, on account both of its magnitude and of the peculiarly direct applica- tion of protection to it, is the cotton manufacture ; and we are fortunate in having, at the same time, the fullest and most trustworthy accounts of the early history of this industry.' During the first of the two periods into which we have divided the early economic history of the United States, several attempts were made to introduce the manufacture of cotton by the machinery invented by Hargreaves and Arkwright in the latter part of the i8th century. One or ' In S. Batchelder's " Introduction and Early Progress of the Cotton Man- ufacture in the U. S." (1863) ; G. S. White's " Memoir of Samuel Slater " (1836) ; and N. Appleton's " Introduction of the Power-loom and Origin of LoweU " (1858). 25 26 PROTECTION TO YOUNG INDUSTRIES. two of these attempts succeeded, but most of them failed,, and themanufacture, which then was growing with marvel- lous rapidity in England, failed to attain any considerable development in this country. In 1787 a factory using the new machinery was established at Beverly, Mass., and obtained aid from the State treasury ; but it was soon abandoned. Similar unsuccessful ventures were made at Bridgewater, Mass., Norwich, Conn., and Pawtucket, R. I., as well as in Philadelphia. The spinning-jenny wa.'i introduced in all these, but never successfully operated.' The first successful attempt to manufacture with the new machinery was made by Samuel Slater, at Pawtucket, R. I. Slater was a workman who had been employed in Arkwright's factories in England. He joined to mechani- cal skill strong business capacity. He had become famil- iar with the system of carding, drawing, roving, and mule- spinning. Induced to come to the United States in 1798 by prizes offered by the Philadelphia Society for Promot- ing Manufactures, he took charge in the following year of a cotton-factory which had been begun and carried on with little success by some Quakers of Pawtucket. He was suc- cessful in setting up the Arkwright machinery, and became the founder of the cotton manufacture in this country. Through him machinery, and instruction in using it, were obtainable ; and a few other factories were begun under ' Batchelder, p. 26 seq.; White, ch. III. The cotton-mill at Norwich, built in 1790, was operated for ten years, and then abandoned as unprofit- able. — Caulkins, " Hist, of Norwich," p. 6g6. THE COTTON MANUFACTURE. 2"] his superintendence. Nevertheless, the manufacture hardly maintained its hold. In 1803 there were only four factories in the country." The cotton manufacture was at that time extending in England at a rapid rate, and the imports of cotton goods from England were large. The Treasury reports of those days give no separate statements of the imports of cotton goods ; but in 1807 it was esti- mated that the imports of cotton goods from England amounted to eleven million dollars' worth — a very large sum for those days." The consumption of cotton goods was large ; but only an insignificant part of it was supplied by home production, although later developments showed that this branch of industry could be carried on with dis- tinct success. The ease with which these imports were paid for, and the stimulus which this period, as described in the preceding pages, gave to agriculture and com- merce, account in part for the slowness with which the domestic manufacture developed. The fact that raw cot- ton was not yet grown to any considerable extent in the country, together, doubtless, with the better machinery and larger experience and skill of the English, account for the rest. When, however, the period of restriction began, in 1808, the importation of foreign goods was first impeded, and soon entirely prevented. The domestic manufacture accordingly extended with prodigious rapidity. Already 'Bishop, " Hist, of Manufactures," II., 102. ^ See the pamphlet by Blodgett " On a Plan of Economy," etc,, already cited, p. 26. ; 28 PROThflWN -lO YOUNG INDUSTRIES. during the years 1804-8 greater activity must have pre- vailed ; for in the latter year fifteen mills had been built., running 8,000 spindles. In 1809 the number of mills built shot up to 62, with 31,000 spindles, and while 25 more mills were in course of erection.' In 1812 there were 50 factories within thirty miles of Providence, operat- ing nearly 60,000 spindles, and capable of operating 100,- 000." During the war the same rapid growth continued, rendered possible as it was by the increasing supply of raw cotton from the South. The number of spindles was said to be 80,000 in 181 1, and 500,000 in 1815. In 1800, 500 bales of cotton had been used ; in 1805, 1,000 bales. In 1810 the number consumed rose to 10,000; in 1815, it was 90,000.' These figures cannot be supposed to be ' Gallatin's Report on Manufactures in 1810 ; " Amer. State Papers, Finance," II., 427. ' " White : " Memoir of Slater," p. 188. * See the Report of a Committee of Congress on the Cotton Manufacture in 1816 ; " Amer. State Papers, Finance," III, 82, ^4. This estimate re- fers only to the cotton consumed in factories, and does not include that used :n household manufacture. The number of spindles for 1815, as given in this report, is probably much too large. In Woodbury's Report of 1836 on cotton, the number of spindles in use in factories is given as foUovi^s : ± 11 XOU5 ' 1807 8,000 " ' 1809 31,000 " ' I8I0 87,000 " ' I8I5 130,000 " ' 1820 220,000 " ' 1821 230,000 " " 1825 800,000 " Exec. Doc, ' I Sess., 24 Congr. No . 146, p. 51- It need not be said iiat these figures are hopelessly loose ; but they are sufficient to support the general assertions of the text. THE COTTON MANUFACTURE. 29 at all accurate ; but they indicate clearly an enormously rapid development of the manufacture of cotton. The machinery in almost all these new factories was for spinning yarn only. Weaving was still carried on by the hand-loom, usually by weavers working in considerable numbers on account for manufacturers. Toward the end of the war, however, a change began to be made almost as important in the history of textile manufactures as the use of the spinning-jenny and mule : namely, the substitu- tion of the power-loom for the hand-loom. The introduc- tion of the power-loom took place in England at about the same time, and some intimation of its use seems to have reached the inventor in this country, Francis C. Lowell. He perfected the machine, however, without any use of English models, in the course of the year 1814. In the same year it was put in operation at a factory at Waltham, Mass. There for the first time the entire pro- cess of converting cotton into cloth took place under one roof. The last important step in giving textile manufac- tures their present form was thus taken.' When peace was made in 181 5, and imports began again, the newly established factories, most of which were badly equipped and loosely managed, met with serious embarrassment. Many were entirely abandoned. The manufacturers petitioned Congress for assistance ; and they received, in 1816, that measure of help which the public was then disposed to grant. The tariff of 18 16 'Appleton, pp. 7-1 1 ; Batchelder, pp. 60-70. 30 PROTECTION TO YOUNG INDUSTRIES. levied a duty of 25 per cent, on cotton goods for three years, a duty considered sufficiently protective in those days of inexperience in protective legislation. At the same time it was provided that all cotton cloths, costing less than 25 cents a yard, should be considered to have cost 25 cents and be charged with duty accordingly; that is, should be charged 25 per cent, of 25 cents, or 6\ cents a yard, whatever their real value or cost. This was the first of the minimum valuation provisos which played so considerable a part in later tariff legislation, and which have been maintained in large part to the present time. A similar minimum duty was imposed on cotton-yarns.' At the time when these measures were passed, the minimum provisos hardly served to increase appreciably the weight of the duty of 25 per cent. Coarse cotton cloths were then worth from 25 to 30 cents, and, even without the provisos, would have paid little, if any thing, less than the minimum duty. But, after 18 18, the use of the power- loom, and the fall in the price of raw cotton, combined greatly to reduce the prices of cotton goods. The price of coarse cottons fell to 19 cents in 1819, 13 cents in 1826, and 8^ cents in 1829.'' The minimum duty became proportionately heavier as the price decreased, and, in a few years after its enactment, had become prohibitive of the importation of the coarser kinds of cotton cloths. ' The minimum system seems to liave been suggested by Lowell. Apple- ton, p. 13. Compare Appleton's speech in Congress in 1833. — " Congres- sional Debates," IX., 1213. ' Appleton, p. 16. THE COTTON MANUFACTURE. 3 1 During the years immediately after the war, the aid given in the tariff of 1816 was not sufficient to prevent severe depression in the cotton manufacture. Reference has already been made to the disadvantages which, under the circumstances of the years 1815-18, existed for all manufacturers who had to meet competition from abroad. But when the crisis of 18 18-19 had brought about a re- arrangement of prices more advantageous for manufac- turers, matters began to mend. The minimum duty became more effective in handicapping foreign competitors. At the same time the power-loom was generally introduced. Looms made after an English model were introduced in the factories of Rhode Island, the first going into opera- tion in 1817 ; while in Massachusetts and New Hampshire the loom invented by Lowell was generally adopted after 1816.' From these various causes the manufacture soon became profitable. There is abundant evidence to show that shortly after the crisis the cotton manufacture had fully recovered from the depression that followed the war.^ The profits made were such as to cause a rapid ' Appleton, p. 13 ; Batchelder, pp. 70-73. " The following passage, referring to the general revival of manufactures, may be quoted : " The manufacture of cotton now yields a moderate profit to those who conduct the business with the requisite skill and economy. The extensive factories at Pawtucket are still in operation. ... In Phil- adelphia it is said that about 4,000 looms have been put in operation within the last six months, which are chiefly engaged in making cotton goods, and that in all probability they will, within six months more, be increased to four times that number. In Paterson, N. J., where, two years ago, only three out of sixteen of its extensive factories were in operation ... all are now in vigorous employment." — " Niles's Register," XXI., 39 (182 1). Com- 32 PROTECTION TO YOUNG INDUSTRIES. extension of the industry. The beginning of those man- ufacturing villages which now form the characteristic economic feature of New England falls in this period. Nashua was founded in 1823. Fall River, which had grown into some importance during the war of 18 14, grew rapidly from 1820 to 1830.' By far the most important and the best known of the new ventures in cotton manu- facturing was the foundation of the town of Lowell, which was undertaken by the same persons who had been en- gaged in the establishment of the first power-loom factory at Waltham. The new town was named after the inventor of the power-loom. The scheme of utilizing the falls of the Merrimac, at the point where Lowell now stands, had been suggested as early as 1821, and in the following year the Merrimac Manufacturing Company was incorporated. In 1823 manufacturing began, and was profitable from the beginning ; and in 1824 the future growth of Lowell was clearly foreseen." pare Ibid., XXII., 225, 250(1822); XXIII., 35, 88(1823); zxi6. passim. In Woodbury's cotton report, cited above, it is said (p. 57) that " there was a great increase [in cotton manufacturing] in 1806 and 1807 ; again during the war of 1812 ; again from 1820 to 1825 ; and in 1831-32." ' Fox's " History of Dunstable " ; Earl's " History of Fall River," p. 20 seq. ^ See the account in Appleton, pp. 17-25. One of the originators of the enterprise said in 1824 : " If our business succeeds, as we have reason to expect, we shall have here [at Lowell] as large a population in twenty years from this time as there was in Boston twenty years ago. " — Batchel- der, p. 6g. In Bishop, II., 309, is a list of the manufacturing villages of 1826, in which some twenty places are enumerated. THE COTTON MANUFACTURE. 33 From this sketch of the early history of the cotton manufacture we may draw some conclusions. Before 1808 the difficulties in the way of the introduction of this branch of industry were such that it made little progress. These difficulties were largely artificial ; and though the obstacles arising from ignorance of the new processes and from the absence of experienced workmen, were partly removed by the appearance of Slater, they were sufficient, when combined with the stimulus which the condition of foreign trade gave to agriculture and the carrying trade, to prevent any appreciable development. Had this period come to an end without any accompanying politi- cal change — had there been no embargo, no non-inter- course act, and no war with England — the growth of the cotton manufacture, however certain to have taken place in the end, might have been subject to much friction and loss. Conjecture as to what might have been is danger- ous, especially in economic history, but it seems reasonable to suppose that if the period before 1808 had come to an end without a jar, the eager competition of well-estab- lished English manufacturers, the lack of familiarity with the processes, and the long-continued habit, especially in New England, of almost exclusive attention to agriculture, commerce, and the carrying trade, might have rendered slow and difficult the change, however inevitable it may have been, to greater attention to manufactures. Under such circumstances there might have been room for the legitimate application of protection to the cotton manq- 34 PROTECTION TO YOUNG INDUSTRIES. facture as a young industry. But this period, in fact, came to an end with a violent shock, which threw indus- try out of its accustomed grooves,' and caused the striking growth of the cotton manufacture from 1808 to 181 5. The transition caused much suffering, but it took place sharply and quickly. The interruption of trade was equiv- alent to a rude but vigorous application of protection, which did its work thoroughly. When peace came, in 1815, it found a large number of persons and a great amount of capital engaged in the cotton manufacture, and the new processes of manufacture introduced on an extensive scale. Under such circumstances the industry was certain to be maintained if it was for the economic interest of the country that it should be carried on. The duties of the tariff of 1816, therefore, can hardly be said to have been necessary. Nevertheless, they may have been of service. The assistance they gave was, it is true, insignificant in comparison with the shelter from all foreign competition during the war. Indeed, most manu- facturers desired much higher duties than were granted." It is true, also, that the minimum duty on cottons was least effective during the years immediately after the war, when the price of cottons was higher, and the duty was therefore proportionately less high. But these years be- ' " In 1816 a new tariff was to be made. The Rhode Island manufac- turers were clamorous for a very high specific duty. Mr. Lowell's views on the tariff were much more moderate, and he finally brought Mr. Lowndes and Mr. Calhoun to support the minimum of 6^ cents a yard, which was carried." — Appleton, p. 13, THE COTTON MANUFACTURE. 35 tween the close of the war and the general fall of prices in 1 8 19 were trying for the manufacturers. The normal economic state, more favorable for them, was not reached till the crisisof 1818-19 was well over. During the inter- vening years the minimum duty may have assisted the manufacturers without causing any permanent charge on the people. The fact that careful and self-reliant men, like the founders of the Waltham and Lowell enterprises, were most urgent in advising the adoption of the rates of 1816 — at a time, too, when the practice of appealing to Congress for assistance when in distress had not yet be- come common among manufacturers — may indicate that those rates were of service in encouraging the continuance of the manufacture. How seriously its progress would have been impeded or retarded by the absence of duties, cannot be said. On the whole, although the great im- pulse to the industry was given during the war, the duties on cottons in the tariff of 18 16 may be considered a judi- cious application of the principle of protection to young industries. Before 1824, the manufacture, as we have seen, was se- curely established. The further application of protection in that and in the following years was needless, and, so far as it had any effect, was harmful. The minimum valua- tion was raised in 1824 to 30 cents, and in 1828 to 35 cents. The minimum duties were thereby raised to 7^ and 8| cents respectively. By 1824 the manufacture had so firm a hold that its further extension should have been 36 PROTECTION TO YOUNG INDUSTRIES. left to individual enterprise, which by that tirne might have been relied on to carry the industry as far as it was for the economic interest of the country that it should be carried. The increased duties of 1824 and 1828 do not come within the scope of the present discussion. IV. THE WOOLLEN MANUFACTURE. The sudden and striking growth of the cotton manu- facture in the last hundred years has caused its history, in this country as in others, to be written with comparative fulness. Of the early history of the manufacture of woollen goods in the United States we have but scanty accounts ; but these are sufficient to show that the general course of events was similar to that in cotton manufac- turing. During the colonial period and the years imme- diately after the Revolution, such woollen cloths as were not spun and woven in households for personal use were imported from England. The goods of household manu- facture, however, formed, and for many years after the in- troduction of machinery continued to form, by far the greater part of those in use. The first attempt at making woollens in large quantities is said to have been made at Ipswich, Mass., in 1792 ; but no machinery seems to have been used in this undertaking. In 1794 the new machin- ery was for the first time applied to the manufacture of wool, and it is noteworthy that, as in the case of the cot- ton manufacture, the machinery was introduced by En- 37 38 PkOTECTlON TO YOUNG INDUSTRIES. lish workmen. These were the brothers Arthur and John Scholfield, who came to the United States in 1793, and in the next year established a factory at Byfield, Mass. Their machinery, however, was exclusively for card- ing wool, and for dressing (fulling) woollen goods ; and for the latter purpose it was probably in no way different from that of the numerous fulling-mills which were scat- tered over the country during colonial times. Spinning and weaving were done, as before, on the spinning-wheel and the hand-loom. The Scholfields introduced carding- machinery in place of the hand-cards, and seem to have carried on their business in several places with success. A Scotchman, James Saunderson, who emigrated in 1794, also introduced carding-machines at New Ipswich, N. H., in 1 801. Their example, however, was followed by few. Carding-machines were introduced in a few other places between 1800 and 1808 ; but no development of the busi- ness of systematically making cloth, or preparing wool for sale, took place. The application of machinery for spinning does not seem to have been made at all.' One great difficulty in the way of the woollen manufacture was the deficient supply and poor quality of wool. The means of overcoming this were supplied when in 1802 a large flock of fine merino sheep was imported from Spain, ' See a sketch of the early history of the woollen manufacture in Taft's " Notes on the Introduction of the Woollen Manufacture." Compare the same writer's account in " Bulletin National Ass. of Wool Manufacturers," II., 478-488 and the scattered notices in Bishop, " Hist, of Manufactures," I., 421, and II., 106, 109, 118, etc. THE WOOLLEN MANUFACTURE. 39 followed in 1809 and 1810 by several thousand pure me- rinos from the same country.' But imports from England continued to be large, and those woollen cloths that were not homespun were obtained almost exclusively from the mother country.^ When the period of restriction began in 1808, the wool- len manufacture received, like all other industries in the same position, a powerful stimulus. The prices of broad- cloth, then the chief cloth worn besides homespun, rose enormously, as did those of flannels, blankets, and other goods, which had previously been obtained almost exclu- sively by importation. We have no such detailed state- ments as are given of the rise of the cotton manufacture. It is clear, however, that the manufacture of woollen goods, which had had no real existence before, began, and was considerably extended. The spinning of wool by ' Bishop, 11., 94, 134. " The United States were mportant customers of woollens for England, as appears from the following figures, which give in millions of pounds sterling the total exports of woollens from England, and those of exports to the United States. Total To the U. S. 1790 5.2 1-5 1791 5-5 1.6 1792 5-5 1-4 1793 3.8 I.O 1794 4.4 I "4 1795 5-2 2.0 1796 6.0 2.3 1797 4.9 1.9 1798 6.5 2.4 1799 6.9 2.8 Brothers, "Wool and Woo . Manufactui es of Grea t Britain," 143, 144 40 PROTECTlOlsr TO YOVNG INDt? STRIPS. machinery was introduced, and goods were made for sale on a large scale. As early as 1 8 lo the carding and spin- ning of wool by machinery was begun in some of the cotton mills in Rhode Island.' In Northampton, Mass., Oriskany, N. Y., and other places, large establishments for the manufacture of woollen goods and of satinets (mixed cotton and woollen goods) sprang up. The value of woollen goods made in factories is said to have risen from $4,ooo,ocx) in 1810 to $19,000,000 in 1815." After 1 8 1 5 the makers of woollens naturally encountered great difficulties in face of the renewed and heavy impor- tations of English goods. The tariff of 1816 gave them the same duty that was levied on cottons, 25 per cent., to be reduced in three years to 20 per cent. The reduction of the duty to 20 per cent., which was to have taken place in 18 19, was then postponed, and in the end never took place. No minimum valuation was fixed for woollen goods ; hence there was not, as for cotton goods, a mini- mum duty. Wool was admitted at a duty of 15 percent. The scheme of duties, under the tariff of 1816, thus afforded no very vigorous protection. Nor did the provi- sions of the act of 1824 materially improve the position of the woollen manufacturers. The duty on woollen goods was in that act raised to 30 per cent, in the first instance, and to 33^^ per cent, after 1825. At the same time the ' Gallatin's report of 1810, " Am. State Papers, Finance," II. 427 ; Taft, 44- " " Bulletin Wool Manufacturers," II., 486. This is hardly more than a loose, though significant, guess. THE WOOLLEN MANUFACTURE. 4I duty on wool (except that costing ten cents a pound or less) was raised to 20 per cent, in the first place, to 25 per cent, after 1825, and to 30 per cent, after 1826. If foreign wool had to be imported to supplement the domestic supply, — and such a necessity has constantly existed in this country since 1816, — the increased price of wool in this country, as compared with other countries which ad- mitted wool free or at a lower duty, would tend to make the effectual protection to woollen manufacturers far from excessive. Notwithstanding the very moderate encouragement given from 18 16 to 1828, the woollen manufacture steadily progressed after the crisis of 1819, and in 1828 was securely established. During the years from the close of the war till 18 19 much embarrassment was felt, and many establishments were given up ; but others tided over this trying time." After 18 19 the industry gradually responded to the more favorable influences which then set in for manufactures, and made good progress. During 182 1 and 1822 large investments were made in factories for making woollen cloths, especially in New England.^ In 1823 the manufacturers of woollens in Boston were sufficiently numerous to form an independent ' Thus a large factory in Northampton, built in l8og (Bishop, II., 136), was still in operation in 1828 ("Am. State Papers, Finance," V., 815). In Taft's "Notes " there is mention (pp. 39-40) of the Peacedale Manufacturing Company, which began in 1804, and has lasted to the present time. It is «aid that the spinning-jenny was first applied to wool in this factory. ^ Bishop, II., 270, 294 ; Niles, XXII., 225. 4^ PROTECTION TO YOUNG INDUSTRIES. organization for the promotion of their interests, which ( were, in that case, to secure higher protective duties.' t The best evidence which we have of the condition of the industry during these years is to be found in the testi- mony given in 1828 by various woollen manufacturers be- fore the Committee of the House of Representatives on Manufactures. This testimony shows clearly that the industry was established in 1828 on such a scale that the difficulties arising from lack of skill and experience, unfa- miliarity with machinery and methods, and other such temporary obstacles, no longer had influence in prevent- ing its growth.' The capital invested by the thirteen manufacturers who testified before this committee varied from $20,000 to $200,000, the average being $85,000. The quantity of wool used by each averaged about 62,000 pounds per year. These figures indicate a scale of opera- tion very considerable for those days. Six of the fac- tories referred to had been established between 1809 and 181 5. With the possible exception of one, in regard to which the date of foundation was not stated, none had been established in the years between 1 8 1 5 and 1 820 ; the remain- ing six had been built after 1820. Spinning-machinery was in use in all. Some used power-looms, others hand-looms. The application of the power-loom to weaving woollens, said one manufacturer, had been made in the United States > Niles, XXV., 148, 189, ' The testimony is printed in full in "American State Papers, Finance," v., 792-832. THE WOOLLEN MANUFACTURE. 43 earlier than in England." An indication, similar to this, of the point reached by the American producers in the use of machinery, was afforded by the difference of opin- ion in regard to the comparative merits of the jenny, and of the " Brewster," a spinning-machine of recent inven- tion. Goods of various kinds were made — broadcloths, cassimeres, flannels, satinets, and kerseys. The opinion was expressed by several that the mere cost of manufac- turing was not greater in the United States than in Eng- land ; that the American manufacturer could produce, at as low prices as the English, if he could obtain his wool at as low prices as his foreign competitor." This testi- ' Testimony, p. 824. The same statement is made by Bishop, II., 317. In Taft's " Notes," p. 39, there is an account of the application of the power-loom to weaving saddle-girths as early as 1S14. In 1822 the power-loom for weaving broadcloths seems to have been in common use. — Taft, p. 43. '' " Broadcloths are now (1828) made at much less expense of labor and capital than in 1825, by the introduction of a variety of improved and labor- saving machinery, amongst which may be named the dressing-machine and the broad power-loom of American invention " (p. 824). The power-loom was very generally used. " Since the power-looms have been put in opera- lion, the weaving costs ten cents per yard, instead of from eighteen to twenty-eight cents " (p. 814). Shepherd, of Northampton, to whose factory reference has already been made (ante p. 44, note i), said : " The differ- ence in price of cloths (in the United States and in England) would be the difference in the price of the wool, as, in my opinion, we can manufacture as cheap as they (the English) can " (p. 816). In the same connection another manufacturer said: "The woollen manufacture is not yet fairly established in this country, but I know no reason why we cannot manufac- ture as well and as cheap as they can in England, except the difference in the price of labor, for which, in my opinion, we are fully compensated by other advantages. Our difficulties are not the cost of manufacturing, but the great fluctuations in the home market, caused by the excessive and irreg- 44 PROTECTION TO YOUNG INDUSTRIE S. mony seems to show conclusively that at the time when it was given the woollen manufacture had reached that point at which it might be left to sustain itself ; at which accidental or artificial obstacles no longer stood in the way of its growth. That many of the manufacturers themselves wanted higher duties, is, for obvious reasons, not inconsistent with this conclusion. Progress had been less certain and rapid than in the case of the kindred cot- ton manufacture, for the conditions of production were less distinctly favorable. The displacement of the house- hold products by those of the factory was necessarily a gradual process, and made the advance of the woollen manufacture normally more slow than that of the kindred industry. But the growth of the cotton manufacture, so similar to that of wool, of itself removed many of the ob- stacles arising from the recent origin of the latter. The use of machinery became common, and, when the first great steps had been taken, was transferred with com- parative ease from one branch of textile production to another. In 1828, when for the first time heavy protec- tion was given by a complicated system of minimum du- ties, and when the actual rates rose, in some cases, to over 100 per cent., this aid was no longer needed to sus- ular foreign importations. The high prices we pay for labor are, in my opinion, beneficial to the American manufacturer, as for those wages we get a much better selection of hands, and those capable and willing to per- form a much greater amount of labor in a given time. The American man- ufacturer also uses a larger share of labor-saving machinery than the Eng- lish " (p. 829). THE WOOLLEN MANUFACTURE. 45 tain the woollen manufacture. The period of youth had then been past. It appears that direct protective legislation had even less influence in promoting the introduction and early growth of the woollen than of the cotton manufacture. The events of the period of restriction, from 1808 to 1815, led to the first introduction of the industry, and gave it the first strong impulse. Those events may indeed be considered to have been equivalent to effective, though crude and wasteful, protective legislation, and it may be that their effect, as compared with the absence of growth before 1808, shows that protection in some form was needed to stimulate the early growth of the woollen manufacture. But, by 181 5, the work of establishing the manufacture had been done. The moderate duties of the period from 1816 to 1828, partly neutralized by the duties on wool, may have something to sustain it ; but the position gained in 181 5 would hardly have been lost in the absence of these duties. By 1828, when strong pro- tection was first given, a secure position had certainly been reached. V. THE IRON MANUFACTURE. We turn now to the early history of the iron manufac- ture, — the production of crude iron, pig and bar. We shall examine here the production, not of the finished article, but of the raw material. It is true that the pro- duction of crude iron takes place under somewhat different conditions from those which affect cotton and woollen goods. The production of pig-iron is more in the nature of an extractive industry, and, under ordinary circum- stances, is subject in some degree to the law of diminishing returns. To commodities produced under the conditions of that law, the argument for protection to young indus- tries has not been supposed, at least by its more moderate advocates, to apply, since the sites where production will be carried on to best advantage are apt to be determined by unalterable physical causes.' It happens, however, that changes in the processes of production, analogous to those which took place in the textile industries, were made at about the same time in the manufacture of crude ' See, for instance, List, " System of National Economy," Phila., 1856, pp. 296-300. 46 THE IRON MANUFACTURE. 47 iron. These changes rendered more possible the success- ful application of the principle of protection to young industries, and make the discussion of its apphcation more pertinent. There is another reason why we should consider, in this connection, the raw material rather than the finished article. The production of the latter, of the tools and implements made of iron, has not, in general, needed protection in this country, nor has protection often been asked for it. The various industries by which crude iron is worked into tools and consumable articles were firmly established already in the colonial period, and since then have maintained themselves with little difficulty. The controversy on the protection of the iron manufac- ture has been confined mainly to the production of pig- and bar-iron. It is to this, therefore, that we shall direct our attention. The production of pig- and bar-iron will be meant when, in the following pages, the " iron manu- facture " is spoken of. During the eighteenth century England was a country importing, and not, as she is now, one exporting, crude iron. The production of pig- and bar-iron was accordingly encouraged in her colonies, and production was carried on in them to an extent considerable for those days. Large quantities of bar-iron were exported from the American colonies to England.' The manufacture of iron was ' See the tables in Bishop, I., 629, and Scrivenor, " History of the Iron Trade," p. 81. In 1740 the total quantity of iron produced in England was about 17,000 tons ; at that time from 2,000 to 3,000 tons annually were regularly imported from the American colonies, 48 PROTECTION TO YOUNG INDUSTRIES. firmly established in the colonies according to the meth- ods common at the time. During the second half of the eighteenth century, however, the great change took place in England in the production of iron which has placed that country in its present position among iron-making countries, and has exercised so important an influence on the material progress of our time. Up to that time char- coal had been used exclusively for smelting iron, and the iron manufacture had tended to fix itself in countries where wood was abundant, like Norway, Sweden, Russia, and the American colonies. About 1750 the use of coke in the blast furnace began. The means were thus given for producing iron in practically unlimited quantities, without dependence for fuel on forests easily exhaustible ; and in the latter part of the century, when the steam- engine supplied the motive power for the necessary strong blast, production by means of coke increased with great rapidity.' At the same time, in 1783 and 1784, came the inventions of Cort for puddling and rolling iron. By these the transformation of pig-iron into bar-iron of convenient sizes was effected in large quantities. Before the inven- tions of Cort, pig-iron had been first converted into bar under the hammer, and the bar, at a second distinct oper- ation in a slitting mill, converted into bars and rods of con- venient size. The rolled bar made by the processes of puddling and rolling — which are still in common use — is ' See the good account of the importance of the use of coke (coal) in Je- vons, " The Coal Question," ch. XV., pp. 309-316, THE IRON MANUFACTURE. 49 inferior in quality, at least after the first rolling, to the hammered and slit iron, known as hammered bar, pro- duced by the old method. Cort's processes, however, made the iron much more easily and cheaply, and the lower price of the rolled iron more than compensated, for most purposes, for its inferior quality. At the same time these processes made easy and fostered the change from production on a small sale to production on a large scale. This tended to bring about still greater cheapness, and made the revolution in the production of iron as great as that in the textile industries, and similar to it in many im- portant respects. During the period 1789-1808 these changes in the iron manufacture were too recent to have had any appreciable effect on the conditions of production and supply in the United States. The manufacture of iron, and its trans- formation into implements of various kinds, went on without change from the methods of the colonial period. Pig-iron continued to be made and converted into ham- mered bar in small and scattered works and forges.' No pig-iron seems to have been imported. Bar-iron was im- ported, in quantities not inconsiderable, from Russia" ; but no crude iron was imported from England. The im- portations of certain iron articles, not much advanced be- yond the crude state, such as nails, spikes, anchors, cables, showed a perceptible increase during this period." ' French, " Hist, of Iron Manufacture," p. 16. '^ Ibid., p. 13. ^ The imports of iron, so far as separately stated in the Treasury reporls. may be found in Young's Report on Tariff Legislation, pp. XXVI.- XXXVI. Cp. Grosvenor, "Does Protection Protect?" pp. 174, 175. so PROTECTION TO YOUNG INDUSTRIES. Whether this increase was the result of the general con- ditions which tended to swell imports during this period, or was the first effect of the new position which England was taking as an iron-making country, cannot be deter- mined. Information on the state of the industry during this period is meagre ; but it seems to have been little affected by the protective duties which Congress enacted on nails, steel, and some other articles. No protection was attempted to be given to the production of pig or bar-iron, for it was thought that the domestic producers would be able to compete successfully with their foreign competitors in this branch of the iron-trade. During the period of restriction from 1808 to 1815, the iron and manufactures of iron previously imported, had to be obtained, as far as possible, at home. A large in- crease in the quantity of iron made in the country accord- ingly took place. The course of events was so similar to that already described in regard to textile manufactures that it need not be referred to at length. When peace came, there were unusually heavy importations of iron, prices fell rapidly, and the producers had to go through a period of severe depression. In 1 8 16 Congress was asked to extend protection to the manufacture of iron, as well as to other industries. The tariff of 1816 imposed a duty of 45 cents a hundred- weight on hammered-bar iron, and one of $1.50 a hun- dred-weight on rolled bar, with corresponding duties on sheet, hoop, and rod iron. Pig-iron was admitted under THE IRON MANUFACTURE. 5I an ad valorem duty of 20 per cent. At the prices of bar- iron in 1 816, the specific duty on hammered bar was equivalent to about 20 per cent.,' and was, therefore, but Httle higher than the rates of 15 and I7|- per cent, levied in 1804 and 1807. The duty on rolled bar was much higher, relatively to price, as well as absolutely, than that on hammered bar, and was the only one of the iron duties of 1816 which gave distinct and vigorous protection. These duties were not found sufificient to prevent the manufacturers from suffering heavy losses, and more effec- tive protection was demanded. In 1818, Congress, by a special act, raised the duties on iron considerably, at the same time, as was noted above," that it postponed the reduction from 25 to 20 per cent, on the duty on cottons and woollens. Both of these measures were concessions to protective feeling, and they may have been the result of an uneasy consciousness of the disturbed state of the country and of the demand for protection which was to follow the financial crisis of the next year.'' . The act of 1818 fixed the duty on pig-iron at 50 cents per hundred- weight — the first specific duty imposed on pig-iron ; ham- mered bar was charged with 75 cents a hundred-weight, instead of 45 cents, as in 1816; and higher duties were put on castings, anchors, nails, and spikes.' These duties ' See the tables of prices in French, pp. 35, 36. ' Ante, p. 27. ' There is nothing in ihe Congressional debates on the acts of i8i8 to show what motives caused them lo be passed. * " Statutes at Large," III., 460, 52 PROTECTION TO YOUNG INDUSTRIES. were comparatively heavy ; and with a steady fall in the price of iron, especially after the crisis of 1818-19, they became proportionately heavier and heavier. Neverthe- less, in the tariff of 1824 they were further increased. The rate on hammered bar went up to 90 cents a hundred- weight ; that on rolled bar still remained at $1.50, as it had been fixed in 18 16. In 1828 a still further increase was made in the specific duties on all kinds of iron, al- though the continual fall in prices was of itself steadily increasing the weight of the specific duties. The duty on pig-iron went up to (>2\ cents a hundred-weight ; that on hammered bar to a cent a pound (that is, $1.12 a hundred- weight) ; that on rolled bar to $37 a ton. In 1832 duties were reduced in the main to the level of those of 1824, and in 1833 the Compromise Act, after maintaining the duties of 1832 for two years, gradually reduced them still further, till in 1 842 they reached a uniform level of 20 per cent. On the whole, it is clear that after 1818 a system of increasingly heavy protection was applied to the iron manufacture, and that for twenty years this protection was maintained without a break. From 1818 till 1837 or 1838, when the reduction of duty under the Compromise Act began to take effect to an appreciable extent, the duties on iron in its various forms ranged from 40 to 100 per cent, on the value. It is worth while to dwell for a moment on the heavy duty on rolled iron — much higher than that on hammered iron — which was adopted in 18(6, and maintained through- THE IRON MANUFACTURE. 53 out this period. Congress attempted to ward off the competition of the cheaper rolled iron by this heavy dis- criminating duty, which in 1828 was equivalent to one hundred per cent, on the value. When first established in 1816, the discrimination was defended on the ground that the rolled iron was of inferior quality, and that the importation of the unserviceable article should be impeded for the benefit of the consumer. The scopeof the change in the iron manufacture, of which the appearance of rolled iron was one sign, was hardly understood in 18 16 and 18 1 8, and this argument against its use may have repre- sented truthfully the animus of the discriminating duty. But in later years the wish to protect the consumer from impositions hardly continued to be the motive for retain- ing the duty. Rolled bar-iron soon became a well-known article, of considerable importance in commerce. The discriminating duty was retained throughout, and in 1828 even increased ; it was still levied in the tariff of 1832 ; it reappeared when the Whigs carried the tariff of 1842 ; and it did not finally disappear till 1846. The real mo- tive for maintaining the heavy tax through these years undoubtedly was the unwillingness of the domestic pro- ducers to face the competition of the cheaper article. The tax is a clear illustration of that tendency to fetter and impede the progress of improvement which is inhe- rent in protective legislation. It laid a considerable burden on the community, and, as we shall see, it was of no service in encouraging the early growth of the iron 54 PROTECTION TO YOUNG INDUSTRIES. industry. It is curious to note that the same contest against improved processes was carried on in France, by a discriminating duty on English rolled iron, levied first in 1816, and not taken off till i860.' After 18 1 5 the iron-makers of the United States met with strong foreign competition from two directions. In the first place, English pig and rolled iron was being pro- duced with steadily decreasing cost. The use of coke be- came universal in England, and improvements in methods of production were constantly made. Charcoal continued to be used exclusively in the furnaces of this country ; for the possibility of using anthracite had not yet been dis- covered, and the bituminous coal fields lay too far from what was then the region of dense population to be avail- able. While coke-iron was thus driving out charcoal-iron for all purposes for which the former could be used, the production of charcoal-iron itself encountered the com- petition of Sweden and Russia. As the United States advanced in population, the more accessible forests became exhausted, and the greater quantity of charcoal-iron need- ed with the increase of population and of production, could be obtained at home only at higher cost. The Scandinavian countries and Russia, with large forests and a population content with low returns for labor, in large part supplied the increased quantity at lower rates than the iron-makers of this country. Hence the imports of iron show a steady increase, both those of pig-iron and ' Ame, " Etudes sur les Tarifs de IJouanes," I., 145. THE IRON MANUFACTURE. 55 and those of rolled and hammered bar ; the rolled bar coming from England, and the hammered bar from Sweden and Russia. The demand for iron was increasing at a rapid rate, and there was room for an increase both of the domestic production and of imports ; but the rise in imports was marked. Notwithstanding the heavy duties, the proportion of imported to domestic iron from 1818 to 1840 remained about the same.' Since importations continued regularly and on a con- siderable scale, the price of the iron made at home was clearly raised, at the seaboard, over the price of the for- eign iron by the amount of the duty. The country, there- fore, paid the iron tax probably on the greater part used, whether of foreign or domestic origin, in the shape of prices from forty to one hundred per cent, higher than those at which the iron could have been bought abroad. ' On the production and imports of iron in the yea-rs aft-^r 1830 the reader is referred to the remarks on p. 124, and to the " Quarterly Journal of Eco- nomics," vol. II., p. 377. Until the middle of the decade 1820-^0 the annual product of pig-iron is supposed to have been about 50,000 ton.", while in the second half of the decade it is put at 100,000 tons and more. The imports of crude iron averaged about 20,000 tons per year in i8i8-2i, ?bcut 30,000 tons in 1822-27, and rose to an average of about 40,000 tons in 1828-30. These figures as to imports refer mainly to bar-iron ; and as it required in those days about if tons of pig to make a ton of bar (French, p. 54), some additions must be made to ihe imports of bar before a proper comparison can be made between the domestic and the imported supply. An addition must also be made for the considerable imports of steel, sheet-iron, anvils, anchors, and other forms of manufactured iron. Figures of imports are given in Grosvenor, pp. 198, igg ; of domestic production, by R. W. Ray- mond, in A. S. Hewitt's pamphlet on "A Century of Mining and Metallur- gy." page 31- 56 PROTECTION TO YOUNG INDUSTRIES. The fact that the manufacture, notwithstanding the heavy and long-continued protection which it enjoyed, was unable to supply the country with the iron which it needed, is of itself sufficient evidence that its protection as a young industry was not successful. It is an essential condition for the usefulness of assistance given to a young industry, that the industry shall ultimately supply its products at least as cheaply as they can be obtained by importation ; and this the iron manufacture failed to do. There is, however, more direct evidence than this, that the manufacture was slow to make improvements in production, which might have enabled it eventually to furnish the whole supply needed by the country, and in this way might have justified the heavy taxes laid for its benefit. Pig-iron continued to be made only with char- coal. The process of puddling did not begin to be intro- duced before 1830, and then inefficiently and on a small scale.' Not until the decade between 1830 and 1840, at a time when the Compromise Act of 1833 was steadily de- creasing duties, was puddling generally introduced.^ The iron rails needed for the railroads built at this time — the first parts of the present railroad system — ^were supplied exclusively by importation. In 1832 an act of Congress had provided that duties should be refunded on all im- ported rails laid down within three years from the date ■ See an excellent article, by an advocate of protection, in the American Quarterly Review, Vol. IX. (1831), pp. 376, 379, which gives very full in- formation in regard to the state of the iron manufacture at that date. - French, p. 56. THE IRON MANUFACTURE. 57 of importation. Under this act all the first railroads imported their rails without payment of duty. Finally, the great change which put the iron manufacture on a firm and durable basis did not come till the end of the decade 1830-40, when all industry was much depressed, and duties had nearly reached their lowest point. That change con- sisted in the use of anthracite coal in the blast-furnace. A patent for smelting iron with anthracite was taken out in 1833 ; the process was first used successfully in 1836. In 1838 and 1839 anthracite began to be widely used. The importance of the discovery was promptly recog- nized ; it was largely adopted in the next decade, and led, among other causes, to the rapid increase of the produc- tion of iron, which has been so often ascribed exclusively to the protection of the tariff of 1842. With this change the growth of the iron manufacture- on a great scale prop- erly begins.' It seems clear that no connection can be traced between the introduction and early progress of the iron manufac- ture, and protective legislation. Dwring the colonial pe- riod, as we have seen, under the old system of production of iron, the country had exported and not imported iron. The production of charcoal-iron and of hammered bar was carried on before the adoption of the Constitution. During the first twenty years after 1789, the iron-makers ' Swank's Report on "Iron and Steel Production," in the Census o* 1880, p. 114. A fuller discussion of the introduction of the use of anthrax cite, and of the effect of protective duties after this had beer done, will b« found at pages 122-13,^. 58 PROTECTION TO YOUNG INDUSTRIES. still held their own, although the progress of invention elsewhere, and the general tendency in favor of heavy im- ports, caused a growing importation from abroad. The production of iron by the old methods and with the use of charcoal was therefore in no sense a new industry. If the business of making charcoal-iron could not be carried on or increased during this and the subsequent period, the cause must have lain in natural obstacles and disad- vantages which no protection could remove. After 1815, the new regime in the iron trade had begun ; the use of coke in the blast-furnace, and the production of wrought- iron by puddling and rolling, had changed completely the conditions of production. The protective legislation which began in 18 18, and continued in force for nearly twenty years, was intended, it is true, to ward off rather than to encourage the adoption of the new methods ; but it is conceivable that, contrary to the intentions of its au- thors, it might have had the latter effect. No such effect, however, is to be seen. During the first ten or fifteen years after the application of protection, no changes of any kind took place. Late in the protective period, and at a time when duties were becoming smaller, the pud- dling process was introduced. The great change which marks the turning-point in the history of the iron manu- facture in the United States — the use of anthracite — be- gan when protection ceased. It is probably not true, as is asserted by advocates of free trade," that protection had ^ E. g., Grosvenor, p. 197. THE IRON MANUFACTURE. 59 Any appreciable influence in retarding the use of coal in making iron. Other causes, mainly the refractory nature of the fuel, sufficiently account for the failure to use an- thracite at an earlier date. The successful attempts to use anthracite were made almost simultaneously in Eng- land and in the United States." The failure to use coke from bituminous coal, which had been employed in Eng- land for over half-a-century, was the result of the distance of the bituminous coal-fields from the centre of popula- tion, and of the absence of the facility of transportation which has since been given by railroads. It is hardly prob- able, therefore, that protection exercised any considerable harmful influence in retarding the progress of improve- ment. But it is clear, on the other hand, that no advan- tages were obtained from protection in stimulating prog- ress. No change was made during the period of protec- tion which enabled the country to obtain the metal more cheaply than by importation, or even as cheaply. The duties simply taxed the community ; they did not serve to stimulate the industry, though they probably did not appreciably retard its growth. We may therefore conclude that the duties on iron during the generation after 181 5 formed a heavy tax on consumers ; that they impeded, so far as they went, the industrial development of the coun- try ; and that no compensatory benefits were obtained to offset these disadvantages. 'Swank, pp. 114, 115. VI. CONCLUDING REMARKS. The three most important branches of industry to which protection has been applied, have now been ex- amined. It has appeared that the introduction of the cotton manufacture took place before the era of protec- tion, and that — looking aside from the anomalous condi- tions of the period of restriction from 1808 to 1815 — its early progress, though perhaps somewhat promoted by the minimum duty of 18 16, would hardly have been much retarded in the absence of protective duties. The manufacture of woollens received little direct assistance before it reached that stage at which it could maintain itself without help, if it were for the advantage of the country that it should be maintained. In the iron man- ufacture twenty years of heavy protection did not ma- terially alter the proportion of home and foreign supply, and brought about no change in methods of production. It is not possible, and hardly necessary, to carry the inquiry much further. Detailed accounts cannot be ob- tained of other industries to which protection was ap- plied ; but so far as can be seen, the same course of 60 CONCLUDING REMARlCS. 6 1 events took place in them as in the three whose history we have followed. The same general conditions affected the manufactures of glass, earthenware, paper, cotton- bagging, sail-duck, cordage, and other articles to which protection was applied during this time with more or less vigor. We may assume that the same general effect, or absence of effect, followed in these as in the other cases. It is not intended to speak of the production of agricul- tural commodities like sugar, wool, hemp, and flax, to which also protection was applied. In the production of these the natural advantages of one country over another tell more decidedly and surely than in the case of most manufactures, and it has not often been supposed that they come within the scope of the argument we are con- sidering. Although, therefore, the conditions existed under which it is most likely that protection to young indus- tries may be advantageously applied — a young and unde- veloped country in a stage 'of transition from a purely agricultural to a more diversified industrial condition ; this transition, moreover, coinciding in time with great changes in the arts, which made the establishment of new industries peculiarly difficult — notwithstanding the pres- ence of these conditions, little, if any thing, was gained by the protection which the United States maintained in the first part of this century. Two causes account for this. On the one hand, the character of the people rendered the transition of productive forces to manufactures com- 62 PROTECTION TO YOUNG INDUSTRIES. paratively easy ; on the other hand, the shock to eco- nomic habits during the restrictive period from 1808 to 1815 effectually prepared the way for such a transition. The genius of the people for mechanical arts showed it- self early. Naturally it appeared with most striking re- sults in those fields in which the circumstances of the country gave the richest opportunities ; as in the applica- tion of steam-power to navigation, in the invention and improvement of tools, and especially of agricultural im- plements, and in the cotton manufacture. The ingenuity and inventiveness of American mechanics have become traditional, and the names of Whitney and Fulton need only be mentioned to show that these qualities were not lacking at the time we are considering. The presence of such men rendered it more easy to remove the obstacles arising from want of skill and experience in manufactures. The political institutions, the high average of intelligence, the habitual freedom of movement from place to place and from occupation to occupation, also made the rise of the existing system of manufacturing production at once more easy and less dangerous than the same change in other countries. At the same time it so happened that the embargo, the non-intercourse acts, and the war of 1812 rudely shook the country out of the grooves in which it was running, and brought about a state of confu- sion from which the new industrial system could emerge more easily than from a well-settled organization of indus- try. The restrictive period may indeed be considered to CONCLVhrnO REMARKS. 63 have been one of extreme protection. The stimulus which it gave to some manufactures perhaps shows that the first steps in these were not taken without some artifi- cial help. The intrinsic soundness of the argument for protection to young industries therefore may not be touched by the conclusions drawn from the history of its trial in the United States, which shows only that the in- tentional protection of the tariffs of 18 16, 1824, and 1828 had little effect. The period from 1808 till the financial crisis of 1818-19 was a disturbed and chaotic one, from which the country settled down, with little assistance from protective legislation, into a new arrangement of its pro- ductive forces. The system of protective legislation began in 1816, and was maintained till toward the end of the decade 1830-40. The Compromise Act of 1833 gradually undermined it. By 1842 duties reached a lower point than that from which they had started in 18 16. During this whole period the argument for protection to young industries had been es- sentially the mainstay of the advocates of protection, and the eventual cheapness of the goods was the chief advan- tage which they proposed to obtain. It goes without saying that this was not the only argument used, and that it was often expressed loosely in connection with other arguments. One does not find in the popular discussions of fifty years ago, more than in those of the present, precision of thought or expression. The "home market " argument, which, though essentially distinct from that for 64 PROTECTION TO YOUNG INDUSTRIES. young industries, naturally suggests itself in connection with the latter, was much urged during the period we are considering. The events of the War of 18 12 had vividly impressed on the minds of the people the possible incon- venience, in case of war, of depending on foreign trade for the supply of articles of common use ; this point also was much urged by the protectionists. Similarly the want of reciprocity, and the possibility of securing, by re- taliation, a relaxation of the restrictive legislation of for- eign countries, were often mentioned. But any one who is familiar with the protective literature of that day, — as illustrated, for instance, in the columns of " Niles's Regis- ter," — cannot fail to note the prominent place held by the young-industries argument. The form in which it most commonly appears is in the assertion that protection norm- ally causes the prices of the protected articles to fall, ' an assertion which was supposed, then as now, to be suffi- ciently supported by the general tendency toward a fall in the price of manufactured articles, consequent on the great improvement in the methods of producing such articles. Shortly after 1832, the movement in favor of protec- tion, which had had full sway in the Northern States since 1820, began to lose strength. The young-industries ' See, for instance, the temperate report of J. Q. Adams, in 1832, in which this is discussed as the chief argument of the protectionists. Adams, though himself a protectionist, refutes it, and bases his faith in protection chiefly on the loss and inconvenience suffered through the interruption of foreign trade in time of war. The report is in " Reports of Committees, 22d Congress, ist Session, vol. V., No. 481. COlSrCLUDING REMARKS. 65 argument at the same time began to be less steadily pressed. About 1840 the protective controversy took a new turn. It seems to have been felt by this time that manufactures had ceased to be young industries, and that the argument for their protection as such, was no longer conclusive. Another position was taken. The argument was advanced that American labor should be protected from the competition of less highly paid foreign labor. The labor argument had hardly been heard in the period which has been treated in the preceding pages. Indeed, the difference between the rate of wages in the United States and in Europe, had furnished, during the early period, an argument for the free-traders, and not for the protectionists. The free-traders were then accustomed to point to the higher wages of labor in the United States as an insuperable obstacle to the successful establish- ment of manufactures. They used the wages argument as a foil to the young-industries argument, asserting that as long as wages were so much lower in Europe, manufac- turers would not be able to maintain themselves without aid from the government. The protectionists, on the other hand, felt called on to explain away the difference of wages; they endeavored to show that this difference was not so great as was commonly supposed, and that, so far as it existed, it afforded no good reason against adopt- ing protection.' About 1840, the positions of the con- ' See, among others. Clay's Tariff Speech of 1824, "Works," I., 465, 466. 66 PROTECTION TO YOVNG INDt/STRlMS. tending parties began to change.' The protectionists be- gan to take the offensive on the labor question: the free- traders were forced to the defensive on this point. The protectionists asserted that high duties were necessary to shutout the competition of the ill-paid laborers of Eu- rope, and to maintain the high wages of the laborers of the United States. Their opponents had to explain and de- fend on the wages question. Obviously this change in the line of argument indicates a change in the industrial situa- tion. Such an argument in favor of protection could not have arisen at a time when protective duties existed but in small degree, and when wages nevertheless were high. Its use implies the existence of industries which are supposed to be dependent on high duties. When the protective system had been in force for some time, and a body of in- dustries had sprung up which were thought to be able to pay current wages only if aided by high duties, the wages argument naturally suggested itself. The fact that the ' Same signs of the appeal for the benefit of labor appear as early as 1831 in a passage in Gallatin's " Memorial,'' p. 31, and again in a speech of Web- ster's in 1833, "Works," I., 283. In the campaign of 1840, little was heard of it, doubtless because other issues than protection were in the foreground. Yet Calhoun was led to make a keen answer to it in a speech of 1840, " Works," III., 434. In the debates on the tariff act of 1842, we hear more of it ; see the speeches of Choate and Buchanan, Congr. Globe, 1841-42, pp. 950, 953, and Calhoun's allusion to Choate, in Calhoun's "Works," IV., 207. In 1846 the argument appeared full-fledged, in the speeches of Winthrop, Davis, and others, Congr. Globe, 1846, Appendix, pp., 967, 973, 1114. See also a characteristic letter in Niles, vol. 62, p. 262. Webster's speech in 1846, " Works," V., 231, had much about pro- tection and labor, but in a form somewhat different from that of the argu- ment we are nowadays familiar with. CONCLUDING REMARKS. 67 iron manufacture, which had hitherto played no great part in the protective controversy, became, after 1840, the most prominent appHcant for aid, accounts in large part for the new aspect of the controversy. The use of the wages argument, and the rise of the economic school of Henry C. Carey, show that the argument for young industries was felt to be no longer sufficient to be the mainstay of the protective system. The economic situation had changed, and the discussion of the tariff underwent a corresponding change. THE EARLY PROTECTIVE MOVEMENT AND THE TARIFF OF 1828. In the present essay we shall consider, not so much the economic effect of the tariff, as the character of the early protective movement and its effect on political events and on legislation. The protective movement in this country has been said to date from the year 1789, even from before 1789; and more frequently it has been said to begin with the tariff act of 1 8 16. But whatever may have been, in earlier years, the utterances of individual public men, or the occasional drift of an uncertain public opinion, no strong popular movement for protection can be traced before the crisis /J of 1818-19. The act of 1816, which is generally said to mark the beginning of a distinctly protective policy in this country, belongs rather to the earlier series of acts, beginning with that of 1789, than to the group of acts of 1824, 1828, and 1832. Its highest permanent rate of duty was twenty per cent., an increase over the previous rates which is chiefly accounted for by the heavy interest charge on the debt incurred during the war. But after the crash J? ( of 1819, a movement in favor of protection set in, which / 68 THE EARLY PROTECTIVE MOVEMENT. 69 was backed by a strong popular feeling such as had been absent in the earlier years. The causes of the new move- ment are not far to seek. On the one hand there was a great collapse in the prices of land and of agricultural products, which had been much inflated during the years from 181 5 to 181 8. At the same time the foreign market for grain and provisions, which had been highly profitable during the time of the Napoleonic wars, and which there had been a spasmodic attempt to regain for two or three years after the close of our war in 181 5, was almost entirely lost. On the other hand, a large number of manufacturing industries had grown up, still in the early stages of growth, and still beset with difficulties, yet likely in the end to hold their own and to prosper. That disposition to seek a remedy from legislation, which always shows itself after an industrial crisis, now led the farmers to ask for a home market, while the manufacturers wanted protection for young industries. The distress that followed the crisis brought out a plentiful crop of pamphlets in favor of pro- tection, of societies and conventions for the promotion of domestic industry, of petitions and memorials to Congress for higher duties. The movement undoubtedly had deep root in the feelings and convictions of the people, and the powerful hold which protective ideas then obtained influ- enced the policy of the nation long after the immediate effects of the crisis had ceased to be felt.' ' The character of the protective movement after 1819 is best illustrated by the numerous pamphlets of Matthew Cary. See especially the " Appeal 70 THE EARLY PROTECTIVE MOVEMENT. The first effect of this movement was seen in a series of measures which were proposed and earnestly pushed in Congress in the session of 1819-20. They included a bill for a general increase of duties, one for shortening credits on duties, and one for taxing sales by auction of imported goods. The first of these very nearly took an important place in our history, for it was passed by the House, and failed to pass the Senate by but a single vote. Although it did not become law, the protective movement which was expressed in the votes and speeches on it re- mained unchanged for several years, and brought about the act of 1824, while making possible the act of 1828. Some understanding of the state of feeling in the differ- ent sections of the country is necessary before the peculiar events of 1828 can be made clear, and it may be conven- iently reached at this point. The stronghold of the protective movement was in the ^y Middle and Western states of those days — in New York, New Jersey, Pennsylvania, Ohio, and Kentucky. They were the great agricultural States ; they felt most keenly the loss of the foreign market of the early years of the century, and were appealed to most directly by the cry for a home market. At the same time they had been most deep- ly involved in the inflation of the years 18 16-19, and were in that condition of general distress and confusion which to Common Sense and Common Justice " (1822) and " The Crisis : A Sol- emn Appeal," etc. (1823). " Niles's Register," which had said little about tariff before 1819, thereafter became a timeless and effective advocate of protection. '/.) THE EARLY PROTECTIVE MOVEMENT. 71 leads people to look for some panacea. The idea of pro- tection as a cure for their troubles had obtained a strong hold on their minds. It is not surprising, when we consider the impetuous character of the element in American democ- racy at that time represented by them, that the idea was applied in a sweeping and indiscriminate manner. , They wanted protection not only for the manufactures that were to bring them a home market, but for many of their own products, such as wool, hemp, flax, even for wheat and corn. For the two last mentioned they asked aid more particularly in the form of higher duties on rum and brandy, which were supposed to compete with spirits distilled from home-grown grain. A duty on molasses was a natural supplement to that on rum. Iron was al- ready produced to a considerable extent in Pennsylvania and New Jersey, and for that also protection was asked. /' j In New England there was a strong opposition to many of these demands. The business community of New England was still made up mainly of importers, deal- ers in foreign goods, shipping merchants, and vessel- owners, who naturally looked with av ersion a t mea sures that tended to lessen the v olume of foreign trade. More- over, they had special objections to many of the duties asked for by the agricultural states. Hemp in the form of cordage, flax in the form of sail duck, and iron, were important items in the cost of building and equip- ping ships. The duties on molasses and rum were aimed at an industry carried on almost exclusively in New England : 72 THE EARLY PROTECTIVE MOVEMENT. the importation of molasses from the West Indies in ex- change for fish, provisions, and lumber, and its subsequent manufacture into rum. Wool was the raw material of a rapidly growing manufacture. So far the circumstances led to opposition to the protective movement. On the other hand, the manufacture of cotton and woollen goods was increasing rapidly and steadily, and was the moving force of a current in favor of protection that became stronger year by year. We have seen that the beginning of New England's manufacturing career dates back to the War of 1812. Before i820'she was fairly launched on it, and between 1820 and 1830 she made enormous advances. The manufacturers carried on a conflict, unequal at first, but rapidly becoming less unequal, with the merchants and ship-owners. As early as 1820 Connecticut and Rhode Island were pretty firmly protective ; but Massa- chusetts hesitated. Under the first weight of the crisis of 1 8 19, the protective feeling was strong enough to cause a majority of her congressmen to vote for the_bill _of_iS20. But there was great opposition to that bill, and after 1820 the protective feeling died down.' In 1824 Massachusetts was still disinclined to adopt the protective system, and it was not until the end of the decade that she came 'The vote on the bill of 1820, by States, is given in Niles, XVIII., i6g. Of the Massachusetts members 19 voted yes, 6 no, and 4 were ab- sent. Of the New England members 19 voted yes, 9 no, and 9 were ab- sent. The opposition to the bill in Massachusetts was the occasion of a meeting at which Webster made his first speech on tariff, which is not re- printed in his works, but may be found in the newspapers of the day. THE EARLY PROTECTIVE MOVEMENT. 73 squarely in line with the agricultural states on that sub- ject. '^], The South took its stand against the protective system with a promptness and decision characteristic of the po- litical history of the slave states. The opposition of the Southern members to the tariff bill of 1820 is significant of the change in the nature of the protective movement between 18 16 and 1820. The Southern leaders had advo- cated the passage of the act of 18 16, but they bitterly op- posed the bill of 1820. It is possible that the Missouri Compromise struggle had opened their eyes to the con- nection between slavery and free trade.' At all events, they had grasped the fact that slavery made the growth of manufactures in the South impossible, that manufactured goods must be bought in Europe or in the North, and that, wherever bought, a protective tariff would tend to make them dearer. Moreover, C otton was not yet King, and the South was not sure that its staple was indispensa- ble fer-all 1te~wofldr While the export of cotton' on a large scale had begun, it was feared that England, in re- taliation for high duties on English goods, might tax or exclude American cotton. Such was in 1 820 the feeling in regar jj^to the protective system in the different parts of the country. After the failure of the bill of that year, the movement for higher duties seems for a while to have lost headway. The low- ' But no reference was made to the Missouri struggle in the debates on the tariff bill of 1820. 74 THE EARLY PROTECTIVE MOVEMENT. est point of industrial and commercial depression, so far as indicated by the revenue, was reached at the close of 1820, and, as affairs began to mend, protective measures received less vigorous support. Bills to increase duties, similar to the bill of 1820, were introduced in Congress in 1 82 1 and 1822, but they were not pressed and led to no legislation.' Public opinion in most of the Northern States, how- ever, continued to favor protection ; the more so because, after the first shock of the crisis of 18 19 was over, recov- ery, though steady, was slow. As a Presidential election approached and caused public men to respond more readily to popular feeling, the protectionists gained a de- cided victory. The tariff of 1824 was passed, the first and the most direct fruit of the early protective movement. The Presidential election of that year undoubtedly had an effect in causing its passage ; but the influence of politics and political ambition was in this case hardly a harmful one. Not only Clay, the sponsor of the American System, but Adams, Crawford, and Jackson were declared advo- cates of protection. Party lines, so far as they existed at all, were not regarded in the vote on the tariff. It was carried mainly by the votes of the Western and Middle ' See the interesting account of a Cabinet meeting in November, 1821, in "J. Q. Adams's Memoirs," vol. V., pp. 408-4H. "The lowest point of the depression was reached at the close of last year" [1820]. Calhoun thought " the prosperity of the manufacturers was now so clearly estab- lished that it might be mentioned in the message as a subject for congratu- lation." Crawford said " there would not be much trouble in the ensuing session with the manufacturing interest," and Adams himself " had no ap- prehension that there would be much debate on manufacturing interests." THE EARLY PROTECTIVE MOVEMENT. 75 states. The South was in opposition, New England was divided ; Rhode Island and Connecticut voted for the bill, Massachusetts and the other New England states were decidedly opposed.' The opposition of Massachusetts was the natural result of the character of the new tariff. The most important changes made by it were in the increased duties on iron, lead, wool, hemp, cotton-bagging, and other articles whose protection was desired chiefly by the Middle and Western States. The duties on textile fabrics, it is true, were also raised. Those on cotton and woollen goods went up from 25 to 33-^ percent. This increase, however, was offset, so far as woollens were concerned, by the imposition of a duty of 30 per cent, on wool, which had before been ad- mitted at 15 per cent. The manufacturers of woollen goods were, therefore, as far as the tariff was concerned, in about the same position as before.^ The heavier duties ' John Randolph said, in his vigorous fashion, of the tariff bill of 1824 : " The merchants and manufacturers of Massachusetts and New Hampshire repel this bill, while men in hunting shirts, vith deerskin leggings and moccasins on their feet, want protection from home manufactures." — " De- bates of Congress, 1824, p. 2370. ' This can be shown very easily. The cost of the wool is about one half the cost of making woollen goods. Then we have in i8i5 : Duty on woollens .... 25 per cent. Deduct duty on wool, \ of 15 cent. . l\ " Net protection in l8i6 .... 17^ " And in 1824 we have : Duty on woollens 33|- per cent. Deduct duty on wool, J of 30 per cent. . 15 " Net protection in 1824 . . . iSJ " The rise in duties both on wool and on woollens took place gradually by the terms of the act of 1824. The calculation is based on the final rates, which were reached in 1826. ^6 THE EARLY PROTECTIVE MOVEMENT. on iron and hemp, on the other hand, were injurious to the ship-builders. The manufacture of textiles was rapidly extending in all the New England States. At first that of cottons re- ceived most attention, and played the most important part in the protective controversy. But by 1824 the cotton industry was firmly established and almost inde- pendent of support by duties. The woollen manufacture was in a less firm position, and in 1824 became the promi- nent candidate for protection. Between 1824 and 1828 a strong movement set in for higher duties on woollens, which led eventually to some of the most striking features of the tariff act of 1828. The duties proposed and finally established on wool- lens were modelled on the minimum duty of 1816 on cottons. By the tariff act of that year, it will be remem- bered, cotton goods were made subject to a general ad valorem duty of 25 per cent. ; but it was further provided that " all cotton cloths, whose value shall be less than 25 cents per square yard, shall be taken and deemed to have cost 25 cents per square yard, and shall be charged with duty accordingly." That is, a specific duty of six and a quarter cents a square yard was imposed on all cotton cloths costing twenty-five cents a square yard or less. The minimum duties, originally intended to affect chiefly East Indian goods and goods made from East Indian cotton, had an effect in practice mainly on goods from England, -.vhether made of American or of Indian cotton. In a few THE EARLY PROTECTIVE MOVEMENT. JJ years, as the use of the power loom and other improve- ments in manufacture brought the price of coarse cottons much below twenty-five cents, the minimum duties be- came prohibitory. How far they were needed in order to promote the success and prosperity of the cotton manu- facture in years following their imposition, we have already discussed.' At all events, whether or not in consequence of the duties, large profits were made by those who entered on it, and in a few years the cheaper grades of cotton cloth were produced so cheaply, and of such good quality, that the manufacturers freely asserted that the duty had become nominal, and that foreign com- petition no longer was feared. This example had its effect on the manufacturers of woollen goods, and on the advocates of protection in gen- eral. In the tariff bill of 1820, minimum duties on linen and on other goods had been proposed. In 1824 an ear- nest effort was made to extend the minimum system to woollens. The committee which reported the tariff bill of that year recommended the adoption in regard to woollens of a proviso framed after that of the tariff of 1816 in regard to cottons, the minimum valuation being eighty cents a yard. The House first lowered the valua- tion to forty cents and finally struck out the whole proviso by a scant majority of three votes." There was one great obstacle in the way of a high duty on cheap woollen ' See above, pp. 25-36. ' The vote was 104 to loi. " Annals of Congress,'' 1823-24, p. 2310. 78 THE EARLY PROTECTIVE MOVEMENT. goods : they were imported largely for the use of slaves on Southern plantations. Tender treatment of the pecul- iar institution had already begun,, and there was strong opposition to a duty which had the appearance of being aimed against the slave-holders. The application of the minimum principle to other than cheap woollen goods apparently had not yet been thought of; but the idea was obvious, and soon was brought forward. After 1824 there was another lull in the agitation for protection. Trade was buoyant in 1825, and production profitable. For the first time since 1818 there was a swing in business operations. This seems to have been particularly the case with the woollen manufacturers. During the years from 181 5 to 1 818-19, they, like other manufacturers, had met with great difficulties ; and when the first shock of the crisis of the latter year was over, matters began to mend but slowly. About 1824, however, according to the accounts both of their friends and of their opponents on the tariff question, they extended their operations largely.' It is clear that this expansion, such as it was, was not the effect of any stimulus given by the tariff of 1824, for, as we have seen, the encouragement given the woollen manufacturers by that act was no greater than had been given under the act of 1816. At all events, the upward movement lasted but a short time. ' See the Report of the Harrisburg Convention of 1827 in Niles, XXXIII., 109 ; Tibbits, " Essay on Home Market " (1827), pp. 26, 27 ; Henry Lee, " Boston Report of 1827," pp. 64 seq. THE EARLY PROTECTI]'E MOVEMENT. Jg In England a similar movement had been carried to the extreme of speculation and had resulted in the crisis of 1825-26. From England the panic was communicated to the United States ; but, as the speculative movement had not been can-ied so far in this country, the revulsion was less severely felt. It seems, however, to have fallen on the woollen manufacturers with peculiar weight. Parlia- ment, it so happened, in 1824 had abolished almost en- tirely the duty on wool imported into England. It went down from twelve pence to one penny a pound.' The imports of woollen goods into the United States had in 1825 been unusually large ; the markets were well stocked ; the English manufacturers were at once enabled to sell cheaply by the lower price of their raw material, and pushed to do so by the depression of trade. A vigorous effort was now made to secure legislative aid to the woollen makers, similar to that given the cotton manufacturers. Massachusetts was the chief seat of the woollen industry. The woollen manufacturers held meet- ings in Boston and united for common action, and it was determined to ask Congress to extend the minimum sys- ' It is sometimes said that this reduction of the wool duty in England was undertaken with the express purpose of counteracting the protective duties imposed on woollens in the United States. But there is little ground for supposing that our duties were watched so vigilantly in England, 01 were the chief occasion for English legislation. The agitation for getting rid of the restriction on the import and export of wool began as early as 1819, and during its course very little reference, if any, was made to the American duties. See the sketch in Bischoff's " History of the Woollen and Worsted Manufactures," vol. II., chapters i and 2. 8o TBE EARLY PROTECTIVE MOVEMENT. tern to woollen goods." The legislature of the State passed resolutions asking for further protection for wool- lens, and these resolutions were presented in the federal House of Representatives by Webster.^ A deputation of manufacturers was sent to Washington to present the case to the committee on manufactures. Their efforts promised to be successful. When Congress met for the session of 1826-27, the committee (which in those days had charge of tariff legislation) reported a bill which gave the manufacturers all they asked for. This measure contained the provisions which, when finally put in force in the tariff of 1828, became the object of the most violent attack by the opponents of protec- tion. It made no change in the nominal rate of duty, which was to remain at 33-I per cent. But minimum val- uations were added, on the plan of the minima on cottons, in such a way as to carry the actual duty far beyond the point indicated by the nominal rate. The bill provided that all goods costing less than 40 cents a square yard were to pay duty as if they had cost 40 cents ; all costing more than 40 cents and less than $2.50 were to be charged as if they had cost $2.50 ; all costing between $2.50 and $4.00 to be charged as if they had cost $4.00. A similar ' The memorial of the manufacturers to Congress is in Niles, XXXI., 185. It asks for minimum duties, on the ground that ad valorem duties are fraudulently evaded. For the circular sent out by this committee, see ibid., p. 200. -"American State Papers, Finance," V., 599; " Annals of Congress," 1826-27, P- loio. THE EARLY PROTECTIVE MOVEMENT. 8 1 course was proposed in regard to raw wool. The ad valo- rem rate on raw wool was to be 30 per cent, in the first place, and to rise by steps to 40 per cent. ; and it was to be charged on all wool costing between 16 cents and 40 cents a pound as if the wool had cost 40 cents. The effect of this somewhat complicated machinery was evi- dently to levy specific duties both on wool and on wool- lens. On wool the duty was to be, eventually, 16 cents a pound. On woollens it was to be 13^ cents a yard on woollens of the first class, 83^ cents on those of the second class, and $1.33^- on those of the third class. The minimum system, applied in this way, imposed ad- valorem duties in form, specific duties in fact. It had some of the disadvantages of both systems. It offered temptations to fraudulent undervaluation stronger than those offered by ad valorem duties. For example, under the bill of 1827, the duty on goods worth in the neigh- borhood of 40 cents a yard would be 13^ cents if the value was less than 40 cents ; but if the value was more than 40 cents, the duty would be 83^ cents. If the value could be made to appear less than forty cents, the im- porter saved 70 cents a yard in duties. Similarly, at the next step in the minimum points, the duty was 83^ cents if the goods were worth less than $2.50, and $1.33^ cents if the goods were worth more than $2.50. The tempta- tion to undervalue was obviously very strong under such a system, in the case of all goods which could be brought with any plausibility near one of the minimum points. 82 THE EARLY PROTECTIVE MOVEMENT. On the other hand, the system had the want of elasticity which goes with specific duties. All goods costing be- tween 40 cents and $2.50 were charged with the same duty, so that cheap goods were taxed at a higher rate than dear goods. The great gap between the first and second minimum points (40 cents and $2.50) made this objection the stronger. But that gap was not the result of accident. It was intended to bring about a very heavy duty on goods of the grade chiefly manufactured in this country. The most important domestic goods were worth about a dollar a yard, and their makers, under this bill, would get a protective duty of 83-J- cents a yard. The object was to secure a very high duty, while retaining nominally the existing rate of 33-! per cent. The woollens bill of 1827 had a fate similar to that of the general tariff bill of 1820. It was passed in the House, but lost in the Senate by the casting vote of the Vice-President. In the House the Massachusetts mem- bers, with one exception, voted for it, and both Senators from Massachusetts supported it.' This bill having failed, the advocates of protection de- termined to continue their agitation, and to give it wider scope. A national convention of protectionists was de- termined on." Meetings were held in the different States ' " Congressional Debates," III., 1099, 496. ' It is rot very clear in what quarter the scheme of holding such a con- vention had its origin. The first public suggestion came from the Phila- delphia Society for the Promotion of Domestic Industry, an association founded by Hamilton, of which Matthew Carey and C. J. IngersoU were at this time the leading spirits. THE EARLY PROTECTIVE MOVEMENT. 83 in which the protective policy was popular, and delegates were appointed to a geneTal convention. "TiT midsummer of 1827 about a hundred persons assembled at Harris- burg, and held the Harrisburg convention, well known in its day. Most of the delegates were manufacturers, some were newspaper editors and pamphleteers, a few were politicians.' The convention did not confine its attention to wool and woollens. It considered all the industries which were supposed to need protection. It recom- mended higher duties for the aid of agriculture ; others on manufactures of cotton, hemp, flax, iron, and glass ; and finally, new duties on wool and woollens. The move- ment was primarily for the aid of the woollen industry ; other interests were included in it as a means of gaining strength. The duties which were demanded on woollens were on the same plan as those proposed in the bill of 1827, differing only in that they were higher. 'YV^ ad valo- rem rate on woollen goods was to be 40 per cent, in the first place, and was to be raised gradually until it reached 50 per cent. It was to be assessed on minimum valua- tions of fifty cents, two dollars and a half, four dollars, and six dollars a yard. The duty on wool was to be twenty cents a pound in the first instance, and was t« be raised each year by 2\ cents until it should reach fifty cents a pound. Needless to say, the duty would be pro- ' Among the politicians was Mallary of Vermont, who had been chairman of the committee on manufactures in the preceding Congress, and became the spokesman of the protectionists in the ensuing session, when the tariff of 1828 was passed, 84 THE EARLY PROTECTIVE MOVEMENT. hibitory long before this limit was reached. Wool cost- ing less than eight cents was to be admitted free." At this point a new factor, which we may call " politics," began to make itself felt in the protective movement. The natural pressure of public opinion on public men had exercised its effect in previous years, and had had its share in bringing about the tariff act of 1824 and the woollens bill of 1827. But the gradual crystallization of two parties, the Adams and Jackson parties, — Whigs and Democrats, as they soon came to be called — put a new face on the political situation, and had an unexpected eflect on tariff legislation. The contest between them had begun in earnest before the Harrisburg convention met, and some of the Jackson men alleged that the con- vention was no more than a demonstration got up by the Adams men as a means of bringing the protective move- ment to bear in their aid ; but this was denied, and such evidence as we have seems to support the denial.^ Yet ^ The proceedings of the convention, the address of the people, the me- morial to Congress, etc., are in Niles, XXXII. and XXXIII. ^ I have been able to find little direct evidence as to the political bearing of the Harrisburg convention. Matthew Carey, in a letter of July, 1827, while admitting he is an Adams man, protests against " amalgamating the questjpn of the presidency %yith that for the protection of manufactures." Niles, XXXII., 389. The (New York) Evening Post, a Jackson paper, said the convention was a manoeuvre of the Adams men ; see its issues of August I and August 9, 1827. This was denied in the National Intelli- gencer (^hAsxai) of July gth, and also in the (New York) American (Adams) of July 9th. The Evening /"oj-f admitted (August nth) that " doubtless many members of the convention were innocent of political views," and that " the rest were induced to postpone or abandon their political views." Van Buren apparently suspected that the convention might have a political THE EARLY PROTECTIVE MOVEMENT. 85 the Adams men were undoubtedly helped by the protec- tive moyenLent. Although there wasTTot then, nor for a number of years after, a clear-cut division on party lines between protectionists and so-called free traders, the Adams men were more firmly and _unitedly in favor of protection than their opponents. Adams was a protec- tionist, though not an extreme one ; Clayj ^he leader and spokesman of the party, was more than any other public man identified with the American system. They were at least willing that the protective question should be brought into the foreground of the political contest.' The position of the Jackson men, on the other hand, meaning, and warned its members against forming " a political cabal " ; cf. the National Intelligencer of July 26tli. But among the delegates from New York were both Jackson and Adams men. See Hammond, " Politi- cal History of New York," II., 256-258; Niles, XXXII., 349. Niles, who was an active member of the convention, denied strenuously that poli- tics had any thing to do with it. Niles, XXXIV., 187. — Since the above was put in type, however, a letter of Clay's has been found which seems to indicate that the movement for holding such a convention was at least started by the anti-Jackson leaders. The letter is printed in the " Quar- terly Journal of Economics," vol. II., July, 1S88. ' There is ground for suspecting that the Adams party would have been willing to make the tariff question the decisive issue of the presidential campaign. Clay made it the burden of his speeches during his journey to the West in the early summer of 1827. Very soon after this, however, the correspondence between Jackson and Carter Beverly was published, and fixed attention on the " bargain and corruption " cry. That was the point which the Jackson managers succeeded in making most prominent in the campaign. Clay dropped the question of protection ; he found enough to do in answering the charge that in 1825 a corrupt bargain had made Adams President and himself Secretary of State. See Clay's speech at Pittsburg, June 20, 1827, in Niles, XXXII., 299. On June 29th, Clay published his first denial of the "bargain and corruption" charges. Hid., p. 35a Cf. Parton, " Life of Jackson," III., iii. 86 THE EARLY PROTECTIVE MOVEMENT. was a very difficult one. Their party had at this time no settled policy in regard to the questions which were to be the subjects of the political struggles of the next twenty years. They were united on only one point, a determi- nation to oust the other side. On the tariff, as well as on the bank and internal improvements, the various elements of the party held very different opinions. The Southern members, who were almost to a man supporters of Jack- son, were opposed unconditionally not only to an increase of duties, but to the high range which the tariff had al- ready reached. They were convinced, and in the main justly convinced, that the taxes levied by the tariff fell with peculiar weight on the slave States, and their opposi- tion was already tinged with the bitterness which made possible, a few years later, the attempt at nullification of the tariff of 1832. On the other hand, the protective policy was popular throughout the North, more especially in the very States whose votes were essential to Jackson, in New York, Pennsylvania, and Ohio. The Jackson men needed the votes of these States, and were not so confi- dent of getting them as they might reasonably have been. They failed, as completely as their opponents, to gauge the strength of the enthusiasm of the masses for their candidate, and they did not venture to give the Adams men a chance of posing as the only true friends of domes- tic industry. The twentieth Congress met for its first session in December, 1827. The elections of 1826, at which its THE EARLY PROTECTIVE MOVEMENT. 87 members were chosen, had not been fortunate for the ad- ministration. When Congress met there was some doubt as to the political complexion of the House ; but this was set at rest by the election to the speakership of the Dem- ocratic candidate, Stephenson of Virginia." The new Speaker, in the formation of the committees, assumed for his party the direction of the measures of the House. On the committee on manufactures, from which the tariff report and the tariff bill were to come, he appointed five supporters of Jackson and two supporters of Adams. The chairmanship, however, was given to one of the latter, Mallary, of Vermont, who, it will be remembered, bad been a member of the Harrisburg convention. Much doubt was entertained as to the line of action the committee would follow. The Adams men feared at first that it would adopt a^ policy of simple delay and inaction. This fear was confirmed when, a few weeks after the beginning of the session, the committee asked for power to send for persons and papers in order to obtain more information on the tariff,- — a request which was opposed by Mallary, their chairman, on the ground that it was made only as a pretext for delay. The Adams men, who formed the bulk of the ardent protectionists, voted with him against granting the desired power. But the South- ern members united with the Jackson men from the ' Stephenson's election is said to have been brought about by Van Buren's influence; Parton, "Life of Jackson," III., 135. It is worth while to bear this in mind, in view of the part played by Van Buren later in the session. 88 THE MARLY PROTECTIVE MOVEMENT. North, and between them they secured the passage of the resolution asked by the committee.' The debate and vote on the resolution sounded the key-note of the events of the session. They showed that the Jackson men from the South and the North, though opposed to each other on the tariff question, were yet united as against the Adams men.° But the policy of delay, if such in fact had been enter- tained by the opposition, was abandoned. On January 31st, the committee presented a report and a draft of a tariff bill, which showed that they had determined on a new plan, and an ingenious one. What that plan was, Calhoun explained very frankly nine years later, in a speech reviewing the events of 1828 and defending the course taken by himself and his Southern fellow-members.° A high-tariff bill was to be laid before the House. It was to contain not only a high general range of duties, but duties especially high on those raw materials on which New England wanted the duties to be low. It was to satisfyjhe protective demands of the Western and Middle States, and at the same time to be obnoxious to the New England members. The Jackson men of all shades, the protectionists from the North and the free-traders from ' The power granted to the committee by this resolution, to examine witnesses, was used to a moderate extent. A dozen wool manufacturers were examined, and their testimony throws some light on the state of the woollen manufacture at that time. See the preceding essay, pp. 42-44. 'In "Congressional Debates," IV., 862, 870. 2 Speech of 1837 ; "Works," III., 46-51. TBE EARLY PROTECTIVE MOVEMENT. 89 the South, were to unite in preventing any amendments; that bill, and no other, was to be voted on. When the final vote came, the Southern men were to turn around and vote against their own measure. The New England men, and the Adams men in general, would be unable to swallow it, and would also vote against it. Combined, they would prevent its passage, even though the Jackson men from the North voted for it. The result expected was that no tariff bill at all would be passed during the session, which was the object of the Southern wing of the opposi- tion. On the other hand, the obloquy of defeating it would be cast on the Adams party, which was the object of the Jacksonians of the North. The tariff bill would be defeated, and yet the Jackson men would be able to parade as the true "friends of domestic industry." The bill by which this ingenious solution of the difficul- ties of the opposition was to be reached, was reported to the House on January 31st by the committee on manu- factures." To the surprise of its authors, it was eventually passed both by House and Senate, and became, with a few unessential changes, the tariff act of 1828. The committee's bill in the first place proposed a large increase of duties on almost all raw materials. The duty on pig-iron was to go up from 56 to 62^ cents per hun- dredweight, that on hammered bar-iron from 90 to 112 cents per hundredweight, and that on rolled bar from $30 ' The bill as reported by the committee is printed in "Congressional Debates," IV., 1727 : 90 THE EARLY PROTECTIVE MOVEMENT. to $37 per ton. The increase on hammered bar had been asked by the Harrisburg convention. But on pig and on rolled bar no one had asked for an increase, not even the manufacturers of iron who had testified before the committee.' The most important of the proposed duties on raw materials, however, were on hemp, flax, and wool. The existing duty on hemp was $35 per ton. It was proposed to increase it immediately to $45, and further to increase it by an annual increment of $5, till it should finally reach $60. Hemp of coarse quality was largely raised in the country at that time, especially in Kentucky. It was suitable for the making of common ropes and of cotton bagging, and for those purposes met with no competition from imported hemp. Better hemp, suitable for making cordage and cables, was not raised in the country at all, the supply coming exclusively from importation. The preparation of this better quality (" water-rotted " hemp) required so much manual labor, and labor of so disagree- able a character, that it would not have been undertaken in any event by the hemp growers of this country." ' See the testimony of the three iron manufacturers who were examined, " American State Papers, Finance," V., 784-792. Mallary, in introducing the bill, said : " The committee gave the manufacturer of iron all he asked, even more." " Congressional Debates," IV., 1748. ' Gallatin, " Memorial of the Free-Trade Convention " (1831), p. 51. This admirable paper, perhaps the best investigation on tariff subjects ever made in the United States, is unfortunately not reprinted in the edition of Gallatin's collected works. The original pamphlet is very scarce. The memorial is printed in U. S. Documents, 1st session, 22d Congress, Senate Documents, vol. I., No. 55. THE EARLY PROTECTIVE MOVEMENT. pt Under such conditions an increase of duty on hemp could be of no benefit to the American grower. Its effect would be simply to burden the rope-makers and the users of cordage, and ultimately the ship-builders and ship- owners. Essentially the same state of things has contin- ued to our own day. The high duties on hemp, which have been maintained from the outset to the present time, have never succeeded in checking a large and con- tinuous importation. The facts were then, and are now, very similar with flax"; yet the same duty of $60 per ton was to be put on flax. On wool a proposal of a similar kind was made. The duty under the tariff of 1824 had been 30 per cent. This was to be changed to a mixed specific and ad valorem duty, the first mixed duty ever enacted in the United States. Wool was to pay seven cents a pound (this was reduced to four cents in the act as finally passed), and in addition 40 per cent, in 1828, 45 per cent, in 1829, and thereafter 50 per cent. The object of the mixed duty was to make sure that a heavy tax should be put on coarse wool. The coarse wool, used in the manufacture of carpets and of some cheap flannels and cloths, was not then grown in the United States to any extent, and, indeed, has been grown at no time in this country, but has always been imported, mainly from Asia Minor and from South America. Its cost at the place of exporta- tion was in 1828 from four to ten cents a pound.' The 'Gallatin, " Memorial," p. 67. 92 THE EARLY PROTECTIVE MOVEMENT. price being so low, a simple ad valorem duty would not have affected it much. But the additional specific duty of seven (four) cents weighted it heavily. The ad valorem part of the duty reached the liigher grades of wool, which were raised in this country ; it was calculated to please the farmer. The specific part reached the lower grades, which were not raised in this country^ and was calculated to annoy and embarrass the manufacturers. This double object, and especially the second half of it, the Jackson men wanted to attain, and for that reason the policy of admitting the cheap wool at low rates was set aside, — a policy which has been followed in all our protective tariffs, with the sole exception of that of 1828.' Another characteristic part of the scheme was the handling of those duties on woollens that corresponded to the duties on cheap wool. It had been customary to fix low duties on the coarse woollen goods made from cheap wool, partly because of the low duty on the wool ' It was followed in 1824, 1832, 1842, and again in the wool and woollens act of 1867, on which the existing duties [1887] are based. The rates on wool have been : 1828 1832 1842 1867 General duty on wool 30 per cent. 4C. plus 40 per cent. 3c. plus 30 per cent. I0C.-I2C. plus II per cent. Duty on cheap wool 15 per cent. on wool under loc. free, wool under 8c. 5 per cent, on wool under 7c. 3c. on wool under I2c. THE EARLY PROTECTIVE MOVEMENT. 93 itself, and partly because coarse woollens were used largely for slaves on Southern plantations. Thus in 1824 woollen goods costing less than 33^ cents a yard had been ad- mitted at a duty of 25 per cent., while woollens in general paid 33|- per cent. In 1828 this low duty on coarse woollens was continued, although the wool of which they were made was subject for the first time to a heavy duty. The object again was to embarrass the manufacturers, and make the bill unpalatable to the protectionists and the Adams men. The same object appeared in the duty on molasses, which was to be doubled, going from five to ten cents a gallon. A spiteful proviso was added in regard to the drawback which it had been customary to allow on the exportation of rum distilled from imported molasses. The bill of 1828, and the act as finally passed, expressly refused all drawbacks on rum ; the intention obviously being to irritate the New Englanders. The animus ap- peared again in the heavy duty on sail-duck, and the re- fusal of drawback on sail-duck exported by vessels in small quantities for their own use." In the duties on woollen goods the changes from the schedule proposed by the Harrisburg convention were on the surface not very great ; but in reality they were im- portant. The committee gave up all pretence of ad ' Sail-duck was charged g cents a yard, with an increase of \ cent yearly, until the duty should finally be T2\ cents. This was equivalent to 40 or 50 percent. In 1824 the duty had been 15 per cent. Drawback was refused on any quantity less than 50 bolts exported in one vessel at one time, 94 THE EARLY PROTECTIVE MOVEMENT. valorem duties. This was not an insignificant circum- stance ; for the ad valorem rate of the minimuna system was said by its opponents to be no more than a device for disguising the heavy duties actually levied under it. The committee brushed aside this device, and made the duties on woollens specific and unambiguous. On goods costing 50 cents a square yard or less, the duty was 16 cents; on goods costing between 50 cents and $1.00, 40 cents; on those costing between $1.00 and $2.50, $1.00; and on those costing between $2.50 and $4.00, $1.60. Goods costing more than $4.00 were to pay 45 per cent. These specific duties, it will be seen, were the same as if an ad valorem duty of 40 per cent, had been assessed, on the minimum principle, on valuations of 50 cents, $1.00, $2.50, and $4.00. The changes from the Harrisburg con- vention scheme were, therefore, the arrangement of specific duties in such a way that they were equivalent to an ad valorem rate of but 40 per cent, (the convention had asked 50 per cent.) ; and, next, the insertion of a minimum point of $1.00, the Harrisburg scheme having allowed no break between 40 cents and $2.50. The first change might have been submitted to by the protectionists ; but the second was like putting a knife between the crevices of their armor. We have already noted the importance of the gap between the minimum points of 40 cents and $2.50. A very large part of the imported goods were worth, abroad, in the neighborhood of $i.oo ; and the largest branch of the domestic manufacture made goods THE EARLY PROTECTIVE MOVEMENT. 95 of the same character and value. The original scheme had given a very heavy duty, practically a prohibitory duty, on these goods, while the new scheme gave a com- paratively insignificant duty of 40 cents. As one of the protectionists said : " The dollar minimum was planted in the very midst of the woollen trade." ' The bill, in fact, was ingeniously framed with the inten- tion of circumventing the Adams men, especially those from New England. The heavy duties on iron, hemp, flax and wool were bitter pills for them. The new dollar minimum took the life out of their scheme of duties on woollen goods. The molasses and sail-duck duties, and the refusal of drawbacks on rum and duck, were undis- guised blows at New England. At the same time, some of these very features, especially the hemp, wool, and iron duties, served to make the bill popular in the Western and Middle States, and made opposition to it awkward for the Adams men. The whole scheme was a characteris- tic product of the politicians who were then becoming prominent as the leaders of the Democracy, men of a type very different from the statesmen of the preceding generation. Clay informs us that it was one of the many devices that had their origin in the fertile brain of Van ' " Congressional Debates," IV., 2274. See the statement of the effect of the minimum system in " State Papers," 1827-28, No. 143. Davis (of Massachusetts) said that the minimum of $1.00 " falls at a point the most favorable that could be fixed for the British manufacturer. * * * It falls into the centre of the great body of American business." " Congres- sional Debates," IV., 1894, l8g5. See to the same effect the speech of Silas Wright, Ibid., p. 1867. 96 THE EARLY PROTECTIVE MOVEMENT. Buren." Calhoun said in 1837 that the compact between the Southern members and the Jackson leaders had come about mainly through Silas Wright ; and Wright made no denial." The result of this curious complication of wishes and motives was seen when the tariff bill was finally taken up in the House in March. Mallary, as chairman of the com- mittee on manufactures, introduced and explained the bill. Being an Adams man, he was of course opposed to it, and moved to amend by inserting the scheme of the Harrisburg convention. The amendment was rejected by decisive votes, 102 to 75 in committee of the whole," and 114 to 80 in the House. The majority which defeated ' " I have heard, without vouching for the fact, that it [the tariff of 1828] was so framed on the advice of a prominent citizen, novir abroad [Van Bu- ren had been made minister to England in 1831], with the view of ulti- mately defeating the bill, and with assurances that, being altogether unac- ceptable to the friends of the American system, the bill would be lost." Clay's speech of February, 1832. "Works "II., 13. ' See Calhoun's speech of 1837, as cited above, p. 88. In the debate of 1837, Wright admitted the compact with the Southern members, but said that he had warned them that the New England men in the end might swallow the obnoxious bill. " Congressional Debates," XIII., 922, 926-927. Wright was a member of the committee on manufactures, was the spokes- man of the Jackson men Avho formed the majority of its members, and had charge of the measure before the House. Jenkins, " Life of Wright," pp. 53-60. The Adams men saw through the scheme at the time. Clay wrote to J. J. Crittenden, in February, even before the House began the discussion of the bill : " The Jackson party are playing a game of brag on the subject of the tariff. They do not really desire the success of their own measure ; and it may happen in the sequel that what is desired by neither party will command the votes of both." " Life of Crittenden," I., 67. ^ " Congressional Debates," IV,, 2038, THE EARLY PROTECTIVE MOVEMENT. 97 the amendment was composed of all the Southern mem- bers, and of the Jackson members from the North, chiefly from New York, Pennsylvania, Ohio, and Kentucky. The minority consisted almost exclusively of friends of the administration.' Mallary then moved to substitute that part only of the Harrisburg convention scheme which fixed the duties on wool and woollens ; that is, the original minimum scheme, with a uniform duty of forty per cent, on wool. This too was rejected, but by a narrow vote, 98 to 97." The Jackson men permitted only one change of any moment: they reduced the specific duty on raw wool from seven cents, the point fixed by the committee, to four cents, the ad valorem rate remaining at 40 per cent.° The duty on molasses was retained, by the same combination that refused to accept the Harrisburg scheme.* The Southern members openly said that they meant to make the tariff so bitter a pill that no New Eng- land member would be able to swallow it.' 'See Niles, XXXV., 57, where the various votes on the bill are ana- nalyzed. The vote on Mallary's amendment was : Yeas ... 78 Adams men, 2 Jackson men ... 80 Nays ... 14 " " 100 " "... 114 '" Congressional Debates," IV., 2050. * The Adams men seem to have opposed this reduction. The vote was : Yeas . . . 10 Adams men, goi Jackson men . . . 100 Nays ... 79 " "20 " " ... gg * On reducing the molasses duty, the vote was : Yeas ... 72 Adams men, 10 Jackson men ... 82 Nays ... 19 " "95 " " ... 114 ' Most of the Southern members kept silence during the debates on the details of the bill. After its third reading, McDuffie and others made long speeches against it. One of the South Carolina Congressmen, however, 98 THE EARLY PROTECTIVE MOVEMENT. When the final vote__on-lhe h ill_c ame, the groups of members split up in the way expected by the Democrats. The Southern memb ers, practically withou t exception, - voted against it. Those from the Middle and Western States voted almost unanimously for it. The Jackson men voted for their own measure for consistency's sake ; the Adams men from these States joined them, partly for political reasons, mainly because the bill, even with the obnoxious provisions, was acceptable to their constitu- ents. Of the New England members, a majority, 23 out of 39, voted in the negative. The affirmative votes from New England, however, were sufificient, when added to those from the West and the Middle States, to en- sure its passage. The bill accordingly passed the House." This result had not been entirely unexpected. The real struggle, it was felt, would come in the Senate, where the South and New England had a proportionately large representation. In previous years the Senate had main- tained, in its action on the tariff bills of 1820 and_ig24, a said frankly : " He should vote for retaining the duty on molasses, because he believed that keeping it in the bill would get votes against its final pas- sage" "Congressional Debates," IV., 2349. The Jackson free-traders from the North (there were a few such) followed the same policy. See Cambreleng's remarks, ibid., 3326. See also the passage quoted in Niles, XXXV., 52. ' The vote was : Yeas .... 61 Adams men, 44 Jackson men . . . 105 Nays . . . . 35 " ' " 59 " " . . . Q4 If six of those New England members who voted yea, had voted nay, the bill would have failed. Niles, loc. cit. THE EARLY PROTECTIVE MOVEMENT. 99 much rnore_conservative position than the House.' But in 1828 the course of events in the Senate was in the main similar to that in the House. The bill was referred to the committee on manufactures, and was returned with amendments, of which the most important referred to the duty on molasses and to the duties on woollen goods. The duty on molasses was to be reduced from 10 cents, the rate fixed by the House, to 7^ cents. The duties on woollen goods, in the bill as passed by the House, had been made specific, equivalent to 40 per cent, on minimum valuations of 50 cents, $1.00, $2.50, ;.nd $4.00. The Sen- ate committee's amendment made \.\\q AviXx^s, ad valorem in form, to be assessed on the minimum valuation just mentioned. The rate was to be 40 per cent, for the first year ; thereafter, 45 per cent.' ' The tariff of 1824 was much changed in the Senate from the shape in which it had been passed by the House. " Annals of Congress," 1823-24, pp. 723-735- '' It was expected that this change to ad valorem duties would have still another effect. According to the method then in use for assessing ad valo- rem duties, the dutiable value of goods imported from Europe was ascer- tained by adding 10 per cent, to the cost or invoice value. See the act of 1828, " Statutes at Large," IV,, 274, substantially re-enacting the provi- sions of the revenue-collection act of 17S9, " .'Statutes at Large," I., 141. It was expected that by the force of this provision the effect of the ad valo- rem rate, under the Senate amendment, would be to increase the duty not merely to 45 per cent., but to 49^ percent. Hence Webster, in his speech on the bill, spoke of the amendment as carrying the duty " up to 45 or per- haps 50 per cent, ad valorem." " Works," III., 231. But the Secretary of the Treasury, Rush, finally decided, veiy properly, that the provision did not apply to duties assessed on minimum valuations, thereby causing much dissatisfaction among the protectionists. See " Congressional Debates," VI., 3o2. lOO THE EARLY PROTECTIVE MOVEMENT. Other amendments were proposed, all tending to make the bill less objectionable to the New England Senators. Most of them were rejected. The proposed reduction on molasses was rejected by the same combination that had prevented the reduction from being made in the House. The Southern Senators, and those from the North who supported Jackson, united to retain the duty of lo cents. When Webster moved to reduce the duty on hemp, only the New England Senators voted with him. Again, an attempt was made to increase the duty on coarse wool- lens, on which, it will be remembered, the House had put a low rate, notwithstanding the heavy duty on coarse wool. The Senate, by a strict party vote, retained the duty as the House had fixed it. One of the amendments, however, was carried — that which changed the duties on woollens to an ad valorem rate of 45 per cent. Two Democratic Senators, Van Buren and Woodbury, who had voted with the South against other amendments, voted in favor of this one. It was carried by a vote of 24 to 22, while all others had been rejected by a vote of 22 to 24.' With this amendment, the bill was finally passed by the Senate, the vote being 26 to 21. The Southern Sena- tors (except two from Kentucky, and one each from Ten- nessee and Louisiana) voted against it. Those from the • Middle and Western States all voted for it. Thos*- from New England split ; six voted yea, five nay. The result ' The votes in the Senate are given in Niles, XXXIV., 178, 179, 196. THE EARLY PROTECTIVE MOVEMENT. lOI seems to have depended largely on Webster. His col- league Silsbee voted nay, and Webster himself had been in doubt a week before the final vote.' Finally he swal- lowed the bill ; and he carried with him enough of the New England Senators to ensure its passage. Webster defended his course to his constituents on the ground that the woollens amendment (fixing the 45 per cent, ad valorem rate) had made the bill much more favor- able to the manufacturers. He said he should not have voted for it in the shape in which the House passed it." Calhoun made the same statement in 1837, in the speech to which reference has already been made.' No doubt the slight change on woollens mollified in some degree the New England men ; but after all, political motives, or, as Webster put it, " other paramount considerations," caused them to swallow the bill. They were afraid to reject it, for fear of the effect in the approaching campaign and election.' ■ " Memoirs of J. Q. Adams," VII., 530, 534. "In a speech made a month later ; printed in his " Works," I., 165. In the House, the representative from Boston had voted against the bill, and Webster commended his action. In his Senate speech Webster had said that, even at the 45 per cent, rate, the duty on woollens was barely suffi- cient to compensate for the duty on wool. " Works," III., 241. '" Works," III., 50, 51. Calhoun even accused Van Buren of being the "real author "of the tariff of 1828. He said that, but for Van Buren's vote in favor of the woollens amendment, there would have been a tie on the amendment ; his own casting vote as Vice-President would have de- feated it ; the bill, without the amendment, would have been rejected by Webster and the other New England Senators. Therefore, Van Buren was responsible for its having been passed. * After the final vote in the House, John Randolph said : " The bill re- I02 iHB EARLY PROTECTIVE MOVEMENT. The act of 1828 had tjiusbeen gassed in a form ap- proved by no one. It was hardly to be expected that a measure of this kind should long remain on the statute- book, and it was superseded by the act of 1832. During the intervening four years several causes combined to lead to more moderate application of the protective principle. The protective feeling diminished. Public opinion in the North had been wellnigh unanimous in favor of protec- tion between 1824 and 1828; but after 1828, although there was still a large preponderance for protection, ' there was a strong and active minority against it. The tariff question ceased to be an important factor in politics, so that this obstacle to its straightforward treatment was removed. And, finally, there was a strong desire to make ferred to manufactures of no sort or kind, except the manufacture of a President of the United States." In 1833, Root, a representative from New York, said : " The act of 1828 he had heard called the bill of Abom- inations. ... It certainly grew out of causes connected with President- making. It was fastened on the country in the scuffle to continue the then incumbent in office, on one side, and on the other to oust him and put an- other in his stead. . . . The public weal was disregarded, ' and the only question was : Shall we put A or B in the presidential chair ? When it was thought necessary to secure a certain State in favor of the then incum- bent, a convention was called at Harrisburg to buy them over. [See, how- ever, the note to p. 84, above.] On the other side another convention was called, who mounted the same hobby. The price offered was the same on both sides : a high tariff. One candidate was thought to be a favorite, because he was supposed to be a warm friend of the protective system, and would support a high tariff ; but they were told, on the other side, that their candidate would go for as high a tariff." " Congressional Debates," IX., 1104, 1105. ' As Gallatin admits: "It is certain that at this time (1832) the tarifif system is supported by a majority of the people and of both Houses of Congress." " Works," II., 455. THE EARLY PROTECTIVE MOVEMENT. IO3 some concession to the growing opposition of the South. It is true that in 1832 Clay and the more extreme protec- tionists wished to retain the act of 1828 intact, and to effect reductions in the revenue by lowering the non-pro- tective duties only.' But most of the protectionists, led by Adams, took a more moderate course, and consented to the removal of the abominations of 1828. Even before 1832 some changes were made. In 1830 the molasses abomination was got rid of. The duty on molasses was reduced from ten cents a gallon to five cents, the rate imposed before 1828, and the drawback on ex- portation of rum was restored.'' At the same time the duties on tea, coffee, and cocoa were lowered, as one means of reducing the revenue.' The most important step taken in 1832 was the entire abolition of the minimum system. Woollen goods were subjected to a simple ad valorem duty of 50 per cent. The minimum system, as arranged in the act of 1828, had been found to work badly. The manufacturers said it had been positively injurious to them.' As might have been expected, it led to attempts at evasion of duties, to undervaluation, and to constant disputes at the cus- '" Works," I., 586-595. '' " Statutes at Large," IV., 419. The act seems to have passed without debate or opposition. ''■Ibid., p. 403. ^ Browne, of Boston, a manufacturer who had actively supported the minimum system, declared: "I could manufacture to better advantage under the tariff of l8l6 than under that of 1828 ; for the duty on wool was then lower, and that on cloths a better protection." Niles. XLI., 204. I04 THE EARLY PROTECTIVE MOVEMENT. tom-houses. The troubles arose mainly under the dollar minimum. Goods worth $1.25 or $1.50 were invoiced so as to bring their values below $1.00, in order to escape the duty under -the next minimum point, $2.50. The difficulties were ascribed to the depravity of foreign ex- porting houses and to the laxity of the revenue laws, and in 1830 a special act in regard to goods made of cot- ton or wool was passed, making more stringent the pro- visions for collecting duties. But the troubles continued nevertheless,' and, in truth, they were inevitable under a system which imposed specific duties graded accord- ing to the value of the goods. Similar duties exist in the present tariff (1887) on some classes of wool and woollens, and lead to the same unceasing complaints of dishonesty and fraud, and the same efforts to make the law effective by close inspection and severer penalties. In 1832, the protectionists themselves swept away the minimum system. The ad valoretn duty of 50 per cent, which was put in its place was left to be not without its ' " Statutes at Large," IV., 400. See the speeches of Mallary, " Congres- sional Debates," VI., 795-803, and of Davis, ibid., p. 874, for instances and proofs of the frauds. The act provided for forfeiture of goods fraudulently undervalued ; but no verdicts under it could be obtained. At the protec- tionist convention held in Nevif York in 1831, one of the speakers said: " The same mistaken current of opinion which prevailed on 'change, en- tered and influenced the jury-box. Men thought the law rigorous and severe. They considered it hard that a man should forfeit a large amount of property for a mere attempt to evade an enormous duty. In two years there was but a single case pursued into a court of justice." Niles, XLI., 203. See also the Report on Revenue Frauds, made by a committee of this same convention, in Niles, XLI., Appendix, p. 33. THE EARLY PROTECTIVE MOVEMENT. lOJ dangers in the matter of fraud and under-valuation, but it was harmless as compared with the minimum system of 1828.' The other " abominations " of the act of 1828 were also done away with in 1832. The duty on hemp, which had been $60 a ton in 1828, was reduced to a duty of $40. Flax, which had also been subjected to a duty of $60 a ton in 1828, was put on the free list. The duties on pig- and bar-iron were put back to the rates of 1824. The duty on wool alone remained substantially as it had been in 1828, being left as a compound duty of 4 cents a pound and 40 per cent. But even here the special abomination of 1828 was removed; cheap wool, costing less than 8 cents a pound, was admitted free of duty. In fact, the protective system was put back, in the main, to where it had been in 1824. The result was to clear the tariff of the excrescences which had grown on it in 1828, and to put it in a form in which the protectionists could advo- cate its permanent retention. Even in this modified form, however, the system could not stand against the attacks of the South. In the fol- lowing year, 1833, the compromise tariff was passed. It provided for a gradual and steady reduction of duties. That reduction took place; and in July, 1842, a general ' J. Q. Adams, who was most active in framing the act of 1832, tried to embody the " home valuation " principle into it ; but in vain. " Congres- sional Debates," VIII., 3658, 3671. He also tried to give the government an option to take goods on its own account at a slight advance over the 4eclared v^lue ; but this plan also was rejected. Ibid., p. 3779- I06 THE EARLY PROTECTIVE MOVEMENT. level of 20 per cent, was reached. Two months later, in September, 1842, a new tariff act, again of distinctly pro- tective character, went into effect. But this act belongs to a different period, and has a different character from the acts of 1824, 1828, and 1832. The early protective movement, which began in 18 19, and was the cause of the legislation of the following decade, lost its vigor after 1832. Strong popular sentiment in favor of protection wellnigh disappeared, and the revival of protection in 1842 was due to causes different from those that brought about the earlier acts. The change in popular feeling is readily explained. The primary object of the protective legislation of the earlier period had been attained in 1842. The movement was, after all, only an effort, half conscious of its aim, to make more easy the transition from the state of simple agriculture and commerce which pre- vailed before the war of 1 8 1 2, to the more diversified condi- tion which the operation of economic forces was reason- ably certain to bring about after 1 8 1 5 . The period of tran- sition was passed, certainly by 1830, probably earlier. At all events, very soon after 1820 it was felt that there was not the same occasion as in previous years for measures to tide it over, and a decline in the protective feeling was the natural consequence. Not the least curious part of the history of the act of 1828 is the treatment it has received from the protec- tionist writers. At the time, the protectionists were far from enthusiastic about it. Niles could not admit it tp THE EARLY PROTECTIVE MOVEMENT. \0J be a fair application of the protective policy,' while Mat- thew Carey called it a " crude mass of imperfection," and admitted it to be a disappointment to the protectionists.'' In later years, however, when the details of history had been forgotten, it came to be regarded with more favor. The duties being on their face higher than those of pre- vious years, it was considered a better application of pro- tective principles. Henry C. Carey, on whose authority rest many of the accounts of our economic history, called it " an admirable tariff."' He represented it as having had great effect on the prosperity of the country, and his statements have often been repeated by protectionist writers. It is almost impossible to trace the economic effect of any legislative measure that remains in force no more than four years ; and certainly we have not the materials for ascertaining the economic effects of the act of 1828. Taken by itself, that_^act is but a stray episode in our po- li tical. history. It illustrates the change in the character of our-public men and our public life which took place during the Jacksonian time. As an economic measure, it must be considered, not by itself, but as one of a series of "Niles, XXXVII., 81 ; XXXVI., 113, and elsewhere. Niles objected especially to the $1.00 minimum on woollens. ' See his " Common-Sense Address " (1829), p. XI. ; " The Olive Branch,'' No. III., p. 54 ; No. IV., p. 3 (1832). 'See his " Review of the Report of D. A. Wells " (1869), p. 4 ; and to the same effect, "Harmony of Interests," p. 5, and "Social Science," II., 225. I08 THE EARLY PROTECTIVE MOVEMENT. measures, begun tentatively in 1816, and carried out more vigorously in 1824, i828^and_l8j2, by which a protective poHcy was maintained for some twenty years. It is very doubtful whether, with the defective information at our 7), disposal, we can learn much as to the effect on the pros- I perity of the country even of the whole series of tariff acts. Probably we can reach conclusions of any value only on certain limited topics, such as the effects of protection to young industries during this time ; as to the general effect of the protective measures we must rely on deduction from general principles. At all events, no one can trace the economic effects of the act of 1828. To ascribe to it the supposed prosperity of the years in which it was in in force, as Henry C. Carey and his followers have done, is only a part of that exaggeration of the effect of pro- tective duties which is as common among their opponents as among their advocates. THE TARIFF, 1830-1860. In the years between 1832 and i860 there was great vacillation in the tariff policy of the United States ; there were also great fluctuations in the course of trade and in- dustry. A low tariff was succeeded by a high tariff, which was in turn succeeded by another low tariff. Periods of undue inflation and of great demoralization, of prosperity and of depression, followed each other. The changes in the rates of duty and the fluctuations in industrial history have often been thought to be closely connected. Protec- tionists have ascribed prosperity to high tariffs, depression to low tariffs ; free traders have reversed the inference. It is the object of the present essay to trace, so far as this can be done, the economic effect of tariff legislation during the thirty years of varying fortune that preceded the civil war. First, by way of introduction, a sketch must be given of the history of the tariff. We begin with the tariff act of 1832, a distinctly protectionist measure, passed by the Whigs, or National Republicans, which put the protective system in a shape such as the advocates of protection hoped it might retain permanently. It levied high duties 109 no THE TARIFF, 1830-1860. on cotton and woollen goods, iron, and other articles to which protection was meant to be applied. On arti- cles not produced in the United States, either low duties were imposed, as on silks, or no duties at all, as on tea and coffee. The average rate on dutiable articles was about 33 per cent. In 1833, the Compromise Tariff Act was passed, and remained in force until 1842. That act, there can be little doubt, was the result of an agreement between Clay and Calhoun, the leaders of the protectionists and free traders, while it secured also the support of the Jackson administration. Clay had been hitherto the most uncom- promising of the protectionists ; Calhoun had represented the extreme Southern demand that duties should be re- duced to a horizontal level of 15 or 20 per cent.' The compromise provided for the retention of a considerable degree of protection for nearly nine years, and thereafter for a rapid reduction to a uniform 20 per cent. rate. The tariff of 1832 was the starting-point. All duties which in that tariff exceeded 20 percent, were to have one tenth of the excess over 20 per cent, taken off on January i, 1834; one tenth more on January i, 1836; again one tenth in 1838; and another in 1840. That is, by 1840, four tenths of the excess over 20 per cent, would be gone. ' The NuUifiers had said that such a horizontal rate was the least they were willing to accept. See the Address to the People of the United States by the South Carolina Convention, in the volume of " State Papers on Nul- lification," published by the State of Massachusetts, p. 69. THE TARIf-F, I83O-1860. lit Then, on January i, 1842, one half the remaining excess was to be taken off ; and on July i, 1842, the other half of the remaining excess was to go. After July i, 1842, therefore, there would be a uniform rate of 20 per cent, on all articles. Obviously, the reduction was very gradual from 1833 till 1842, while in the first six months of 1842 a sharp and sudden reduction was to take place. Considered as a political measure, the act of 1833 may deserve commendation. As an economic or financial measure, there is little to be said for it. It was badly drafted. No provision was made in it as to specific duties ; yet it was obviously meant to apply to such duties, and the Secretary of the Treasury had to take it on himself to frame rules as to the manner of ascertaining the ad valorem equivalents of specific duties and making the reductions called for by the act.' Again, the reduc- tions of duty were irregular. Thus on one important article, rolled bar-iron, the duty of 1832 had been specific, — $1.50 per hundredweight. This was equivalent, at the prices of 1832, to about 95 per cent. The progress of the reductions is shown in the note.'' Up to 1842, they were ' The instructions issued from the Treasury Department may be found in " Exec. Doc." 1833-34, vol. I., No. 43. It has been thought that the act did not apply to specific duties ; but this is a mistake. ' Year. Duty, per cent. 1834 87 1S36 80 1838 72.5 1840 65 Jan. I, 1842 42.5 July 5, 1842 20 This calculation is on the basis of the prices of 1833. If prices changed 112 THE TARIFF, 183O-1860. comparatively moderate ; but in the six months from Jan- uary I to July I, 1842, the duty dropped from 65 to 20 per cent. Producers and dealers necessarily found it hard to deal with such changes. It is true that a long warning was given them ; but, on the other hand, Con- gress might at any moment interfere to modify the act. Finally, and not least among the objections, there was the ultimate horizontal rate of 20 per cent. — a crude and indiscriminating method of dealing with the tariff prob- lem, which can be defended on no ground of principle or expediency. The 20 per cent, rate, according to the terms of the act, was to remain in force indefinitely, that being the concession which in the end was made to the extremists of the South.' As it happened, however, the 20 per cent, duty remained in force for but two months, from July i till September I, 1842.'' At the latter date the tariff act of 1842 went (and they did change greatly), the rates under the Compromise Act would vary materially from those given in the text ; since the ad valorem equiva- lent of the specific duty, and its excess over 20 per cent., were ascertained for each year according to the prices of that year. ' Clay, who drafted the act, probably had no expectation that the 20 per cent, rate ever would go into effect. He thought Congress would amend before 1842, and intended to meet by his compromise the immediate emer- gency only. See his " Works," vol. II., pp. 131, 132. He tried to show Appleton and Davis, two leading representatives of the protectionists, that " no future Congress would be bound by the act." See Appleton 's speech on the Tariff Act of 1842, " Appendix to Cong. Globe," 1841-42, p. 575. " The Compromise Act was so loosely constructed that doubt was enter- tained whether under its terms any duties at all could be collected after June 30, 1842. The point was carried before the Supreme Court, which decided, however, that the rate of 20 per cent, was in effect during the two THE TARIFF, 183O-1860. II3 into force. That act was passed by the Whigs as a party measure, and its history is closely connected with the political complications of the time. The Whigs had broken with President Tyler, and had a special quarrel with him as to the distribution among the States of the proceeds of the public lands. Tyler vetoed two successive tariff bills because of clauses in them in regard to distri- bution. The bill which he finally signed, and which became law, was passed hurriedly, without the distribution clause. Attention was turned mainly to the political quar- rel and to the political effect of the bill in general.' The act, naturally enough, was a hasty and^ imperfect measure, of which the details had received little consideration. The duties which it levied were high, — probably higher than they would have been had the tariff discussion been less affected by the breach betweea_Tylerand-the -Whigs. Though distinctively protective, and proclaimed to be such by the Whigs, it had not such a strong popular feeling behind it as had existed in favor of the protective measures of 1824, 1828, and 1832. In the farming States the enthusiasm for the home-market idea had cooled per- ceptibly ; and in the manufacturing States the agitation came rather from the producers directly interested than months before the act of 1842 went in force. (Aldridge vs. Williams, 3 Howard, 9.) Justice McLean dissented ; and there is much force to his dissenting opinion and to the argument of Reverdy Johnson, the counsel against the government. ' A full account of this struggle is in Von Hoist's " Constitutional His- tory," vol. III., pp. 451-463. 114 THE TARIFF, 1 8 30- 1 860. from the public at large. There is much truth in Cal- houn's remark that the act of J 842 was passed, not so much in compliance with the wishes of the. manufacturers us because the politicians wanted an issue." The act of 1842 remained in force for but four years, [t was in turn superseded by the act of 1846, again a political measure, passed this time by the Democrats. The act of 1846 carried out the suggestions made by Secretary Walker in his much debated Treasury Report of 1845. Indeed, it may be regarded as practically framed by Walker, who professed to adhere to the principle of free trade ; and the act of 1846 is often spoken of as an instance of the application of free-trade principles. In fact, however, it effected no more than a moderation in the application of protection. The act established several schedules, indicated by the letters A, B, C, D, and so on. All the articles classed in schedule A paid 100 per cent., all in schedule B paid 40 per cent., all in schedule C paid 30 per cent., and so on for the rest. Schedule C, with the 30 per cent, duty, included most articles with which the protective controversy is concerned, — iron and metals in general, manufactures of metals, wool and woollens, man- ufactures of leather, paper, glass, and wood. Cottons were in schedule D, and paid 25 per cent. Tea and coffee, on the other hand, were exempt from duty. ' " Works," vol. IV., pp. 199, 200. Calhoun thought that a good deal was due also to the influence of the "moneyed men" who wanted the Treasury to be filled. THE TARIFF, 1 830-1 860. 115 The act of 1846 remained in force till 1857, when a still further reduction of duties was made. The revenue was redundant^ in i857,_and this was the chief cause of the reduction of duties. The measure of that year was passed with little opposition, and was the first tariff act since 1 8 16 that was not affected by politics.' It was agreed on all hands that a reduction of the revenue was imperatively called for, and, except from Pennsylvania, there was no opposition to the reduction of duties made in it. The framework of the act of 1846 was retained, — the schedules and the ad valorem duties. The duty on the important protective articles, in schedule C, was lowered to 24 per cent., cottons being transferred, moreover, to that sched- ule. Certain raw materials were at the same time admitted free of duty. The act of 1857 remained in force till the close of the period we now have under examination. We begin with a high protective ta riff in 18 32 ; then follows a gradual reduction of duties, ending in 1842 with a brief period of very low duties. In the four years 1 842-4 6 we have a strqng application of protection. In 1846 begins what is .often called a period of free trade, but is in reality one of moderated protection. In 1857 the protection is still fur- ther moderated, and for a few years there is as near an approach to. free trade as the country has had since 1816. ' Seward said, in 1857, that " the vote of not a single Senator will be governed by any partisan consideration whatever." Appendix to " Con- gressional Globe, " 1856-57, p. 344 ; and see Hunter's speech, ibid., p. 331. Il6 THE TARIFF, 183O-1860. Turning now to the economic effect of this legislation, we have to note, first, its connection with the general prosperity of the country. That there was a distinct connection is asserted by both protectionists and freetrad- ers. The protectionists tell us that the compromise tariff caused the disastrous crises of 1837 and 1839; that the high tariff of 1842 brought back prosperity ; that depres- sion again followed the passage of the act of 1846, and that the panic of 1857 was precipitated by the tariff act of 1857. On the other hand, free traders not infrequently describe the period between 1846 and i860 as one of ex- ceptional prosperity, due to the low duties then in force. It would not be worth while to allude to some of these assertions, if they were not so firmly imbedded in current literature and so constantly repeated in many accounts of our economic history. This is especially the case with the curious assertion that the crises of 1837 and 1839 were caused by the compromise tariff of 1833, or connected with it. This assertion had its origin in the writings of Henry C. Carey, who has been guilty of many curious versions of economic history, but of none more remarka- ble than this. It may be found in various passages in his works ; and from them it has been transferred to the writings of his disciples and to the arguments of protec- tionist authors and speakers in general.' Yet no fair- ' References to the supposed effects of the act of 1833 abound in Carey's works. As good a specimen as any is this : " Agitation succeeded in pro- ducing a total change of system in the tariff of 1833. * * * Thencefor- THE TARIFF, 183O-I860. WJ minded person, having even a superficial knowledge of the economic history of these years, can entertain such notions. The crises of 1837 and 1839 were obviously due to quite a different set of causes — to the bank troubles, the financial mistakes of Jackson's administration, the in- flation of the currency, and to those general conditions of speculation and unduly expanded credit which give rise to crises. The tariff act had nothing whatever to do with them. Indeed, the reductions in duty under it, as we have ward the building of furnaces and mills almost wholly ceased, the wealthy English capitalists having thus succeeded in regaining the desired control of the great American market for cloth and iron. As a consequence of their triumph there occurred a succession of crises of barbaric tendency, the whole terminating, in 1842, in a scene of ruin such as had never before been known, bankruptcy among the people being almost universal," etc. " Let- ters on the Iron Question " (1865), p. 4, printed in his " Miscellaneous Works " (1872). To the same effect, see his "Financial Crises," p. i8 ; "Review of Wells' Report, "p. 5; " Social Science," II., p. 225. Professor Thompson makes the same statement in his " Political Economy," p. 353. See also Elder, "Questions of the Day " (1871), pp. 200, 201. Senator Evarts, in a speech made in 1883, ascribed to the act of 1833 " a bank- ruptcy which covered the whole land, without distinction of sections, with ruin." The pedigree of statements of this kind, which are frequent in cam- paign literature, can be traced back to Carey. Doubtless Carey wrote in good faith ; but his prejudices were so strong as to prevent him from taking a just view of economic history. Oddly enough, Calhoun ascribed the crisis of 1837 to the fact that duti s under the act of 1833 remained too high. The high duties brought in a lari;c revenue and caused a surplus in the Treasury ; the deposit and distribution of this brought inflation and speculation, and eventually a crisis (" Works," IV., p. 174). No doubt the high duties were one cause of the government surplus, and thereby aided in bringing about the crisis, so that this view, incomplete as it is, has more foundation than Carey's explanation. On the other hand, Clay, as might be expected, took pains to deny that the act of 1833 had any thing to do with the troubles of the years following its passage (" Works," II., pp. 530, 531 ; edition of 1844). Il8 TffE TARIFF, 1830-1860. seen, were slight until 1840, and could hardly have influ- enced in any degree the breaking out of the panics. Even if the reductions of duty had been greater, and had been made earlier, they would probably have had no effect, favorable or unfavorable, on the inflation of the earlier years or on the depression which followed. We may dispose at this point of a similar assertion oc- casionally made in regard to the crisis of 1857,— that the tariff act of 1857 caused or intensified it. This view also is traceable, probably, to Carey. It appears in his writ- ings and in those of his disciples." In fact, the crisis of 1857 w^s an unusually simple case of activity, speculation, over-banking, panic, and depression ; and it requires the exercise of great ingenuity to connect it in any way with the tariff act. As it happened, indeed, the tariff was passed with some hope that it would serve to prevent the crisis. Money was accumulating in the Treasury ; and it was hoped that by reducing duties the revenue would be diminished, money would be got out of the Treasury, and the stringency, which was already threatening, prevented." ' Carey speaks in one place of "the terrific free-trade crisis of 1857." " Letters to Colfax," p. 15 ; "Financial Crises," p. 8; " Review of Wells," p. 5 (all in his "Miscellaneous Works"}. Thompson ("Political Econ- omy," p. 357) says : " In 1857, Congress reduced the duties twenty-five per cent. * * * It at once intensified all the unwholesome tendencies in our commercial and industrial life. * * * Another great panic followed through the collapse of unsound enterprises." " See a letter from a Boston merchant to Senator Wilson, "Congr. Globe, 1856-57, Appendix," p. 344 ; and the statement by Senator Hunter, ibid. , 329. THE TARIFF, 183O-1860. II9 The reduction failed to prevent the panic ; but, at the time, it would have been considered very odd to ascribe the disaster to the tariff act. On the other hand, it has been very often said that the activity of trade in 1843-44 was due to the enactment of the protective tariff act of 1842. There may be a degree of truth in this. The unsettled state of legislation on the tariff before the act of 1842 was passed must have been an obstacle to the revival of confidence. After July i, 1842, there was the uniform duty of 20 per cent. ; nay, it was doubtful whether there was by law even that duty in force. It was certain that Congress would wish not to retain the horizontal rate, but would try to enact a new tariff law ; yet the quarrel between the Whigs and Tyler made the issue quite doubtful. Such uncertainty neces- sarily operated as a damper on trade ; and the passage of any act whatever, settling the tariff question for the time being, would have removed one great obstacle to the re- turn of activity and prosperity. It is even possible that the passage of the act of 1842 may have had a more direct effect than this. No doubt, in the regular recurrence of waves of activity and depression, the depression of 1840- 42 would soon have been followed, in any event, by a period of activity. The point at which activity will begin to show itself under such circumstances is largely a mat- ter of chance. It begins, for some perhaps accidental reason, with one industry or set of idustries, and, the material? for general revival being read)-, then spreads I20 THE TARIFF, 183O-1860. quickly to the others. In the same way, when the mate- rials for a crisis are at hand, a single accidental failure may precipitate a general panic. In 1842-43 the high duties of the tariff act probably helped to make profits large for the time being in certain manufactures, notably those of cotton and iron. Prosperity in these set in, and may have been the signal for a general revival of confi- dence and for a general extension of business operations. To that extent, it is not impossible that the protective tariff of 1842 was the occasion of the reviving business of the ensuing years. But it is a very different thing from this to say that the tariff was the cause of prosperity, and that depression would have continued indefinitely but for the re-establishment of high protec- tive duties. In truth, there has been a great deal of loose talk about tariffs and crises. Whenever there has been a crisis, the free traders or protectionists, as the case may be, have been tempted to use it as a means for overthrowing the system they opposed. Cobden found in the depression of 1839—40 a powerful argument in his crusade against the corn laws, and knew that a return of prosperity would work against him." Within a few years, the opponents of protection in this country have found in general de- pression a convenient and effective argument against the tariff. In the same way, the protectionists have been tempted to use the crises of 1837 and 1857, and conversely ' See passages in Morley's " Life of Cobden," pp. 162, 163, 210. THE TARIFF, 183O-I860. 121 the revival of 1843-44, to help their case. But the effect of tariffs cannot be traced by any such rough-and-ready method. The tariff system of a country is but one of many factors entering into its general prosperity. Its influence, good or bad, may be strengthened or may be counteracted by other causes ; while it is exceedingly diffi- cult, generally impossible, to trace its separate effect. Least of all can its influence be traced in those varia- tions of outward prosperity and depression which are marked by " good times " and crises. A protective tariff may sometimes strengthen other causes which are bring- ing on a commercial crisis. Some such effect is very likely traceable to the tariff in the years before the crisis of 1873. It may sometimes be the occasion of a revival of activity, when the other conditions are already favora- ble to such a revival. That may have been the case in 1843. But these are only incidental effects, and lie quite outside the real problem as to the results of pro- tection. As a rule, the tariff system of a country operates neither to cause nor to prevent crises. They are the results of conditions of exchange and produc- tion on which it can exercise no great or permanent influence. Remarks of the same kind may be made on the fre- quent assertion that the prosperity of the country from 1846 to i860 can be traced to the low duties then in force. He who is convinced, on grounds of general rea- soning and of general experience, that the principles of 122 THE TARIFF, 183O-1860. free trade are sound and that protective duties are harm- ful, can fairly deduce the conclusion that the low tariffs of 1846 and 1857 contributed, so far as they went, to gen- eral prosperity. But a direct connection cannot be traced. A number of favorable causiss were at work, such as the general advance in the arts, the rapid growth of the rail- way system and of ocean communication, the Californian gold discoveries. There is no way of eliminating the other factors, and determining how much can be ascribed to the tariff alone. Even in the growth of international trade, where some direct point of connection might be found, we cannot measure the effect of low duties ; for international trade was growing between all countries under the influence of cheapened transportation and the stimulus of the great gold discoveries.' The inductive, or historical, method absolutely fails us here. ' The growth of foreign trade under the tariffs of 1846 and 1857 was cer- tainly very striking. In Grosvenor's " Does Protection Protect ? " there is a table showing the imports and exports per head of population from 1821 to 1869, in which it is stated that the annual average per head of popula- tion was : Imports. Exports. In 1843-46, $4.66 $5.22 " 1847-50, 6.35 6.32 " 1851-55, 9-IO 7-35 " 1856-60, 10.41 g.45 The imports and exports were, in millions of dollars : Imports. Exports. Annual average of the four years 1843-46, 92.7 100 " " " " 1847-50, 138.3 136.8 " " " " five " 1851-55, 231. x86.2 " " < ■< <■ .. 1856-60, 305. 278.2 But how are we to measure the share which low duties had in promoting this growth ? THE TARIFF, 183O-1860. 1 23 We turn now to another inquiry, as to the effect of the fluctuating duties of this period on the protected indus- tries. That inquiry, it is hardly necessary to say, leads us to no certain conclusion as to the effect of the duties on the welfare of the country at large. It is quite conceiv- able, and indeed on grounds of general reasoning at least probable, that any stimulus given to the protected indus- tries indicated a loss in the productive powers of the com- munity as a whole. But it has often been asserted, and again often denied, that the duties caused a growth of certain industries; and it is worth while to. trace, if we can, the tangible effect in this direction, even though it be but a part-of the total effect. It is the production of iron in the unmanufactured form that has been most hotly discussed in the protective con- troversy. And in regard to this, fortunately, we have good, if not complete, information. The duty on pig-iron had been 62^ cents a hundred- weight under the tariff act of 1828. In 1832 it was re- duced to 50 cents, or $10 per ton. This rate was equiva- lent to about 40 per cent, on the foreign price at that time; and, under the Compromise Act of 1833, it was gradually reduced, until it reached 20 per cent, in 1842. Under the act of 1842, the duty was again raised to $10 a ton. In 1846 it was made 30 per cent, on the value, and in 1857 24 per cent. As the value varied, the duty under the last two acts varied also. In 1847; a time of high prices, the duty, of 30 per cent, was equal to $5.75 per 124 THE TARIFF, 183O-1860. ton ; in 1852 it was only $3.05.; in 1855 it was as high as $6; in i860 it again fell to $3.40." The duty on bar-iron was of two kinds until 1846, — a duty on hammered bar-iron, and another heavier duty on rolled bar-iron. The duty on hammered bar was, in 1832, fixed at 90 cents per hundredweight, or $18 per ton. That on rolled bar was nearly twice as heavy, being $30 per ton, or nearly 100 per cent, on the value. These duties were reduced under the Compromise Act ; and, as we have seen, the reduction on rolled bar was very great, and, in 1842, very sudden. Under the act of 1842, the duty on hammered bar was made $17 per ton, that on rolled bar $25 per ton. The act of 1846 gave up finally the discrimination between the two kinds, and admitted ' The duty from year to year, on the average, for the fiscal years ending June 30th, is given in the following table. The foreign value, on vifhich the duty vifas computed, is also given. The figures are compiled from the tables given in French, " History of Iron Manufacture," p. 70, and in the "Re- port of the Iron and Steel Association for 1876," p. 182. Duty (50 per cent, till 1857, Vear ending June 30th. Average value. 24 per cent, after 1857.) 1847 . . . Iig.go . . . $5.95 1848 15.80 4-75 1849 13-30 4.00 1850 12.70 3.80 1851 12.60 3.75 1852 10.20 3.05 1853 13.40 4.00 1854 18.00 '5-40 1855 20.00 6.00 1856 19.80 5-95 1857 19-50 5-85 1858 17.60 4.20 1859 15.20 . 3-65 i860 14.10 3.40 THE TARIFF, 183O-I860. 12$ both alike at a duty of 30 per cent. ; and the act of 1857 admitted them at 24 per cent.' Before proceeding to examine the economic effect of these duties, it should be said that our information as to the production of iron is in many ways defective, and that the statements relating to it in the following para- graphs cannot be taken to be more than roughly accurate. The government figures give us trustworthy information as to the imports ; but for the domestic production we must rely, at least for the earlier years, on estimates which are often no more than guesses. Nev.ertheless, the general trend of events can be made out pretty clearly, and we are able to draw some important conclusions." It seems to be clear that the importation of iron was somewhat affected by the duties. The years before 1842, when the compromise tariff was in force, were years of such disturbance that it is not easy to trace any effects clearly to the operation of the tariff ; but imports during these years were a smaller proportion of the total con- sumption of iron than they were during the period after ' Between 1832 and 1842, an exception had been made for one class of rolled iron, — iron rails actually laid down on railroads. These were ad- mitted free of duty ; or, rather, a drawback was granted of the full amount of duty due or paid on them. Between 1828 and 1832, a drawback had been granted such as to make the duty on railroad iron only 25 per cent. After 1842, however, it was charged with duty like any other iron. ° The reader who wishes to examine further the data as to the production of iron before i860, is referred to the Appendix to the Quarterly Journal of Economics for April, 1888, vol. II., pp. 377-382, where I have considered the figures in detail. 126 THE TARIFF, 183O-1860. 1846. It must be remembered that from 1830 till 1842 all railroad iron was admitted free of duty, and that a large part of the imported iron consisted of rails. If this quantity be deducted from the total import, the remaining quantity, which alone was affected by the duties, becomes still smaller as compared with the domestic product. In 1 841 and 1842, when duties began to be low under the operation of the Compromise Act, imports were larger in proportion to the home product. On the other hand, in the four years, 1843-46, under the act of 1842, they show a distinct decrease. After 1847, they show as distinct an increase, and continue to be large throughout the period until i860. In the speculative and railroad-building years, from 1852 to 1857, the importation was especially heavy ; and in 1853 and 1854 the total quantity of iron imported was almost as great as the home product. The most effective part of the iron duties until 1846 was the heavy discriminating duty on rolled bar-iron. That duty amounted (from 1818 till 1846, except during a few months in 1842) to about 100 per cent. Rolled iron, made by the puddling process and by rolling, is the form of bar-iron now in common use. The process was first applied successfully by Cort in England about 1785, and in that country was immediately put into extensive use. It made bar-iron much more cheaply and plentifully than the old process of refining in a forge and under a hammer ; and, at the present time, hammered bar of the old-fashioned kind has ceased to be made, except in com- THE TARIFF, 183O-I860. 12/ paratively small quantities for special purposes. Cort's processes of puddling and rolling were practicable only through the use of bituminous coal and coke. The abundant and excellent coal of Great Britain gave that country an enormous advantage in producing rolled iron, as it had already done in smelting pig-iron, and put her in that commanding position as an iron producer which she continues to occupy to the present day. When rolled iron first began to be exported from England to foreign countries, it aroused strong feelings of jealousy, being so much cheaper than other iron. Several countries fought against the improvement by imposing discriminating duties on it.' That course was adopted in the United States. In 18 18, a discriminating duty was put on rolled iron, partly because it was said to be inferior in quality to hammered iron, and partly from a feeling in favor of pro- tecting the domestic producers of hammered iron. The duty was retained, as we have seen, till 1846. Its effect was neutralized in part by the free admission of railroad iron, which was one form of rolled iron ; but, so far as it was applied to rolled iron in general, it simply prevented the United States from sharing the benefit of a great im- provement in the arts. It had no efTect in hastening the use of the puddling and rolling processes in the country. Though introduced into the United States as early as ' In France a discriminating duty equivalent, to 120 percent, was im- posed in 1833 on iron imported by sea, i. e., on English iron. Arme, " Tarifs de Douanes," I., 144, 145. The discrimination was maintained until 1855. Ibid., 271. 128 THE TARIFF, 183O-1860. 1817, these processes got no firm hold until after anthra- cite coal began to be used, about 1840, as an iron-making fuel.' We turn now to the history of the domestic production. By far the most important event in that history is the use of anthracite coal as a fuel, which began about 1840. The substitution of anthracite for wood (charcoal) revo- lutionized the iron trade in the United States in the same way as the use of bituminous coal (coke) had revolution- ' The first puddling and rolling mill in the United States was put up in Pennsylvania in 1817. The first puddling in New England was done as late as 1835. Wood was used as fuel at the outset. Swank, " Iron in All Ages," 166, 330. The effect of the duty on rolled iron cannot be better described than in the clear and forcible language used by Gallatin in 1831 : " It seems impracticable that iron made with charcoal can ever compete with iron made from bituminous coal. * * * a. happy application of anthracite coal to the manufacture of iron, the discovery of new beds of bituminous coal, the erection of iron-works in the vicinity of the most East- erly beds now existing, and the improved means of transportation, which may bring this at a reasonable rate to the sea-border, may hereafter enable the American iron-master to compete in cheapness with foreign rolled iron in the Atlantic districts. On those contingencies the tariff can have no effect. To persist, in the present state of the manufacture, in that particu- lar competition, and for that purpose to proscribe the foreign rolled iron, is ' to compel the people for an indefinite time to substitute a dear for a cheap article. It is said that the British iron is generally of inferior quality ; this is equally true of a portion of that made in America. In both cases the consumer is the best judge, — has an undoubted right to judge for himself. Domestic charcoal iron should confine itself to a competition with the for- eign iron made from the same fuel." Gallatin added, prophetically : ' ' Your memorialists believe that the ultimate reduction of the price of American iron to that of British rolled iron can only, and ultimately will, be accomplished in that Western region which abounds with ore, and in which are found the most extensive formations of bituminous coal." — " Memorial of the Free-Trade Convention," pp. 60, 61. THE TARIFF, 183O-1860. 1 29 ized the English iron trade nearly a century before. Up to 1840, pig-iron had been smelted in this country with charcoal, a fuel which was expensive, and tended to be- come more and more expensive as the nearer forests were cut down and wood became less easily attainable. Char- coal pig-iron could not have competed on even terms with the coal-made English iron. But between 1830 and 1840 it was protected by the heavy duties on English iron ; and, under their shelter, the production in those years steadily increased. There seems to t^e no doubt that, with lower duties or no duties at all, the domestic production would have been less, and the import greater. In other words, the duty operated as a true protective duty, hampering international trade and increasing the price of the home product as well as of the imported iron. In 1840, however, anthracite coal began to be applied to the making of pig-iron. The use of anthracite was made possible by the hot blast, — a process which was put in successful operation in England at nearly the same time.' The importance of the new method was immediately appreciated, and predictions were made that henceforth there would be no longer occasion for importing iron, even under the 20 per cent, duty of the Compromise Act. Many furnaces were changed from the charcoal to the ' The hot blast was successfully applied in a furnace in Pennsylvania in 1835, but the experiment was not prosecuted. In 1837, Crane applied it in Wales, and about the same time the process was successfully used in this country. Swank, " Iron in All Ages," 268-273 ; French, " History of the Iron Trade," 58-60, 130 THE TARIFF, 183O-1860. anthracite method.' At very nearly the same time, as it happened, the tariff act of 1842 was passed, imposing heavy duties on all kinds of iron, among others on the railroad iron which had hitherto been admitted free. Very shortly afterwards a general revival of trade set in. Under the influence of these combined causes, the pro- duction of iron was suddenly increased. The exact amount of the increase is disputed ; but the production seems to have risen from somewhere near 300,000 tons in 1840-41, to 650,090 or more in 1846-47. Some part of this great growth was certainly due to the high protection of 1842 ; but, under any circumstances, the use of anthra- cite would have given a great stimulus to the iron trade. This is shown by the course of events under the tarifT acts of 1846 and 1857. The production remained, on the whole, fairly steady throughout the years when these acts were in force. There was, on the whole, an increase from between 500,000 and 600,000 tons in the earlier years of the period to between 800,000 and goo,000 tons in the later years. For a few years after the passage of the act of 1846, the reduction of the duty to 30 per cent, had little, if any, effect. Prices were high both in England and in the United States ; for it was a time of active railroad building in England, and consequently of great demand for iron. The ad valorem duty was correspond- ' See the notices in Hazard's " Statistical Register," I., pp. 335, 368 ; III., p. 173 ; IV., p. 207. That great results were at once expected from the new method is shown by an interesting speech of Nicholas Biddle's. ibid., II., p. 230, THE TARIFF, 183O-1860. 13I ingly high. In 1850-51 the usual reaction set in, prices went down, production decreased, and the iron-masters complained." But the natural revival came after a year or two. Prices rose again ; production increased, and continued to increase until i860. Although the duty, which had been $9 a ton under the act of 1842, was no more than $3 and $4 under the 24 per cent, rate which was in force during the years 1858, 1859, ^"^ i860, and although these were not years of unusual general activity, the domestic production showed a steady growth. The country was growing fast, many railroads were in course of construction, much iron was needed. An un- diminished home product was consumed, as well as largely increased imports. The most significant fact in the iron trade, however, is to be seen, not in the figures of total production, but in the shifting from charcoal to anthracite iron. While the total product remained about the same, the component elements changed greatly. The production of anthracite ' The iron-masters admitted that the act of 1846 had been sufficiently protective when first passed. But in 1849 and 1850, they began to com- plain and ask for higher duties. See ' ' Proceedings of Iron Convention at Pittsburg (1849)," p. 9 ; " Proceedings of Convention at Albany," pp. 27, 42. They certainly had a legitimate subject for complaint in the operation of the ad valorem duty, in that it tended to exaggerate the fluctuations of prices. When prices abroad were high, the duty was high ; when prices abroad were low, the duty was low. Consequently, the price of foreign iron in the United States, which is the sum of the foreign price and the duty, fluctuated more widely than the foreign price alone. This was cer- tainly an evil, especially with an article whose price was liable under any conditions to vary so much as the price of iron. See the table above, p. 124, 132 THE TARIFF, 183O-1860. iron rose steadily : that of charcoal iron fell as steadily. The first anthracite furnace was built in 1840. In 1844 there were said to be twenty furnaces, making 65,000 tons annually.' Thence the production rose with hardly an interruption being in 1844 65,000 gross tons. " 1846 110,000 " " " 1849 115,000 " " " 1854 308,000 net " " 1855 . . 343,000 " " 1856 394,000 " " As the anthracite iron production increased, that of char- coal iron decreased. Under the tariff act of 1842, a large number of new charcoal furnaces had been put up.' Many of these had to be given up under the combined competition of anthracite and of English iron. Some maintained themselves by using coke and raw bituminous coal, in those parts of the country where bituminous coal was to be had ■" ; others disappeared. That at least some ' See a " Letter of the Philadelphia Coal and Iron Trade to the Commit- tee on Finance " (pamphlet, Philadelphia, 1844). ' The figure for 1846 is that given in Taylor, "Statistics of Coal," p. 133. Swank gives the figure for 1846 as 123,000 (gross ?) tons. " Iron in All Ages," p. 274. The figures for 1849-56 are from Lesley, " Iron Manufacturers' Guide (1859)," pp. 751,752. Those given by Grosvenor, " Does Protection Protect?" p. 225, vary somevi'hat ; but the differences are not great. ' See the figures in Grosvenor, p. 215. There were built in 1843 9 char- coal furnaces ; in 1844, 23 ; in 1845, 35 ; in 1846, 44 ; in 1847, 34 ; in 1848, 28 ; in 1849, 14. ■* The use of coke began in the United States about 1850, but was of little importance until after 1856. The use of raw bituminous coal was in- troduced about 1850 in the Shenango and Mahoning valleys (on the border THE TARIFF, 183O-1860. 1 33 of them should disappear was inevitable. Charcoal iron for general use was a thing of the past ; and the effect of the tariff of 1842 was to call into existence a number of furnaces which used antiquated methods, and before long must have been displaced in any event by anthracite furnaces The use of anthracite not only stimulated the produc- tion of pig-iron, but also that of rolled iron and railroad bars. Anthracite was first used in puddling and reheating in 1844 and 1845,' and thenceforward rolled iron was made regularly in large quantities. In 1856 the production of rolled iron was nearly 500,000 tons.'' Iron rails first began to be made while the tariff act of 1842 was in force, though the steps towards making them were taken even before that act put an end to the free admission of Eng- lish rails.^ With the decline in railroad building and the. between Pennsylvania and Ohio), where there is suitable coal. Swank, " Iron in All Ages," pp. 2S 1-284. In the " Report of the American Iron and Steel Association for 1876 " (prepared by Swank), the following figures are given of the production of iron with the various kinds of fuel. I have selected a few typical years : Anthracite Charcoal Bituminous coal Year. iron. iron. and coke iron. Total. 1854 339,000 342,000 55,000 736,000 1856 443,000 370,000 70,000 883,000 1858 362,000 285,000 58,000 705,000 i860 519,000 278,000 122,000 919,000 The figures have denote net tons. ' Speech of A. S. Hewitt, in ' ' Proceedings of Iron Convention at Albany " (1849), p. 54. ' Lesley, "Iron Manufacturers' Guide," p. 761. ^See a pamphlet, "Observations on the Expediency of Repealing the Act by which Railroad Iron is Released from Duty," 1842. It gives an ac- count of large rolling mills then being erected at Danville, Pennsylvania. 134 THE TARIFF, 183O-1860. general fall in iron prices, which took place in 1849, many of the rail mills stopped work. But the business revived with the general prosperity which set in early in the dec- ade, and the production of rails steadily increased until 1856. Under the influence of the crisis of 1857 it fell, but soon rose again, and in i860 was more than 200,000 tons.' To sum up : The high duty on iron in its various forms between 1832 and 1841, and again in 1842-46, impeded importation, retarded for the United States that cheapen- ing of iron which has been one of the most important factors in the march of improvement in this century, and maintained in existence costly charcoal furnaces long after that method had ceased in Great Britain to be in general use. The first step towards a vigorous and healthy growth of the iron industry was in the use of an- thracite in 1840. That step, so far from being promoted by the high duties, was taken in a time when duties were on the point of being reduced to the 20 per cent, level. Hardly had it been taken when the high duties of the tariff act of 1842 brought about (not indeed alone, but in conjunction with other causes) a temporary return to the ' See the figures given in " Report of Iron and Steel Association for 1876," p. 165. The production of rails is there stated to have been : In 1849 " 1850 " 1854 " 1856 " 1857 " i860 24,000 ton 44,000 108,000 180,000 162,000 205,000 THE TARIFF, 183O-1860. 1 35 old charcoal process. A number of new charcoal furnaces were built, unsuited to the industry of the time and cer- tain to succumb before long. Under the lower duties from 1846 to i860, the charcoal production gradually be- came a less and less important part of the iron industry, and before the end of the period had been restricted to those limits within which it could find a permanent market for the special qualities of its iron.' On the other hand, the lower duties did not prevent a steady growth in the making of anthracite iron ; while the production of railroad iron and of rolled iron in general, also made pos- sible by the use of anthracite, showed a similar steady progress. There is no reason to doubt that, had there been no duty at all, there would yet have been a large production of anthracite pig- and rolled iron. Meanwhile the country was rapidly developing, and needed much iron. The low duties permitted a large importation of foreign iron, in addition to a large domestic production. The comparative cheapness and abundance of so import- ant an industrial agent could not have operated other- wise than to promote material prosperity. We turn now to another industry, — the manufacture of cotton goods, by far the largest and most important branch of the textile industry. Here we are met at the ' Charcoal iron has qualities which cause a certain quantity of it to be in demand under any circumstances. Since it settled down, about i860, to its normal place as a supplement to coal-made iron, the product has steadily increased with the growing needs of the country. In the years 1863-65 the annual product was about 240,000 tons. In 1886 it was 460,000 tons. 136 THE TARlfiF, 183O-1860. outset by the fact that, at the beginning of the period which we are considering, the cotton manufacture was in the main independent of protection, and not likely to be much affected, favorably or unfavorably, by changes in duties. Probably as early as 1824, and almost certainly by 1832, the industry had reached a firm position, in which it was able to meet foreign competition on equal terms." Mr. Nathan Appleton, who was a large owner of cotton factory stocks, and who was also, in his time, one of the ablest and most prominent advocates of protective duties, said in 1833 that at that date coarse cottons could not have been imported from England if there had been no duty at all, and that even on many grades of finer goods competition was little to be feared. In regard to prints, the American goods were, quality for quality, as cheap as the English, but might be supplanted, in the absence of duties, by the poorer and nominally cheaper English goods, — an argument, often heard in our own day, which obviously puts the protective system on the ground of regulating the quality of goods for consumers. The gen- eral situation of the cotton manufacture, as described by Appleton, was one in which duties had ceased to be a factor of much importance in its development." ' See the previous essay on " Protection to Young Industries," Part III., where an account is given of the history of the cotton manufacture up to 1824. ^ See Appleton's speech on the Verplanck bill of 1833, " Congressional Debates," IX., pp. 1216-1217. Compare his remarks in the same vol- ume at p. 1579. THE TARIFF, 183O-1860. I37 During the extraordinary fluctuations of industry and the gradual reduction of duties which ensued under the compromise tariff of 1833, the business of manufacturing cottons was profitable and expanded, or encountered de- pression and loss, in sympathy with the industry of the country at large, being influenced chiefly by the expansion of credit and the rise of prices before 1837 and 1839, and the crisis and liquidation that followed those years. Not- withstanding the impending reductions of duty under the Compromise Act, large investments were made in the business in the earlier part of the period. Thus, in 1835- 36, the Amoskeag Company began on a large scale its operations in Manchester, N. H.' The depression at the close of the decade checked growth for a while, but did not prevent new investments from being made, even before the passage of the act of 1842 settled the tariff uncertainty.'' The best informed judges said that the causes of increase or decrease of profit had been, as one might expect, the same as those that produced fluctua- tions in other branches of business ; and they made no mention of duties or of tariff.' Appleton's account of the 'Potter, "History of Manchester," p. 552. The Stark Mills were built in 1838, the second Stark Mills in 1839. ' Earl, " History of Fall River," pp. 35-37. " From the panic of 1837, which affected every business centre in the country, Fall River seems to have speedily recovered, since within a few years from that date nearly every mill in the place was enlarged, though only one new one was built." Ibid., p. 53. ' See the answers from T. G. Gary, treasurer of a Lowell mill, and from Samuel Batchelder to circulars sent out in 1845 by Secretary Walker. Batch- 138 THE TARIFF, 183O-1860. Stage reached by the industry finds confirmation in a care- ful volume on the cotton manufacture in the United States, published in 1840 by Robert Montgomery. This writer's general conclusions are much the same as those which competent observers reach for our own time. Money wages were about twice as high in the United States, but the product per spindle and per loom was considerably greater. The cotton, in his time, was not so well mixed, not so thoroughly cleaned, not so well carded in the United States as in England ; but, on the other hand, the Americans were superior in ordinary power-loom weaving, as well as in warping and dressing. Elaborate tables are given of the expenses per unit of product in both countries, the final result of which, when all things were considered, showed a difference of three per cent, in favor of the American manufactures. Calculations of this kind, which are common enough in discussions of protective duties, are apt to express inadequately the multiplicity of circumstances which affect concrete indus- try ; yet they may gauge with fair accuracy the general conditions, and in this case were made intelligently and without bias. It is worth noting that Montgomery attrib- utes the success of the Americans in exporting cottons to elder, our most trustworthy informant on the early history of the cotton manufacture, writes that " the increase and decrease of profit from 1831 to 1844 have conformed very nearly to the general prosperity of the country." The circulars and answers are printed in the appendices to Walker's Re- port. Exec. Doc. 1845-46, vol. II., No. 6, pp. 215, 216, 313. THE TARIFF, 1830-1860. 1 39 greater honesty in manufacturing and to the superior quaUty of their goods.' During the years following the passage of the act of 1842, by which the duties on cottons were increased largely, the manufacturers made high profits. In Secre- tary Walker's Report, and in other attacks on protective duties, much was made of this circumstance, the high profits being ascribed to the new duties. The protec- tionists denied the connection, and a lively controversy ensued." The truth seems to be that the case was not different from that usually presented in economic phe- nomena, — several causes combined to produce a single general effect. The high duties very likely served, in part, to enable a general advance of profits to be main- tained for several years. But there was also an increased ' See " Montgomery's " Cotton Manufacture," pp. 29, 38, 82, 86, 91, loi. The tables of expenses are on pp. 124, 125 ; the remarks on quaUty of goods, on pp. 130, 194; on wages and product, on pp. I1S-121, 123. Montgomery was superintendent of the York Factories at Saco, Maine, of which Samuel Batchelder was treasurer. Allusions to Montgomery's book, and confirmation of some of his conclusions, may be found in Batchelder's " Early Progress of the Cotton Manufacture," p. 80 and following. At a convention in favor of protection, held in New York in 1842, com- mittees were appointed on various industries. The committee on cottons reported a recommendation to Congress of minimum duties on plain and printed goods, but added that these duties were " more than is necessary for much the largest part of the cotton goods," and that " most of the printed calicoes are now offered to the consumer at lower prices than they could be imported under a tariff for revenue only." *" See T. G. Gary, " Results of Manufactures at Lowell," Boston, 1845 ; N. Appleton, " Review of Secretary Walker's Report," 1846; and the speeches of Rockwell, " Congr. Globe," 1845-46, pp. 1034-1037, and Win- throp, ibid., Appendix, p. 969. 140 THE TARIFF, 183O-1860. export to China, which proved highly profitable. More- over, the price of raw cotton was low in these years, lag- ging behind the advance in the prices of cotton goods ; and, as long as this lasted, the manufacturers made large gains. The fact that prosperity was shared by the cotton manufacturers in England shows that other causes than the new tariff must have been at work. On the other hand, when the act of 1846 was passed, the protectionists predicted disaster ' ; but disaster came not, either for the country at large or for the cotton in- dustry. Throughout the period from 1846 to i860 the manufacture of cotton grew steadily, affected by the gen- eral conditions of trade, but little influenced by the lower duties. Exact figures indicating its fortunes are not to be had, yet we have enough information to enable us to judge of the general trend of events. The number of spindles in use gives the best indication of the growth of cotton manufacturing. We have no trustworthy figures as to the number of spindles in the whole country ; but we have figures, collected by a competent and well-informed writer, in regard to Massachusetts. That State has always been the chief seat of the cotton manufacture, and its progress there doubtless indicates what took place in the country at large. The number of spindles in Massachu- ' Abbott Lawrence predicted in 1849 that " all this [a general crash] will take place in the space of eighteen months from the time this experimental bill goes into operation ; not a specie-paying bank doing business will be found in the United States." "Letters to Rives," p. 12. Appleton made a similar prediction in his " Review of Walker's Report," p. 28. THE TARIFF, 183O-1860. I4I setts, which was, in round numbers, 340,000 in 1831, had nearly doubled in 1840, was over 800,000 in 1845, a"d was over 1,600,000 in i860, having again nearly doubled during the period of low duties." The same signs of growth and prosperity are seen in the figures of the consumption of raw cotton in the United States, which, compiled independently, reach the same general result. Between the first half of the decade i840*-5o, and the second half of the decade 1850-60, the quantity of raw cotton used in the mills of the United States about doubled. The annual consumption, which had been about 150,000 bales in 1830, rose to an average of more than 300,000 bales in the early years of the next decade, and again to one of more than 600,000 bales in the years 1850-54. In the five years immediately preceding the civil war, the average annual consumption was about ' The following figures are given by Samuel Batchelder in a " Report to the Boston Board of Trade," made in i860 (published separately ; the essen- tial parts printed also in " Hunt's Merchants' Magazine," xlv., p. 14) : Spindles in Massachusetts : In 1S31 . . . 340,000 " 1840 . . . 624,500 (other sources make it 665,000). " 1845 . . . 817,500 " 1850 . . . 1,288,000 " 1855 . . . 1,519,500 " i860 . . . 1,688,500 For Ne-v England, and the United States as a whole, Batchelder gives the following figures, taken from De Bow, for the years 1840 and 1850. They are not entirely trustworthy, but may be accepted as roughly accurate. We add the census figures for i860 : Spindles in New England. United States. 1840 . . 1,597,000 . . 2,112,000 1850 . . 2,751,000 . . 3,634,000 i860 . . 3,859,000 , 5,236,000 142 THE TARIFF, 183O-1860. 800,000 bales. During these years the consumption of cotton in Great Britain seems to have increased at very nearly the same rate.' Such iigures indicate that the cotton manufacture was advancing rapidly and steadily. Another sign of its firm position is the steady increase during the same period in the exports of cotton goods, chiefly to China and the East. The value of the cotton goods exported averaged but little over $3,000,000 annu- ally between 1838 and 1843, rose to over $4,000,000 between 1844 and 1849, was nearly $7,000,000 a year between 185 1 and 1856, was over $8,000,000 in 1859, and almost touched $11,000,000 in i860. An industry which regularly exports a large part of its products can hardly be stimulated to any considerable extent by protective duties. No doubt, the absence of high duties had an effect on the range of the industry. It was confined mainly to the production of plain, cheap, staple cotton cloths, and was not extended to the making of finer and " fancy " goods. But, even under the high protective duties of the last twenty-five years, the bulk of the product has continued to be of the first mentioned kind, and cottons of that grade have been sold, quality for quality, at prices not above those of foreign goods ; while comparatively little progress has been made in the manu- facture of the finer grades." ' The reader is referred to the Appendix to the Quarterly Journal of Economics for April, 1888, for tables of the consumption of cotton and of fhe exports of cotton goods. ' Batchelder, who was a decided advocate of proctection, wrote in 1861 a THE TARIFF, 183O-1860. 1 43 The situation of the woollen manufacture differs in some important respects from that of the cotton manu- facture, most noticeably in that it is less favorable as regards the suppl}- of raw material. The maker of cot- ton goods is sure of securing at home cotton of the best quality at a price below that which his foreign rival must pay. But many qualities of wool cannot be produced to advantage in the United States ; while others cannot be grown at all, or at least, notwithstanding very heavy protective duties, never have been grown. Moreover, the raw material, when obtained, is neither so uniform in quality nor so well adapted to treatment by machin- ery as is the fibre of cotton. Wool is of the most diverse quality, varying from a fine silk-like fibre to a series of articles for the Boston Commercial Advertiser^ in which, after com- paring the prices and qualities of English and American shirtings, he said : " The inquiry may then be made, What occasion is there for a protective duty ? The answer is : There would be none in the ordinary course of busi- ness. But there are sometimes occasions when * * * there has been a great accumulation of goods in the hands of manufacturers abroad, so that, if crowded on their market, it would depress the price of the usual supply of their customers at home. On such occasions, our warehouse system af- fords the opportunity, at little expense, to send the goods here, where they may be ready to be thrown on the market to be sold," etc. In Ellison's " Handbook of the Cotton Trade," it is stated, at p. 29 ; " It is believed that, had it not been for the free-trade policy of Great Brit- ain, the manufacturing system of America would at the present time have been much more extensive than it is ; but the spinners and manufacturers of Lancashire can as yet successfully compete with those of Lowell, though for how long a time remains to be seen, for the latter are yearly gaining ex- perience and improving their machinery, s(? that before long they will be able to compete with the old country, more especially should the executive \sic\ abolish the present protective system adopted with respect to the im- port of cotton manufactures." This was written in 1858. 144 THE TARIFF, 183O-1860. coarse hairy one. A process of careful sorting by hand must therefore be gone through before manufacture can begin. In some branches of the industry the qualities of the fibre, and those of the goods which are to be made from it, call for more of manual labor, and admit in less degree of the use of machinery, than is the case with the cottons; and it is a familiar fact, though one of which the true meaning has not often been grasped, that a need of resorting to direct manual labor in large proportion and a difficulty in substituting machinery, constitute, under con- ditions of freedom, an obstacle to the profitable prosecu- tion of a branch of industry in the United States. But, on the other hand, certain qualities of wool are grown to advantage in the climate of this country and under its industrial conditions, especially strong merino wools of good though not fine grade, of comparatively short staple, adapted for the making of flannels, blankets, and substantial cloths. At the same time, machinery can be applied to making these fabrics with less difficulty than to the manufacture of some finer goods. Our information in regard to the history of the woollen manufacture is even more defective than that on iron and cottons. For the period between 1830 and 1840 we have no information that is worth any thing. In 1840 the in- dustry was confined to making satinets (a substantial, inexpensive cloth, not of fine quality), broadcloths, flan- nels, and blankets.' The tariff act of 1842 imposed on ' See a passage quoted from Wade's " Fibre and Fabric " in the Bureau of Statistics' "Report on Wool and Manufactures of Wool," 1887, p. xlvii. THE TARIFF, 183O-1860. I45 woollen goods a duty of 40 per cent., and on wool one of three cents a pound plus 30 per cent, on the value. It is said that during the four years in which these rates were in force a stimulus was giving to the making of finer qualities of broadcloths, the development being aided by evasions of the ad valorem duty on wool.' The act, however, did not remain in force long enough to make it clear what would have been its permanent effect on the woollen manufacture. Whatever may have been the start made in these few years in making finer woollens, this branch of the industry, as is generally admitted, well- nigh disappeared under the duties of 1846. The tariff of that year imposed a duty of 30 per cent, on woollen goods in general ; but flannels and worsteds were admitted at 25 per cent., and blankets at 20 per cent. On wool also the duty was 30 per cent. Under this arrangement of duties,— whether or not in consequence of it, — no development took place in those branches of the manu- facture which needed wool that was subject to the 30 per cent. duty. The finest grades of woollens were not made at all. But the manufacture of cloths of ordinary quality (so-called cassimeres and similar goods), and that of blankets and flannels, continued to show a regular growth. The census figures are not of much value as accurate statistics, but there seems to be no reason for doubting that they prove a steady advance in the woollen manufac- 'Grosvenor. "Does Protection Protect ?" p. 147; Introduction to the volume of the "Census of i860" on Manufactures, p. xxxiii. 146 THE TARIFF, J83O-1860. ture as a whole.' The growth was confined mostly to those branches which used domestic wool ; but within these there was not only increase, but development. The methods of manufacture were improved, better machinery was introduced, and new kinds of goods were made.° It is a striking fact that the very high protective duties which were imposed during the civil war, and were increased after its close, have not brought the manufacture of woollen cloths to a position substantially different from that which had been attained before i860. The descrip- tion of the industry which the spokesman of the Asso- ' The census figures on the woollen manufacture are ; Capital. Value of Product. Hands (In million dollars.) Employed. 1840 .... 15.7 20. 21,342 1850 .... 26.1 43.5 34,8g5 i860 .... 30,8 61.9 41,360 The figures for 1850 are exclusive of those relating to blankets ; for i860 are exclusive of those relating to worsteds. ' " Eighteen hundred and fifty saw the success of the Crompton loom at Lowell and Lawrence, on which were made a full line of Scotch plaids in all their beautiful colorings, as well as star twills, half-diamonds. * * * Up to that time fancy cassimeres had been made largely through the Blackstone Valley (in Rhode Island) on the Crompton and Tappet looms, as made by William Crompton. As early as 1846 the Jacquard was used at Woon- .socket and Blackstone. From 1850 to i860 fancy cassimeres made a rapid advance, and the styles ran to extremes far more than they have ever since." Wade's " Fibre and Fabric," as quoted above, p. xlviii. According to the official "Statistical Information Relating to Certain Branches of Industry in Massachusetts," 1855, at pp. 573-575, woollen goods were made in 1855 in that State as follows : Broadcloth to the value of % 838,000 Cas.simeres to the value of 5,015,000 Satinets to the value of 2,709,000 Flannels and blankets to the value of . . . 3,126,000 Woollen yarns to the value of 386,000 THE TARIFF, 183O-1860. I47 elation of Wool Manufacturers gave in -1884 is, in the main, applicable to its state in i860. " The woollen manu- facture of this country * * * is almost wholly absorbed in production for the masses. Nine tenths of our card-wool fabrics are made directly for the ready-made clothing establishments, by means of which most of the laboring people and all the boys are supplied with woollen gar- ments. The manufacture of flannels, blankets, and ordi- nary knit goods — pure necessaries of life — occupies most of the other mills engaged in working up carded wool." ' Some outlying branches of the woollen manufacture, however, showed a striking advance during the period we are considering. The most noteworthy of these is the carpet manufacture, which received a great impetus from the application of newly-invented machinery. The power- loom for weaving ingrain carpets was invented in 1841 by Mr. E. B. Bigelow, and the more complicated loom for weaving Brussels carpets was first perfected by the same inventive genius in 1848.'' The new machinery at ' Mr. John L. Hayes, in the " Bulletin of the Association of Wool Manu- facturers," vol. xiv., p. n6. Mr. Hayes also states the woollen maiiutaclu re to be " capable of producing commodities of the highest luxury, — rich car- pets, fine upholsteries, and superfine broadcloths " ; but his description of other branches of the industry is similar to that quoted in the text on card- wool goods. " The dress goods manufactured are fabricates almost exclu- sively for the million, the women of the exclusive and fashionable classes supplying themselves mainly through French importations. The vast car- pet manufacture of Philadelphia, larger than in any city of Europe, has its chief occupation in furnishing carpets for the more modest houses." 'See the sketch of Mr. Bigelmv's career up to 1854, in " Hunt's Mer- chants Magazine," xxx., \i\i. 162 170. 148 THE TARIFF, 183O-I860. once put the manufacture of carpets on a firm basis ; and in its most important branclies, the manufacture of ingrain and Brussels carpets, it became independent of aid from protective duties. A similar development took place in the manufacture of woollen hose. The knitting-frame had been invented in England as early as the sixteenth century, but had been worked only by hand. It was first adapted to machinery in the United States in 1831, and was first worked by machinery at Cohoes in New York in 1832. Other inventions followed ; and a prosperous in- dustry developed, which supplied the entire domestic market, and was independent of protective duties.' On the other hand, hardly more than a beginning was made before the civil war in the manufacture of worsted goods. In i860 there were no more than three consider- able factories engaged in making worsteds, and the im- ports largely exceeded the domestic product.'' Some ex- 'See the account of the history of the manufacture of knit goods in the "Census of i860," volume on Manufactures, pp. xxxix.-xlv. Compare the brief sketch by John L. Hayes in his address on " Protection a Boon to Con- sumers " (Boston, 1S67), pp. g-ii. No attempt had been made before i860, in the United States or elsewhere, to make knit goods of cotton. -See the Introduction to the volume on Manufactures, "Census of i860," pp. xxxvi.-xxxix. From the figures of production in the "Census of i860," and from those of imports in the " Report on Commerce and Navigation " for the fiscal year 1859-60, we have the materials for a comparison of the domestic and the foreign supply of the most important kinds of woollen goods. The figures are : Production, Imports, i860. 1859-60. Woollens generally (including flannels, but not blankets, shawls, or yarns) . . . $43,500,000 $13,350,000 Carpets 7,860,000 2,200,000 .Vorsteds ....... 3,700,000 12,300,000 THE TARIFF, 183O-1860. I49 planation of this state of things may be found in the com- paratively low duty of 25 per cent, on worsteds under the tariff of 1846. Something was due to the fact that the worsted industry in England not only was long estab- lished, but was steadily improving its methods and ma- chinery. But the most important cause, doubtless, was the duty of 30 per cent, on the long-staple combing wool, which then was needed for making worsted goods, and which physical causes have prevented from being grown to any large extent in the United States. The greatest difference between the woollen industry as it stands to-day and as it stood before i860 is in the large worsted manufacture of the present, which has grown up almost entirely since the wool and woollens act of 1867. The high duties undoubtedly have been a cause of this development, or at least were so in the beginning; but a further and important cause has been the great im- provement in combing machinery, which has rendered it possible to make so-called worsted goods from almost any grade of wool, and has largely done away with the dis- tinction between woollen and worsted goods. The result has been that the worsted makers, as well as the makers of woollens, have been able to use domestic wool ; and it is in the production of goods made of such wool that the greatest growth of recent years has taken place. The tariff act of 1857 reduced the duty on woollens to 24 per cent., but much more than made up for this by admitting wool practically free of duty. Wool costing 150 THE TARIFF, 183O-1860. less than twenty cents at the place of exportation was ad iTiitted free, which amounted in effect to the exemption of almost all wool from duty. Moreover, dyestuffs and other materials were admitted free or at low rates. The free admission of wool from Canada, under the reciprocity treaty of 1854, had already been in force for three years.' The remission of duties on these materials explains the willingness with which the manufacturers in general ac- ceded to the rearrangement of rates in 1857. In i860, when the beginnings were made in re-imposing higher protective duties, it was admitted that no demand for such a change came from manufacturers." The only ex- ception was in the case of the iron-makers of Pennsyl- vania, who did not share in the benefits of the free list, ' Large quantities of combing wool were imported from Canada under the reciprocity treaty, and were used in making worsteds and carpets." In 1866, when the treaty was terminated, and high duties had been im- posed on wool in general, the manufacturers pleaded hard for the con- tinued free admission of Canada wool, though they were active in securing the general high duties of 1867 on wool and woollens. But they did not succeed in getting the Canada wools free. See the " Statement of Facts Relative to Canada Wools and the Manufacture of Worsteds," made by the National Association of Wool Manufacturers, Boston, 1866. " Senator Hunter, who had been most active in bringing about the pas- sage of the act of 1857, said, during the debate on the Morrill bill of l86o. " Have any of the manufacturers come here to complain or to ask for new duties ? If they have, I am not aware of it, with the exception, perhaps, of a petition or two presented early in the session by the Senator from Con- necticut. Is it not notorious that if we were to leave it to the manufacturers of New England themselves, to the manufacturers of hardware, textile fabrics, etc., there would be a large majority against any change? Do we not know that the woollen manufacture dales its revival from the tariff of 1857, which altered the duties on wool?" " Congressional Globe," 1859 -60, p. 301. Cp. the note to p. 160, below. THE TARIFF, 183O-I860. 151. and who opposed the reduction of 1857. So far as the manufacture of woollen goods was concerned, the changes of 1857, as might have been expected, served to stimulate the industry; and it grew and prospered during the years immediately preceding the civil war. A remission of duty on materials obviously operates in the first instance mainly to the advantage of producers and middle-men, and brings benefit to consumers only by a more or less gradual process. The experiment of free wool, with a moderate duty on woollens, was not tried long enough to make certain what would be its final re- sults. It is not impossible that, as is often asserted by the opponents of duties on wool, the free admission of that material would have led in time to a more varied development of the woollen manufacture. On the other hand, it may be, in the case of woollens as in that of cot- tons, that the conditions in the United States are less favorable for making the finer qualities than for making those cheaper qualities to which the application of ma- chinery is possible in greater degree, and for which, at the same time, the domestic wool is an excellent material. The test of experience under conditions of freedom could alone decide what are the real causes of the comparatively limited range of both of the great textile industries; but it is not improbable that general causes like those just mentioned, rather than the hampering of the supply of wool, account for the condition of the woollen manufac- ture. However that may be, it seems certain that the 152 THE TARIFF, 183O-1860. practical remission of duty in 1857, whether or no it would in the long run have caused a wide development of the woollen manufacture, gav6 it for the time being a distinct stimulus ; it seems to have had but little, if any, effect on the prices of domestic wool ' ; and it must have tended at the least to cheapen for the consumer goods made in whole or in part of foreign wool. It would be possible to extend this inquiry farther,'' but enough has been said for the present purpose. In the main, the changes in duties have had much less effect on the protected industries than is generally supposed. Their growth has been steady and continuous, and seems to have been little stimulated by the high duties of 1842, and little checked by the more moderate duties of 1846 and 1857. Probably the duties of the last-mentioned years, while on their face protective duties, did not have in any important degree the effect of stimulating indus- ' The price per pound of medium wool, averaged from quarterly quota- tions, was : In 1852 " 1853 " 1854 •' 1855 The prices of other grades moved similarly. The panic of 1857 caused a fall in 1858, but in the following year the old level was recovered. The figures are based on the tables of wool prices in the Bureau of Statistics' " Report on Wool and Manufactures of Wool," 1887, p. 109. The move- ment of wool prices abroad during these years seems to have been about the same. '-' In the Introduction to the volume on Manufactures of the " Census of i860," to which reference has been made before, there is a useful sketch of the history of various branches of manufacture up to that date. cts. cts. 38i In 1856 45 53 " 1857 46 42i "1858 36 38 " 1859 47 " i860 • 47^ THE TARIFF, 183O-1860. 153 tries that could not have maintained themselves under freedom of trade. They did not operate as strictly pro- tective duties, and did not bring that extra tax on con- sumers which is the peculiar effect of protective duties. The only industry which presents a marked exception to these general conditions is the manufacture of the cruder forms of iron. In that industry, the conditions of pro- duction in the eastern part of the United States were such that the protective duties of 1842 caused a return to old processes, and an enhanced price to the coun- try without a corresponding gain to producers. Even under the rates of 1846 and after the use of anthracite coal, the same effect can be seen, though in less degree. We often hear it said that any considerable reduction from the scale of duties in the present tariff, whose char- acter and history will be considered in the following pages, would bring about the disappearance of manufacturing industries, or at least a disastrous check to their develop- ment. But the experience of the period before i860 shows that predictions of this sort have little warrant. At present, as before i860, the great textile manufactures are not dependent to any great extent on protective duties of the kind now imposed. The direction of their growth has been somewhat affected by these duties, yet in a less degree than might have been expected. It is striking that both under the system of high protection which has been maintained since the civil war, and under the more moderate system that preceded it, the cotton 154 THE TARIFF, 183O-1860. and woollen industries have been kept in the main to those goods of common use and large consumption to which the economic conditions of the United States might be expected to lead them. The same would doubtless be found to be true of other branches of manu- facture. In some cases, no doubt, their growth has been stimulated beyond the point at which they could maintain themselves under conditions of free- dom. The making of pig-iron in the eastern part of the United States now presents in some degree the case of an industry dependent on a protective duty. Yet the bulk even of the manufacture of crude iron would not be likely to disappear under duties much lower than the pre- sent, or even in entire absence of duties. In general, the extent to which mechanical branches of production have been brought into existence and maintained by the pro- tective system is greatly exaggerated by its advocates ; and even the character and direction of their development have been influenced less than, on grounds of general reasoning, might have been expected. THE HISTORY OF THE EXISTING TARIFF. CHAPTER I. THE WAR TARIFF. Every one has heard of our " war tariff " and of our " war taxes." Every one knows that our tariff is con- nected in some way with the series of extraordinary finan- cial measures which the Rebellion called out. But few have any exact knowledge of the extent to which our ex- treme protective system is due to the war. An account of the way in which the tariff was put into its present shape will show how the exigencies of the Civil War caused duties to be greatly increased ; how these high duties were retained and even increased in an unexpected and indefensible way ; and how the tariff, as it now stands, is still, in the main, a product of war legislation. A history of the existing tariff is simply a history of the way in which the war duties were retained, increased, and systematized, and of the half-hearted and unsuccessful attempts at reduction and reform which have been made from time to time. 155' 156 HISTORY OF THE EXISTING TARIFF, Before the war we had a tariff of duties which, thpugh The tariff '^°'- arranged completely or consistently on the before the principles of free trade, was yet very moderate in comparison with the existing system. For about fifteen years before the Rebellion began, duties on imports were fixed by the acts of 1846 and 1857. The act of 1846 had been passed by the Democratic party with the avowed intention of putting into oper- ation, as far as was possible, the principles of free trade. This intention, it is true, was by no means car- ried out consistently. Purely revenue articles, like tea and coffee, were admitted free of duty; and on the other hand, articles like iron and manufactures of iron, cotton goods, wool, and woollen goods, — in fact most of the im- portant articles with which the protective controversy has been concerned, — were charged with a duty of thirty per cent. Other articles again, like steel, copper, lead, were admitted at a lower duty than this, not for any reasons of revenue, but because they were not then produced to any extent within the country, and because protection for them in consequence was not asked. Protection was by no means absent from the act of 1846 ; and the rate of thirty per cent., which it imposed on the leading articles, would be supposed, in almost any civilized country, to give even a high degree of protection. Nevertheless, the tariff of 1846 was, in comparison with the present tariff, a moderate measure ; and a return to its rates would now be considered a great step of reform by those who are op- THE WAR TARIFF. 1 57 posed to protective duties. The act of 1857 took away still more from the restrictive character of our tariff legis- lation. Congress, it may be remarked, acted in 1857 with reasonable soberness and impartiality, and without being influenced by political considerations. The maximum protective duty was reduced to twenty-four per cent. ; many raw materials were admitted free ; and the level of duties on the whole line of manufactured articles was brought down to the lowest point which has been reached in this country since 181 5. It is not likely we shall see, for a great many years to come, a nearer approach to the free-trade ideal. The country accepted the tariff acts of 1846 and 1857, and was satisfied with them. Except in the years imme- diately following the passage of the former act, when there was some attempt to induce a return to a more rigid protective system, agitation on the tariff ceased almost entirely. There is no doubt that the period from 1846 to i860 was a time of great material prosperity, in- terrupted, but not checked, by the crisis of 1857. It would be going too far to assert that this general pros- perity was due chiefly to the liberal character of the tariff. Other causes exercised a great and perhaps a predominant 1 influence. But the moderate tariff undoubtedly was one of the elements that contributed to the general welfare. It may be well to add that prosperity was not confined to any part of the country, or to any branches of industry. Manufactures in general continued to flourish ; and the 158 HISTORY OF THE EXISTING TARIFF. reduction of duties which was made in 1857 had the con- sent and approbation of the main body of the manufac- turing class. The crisis of 1857 had caused a falHng off in the reve- nue from duties. This was made the occasion for a reac- tion from the Hberal poHcy of 1846 and 1857. In 1861 the Morrill tariff act began a change toward a higher range of duties and a stronger application of protection. The Morrill act is often spoken of as if it were the basis of the present protective system. But this is by no means the The Morrill '^'^se. The tariff act of 1861 was passed by the tariff act House of Representatives in the session of 1859-60, the session preceding the election of President Lincoln. It was passed, undoubtedly, with the intention of attracting to the Republican party, at the approaching Presidential election, votes in Penn- sylvania and other States that had protectionist lean- ings. In the Senate the tariff bill was not taken up in the same session in which it was passed in the House. Its consideration was postponed, and it was not until the next session — that of 1860-61 — that it received the assent of the Senate and became law. It is clear that the Morrill tariff was carried in the House before any serious expectation of war was entertained ; and it was accepted by the Senate in the session of 1861 without material change. It therefore forms no part of the finan- cial legislation of the war, which gave rise in time to a series of measures that entirely superseded the Morrill THE WAR TARIFF. I 59 tariff. Indeed, Mr. Morrill and the other supporters of the act of 1861 declared that their intention was simply to restore the rates of 1846. The important change which they proposed to make from the provisions of the tariff of 1846 was to substitute specific for ad-valorem duties. Such a change from ad-valorem to specific duties is in itself by no means objectionable ; but it has usually been made a pretext on the part of protectionists for a considerable increase in the actual duties paid. When protectionists make a change of this kind, they almost invariably make the specific duties higher than the ad-valorem duties for which they are supposed to be an equivalent, — a circumstance which has given rise to the common notion, of course unfounded, that there is some essential connection between free trade and ad-valorem. duties on the one hand, and between protection and specific duties on the other hand. The Morrill tariff formed no exception to the usual course of things in this respect. The specific duties which it established were in many cases considerably above the ad-valorem duties of 1846. The most important direct changes made by the act of 1861 were in the increased duties on iron and on wool, by which it was hoped to attach to the Republican party Pennsylvania and some of the Western States. Most of the manufacturing States at this time still stood aloof from the movement toward higher rates.' ' Mr. Rice, of Massachusetts, said in i860 : " The manufacturer asks no additional protection. He has learned, among other things, that the great- l6o HISTORY OF THE EXISTING TARIFF. Hardly had the Morrill tariff act been passed when Fort Sumter was fired on. The Civil War began. The need of additional revenue for carrying on the great strug- gle was immediately felt ; and as early as the extra session of the summer of 1861, additional customs duties were imposed. In the next regular session, in December, 1861, a still further increase of duties was made. From that time till 1865 no session, indeed, hardly a month of any session, passed in which some increase of duties on im- ports was not made. During the four years of the war every resource was strained for carrying on the great struggle. Probably no country has seen, in so short a time, so extraordinary a mass of financial legislation. A huge national debt was accumulated ; the mischievous expedient of an inconvertible paper currency was resorted to ; a national banking system unexpectedly arose from the confusion ; an enormous system of internal taxation was created ; the duties on imports were vastly increased and extended. We are concerned here only with the change in the tariff ; yet it must be borne in mind that est evil, next to a ruinous competition from foreign sources, is an excessive protection, which stimulates a like ruinous and irresponsible competition at home," — Congress. Globe, 1859-60, p. 1867. Mr. Sherman said: "When Mr. Stanton says the manufacturers are urging and pressing this bill, he says what he must certainly know is not correct. The manufacturers have asked over and over again to be let alone. The tariff of 1857 is the manu- facturers' bill ; but the present bill is more beneficial to the agricultural in- terest than the tariff of 1857." — Ibid., p. 2053. Cf. Hunter's Speech, Ibid,, p. 3010. In later years Mr. Morrill himself said that the tariff of 1861 " was not asked for, and but coldly welcomed, by manufacturers, who always and justly fear instability." — Congr, Globe, 1869-70, p. 3295. THE WAR TARIFF. l6l these changes were only a part of the great financial meas- ures which the war called out. Indeed, it is impossible to understand the' meaning of the changes which were made in the tariff without a knowledge of the other legislation that accompanied it, and more especially of the extended system of internal taxation which was adopted at the same time. To go through the various acts for levying internal taxes and imposing duties on imports is not neces- sary in order to make clear the character and bearing of the legislation of the war. It will be enough to describe those that are typical and important. The great acts of 1862 and 1864 are typical of the whole course of the war measures; and the latter is of particular importance, because it became the foundation of the existing tariff system. It was not until 1862 that the country began to appre- ciate how great must be the efforts necessary to suppress the Rebellion, and that Congress set to work in earnest to provide the means for that purpose. Even in 1862 Con- gress relied more on selling bonds and on issuing paper- money than on immediate taxation. But xaxand two vigorous measures were resorted to for tariff acts of taxing the people immediately and directly. The first of these was the internal revenue act of July I, 1862. This established a comprehensive system of excise taxation. Specific taxes were imposed on the production of iron and steel, coal-oil, paper, leather, and other articles. A general ad-valorem tax was 1^2 HISTORY OF THE EXISTING TARIFF. imposed on other manufactures. In addition, licenses were required in many callings. A general income tax was imposed. Railroad companies, steamboats, express companies were made to pay taxes on their gross receipts. Those who have grown to manhood within the last fifteen years find it difficult to imagine the existence and to ap- preciate the burden of this heavy and vexatious mass of taxation ; for it was entirely swept away within a few years after the end of the war. The second great measure of taxation to which Con- gress turned at this time was the tariff act of July 14, 1862. The object of this act, as was stated by Messrs. Morrill and Stevens, who had charge of its passage in the House, was primarily to increase duties only to such an extent as might be necessary in order to offset the inter- nal taxes of the act of July 1st.' But although this was the chief object of the act, protective intentions were enter- tained by those who framed it, and were carried out. Both Messrs. Morrill and Stevens were avowed protec- tionists, and did not conceal that they meant in many cases to help the home producer. The increase of duties on articles which were made in this country was therefore, ' Mr. Moirill said, in his speech introducing the tariff bill : "It will be ' indispensable for us to revise the tariff on foreign imports, so far as it may be seriously disturbed by any internal duties, and to make proper repara- tion. * * * If Yi^e bleed manufacturers, we must see to it that the proper tonic is administered at the same time." — Congr. Globe, 1861-62, p. 1 196. Similarly Mr. Stevens said : "We intended to impose an additional duty on imports equal to the lax which had been put on the domestic articles. It was done by way of compensation to domestic manufacturers against foreign importers." — Ibid., p. 2979. THE WAR TARIFF. 163 in all cases, at least sufficient to afford the domestic pro- ducers compensation for the internal taxes which they had to pay. In many cases it was more than sufficient for this purpose, and brought about a distinct increase of protec- tion. Had not the internal revenue act been passed, affording a good reason for some increase of duties ; had not the higher taxation of purely revenue articles, like tea and coffee, been a justifiable and necessary expedient for increasing the government income ; had not the increase even of protective duties been quite defensible as a temporary means for the same end ; had not the general feeling been in favor of vigorous measures for raising the revenue; — had these conditions not existed, it would have been very difficult to carry through Congress a measure like the tariff of 1862. But, as matters stood, the tariff was easily passed. Under cover of the need of revenue and of the intention to prevent domestic producers from being unfairly handicapped by the internal taxes, a clear increase of protection was in many cases brought about. The war went on ; still more revenue was needed. Gradually Congress became convinced of the necessity of resorting to still heavier taxation, and of the willingness of the country to pay all that was necessary to maintain the Union. Passing over less important acts, we have to consider the great measure that was the climax of the financial legislation of the war. The three revenue acts of June 30, 1864, practically form one measure, and that probably the greatest measure of taxation which the 164 HISTORY OF THE EXISTING TARIFF. world has seen. The first of the acts provided for an enormous extension of the internal-tax system ; the second for a corresponding increase of the duties on im- ports ; the third authorized a loan of $400,000,000. The internal revenue act was arranged, as Mr. David Internal ^- Wells has said, on the principle of the revenue act, Irishman at Donnybrook fair; "Whenever you see a head, hit it ; whenever you see a com- modity, tax it." Every thing was taxed, and taxed heavily. Every ton of pig-iron produced was charged two dollars ; every ton of railroad iron three dollars ; sugar paid two cents a pound ; salt, six cents a hundred-weight. The general tax on all manufactures produced was five per cent. But this tax was repeated on almost every article in different stages of production. Raw cotton, for instance, was taxed two cents a pound ; as cloth, it again paid five per cent. Mr. Wells estimates that the govern- ment in fact collected between eight and fifteen per cent, on every finished product. Taxes on the gross receipts of railroad, steamboat, telegraph, express, and insurance companies were levied, or were increased where already in existence. The license-tax system was extended to almost every conceivable branch of trade. The income tax was raised to five per cent, on moderate incomes, and to ten per cent, on incomes of more than $10,000. Tariff act of The tariff act of 1864, passed at the same time 1864. with the internal revenue act, also brought about a great increase in the rates of taxation. Like the tariff act THE WAR TARIFF. 165 of 1862, that of 1864 was introduced, explained, amended, and passed under the management of Mr. Morrill, who was Chairman of the Committee on Ways and Means. That gentleman again stated, as he had done in 1862, that the passage of the tariff act was rendered necessary in order to put domestic producers in the same situation, so far as foreign competition was concerned, as if the internal taxes had not been raised. This was one great object of the new tariff ; and it may have been a good reason for bring- ing forward some measure of the kind. But it explains only in part the measure which in fact was proposed and passed. The tariff of 1864 was a characteristic result of that veritable furor of taxation which had become fixed in the minds of the men who were then managing the national finances. Mr. Morrill, and those who with him made our revenue laws, seem to have had but one princi- ple : to tax every possible article indiscriminately, and to tax it at the highest rates that any one had the courage to suggest. They carried this method out to its fullest extent in the tariff act of 1864, as well as in the tax act of that year. At the same time these statesmen were pro- tectionists, and did not attempt to conceal their protec- tionist leanings. What between their willingness to make every tax and duty as high as possible for the sake of raising revenue, and their belief that high import duties were beneficial to the country, the protectionists had an opportunity such as the country has never before given them. It would be unfair to say that Mr. Morrill, Mr, 1 66 HISTORY OF THE EXISTING TARIFF. Stevens, and the other gentlemen who shaped the revenue laws, consciously used the urgent need of money for the war as a means of carrying out their protectionist theories, or of promoting, through high duties, private ends for themselves or others. But it is certain that their method of treating the revenue problems resulted in a most unex- pected and extravagant application of protection, and moreover, made possible a subservience of the public needs to the private gains of individuals such as unfortunately made its appearance in many other branches of the war administration. Every domestic producer who came be- fore Congress got what he wanted in the way of duties. Protection ran riot ; and this, moreover, not merely for the time being. The whole tone of the public mind toward the question of import duties became distorted. Not only during the war, but for several years after it, all feeling of opposition to high import duties almost entirely disappeared. The habit of putting on as high rates as any one asked had become so strong that it could hardly be shaken off ; and even after the war, almost any increase of duties demanded by domestic producers was readily made. The war had in many ways a bracing and enno- bling influence on our national life; but its immediate effect on business affairs, and on all legislation affecting moneyed interests, was demoralizing. The line between public duty and private interests was often lost sight of by legislators. Great fortunes were made by changes in legislation urged and brought about by those who were THE WAR TARIFF. 167 benefited by them ; and the country has seen with sorrow that the honor and honesty of pubHc men did not remain undefiled. The tariff, like other legislation on matters of finance, was affected by these causes. Schemes for money- making were incorporated in it, and were hardly ques- tioned by Congress. When more enlightened and unselfish views began to make their way, and protests were made against the abuses and excessive duties of the war period, these had obtained, as we shall see, too strong a hold to be easily shaken off. Such were the conditions under which the tariff act of 1864 was passed. As in 1862, three causes were at work: in the first place, the urgent need of revenue for the war ; in the next, the wish to offset the internal taxes imposed on domestic producers ; and finally, the protectionist leanings of those who managed our financial legislation. These causes made possible a tariff act which in ordinary times would have been summarily rejected. It raised duties greatly and indiscriminately, — so much so, that the average rate on dutiable commodities, which had been 37.2 per cent, under the act of 1862, became 47.06 per cent, under that of 1864. It was in many ways crude and ill-considered ; it established protective duties more extreme than had been ventured on in any previous tariff act in our country's history ; it contained flagrant abuses, in the shape of duties whose chief effect was to bring money into the pockets of private individuals. Nothing more clearly illustrates the character of thjs l68 HISTORY OF THE EXISTING TARIFF. piece of legislation, and the circumstances which made its enactment a possibility, than the public history of its passage through Congress. The bill was introduced into the House on June 2d by Mr. Morrill. General debate on it was stopped after one day. The House then pro- ceeded to the consideration of amendments. Almost without exception amendments offered by Mr. Morrill were adopted, and all others were rejected. After two days had been given in this way to the amendments, the House, on June 4th, passed the bill. In the Senate much the same course was followed. The consideration of the bill began on June i6th; it was passed on the following day. That is to say, five days in all were given by the two houses to this act, which was in its effects one of the most important financial measures ever passed in the United States. The bill was accepted as it came from the Committee on Ways and Means, and was passed practi- cally without debate or examination. No pretence could be made of any detailed or effective criticism by Congress. The necessity of the situation, the critical state of the country, the urgent need of revenue, may have justified this haste, which, it is safe to say, is unexampled in the The tariff history of civilized countries. But surely there of 1864 is the can be no excuse for making a measure passed basis of . , . 1 1 , the existing ^"^ *''^'^ manner and under these circumstances tariff. the foundation of the permanent economic policy of an enlightened people. And yet this has been the case, and it is the central point in the his- THE WAR TARIFF. 1 69 tory of tariff legislation of the last twenty-five- years. The tariff act of 1864 is the basis of the existing sys- tem of import duties. Great changes have indeed been made since the war, as will be seen in the following chapters. But on almost all the articles with which the protective controversy is concerned, rates are still those of the tariff act of 1864. This is said without taking into account the last tariff act, that of 1883; and it will be seen at a subsequent point that the changes made by the act of 1883 were not of sufficient importance to affect the substantial correctness of the general statement. In re- gard to the duties as they stood before 1883, it is literally true, in regard to almost all protected articles, that the tariff act of 1864 remained in force for twenty years with- out reductions. Any one who will glance over the margin of those sections of the Revised Statutes of the United States which refer to the tariff, can' see how large a pro- portion of the rates there enumerated date from the year 1864; and if he notes the occasional protective duties set down in the Revised Statutes as having been fixed by acts passed later than 1864, he will find that these almost invariably show, not a reduction, but an increase over the rates of the war tariff. ' ' In Heyl's " Import Duties " the reader will find the act of 1864 printed in full, those parts which are no longer in force being distinguished by small type, and he will be surprised to find '(in any edition before 1883, how few sections of the act are set down as obsolete. See, e.g., edition of 1879, pp. 57-73- It should be said that the act of 1864 was not in form a general act, repealing all previous enactments. It left in force, for instance, all pro- I70 ■ HISTORY OF THE EXISTING TARIFF. How this maintenance of the war duties came about, will be the subject of the following chapters. visions of the Morrill act of 1861 and of the tariff act of 1862 which were not expressly changed by it. But it afEected so completely and with so few exceptions the whole range of import duties, and especially the protective duties, that it was practically a new general tariff. CHAPTER II. THE FAILURE TO REDUCE THE TARIFF AFTER THE WAR. When the war closed, the revenue acts which had been hastily passed during its course constituted a chaotic mass. Congress and the Secretary of the Treasury immediately set to work to bring some order into this chaos, by fund- ing and consolidating the debt, by contracting the paper currency, and by reforming and reducing the internal taxes."- The years between 1865 and 1870 are full of dis- cussions and enactments on taxation and finance. On some parts of the financial system, in regard to which there was little disagreement, action was prompt and salutary. The complicated mass of internal taxes was felt to be an evil by all. It bore heavily and vexatiously on the people ; and Congress proceeded to sweep it away with all possible speed. As soon as the immense floating debt had been funded, and the extent of the ' Those who wish to get some knowledge of the confused character of the financial legislation called out by the war, are referred to Mr. David A. Wells's excellent essay on "The Recent Financial Experiences of the United States " (1872). Those who wish to study more in detail the course of events after the war should read Mr. Wells's reports as Commissioner of the Revenue, of 1867, 1868, 1869, and 1870. 171 172 HISTORY OF THE EXISTING TARIFF. annual needs of the government became somewhat clear, Congress set to work at repealing and modifying the excise laws. It is not necessary to enumerate the various steps by which the internal-tax system was modi- Abolition of the fied. Year after year acts for reducing and internal taxes ^^jQjjgjjjjjg internal taxes were passed. By 1872 1866-1872. all those which had any connection with the subject of our investigation — the protective duties — ■ had disappeared.' The taxes on spirits and beer, those on banks, and a few comparatively unimportant taxes on matches, patent medicines, and other articles were retained. But all those taxes which bore heavily on the productive resources of the country — those taxes in compensation for which higher duties had been im- posed in 1862 and 1864 — were entirely abolished. Step by step with this removal of the internal taxes, a reduction of import duties should have taken place ; at the least, a reduction which would have taken off those additional duties that had been put on in order to offset the internal taxes. This, however, Congress hesitated to undertake. We have seen in the preceding chapter that the opportunity given by the war system of taxation was seized by the protectionists in order to carry out their wishes. It would not be easy to say whether at the time the public men who carried out this legislation meant the new system of import duties to be permanent. Certainly the war methods of finance as a whole were not meant to ' The most important acts for reducing the internal taxes were those of July II, 1866 ; March 2, 1867; March 31, 1868 ; July 14, 1870 ; Jane 6, 1872. REDUCTION OF THE TARIFF. 1 73 remain in force for an unlimited time. Some parts of the tariff were beyond doubt intended to be merely tem- porary ; and the reasonable expectation was that the pro- tective duties would sooner or later be overhauled and reduced. Had the question been directly put to almost any public man, whether the tariff system of the war was to be continued, the answer would certainly have been in the negative, — that in due time the import duties were to be lowered.' During the years of confusion immediately after the war little was attempted ; but soon a disposition to affect some reform in the incongruous mass of duties began to be shown. Each year schemes for reduction and reform were brought forward. Commissions were ap- pointed, bills were elaborated and considered ; but the reform was put off from year to year. The pressure from the interested domestic producers was strong ; the power of the lobby was great ; the overshadowing problem of reconstruction absorbed the energies of Congress. Gradu- ' As late as 1870, Mr. Morrill said : " For revenue purposes, and not solely for protection, fifty per cent, in many instances has been added to the tariff [during the war] to enable our home trade to bear the new but indis- pensable burdens of internal taxation. Already we have relinquished most of such taxes. So far, then, as protection is concerned * * * -j^re might safely remit a percentage of the tariff on a considerable share of our foreign importations. * * * It is amistake of the fiiends of a sound tariff^ to insist on the extreme rates imposed dttritig the war, if less will raise the necessary revenue. * * * Whatever percentage of duties was imposed on foreign goods to cover internal taxation on home manufactures, should not now be claimed as the lawful prize of protection, when such taxes have been repealed. There is no longer an equivalent." — Congress. Globe, 1869- 70, p. 3295. These passages occur at the end of a long speech in favor of the principle of protection. 174 HISTORY OF THE EXISTING TARIFF. ally, as the organization of industry in the country adapted itself more closely to the tariff as it was, the feel- ing that no reform was needed obtained a strong hold. Many industries had grown up, or had been greatly extended, under the influence of the war legislation. As that legis- lation continued unchanged, still more capital was em- barked in establishments whose existence or prosperity was in some degree dependent on its maintenance. All who were connected with establishments of this kind asserted that they would be ruined by any change. The business world in general tends to be favorable to the maintenance of things as they are. The country at large, and especially those parts of it in which the protected industries were concentrated, began to look on the existing state of things as permanent. The extreme protective system, which had been at the first a temporary expedient for aiding in the struggle for the Union, adopted hastily and without any thought of deliberation, gradually became accepted as a permanent institution. From this it was a short step, in order to explain and justify the existing state of things, to set up high protection as a theory and a dogma. The restraint of trade with foreign countries, by means of import duties of forty, fifty, sixty, even a hundred per cent., came to be advocated as a good thing in itself by many who, under normal circumstances, would have thought such a policy preposterous. Ideas of this kind were no longer the exploded errors of a small school of economists ; they became the foundation of the policy REDUCTION OF THE TARIFF. 1 75 of a great people. Then the mass of restrictive legislation which had been hurriedly piled up during the war, was strengthened and completed, and made into a firm and consistent edifice. On purely revenue articles, such as are not produced at all in the country, the duties were al most entirely abolished. A few raw materials, if is true, were admitted at low rates, or entirely free of duty. But these were exceptions, made apparently by accident. As a rule, the duties on articles produced in the country, that is, the protective duties, were retained at the war figures, or raised above them. The result was that the tariff gradually became exclusively and distinctly a protective measure ; it included almost all the protective duties put on during the war, added many more to them, and no longer contained the purely revenue duties of the war. We turn now to a somewhat more detailed account of the process by which the reform of the tariff was pre- vented. To give a complete account of the various tariff acts which were passed, or of the tariff bills which were pressed without success, is needless. Every session of Congress had its array of tariff acts and tariff bills ; and we may content ourselves with an account of those which are typical of the general course of events. Of the at- tempts at reform which were made in the years imme- diately after the war, the fate of the tariff unsuccessful bills of 1867 is characteristic. Two proposals tariff bill were then before Congress : one a bill passed by the House at the previous session ; the other a bill 176 HISTORY OF THE EXISTING TARIFF. prepared by Mr. David A. Wells, then Special Com- missioner of the Revenue, and heartily approved by Secretary McCulloch. The great rise in prices and in money wages in these years, and the industrial embar- rassment which followed the war, had caused a demand for still higher import duties; the House bill had been framed to answer this demand, and proposed a general increase. Mr. Wells recommended a different policy. He had not then become convinced of the truth of the principles of free trade ; but he had clearly seen that the indiscriminate protection which the war tariff gave, and which the House bill proposed to augment, could not be beneficial. His bill reduced duties on raw materials, such as scrap-iron, coal, lumber, hemp, and flax ; and it either maintained without change or slightly lowered the duties on most manufactured articles. A careful rearrangement was at the same time made in the rates on spices, chemi- cals, dyes, and dye-woods, — articles of which a careful and detailed examination is necessary for the determina- tion of duties, and in regard to which the tariff contained then, as it does now, much that was arbitrary and inde- fensible. Mr. Wells's bill, making these reforms, gained the day over the less liberal House bill. It was passed by the Senate, as an amendment to the House bill, by a large majority (27 to 10). In the House there was also a ma- jority in its favor; but unfortunately a two-thirds majori- ty was necessary in order to suspend the rules and bring it before the House. The vote was 106 to 64 in favor of REDUCTION OF THE TARTFF. lyj the bill ; the two-thirds majority was not obtained, and it failed to become law. The result was not only that no general tariff bill was passed at this session, but the course of tariff reform for the future received a regrettable check. Had Mr. Wells's proposals been enacted, it is not unlikely that the events of the next few years would have been very different from what in fact they were. It would be too much to say that these proposals looked forward to still further steps in the way of moderating the protective system, or that their favorable reception showed any dis- tinct tendency against protection. There was at that time no free-trade feeling at all, and Mr. Wells's bill was simply a reform measure from the protectionist point of view. But the vote on it is nevertheless significant of the fact that the extreme and uncompromising protective spirit was not then all-powerful. The bill, it is true, had been modified in a protectionist direction in various ways before it came to be voted on ; but the essential reductions and reforms were still contained in it and the votes show that the protectionist feeling was far from being solidified at that time to the extent that it came to be a few years later. Had the bill of 1867 been passed, the character of recent tariff legislation might have been very different. A beginning would have' been made in looking at the tariff from a sober point of view, and in reducing duties that were clearly pernicious. The growing habit of look- ing on the war rates as a permanent system might have been checked, and the attempts at tariff reform in subse- 178 HISTORY OF THE EXISTING TARIFF. quent years would probably have found stronger support and met with less successful opposition. From this time till the tariff act of 1883 was passed, there was no general tariff bill which had so good a chance of being passed. The failure of the attempt of 1867 encouraged the protec- tionists in- fighting for the retention of the war duties wherever they could not secure an increase over and above them ; and in this contest they were, with few exceptions, successful.' Of the legislation that was in fact carried out, the act of Act of 1870. 1870 is a fair example. It was passed in compli- ance with the demand for a reduction of taxes and for tar- iff reform, which was at that time especially strong in the West, and was there made alike by Republicans and Dem- ocrats." The declared intention of those who framed it and ' Mr. Wells's bill and the rates proposed in the House bill may be found in his report for 1866-67, PP- 235-290. The principle of " enlightened protection " on which he proceeded is stated on p. 34. At this time Mr. Wells was still a protectionist ; it was not until he prepared his report for 1868-69 tli^t ^^ showed himself fully convinced of the unsoundness of tlie theory of protection. His able investigations and the matter-of-fact tone of all of his reports gave much weight to his change of opinion, and caused it to strengthen greatly the public feeling in favor of tariff reform. ' President Garfield (then Representative) said in 1870 : " After studying the whole subject as carefully as I am able, I. am firmly of the opinion that the wisest thing that the protectionists in this House can do is to unite on a moderate reduction of duties on imported articles. * * * If I do not misunderstand the signs of the times, unless we do this ourselves, prudently and wisely, we shall before long be compelled to submit to a violent reduc- tion, made rudely and without discrimination, which will shock, if not shatter, all our protected industries.". — Young's Report, p. clxxii. It is worthy of remark that Mr. Garfield had also supj^orted earnestly the unsuc- cessful bill of 1867. He had appealed to his party to vote so as to make up the two-thirds majority necessary for its consideration, telling them that later REDUCTION OF THE TARIFF. 1 79 had charge of it in Congress was to reduce taxation. But the reductions made by it were, almost without exception, on purely revenue articles. The duties on tea, coffee, wines, sugar, molasses, and spices were lowered. Other articles of the same kind were put on the free list. The only noteworthy reduction in the protective parts of the tariff was in the duty on pig-iron, which went down from $9.00 to $7.00 a ton. On the other hand, a very considerable increase of duties was made on a number of protected articles — on steel rails, on marble, on nickel, and on other articles." We shall have occasion to refer to some of these indefensible exactions in another connection.' At present we are concerned only with the reductions of duty which were carried out. Among the protective duties the lower- ing of that on pig-iron was the only one of importance. This change, indeed, might well have been made at an earlier date, for the internal tax of $2.00 on pig-iron (in compensation for which the tariff rate had been raised to $9.00 in 1864) had' been taken off as early as 1866.° The only effort to reform the protective parts of the tariff which had any degree of success, was made in they might "make up their record" by voting against it. — Congr. Glolie, 1866-67, pp. 1657, 1658. ' An increase in the duties on bar-iron was also proposed in the bill as reported by the Committee on Ways and Means ; but this, fortunately, was more than could be carried through. See the speeches of Messrs. Brooks {Congr. Globe, 1869-70, part 7, appendix, pp. 163-167) and Allison {ibid., p. 192 et seq.), which protest against the sham reductions of the bill. ' See chapter iii. ° See the list of reductions made by the act of 1870 in Young's Report, p. clxxvii. l8o HISTORY OF THE EXISTING TARIFF. 1872. The tactics of the proctectionists in that year illustrate strikingly the manner in which attempts at tariff reform have been frustrated ; and the history of the attempt is, from this point of view, so instructive that it may be told somewhat in detail. The situation Situation in in 1 8/2 was in many ways favorable for tariff 1872. reform. The idea of tax and tariff reform was familiar to the people at large. It was not as yet openly pretended that the protective duties were to remain indefinitely as they had been fixed in the wai'. The act of 1870 had made a concession by the reduc- tion on pig-iron; further changes of the same kind were expected to follow. Moreover, the feeling in favor of tariff reform was in all these years particularly strong in the West. So strong was it that, as has already been noted, it overrode party differences, and made almost all the Western Congressmen, whether Democrats or Repub- licans, act in favor of reductions in the tariff. The cause of this state of things is to be found in the economic con- dition of the country from the end of the war till after the panic of 1873. The prices of manufactured goods were then high, and imports were large. On the other hand, exports were comparatively small and the prices of grain and provisions low. The agricultural population was far from prosperous. The granger movement, and the agitation against the railroads, were one result of the depressed condition of the farmers. Another result was the strong feeling against the tariff, which the farmers REDUCTION OF THE TARIFF. l8l rightly believed to be among the causes of the state of things under which they were suffering.' Their represen- tatives in Congress were therefore compelled to take a stand in favor of lowering the protective duties. The Western members being nearly all agreed on this subject, Congress contained a clear majority in favor of a reform in the tariff. Party lines at that time had little influence on the protective controversy, and, although both houses were strongly Republican, a strong disposition showed itself in both in favor of measures for lowering the pro- tective duties. Added to all this, the state of the finances demanded immediate attention. The redundant revenue, which has forced Congress in the last two or three years to pay attention to the question of tariff reform, had the same influence in 1872. In each of the fiscal years, 1870-71 and 1871-72, the surplus revenue, after paying all appropria- tions and all interest on the public debt, amounted to about $100,000,000, a sum greatly in excess of any re- quirements of the sinking fund. The government was buying bonds in the open market in order to dispose of the money that was flowing into the treasury vaults." , — I ' No satisfactory investigation of the period preceding the crisis of 1873 has yet been made. Of the fact tliat the situation was especially depressing for the agricultural parts of the country, there can be no doubt. The speculative mania and the fictitious prosperity of those years were felt most strikingly in manufactures and railroad building ; exactly why so little effect of this appeared in agriculture has never been clearly explained. The whole period will repay careful economic study. " On account of the low premium on bonds and the high premium on gold, 1 82 HISTORY OF THE EXISTING TARIFF. This being the state of affairs, the Committee on Ways and Means introduced into the House a bill which took decided steps in the direction of tariff Reform bill reform. Mr. Dawes, of Massachusetts, the in chairman of the committee, was opposed to the recommendations of the majority of its members, and therefore left the explanation and man- agement of the bill to Mr. Finkelnburg, of Missouri. That gentleman explained that the committee's measure was intended merely to " divest some industries of the superabundant protection which smells of monoply, and which it was never intended they should enjoy after the war." ' The bill lopped off something from the protec- tive duties in almost all directions. Pig-iron was to be charged $6.00 instead of $7.00 a ton. The duties on wool and woollens, and those on cottons, were to be reduced by about twenty per cent. Coal, salt, and lumber were subjected to lower duties. Tea and coffee were also to pay less ; but the duties on them were not entirely abolished, — a circum- stance which it is important to note in connection with subsequent events. The bill still left an ample measure of protection subsisting ; but it was clearly intended to bring about an appreciable and permanent reduction of the war duties. This bill was introduced into the House in April. Be- fore that time another bill had been introduced in the it was cheaper for the government at that time to buy bonds in the open'marlf^ than to redeem them at par. ' See Mr. Finkelnburg's speech, Congr. Globe, 1871—72, pp. 2826-2829' REDUCTION- OF THE TARTFF. l8- Senate, by the committee of that body on finance, which also lowered duties, but by no means in so . . Ten per mcisive a manner as the House bill. The cent, reduc- Senate bill simply proposed to reduce all ''°" , ... proposed. the protective duties by ten per cent. When the ten per cent, reduction was first suggested, it was strongly opposed by the protected interests, whose rep- resentatives, it is hardly necessary to say, were present in full force. They were unwilling to yield even so small a diminution. When, however, the House bill, making much more radical changes, was brought forward with the sanction of a majority of the Committee on Ways and Means, they saw that an obstinate resistance to any change might lead to dangerous results. A change of policy was accordingly determined on. Mr. John L. Hayes, who has been for many years Secre- p^^j , tary of the Wool-Manufacturers' Association, the protec- and was President of the Tariff Commission '°'''^ ^' of 1882, was at that time in Washington as agent for the wool manufacturers. Mr. Hayes has given an account of the events at Washington in 1872, from which it appears that he was chiefly instrumental in bringing about the adoption of a more far-sighted policy by the protectionists.' Mr. Hayes believed it to be more easy to defeat the serious movement in favor of tariff reform by making some slight concessions than by unconditional ' See the speech which Mr. Hayes made, shortly after Ihe close of the ses- sion of 1872, at a meeting of the wool manufacturers in Boston ; printed in Ha.^ Bulletin of the Wool Manufacturers , vol. iii., pp. 283-290. 184 HISTORY OF THE EXISTING TARIFF. opposition. The woollen manufacturers were first induced to agree to this policy ; the Pennsylvania iron makers were next brought over to it ; and finally, the whole weight of the protected interests was made to bear in the same direction. As a concession to the demand for reform, the general ten per cent, reduction was to be permitted. With this, however, was to be joined a sweeping reduction of the non-protective sources of revenue : the taxes on whiskey and tobacco were to be lowered, and the tea and coffee duties were to be entirely abolished. This plan of action was successfully carried out. An act for abolishing the duties on tea and coffee was first passed.' This being disposed of, the general tax and tariff bill was taken up in the House. The Senate had already indicated its willingness to act in the manner desired by the protectionists. It had passed and sent to the House a bill making the general reduction of ten per cent., and nothing remained but to get the consent of the House. But this consent was not easily obtained. A large num- ber of representatives were in favor of a more thorough and radical reform, and wished for the passage of the bill prepared by the Ways and Means Committee. But un- fortunately the reform forces were divided, and only a part of them insisted on the Ways and Means bill. The remainder were willing to accept the ten per cent, reduc- tion, which the protectionists yielded. On the other hand, ' The House had already passed, at the extra session in the spring of 1871, a bill for admitting tea and coffee free of duty. This bill was now taken up and passed by the Senate. REDUCTION OF THE TARIFF. 185 the protectionist members were united. Messrs. Kelley and Dawes led them, and succeeded in bringing their whole force to vote in favor of the horizontal reduction. The powerful influence of the Speaker, Mr. Blaine, was also on their side. They finally succeeded in having the original committee bill set aside, and in passing the bill for the ten per cent, reduction. Most of the revenue reformers in the end voted for it, believing it to be the utmost that could be obtained. It must be observed, how- Act of 1872. ever, to their credit, that the " horizontal " re- duction of the protective duties was not the only concession to the reform feeling that was made by the act of 1872. It also contained a number of minor but significant changes of duty. The duty on salt was reduced to one half the previous rates ; for the feeling against the war-duty on salt, which very clearly resulted in putting so much money into the pockets of the Syracuse and Saginaw producers, was too strong to be resisted. The duty on coal was re- duced from $1.25 to 75 cents a ton. Some raw materials, of which hides and paper stock were alone of considerable importance, were admitted free of duty. The free list was also enlarged by putting on it a number of minor articles used by manufacturers. But the important change in the protective duties was the ten per cent, re- duction, which applied to all manufactures of cotton, wool, iron, steel, metals in general, paper, glass, and leather, — that is, to all the great protective industries. It is worth while to dwell for a moment on the abolition 1 86 HISTORY OF THE EXISTING TARIFF. of the duties on tea and coffee. At the time much was said about this as an act for the benefit of Removal of the tea ^^e working man, to whom it was to give and coffee a " free breakfast-table." In fact, as it is duties. 11, . ,." . , hardly necessary to say, it was a distmctly protectionist measure. The loss of revenue which it caused would ordinarily have to be made good by impos- ing or retaining protective duties. As matters stood in 1872, it prevented at least a more complete reduction of the latter. The tea and coffee duties were among the simplest, most equable, and most productive sources of national revenue. As taxes, they were little felt by con- sumers. Most important to note, they yielded to the government every thing which they took out of the pockets of the tax-payers. This is their distinctive ad- vantage over protective duties. A duty on imports, like every indirect tax, reaches the tax-payer in the shape of higher prices of the commodities which he consumes. When a duty is imposed on an article like tea or coffee, the whole increase of price to the consumer results in so much revenue to the government. But when a duty is imposed on an article like silks or linens, and results in the production (or in an increased production) of this article at home, the effect is different. Here also the commodity is increased in price to the consumer, and he is thereby taxed. So far as he uses imported articles, the increased price, as in the case of tea and coffee, is a tax paid to the government ; and as such it is not specially open to REDUCTION OF THE TAKIP/r, ^87 objection. But when the consumer buys &nd uses an article of this kind which is made at home, he must pay an increased price quite as much as when he buys the im- ported article. The increase of price, or tax, in such a case is not paid to the government, but to the home pro- ducer. It does not flow into the national revenue, and does not serve to pay for the performance of government functions. It flows into the pockets of a private indi- vidual. The private individual does not necessarily obtain, on account of this tax, exceptional profits in the production of the dutied, i. e., protected, articles. It is true that in some cases of monopoly, as we shall have occasion to see, he may permanently make high profits. But in many cases he fails to do so. It may cost more, from inherent and natural causes, to make the protected article at home than it costs to make it abroad. In this case — the most frequent — the home producer gets a higher price in consequence of the duty ; but he does not make corre- spondingly high profits. The tax on the consumer here represents simply the greater cost, the inherent natural disadvantage, of making the commodity at home. It represents a useless diversion of national industry. , A commodity is made at home which can be more cheaply bought abroad ; and nobody is benefited by the tax im- posed on the consumer. All this is clear and familiar to every one who has grasped the fundamental principles of political- economy ; but so great a mass of untrue and sophistical writing is constantly put forth on the protec- 1 88 HISTORY OP TBE EXISTING TARIFF. tive controversy, that the sound elementary principles cannot be too often repeated. For these reasons import duties, where they must be levied, should be imposed primarily on articles like tea and coffee, of which the domestic production will not be stimulated by the duties. In a government like ours, where the national revenue, by tradition and from the necessity of the case, is chiefly derived from import duties, these should be imposed primarily on non-protected com- modities. At the most, it is only after such articles have yielded the revenue that they can reasonably and properly afford, that resort should be had to duties which operate for protection. But these principles have been often lost sight of in our tariff legislation.' In the legislation of the last twenty years they have been entirely disregarded. The removal of the tea and coffee duties is only one of a number of changes of the same kind. Step by step, in the various tariff acts which have been passed since the war, all the non-protective duties have been swept away, in order that the protective duties might be retained. Articles like cocoa, pepper, cinnamon, cloves, olives, the most natural and proper sources of revenue from import duties, have been admitted free of duty. The decisive step in this process was the tea and coffee act of 1872. There are at present none other than protective duties in our tariff. In recent years, when it has again brought in ' Even the tariffs of 1846 and 1857, which were supposed to be based on principles opposed to protection, admitted tea and coffee free of duty, while they imposed heavy duties on iron, cottons, woollens, etc. REDUCTION OF THE TARIFF. 1 89 an excessive revenue, those who oppose any diminution of protection advocate, as a step analogous to the aboli- tion of the tea and coffee duties, the removal of the in- ternal taxes on tobacco, and even of those on spirits. The object here is the same as it was in 1872, — to reduce the revenue without touching the protective parts of the tariff. To return from this digression to the tariff act of 1872. The free-traders were on the whole satisfied with it ; they thought it a step in the right direction, and the beginning of a process of reform. The protectionists, however, believed that they had won a victory ; and, as events proved, they were right." It is not within the purpose of this volume to discuss the intrinsic merits of a " horizontal reduction," such as was carried out in the act of 1872. Undoubtedly it is a simple and indiscriminating method of approaching the problem of tariff reform. The objections to it were very prominently brought forward when Mr. Morrison, during the session of 1883-84, proposed to take off ten per cent, from the duties, in exactly the same way that the tariff of 1872 had taken off ten per cent. It is certainly curious that this method, when proposed by Mr. Morrison in 1884, should be vehemently denounced by protectionists ^ Mr. K[ayes, in the speech already referred to, spoke of "the grand re- sult of a tariff bill reducing duties fifty-three millions of dollars, and yet leav- ing the great industries almost intact. The present tariff (of 1872) was made by our friends, in the interest of protection." And again : "A reduction of over fifty millions of dollars, and VLt taking only a shaving off from the protection duties," igo HISTORY OF THE EXISTING TARIFF. as crude, vicious, unscientific, and impractical, although, when proposed by Mr. Dawes in 1872, it received their earnest support. There is, however, one objection to such a plan which was hardly mentioned in connection with Mr. Morrison's bill, but was brought out very clearly by the experience of 1872. This is, that a horizontal re- duction can very easily be revoked. The reduction made in 1872 was repealed with little difficulty in 1875. After the panic of 1873, imports greatly diminished, and Ten per with them the customs revenue. No further cent, reduc- thought of tax reduction was entertained ; tion re- , r • • t pealed in ^"^^ soon a need of mcreasmg the revenue was 1875- felt. In 1875 Congress, as one means to that end, repealed the ten per cent, reduction, and put du- ties back to where they had been before 1872.' The repeal attracted comparatively little attention, and was ' It was far from necessary, for revenue purposes, to repeal the ten per cent, clause. Mr. Dawes (who advocated in 1875 the repeal of his own measure of 1872) attempted to show the need of raising the tariff by assum- ing that a fixed sum of $47,000,000 per year was necessary for the sinking- fund, — that the faith of the government was pledged to devoting this sum to the redemption of the debt. But it was very clearly shown that the government never had carried out the sinking-fund provision in any exact way. In some years it bought for the sinking fund much less than the one per cent of the debt which was supposed to be annually redeemed ; in other years (notably in 1869-73) it bought much more than this one per cent. The same policy has been followed in recent years. There can be little doubt that the need of providing for the sinking fund was used merely as an excuse for raising the duties. See Mr. Wood's remarks, Congr. Record, 1874-75, PP- 1187, 1188, and f/. Mr. Beck's speech, ibid. ,yp.li\oi, 1402. It may be noted that in 1875 President Grant and the Secretary of the Treasury recommended, and men like Senators Sherman and Schurz sup- ported, a re-imposition of duties on tea and coffee as the best means of in- creasing the customs revenues. REDUCTION OF THE TARIFF. I9I carried without great opposition. If a detailed examina- tion of the tariff had been made in 1872, and if duties had been reduced in that year carefully and with discrimi- nation, it would have been much more difficult in 1875 to put them back to the old figures. If some of the duties which are of a particularly exorbitant or burdensome character had been individually reduced in 1872, public opinion would not easily have permitted the restitution of the old rates. But the general ten per cent, reduction, which touched none of the duties in detail, was repealed without attracting public attention. The old rates were restored ; and the best opportunity which the country has had for a considerable modification of the protective system, slipped by without any permanent result. Of the attempts at reform which were made between 1875 and 1883, little need be said. Mr. Morrison in 1876. and Mr. Wood in 1878, introduced tariff bills into the House. These bills were the occasion of more or less debate ; but there was at no time any probability of their being enacted.' In 1879 "^^ duty on quinine was abolished entirely, — a measure most beneficial and praise- worthy in itself, but not of any considerable importance in the economic history of the country. Of the tariff act of 1883 we do not purpose speaking in ' Those who are interested in the details of these measures will find the bill of 1876 explained in Mr. Morrison's speech, in Cong. Record, 1S75-1876, p. 3321. The bill of 1878 was similarly explained by Mr. "Wood, Cong. Record, 1877-78, p. 2398. It was at one time supposed that Mr. Wood's bill might be passed by the House ; but the enacting clause was struck out, after sonae debate, by a vote of 137 to 114. 192 HISTORY OF THE EXISTING TARIFF. this connection. It will be discussed in detail in the con- cluding pages. We have now completed our account of the attempts to reform the tariff which were made between the close of the Civil War and the act of last year (1883). It is clear that the duties, as they were imposed in the act of 1864, were retained substantially without change during the whole of this period. The non-protective duties were indeed swept away. A few reductions of protective duties were made in the acts of 1870 and 1872; but the great mass of duties imposed on articles which are pro- duced in this country were not touched. It is worth while to note some of the more important classes of goods on which the duties levied in 1864 remained in force, and to compare these duties with the rates of the Morrill tariff of 1 86 1. The increase which was the result of the war will appear most plainly from such a comparison. In the appended table' it will be seen that the rates on books, chinaware, and pottery, cotton goods, linen, hemp, and jute goods, glass, gloves, bar- and hoop-iron, iron rails, steel, lead, paper, and silks, were increased by from ten to thirty per cent, during the war, and that the increase then made was maintained without the slightest change till 1883. That these great changes, at the time when they were made, were not intended or expected to be per- manent, cannot be denied. An example like that of the duty on cotton goods shows plainly how the duties were ' See table III., Appendix, REDUCTION OF THE TARIFF. 193 fixed during the war according to the conditions of the time, and without expectation of their remaining indefi- nitely in force. The duty on the cheapest grade of cotton tissues had been in 1861 fixed at one cent per yard. During the war the price of cotton rose greatly, and with it the prices of cotton goods. Consequently it is not sur- prising to find the duty in 1864 to be five cents per yard on this grade of cottons. But shortly after the war, raw cotton fell nearly to its former price ; and it does occasion surprise to find that the duty of five cents per yard should have been retained without change till 1883, and even in the act of 1883 retained at a figure much above that of 1 861. The duty on cheap cottons happens not to have been particularly burdensome, since goods of this kind are made in this country as cheaply as they can be made abroad. But the retention of the war duty on them, even after it became exorbitantly high, is typical of the way in which duties were retained on other articles on which they were burdensome. Duties which had been imposed during the war, and which had then been made very high, either for reasons of revenue or because of circumstances such as led to the heavy rate on cottons, were retained unchanged after the war ceased. It would be untrue to say that protection did not exist before the great struggle began, — the tariff of 1861, was a distinctly protectionist measure ; but it is clear that the extreme protectionist character of our tariff is an indirect and unexpected result of the Civil War. CHAPTER III. HOW DUTIES WERE RAISED ABOVE THE WAR RATES. In the preceding chapter it has been shown how the duties levied during the war failed to be reduced after its close. But in many cases not only has there been a failure to diminish the war rates, but an actual increase over them. We have already noted how the maintenance of the tariff of 1864 brought about gradually a feeling that such a system was a good thing in itself, and desirable as a permanent policy. This feeling, and the fact that Con- gress and the public had grown accustomed to heavy taxes and high rates, enabled many measures to become law which under normal circumstances would never have been submitted to. In the present chapter we are con- cerned with the not infrequent instances in which, in obedi- ence to the demands of the protected interests, duties were raised over and above the point, already high, at which they were left when the war closed. The most striking instance of legislation of this kind is to be found in the wool and woollens act of 1867; a measure which is so characteristic of the complications of our tariff, of the remarkable height to which protection has been car- 194 ffOlV DUTIES WERE RAISED. 1 95 ried in it, and of the submission of Congress and the people to the demands of domestic manu- .^^ ^ ^, facturers that it deserves to be described woollen act in detail. Such a description is the more desirable since the woollen schedule of our tariff is the one which imposes the heaviest and the least defensi- ble burdens on consumers, and at the same time is the most difficult of comprehension for those who have noth- ing but the mere language of the statute to guide them. In order to understand the complicated system that now exists, we must go back to the Morrill tariff act of 1861. In that act specific duties on wool wcvc substituted for the ad-valorem rates of 1846 and 1857. The cheaper kinds of wool, costing eighteen cents or less per pound, were still admitted at the nominal rate of five per cent. But wool costing between eighteen and twenty-four cents per pound was charged three cents per pound ; that costing more than twenty-four cents was charged nine cents per pound. The duties on woollens were increased correspondingly. An ad-valorem rate of twenty-five per cent, was levied on them ; in addition they paid a specific duty of twelve cents for each pound of cloth. This specific duty was intended merely to compensate the manufacturers for the duty on wool, while the ad-valorem rate alone was to yield them any protection. This is the first appearance in our tariff history of the device of exact compensating duties. Compensation for duties on raw materials used by domestic producers had indeed been provided for in 196 HISTORY OF THE EXISTING TARIFF. previous tariffs ; but it was not until the passage of the Morrill act and of its successors that it came to be applied in this distinct manner. As the principle of compensa- tion has been greatly extended since 1861, and is the key to the existing system of woollen duties, it may be well to explain it with some care. It is evident that a duty on wool must normally cause The ^^ price of all wool that is imported to compensating rise by the full extent of the duty. More- sys em. over, the duty presumably causes the wool grown at home, of the same grade as that imported, also to rise in price to the full extent of the tax. It is clear that, if foreign wool continues to be imported, such a rise in the price of domestic wool must take place ; since wool will not be imported unless the price here is higher, by the amount of the duty, than the price abroad. It may happen, of course, that the tax will prove prohibi- tory, and that the importation of foreign wool will cease ; in which case it is possible that the domestic wool is raised in price by some amount less than the duty, and even possible that it is not raised in price at all. Assum- ing for the present (and this assumption was made in arranging the compensating system) that domestic wool does rise in price, by the extent of the duty, as compared with foreign wool, it is evident that the American manu- facturer, whether using foreign or domestic wool, is com- pelled to pay more for his raw material than his com- petitor abroad, This disadvantage it becomes necessary HOW DUTIES WERE RAISED. 1 97 to offset by a compensating duty on foreign woollens. In 1861 the duty on wool of the kind chiefly used in this country (costing abroad between ten and twenty-four cents a pound) was three cents a pound. The compen- sating duty for this was made twelve cents a pound on the woollen cloth, which tacitly assumes that about four pounds of wool are used for each pound of cloth. This specific duty was intended to put the manufacturer in the same situation, as regards foreign competition, as if he got his wool free of duty. The separate ad-valorem duty of twenty-five per cent, was then added in order to give protection. The compensating system was retained in the acts of 1862 and 1864. During the war, it is needless to say, the duties on wool and woollens were considerably raised. They were increased, and to some extent properly in- creased, to offset the internal taxes and the increased duties on dye-stuffs and other materials; and care was taken, in this as in other instances, that -yy^^j ^^^ the increase in the tariff should be sufficient woollen du- and more than sufificient to prevent the do- '^^ ° ' *" mestic producer from being unfairly handicapped by the internal taxes. In the final act of 1864 the duties on wool were as follows : On wool costing 12 cents or less, a duty of 3 cents per pound. " " " between 12 and 24 cents, a duty of 6 cents per pound. ' " 24 and 32 cents, a duty of 10 cents per pound, plus ten per cent. On wool costing more than 32 cents, a duty of 12 cents per pound, plus ten per cent.' ' Exactly how this duty on wool of ten per cent, on the value, in addition 198 HISTORY OF THE EXISTING TARIFF. The wool chiefly imported and chiefly used by our manufacturers was that of the second class, costing between twelve and twenty-four cents per pound, and paying a duty of six cents. The compensating duty on woollens was therefore raised in 1864 to twenty-four cents per pound of cloth. The ad-valorem (protective) duty on woollens had been raised to forty per cent. During the war the production of wool and woollens had been greatly increased. The check to the manufacture of cotton goods, which resulted from the stoppage of the great source of supply of raw cotton, caused some in- crease in the demand for woollens. The government's need of large quantities of cloth for army use was also an im- portant cause. After the war, a revolution was threatened. Cotton bade fair to take its former place among textile goods ; the government no longer needed its woollens, and threw on the market the large stocks of army clothing which it had on hand. In the hope of warding off the immi- nent depression of their trade, the wool growers and manu- facturers made an effort to obtain still further assistance from the government. A convention of wool growers and manufacturers was held in Syracuse, N. Y., in December, 1865. That both these classes of producers, as a body, un- derstood and supported the views of this meeting, is not at all certain. The mass of wool growers undoubtedly knew to the specific duty, came to be imposed, the writer has never seen satisfac- torily explained. It probably came into the taiiff in connection with the discriminating duty of ten per cent, which was imposed on goods imported in the vessels of nations that had no treaty of commerce with us. I/OW DUTIES WERE RAISED. 1 99 nothing of it ; they were represented chiefly by a few breed- ers of sheep. Among the manufacturers, many held aloof from it when its character became somewhat more plain. There is good evidence to show that the whole movement was the work of a few energetic manufacturers of New England, engaged chiefly in producing carpets and worsted goods, and of some prominent breeders of sheep.' The fact that the rates of duty, as arranged by the Syracuse convention, were especially advantageous to certain manufacturers — namely, those who made carpets, worsted goods, and blankets, — tends to support this view. On the surface, however, the movement appeared to be that of the growers and manufacturers united. The latter agreed to let the wool producers advance the duty on the raw material to any point they wished ; they under- ' " This tariff (of 1867) was devised by carpet and blanket makers, who pretended to be ' The National Woollen Manufacturers' Association,' in combination with certain persons who raised fine bucks and wished to sell them at high prices, and who acted in the name of ' The National Wool- Growers' Association.' * * * A greater farce was never ^\itnessed * * * Many who took part in the proceedings of 1866, finding that the Association [of Wool Manufacturers] was used for the convenience of spe- cial interests, have since withdrawn." — Harris, " Memorial," pp. 22, 23. Mr. Harris says elsewhere ; '* The carpet interest was predominant [in the Wool Manufacturers' Association]. * * * Xhe President was, and is now (1871), a large carpet manufacturer ; and the Secretary was a ^"ery talented and astute politician, from Washington, chosen by the influence of the President." And again: "The Association having spent considerable sums in various ways pectiliar to Washington (the italics are Mr. Harris's) increased tlie annual tax on its members very largely ; and at the present time (1871) it is hopelessly in debt to its President." — "Protective Duties," pp. 9, 10 ; " The Tariff," p. 17. See also " Argument on Foreign Wool Tariff before Finance Committee of Senate," New York, 1871. 200 HISTORY OF THE EXISTING TARIFF. took, by means of the compensating device, to prevent any injury to themselves from the high duty on the wool they used. The tariff schedule which was the result of this combination was approved by the United States Revenue Commission.' It was made a part of the unsuc- cessful tariff bill of 1867, already referred to' ; and when that bill failed, it was made law by a separate act, to whose passage no particular objection seems to have been made. The whole course of events forms the most strik- ing example — and such examples are numerous — of the manner in which, in recent tariff legislation, regard has been had exclusively to the producer. Here was an in- tricate and detailed scheme of duties, prepared by the producers of the articles to be protected, openly and avowedly with the intention of giving themselves aid ; and yet this scheme was accepted and enacted by the National Legislature without any appreciable change from the rates asked for, and without question as to its effect on the people at large.' We turn now to examine this act of 1867, which re- mained in force till 1883, and in which no changes of ' Mr. Stephen Colwell, a disciple of the Carey protectionist school, was the member of this commission ivlio had charge of the wood and woollens schedule. Mr. Wells, who was also a member of the commission, had nothing to do with this part of the tariff. ' Ante, p. 21. ' The proceedings of the Syracuse convention may be found in full in the volume of "Transactions of the Wool Manufacturers"; also in " U. S. Revenue Report, 1866," pp. 360-419. Mr. Colwell's endorsement of the scheme is also in " U. S. Revenue Report, i866," pp. 347-356. Mr. Wells, in his report of 1867, sharply criticised the act as passed. HOW DUTIES WERE RAISED. 20I great importance are made by the existing tariff. In this examination w.e will follow the statement published in 1866, in explanation of the new schedule, by the Execu- tive Committee of the National Association of Wool Manufacturers.' To begin with, the duties ^^^ ^^ ^gg on wool were arranged on a new plan. Wool Duty on was divided into three classes : carpet, cloth- ing, and combing wool.' The first class, carpet wool, corresponded to the cheap wools of the tariff of 1864. The duty was three cents a pound if it cost twelve cents or less, and six cents a pound if it cost more than twelve cents. The other two classes, of cloth- ing and combing wools, are the grades chiefly grown in this country, and therefore are most important to note in connection with the protective controversy. The duties on these were the same for both classes. Clothing and combing wools alike were made to pay as follows : Value 32 cents or less, a duty of 10 cents per .pound and II per cent. ad valorem. Value more than 32 cents, a duty of 12 cents per pound and 10 per cent, ad valorem.^ ' See " Statement of the Executive Committee of the Wool Manufacturers Association to the U. S. Revenue Commisson," printed in " Transactions," as above ; also printed in " Revenue Report for 1866," pp. 441-460. ' Clothing wool is of comparatively short fibre ; it is carded 3.5 a preparation for spinning ; it is used for making cloths, cassimeres, and the other common woollen fabrics. Combing wool is of longer fibre ; it is combed in a comb- ing machine as a preparation for spinning ; and it is used in making worsted goods, and other soft and pliable fabrics. 'Here again we have the rather absurd combination of specific and ad-va- lorem duties on wool, In the act of 1867, there is the further complication 202 HISTORY OF THE EXISTING TARIFF. Comparing these figures with the rates of 1864, one would not, at first sight, note any great change. .In 1864, wool costing between twenty-four and thirty-two cents had been charged ten cents per pound plus ten per cent, ad valorem ; and wool costing more than thirty-two cents had paid twelve cents a pound plus ten per cent. These seem to be almost exactly the rates of 1867. But in fact, by the change in classification, a very considerable increase in the duty was brought about. In 1867 all vjool costing less than thirty-two cents was made to pay the duty of ten cents per pound and eleven per cent. In 1864 wool cost- ing (abroad) between eighteen and twenty-four cents had been charged only six cents per pound. This is the class of wool chiefly grown in the United States, and chiefly imported hither; and it was charged in 1867 with the duty of ten cents and eleven per cent. With the ad- valorem addition, the duty of 1867 amounted to eleven and a half or twelve cents a pound, or about double the duty of 1864. The consequence was that in reality the duty on that grade of wool which is chiefly used in this country was nearly doubled by the act of 1867 ; and the increase was concealed under a change in classification. The duty on clothing and combing wools, as fixed in that the ad-valorem duty is in the one case ten per cent., in the other eleven per cent. This difference resulted by accident, as the writer has been in- formed, from the need of complying technically with certain parliamentary rules of the House. It is hardly necessary to say that this mixture of specific and ad-valorem duties on wool has no connection with the compensating system. The compensating scheme accounts only for the two kinds of duties on woollen goods., HOW DUTIES WERE RAISED. 203 1867, has been on the average more than fifty per cent, on the value abroad. The duty on wool being fixed in this way, that on woollens was arranged on the following ^j^^ ^^. ^^ plan. It was calculated that four pounds woollen of wool (unwashed) were needed to produce a pound of cloth. The duty on wool, as has been ex- plained, amounted to about eleven and one half cents a pound, taking the specific and ad-valorem duty to- gether. Each of the four pounds of wool used in mak- ing a pound of cloth, paid, if imported, a duty of four times eleven and one half cents, or forty-six cents. If home, grown wool was used, the price of this, it was assumed, was equally raised by the duty. The manufacturer in either case paid, for the wool used in making a pound of cloth, forty-six cents more than his foreign corhpetitor. For this disadvantage he must be compensated. ^ More- over, the manufacturer in the United States, in 1867, paid duties on drugs, dye-stuffs, oils, etc., estimated to amount to two and one half cents per pound of cloth. For this also he must be compensated. In addition he must have interest on the duties advanced by him ; for between the time when he paid the duties on the wool and other materials, and the time when he was reimbursed by the sale of his cloth, he had so much money locked up. Add interest for, say six months, and we get the final total of the duty necessary to compensate the manufacturer for what he has to pay on his raw materials. The account stands : 204 HISTORY OF THE EXISTING TARIFF. Duty on4poundsof wool at 1 1^ cents ... 46 cents " " oils, dye-stuffs, etc. ..... 2j " Interest . . . . . . . . . 4-i- " Total 53 " Congress did not accept the exact figure set by the woollen makers. It made the compensating duty fifty cents per pound of cloth instead of fifty-three ; but this change was evidently of no material importance. The woollen manufacturers got substantially all that they wanted. It will be remembered that in 1864 the com- pensating specific duty on cloth had been only twenty- four cents per pound. The ad~valore7n duty was fixed at thirty-five per cent. The woollen manufacturers said they wanted a " net effec- tive protection " of only twenty-five per cent.' This does not seem immoderate. But ten per cent ad-valorem was supposed to be necessary to compensate for the internal taxes, which were still imposed in 1867, though abolished very soon after. This ten per cent., added to the desired protection of twenty-five per cent, brought the ad-valorem ' * ' All manufactures composed wholly or in part of wool or worsted shall be subjected to a duty which shall be equal to twenty-five per cent, net ; that is, twenty-five per cent, after reimbursing the amount paid on account of wool, dye-stuffs, and other imported materials, and also the amount paid for the internal revenue ta.K imposed on manufactures and on the supplies and materials used therefor." Joint Report of Wool IVIanufacturers and Wool Growers, "Revenue Report, for 1866," p. 430; also in "Transactions." The Executive Committee of the Wool Manufacturers' Association said, in 1866 : ' ' Independently of considerations demanding a duty on wool, the wool manufacturers would prefer the total abolition of specific duties, pro- vided they could have all their raw material free, and an actual net protec- tion of twenty.five per cent." Harris, " Memorial," p. 9. Hon^ DUTIES WERE RAISED. io? rate to thirty-five per cent. The final duty on woollen cloth was therefore fifty cents per pound and thirty-five per cent, ad valorem : of which the fifty cents was com- pensation for duties on raw materials ; ten per cent, was compensation for internal tax ; and of the whole accumu- lated mass only twenty-five per cent, was supposed to give protection to the manufacturer. This duty was levied on woollen cloths, woollen shawls, and manufactures of wool not otherwise provided for — - categories which include most of the woollen goods made in this country. On other classes of goods the same sys- tem was followed. An ad-valorem duty of Duty thirty-five per cent, was imposed in all cases ; °° "^"neis. carpets, twenty-five per cent, being intended to be (j^ss goods, protection, and ten per cent, compensation for ^'^^■ internal taxes. The specific duty varied with different goods, but in all cases was supposed merely to offset the import duties on wool and other supplies. For in- stance, on flannels, blankets, and similar goods, the spe- cific duty varied from fifty cents a pound to twenty cents, being made to decrease on the cheaper qualities of goods, as less wool, or cheaper wool, was used in making a pound of flannel or blanket. The duties on knit goods were the ^ same as those on blankets. On carpets the system was applied with some modification. The specific duty was levied here by the square yard, and not by the pound. A calculation was made of the quantity of wool, linen, yarn, dye-stuffs, and other imported articles used for each 2o6 HiSTORV OP THE EXISTING TARIFP. yard of carpet ; the total duties paid on these materials, with interest added as in the case of cloth, gave the com- pensating duty per yard of carpet. On this basis, for in- stance, the specific duty on Brussels carpets was made forty-four cents per yard (the manufacturers had asked for a duty of forty-eight cents) ; the ad-valorem duty of thirty-five per cent, being of course also imposed. In the same way the specific duty on dress goods for women's and children's wear was made from six to eight cents per yard, according to quality. It is evident that the task of making the specific duty exactly compensate for the duties on wool was most complicated in these cases, and that any excess of compensation would here be most difficult of discovery for those not very familiar with the details of the manufacture. As a matter of fact, it is precisely in these schedules of the woollens act that, as we shall see, the " compensating " system was used as a means of secur- ing a high degree of protection for the manufacturer. These duties, ad valorem and specific taken together, have been from fifty to one hundred per cent., and even more, on the cost of the goods. On cloths generally they have been from sixty to seventy per cent, on the value. On blankets and flannels they have been from eighty to one hundred per cent., and have been entirely prohibitory of importation. On dress goods they have been from sixty to seventy per cent. ; on Brussels carpets again from sixty to seventy per cent. ; and on ingrain carpets from fifty to fifty-five per cent. Yet a net protection of now DUTIES WERE RAISED. 2O7 twenty-five per cent, is all that the manufacturers asked for and were intended to have; and the question naturally presents itself, did they not in fact get more than twenty- five per cent. ? The first conclusion that can be drawn from this expla- nation of the woollens duties is that there was at all events no good reason for the permanent retention of the ad-valorem rate of thirty-five per cent. Of Comment that rate ten per cent, was in all cases meant on the to compensate for the internal taxes. These ad-valorem disappeared entirely within a year or two after the woollens act was passed. Yet the ad-valorem rate on woollens remained at thirty-five per cent, without change from 1867 to 1883. In the present tariff, that of 1883, it still is thirty-five per cent, in most cases; and where it has been changed at all, it has even been raised to forty per cent. There is no more striking illustration of the way in which duties which were imposed in order to offset the internal taxes of the war period, have been retained and have become permanent parts of our tarifif system, although the original excuse for their imposition has entirely ceased to exist. It may seem that the retention of the specific duties on woollens was justified, since the duties Comment on on wool were not changed. It is true that the specific the duties on dye-stuffs, drugs, and such ar- ticles have been abolished or greatly reduced since 1867 ; but these played no great part in the determina- 5o8 HISTORY OF THE EXISTING TARIFF. tion of the specific duty. The duties on wool were not changed till the passage of the act of 1883. There are, however, other grounds for criticising the specific duties on woollens, which have been in fact not merely compensating, but have added, in most cases, a consider- able degree of protection to the " net " twenty-five per cent, which the act of 1867 was supposed to give the manfacturers. The compensating duties, as we have seen, Tvere based on two assumptions : first, that the price of wool, whether foreign or domestic, was increased by the full extent of the duty ; second, that four pounds of wool were used in making a pound of cloth. The first assumption, however, holds good only to a very limited extent. A protective duty does not necessarily cause the price of the protected article to rise by the full extent of the duty. It may be prohibitory; the importation of the foreign article may entirely cease ; and the domestic article, while its price is raised to some extent, may yet be dearer by an amount less than the duty. This is what has happened with regard to most grades of wool. The commoner grades of wool are raised in this country with comparative ease. The duty on them is prohibitory, and their importation has ceased. Their price, though higher than that of similar wools abroad, is not higher by the full extent of the duty. It is true that the importation of finer grades of clothing and combing wools continues ; and it is possible that the wools of Ohio, Michigan, and other States east of the Mississippi no IV DUTIES WERE RAISED. 269 are higher in price, by the full amount of the duty, than similar wools abroad. Even this is not certain ; for the wools which continue to be imported are not of precisely the same class as the Ohio and Michigan wools. As a rule, the importations are for exceptional and peculiar pur- poses, and do not replace or compete with domestic wools. At all events, it is certain that the great mass of wools grown in this country are entirely shielded from foreign competition. Their price is raised above the foreign price of similar material ; but raised only by some amount less than the duty. The manufacturer, however, gets a compensating duty in all cases as if his material were dearer, by the full extent of the duty, than that of his foreign competitor. The bulk of the wool used by Ameri- can manufacturers does not show the full effect of the tariff, and the manufacturers clearly obtain, in the specific duty, more compensation than the higher price of their wool calls for. The result is that this duty, instead of merely preventing the domestic producer from being put at a disadvantage, yields him in most cases a considerable degree of protection, over and above that given by the ad-valorem duty.' There is another way in which the compensating duty is excessive. A very large quantity of woollen goods are ' See the instructive remarks of Mr. John L. Hayes, in Bulletin Wool Manufacturers vol. xiii. pp. 98-108. Cf. "Tariff Comm. Report," pp. 1 782-1 785. Tlie production and importation of wool in different parts of the country for a series of years are given in some detail in " Tariff Comm. Report," pp. 2435, 2436. 2IO HISTORY OF THE EXISTING TARIFF. not made entirely of wool. Cotton, shoddy, and other substitutes are in no inconsiderable part the materials of the clothes worn by the mass of the people. In these goods very much less than four pounds of wool is used in making a pound of cloth, and the specific duty again yields to the manufacturer a large degree of protection. The second assumption of the compensating system, that four pounds of wool are used in making a pound of cloth, is also open to criticism. The goods in which cotton and shoddy are used clearly do not require so much wool. But it is probable that even with goods made entirely of wool, the calculation of four pounds of unwashed wool for each pound of cloth is very liberal. Wool, unwashed, shrinks very much in the cleaning and scouring which it must receive before it is fit for use ; and the loss by wear and waste in the processes of manu- facture is also considerable. The shrinkage in scouring is subject to no definite rule. In some cases wool loses only forty per cent, of its weight in the process, in others as much as seventy-five percent. The shrinkage in scouring on American wools is rarely more than sixty per cent ; and if to this is added a further loss of twenty-five pei cent, in manufacture, there will be needed for a pound of cloth no more than three and one third pounds of wool.' ' See, as to the loss of wool in scouring, Quarterly Report Bureau of Sta- tistics, for quarter ending June 30, lS34, pp. 563-565 ; Harris, " Memorial," p. II ; Schoenhof, "Wool and Woollens," p. 10 ; Bulletin WoolMf., vol. xiii., p. 8. The least loss I have found mentioned is twenty-five per cent, (coarse Ohio), and the highest seventy per cent. (Buenos Ayres wool). Ordinary HOW DUTIES WERE RAISED. 2ii With the great majority of goods made in this country, the shrinkage and the loss in manufacture do not amount to more than this. The calculation of four for one is for most American goods a liberal one ; and it is evident that the compensating duty, based on this liberal calculation, yields a degree of protection in the same way that it does on goods that contain cotton or shoddy. On the other hand, there are some grades of imported wool on which the shrinkage and loss in manufacture are so great that the compensating duty is not excessive. Some grades of Australian wool, which are imported for manufacturing fine goods and worsteds, are subject to exceptional shrinkage and to exceptional waste in the process of manufacture. Of this class of wool four pounds, and sometimes a little more, are apt to be used for a pound of cloth.' In such cases the compensating duty evidently American wool loses between fifty and sixty per cent, in scouring. The loss in weight in manufacturing varies much with the processes, but with care will not exceed t\\'enty-five per cent. Witlr most goods it is less. If the loss in scouring loo lbs. of wool is sixty per cent., there remain 40 lbs. scoured wool. Deduct twenty-five per cent, for loss in manufacture 10 lbs. Leaves . . 30 lbs. of cloth, or I lb. of cloth for 3^ lbs. of wool. If the loss in scouring 100 lbs. of wool is sixty-five per cent, there remain .... 35 lbs. scoured wool. Deduct twenty-five per cent, for loss in manufacture 8flbs. Leaves . . . 26J lbs. of cloth, or I lb. cloth for not quite 4 lbs. of wool. ' See the instances given by Mr. Hayes in Wool Manufacturers' Bulletin, vol. xii., pp. 4-9. These all refer to Australian wool, which, as Mr. Hayes says elsewhere (ibid., p. 107), is imported in eomparatively small quantities for exceptional purposes. 212 HISTORY OF THE EXISTING TARIFF. may fail to counterbalance entirely the disadvantage under which the manufacturer labors in the higher price of his raw material ; for the wool, being imported into this country, and paying the duty, must be higher in price by the full amount of the duty than the same wool used by the foreign producer. In other words, there are cases where the specific duty is not sufficient to offset the duty on the raw material. It is probable that this fact ex- plains, in part at least, the regular importation of certain dress goods and finer grades of cloths, which continue to come into the country from abroad in face of the very heavy duty. But such cases are exceptional. For most goods made in the United States the compensating duty on the four to one basis is excessive. One other provision in the act of 1867 may be pointed out, which bears on the calculation of four pounds of wool to one pound of cloth, and at the same time illustrates the spirit in which the act was prepared. It has already been said that the duty on wool is laid on imwashed wool ; and the compensating duty is fixed on the calculation that it requires four pounds of unwashed wool to make a pound of cloth. The act of 1867 provided that clothing wool, if washed, should pay double duty, and if scoured, treble duty. Similarly combing wool and carpet wool were made to pay treble duty if scoured. But no provi- sion whatever was made as to combing and carpet wools if washed ; they were admitted at the same rate of duty whether washed or unwashed. This amounted practically ffOW DUTIES WERE RAISED. 21 3 to a lowering of the duty on them. The same wool which would weigh, if unwashed, one and one half pounds, and would be charged with a duty of twenty cents, would weigh, if washed, only about a pound, and would pay a duty of only thirteen cents. The result was that combing and carpet wool was advantageously imported in a washed condition, and the duty was in effect appreciably below the rate on unwashed wool. Yet the compensating duty on carpets, worsteds, and all goods made from these wools was arranged as in the case of cloths, as if the full rate on unwashed wool were levied. The manufacturer got the full compensating rate on his product, though he did not pay the full duty on his wool. It is a well-known fact that this anomaly in the act of 1867 was due chiefly to a prominent manufacturer of New England, whose business, as a consequence, was made exceedingly profita- ble during the years immediately succeeding the passage of the act.' If, as we have seen the case to be, the compensating duty was very liberal in the case of ordinary woollen cloth, where the calculations on which it was founded can be checked with comparative ease, it is to be expected ' The act of 18S3 maintains without change the admission of washed combing wool at the same rates of unwashed. The great profits which this state of things enabled certain worsted manufacturers to make in the first instance, have been biought down by the force of domestic competition ; and a considerable industry has grown up on the basis of the easy admis- sion of washed wool. It would, therefore, hardly be wise to revert from it at the present time. But its insertion in the original act is very characteris- tic of the spirit ia which the compensating scheme was devised. 214 HISTORY OF THE EXISTING TARIFF. that Other schedules, where a check is more difficuh to apply, will also contain excessive compensation. ?'he specific duty on carpets is levied by the yard ; that on Brussels carpets, for instance, was forty-four cents a square yard. Similarly the specific duty on dress-goods was levied by the square yard. That on blankets, flannels, worsteds, yarns, etc., was fixed by the pound, but was made to vary from twenty to fifty cents a pound, accord- ing to the value of the goods. The last-mentioned goods, for instance, paid a duty of twenty cents a pound if worth forty cents or less a pound ; a duty of thirty cents if worth between forty and sixty cents ; and so on. In every case, of course, the ad-valorem (nominally protective) rate of thirty-five per cent, was added to the specific duties. It is evidently a very complex problem whether these "compensating" duties represent the exact sum necessary to offset the increased price of materials due to the tariff rates on wool, hemp, dye-stuffs, and other dutiable articles used by manufacturers. We have seen that the movement that resulted in the passage of the act of 1867 was brought about chiefly by the manufacturers of carpets and worsteds. These men adjusted the specific duties, and alone could know with how great accuracy they attained their object of compensation. In some in- stances it was confessed that there was more than com- pensation in their scheme ; this was admitted to be the case with blankets and dress-goods. On all goods it is pot to be doubted that a liberal allowance was made in HOW DUTIES WERE RAISED. 21$ favor of the manufacturers, and that the specific rates gave them a great amount of pure and simple protection. The truth is that the wool and woollens schedule, as it was enacted in 1867, and as it now remains in The woollens force with the modifications made in 1883, is a ^<=' a heavy , TvT • 11 • 1 1- protective great sham. Mommally, it makes an exact di- measure vision between protective and compensating '™ disguise. duties ; and nominally, it limits the protection for the manufacturer to twenty-five (now thirty-five) per cent. As a matter of fact, no one can tell how much of the different duties is protective, and how much merely compensating. So complicated is the schedule, and so varying are the conditions of trade and manufacture, that the domestic manufacturer himself finds it difficult to say exactly how great a degree of encouragement the govern- ment gives him. In some exceptional cases the effectual protection may be less than the twenty-five (now thirty- five) per cent, which the tariff is supposed to yield. In the great majority of cases it is very much more than this, and was meant to be more. The whole cumbrous and intricate system, — of ad-valorem and specific duties, of duties varying according to the weight and the value and the square yard, — was adopted, it is safe to say, sim- ply because it concealed the degree of protection which in fact the act of 1867 gave. Duties that plainly and palpa- bly levied taxes of 60, 80, and 100 per cent, would hardly have been suffered by public opinion or enacted by the legislature. Probably few members of Congress under- 2l6 HISTORY OF THE EXISTING TARIFF. stood the real nature and bearing of the scheme ; and no attempt was made to check the calculations of the woollen manufacturers, or to see whether, intentionally or by accident, abuses might not have crept into their pro- posals. The most remarkable fact in the history of this piece of legislation was its failure to secure Manu- facturers not the object which its supporters had in mind. benefited Notwithstanding the very great degree of by the act. . , . , , ^ , protection which the manufacturers got, the production of woollen goods proved to be one of the most unsatisfactory and unprofitable of manufacturing occupations. As a rule, a strong protective measure causes domestic producers to obtain, at least for a time, high profits ; though under the ordinary circumstances of free competition, profits are sooner or later brought down to the normal level. But in the woollen manufacture even this temporary gain was not secured by the home producers after the act of 1867. A few branches, such as the pro- duction of carpets, of blankets, of certain worsted goods, were highly profitable for some years. These were the branches, it will be remembered, in which the compensa- ting duties were most excessive, and the prominent manu- facturers engaged in them had done most to secure the passage of the act of 1867. Profits in these branches were in course of time brought down to the usual level, and in many instances below the usual level, by the in- crease of domestic production and domestic competition. HO IV DUTIES WERE RAISED. 21/ The manufacture of the great mass of woollen goods, however, was depressed and unprofitable during the years immediately following the act, notwithstanding the specu- lative activity and seeming prosperity of that time.' It has sometimes been said that this was the effect of the act itself ; but other causes, such as the cessation of the the war demand and the increasing use of worsted goods in place of woollen goods, probably suffice to account for the unprosperous state of affairs. It has also been said that the lack of diversity in the woollen manufacture of the United States can be traced to those provisions in the act of 1867 by which particularly high protection was given on the common and cheaper goods ; the more so since the high duty on wool has tended to hamper the manufacturer in the choice of his material. No doubt it is true that at present the majority of finer woollen goods are imported, and the manufacture in this country is confined mainly to cheaper grades. The situation is not essentially different from that which we have already described as existing before i860.'' But here again too much is ascribed, for good or evil, to the tariff. The 'See an instructive article, by a manufacturer, in " Bulletin Nat. Assoc. Wool Mf.," vol. III., p. 354(1872). "There is one thing that all who are interested in the manufacture will agree to, that for the last five years [from 1867 to 1872) the business in the aggregate has been depressed, that the profits made during the war have been exhausted mainly, and that it has been extremely difficult during all this time to buy wool and mannfacture it into goods and get a new dollar for an old one." — Cf. Mr. Harris' pamph- lets, cited above. " See above, p. 147. 2l8 HISTORY OF THE EXISTING TARIFF. limited range of the woollen manufacturer is probably due to deeper causes ; in part to the adaptability of the domestic wool for making the woollen goods which form the staples of the American manufacture, in part to the fact that the methods and machinery for those goods are fitted to our economic conditions. The causes, in fact, are probably analogous to those which have confined the cotton manufacture within a limited range. But, on the other hand, it is clear that the act of 1867 has not been successful as a protective measure ; it has not stimulated the woollen industry to any noticeable degree, nor has it greatly affected the character or extent of the imports. So far as the wool-growers are concerned, it has not pre- vented the price of wool from declining in the United States, in sympathy with the decline elsewhere ; nor has it prevented the shifting of wool-growing from the heart of the country to the western plains, where wool is raised under conditions like those of Australia and the Argen- tine Republic. The manufacture probably would have been, on the whole and in the long run, more satisfactory to those engaged in it if they had had free wool and if woollens had been charged with no more than the pro- tection of 25 per cent, which the act of 1867 was supposed to give.' Some establishments, no doubt, have arisen which could not continue under such a system, and for these temporary provisions should be made if the present duties are swept away. ' This statement does not lack the authority of men of practical experience ; I may mention Mr. Rowland Hazard, of Providence, R. I., a large manu- HOW DUTIES WERE RAISED. 219 The woollens act of 1867 has been discussed somewhat at length because it is the most striking illustration of the manner in which protective duties were advanced after the war at the request of domestic producers. There are not a few other cases in which an increase of duties beyond the level reached during the war was made. After the woollens act, perhaps the most remarkable is the copper act of 1869. Before that year the duty ^ on copper ore had been five per cent., that of i86g. on copper in bars and ingots had been two and a half cents per pound. Under the very low duty on copper ore a large industry had grown up in Boston and Balti- more. Ore was imported from Chili, and was smelted and refined in these cities. But during the years im- mediately preceding 1869 the great copper mines of Lake Superior had begun to be worked on a considerable scale. These mines are probably the richest sources of copper in the world, and under normal circum- facturer, who has kindly permitted the use of his name as sanctioning the text on this point. It is not part of the object of this volume to discuss in detail the economic effect of the duties on wool and woollens. The reader is referred to a dis- cussion of the original scheme in Mr. Wells's " Report of 1866-67," pp. 50- 60 ; also to Mr. Wells's " Report for 1869-70," pp. xcii-cv.; Wells, " Wool and the Tariff" (1873); Harris, "Memorial to Committee on Ways and Means" (1872); Schoenhof, "Wool and Woolens" (1883); R. Hazard, "Address before the Washington County Agr. Society" (1884). On the other side, see Bulletin Wool Manufacturers, vol. ii., pp. 19-34, in reply to Wells's remarks in 1870 ; " Examination of Statements in the Report of the Revenue Commissioner," House Rep., 41st Congress, 2d session. Report No. 72 (1869-70) ; Bulletin Wool Mfr., vol, xiii., p. 1-13 ; " Tariff Comm. Report," pp. 2240-47, 2411-2440, 220 HISTORY OF THE EXISTING TARIFF. stances would supply the United States with this metal more cheaply and abundantly than any other country ; yet through our tariff policy these very mines have caused us for many years to pay more for our copper than any other country. The increased production from these mines, with other circumstances, had caused copper to fall in price in 1867 and 1868; and their owners came before Congress and asked for an increase of duties. Cop- per ore was to pay three cents for each pound of pure cop- per, equal to twenty-five or thirty per cent., in place of the previous duty of five per cent. ; and ingot copper was to pay five cents per pound, instead of t\\'o and a half cents. The bill making these changes was passed by both houses. President Johnson refused to sign it, and sent in a veto message, which bore marks of having been composed by other hands than his own. But the President was then per- haps the most unpopular man in the country ; Congress had got a habit of overriding his vetoes, and the copper bill was passed in both Houses by the necessary two-thirds vote, and became law.' A more open use of legislation ^ The veto message is in Congress, Record^ 1868-69, p. 1460. It was written by Mr. David A. Wells, as that gentleman has informed the writer. The character of the bill was made clear enough in the course of the debate, at well as by the veto message. See Brooks's speech, ibid., p. 1462. The manner in which this bill, and others of the same kind, were carried through Congress is illustrated by some almost naive remarks of Mr. Frelinghuysen : " JNIy sympathies are with this bill, as they always are for any tariff bill. I confess, however, that I do not like this system of legislation, picking out first wool, then copper, then other articles, and leaving the general manu- facturing interests without that protection to which they are entitled, and thus dividing the strength which those great interests ought to have. But ffOJV DUTIES WERE RAISED. 221 for the benefit of private individuals has probably never been made. The effect of the act was, in the first place, to destroy the smelting establishments which had treated the Chilian ores. In the second place, it enabled the copper producers at home to combine and to settle the price of their product without being checked by any pos- sible foreign competition. It is a well-known fact that the mining companies of Lake Superior, which controlled until within a year or two almost the entire production of copper in the United States, have maintained for many years a combination for fixing the price of copper. Their price has been steadily higher than the price of copper abroad ; and when they have found it impossible to dis- pose of all their product at home at the combination price, large quantities have been sent abroad and sold there at lower prices, in order to relieve the home market. Several of these companies have paid for a series of years enormous profits — profits due in part, no doubt, to the unsurpassed richness of their mines, but in part also to the copper act of 1869.' Still another instance of the increase of duties since the war is to be found in the case of steel rails. Before 1870 steel rails had been charged with duty under the head of still, if a bill is introduced which gives protection to copper, trusting to the magnanimity of the Representatives from the West who have wool and cop- per protected, I should probably vote for the bill." — Ibid., p. 161. ' On the effect of the copper act, see Mr. Wells's Essay, already referred to, in the Cobden Club series, pp. 518-521 Cf. the "Report of the Tariff Comm.," pp. 2554-2577. See also Appendix, V., where the total pro- duction of copper in each year, prices at home and abroad, etc., are given. 222 HISTORY OF THE EXISTING TARIFF. "manufacturers of steel not otherwise provided for," and Steel rails, as such had paid forty-five per cent. The 1870. tariff act of 1870 changed this to a specific duty of i^ cents per pound, or $28 per gross ton. At the time, the change caused an increase, but no very great increase, in the duty. The Bessemer process of making steel had hardly begun to be used in 1870, and the price of steel rails at that time in England was about $50 per ton. The ad-valorem rate of forty- five per cent., calculated on this price, would make the duty $22.50 per ton, or not very much less than the duty of $28 per ton imposed by the act of 1870. Between 1870 and 1873, the price of steel rails advanced in Eng- land, and the specific duty of $28 imposed in the former year was not higher than the ad-valoreiii rate of forty-five per cent, would have been. But after 1873 the prices of Bessemer steel and of steel rails steadily went down. As they did so, the specific duty became heavier in propor- tion to the price. By 1877 the average price of steel rails in England was only a little over $3 1 per ton ; and since 1877 the English price has not on the average been so high as $28 per ton. The duty of $28, which this country imposed, has therefore been equivalent to more than one hundred per cent on the foreign price. The result of this exorbitant duty was an enormous gain to the producers of steel rails in the United States. The patent for the use of the Bessem'er process was owned by a comparatively small number of companies ; and these companies, aided by a I/Oir DUTIES WERE RAISED. 223 patent at home and protected by an enormous duty against foreign competitors, were enabled for a time to ob- tain exceedingly high prices for steel rails. During the great demand for railroad materials which began on the revival of business in 1879, and continued for several }"ears thereafter, the prices of steel rails were advanced so high that English rails were imported into this country even though paying the duty of one hundred per cent. During this time the price in England was on the average in 1880 about $36 per ton, and in 1881 about $31 per ton. In this country during the same years the price averaged %6'] and $61 per ton. That is, consumers in this country were compelled to pay twice as much for steel rails as they paid in England. Any thing which increases the cost of railroad-building tends to increase the cost of transportation ; and a tax of this kind eventually comes out of the pockets of the people in the shape of higher railroad-charges for carrying freight and passengers. The domestic producers of steel rails secured enormous profits, of one hundred per cent, and more on their capital, during these years. These profits, as is always the case, caused a great extension of production. The men who had made so much money out of Bessemer steel in 1879-S1 put this money very largely into establishments for making more steel. New works were erected in all parts of the country. At the same time the demand fell off, in consequence of the check to railroad-building ; and the increased supply, joined to the small demand, caused 224 HISTORY OF THE EXISTING TARIFF. prices here to fall almost to the English rates. But during the years of speculation and railroad-building the tariff had yielded great gains to makers of steel rails ; and popular feeling against this state of things was so strong that in 1883 Congress felt compelled, as we shall see, to make a considerable reduction in the duty.' Still another case, and one which bears some resem- Marble i86a ^^^"''^ *° ^^ woollen act of 1867, is to be and 1870. found in the change of the duty on marble, which was made in 1870. The -duty on marble had been put in 1864 at fifty cents per cubic foot, and twenty per cent, in addition. This, it may be remarked, is one of the not infrequent cases in which our tariff has imposed, and still imposes, both ad-valorem and specific duties on the same article. No compensating principle, such as is found in the woollen schedule, ex- plains most of these mixed duties ; and it is hard to find any good reason for retaining them, and giving the customs authorities the task of assessing the duty both on value of the article and on its weight or measure. The cause of their retention, there can be little doubt, is that they serve to conceal the real extent of the duties imposed. The duty on marble, for instance, had been thirty per cent, in 1861, and had been raised to forty per ' The effect of the steel-rail duty is discussed more in detail in Mr. J. Schoenhof's " Destructive Influence of the Tariff," ch. vii. On the profits made by the manufacturers, see Mr. A. S. Hewitt's speech in Congress, May, 16, 1S82, Congress. Record, pp. 3980-83 ; also printed separately. Cf. infra, p. 94, and figures of production, prices, etc. in Appendix, VI. HOW DUTIES WERE RAISED. 225 cent, in 1862. The mixed duty put on in 1864 was equivalent to eighty per cent, and more.' A direct in- crease of the duty from forty to eighty per cent, would hardly have been ventured on ; but the adoption of the mixed duty veiled the change which was in fact made. One would have supposed that this rate of eighty per cent, would have sufficed even for the most ardent sup- porter of home industries ; but in 1870 a still further increase was brought about. It was then enacted that marble sawed into slabs of a thickness of two inches or less should pay twenty-five cents for each superficial square foot, and thirty per cent, in addition ; slabs be- tween two and three inches thick should pay thirty-five cents per square foot, and thirty per cent. ; slabs between three and four inches thick should pay forty-five cents per square foot, and thirty per cent.; and so on in propor- tion. Marble more than six inches thick paid at the old rate of fifty cents per cubic foot, and twenty per cent. It is evident that the change made in the duty on marble in slabs caused a great increase. The duty on the thinnest slabs (two inches or less in thickness) became $1.50 per cubic foot, and thirty per cent, in addition ; this same ' The duty of 1864 was fixed, as Mr. Morrill then explained, in accord- ance with an arrangement made between the importing merchants and " the gentlemen in Washington in the marble-quarry interest. " The latter were Mr. Morrill's constituents. It did not seem to occur to that gentleman that the persons who were to pay for the marble should be regarded at all. Originally Mr. Morrill had even proposed a duty of seventy-five cents per cubic yard, with twenty per cent, in addition. See Congr. Globe, 1863-64, pp. 2746-2747. 226 HISTORY OF THE EXISTING TARIFF. marble had hitherto been admitted at fifty cents per cubic foot, and twenty per cent. The new rates of 1870 have been equivalent to between 100 and 150 per cent, on the value, and have been practically prohibitive. The effect of the marble duty and of the change made in it in 1870 can be understood only by those who know the cir- cumstances under which marble is produced and imported in this country. The only marble imported, and that which alone is affected by the duty, is fine marble used for ornamental purposes in mantel-pieces, furniture, grave- stones, etc. Such marble comes into use very largely in the shape of slabs of a few inches in thickness. The marble is imported, notwithstanding the heavy duty, from Italy, whence it is brought cheaply by ships that have taken out grain and other bulky cargoes. It is produced in the United States in a single district in Vermont. The owners of the marble quarries in this district have their product raised in price almost to the extent of the duty of eighty or 150 per cent. The result has been to make these quarries very valuable pieces of property, and to put very handsome profits into the pockets of their owners ; profits which represent practically so much money which Congress has ordered those who use ornamental marble to pay over to the quarry-owners.' Wool and woollens, copper, steel rails, marble, which we have now considered, are sufficient examples of the man- ' In regard to the duty on marble, see " Tariff Commission Report," pp. 227, 1560, 1648. HOW DUTIES WERE RAISED. 227 ner in which duties, already raised to high figures during the war, were still further increased after the war, for the benefit of the domestic producers. Other instances could be given in which an equal disregard other of the consumer and taxpayer has been examples, shown. The duty on flax, the raw material ^^' ""^ ^ ' of a manufacture not over-prosperous, had been $15 per ton in 1864; in 1870 it was raised to $20 on undressed flax, and to $40 on dressed flax. Nickel had been admitted free of duty in 1861, and had paid only fifteen per cent, by the act of 1864. In 1870 the duty was sud- enly made thirty cents per pound, or about forty per cent, on the value. Nickel, like marble, is produced in only one locality in this country. There exists a single nickel mine, in Pennsylvania, owned by a well-known ad- vocate of protection, and, with the aid of the tariff, this mine, doubtless, has yielded the owner very handsome re- turns.' Examples need not be multiplied. Enough has ' Mr. Joseph Wharton, of Philadelphia, is the owner of the nickel mine. Mr. Wharton has also been largely interested in Bessemer steel-works. There can be no impropriety in mentioning his name, as he has publicly advocated not only the general doctrine of protection, but also the retention of the duties on nickel and steel. See "Tariff Com. Report," pp. 201-204; ^^^ ibid., 219,393, inregardto the effect of the duty on nickel. Cf. Mr. Wharton's pamphlet, " The Duty on Nickel," Philadelphia, 1883 ; and Mr. D. A. Wells's remarks on this pamphlet in /'nW.ffcre Review, ^vX-^., 1883, pp. 8-1 1. See also "Mineral Resources of the United States," p. 405. Mr. Wharton is the founder of the Wharton School of Finance and Economy, in Philadel- phia, in which protectionist doctrines are taught. Indeed, Mr. Wharton, when giving the money for founding the school, stipulated that the profes- sors should teach "how, by suitable tariff legislation, a nation * * * may keep its productive industry alive, cheapen the cost of commodities, and 228 HISTORY OF THE EXISTING TARIFF. been said to show how the tendency toward high duties, which was caused by the war, continued after the war ceased, and how this tendency was taken advantage of by the home producers in order to obtain a degree of protection which, under ordinary circumstances, they would not have dreamed of asking. No excuse can be found for the great increase of duties on wool and woollens, on copper, Character of these ^iid on the other articles which have been measures, dealt with in the present chapter. That duties were greatly increased during the course of the war, and in many cases increased wantonly and unnecessarily, may be explained and in some degree excused by the imperative need of heavy taxation at that time, and by the impossibility of avoiding mistakes and incongrui- ties in the hurried passage of a complicated mass of legislation. The retention of these war taxes, heavy and often exorbitant as they were, for twenty years after the occasion for them had passed, is not indeed to be defended, but it may be reasonably explained. The pressure of other problems, the fear of infringing on vested rights and interests, the powerful opposition which is always met in withdrawing public bounty when once it has been conferred, may explain the failure to reduce the war duties on grounds which, if not sufficient, are at least not unbecoming to our public life. But for the additions oblige foreigners to sell it at low prices, while contributing largely toward defraying the expense of its government." The quotation is from the letter of gift. /fOlV DUTIES WERE RAISED. 229 to the protective system that were made by measures like the woollens act of 1867 and the copper act of 1869, no explanation can be given that does not reflect in some degree on the good name and the good faith of the national legislature. Such measures can be accounted for only when we call to mind that our public life was demoralized during the years immediately following the war ; that jobs were plenty and lobbyists powerful ; that some Congressmen thought it not improper to favor legislation that put money into their own pockets, and many thought it quite proper to support legislation that put money into the pockets of influential constituents. The measures which we have been considering were by no means the most conspicuous or the worst results of this state of things. Bribery, direct or indirect, is not likely to have been used to affect tariff provisions ; it certainly can have had little influence on legislation. Contributions to the party chest are the form in which money payments by the protected interests are likely to have been made, so far as such payments were made at all. But the general laxity of thought on public trusts undoubtedly made possible the manipulation of the tariff in the interest of private individuals. The tone of political life, as indeed that of commercial life, was lowered by the abnormal economic conditions that followed the war; and the general demoralization enabled the protected interests and their champions to rush through Congress measures which, in a more healthy state of public affairs, would have been reprobated and rejected. CHAPTER IV. THE TARIFF ACT OF 1 883. In the preceding chapters the tariff has been discussed independently of the act of 1883. That act, aside from the abortive horizontal reduction of 1872, made the first general revision since the Civil War. It has been as- sumed, in our discussion of the legislation previous to 1883, that the revision was not so complete, and the change made in the course of it not sufficiently great, to affect the substantial truth of the statement that the war duties are still retained as the basis of our tariff system. It remains to justify this assumption by examining in some detail the act of 1883. The history of the passage of the act is so recent and familiar that only the salient events need be recalled. After the crisis of 1873 little or nothing was heard for a while about the tariff ; and so habituated had the public become to the extreme protective regime that the demand for its reform met with little support. The subject was again made prominent, after having attracted little atten- tion for several years, by the redundant revenue which was the consequence of the revival of trade in 1879 ^"^^ the subsequent years. The connection between tariff legisla- ^30 THE TARIFF ACT OF 1 883. 23 1 tion and the state of the revenue has indeed been curi- ously constant in our history. In 1842 an empty treasury was followed by the passage of a high protective tariff. In 1857 an overflowing revenue caused a reduction of the duties. In 1861 the Morrill tariff was passed, partly in order to make good a deficit. During the war the need of money alone made possible the act of 1864. The ten per cent, reduction of 1872 was called out ^ itation largely by the redundant revenue ; its abolition on the tariff in 1875 was excused by the falling off in the ''^"^^^ government income. In recent years the surplus has been on the average about a hundred millions a year,' and the demand for a reduction in the tariff rates has become steadily stronger. In 1882 a protectionist Congress passed an act for the appointment of a Tariff Commission, Tariff which was to report at the next session of Commission Congress what changes it thought desirable. Of the gentlemen appointed by the President on this commission a majority were advocates of high protec- tion ; while no member could be said to represent that part of the public which believed a reduction of the protective duties to be desirable. Mr. John L. Hayes, ' The surplus, after paying all expenses and interest on the public debt, was : In the fiscal year 1880 $65,883,000 '■ " 1881 100,069,000 " " 1882 145,543,000 " " 1883 132,879,000 " " 1884 104,393,000, (under the act of 1883). 232 HISTORY OF THE EXISTING TARIFE. the secretary of the Wool Manufacturers' Association, was president of the commission. Its report was laid before Congress at the beginning of the session of 1882-83. At first no action on this report or on the tariff seemed likely to be taken ; for the House, in which revenue bills must originate, was unable to agree on any bill. But the House, having passed a bill for the reduction of some of the internal taxes, the Senate tacked to this bill, as an amendment, a tariff bill based, in the main, on the recom- mendations of the Tariff Commission. When this bill came before the House the protectionists again succeeded, as in 1872, in obtaining a parliamentary victory. By an adroit manoeuvre they managed to have it referred to a conference committee.' In this committee the details of the tariff act were finally settled ; for the bill, as reported ' This manoeuvre was a curious example of the manner in which the rules of Congress are manipulated in order to affect legislation. A two-thirds vote, by the existing rules, was required to bring the Senate bill before the House. A two-thirds majority in favor of the bill could not be obtained ; though it was probable that on a direct vote a majority in its favor could have been got. The protectionists wished to have the bill referred to a confer- ence committee, which would probably act in the direction desired by them. For this purpose a resolution was introduced by Mr. Reed, of Maine, pro- viding for a new rule of the House, by which a bare majority was to have power to take up a bill amended by the Senate for the purpose of non-con- currence in the Senate amendments, but not for the purpose of concurrence. By the passage of this rule a majority of the House could take up the tariff bill, and then refuse to concur in the Senate amendments ; but under this rule the amendments could not be concurred in, There was, consequently, no possibility of passing the tariff bill in the shape in which it came from the Senate. The bill had to be referred to a conference committee ; and in that committee, as the text states, the details of the bill were settled. The Reed rule, though made a permanent rule of the House, was passed merely in order to attain this object. THE TARIFF ACT OF 1 883. 233 to the Senate and House by the conferees of the two bodies, was passed by them and became law. Act of 1883; The object of the manoeuvre was to check the how passed. reduction of duties as it appeared in the Senate bill ; and this object was attained. The changes made by the conference committees were, as a rule, in a protectionist direction. The duties on a number of articles were raised by the committee above the rates of the Sen- ate bill, and even above the rates which the House had shown a willingness to accept. The consequence was that the tariff act, as finally passed, contained a much less degree of reduction than the original Senate bill ; and it was passed in the Senate only by a strict party vote of 32 to 31, while the original Senate bill had been passed by a vote of 42 to 19.' ' Mr. Morrison said, in the last session of Congress (1B83-84), in com- menting on the act of 1883 • " The office and duty of a conference commit- tee is to adjust the difference between two disagreeing Houses. This House had decided that bar-iron of the middle class should pay $20 a ton ; the Senate that it was to pay $20,16 a ton. The gentlemen of the conference committee reconciled this difference — how ? By raising bar-iron [of this class] above both House and Senate to $22,40 a ton. The Tariff Commis- sion reported that the tariff on iron ore should be 50 cents a ton. The Senate said it should be 50 cents a ton. The House said it should be 50 cents a ton. Gentlemen of the conference committee reconciled the agree- ment of the House, Senate, and Tariff Commission into a disagreement, and made the duty on iron ore 75 cents a ton. The gentlemen of the confer- ence did a similar service for the great corporation of corporations, the Iron and Steel Association, by giving it a tax of $17 on steel rails, which the House had fixed at $15 and the Senate at $15.68 per ton." Quoted in Nel- son's " Unjust Tariff Law," pp, 22, 23, Cf. remarks to the same effect by Senator Beck, who was a member of the conference committee. — Cong. Record, 1883-84, p. 2786. The conferees for the Senate were Messrs. Morrill, Sherman, Aldrich, 234 HISTORY OF THE EXISTING TARIFF. In taking up the provisions of the act of 1883/ it will be best to consider first those cases in which an increase in the duties has been made. For, unex- pected as it may be to the reader of the preceding pages, the act of 1883 contains a number of sections in which protective duties have been advanced above Duties ^^^ rates of preceding acts ; and these sec- raised in tions are very instructive when we try to make out the general character of the new act. To begin with, the duties on certain classes of woollen goods have been raised. On most woollens the figures have been lowered ; though, as will be seen, the reduction in these cases has not been such as to bring any benefit to consumers. But on certain classes of woollens, on which a reduction of duty, if made, would have been of benefit to consumers, the duties have not been reduced, but advanced. This is the case Woollen with dress goods made wholly of wool. Under dress goods, ^j^g g^j-j- qJ igg^ sucli goods had paid a maxi- mum duty of eight cents per yard and forty per cent. It will be observed that the forty per cent, rate on these goods had already been above the general ad-valorem duty Bayard, and Beck ; for the House, Messrs. Kelley, McKinley, Haskell, Randall, and Carlisle. All but three (Bayard, Beck, and Carlisle) were strong protectionists. ^ In the appendix, VII,, the reader will find a table giving in detail the old duties, those recommended by the Tariff Commission, and those now in force, on all articles mentioned in this chapter. In the document entitled " Tariff Compilation," printed by the Senate in 1884, a complete list of the old and new duties is given. THE TARIFF ACT OF 1883. 235 of thirty-five per cent, established by the act of 1867. Nevertheless the act of 1883 increased the duty on these goods to nine cents a )'?.rd and forty per cent. The Tariff Commission had even recommended twelve cents a yard and forty per cent. Goods of this class form the largest single item in the importations of woollens into the United States. They are made to no very great extent by the domestic manufacturers. The new duty is intended to enable the latter to engage profitably in making them ; since the old duty, though it amounted in all to more than sixty-five per cent, on the values of the imports, had not sufificed for this purpose. No pretence was made that this increase in the specific duty was necessary to give more effective compensation for the wool duty ; in fact, as we shall see, the duty on wool was slightly lowered, so that the compensating duty, if changed at all, should have gone down. The new duty was simply a concession to the demand of the manufacturers for still further protection on one of the few articles on which the previous rates had still permitted foreign competi- tion.' Next to dress goods, such as were discussed in the preceding paragraph, the class of woollens of which ^ The Tariff Commission, in its "Report" (p. 31), says: "The new clause in relation to all-wool merino goods is a new provision, and has in view the introduction of fabrics never yet successfully made in this country. Many of these goods constitute staple fabrics * * * and their manufac- ture would be a desirable acquisition to our national industry." Cf., on the whole of the new system of wool and woollen duties, two articles in Bulletin Wool Mf., xiii., 1-13, 89-128. 236 HISTORY OP THE EXISTING TARIFF. the importations are largest are the finer grades of cloths and cassimeres. The importation of these goes on Woollen steadily in large quantities, and the tariff tax cloths, on them is felt with its full weight ; for, since importation continues, it is clear, that not only the imported goods, but also those of the same kind made at home, are raised in price to the full extent of the duty. The duty on them, like that on dress goods, is one of the comparatively few in the woollens schedule which has not been entirely prohibitory. The production of these finer woollens is carried on in this country only to a limited extent. It is not surprising, therefore, to find here also a rise of the rates in the new act. Cloths are there divided into two classes : those costing more and those costing less than eighty cents per pound. The latter, costing less thai? eighty cents, are admitted, as before, at an ad-valorem duty of thirty-five per cent. But the former, costing more than eighty cents, per pound, are now made to pay forty per cent. The specific compensating duty is indeed reduced somewhat in both cases, in connection with the lower duties on wool, which will presently be discussed ; but the ad-valorem rate, that which is avowedly protective, is increased. A change of almost the same kind was made in the Cotton duties on cotton goods. Here also the duty goods, was lowered on the common grades of goods ; and on these grades, as will be seen in the following, the reduction was again a purely nominal one, of no benefit . THE TARIFF ACT OF 1 883. 237 to the consumers and taxpayers. But on other grades of cotton goods, whose importation still goes on, and on which a decrease in the duty would have caused some lowering of prices and some relief from taxation, there was no reduction, but an increase. The duty on cotton hosiery, embroideries, trimming, laces, insertings, etc., had been thirty-five per cent, under the old law. In the act of 1883 it was made to be forty per cent. The duty of thirty-five per cent, had been imposed during the war, in 1864, at a time when raw cotton was taxed, and the manufactured cotton also paid a heavy internal tax. This rate remained unchanged from 1864 till 1883, notwithstanding the abolition of the internal taxes; and now it has even been raised to forty per cent. The importance of this change is clear only when we know that imports of cottons consist chiefly of goods of the class on which the duty is increased. The statistics of former years are so arranged that we cannot tell ex- actly how large a proportion these goods bear to the total imports of cottons ; but it is safe to say that more than half the cotton goods which continue to be brought into this country from abroad will be affected by the increase of duty from thirty-five to forty per cent.' The process by which the protective system has gradu- ' The goods on which the new duty took effect are separately stated for the first time in the statistical returns for 1S83-84. From the statement of imports for the ten months ending April, 1884 (the only statement the writer has at hand), it appears that out of a total importation of about $25,000,000 of cottons, not less than $15,000,000 paid the new duty of forty per cent. 238 HISTORY OF THE EXISTING TARIFF. ally been brought to include almost every article, what- ever its character, whose production in the Iron ore. country is possible, is illustrated by the new duty on iron ore. This, as the crudest of raw mate- rials, would be admitted free, or at very low rates, according to ordinary canons of protection. In 1861 it had paid a duty of ten per cent, as an unenumerated article ; and this rate had not been changed during the war, since the article was not one likely to be im- ported or to yield revenue. In 1870, when the protec- tive principle, as we have seen, was applied with greater strictness in various directions, the duty was raised to twenty per cent. In recent years iron ore has been im- ported in considerable quantities from Spain ; and now the duty has been raised, in the present tariff, to seventy-five cents per ton, or about thirty-five per cent, on the value. Still another instance of the advance of duties in the existing act is to be found in the rates on certain manu- factures of steel. Here, as has so often happened, Steel. . rr . the increase is concealed under what is in ap- pearance merely a change in classification. The duties on steel ingots, bars, sheets, and coils had been, until 1883, those fixed in the war tariff of 1864, — from two and one quarter cents to three and one half cents per pound, varying with the value of the steel. The act of 1883 apparently reduced these duties slightly, making them from two to three and a quarter cents per pound. But previous to 1 883 " steel, in forms not otherwise specified," had been admitted THE TARIFF ACT OF 1 883. 239 at a duty of thirty per cent. Under this provision, which had been in force since 1864, a number of articles, like cogged ingots, rods, piston-rods, steamer shafts, and so on, had paid only thirty per cent. The act of 1883, however, specifically enumerated these and other articles, and put them in the same schedule with steel ingots and bars, — that is, compelled them to pay a duty of from two to three and a quarter cents a pound. In almost all cases these arti- cles now must pay three and a quarter cents a pound, which will be a considerable advance over the previous rate of thirty per cent. On the newly-enumerated articles the present act causes an increase in the duty; although, at first sight, the new schedule of steel ingots, bars, etc, seems to show a lowering of the rate. In very much the same way, by means of a change in classification, an increase has been brought about in the duty on files. These had paid, before 1883, a duty varying, according to the length of the files, from six to Files, ten cents per pound, and, in addition, thirty per cent. The Tariff Commission recommended, and the act of 1883 established, a new rate of from thirty-five cents to %2.'^o per dozen. The effect of the change was to increase the duty on the small sizes of files. These sizes alone will feel any effect from the new duty. Under the old duty the importation of most classes of files had entirely ceased ; but small files, such as are used chiefly by watchmakers, continued to be imported from Switzerland and England. On these the new classification brought about ari increase 240 HISTORY OF THE EXISTING TARIFF. in the duty, which, it is needless to say, operated greatly to the advantage of the domestic manufacturers of the article. Again, quicksilver had been admitted in previous years Other free of duty; the act of 1883, in response to articles, g^ demand from the owners of the richest mines in the world, those of California, imposed on this metal a duty of ten per cent.' One of the impor- tant drag-net paragraphs in the tariff — " manufactures, articles, vessels, and wares, not otherwise provided for, of brass, iron, lead, pewter, and tins " — shows an increase in the duty from thirty-five to forty-five per cent. A very large number of articles, tools, and machinery of various kinds are charged with duty under this clause : the imports of manufacturers of iron alone, on which the higher rate of forty-five per cent, will take effect, amounted in 1883 to nearly $3,400,000. Other instances of the same kind could be found in the new act ; but enough have been given to show that the process of extending and increasing the protective duties, which was traced in part in the preceding chapter, by no means ceased in the act of 1883. The reader may be weary of the dry figures of the preceding paragraphs, and especially of those relating to articles of little importance, like watchmakers' files. It is true that the economic welfare of the country is not per- ceptibly affected by an increase in the duty on watch- ' See " Tariff Commission Report," pp. 2591—2597. THE TARIFF ACT OF 1883. 24! makers' files and by the consequent rise in their price. But the tariff contains a mass of these duties, 1-1 11 • ^ Thisincrfease which, taken together, have no small mnuence q£ duties on the prosperity of the country ; and it is im- "°' defensi- ble possible to understand the history of the tariff or its effects without going more or less into details of this kind. Moreover, in regard to this act of 1883, the many instances in which duties have been ad- vanced deserve especial attention, because they throw light on the character of the act and the intentions of those who passed it. That these changes are not defen- sible on any sound economic principles need not here be shown. They are to be condemned when we look at them from the point of view not only of economic princi- ple, but of public policy and public faith. The Tariff Commission was given the task of revising the tariff "judiciously"; its recommendations were declared to contain a general reduction of duties by twenty per cent, or more, and the declared object of the leaders of the dominant party was to bring about some substantial relief. No one can doubt that " reform " at the present time means a reduction, and excludes an increase in duties, and that the advance in the rates on cottons, woollens, and other articles was no part of what the public reasonably expected in the new act. Whatever may be the feeling as to the retention of the existing duties, or as to the time and manner in which reduction should be made, public opinion with the majority of the 242 HISTORY OF THE EXISTING TARIFF. people may be safely said to be opposed to any further growth of the protective system. No rational and un- prejudiced person will deny that protection has at least been carried far enough in our tariff system. Had the higher duties of the act of 1883 been brought before Con- gress in a separate bill, there can be no doubt that their enactment would have been impossible. That they were in many cases half concealed by means of changes in clas- sification, or were coupled with apparent reductions on other articles in the same schedules, shows that the pro- tectionists themselves had some fear of putting them nakedly before the public. The existence of changes of this kind causes a feeling of suspicion as to the new tariff act as a whole. It makes a doubt arise whether in those cases where the figures have been lowered, any thing has really been done that gives relief from the burden of the protective duties. The schedules in the tariff which have the greatest effect on the welfare of the country are those Reductions of duty: fixing the duties on iron and wool; and to wool. these we will first give our attention. The change in the duty on wool was sufiSciently simple. The ad-valorem rate was taken off. The duty of 1867, it will be remembered, had been, on wools costing less than thirty-two cents, ten cents per pound and eleven per cent, ad valorem, and, on wools costing more than thirty-two cents, twelve cents per pound plus ten per cent, ad valorein. These ad-valorem rates of eleven and THE TARIFF ACT OF 1 883. 243 ten per cent, were taken off, and the rates left simply at ten and twelve cents per pound.' In regard to the greater part of the wools raised in the United States, this reduc- tion is purely nominal. It leaves the duty on the cheaper grades of wool raised in Texas and in the Territories at a point where it is still entirely prohibitory. That such is the case, has been frankly acknowledged in the ofificial mouth-piece of the wool manufacturers." So far as con- cerns the higher grades of wool, such as are raised in Ohio and neighboring States, the reduction is a slight sub- stantial gain. The only objection is that it does not go far enough. The duty on wool, notwithstanding the cumbrous machinery of compensating duties, undoubtedly has a hampering influence on the wool manufacture, and has been an important factor in confining this industry within a limited range that is often complained of. Like ' The duty in the act of 18S3 is ten cents on wool costing thirty cents or less, and twelve cents on that costing more than tiiirty cents. The change (in the line of division, according to value) from thirty-two to thirty cents is not without importance ; and, as far as it goes, it evidently tends to neutralize the reduction. This is confessed in the Bulletin Wool Mf., xiii., II, 109. The duty on carpet wool [ante p. 47) was also reduced from three and six cents per pound to two and one half and five cents. There is no reason why carpet wool should not have been admitted entirely free of duty, since such wool is hardly raised in this country at all. (See " Tariff Comm. Report," PP' 2335-2338.) The retention of the duty on it is doubtless explained by the fact that the compensating specific duty on ca]pets, like most of the com- pen.sating duties, in reality yields a good deal of protection to the manu- facturers ; this they are unwilling lo give up ; and they cannot retain it without also retaining the duty on carpet wool, that being the only founda- tion for the specific compensating duty, '^ 's^e. Bulletin Wool Mf., y-'m., 100. 244 HISTORY OF THE EXISTING TARIFF. every protective duty, it causes consumers to pay a tax which does not go into the government coffers, but merely aids or enriches individuals. As a tax on raw materials, it tends to bear with heavier weight than would be the case with the same duty on a finished product ; since it is advanced again and again by the wool dealer, the manu- facturer, the cloth dealers, the tailor, each of whom must have a greater profit in proportion to the greater amount of capital which the wool duty and the higher price of wool make it necessary for him to employ. So strong and so clear are the objections to duties of this kind that hardly another civilized country, whatever its general policy, attempts to protect wool.' Moreover, the reduc- tion of a duty of this kind can take place with excep- tional ease. Wool is not produced, as a rule, in large quantities, by persons who devote themselves exclusively to this as a business. It is mainly produced by farmers, whose chief income comes from other sources, and on whom a reduction of duty and a fall of price would fall with comparatively little weight.' The case is different in many branches of manufacture, where a considerable ' Not only England, but Germany, France, Austria, and Italy, all of ■whom maintain a more or less protective tariff, and grow large quantities of wool, admit Ihis material free of duty. ' It may be said that this is not the case with the large sheep ranches of the Western States and Territories. But these ranches, it happens, pro- duce the grades of wool of which the price is least affected by the duty ; and moreover, the production of these wools has been exceptionally profitable (partly in consequence of the tariff), and such fall in price as would ensue could very well be endured by the producers. See " Tariff Comm. Report," pp. 1782-1785, and the passages in Bulletin Wool Mf. already referred to. THE TARIFF ACT OF 1 883. 245 fall in prices may produce an entire cessation of produc- tion and a great disturbance of economic relations, and where in consequence a reduction of protection must be made more gradually and" carefully. The wool duty may be reduced quickly and sharply without any great danger of interfering harmfully with the established state of things. All economic experience, and more especially the lessons of the last few years, show that such a change is likely to come in the near future. We turn now to the reductions of duty in the new act on woollen goods, which must follow from the Woollens. lower duty on wool. It has been seen that the ad-valorem, or protective, duty was not decreased at all, and that on the finer classes of woollens it was increased from thirty-five to forty per cent. But the specific, or compensating, duty was reduced from fifty cents to thirty-five cents a pound. The present duty is thirty-five cents a pound and thirty-five per cent, oi) woollens costing less than eighty cents per pound, and thirty-five cents and forty per cent, on woollens costing more than eighty cents. The lowering of the specific duty was in part called for by the reduction of the duty on wool ; but the decrease is somewhat larger than the reduced duty on the raw material made necessary. The compensating duty in the new act seems to be fixed on the assumption that no more than three and one half pounds of wool are used in making a pound of cloth ; whereas the act of 1867, it will be remembered, was 246 HISTORY OF THE EXISTING TARIFF. framed on the basis of four pounds of wool to the pound of cloth. This may be called a tacit confession that the compensating duty of 1867 was excessive ; and the new arrangement takes away some? of the protection which was formerly given by the specific duty. But this change is of little, if any, benefit to consumers. So far as the finer grades of woollens are concerned, it is more than offset by the increase in the ad-valorem duty from thirty- five to forty per cent. So far as the cheaper grades of woollens are concerned, it has no real effect. The duty on these was prohibitory before, and it remains prohibi- tory now. A reduction of a prohibitory duty may be made and still leave the rate so high as to shut out impor- tation ; and this is what has been done. Such a change has no effect on trade or prices, and brings no benefit to consumers. Precisely similar is the state of things in re- gard to flannels, blankets, and similar goods. On these also the specific duty has been reduced, — on the cheapest grades from a rate of twenty cents a pound to rates of ten and twelve cents. But the new rates are still high enough to shut out importation, and bring about no change beyond that of the figures on the statute-book.' ' The manufacturers assert that the duties on goods have been reduced more in proportion than those on wool. See Mr. Hayes's article in Bulletin Wool Mf.y vol. xiii. Complaints are particularly strong from the manufac- turers of yarns, who say that the readjustment of duties on the new tariff enables yarns to be imported from England too easily ; and it seems there is ground for this complaint, to the extent that on some yarns the duty, in com- parison with the duty on the wool, is too low. — See Bureau of Statistics ^ ^'<=- bacon, lard, cheese, butter, wheat, corn, and oats, are left unchanged in the act of 1883. The duty on bar- ley was somewhat lowered, at the request of the brewers of beer ; and that on rice also was slightly re- duced. But almost all of these products continue to be charged with the same rates as in previous years. It is needless to say that the duties on them have no effect whatever, except to an insignificant extent on the local trade across the Canadian border. Articles such as these, which are steadily exported, are not affected by import duties. The duties probably are left unchanged in order to maintain the fiction that the agricultural population gets through them a share of the benefits of protection. It is curious that the reductions in this schedule, on barley and on rice, affect almost the only products on which the duties in fact bring any benefit to the agricultural pro-i ducer and any burden for the consumer. Enough has been said of the details of General the changes made by the act of 1883. Its '^«°'^'^l^=- general character cannot easily be described. In truth, it can hardly be said to have any general character. 254 HISTORY OF THE EXISTING TARIFF. It is best described as a half-hearted and unsuccess- ful attempt on the part of protectionists to bring about an apparent reform of the tariff.' That it was framed by men who at heart were protectionists, and who had no conviction that protection in this coun- try had been carried too far, or even far enough, is shown by the numerous cases in which, more or less openly, an increase in protective taxes was made. On the other hand, the desire to make some concession to the growing popular feeling against excessive duties caused reductions to be made — sometimes reductions that gave a real, though slight, relief from the burden of the duties, but more often reductions such as had little effect other than the change of the figures on the statute-book. On the whole, the changes have clearly not been of enough importance to affect the essential character of our tariff system. That system still retains, substantially un- changed, those high duties which were imposed during the war, and those further protective duties which the weakness of Congress, the general disorder of public affairs, and the insistence of domestic producers, brought about in the years immediately following the war. It is ' Mr. John L. Hayes, the President of the Tariff Commission, writing more particularly of the new duties on wool and woollens, said, shortly after the passage of the act : " Reduction in itself was by no means desirable to us ; it was a concession to public sentiment, a bending of the top and branches to the wind of public opinion to save the trunk of the protective system. In a word, the object was protection through reduction. We were willing to concede only to save the essentials both of the wool and woollens tariff. * * * We wanted the tariff to be made by our friends." — Bul- letin Wool Mf., xiii., 94. THE TARIFF ACT OF 1883. 255 Still a system which, if proposed in time of peace as a substitute for the duties in force in i860, would be re- jected as excessive and unreasonable. Since the passage of the act of 1883, several unsuccess- ful attempts have been made to amend it.' In 1884, Mr. Morrison, of Illinois, introduced a bill by which a general reduction of twenty per cent., and the entire remission of duties on iron ore, coal, lumber, and other articles, were proposed. Mr. Morrison may have been moved to advo- cate the plan of a " horizontal " reduction by the example which the Republicans had set in 1872 ; and doubtless he was also influenced by the circumstance that the pro- tectionists themselves had arranged the details of the act of 1883, and could not complain of disproportionate re- ductions, or of a disturbance of relative rates, under a plan which affected all articles equally. Nevertheless, the proposal met with vehement opposition not only from the Republicans, but from a strong minority in Mr. Mor- rison's own party. It was disposed of on May 6, 1884, by a vote (156 to 151) striking out its enacting clause. Two years later, in the Forty-ninth Congress, a similar disposition was made of another bill introduced by Mor- rison. The proposal of 1886, however, was different from that of 1884, in that it made detailed changes in the duties. Lumber, salt, wool, hemp, flax, and other articles were put on the free list ; the duty on woollens was made ' An excellent account of these attempts is given by Mr. O. H. Perry in the Quarterly Journal of Economics iox Octt^^x, 1887, vol. II. , pp. 69-79. 2 $6 History of the existing tarifp. 35 per cent., the specific duties on woollens being re- moved with the duties on wool ; and reductions were pro- posed on cottons and on sugar. The bill never was dis- cussed in Congress, for Mr. Morrison's motion to proceed to its consideration was defeated by a vote of 157 to 140, and during the rest of the session no further attempt was made to take it up. Early in the next session, in Decem- ber, 1886, a motion was again made to proceed to the consideration of revenue bills, and again was defeated. Some other measures of less significance were also intro- duced in these years, such as a bill of 1884, to restore the duties of 1867 on wool, which was defeated by a close vote of 126 to 119, and bills introduced by Messrs. Ran- dall and Hiscock in i886.' Mr. Randall's bill proposed the removal of internal taxes on tobacco, fruit brandies, and spirits used in the arts, entire remission of duties on lumber, jute butts, and a few minor articles, and a slight reduction of some other duties. Mr. Hiscock's bill pro- posed similar changes in the internal taxes, and a large reduction of the duty on sugar, with a bounty to Ameri- can sugar-makers. Both of these bills, which indicate the manner in which the protectionists tried to grapple with the problem of reducing the revenue, were referred to the Committee of Ways and Means, and, not being reported from that body, never came to a vote in the House. It may be an indication of some change in public opinion that the minority among the Democratic Con- gressmen, by whom the consideration of tariff bills has THE TARIFF ACT OF 1883. 257 been opposed, has become less strong in the last few years. The Democrats have had the control of the House since 1884, but have been divided on the tariff question. In 1884, 41 Democrats voted against Mr. Morrison's horizontal bill, while 151 voted for it; in June, 1886, 35 Democrats voted against the tariff bill of that year, 136 voting for it; and in December of 1886, the votes were 26 in the negative and 143 in the affirmative. The Dem- ocratic minority has steadily diminished, from 41 to 35, and between the two sessions of the Forty-ninth Congress from 35 to 26. The Republican votes on all three occa- sions were practically unanimous in opposition to the proposed legislation." The act of 1883 made no change that could be satis- factory to those who oppose protective duties on prin- ciple, or to that larger class whose members believe that the time has come for some modification of the existing protective system. The feeling in favor of that system, while perhaps undiminished in those parts of the country where the population is engaged very largely in protected industries, has declined perceptibly in the country at large. The redundant revenue has acted as a powerful force toward a reduction of duties, as under similar circum- stances it acted in 1832-33, and again in 1857. The indi- cations are that duties will be lowered in some moderate degree in the early future. When it is found, as beyond ' Interesting tables, by States, of these votes, will be found in Mr. Perry's article, referred to above. ;2S8 HISTORY OF THE EXISTING TARIFF. doubt it will be found, that no such disastrous results ensue as are predicted by the extreme protectionists, a further reduction may meet with less opposition. Cer- tainly it is to be wished that changes from a system which has been in force for twenty-five years, and to which the industrial organization has more or less completely adapted itself, may be made slowly and with caution. It would be a great mistake — fortunately not one likely to be committed — if a headlong reduction like that of 1833 were again to be attempted, and were again to overshoot the mark. A great change in the character of our cus- toms system, in order to be safe, must be gradual and tentative, and is not likely to be fully carried out in less time than has elapsed since the present system was begun. But the permanent retention of the extreme protection which is the unexpected residuum of the war troubles, should not be permitted ; proposals, such as are occasion- ally brought forward, for the further increase of protective duties, are to be uncompromisingly opposed ; and a care- ful and judicious pruning of the present duties is the part of sound policy for the immediate future. APPENDIX. TABLE I. Imports, Duties, and Ratio of Imports to Duties, 1860-1883. (From the " Statistical Abstract.") 00.000 omitted. Imports. Per cent, of Per cent, of FiscalYear Duties Duties on Duties on Ending Free. Dutiable. Total. Collected. Dutiable Im- Aggregate June 30. ports. Imports. i860 73-7 279.9 353.6 52.7 19.67 15.67 I 71. 1 218.2 289.3 39-0 18.84 14.21 2 52-7 136.6 189.4 46-5 36.20 26.08 3 35-2 208.1 243-3 63.7 32.62 28.28 4 41. 1 275-3 316.4 96.5 36.69 32.04 5 44-5 194.2 238.7 80.6 47-56 38.46 6 59.0 375.8 434.8 177.1 48.35 41 81 7 23.1 372.6 395-7 168.5 46-67 44-56 8 15.2 342.2 357-4 160.5 48.70 46-56 9 21.6 395-9 417.5 176.6 47.36 44 76 1870 20.1 415-8 435.9 191. 5 47.16 44.92 I 36.6 483.6 520.2 202.4 44-05 40.47 2 47-3 579-2 626.5 212.5 41-47 37-94 3 144-8' 497-3 642.1 184.9 38.15 27-89 4 151-5 4159 567.4 160.5 38-61 28.29 5 146.3 386.7 533-0 1546 40.69 29.37 6 140.4 320.4 460.8 145.2 44.80 31-25 7 140.8 310-5 451-3 128.4 42.95 20.20 8 141.3 295-8 437.0 127.2 42.81 29 01 9 142.7 303-1 445-7 133-4 44-95 30.37 1880 208.3 459.6 667.9 182.7 43.56 29.12 I 202.5 440.2 642.7 193.8 43-25 29-79 2 210 6 514.1 724.6 216. 1 42.70 30.18 3 207.5 515-7 723-2 210.6 42.65 30.05 4 211. 3 456.3 667.6 1903 41.70 28.5 5 192.9 386.7 579-6 1 78. 1 46,00 30.7 6 211. 5 413.8 625.3 189.4 45 80 30.0 7 233-1 450.3 683.4 188.5 47. lO 27.6 ' The abolition of the tea and coffee duties, and the free admission of some other articles, in 1872, account for the sudden increase of non-dutiable imports. See p. 186. 259 26o APPENDIX. This table is taken from the "Statistical Abstract," and gives the computations of the Bureau of Statistics. The figures given in successive editions of the " Abstract " are not always the same, and, again, sometimes vary from those given by the Bureau in its " Reports on Commerce and Navigation." These discrepancies arise in part from varying usage. " Imports," for instance, sometimes in- clude articles of domestic produce which have been ex- ported and brought back, and " duties " sometimes include the internal tax then collected on such articles. Some peculiarities in the table as given above may be worth noting. The average rate on dutiable articles in 1863 is 32.62 per cent., while in 1862 the average on dutiable articles was 36.20. Yet, since duties were stead- ily increasing during the war, one would expect the rate to be higher in 1863 than in 1862. The explanation must be that a number of articles which before 1863 had been admitted free were subjected to rather low duties in that year, and caused a lowering of the average rate on duti- able articles ; or that the importation of goods charged with high rates was exceptionally small in 1863. Both causes may have operated. It is to be remembered that, although the Morrill tariff act of 1861 went in force for the iiscal year ending June 30, 1862, the average rate of that year (36.20 on dutiable goods) does not represent the rates of the Morrill tariff. During 1861 and the early parts of 1862 several other tariff acts were passed, levying duties additional to those of the Morrill act, and going APPENDIX. 261 into force during that fiscal year. The effect of all these measures is seen in the average rates for the fiscal year 1861-2, which consequently do not indicate the general character of the Morrill tariff. The effect of the ten per cent, reduction of 1872 is clearly seen in the average rates of 1873 and the subsequent years. TABLE II. Duties on Some Important Articles, Raised during the War, and Retained without Reduction till 1883. Articles. Duty under the Morrill Duty of 1864, in Force in Tariff of 1861. 1883. Books 15^ 25^ Chinaware, plain . . ^o% 45^ Cotton goods, not other- wise provided for . 30^ 35^ Cottons, coarse, un- bleached .... I ct. per yard. 5 cts. per yard. Cotton spool-thread . 30^ 6 cts. per dozen, plus 30 % (— 60 to 70 ^. Cottons, fine printed . 4^ cts. per square yard 5j cts. per square yard plus 10% plus 20 % Manufactures of flax, jute, or hemp, not otherwise provided for 30^ 40% Glass, common window I to l^ cts. per square 1 to 4 cts. per square foot. foot. Gloves, of kid or leather 30^ 50^ Bar-iron ' |ct. per tMf )t $12 per ton I to ij cts. per lb. Iron rails .... $14 per ton Steel, in ingots, bars. etc l| to 2 cts. per lb. 2| to 3j cts. per lb. Pig lead I ct. per lb. 2 cts. per lb. Paper 30% 35^ Silks 30 !? 60^ ' On all forms of bar-iron, band-, hoop-, and boiler-iron, on chains, anchors, nails and spikes, pipes, etc., etc., the duties of 1864 were in force till 1883. 262 APPENDIX. TABLE III. Duties on Certain Articles, Raised since 1864 above the War Rates. Articles. Duty of 1861. Duty of 1864. Duty as Fixed in 1865-70. Bichromate of potash 3c. lb. 3c. lb. 4C. lb. (1875) Copper, ingot . . 20. lb. 2^0. lb. 5c. lb. Flax $15 ton $15 ton $20 to $40 ton Marble in slabs . 30^ 50C. cub. foot + $1.25 to $1.50 20^ cub. foot + 30^ Nickel Free 15^ 20C. to 30c. lb. Steel rails .... 30^ AS% $28 ton Umbrellas . . . 30^ 35^ 50 to (10% Wool 3c. lb. 6c. lb. IOC lb. + 11^ Woollens : Carpets (Brussels) 40c. sq. yd. 70c. sq. yd. 1 44 to 70c. sq. yd. + 35 % Cloths .... 120. lb. +25^ 24c. lb. +40^ 50c. lb. + 35^ Dress-goods . . I2C. lb. + 25 %, 24c. lb. + 40 ^ ( 6c.sq.yd. +35^ ] 8c. sq. yd. +40^ Flannels . . . 30% 24c. lb. + 35^- 20 to 50c. lb. + 35^ TABLE rV. Revenue from Customs Duties, and Internal Revenue, 1861-1883. (00,000 omitted.) Year. Internal Revenue. 1861 None. 2 ** 3 37.6 4 109.7 5 209.5 6 309-2 7 266.0 8 191. 1 9 158.4 1870 184.9 I 143-1 2 130.6 3 113-7 4 102.4 5 IIO.O 6 116.7 7 118.6 8 U0.6 9 113. 6 1880 124.0 I 135.3 2 146.5 3 144.7 Customs Revenue. 39.6 49-1 69.1 102.3 84.9 179.0 176.4 164.5 180.0 194-5 206.3 216.4 188.1 1 63. 1 157-2 148. 1 131.0 130.2 137.2 186.5 198.2 220.4 214.7 APPENDIX. 263 TABLE V. Prot^Kction, Imports, and Exports of Copper, and Foreign and Domestic Prices. (Quantities in gross tons.) Imports. Price per It), in cen ts. Ex- ports. Difference ill Price, if ear. Product'n. Copper in Copper New York London Higs. Ore. LakeCop'r. Chili Bars. 1875 18,000 415 2,300 2,280 23 18 5 6 19,000 777 910 6,430 21.5 16.5 5 7 2I,OCO 750 15 6,050 19 14.6 4.4 8 21,500 165 399 5,040 16.5 13-5 3 9 23,000 70 100 7,680 17-5 12.2 5-3 1880 27,000 2,350 2,000 1,880 20 13-5 6.5 I 32,000 320 4,420 2,160 18,5 133 5.2 2 41,000 334 8,190 1,490 18.7 14.4 4-3 3 52,000 148 500' 3,890 16. 1 13.7 2.4 4 63,500 65 980 7,6io 13-7 II. 8 1-9 5 74,000 35 1,630 19,900 II 9-5 1-5 6 70,000 i3 1,840 10,850 u 8.8 2.2 Figures are from " Mineral Resources of the United States," pp. 214, et seq. The production is for the calen- dar year, the imports and exports for the fiscal year (end- ing June 30th). The annual average prices are from the monthly prices given in " Mineral Resources." The fig- ures given in "Mineral Resources" seem to contain con- siderable understatements, so far as exports are con- cerned. See Eng. and M in. Journal, Jan. 26, 1884, p. 59. These tables show the price in New York to have been higher than that in London by from i^ to 5^ cents. In recent years the great increase in domestic production ' Beginning with 1883, this column states the quantity of copper con- tained in imported ore, not the gross amount of ore. The 8,igotons of ore imported in 1882 contained about 600 tons of copper. 264 APPENDIX. has forced down the price here, and the difference in price is not more than \\ cents. The better quality of domestic Lake copper would cause it to bring i^ cents more ttiaw Chili bars under any circumstances. Cost of transporta- tion (from London to New York) is insignificant. It is safe to say that any difference in price over and above i^ cents per pound could not exist if it were not for the duty on copper. TABLE VI. Production, Imports, and Foreign and Domestic Prices of Besse- mer Steel Rails. Year. Product in Imports into Average Price Average Price Average U. S." U. S.' in U. S.'' in England. '■* Difference in Price. 1871 38,300 not given 91.70 57-70 34-00 2 94,000 150,000 99.70 67.30 32.40 3 129,000 160,000 95.90 74-40 21.50 4 145,000 101,000 84.70 57-50 27.20 5 291,000 18,000 59-70 44.10 15-60 6 412,000 none 53- 10 37.70 15.40 7 432,000 43-50 31-90 11.60 8 550,000 " 41.70 27.20 14.50 9 684,000 25,000 48.20 24.70 23-. 50 1880 954,000 158.000 67.50 36.00 31-50 I 1,330,000 249,000 61.10 31-20 29.90 2 1,438,000 182,000 48.50 30.00 18.50 3 1,286,000 38,200 37-75 25-40 12.35 4 1,119,000 3,000 30.75 22.90 7.85 5 1,079,000 2,400 28.50 23.65 4-85 6 1,769,000 46,500 34-50 20.65 13.85 7 2,295,000 154,000 37.10 20.65 16.45 The figures of production and importation are from the Reports of the American Iron and Steel Association, as are also those of prices in this country. The prices in ' In net tons of 2,000 lbs. ' Price per gross ton of 2,240 lbs. APPENDIX. 265 England have been compiled from the files of the London " Economist," checked by occasional tables in the Iron and Steel Association Reports (^. ^., in " Report for 1879," P- 63). Prices by yearly average necessarily indicate only the general fluctuations ; but for purposes of general com- parison the above are, I believe, trustworthy. Cost of transportation varies from two to four dollars per ton. The difference in price over and above this sum represents the effect of the tariff tax. It will be noticed that in the years of activity (e. g., in 1871-72, and in 1880-81) the difference in price is fully equal to the duty, which was $28.00 per ton till 1883. In years of depression the difference in price is much less than the duty {e. g., in 1875—78), and at such times importation ceases. In 1886, when the duty was $17.00 per ton, the price in this country was higher than that in England by about $14.00; under such circumstances, importation must evidently cease, the duty being prohibitory. 266 APPENDIX. TABLE VII. Changes of Duty in 1883. Article. Duty before 1883. Duty Recommended by Duty of Act ol 1883. 1 1 Tariff Comm. Barley . . ! 15c. bushel 15c. IOC. Copper, ingot . 5c. lb. 4C. 4C. Cottons, coarse, . 5c. sq. yd. 3c. 2ic. " finer printed 5|sq. yd. and 20^ 6c. 6c. mf. n. 0. p. > 35 ^ 40^ 40^ p., 2 j 6 to IOC. lb. and ( 30 ^ 35c. to$2.5odoz. 35c. to $2.50 Iron ore . i 20 ^ 50c. ton 75c. " pig . . $7.00 ton $6.72 $6.72 " bar . . IC. lb. Ac lb. Ac. Linens, finer 40^ 35^ 35^ Manufactures of iron. brass, lead, pewter, tin, etc. . 35^ 45^ 45^ Marble, block . | 50c. cub. ft. and 20% 75c. cub. ft. 65c. cub. ft. Nickel 20 to 30c. lb. 25c. lb. 15c. lb. Quicksilver free lO^ 10^ Rice, uncleaned . 2C. lb. lie lie Silks . to% 50^ io% Steel, in ingots^ . 2i to 3ic. lb. 2 to 3|c. 2 to 3ic. Wool, value under 32c. IOC. lb. and 11 % IOC. IOC. Woollens, dress goods'* j 6c. yd. and 35^ ')8c. " ■' 40^ 5c. and 35 i 5c. and 35 % I2C. and 40 % go. " 40^ cloths . 50c. lb. and 35 % ( 30c. and 35 % \ 35c. " 40^ 35c. and 35 % 35c. " 40^ Flannels, blankets, etc. 20 to 50c. lb. and 35 % 8 to 24c. and 35 % 10 to 24c. and 35^ ' Manufactures not otherwise provided for, embroideries, laces, trimmitigs. etc., see p. 237. ' See p. 240. ^See p. 239. ''See p. 235. INDEX. Ad-valorem duties, 159 Ad-valorem duty on woollens, 207 Agricultural products, duties on, 253 Bar-iron, duty of 1883, 248 ; duty in 1864-1883, 261 Blankets, duty of 1867, 205, 214 ; of 1883, 246 Carpet wool, duty of 1867, 201 ; of 1883, 243 Charcoal iron, 54, 131 Clay and the tariff, 74, 85, 96 Coal duty reduced, 1872, 185 Coffee, free in 1846, 114 ; duty re- duced, 179 ; repealed, 183 ; policy of, 186 Colonies, industrial state of, 8 Combing wool, imported from Canada, 150 ; duty in 1867, 212 Compensating system, 196 Compromise tariff of 1833, no Conference committee on tariff of 1883, 233 Copper, duty, 219, 250 ; statistics on, 263 Cotton goods, duty of 1816, 30 ; of 1864, 193 ; of 1883, 236, 247 Cotton manufacture, 1789-1824, 25; under tariff of 1833, 134 ; of 1846, 139 Crisis, of 1818, 20, 69, 74 ; of 1837, u6 ; of 1857, 118 Dawes on tariff of 1872, 182, 185 Files, duty of 1883, 239 Finkelnburg introduces bill of 1872, 182 Flannels, duty of 1867, 205, 214 ; of 1883, 246 Flax, duty of 1828, 90, 105 ; in- creased in 1870, 227 Frelinghuysen on copper act of 1869, 220 Foreign trade, 1792-1815, n ; after 1816, 20, 23 ; under tariff of 1846, 121 Garfield on tariff in 1870, 178 Harris, E., on woollen duties, 199 Harrisburg convention o£ 1827, 83 Hayes, J. L., on act of 1872, 183, 189 ; President of Tariff Commis- sion of 1882, 231 ; on tariff of 1883, 254 Hemp, protected in 1789, 15 ; duty of 1828, 90, 105; duty discussed, 90 Hides admitted free, 185 Home market argument after 1S18, 67, 70 267 268 INDEX. Horizontal reduction, iii, 189, 255 Hosiery manufacture before i860, 148 Imports and exports, '1791-1S14, 12, 23 Imports, 1860-1886, 259 Internal revenue acts of 1862 and 1864, 161, 165 Internal taxes repealed, 172 Iron manufacture, in the colonies, 47 ; 1789-1838, 49 ; underacts of 1842 and 1846, 129 Iron duties of 1816, 50 ; of 1818, 51 ; of 1824, 52 ; of 1828, 52, 89 ; of 1846, 124 ; of 1870, 179 ; of 1883, 247 Iron ore duty, 238 Iron rails free in 1833, 56 Jackson party and the tariff of 1828, 85 Jefferson on protection, 14 Lowell founded, 32 Madison on protection, 14 Mallory and the tariff of 1828, 83, 87 Marble duty, 1864-1870, 224 ; 1883, 251 Metal manufactures, duty of 1883, 240 Minimum duties, of 18 16, 30, 76 ; proposed in 1820 and 1824, 77 ; in 1827, 80, 83 ; in 1828, 93, 103 ; discussed, 81, 104 Molasses duty of 1828, 93, 100 Morrill, J. S., on tariff of 1861, 160; of 1864, 165, 173 ; on marble duties, 225 Morrison, bill of 1876, 191 ; of 1884. 1886, 255 ; on act of 1883, 233 Nickel duty, 227, 251 Pig iron, see iron Politics and the tariff of 1828, 84 Power loom introduced, 31, 42 Protection to young industries, argu- ment for, I ; essential objection to, 186 Protection feeling, in 1789, 14, 68 ; after 1808, 17 ; in 1816, 18, 68 ; strong after 1818, 23, 69 ; declines after 1832, 64, 106 ; in New Eng- land, 71 ; in West, 70 ; after the civil war, 173, 190 Quicksilver duty in 1883, 240 Reed rule in 1883, 232 Revenue, duties abolished, 189 : from customs and internal taxes, 262 Rice, A. H. , on tariff of 1861, 150 Rolled bar iron, discriminating duty on. 50. 52, 126 ; first made in U. S., 132 Salt duty reduced, 185 Seward on tariff of 1857, 115 Sherman, on tariff of i86l, 160 ; on tea and coffee in 1875, 190 Silks, duty in 1883, 252 Sinking fund, 190 South against protection after 1820, 73 Specific duties, under act of 1833, III ; in l85i, 159 Steel duty, 1883, 238 INDEX. 269 Steel rails, duty of 1870, 221 ; of 1883, 248 ; statistics on, 264 Syracuse convention of 1865, ig8 Tariff act, of 1789, 14 ; of 1816 ; 18, 68 ; of 1824, 74 ; of 1828, 89 ; of 1832, 103, no ; of 1833, III ; of 1842, 113 ; of 1846, 114, 156 ; of 1857, 115, 157 ; of 1861, 158 ; of 1862, 162 ; of 1864, 164 ; of 1870, 178 ; of 1874, 185 ; of 1875, 190 ; of 1883, 233, 253, 266 Tariff bill, of 1820, 70, 72 ; of 1827 (woollens), 80 ; of 1867, 175 ; of 1872, 182 ; of 1876, 1878, 191 ; of 1882, 266 ; of 1884, 1886, 255. Tariff commission of 1882, 231 Tea, free in 1846, 114 ; duty reduced, 179 ; repealed 1872, 183 ; policy of, 186 Ten per cent, reduction of 1872, 183, 190 Van Buren and tariff of 1828, 96, 100, lOI Walker, R. J., and tariff of 1646, 114 War finances, 161, 177 Webster and tariff of 1828, 100, loi Wells, D. A., on internal taxes, 164; prepares bill of 1867, 176; on copper veto of 1869, 220 Wharton, J., on nickel duty, 227 Wheat, exports of, 1803-1820, 23 Wood, F., introduces bill of 1878, 191 Wool, cheap, admitted at low rates, 91 Wool and woollens, duties of 1816, 40, 75 ; of 1824, 40, 75 ; of 1828, 91, 93 ; of 1832, 103, 105 ; of 1846, 114 ; of 1857, 150 ; of 1861, 195 ; of 1864, 197, 198 ; of 1867, 201, 203 ; of 1883, 236, 242, 245 Wool duty in England repealed, 1824, 79 Woollen dress goods, duty of 1883, 234 Worsted manufacture, 148 Wright, Silas, on tariff of 1828, 96 Wages argument appears about 1840, 65 Young industries argument, i G. P. PUTNAM'S SONS' PUBLICATIONS. CONSTITUTIONAL QUESTIONS I. THE FEDERAL CONSTITUTION. An Essay. By John T. Baker, of the New York Bar. i2mo, cloth . . . . . . . . ,pi oo " ' The Federal Constitution,' by John T. Baker, a brief historical essay upon the origin, growth, and principles of constitutional liberty as enunciated by the Federal Constitution . . . his aim is chiefly to give honor to the great instrument of our government." — Atlantic Monthly. ' ' The author gives a clear and succinct account of the history and interpretations of that instrument." — JV. V, Commercial Advertiser. " Considers the circumstances which led to the establishment of the Constitution of ihe United States ; discusses the character of the gov- ernment for which it provides, and gives a brief chapter on the causes which may endanger the Federal Government." — San Francisco Ar- gonaut. " As a compendium of constitutional history this little volume is convenient and highly valuable." — Washington, D. C, Public Opinion. ' ' A brief historical and critical essay on The Federal Constitution. . . . The author writes patriotically." — Bosioti Literary World. " An outline of the origin, growth, and principles of constitutional liberty as laid down in the Federal Constitution." — N. Y. Star. "It is ably written and deserves attention." — Boston Congrega- tionalist. "A convenient little history, succinctly and patriotically related." — Philadelphia Press. " The essay is particularly valuable to young men as a compendium of our political history ; and the appendix, containing the Constitution, with foot-notes arranged under the proper sections, renders the work also acceptable." — From letter in N . Y. Com.mercial Advertiser. II. AME.RICAN STATE CONSTITUTIONS. An Analysis of the Influences that have Affected their History and Modifications. By Henry Hitchcock, LL.D., of the Missouri Bar. (Questions of the Day Series, No. 37.) Cloth extra -75 cts. " The author has pointed out, in an instructive manner, a variety of interesting facts in the development of our constitutional systems. " — The Nation. G. P. PUTNAM'S SONS' PUBLICATIONS. " The book is clear and comprehensive and condensed, setting forth all the significant features of our State Constitutions." — New York Christian Union. " It is a study of the growth of the State constitutions, and necessa- rily is largely statistical and technical, but is able and of more than merely temporary value." — Boston Congregationalist. III. THE AMERICAN ELECTORAL SYSTEM. An Analysis of its Character and its History. By Charles A. O'Neil, of the New York Bar. i2mo, cloth . $1 50 " Mr. O'Neil's discussion of the relative merits of various electoral systems is vigorous, intelligent, and impartial." — Philadelphia Press. " Full of valuable suggestions, and deserves a careful reading by all who are interested in our political system." — Boston Traveller. " Mr. O'Neil has collected his material, and his book traces the whole history of his subject, with clear statement of every question which has ever arisen in connection therewith, and does it in a way at once consecutive as to time, fair in the statement of argument pro and eon, and lucid in manner of presentation." — Chicago Times. IV. FEDERAL TAXES AND STATE EX- PENSES ; or, The Decay of Separate State Power of Excise under the Federal Constitution, and the Com- pensation therein Provided for it ; and the Relation of the General Civil Administration under Separate State Authority, to " the General Welfare of the United States " under the Federal Autonomy. By William H. Jones. (Questions of the Day Series, No. 39.) izmo, cloth, $1 00 THE CONSTITUTIONAL HISTORY AND POLITICAL DEVELOPMENT OF THE UNITED STATES. An Analytical Study. By Simon Sterne, of the New York Bar. Second edition, revised with additions. i2mo, cloth . . $1 25 O. P. PUTNAK'S SONS, Publishers, NewTorkand London. QUESTIONS OF THE DAY. 42 — Bodyke : A Chapter in the History of Irish Landlordism. By Henry Norman. Octavo, cloth, illustrated ... 75 43 — Slav or Saxon : A Study of the Growth and Tendencies of Russian Civilization. By Wm. D. Foulke, A.M. Octavo, cloth . i 00 44 — The Present Condition of Economic Science, and the Demand for a Radical Change in its Methods and Aims. By Edward C. Lunt. Octavo, cloth . . . . . 75 46 — Property in Land. An essay on the New Crusade. By Henry Winn. Octavo, paper 25 47— The Tariff History of the United States. By F. W. Taussig. Octavo, cloth . . I 25 48— The President's Message, 1887. With Annotations by R. R. BowKER. Octavo, paper ....... 25 49 — Essays on Practical Politics. By Theodore Roosevelt. Octavo, paper 40 50 — Friendly Letters to American Farmers and Others. By J. S. Moore. Octavo, paper . . . . . . . 25 51 — American Prisons in the Tenth United States Census. By Frederick Howard Wines. Octavo, paper, . . 25 52 — Tariff Chats. By Henry J. Philpott. Octavo, paper 25 S3 — The Tariff and its Evils ; or. Protection which does not Protect. By John H. Allen. Octavo, cloth . . . . . i 00 54 — Relation of the Tariff to Wages. By David A. Wells. Octavo, paper ........... 25 £5 — True or False Finance. The Issue of 1888. By A Tax-payer. Octavo, paper ......... 25 G. P. PUTNASI'S SONS, Publishers, New York and London. QUESTIONS OF THE DAY. 56 — Outlines of a New Science. By E. J. Donnell. Octavo, cloth, I 00 67 — The Plantation Negro as a Freeman. By Philip A. Bruce. Octavo, cloth I 25 S8 — Politics as a Duty and as a Career. Octavo, paper . 25 S9 — Monopolies and the People. By Chas. W.Baker. Octavo, cloth, I 25 60— The Public Regulation of Railways. By W. D. Dabney, formerly Chairman of the Committee on Railways and Internal Navigation in the Legislature of Virginia. Octavo . . I 25 61 — RailTvay Secrecy and Trusts: Its Relation to Interstate S,egis- lation. An Analysis of the Chief Evils of Railway Management in the United States, and Influence of Existing Legislation upon these Evils, and Suggestions for their Reform. By John M. Bonham, author of " Industrial Liberty." Octavo . . . . 1 00 62 — American Farms : Their Condition and Future. By J. R. Elliott. Octavo, cloth . . _ I 25 63 — Want and Wealth. A Discussion of Certain Economic Dangers of the Day. An Essay. By Edward J. ShRiver, Secretaiy Ni Y. Metal Exchange. Octavo, paper . . . . . 25 64 — ^The Question of Ships. • Comprising The Decay of Our Ocean Mercantile Marine : Its Cause and its Cure. By David A. Wells ; and Shipping Subsidies and Bounties. By John Codman . 25 65 — A Tariff Primer. The Effects of Protection Upon the Farmer and Laborer. By Porter Sherman, M.A 25 66 — The Death Penalty. A Consideration of the Objections to Capital Punishment, with a Chapter on War. By Andrew J. Palm i 25 (The numbers omitted represent Monographs no longer in print. ) GS-. P. PUTNAM'S SONS, Publishers, New York and London.