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country wakened up from a feverish dream to find itself on the
point of bankruptcy. The revenue fell off so greatly that the
government was obliged to ask loans, first in the home and then
in the foreign money market, and met only with rebuff in both,
although the loan asked was less than a fourth of its ordinary
income. Labor ran begging for employment, and during 1839—
1841, the cry was heard far and near, " Give me work, only give
me work ! Make your own terms ; myself and family have
nothing to eat !"

By 1840 the country was thoroughly aroused, and elected a
protectionist President, after the fiercest political campaign in
our history. When Congress met in December of 1841, Gen.
Harrison was dead, but his successor, Tyler, recommended an



THE DALLAS TARIFF AND ITS METHODS. 367

increase of duties in a conciliatory spirit. The tariff of 1342
one of the best and most protective ever enacted, was adopted,
and no more threats of secession were heard. The prosperity
that free trade was to bring to the South had not been achieved,
and the preservation and extension of slavery now absorbed the
attention of that section. The new policy bore the old fruits ;
lanquishiug industries were quickened into life; with the growth
of the power to purchase, foreign commerce revived ; govern-
ment reaped a large revenue, and the finances of the country
were again in a satisfactory state. The home production of great
staples was multiplied, and the prices of many of them fell.
A better and more trustworthy currency came into circulation.
Then, in 1846, the policy was changed once more, and that
of military aggression upon weaker neighbors at home suc-
ceeded that of industrial resistance to more powerful nations
abroad. England, after some five centuries of rigid protection,
had adopted the policy of free trade, and was preaching it with all
her eloquence to the rest of the world. Mr. Robert J. Walker,
secretary of the U. S. treasury, was one of her disciples. " Let
them alone," he told Congress, " is all that is required of man ;
let all international exchanges of products move as freely in
their orbits as the heavenly bodies in their spheres, and their
order and harmony will be as perfect, and their results as bene-
ficial, as in every movement under the laws of nature when un-
disturbed by the errors and interference of man." But even a
Democratic Congress had not quite forgotten the past, nor broken
so far with the Democratic precedents of 1824-1828. The
Dallas tariff of 1846 was still protective. It adopted, indeed,
the vicious method of imposing ad valorem, duties, while those
of 1842 had been specific; and it taxed a host of articles that
better tariffs, before and since, put into the free list. But it
still imposed duties of from 40 to 20 per cent, upon the
great staples of manufacture. Had these rates been calculated
on the average price of the several articles, and then made spe-
cific at that figure, the effect would have been far better. For
ad valorem duties make the home market far more dependent



o68 SOCIAL SCIENCE AND NATIONAL ECONOMY.

upon the fluctuations of the foreign market, and in the long run
bring it under the power of the trader and the foreign producer.
Thus during the years 1846-9 English iron was cheap, selling in
New York at S-tO a ton, and largely driving the home producer
out of the market. One- third of the furnaces and iron-mills
of Pennsylvania ceased operations soon after the tariff was
enacted, many being sold out by the sheriff; the rest were sorely
crippled, and the amount of their production greatly diminished.
The iron men met, and in a memorial, prepared by Stephen Col-
well, expostulated with Congress, showing that the ruin, which
was impending over their industry, would be a costly injury to
the whole country. They predicted that if home competition
were out of the way, the nation would soon learn that the price
of British iron was fixed, not by the cost of production but by
the demand made upon that market, and the dependent condi-
tion of their customers. Their remonstrances were unheeded;
the work of destroying a great industry went on, and its traces
may be seen in the old furnaces of the Allegheny ridges. In
1851-4, when home competition was virtually out of the way,
iron sold for §80 a ton, whereas native iron had been furnished
for $60. When English iron was cheap, the duty was also low,
and the native producer was driven from the home market.
When it rose in price, the duty rose also, and enhanced its value
to a degree that greatly checked its consumption. But this rise
gave no security to the home producer to increase his turn-out,
or to the capitalist to begin iron-works. Neither could tell how
soon a real or an artificial cheapness might destroy his market
again. There was no security for the home producer, while the
home consumer was fleeced to the uttermost.

The Dallas tariff lasted till 1857, and inflicted injuries upon
nearly all our industries, preventing the influx of capital in that
direction. To compensate for this we were to have an unlimited
foreign market for breadstuff's since England had repealed the
corn laws. The more we bought of her, the more we must sell
her, as " commodities are paid for with commodities.'' The
commodity with which we chiefly paid was gold. The tariff



THE slave-holders' policy. 369

increased the dependence of the country upon both the buyer
and tbe seller of foreign markets. Its bad effects were alleviated
by the discoveries of gold in California, which gave an impulse
to all kinds of business. Its reconsideration was prevented by
the all-absorbing interest of the slavery controversy. It was the
settled policy of the slave-holding interest and their friends to
" prevent the increase of manufactures, force the surplus labor
into agriculture, promote the cultivation of unimproved western
lands, until provisions are so multiplied and reduced in price
that the slave can be fed so cheaply as to enable the South to
grow sugar at three cents a pound. . . The Western farmer, the
Southern planter, and the English manufacturer became united
in a common bond of interest, the whole giving their support to
the doctrine of free trade" (Eliot's Cotton is King, Augusta,
Ga., 1860). A Congress controlled by this interest reduced the
duties twenty-five per cent, in 1857. This was not a sudden
change of policy, but the crowning of the edifice that had been
building for eleven years past. It at once intensified all the uu-
wholesome tendencies in our commercial and industrial life ;
turned capital ouce more from production to speculation, and led
to a large and varying increase of importations. Another great
panic followed through the collapse of unsound enterprises, and
carried with it many that were sound. Every one had been buy-
ing at any price ; every one made haste to sell, and fouud no
customers. Lands in what was then the far West, by whose
purchase fortunes were confidently expected, were sold by the
county to pay the taxes. The treasury was again depleted, and
years came in which it must borrow the means to carry on the
government.

In 1860 the Republican party, composed very largely of the
old Protectionist party, won its first national victory, and broke,
for the third time in sixty years, the Democratic succession of
Presidents. In 1861 the war for the Union bcean. and the
Morrill tariff was enacted, and up to the present writing that
policy has been persisted in by the nation. Not that that tariff,
either in its original form or as subsequently modified, is satis-
24



370 SOCIAL SCIENCE AND NATIONAL ECONOMY.

factory in its application of general principles. It has been made
more satisfactory, indeed, by fairer protection to the woollen in-
dustry, and by the removal of duties that had been laid upon
articles that cannot be produced at home. But in some other
directions — notably in the reduction of duties upon iron —
changes have not been for the better. Another trreat defect in
our financial system was the heavy internal revenue duties levied
until after the war, — duties that took away with one hand nearly
all that was given with the other.

When the war began American industry was unable to furnish
all the materials to arm and equip the national forces. Steel and
cloth, and blankets, had to be got from England ; and fortunately
the seas were open. Long before it closed all these elements
of the national defence were produced at home, of as good
quality and in quantities large enough to meet any demand.
But from the very start to the close of the struggle the North
reaped the advantage of the possession of that diversified in-
dustry which had perpetuated itself in the face of so many dis-
couragements, and now sprang into vigorous life ; — while the
merely agricultural South was continually hampered through the
absence of manufactures, of the middle class who sustain them,
and of the industrial habits which they cultivate.

The result of the persistence in the nationalist policy was
summed up in 1869 by Mr. David A. Wells, U. S. Commissioner
of Internal Revenue : " Within the last five years more cotton
spindles have been put in operation, more iron furnaces erected,
more bars rolled, more steel made, more coal and copper mined,
more lumber sawed and hewn, more houses and shops constructed,
more manufactories of various kinds started, and more petroleum
collected, than during any equal period in the history of the
country. And this increase has been greater both as regards
quality and quantity, and greater than the legitimate increase to
be expected from the normal increase of wealth and population."

Again, in 18G9, he says in his report that " to review the
main features of our national experience in relation to capital
and industry for the past year is but to chronicle and affirm



MR. WELLS PRO AND CON. 371

anew the apparent continuance of that same wonderful ratio of
progress and development which, with the exception of a period
of war, has especially characterized the annual history of the
nation for the last quarter of a century." (The form of this
statement shows that the impression produced on Mr. Wells hy
the prosperity of the nation under a protective policy was so
brilliant as to efface all recollection of the wretched and disastrous
experiences of 1847 and 1857, and of the dead-alive decade that
intervened between them.) He estimates the value of the
nation's property in 1860 at 14,183 millions of dollars ; and the
increase in the nine years that followed, 9217 millions of dollars ;
and calls attention to the fact that the former sum represents the
accumulations of nearly a quarter of a millennium ; the latter
of a single decade, four years of which were occupied by a
wasteful war. The products of all our industries were worth
§3804 millions in 1860; but §6825 millions in 1869.

Mr. Wells has changed his mind as to the benefits of a protective tariff
since he wrote this. He bases his dissent (1) On the (supposed i faci that
much as wages have advanced under protection, they have advanced still
more in Europe if measured by their purchasing power. The comparison
is unfair because every leading nation in Europe, with the partial excep-
tion of England, is a protectionist nation. England and most of tho
others would have a varied industry under any system, while only under
protection would we have it to such an extent as to produce equilibrium of
the industries. And " the proof of the pud ling is the eating." Skilled
labor emigrated from England to America — flying from Free Trade to
Protection — since ISfil as never before. If wages rose in England, it
was to keep labor at. home. (Mr. Wells bases his conclusion that " whilo
the rich are growing richer the poor are growing poorer" upon a series of
tables, which have been so carefully prepared from a large generalization
of observed facts, that they show that a man with five or six children
lives more cheaply and earns less than a man with four; but that if ho
be so unlucky as to have seven his family expenses are at once double
what they were when he had six!) (2) On the decline of American ship-
ping. When sailing-vessels, built of wood, were the chief mean- •>(' ocean
transport, Hv United States and the British American Colonies had great
advantages in their construction, and largely monopolized the business.
S'-nce 185.5 American ship-building has declined on both aides <>f the bor-
der, because steamships built of iron have taken their place, and for the
construction of these the Clyde, the Mersey and Belfasl have exceptional
advantages. We have had for years complete free trado in all the materi-



372 SOCIAL SCIENCE AND NATIONAL ECONOMY.

als, but the business does not resume its old proportions, though it might
do so if we protected our commerce by heavy discriminating duties in favor
of goods imported in American ships. As it is, our shipbuilding Las began
to revive, and a line of ocean steamers, built of American iron in Ameri-
can dockyards, is competing for the ocean carrying-trade. (3) On
the decline in export trade, and the increase of importations, showing
that we are more than ever dependent on the foreign producer. If, as Mr
Wells admits, we produce vastly more and export less, it must be because
our power to consume is vastly increased. And this, surely, is the final test
of a nation's wealth, of its power over nature. Not that we are less
able to export than we were, but that we are under less necessity to
export, through the greater development of the home market. In fact
we are competing with England for the markets of the world and even
those of her colonies and dependencies, as never before. Another
American Free Trader has come nearer the truth on this subject; Mr.
Opdyke says that when a country has attained a certain density of
population, it ceases to import manufactured goods, and to export raw
materials, and begins to import raw materials and to export manufac-
tured goods; and that "during the period of transition, the foreign
commerce of a nation must gradually diminish." (±) That the increase
per cent, in production is not as great as in former decades. Even if
this were so, it is to be remembered (as The (London) Times well objects
here), there was a larger amount to increase from, so that even an accel-
erated rate of production might well appear less when thus estimated,
and a steady rate of increase always must. When a child passes from
its fifth to its tenth year, those five years are an increase of a hundred
per cent; the next five are but fifty per cent. ; the next thirty-three, and
so on. But when the growth of the national wealth during the period
in question is taken in gross, and compared with that of the previous
decades, it exhibits an accelerated rate of growth as compared with pre-
vious decades.

§ 319. The census taken in 1870 gives us the means to form
an approximate estimate of the .growth of the country during the
previous decade under a Protectionist policy. In considering its
statistics, we must remember (1) that they are confessedly very
imperfect, and fall short of the actual facts, through the impcr-
fectness of the census law, and most especially through the in-
efficiency of many of the government's agents for the collection
of facts. (2) That they refer to a period which witnessed a vast
destruction of national wealth by civil war, and a vast diversion
of popular energies from industrial to martial pursuits;

Superintendent Walker sums up the natioual wealth, the true



THE GROWTH OF A DECADE. 373

value of personal and real estate, at §30,068,518,507 in 1^70,
while in 1SG0 it was 610,159,616,068 (including §3,000,000,000
of slave property), and in 1850, 87,135,780,218. That is to
say (leaving out the slaves), to the something over thirteen bil-
lions, which represented the entire accumulations of the nation
in a quarter of a millennium, there were added nearly seventeen
billions by the accumulations of one decade, while the accumu-
lations of the previous decade were about nine billions.

Mr. Walker thinks the increase is not so great as this, because (1) of
the careless way in which the census of 18G0 was taken : and (2) the " in-
flation of prices" in 1S70 through depreciation of the currency. The last
reason for a deduction we utterly reject as unfounded, for reasons already
given. The former (for which he deducts twenty or thirty per cen t
applies still more forcibly to the census of 1850 as compared with 1860.
As Mr.. Wells says, the increase in that decade was at most eighty, or per-
haps only sixty-five per cent.

The aggregate value of the farm lands (and of the implements
and machinery used to till them) advanced from $6,891,163,238 to
89, 599, 682,290, while their area increased from 163 to 188 mil-
lion acres. This, be it noted, includes those districts of the
country where the value of real estate has deteriorated through
the transition from slavery to freedom, and the imperfect adjust-
ment of society to the new condition. Were other parts of the
country to be taken by themselves, the results would be far more
striking, and it would be seen in a multitude of cases that the in-
crease in the value of the lands has far outrun the increase of
area under cultivation, mainly through the development of a va-
ried industry in the farmer's vicinity.

The difference between different districts of the country in
their greater or less approximation to that equilibrium ot the
industries, through which alone the farmer obtains a fair price
for his crops, makes it hard to fix the aggregate value of the
crops. The Superintendent speaks of " such notorious facts as
corn selling in New England at ninety cents a bushel, and burn-
ing for fuel in Iowa; wheat selling at 81. 35 in New York, and
for forty-five cents in Minnesota; beef bringing 87 a hundred
on the hoof in the East, while cattle are slaughtered for their



374 SOCIAL SCIENCE AND NATIONAL ECONOMY.

hides in Texas." He estimates the annual value of farm pro-
ducts at §2,447.538,658, and of the orchards and market gar-
dens at one-fourth as much.

Has the farmer suffered from the policy that has sought to
bring him and the artisan into neighborhood, and to give him a
steady market, a home market for his crop? Mr. WellS, sum-
ming up the results reached in 1869, found that the value of
our farm products in that year was nearly as great as that of all
our products in 1860. The increase in their bulk had been '
great; that of their value still greater. The farm produce car-
ried by our railroads had increased two hundred and twenty-five
per cent, in bulk and three hundred and fifty per ceut. in market
price.

The unwisely rapid extension of Western settlement, and the
immense growth of the farming class under the impulse given
by the homestead and similar laws, aud by railroad grants, has
indeed postponed the attainment of the equilibrium of our na-
tional industries. But more than ever before for that very rea-
son the Western farmer needs the Eastern market for his grain
— a market that would be greatly diminished by the reduction
of the class engaged in manufactures. Were our people
driven to farming by the closing of our factories, the price of
pork and grain in the Mississippi valley would be a problem for
the calculus of infinitesimals.

The East, indeed, especially New England, has gone too far
in the transfer of industry from farming at home to the West,
if not to the factory. Vermont raises wheat enough to feed her
people thirty-seven days of the year; Maine, New Hampshire
and Connecticut, ten or eleven days; Massachusetts, to give them
a breakfast, a dinner, and a sparing supper ; Rhode Island raises
782 bushels, and buys 3,000,000. This will be corrected as the
West puts more money into manufacturing, and consumes the
bulk of her crop at home; and agriculture will again assume its
old proportions in the East, where plenty of good land lies idle,
and is passed by in the eagerness for a home on the prairies.

Reducing the census of 1870 aud that of 1860 to the same



THE PROGRESS OF MANUFACTUBES. 375

basis of calculation, as to the admission or the omission of
certain industries, the Superintendent finds the total reported
production of our manufactures in I860 was $1,880, 801,670 ; in
1870, 3,924,958,000,— a gross gain of 108.12 per cent. Both
statements, he believes, fall very far short of the actual facts,
and his belief is fully confirmed by a comparison of the returns
of Philadelphian manufactures in the census, with the facts
reached by a more careful inquiry.

The Superintendent again disputes the amount of increase by asserting
a rise in prices of manufactured goods, such as would bring down the
increase to fifty-two per cent.

The materials consumed by our manufacturers, and of course
purchased in large part from our other producing classes, were
worth $555,123,822 in 1850; 81,031,005,092 in 1860; and
$2,488,427,242 in 1870.

The returns of the amount paid in wages by manufacturers

are defective, because in the minor industries the masters are

also workmen, and their earnings in the latter capacity are not

reported. In 1850 the amount paid in wages was 8236,755,404

to 957,059 persons; in 1800,8378,878,966 to 1,311,240 persons;

in 1870, 8775,584,343 to 2,053,966 persons. The gain of the

nation has been the gain of the many, not of the few only.

The deposits in the savings' banks of Massachusetts for instance

were more than the aggregate dividends of her manufacturers,

and investment is found for these savinsrs through the manufac-

turers borrowing. Yet the best-paid workingmen made little or

no use of these institutions. In Connecticut labor absorbs

thirty-seven and seven-eighths millions of the gross profits of

manufacture, leaving thirty-five and three-fourths millions to

the capitalists of that state, to pay interest on capital, cover all

risks and insurance, replace the wear of machinery, and pay all

. incidental expenses And the farmer's gain of a home market

has been the laborer's gain of more than the opportunity to turn

farmer; for in a country where every one can get land, the

manufacturer has to compete, not with the farmer's offer of

wag.es, but with the attractions and advantages of the fanner's

positiou.



376 SOCIAL SCIENCE AND NATIONAL ECONOMY.

§ 320. We will now look at the progress of a few of the great
staples of industry.

Our make of iron fell from seven to five hundred thousand
tons under the tariff of 1847. It rallied again under the stimu-
lus of California gold, and up to the outbreak of the war vibrated
between seven and nine hundred thousand tons. We passed
the million in 186-4, fell back again nest year, and then passed
it again and for ever, and reached nearly two millions in 1869.
During the latter part of the decade, the world, as Mr. Greeley
said, was "iron-hungry." The demand for it throughout the
world was so great, especially through the extension of railways,
that it surpassed the possible supply, and the price rose every-
where. England had to import foreign ores to fill her contracts,
as her own mines did not supply enough. Alarm was taken at
the high profits of American iron men, and the duty was lowered
in 1870, and again in 1872. The price did not fall, however,
and the only effect of the reduction was to put some $15,000,000
into the pockets of English iron-men, which would otherwise
have gone into the United States treasury.

America was putting $350,000,000 a year into building new
railroads and re-building old ones, which was too large an outlay
of capital in that direction, and much of it was spent on roads
which ought not to be built for many years to couie, and which
could only help to still more increase and disperse our merely
agricultural population, and put off the equilibrium of our in-
dustries. x\t last the limit of that business was reached in the
fall of 1873 and its panic. The iron-hunger was satiated for a
while, and the tariff, even as mutilated in the' previous years,
began to be of use again. The home production of iron had
reached a point that made it amply sufficient to meet the re-
duced demand. English producers were forced to relieve their
home market of its glut in any possible direction, and but for
the tariff, and the specific character of its duties, we might have
had the glut of 1847 over again.

When the census of 1870 was taken, the total annual value
of American iron and manufactures of iron was $3:22,128,698;



OUR IRON AND STEEL INDUSTRIES. 377



Online LibraryRobert Ellis ThompsonSocial science and national economy → online text (page 34 of 38)