The crisis of 1857.

cases, while the net gain of the latter five years is ten times that of the former. In 1846, 638 patents were issued. In 1860 there were granted 4,778, a gain of 650 per cent. In 1876 there were 15,595 issued, and in 1890, 26,292 issued, a gain of only 68 per cent for the fifteen years of protection, against a gain of 650 during the fifteen years of free trade. And yet, the total number of patents issued during the latter period was 288,207, against 29,017 in the former period, or about ten times as many, or, per capita, five times as many. While this allusion to the number of patents issued is given to illustrate the fallacy of a comparison of percentage increase, it will serve to point out most significantly the effects of free trade and protection on the inventive genius of the people. Without ambition or hope, the mind does not reach out very far; it must be wholly occupied in solving the problem of existence, while under prosperity, in the enjoyment of comfort and contentment, there is a constant desire to grasp higher attainments, and the result can be clearly seen from the returns of the patent office.

But all the percentages of free trade conception and calculation cannot make wealth from poverty, prosperity from bankruptcy, or gain from loss. Treat the period from 1846 to 1860 as you will, the best that can be said of it is, that we stood still in proportion to our increasing population. And had it not been for a succession of domestic and foreign advantages such as had never before occurred, and probably never will occur again in a single decade, the ruin that came would have come ten years sooner, or been ten times as great, if it were possible to reach such a result. But if we suffered, England did not. She gained to the extent of millions; yes, hundreds of millions of dollars.

Professor Taussig, says:1

"The revenue was redundant in 1857, and this was the chief cause of the reduction of duties."

And again :

In fact, the crisis of 1857 was 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."

What are the facts? In 1855. '56 and '57, the customs receipts and expenditures of the government were as follows:

Had it not been for the unprecedented receipts from the sales of public lands which amounted to $28,885,492 during the three years preceding 1857 there would have been a deficit in the treasury each year. Whether these sales were made for the purpose of meeting the requirements of the government or not, it is certain that any redundancy was not due to the workings of the tariff.

How about the balance of trade for these years? Since 1847 it had Balance of been as follows:

trade1848-57.

Now, how much coin and bullion were we compelled to send away

to pay for this excessive importation?

EXPORTS OF Gold and SILVER COIN AND BULLION FROM THE UNITED STATES.

Not in a single year of the ten was the balance of trade in our favor; not a single year passed without our sending away our gold in large amounts. And yet Professor Taussig would have us believe that the reduction of duties in 1857 was due to the "redundant" condition of the national finances.

The experience of the United States under a high tariff or a low tariff has been well understood by the statesmen, economists and historians of the world. The result has not been different from that in other

Results of

the pro

tective

policy.

Effects of the two tariff systems.

The industrial policy of the South-Its

countries when protection has been extended to their industries, or when they have been exposed to the ruinous competition of rivals possessed of superior advantages. The dogmatic free trader does not dispute the effect which the practice of protection or free trade has on the industries of a country under those conditions. Their position, however, being that it is better for a nation to forego the production of those articles which it. is unable to make at a lower cost than they can be produced in other countries having superior advantages either of capital, skill, or cheap labor, and to buy in the cheapest market. When there is no dispute among economists or between protectionists and free traders upon the effect of the two systems on the industries of a country; when the controversy only arises over their relative benefits, it is idle for free traders who are advocating the "buy in the cheapest market" doctrine, to attempt to disguise or misrepresent the effect of those low tariffs on established industries, or to claim for them different results from those actually intended or achieved. That we purchased more largely of the manufactures of foreign countries under the low tariffs than we did under the high tariffs, and that labor and capital under the low tariffs found less employment at home in the industries thereby affected, there is not the slightest question. That high tariffs encouraged the building of factories and gave employment in them is equally conceded; the contentions of the free traders, however, being that industries thus brought into existence and supported, are artificially fostered, and that the result is to compel the consumers to pay more for their goods than they would be able to buy them for in other countries where they can be made cheaper. This being the common argument of free trade writers, the free trade press and the free trade stump speakers, why they should seek to misrepresent the effect of the acts of 1846 and 1857, is inexplicable on any other grounds than that they are attempting to evade the responsibility of the business depression and calamities which have ever befallen the people under an actual test of their dogmas.

The unwise course of Southern statesmen was fully demonstrated when between 1861 and 1865 they came to measure their strength with evil effects. the people of the North. Under their leadership and teachings the South had become imbued with the principles of free trade. Although possessing one great staple product, cotton, for which their climate was so well adapted and in the production of which they could hold a monopoly of the world's markets and supply cotton factories whether located in Europe or America, yet, as is now being demonstrated, it was but one source of wealth and formed, in fact, but a small part of the natural richness and resources of the country. With inexhaustible iron mines and coal measures in nearly all their States, with fuel and raw material lying side by side, with their cheap labor they could have established cotton factories, worked up their raw material at home, and rivaled Manchester

in the production of this fabric. With the natural resources and richness of the South, a diversity of industries would have attracted capital, skilled labor, and developed a degree of genius and business enterprise which would have made the States unrivaled in their wealth; but instead of this, they turned their energy to the production of one great, staple commodity; following out the teachings of British economists, they neglected everything else for one great industry. The result was that in 1861, and during the war, their cities and towns were unprosperous, their capital was invested in cotton plantations, and the only way they could get this product to the market was by running the blockade of Federal cruisers. They had been talking secession and preparing for war for nearly thirty years. Industrially they were little prepared for it. On the other hand, the North, without believing in the danger of a rebellion and with no intention of preparing for internal strifes, had availed itself of the advantages afforded by the protective regulations and in every way possible built up a system of diversified industries which had attracted to it immigration, skill and capital. Large commercial cities, numerous. industrial centres had arisen in the North, which had a population of 22,000,000 and nearly all the wealth of the country; while the Confederate States had only 11,000,000 of people, and limited and undeveloped resources. In these circumstances, the contest from the outset, when the chances of war are measured by property and wealth alone, was an unequal one. The South had threatened secession for nearly thirty years, and yet in 1860 it had only seventy-five hands engaged in making firearms, while in the North there were 1987 in this occupation. The South had only 1768 persons employed in the woolen and worsted industry, while in the North there were 31,500. Although producing the raw cotton, the South had only 9966 hands engaged in its manufacture, while in the North the number had reached 111,378. With an inexhaustible supply of coal and iron easily accessible, the South gave employment only to 5087 persons in the production of iron manufacture, while in the North there were 63,045. So we might go through the whole line of manufacturing with a comparison of establishments, hands employed and value of the product, and by a similar comparison fully illustrate the folly of a people possessed of great natural resources and facilities for carrying on almost every kind of industrial pursuits, in becoming wedded to an unwise industrial system, neglecting the very opportunities which nature had given them, and failing to avail themselves of the advantages of the fostering care of protection, which was enacted to promote the welfare and advance the prosperity of every section of our common country, North, South, East and West.

Figh tariffs.

Tariff policy of the North contrasted

with that of the South.

CHAPTER III.

PROTECTIVE LEGISLATION, 1860 TO 1890.

It is the province of this and succeeding chapters to show by facts and figures the industrial changes of our country since the enactment of the Morrill tariff in March, 1861.

It was on March 12, 1860, that Mr. Morrill, of Vermont, introduced a tariff bill from the Ways and Means Committee. It passed the House May 10. In the Senate, however, it was put aside till December, but was finally passed March 2, 1861, receiving President Buchanan's signature a few hours before his leaving office. The bill went into effect April 2. This bill increased the duties by about 10 per cent, and by the changing of many duties from ad valorem to specific gave the new law a distinctively protective character. But this act was not adequate to meet the increasing expenditures made necessary by the war. An extraordinary session of Congress was convened July 4, 1861, and a bill further increasing tariff duties became a law August 5. This was practically the first of the war tariffs. On December 24, of the same year, duties were increased on sugar 1⁄2 cent per pound, tea 5 cents, and coffee I cent.

The Republican party, in nominating Abraham Lincoln in the preceding year, had made protection to native industries one of its cardinal principles, and inserted in its platform the following plank, written by Henry C. Carey:

12. That while providing revenue for the support of the general governments by duties from imports, sound policy requires such an adjustment of these imports as to encourage the development of the industrial interests of the country; and we commend the policy of National Exchange which secures to the workingmen liberal wages, to agriculture remunerative prices, to mechanics and manufacturers an adequate reward for their skill, labor and enterprise, and to the nation commercial prosperity and independence.

On the other hand, the South had adopted free trade pure and simple. Article 1, section 8, clause 1, of the Confederate Constitution reads:

The Congress shall have power: To lay and collect taxes, duties, imports and excise, for revenue necessary to pay the debts, provide for the common defence and carry on the government of the Confederate States; but no bounties shall be granted from the treasury, nor shall any duties or taxes on importations from foreign nations be laid to promote or foster any branch of industry.

It may not be amiss to state here that the events and results chronicled in the following pages are a true history of the times. The terms North and South are used in no partisan or offensive spirit.

No historian