Nathaniel Hillyer. Egleston.

The North American review (Volume 139) online

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I was planning the furnace, the iron was ore in the mine, the
stone was still in the quarry, the bricks were clay. To trans
form them required labor, and that it was which gave them their
value in the completed structure. Were such a furnace to be
built in Europe, its cost would not exceed $300,000, wages there
being sixty per cent, lower than here. So, too, with regard to
interest on money. Our capitalists, being very timid on account
of the continued tariff agitation, demand greater interest, $40,000
a year on $500,000, and $10,500 a year on $300,000. Here the
interest on the cost of this blast-furnace would be about eight


per cent., at an average, North and South j while in Europe it
would be only three and a half per cent. In the light of such
facts, what possible chance of existence would American manu
factures have, if they were to be exposed in the home market,
to competition with the manufactures of countries where both
labor and capital are so much cheaper ?

We have here in abundance the skilled labor and the capital
needed for the development of our vast natural resources. The
application of labor to the stores of wealth hidden in the mine,
latent in the forest and in the soil, is the source of our national
prosperity. Before the advent of the white man, all this wealth
was in the possession of the aboriginal race ; but the red man was
heedless of the treasure that nature had placed at his command,
and his life was a continual struggle for a bare existence. The
policy of free trade, whether frankly expressed or cunningly
disguised, tends to the same consummation. The iron of Penn
sylvania would lie unheeded in the mine ; the looms of New
England would be transported to other lands ; there would be
here no career for our enterprising and highly gifted population.
I see not how these conclusions can be avoided ; the utter ruin
of at least half of our industries would inevitably follow the
enactment of a tariff for revenue only, unless, indeed, the millions
of workers consented to enter into competition with the workers
of Europe, and to work for half the wages they now receive,
with corresponding restriction of their enjoyment of the com
forts and decencies of life. But we are not left to mere argu
mentation and inference when we seek to determine the outcome
of a policy of free trade. From a study of what the policy of
protection has done for our country, we may estimate precisely
what results will follow if ever that policy is abandoned. We
have only to read the history of the country's material progress
since the enactment of the protective tariff, and to compare our
condition since that period with our condition before; or we
have only to compare to-day those States of the Union that
accept cordially the doctrine of protection, with those that are
in favor of free trade. The former are prosperous, opulent, and
growing rapidly in wealth and population, in civilization and
culture; while the latter in all these respects lag far behind.
The South, with equal and in many cases superior natural
resources, remains undeveloped, and is trying to force legislation
to bring the North to the same condition.


The principles of political economy upon which our existing
tariff system is based, were clearly apprehended by Benjamin
Franklin, who, having studied the conditions of industrial de
velopment in England, thus wrote in 1791, from London, to
Humphrey Marshall, Sr. .

" Every manufacture encouraged in our country makes a market for prod
uce within ourselves, and saves us much money to the country that must
otherwise be exported to pay for the manufacture supplied. Here in Eng
land it is well known and understood that wherever a manufacture is estab
lished which employs a number of hands, it raises the value of land in the
neighboring country all around it, partly by the greater demand near at hand
for the produce of the land, and partly from the plenty of money drawn by the
manufacturer to that part of the country. It seems, therefore, the interest of
our farmers and owners o'f land to encourage our manufactures in preference
to foreign ones imported among us from distant countries."

Madison, too, advocated the policy of producing at home the
manufactured goods we need, and advised his countrymen, by
imposing duties on the manufactures brought from foreign
countries, to invigorate their own manufacturing industries;
and he adds that " we should not be be in a state of commercial
dependence upon a single nation for necessary articles of con
sumption or of defense in time of war." Andrew Jackson also
perceived the advantages of home production, as benefiting at
once and in equal degree the artisan and the farmer. " Build
your factories and workshops," said he, "close to your plan
tations and your farms, and you will confer inestimable and
innumerable blessings on the whole of the American people by
that policy."

It must not be forgotten that when these wise counsels were
given, there stood between America and Europe a barrier far
more difficult to overcome than any that can be set up by tariff
legislation. In those days the importation of foreign merchan
dise, and its conveyance to settlements at any distance from the
sea-board, took at least as many weeks as those operations now
require days, and the freight charges were correspondingly on
erous. To this must be added the exceedingly imperfect mechan
ism of exchange that then existed, and the lack of a perfected
system of brokerage and commission. These disadvantages had
the effect of an almost prohibitive tariff; yet the fathers of
the republic maintained that for the encouragement of
home manufactures a high customs tariff should further be


imposed on foreign manufactures imported into this country.
But to-day Europe is at our doors, and a merchant in San
Francisco can have his order filled by a manufacturer in
Manchester in one-fourth of the time that would have been
required to fill it for a merchant in New York in Jackson's
day. Hence, in the absence of a protective tariff, we should
be to-day exposed to a competition with foreign markets,
with their cheap capital, cheap labor, and cheap transportation,
much more disastrous to the manufacturing interests of this
country than could have arisen fifty years ago. Even with the
present high tariff, our imports are enormous, and they are
increasing in volume from year to year with astonishing
rapidity. This shows that the tariff is not impoverishing the
people; if that were the case, they could not afford to buy the
manufactured products of foreign countries to such an amount.
Our imports in 1841, 1851, 1861, 1871, and 1881, were respec
tively $127,946,177, $216,224,932, $335,650,153, $541,493,708, and
$753,240,125. This steady and rapid increase of importations
under our present tariff shows wherein the system may profitably
be reformed and amended. Would it not be a beneficial reform
of the tariff were our law-makers so to shape their legislation as
to keep that money at home, and thus give additional employment
to our own workers ? If at the outbreak of the war we had not
enacted a protective tariff, we should have found it impossible,
with the high price of labor and the depreciation of the cur
rency, to compete with foreign manufacturers. Our factories
and workshops would have been closed, and we should have
been completely at the mercy of England's manufacturers. Our
mechanics, our skilled labor, would have had to turn to agricult
ure, and the farmer would have lost his home market, which
under present conditions takes seven-eighths of his surplus

So far from heeding the advice of the fathers in regard to a
policy of protection, the South has always purposely acted out
the opposite policy. Instead of setting up workshops alongside
of the plantations, the people of the South raised cotton, sugar,
tobacco, etc., and shipped the crude products to foreign countries
or to the North, receiving in exchange their clothing, food to a
great extent, tools, furniture, machines, articles of luxury, etc.
The policy of sending out the crude materials and leaving to
other communities the profit of manufacturing them, has been


disastrous to every nation that has practiced it. When the
Southern States attempted to secede from the Union, they found
themselves still absolutely dependent on the outside world, and
as they were soon largely cut off from communication with Eng
land, and had no manufactures, no skilled labor of their own,
they were foredoomed to defeat. Does any one suppose that
the people of the North would have been able to conquer the
Rebellion had they been obliged to import from foreign coun
tries the material of war, clothing, and medicines for their
armies and fleets ?

The whole country has lately had very forcibly presented to
it the figures that show the marvelous increase of wealth in the
United States since 1860, or since the initiation of the policy of
protection from $16,150,000,000 to $55,000,000,000, the latter
being the estimate of our national wealth in 1880, made by an
English authority on finance, quoted approvingly by the " Lon
don Times." In the meantime we had passed through a great
and protracted civil war, in which two million men had been
engaged, and thus taken away from productive industry ; and
which entailed upon the country a debt that, on June 30, 1865,
amounted to $2,680,000,000, to say nothing of the cost to the
South. Again, since 1860, we have consumed wealth in a far
higher ratio than ever before, the general standard of comfort
having risen notably all over the whole country. Of course it
was not the war that caused this wonderful increase ; war
destroys life and property, wastes but does not build up. But
the war made a tariff necessary, and the tariff stimulated all
kinds of industries ; it compelled us to apply our own labor to
our own forests, mines, and farms. Thus the straits in which
we found ourselves on the outbreak of the war compelled us to
put in execution the advice given by Franklin, Madison, Jack
son, and, I may add, Jefferson. The advocates of the tariff had
always maintained that it would have the effect of producing
wealth ; its enactment was, as a matter of fact, followed by an
unexampled increase of wealth. Is it not, then, perfectly logi
cal to conclude that the tariff, the policy of protection, is the
cause of the increased wealth ? That this is so can, I think, be
easily proved.

Suppose that after the war the United States had repudiated
the policy of protection and adopted the policy of the South, ex
porting all their surplus crude products and taking in exchange


England's manufactured goods. What would have "been the result ?
The national debt would of necessity have been repudiated also,
for where should we have found the money to pay the interest ?
Our farmers, herders, cotton and sugar planters, and petroleum
producers could not have paid it. Who else, pray, would have
had any money ? What other industries would have remained ?
Consider the condition of the national finances at the beginning
of the conflict between North and South, before protection had
come to supply the sinews of war. Here we had been buying in
the cheapest market, had been practically free-traders, with a
tariff for revenue only ; and on the theory of the free-trade econ
omists we must have had abundance of money, not having been
compelled to pay to " monopoly " exorbitant prices for the goods
we consumed. But the figures already quoted show that at that
time our wealth was not much more than one-fourth what it was
in 1880. To-day, on the other hand, the grievance of the tariff-
reformers is, that the treasury is overflowing. There was no
surplus in 1861. The government, in fact, was unable to pay the
interest, soon after the outbreak of the war, then due to its
bondholders, and the banks of New York City had to come to
the rescue. But the nation that in 1861 was on the verge of
bankruptcy, and in the four years following had incurred an
enormous debt, so far from being obliged to compromise with
its creditors, has ever since been paying its debt, principal and
interest with a punctuality that is only too exemplary. A study
of the condition of the treasury in 1860 and in 1883 respectively,
as set forth in the following table, is instructive :

In 1860 the surplus was $4,877,885.57

The bonded indebtedness 64,640,888.00


National debt June 30, 1865 $2,680,000,000.00

Interest paid on debt from June 30, 1865, to
June 30, 1882 2,047,500,000.00

Total debt with accrued interest

June 30, 1883 $1,896,481,110.40

Less cash in treasury.. 345,389,902.92 1,551,091,207.48


To which add premium paid on gold to 1879, 409, 000,000. 00

Total amount paid $3,585,408,792.52


Thus in 1860, after nearly half a century of peace, unbroken
save by the slight difficulty with Mexico, we had a surplus of
less than $5,000,000, while our bonded debt was nearly $65,000,-
000. But the best measure of our financial weakness is seen in
the high rate of interest we had to pay 5J per cent, on the aver
age. Such was the financial situation when we were about to
enter on the greatest war of modern times, which brought into
combat two million men. Our condition* to-day, as regards
credit, wealth, population, and development, is the result of the
policy that imposes a tariff without regard to revenue, a tariff
that encourages the application of our own labor to our own
resources. We have in the treasury upward of $345,000,000, and
so strong is the credit of the United States that were the treasury
to issue bonds at 3 per cent., they would be taken up immediately
at par. Such is the result of nineteen years of peace and a
protective policy, after repairing the ravages of war and paying
in principal and interest more than $3,500,000,000 upon the debt
incurred on account of the war ; the rate of interest having been
reduced in the meantime 25 per cent., to the advantage of the
whole people.

Nor is it difficult to account for this extraordinary prosperity.
All commercial exchanges are in reality exchanges of one com
modity for another, and the holders of each of the commodities
that are exchanged look for a profit in the transaction the
buyer as well as the seller. If we buy in America the commod
ities we need, both of these profits remain with us j but if we
buy in England, the profit of the seller remains there ; and if we
sell in England, the buyer's profit remains in England. Under
the protective tariff, the profits of all the exchanges of fifty-five
millions of people are kept at home. Take for illustration the
" monopoly" of steel-rail making. Up to 1867 no steel rails were
made in America ; we purchased all our steel rails in England,
leaving to the English makers the whole of the seller's profit.
The prices of steel rails, free on board, in English ports, from
1863 to 1875, per ton of 2,240 pounds, as stated in " Poor's Rail
road Manual," were as follows :

1863 18 9s $89.79 1870 10 7s $50.37

1864 1712 .... 85.65 1871 11 6 .... 54.99

1865 16 7 .... 79.56 1872 1318 .... 67.54

1866 1410 .... 70.56 1873 16 9 .... 80.05

1867 1310 .... 65.70 1874 13 2 .... 68.75

1868 1212 .... 61.32 1875 9 2 .... 44.28

1869 11 6 54.99


Between 1867 and 1880, inclusive, steel rails were produced
in the United States in the following quantities : In 1867, 2,550
tons ; 1868, 7,225 tons ; 1869, 9,650 tons ; 1870, 34,000 tons ; 1871,
38,250 tons ; 1872, 94,070 tons ; 1873, 129,015 tons ; 1874, 144,944
tons 5 1875, 290,863 tons ; 1876, 412,461 tons ; 1877, 432,169 tons j
1878, 550,398 tons; 1879, 683,964 tons; 1880, 954,460 tons. At
a valuation of $65 a ton, this represents $245,961,235 paid for
steel rails, and all the profit remained at home. On the other
hand, while we were purchasing rails from England, we were
sending her our cotton, breadstuffs, and meat, and paying her
ships to take these products to market. She was sending us
back steel rails and manufactured cotton goods. Corn was then
worth fifty cents a bushel, and steel rails eighty dollars a ton ; so
we were giving her one hundred and sixty bushels of corn for one
ton of rails. The tariff encouraged capitalists to invest in making
steel rails in this country, and so far from establishing a monop
oly, it has given rise to the keenest competition, so that sixty
bushels of corn will purchase a ton of steel rails, and the other
one hundred bushels are saved ; or we can now purchase two and
a half tons of rails made at home for the same amount of corn
that used to be paid to foreign manufacturers for one ton. We
have reaped for our own people all the profits of the several
operations involved in transforming iron ore into steel rails. And
as the ore, coal, and limestone that go to make a ton of steel
rails are worth, in the mine and in the quarry, only $1.25, the
difference between $1.25 and the market price per ton of steel
rails represents the wages paid to labor, and the interest on
capital. These facts are conclusive as to the benefit of the pro
tective tariff, save in the eyes of the "revenue reformers," who, as
a rule, are neither ma luf acturers, nor farmers, nor mechanics ;
they are non-producers, living by barter of the products of
labor. I call attention now to a few figures on iron production :

In 1870 we took from the mines : In 1880 we took from the mines :

Of ore 3,655,215 tons. Of ore 7,709,708 tons.

To smelt this into pig To smelt this into pig
required : required :

Of limestone 1,500,000 ' Of limestone . . .3,169,149 "

Of coal 4,500,000 " Of coal 8,981,553

Of coke 1,000,000 " Of coke 2,277,555 "

Making of transpor- 22,137,965

tation more than. .10,655,000 "


These figures show an increase in ten years of ninety-eight
per cent., making a total of more than 22,000,000 tons of trans
portation in one year, merely to change the ore into pig. Have
the men engaged in transportation no interest in this ? Shall we
leave these 22,000,000 tons of ore, coal, and limestone "bnried in
onr own soil, and encourage their development in a foreign land,
simply because labor is cheaper ? Will any one say what the effect
would be to this nation of drawing each year from our financial
resources, and sending money abroad to purchase our annual sup
ply ? Would not this increase the cost of iron in the country we
purchase it from"? Shall all this transportation, shown to be so
immense, be done in this country, or in a foreign one ? And what
would be the loss to our inland carrying trade if this vast freight
age from the mine to the furnace were shut off ? In fact, the whole
freight would go to foreign ship-owners and foreign railroads, if we
used foreign iron. These 7,709,708 tons of ore, which were worth
but thirty cents a ton in the mine, were increased in value to
$100,557,685, when they had merely been converted into iron and
steel billets and muck bars. The value that this ore would attain
when worked up into all the conceivable forms for use, from the
plow to the knife-blade, from the axe to the surgeon's lancet, and
from the ship-plate to the watch-spring, cannot be estimated.
But what has been applied to create this value ? Labor, nothing
but labor ; in producing this, we retain both profits at home, we
exchange our bread and clothing for our iron.

But, with this wonderful development, did the tariff encourage
a monopoly ? The following official figures prove that there was
no monopoly. We sold the articles to the consumer 25 per cent,
cheaper than when we had a tariff for revenue, in the years from
1855 to 1860. What is true of iron and steel as to reduced
cost, is equally true of cotton and woolen goods, boots, shoes,
and clothing, when quality is compared.


AT PHILADELPHIA, FROM 1855 TO 1861 AND FROM 1880 TO 1884:*

Years. Prices. Tears. Prices.

1855 $74.58 1860 $58.75

1856 73.75 1880 60.38

1857 71.04 1881 58.05

1858 62.29 1882 61.41

1859 60.00 1883 50.30

* Compiled by the American Iron and Steel Association, from the sales-
books of several prominent Philadelphia iron merchants. Per ton of 2240 Ibs.

VOL. cxxxix. NO. 335. 28


PHIA, FROM 1855 TO 1861 AND FROM 1880 TO 1884. PER TON OF
2240 LBS. :*

Tears. Prices. Tears. Prices.

1855 $27.75 1860 $22.75

1856 27.12 1880 28.50

1857 26.37 1881 25.12

1858 22.25 1882 25.75

1859 23.37 1883 2237

At the same time the wages of the workingmen increased, as
appears from the following table, compiled from the pay-rolls of
the largest iron works in New York City, viz., the Delamater
Iron Works, W. & A. Fletcher Co., Cobanks & Theall, J. B. & J.
M. Cornell, Quintard Iron Works, and the Morgan Iron Works :


1855 to I860. 1879 to 1884.

Pattern makers $2.28 $3.27

Machinists 1.63 .... 2.66

Holders 2.12 .... 3.05

Flange turners 2.30 3.00

Blacksmiths 2.30 2 . 70

Blacksmiths' helpers 1 .10 1 . 70

Boilermakers 1.58 2.50

Boiler makers' helpers 1.00 1.50

Boys 55 .... 1.00

Laborers 1.05 1 . 70

Thus wages averaged about forty-five per cent, more from
1879 to 1884 than from 1855 to 1860, and the product of this
labor is selling now twenty-five per cent, cheaper than it was then.

But the tariff reformers are crying out " overproduction "
and " monopoly " at the same time, to suit different audiences,
" monopoly " to the farmer and overproduction to the working-
man. If we were buying annually 100,000,000 bushels of grain,
would there be an overproduction of grain? Certainly not.
They again cry out, " We want a foreign market for our manu
factures." So we do, but we must supply our home market first.
We don't do that, as the following figures will show. If we
cannot undersell the foreign manufacturers in our own market,
how can we undersell them in a foreign market, when extra cost
is put on the price in the shape of freight, commission, and ex-

* Compiled by the American Iron and Steel Association.


change. It would be far more sensible to reform the tariff so as
to supply this 525,000,000 and more of imports, than to fly to
evils we know not of. The articles in the table are supplies to
our common every-day use, and should be made at home :


ITOU andSteel

Cotton Goods. Woolen Goods. and

manufactures of

1883 $36,853,689 .... $44,274,952 .... $40,796,907

1882 34,351,292 .... 37,361,520 .... 51,377,633

1881 3,219,229 .... 31,156,426 .... 46,439,747

1880 29,929,366 .... 33,911,093 .... 53,714,008

1879 19,928,310 .... 24,355,821 .... 9,447,148

Totals.. $152,281,986 .... $171,059,812 .... $201,774,543

Total $525,116,341

Should not North Carolina, Alabama, and Georgia, with
their abundance of coal, iron, and cotton, be manufacturing the
above goods, making a home market for their cotton and bread,
keeping the profits of cotton and corn growing and manufact
uring at home, and giving a variety of employments to their
own people f

The encouragement of home industry has attracted to this
country a vast multitude of laborers from Europe, the immigra
tion from 1865 to 1883 amounting to six million souls, of whom
four millions, male and female, are able-bodied workers, adding
enormously to the sum of our national wealth. At the same
time, our mineral resources throughout the country have been
developed, and this has led to the construction of lines of rail
road in every direction, opening up to settlement regions that
else would have remained uninhabited and unimproved. Every
new center of manufacturing or mining industry necessitates
bringing new tracts of land under cultivation, and opens a new
market for the products of the farm ; and the farmer can always
obtain remunerative prices for his crops.

There remains of the national debt, less cash in the treas
ury, $1,551,091,207.48 yet to be paid. No business man ever
considered that he had a surplus until he had enough in the
bank, or under his control, to pay his debts. But the govern-

* Compiled by Joseph Nimmo, Jr., Bureau of Statistics, Treasury Depart


ment did not anticipate this wonderful prosperity. It made

Online LibraryNathaniel Hillyer. EglestonThe North American review (Volume 139) → online text (page 37 of 60)