capital and active competition in Europe, that a profit of 6 per cent. in any business is sufficient to produce large investments of money in that business; and if, by our tariff, a duty of 40 per cent. be exacted on the products of such business, and the foreign producer deducts that duty from his previous price, he must sustain a heavy loss. This loss would also soon extend beyond the sales for our consumption to sales to our merchants of articles to be re-exported by them from our ports with a drawback of the duty, which would bring down their price throughout the markets of the world. But this the foreign producer cannot afford. The duty, therefore, must be added to the price, and paid by the consumer, the duty constituting as much a part of the price as the cost of production. .

No prejudice is felt by the Secretary of the Treasury against manufacturers. His opposition is to the protective system, and not to classes or individuals. He doubts not that the manufacturers are sincerely persuaded that the system which is a source of so much profit to them is beneficial also to the country. He entertains a contrary opinion, and claims for the opponents of the system a settled conviction of its injurious effects. Whilst a due regard to the just and equal rights of all classes forbids a discrimination in favor of the manufactures, by duties above the lowest revenue limit, no disposition is felt to discriminate against them by reducing such duties as operate in their favor below that standard. Under revenue duties, it is believed, they would still receive a reasonable profit — equal to that realized by those engaged in other pursuits; and it is thought they should desire no more, at least through the agency of governmental power. Equal rights and profits, so far as laws are made, best conform to the principles upon which the constitution was founded, and with an undeviating regard to which all its functions should be exercised - looking to the whole country, and not to classes or sections.

Soil, climate, and other causes, vary very much, in different countries, the pursuits which are most profitable in each; and the prosperity of all of them will be best promoted by leaving them, unrestricted by legislation, to exchange with each other those fabrics and products which they severally raise most cheaply. This is clearly illustrated by the perfect free trade which exists among all the States of the Union, and by the acknowledged fact that any one of these States would be injured by imposing duties upon the products of the others. It is generally conceded that reciprocal free trade among nations would best advance the interest of all.

IX. ARGUMENTS FOR PROTECTION

The Case Stated, 18491

After the passage of the Walker Tariff Act of 1846, friends of protection kept up an agitation for an increase in the tariff rates. Henry C. Carey, of Philadelphia, one of the best known American economists of the time, writing in 1849, argued for protection as follows:

Why is protection needed? Why cannot trade with foreign nations be carried on without the intervention of custom-house officers? Why is it that that intervention should be needed to enable the loom and the anvil to take their natural places by the side of the plough and the harrow? Such are the questions which have long occupied my mind, and to the consideration of which I now invite my readers.

Of the advantage of perfect freedom of trade, theoretically considered, there could be no doubt. The benefit derived from such freedom in the intercourse of the several States, was obvious to all; and it would certainly seem that the same system so extended as to include the commerce with the various states and kingdoms of the world could not fail to be attended with similar results. Nevertheless, every attempt at so doing had failed. The low duties on most articles of merchandise in the period between 1816 and 1827, had produced a state of things which induced the establishment of the first really protective tariff, that of 1828. The approach to almost perfect freedom of trade in 1840, produced a political revolution, and a similar but more moderate measure, led to the revolution of last year. These were curious facts, and such as were deserving of careful examination.

It may be assumed as an universal truth, that every step made in the right direction will be attended with results so beneficial as to pave the way for further steps in the same direction, and that every one made in the wrong direction will be attended with disadvantageous results tending to produce a necessity for a retrograde movement. The compromise bill, in its final stages, was a near approach to perfect freedom of trade, the highest duty being only 20 per cent. Believing it to be a step in the right direction, one of the enthusiastic advocates of perfect freedom of trade proposed, soon after its passage, that, commencing with 1842, there should be a further reduction of one per cent. per annum for twenty years, at the end of which time all

1 Miscellaneous Works (Harmony of Interests). By Henry C. Carey (Philadelphia, 1872), 3-10.

necessity for custom-houses would have disappeared. With the gradual operation of the earlier stages of that bill there was, however, produced a state of depression so extraordinary as to lead to a political change before reaching its final stages, and the duties had scarcely touched the point of 20 per cent. before they were raised to 30, 50, 60, or more, by the passage of the tariff of 1842. With the election of 1844, the friends of free trade were restored to power, and two years afterwards was passed the tariff of 1846 the free-trade measure in which the revenue duty on articles to be protected was fixed at thirty per cent. Here was a retrograde movement. Instead of passing from twenty downwards, we went up to thirty, and thus was furnished an admission that so near an approach to free trade with foreign nations as was to be found in twenty per cent. duties had not answered in practice. Since then, it has been admitted, even by the most decided free-trade advocates, that on certain commodities even thirty per cent. was too low, and within six months from the date of the passage of the act of 1846, its author proposed to increase a variety of articles to thirty-five and forty per cent. Here was another retrograde movement. It is now admitted that there are other articles the duties on which require to be raised, and daily experience goes to prove that such must be the case, or we must abandon some of the most important branches of industry. The tendency is, therefore, altogether backward. Thirty per cent. duty is now regarded as almost perfect freedom of trade, and instead of proposing a further annual reduction, each year produces a stronger disposition for a considerable increase. In all this, it is impossible to avoid seeing that there is great error somewhere, and almost equally impossible to avoid feeling a desire to understand why it is that the approaches towards freedom of trade with foreign nations have so frequently failed, and why it is that every strictly revenue tariff is higher than that which preceded it.

With a view to satisfy myself in regard thereto, I have recently made the examination, before referred to, of our commercial policy during the last twenty-eight years, commencing with 1821, being the earliest in relation to which detailed statements have been published. Before commencing to lay before you the results obtained, it may be well to say a few words as to the merits claimed by the two parties for their respective systems.

The one party insists that protection is "a war upon labour and capital," and that by compelling the application of both to pursuits that would otherwise be unproductive, the amount of necessaries, comforts, and conveniences of life obtainable by the labourer is dimin

ished. The other insists that by protecting the labourer from competition with the ill-fed and worse-clothed workmen of Europe, the reward of labour will be increased. Each has thus his theory, and each is accustomed to furnish facts to prove its truth, and both can do so while limiting themselves to short periods of time, taking at some times years of small crops, and at others those of large ones, and thus it is that the inquirer after truth is embarrassed. No one has yet, to my knowledge, ever undertaken to examine all the facts during any long period of time, with a view to show what have been, under the various systems, the powers of the labourer to command the necessaries and comforts of life. One or other of the systems is true, and that is true under which labour is most largely rewarded: that under which the labourer is enabled to consume most largely of food, fuel, clothing, and all other of those good things for the attainment of which men are willing to labour. If, then, we can ascertain the power of consumption at various periods, and the result be to show that it has invariably increased under one course of action, and as invariably diminished under another, it will be equivalent to a demonstration of the truth of the one and the falsehood of the other. To accomplish this, has been the object of the inquiry in which I have recently been engaged.

It is necessary now to show what have been the distinguishing features of the several systems that have been in operation during the period to be examined. They are as follows:

First. The tariff of 1816 was a planters' and farmers' measure. Cotton and coarse cotton cloths were carefully protected. Iron itself was well protected, but almost all manufactures of iron, the commodities for the production of which pig or bar iron could be used, were admitted at 20 per cent. Wool paid 15 per cent. Blankets and woolen and stuff goods paid 15 per cent., and finer goods 25 per cent., until 1819, after which they paid but 20 per cent. Spirits paid a heavy specific duty, for the benefit of the farmers; but paper, hats, caps, manufactures of leather, types, and manufactured articles generally, paid only from 20 to 30 per cent. Coal paid 5 cents per bushel, but the commodities in the manufacture of which coal was to be used paid ad valorem duties. Protection was thus given to the coarse commodities that least required it, and refused to those for the production of which the coarser ones were to be used. As a matter of course, its protective features were totally inoperative.

Second. That of 1824, under which iron was, as before, well protected, but manufactures of iron, and of metals generally, were ad

mitted at 25 per cent. Wool was raised to 20 per cent., to increase, by successive stages, until it reached 30 per cent. Coarse woolens were fixed permanently at 25 per cent. Finer ones were to rise gradually until they reached 333 per cent. Carpets paid from 20 to 50 cents per square yard. Hams paid 3, and butter 5 cents per pound. Potatoes 10, oats 10, and wheat 25 cents per bushel; while scythes, spades, shovels, and other things requisite for the raising of wheat and potatoes, paid 30 per cent. Spirits were carefully protected. Bolting cloths paid 15 per cent. Sail-duck, Osnaburgs, &c., 15 per cent. Cotton cloths paid 25 per cent., with a minimum of 30 cents per yard. The general features of this law did not vary materially from those of that of 1816, although protection was slightly increased.

Third. The first tariff thoroughly protective, and so intended to be, was that of 1828. It continued until 1832, when was passed the first of two laws by which the whole policy of the country was changed. This series constitutes stage the

Fourth. By the act of July 14, 1832, railroad iron was admitted free of duty. Axes, spades, &c., as before, 30 per cent. Bar and pig iron were carefully protected, but a large portion of the commodities for which they were needed were thus admitted without duty, or at the same rate as under our present free-trade tariff. Tea and coffee were free. Silks paid 10 per cent. Wool was protected, but worsted stuff goods were admitted at 10 per cent. Cotton goods paid 25 per cent., with minimums of 30 cents for plain, and 35 for prints. This continued in force until the following March, when was passed the Compromise Act, under which linens, stuff goods, silks, and other articles were admitted free of duty, and one-tenth of the excess over 20 per cent. reduced from all other commodities, to take effect December, 1833, with a further similar reduction every two years until 1841, when one-half of the remaining surplus was to be reduced, and the other half in 1842, when no duty would exceed 20 per cent.

Fifth. The protective tariff of 1842, which was followed by
Sixth. The free trade tariff of 1846, now in existence.

We have thus had six different systems, but the first and second differ from each other so little that it is unnecessary to separate the years falling under them, whereas the early years of the Compromise differ so essentially from the two latter that it is expedient to separate them. I shall therefore group the results as follows:

First. The tariffs of 1816 and 1824, ending with 1829.

Second. That of 1828, commencing with October, 1829, and end