SHOET INQUIEY INTO THE COMMERCIAL POLICY UNITED STATES; RIGHT PRINCIPLES OF REVENUE LAWS, INTERNATIONAL COMMERCE. BY A MERCHANT OF BOSTON. BOSTON: WILLIAM D. TICKNOR AND COMPANY. mdccc: PREFACE. The following pages are prepared in the hope of bring¬ ing the subject before the public. They contain nothing novel or different from what has appeared before, but are an attempt to explain and set forth, in a short and simple manner, the principles of Trade, as agreed upon by nearly every prominent writer on political economy. In this country, where the right of suffrage is so general, it is important that all matters pertaining to the advance¬ ment of the nation, should be fully discussed and under¬ stood, and the object of the writer will be attained if these remarks shall lead to an examination of the subject by those more able to illustrate and instruct. Boston, November 20 , 1845 . REMARKS. Most writers upon the principles of Trade and Commercial intercourse, have agreed that it is for the permanent advantage of all nations, to free them¬ selves, as far as practicable, from the effect of boun¬ ties and prohibitions, and to establish then- revenue laws upon a liberal and just basis. It is generally acknowledged, that Labor is the source of all wealth ; that the aim and end of com¬ merce is to facilitate the exchange of commodities, or the products of labor, between the different classes of producers, either of the same, or of foreign coun¬ tries ; and that it is the tendency of human enter¬ prise, if left unshackled by laws, to procure the most of the productions of others, in exchange for what each class may have to part with. . In many of the nations of the old world, the prin¬ ciples and laws which make up what is termed their mercantile system, have been introduced at periods of international enmity and warfare, and in ignorance 6 of what political economists of later days have de¬ monstrated to be the true sources of national pros¬ perity and wealth. The reform has been gradual and slow, as it must necessarily be, in countries burthened with debt, re¬ dundant in population, and in which great interests have grown up under the mistaken system of partial legislation. Whatever advances have been made towards an equality of laws upon this subject, have been forced by the energy and perseverance of the enlightened, from the unwilling monopolists whose interests were favored under the old abuses. In the United States, embracing a great variety of climate and extent of territory, a large proportion of which is either unsettled, or devoted to agricul¬ tural purposes, no good reasons yet exist against establishing our mercantile system upon a sound ba¬ sis, by which all interests shall be equally benefited, and in accordance with the principles so clearly laid down by Adam Smith, Say, Ricardo, McCulloch, Mill, and Buchanan, and in our own country by Professor- Cooper, Condy Raguet, Vethake, Tucker, and many others. The great preponderating interest is that of agriculture, which requires no especial protection, and for the advancement of which the freest ex¬ change of productions, in all the natural markets of the world, for the articles required in barter, and lib¬ erty to buy and sell on the best terms, is the greatest good that laws can guarantee to them. It will there¬ fore be well if we establish a system which is likely to be permanent, before any great interests are forced 7 into being; inasmuch as, sooner or later, unequal protection must yield to the enlarged views conse¬ quent upon an increased knowledge of the subject. It may perhaps be thought, that in New-England the manufacturing interest, under the encouragement of our revenue laws, has increased to such an ex¬ tent, as to deserve and demand the continued protec- ti:n of government; but it will be one of the objects of this tract to show, that no fear need exist that this interest will receive any permanent injury from an equalization of the laws; and to prove, that if Ameri¬ can manufactures can be exported to China, South America, and other markets, where, no such protec¬ tion exists, we certainly need fear no competition in our own markets, where the most radical friends of free trade are willing to allow a protection, conse¬ quent upon raising by imposts on foreign goods, the necessary revenue for the support of government. The right understanding of the laws of interchange between nations, has been much retarded by certain political watchwords, which often appear in our re¬ views and journals. These are, “ over-importations,” “export of specie,” “protection to American labor against the pauper labor of Europe.” In examina¬ tion of these, an extract is given from Mr. Mill’s “ Elements of Political Economy,” chap. 3d, section 5, on Interchange: — “ The commodities imported are the cause of THE BENEFITS DERIVED FROM A FOREIGN TRADE. “ The benefit which is derived from exchanging one commodity for another, arises, in all cases, from the commodity received, not from the commodity given. 8 When one country exchanges, in other words, when one country traffics with another, the whole of its advantage consists in the commodities imported — it benefits by the importation, and by nothing else. “ This seems to be so very nearly a self-evident proposition, as to be hardly capable of being rendered more clear by illustration ; and yet it is so little in harmony with current and vulgar opinions, that it may not be easy, by any illustration, to gam it ad¬ mission into certain minds. “ When a man possesses a certain commodity, he cannot benefit himself by giving it away. It seems to be implied, therefore, in the very fact of his parting with it for another commodity, that he is benefited by what he receives. His own commodity he might have kept, if it had been valued by him more than that for which he exchanges it. “ The corresponding facts are evidence equally con¬ clusive in the case of nations. When the nation ex¬ changes a part of its commodities for a part of the commodities of another nation, the nation can gain nothing by parting with its commodities; all the gain must consist in what it receives. If it be said, that the gain consists in receiving money, it will presently appear, from the doctrine of money, that a nation derives no advantage, but the contrary, from possessing more than its due proportion of the pre¬ cious metals.” This is a doctrine, as Mr. Mill says, entirely at variance with the generally conceived opinions on the subject, but a careful re-perusal of his argument will convince the reflecting of the justice of his posi- 9 tions; and in further illustration, an extract from Section 13, of the same chapter, is given, entitled « The value of the precious metals determines WHETHER A COUNTRY SHALL EXPORT OR IMPORT. “ Metallic money, or more generally speaking, the precious metals, are nothing more, considered strictly, and in then essence, than that commodity which is the most generally bought and sold, whether by indi¬ viduals or by nations. “ In ordinary language it is immediately acknowl¬ edged, that those commodities alone can be exported, which are cheaper in the country from which, than in the country to which, they are sent. “According to this proposition, if gold is cheaper in any one country, as in England, for example, it will he exported from England. Again, if gold is dearer in England, than in other countries, it will be import¬ ed into England. But, by the very force of the terms, it is implied, that in any country where gold is cheap, other commodities are dear. Gold is cheap, when a greater quantity of it is required to purchase other commodities. “ It is evident, therefore, that a country will export, that is, commodities other than the precious metals, only when the value of the precious metals is high. It is equally evident, that she will import (that is, to excess,) only when the value of the precious metals is low. The increase, therefore, of the quantity of the precious metals, which diminishes the value of them, gradually diminishes, and tends to destroy, the power of exporting other commodities: the diminu¬ tion of the quantity of the precious metals, which in- 2 10 creases their value, increases, by a similar process, the motive to the exportation of other commodities, and of course, in a state of freedom, the quantity ex¬ ported. “ The once prevalent opinion, (says Mr. M’Cul- loch,) that wealth consists exclusively of gold and silver, naturally grew out of tire circumstance of the money of all civilized countries being almost entirely- formed of these metals. The attention was gradual¬ ly transferred from the money's worth, to the money itself; and the wealth of individuals and of States was measured, not by the abundance of their disposa¬ ble products, but by the quantity of these metals ac¬ tually in their possession. “ The acquisition of a favorable balance of payment was the grand object to be accomplished; and heavy duties and restrictions on importations, and bounties and premiums on exportation, were the means by which this object was to be attained. “ It cannot excite our surprise that a system, haring so many popular prejudices in its favor, and which afforded a plausible apology for the privileges enjoyed by the manufacturing and commercial classes, should have early attained, or that it should still preserve, notwithstanding the overthrow of its principles, a pow¬ erful practical influence.” It having been shown, that neither over-importa¬ tions, or the export of specie, are subjects of alarm, or to be feared as prejudicial to the interests of the nation, under a proper system of banking and rev¬ enue laws, it will be proper to consider the danger 11 to American labor from competition with the (so called) pauper labor of Europe. It has been shewn by Professor Tucker, in his “ Progress of the United States,” that only about one in twenty of the population of this country are en¬ gaged in manufactures, and that the number employed in agriculture are five times as great as those in man¬ ufactures of every kind ; and even out of this num¬ ber, the proportion who come into competition with the product of artisans abroad, must be very small. Now it is worthy of remark, that we hear little or nothing about the competition of pauper labor from this immense agricultural interest, and there seems to be no fear on the part of this' interest, but that they will be able to produce butter, cheese, pork, cotton, wool and flour, on as good terms as any other nation. All that they ask of government is, liberty to export their productions to the natural markets of the world, and to receive, in exchange, such thin gs as necessity or fancy may dictate, on the best possi¬ ble terms. It is also worthy of inquiry, whether this outcry about pauper labor does not entirely arise from a few capitalists, whose interests are doubtless temporarily advanced by the present exclusion of foreign commo¬ dities, and by the taxation of the whole country for their benefit, or by political presses who have never fully examined into the various bearings of the sub¬ ject. Even in regard to the pauper labor of Europe, statements have lately been made, and not denied, which demonstrate that the wages in the mills of England are but little below what is current for 12 similar labor in this country; and, taking into con¬ sideration the greater number of hours of work in the mills of the United States, and the fact that, here, a girl usually attends to three looms, whereas in England, only two, there is conclusive proof that the cost of manufacturing, estimating the production of the loom in pounds weight of cloth, per piece, or per yard, is no more, and perhaps even less than in England. Further evidence of this is to he found in the fact before stated, that the productions of our mills are shipped and sold in foreign markets, in free competition with English goods. Should these state¬ ments he denied, an abundance of statistical facts will he brought forward to prove the statement here made, which facts have only been kept back from a feeling that they were unnecessary to the argument. “ Such a catalogue of solemn fooleries as the Brit¬ ish Tariff, (said an English writer, in 1842,) does not exist in the three kingdoms. Some fifty or sixty years hence, we are not without hopes that it may strike the premier of the day, that, by an entire abo¬ lition of every custom’s duty, the purchasing people who happen to he the nation, will be rendered richer by the exact difference between the price of the home and the foreign articles, which such duties de¬ prive us of, whilst the revenue would gain by a mil¬ lion and a quarter sterling per annum, which we now consume and waste in the collection of duties, and the abortive attempt to prevent smuggling.” It would perhaps be disrespectful to designate our own laws upon this subject as “ fooleries,” but the Tariff law of 1842, or in fact, any of the preceding tariffs, 13 cannot stand the examination of any one impressed with the principles of justice, of equality, or of en¬ larged views of international commerce. Even to the initiated they are puzzles, and one duty upon woollens, another on cottons, a third upon mixed fabrics, a different per centage upon buttons, yet another upon pins, with some two or three va¬ rious ones upon screws, brads, and nails, must ap¬ pear ridiculous enough to future generations, or even to the philosophic thinker of the present day. Allowing that a system of impost duties is the best plan on which a revenue can be collected, it cannot be doubted that it is the duty of government to render this system, as far as practicable, equal, simple, and free from details and vexatious differ¬ ences. “ Protecting duties, as well as bounties, (says a writer upon the commercial policy of Great Britain,) are imposed for the benefit of the ignorant and inca¬ pable. Where the workmen at home, or the climate furnishes a better article than can be got from abroad, no protection is required. It is only where the home are inferior to the foreign articles, and therefore do not sell, that it becomes necessary, by means of pro¬ tecting duties, to force the sale, by which we tax the many for the benefit of the few, depress ingenious in¬ dustry, and actually hold out a bounty on indolence and rapacity. “ Such manufactures as cannot stand then- ground without undue protection, should be left to their fate; and if they should decay, the capital and industry 14 they employ will flow naturally into other and more profitable channels. “ Impost duties are framed on this narrow notion, that it is profitable to sell and not to buy, though wholly inapplicable to the concerns of a great na¬ tion.” If prohibitions and restrictions are injurious to the commercial prosperity of England, how much more so are they to that of the United States, as from our vast extent of territory, the great variety of our productions, our mineral wealth and water-power, our mechanical skill and enterprise, we are able to compete with any nation, both in agricultural and manufacturing pursuits. It is very clear that, under a currency not unduly increased, the sum total of our exports will about bal¬ ance the sum total of our imports ; and if, for some single year, by reason of excess of specie, of paper money, or from any other cause, the imports should exceed the exports, it would soon correct itself by the export of the cheapest commodity. A perusal of the authorities mentioned in this Tract, will doubtless convince any one, not biassed by per¬ sonal interest, that no fears need be entertained for the success of our manufacturing interests, under a just system of revenue laws. If there should be any so prejudiced, it may be due to them to examine the subject in its worst possible view. It has been the good fortune of the writer to have journeyed through a great portion of the United States, to have made a pedestrian tour in the coal 15 regions of Pennsylvania, steamed down the Ohio, and up the Missouri rivers, to have passed on the glo¬ rious Mississippi, from New Or’eans to the Falls of St. Anthony, — traversed extensive prairies, looked at lead-diggings, talked about copper, and made in¬ quiries after corn, hemp, tobacco, and all those things which make up the wealth of a nation; — to have steamed through the great chain of lakes, from Supe¬ rior to the St. Lawrence; and mingling with intelli¬ gent men of every pursuit, to have used that faculty which nature has so bountifully bestowed upon the natives of New-England, to discover all he could. On every side he has found fertile lands, ready to repay speedily the farmer by its products, for the slight toil of planting and harvesting — a profusion of mineral wealth waiting for the energy of man to combine it to useful ends,— all this umvrought nature, apparently wasting in its abundance, for the want of human skill and labor. And the question forced itself upon his mind, if it be good policy, by partial legislation, to draw men from these manly pursuits, to immure them, for twelve or fourteen hours per day, 'within the walls of a cotton mill. Even the most selfish le¬ gislation would seek to extend, rather than retard the agricultural interests, leaving the more confined and less healthful pursuits of the mill and the work¬ shop to foreign nations. If it is feared that we should grow more corn, cotton, &c., than would be taken by foreign nations, in exchange for their goods, or could be consumed by ourselves; when that time arrives, we shall assuredly manufacture at home, and 16 this will always be done, when more advantageous than to buy of others, tariff or no tariff. And here it may he suggested to the manufacturers of the North, who are the only class that can, by any course of reasoning, be supposed to be benefited by the present system, that the competition most to be feared will not be from the mills of Europe, but from the Valley of the Ohio and Mississippi, and from those States where mineral wealth, cheap food, raw materials, and all the great foundations of manufac¬ turing prosperity, exist in the greatest abundance. The unfairness of the present system towards the great agricultural interests, can be illustrated by the article of cotton. The actual growth of the cotton in the States, is more than two millions of bales; of which, allow (for simplifying the argument) a half million of bales for the consumption of our own mills, leaving a million and a half for exportation — for the half million of bales consumed in New Eng¬ land the South gets back, say in fair exchange, the various productions of the North, and for the million and a half bales going to foreign countries, it would, under a just system, receive in barter the various pro¬ ductions of foreign countries; but before such returns can get to the planter of the South and West, they are liable for the payment to government of duties, varying, upon coarse manufactures, from fifty to one hundred per cent., thereby lessening, by the amount of duty, what the South and West would actually receive in exchange for the cotton shipped. If it be replied to this argument, that, in the course of time, the North will take all the cotton of the South, and 17 supply her with every kind of goods, the cotton- planters and Western farmers would naturally reply, that they will be happy to do this, so soon as the North can supply them on the best terms; but in the mean time they want liberty to trade wherever it may be most to their advantage, and to get back in exchange for then - productions, such articles as they desire, without undue interference of legislation. The recent reduction in the British Tariff, by which the duty upon articles imported from America, exclusive of tobacco, will not average twenty per cent., and in the opinion of well-informed persons much less, followed as it has been, by a period of great prosperity, both commercial and manufacturing, sustains the truth of the positions here advocated. That this reduction should have been made, in op¬ position to all those great interests, which have grown up under the former system of high duties and boun¬ ties, shows how conclusive must have been the argu¬ ments in favor of liberal legislation. It is to be hoped, that this enlightened course will be met by a corresponding liberality on the part of the United States, and that the advocate for the abolition of the duties on bread stuffs, in the British Parliament, will not be again met (as in 1842) by the taunt, that while the English were lessening the duties on American productions, the Americans were actually increasing the duties on British goods. To those who prize facts above all theories, this fact of the increased prosperity of England, consequent upon the reduction of duties, is one of great value, while the example of Spain, with its Commercial System 3 18 of extravagant duties, and consequent army of smug¬ glers and custom-house officers, annually retrograding in the scale of nations, is equally conclusive. An extract from a late Review upon the Spanish peo¬ ple well illustrates the effect of their system : — “ One of the leading features of the Spanish mind is, we are told, a dislike of foreigners and their pro¬ ductions. We can understand this dislike. It is the natural reluctance which most people feel to compare themselves with persons more advantageously sit¬ uated, or to place the fruits of then own industry in juxtaposition with those of an industry far more en¬ lightened and ingenious. This gives us some hopes of Spain ; for if it. he ashamed of its inferiority, it may some day, perhaps, he excited to enter upon a course of generous rivalry with foreign countries. At the same time, however uncomfortable may be the feeling that accompanies them, foreign manufactures necessarily find their way into Spain, because she herself may be almost said to produce none. “ From these causes it has come to pass, that there is no scene in Spanish life without a smuggler mixed up in it. The peasant smuggles through ne¬ cessity, the rich man through avarice, or the pleasure of cheating the revenue. “The whole Southern coast, from Barcelona to Cadiz, is perpetually transformed, at night, into one long strand, for the landing of contraband goods. An army of smugglers, four hundred thousand strong, is said to hover about the Sierras, holding communion there with proscribed foreigners, and receiving from them the materials of rendering millions of people comfortable , free of duty. 19 “ It is impossible not to admire the sagacious policy in which this state of things originates. The gov¬ ernment wants money, and therefore levies upon foreign goods, not a reasonable duty, which the peo¬ ple might perhaps be induced to pay, but a monstrous duty, which the least glimmering of common sense would show to be uncollectable. “But how does the drama terminate? does the Exchequer, replenished by a thousand channels, over¬ flow with gold doubloons ? On the contrary, most lame and impotent is the conclusion of all this law¬ making, of all this bottomless policy, of all this Iberian statesmanship ! Nothing comes of them but an empty treasury, the annihilation of trade, the paralysis of industry — the ruin, in one word, of the whole nation. “ It is quite true that we, also, here in these British Islands, are guilty of many foolish things on the sub¬ ject of commerce. But of that some other time. Our business just now is not self-examination, but the catechising of a neighbor, a far more agreeable task.” The doctrine that high duties permanently lower prices, is too plainly a false one to require refutation, and is only worthy of notice on account of its having been advocated by parties, who by some good fortune, other than sound reasoning powers, have attained a position in the community. It being a universal law of trade, that all perma¬ nent production is regulated by the cost that such production bears to its price, it necessarily follows, that whenever the price of an article falls below the 20 cost of production, for any length of time, the labor and capital employed therein will he transferred to some other pursuit. The idea of low prices stimulating production, or that a business will be continued for any considerable time under a certain loss, is too ridiculous to require argument. An extravagant duty, by preventing the commerce in any article, or lessening its consump¬ tion, may so check the natural demand as to cause the price to fall at the place of production, more even than the increased duty, thus actually lessening the price in the market where the duty has been in¬ creased ; this lower price, however, can be but temporary, unless other causes intervene, to lessen the cost of production. The argument sometimes used, that the price of brown sheetings, lower now than some years ago when the duty was less, is in consequence of ad¬ vanced duty, is without any foundation. The lessen¬ ing of the price of sheetings is wholly owing to other causes, such as the reduced price of the raw material, (far greater than that of the manufactured article,) improved machinery, increased speed of looms and spindles, and less price per piece paid for labor. That the price of sheetings’ has not been reduced on account of increase of duty, can be best exempli¬ fied by reference to the price of cotton, as compared with the price of cloth, at different periods. In answer to the often urged reason for protective duties, that they increase the employment of Ameri¬ can labor, it has before been stated that exchanges are equal or nearly so — that imports increase exports. 21 If one hundred cases of calicoes are shipped from Liverpool to Boston, something will he required to he taken hack in payment — prohahly, at this time, one thousand barrels of flour; and it is very plain that the production of wheat necessary to make this thousand barrels of flour, in all its operations of ploughing, reaping, grinding, package, and shipping, will employ about the same number of people as making the cloth would have done. The policy and justice of equal revenue laws, in reference to the commercial interests and pecuniary advantage of a great nation, having been examined, it may not perhaps be thought irrelevant to look upon the subject in a moral point of view. “ That Political Economy,” says Archbishop Whate- ly, “ should have been complained of as hostile to re¬ ligion, will probably be regarded, a century hence, with the same wonder, almost approaching to incre¬ dulity, with which we, of the present day, hear of men sincerely opposing, on religious grounds, the Copernican system. But till the advocates of Christ¬ ianity shall have become universally much better ac¬ quainted with the true character of their religion, than universally they have ever yet been, Ave must always expect every branch of study, every scientific theory, that is brought into notice, will be assailed on religious grounds, by those who have either not studied the subject, or Avho are incompetent judges of it.” The NeAv Testament, Avhich an eminent la\A r yer has beautifully described as containing the foundation of all laAV, and the observance of Avhose precepts leads equally to national greatness and individual 22 happiness, emphatically concurs in the doctrines here advanced, to act justly towards other nations, as “we would that they should do unto us,” not waiting for them to lead the way; with full confidence that such justice and liberality, apart from other considerations, is the very method to insure permanent prosperity to the great interests of the nation. Let us in this, as in all other matters, dedicate our broad country to the principles of the faith we profess, confident that the doctrines of Christianity, carried out in all the concerns of the nation, lead to the true greatness. May we fully believe, in the language of Mr. Sum¬ ner, that “ The truest tokens of grandeur in a State, are the diffusion of the greatest happiness among the greatest number, and that passionless, god-like jus¬ tice, which controls the relations of the State to other States, and to all the people who are committed to its charge.”