CHAPTER XLVI NATIONALISM AND REACTION I. THE RISE OF "PROTECTION" 506. From 1807 to 1815 the embargo and the war shut out European goods. This afforded an artificial "protection" for home manufactures. We had to use up our own raw cotton, wool, and iron, or let them go unused; and we had to supply our own clothing, fabrics, tools, and machinery, or do without. This new demand for building up home manufactures was met mainly in New England, where much capital and labor, formerly engaged in shipping, was temporarily unemployed. In 1807 New England cotton mills had only 8000 spindles in use (§ 435); in 1809 the number was 80,000; and, by the close of the war, 500,000, employing 100,000 workers. Woolen and iron manufactures had not grown quite so rapidly; but they also were well under way. The total capital invested had risen to about a hundred million dollars. Two fifths of this was in the cotton industry. 507. When peace returned, it was plain that this manufacturing industry, developed by unnatural conditions, could not sustain itself against restored competition. We could let it die, and permit the capital and labor to find their way back into other industries; or we could now "protect" it from foreign competition by law. To do this, we would place high tariffs on foreign goods like those we manufactured. If we adopted this policy of "protection," we should pay more for the articles than if we let them come in, untaxed, from the Old World, where their cost was lower. But, it was urged, we should have more diversified industries, larger city populations, and so more of a home market for our raw materials and for foodstuffs, and, after a time, when we should come to do the work efficiently, even cheaper manufac tures, because of the absence of ocean freights. The question of "protection" was not new. Earlier tariffs had been framed to carry "incidental protection” (§ 374); and in a famous Report on Manufactures Hamilton had argued for a protective tariff. But all such plans had been for taxation in order to create manufactures. It was more effective to call upon Congress to preserve industries into which a national war had driven our citizens. Moreover, Calhoun and Clay urged that America must make itself independent, economically, of Europe. Such economic independence, they argued eloquently, was essential to real political independence. They took ground for America like that which led English statesmen in 1660 to favor the old Navigation Acts for the British Empire (§ 137). The war had just given point to the plea. John Randolph raised his voice in almost solitary protest in Congress, in behalf of the "consumer." With keen insight, he warned the agricultural masses that they were to pay the bills, and that, in the discussion of future rates, they would never be able to make their needs and opinions felt in Congress as could the small body of interested and influential capitalists: 66 Alert, vigilant, enterprising, active, the manufacturing interests are collected .. ready to associate at a moment's notice for any purpose of general interest to their body. . . . Nay, they are always assembled. They are always on the Rialto; and Shylock and Antonio meet every day, as friends, and compare notes. And they possess, in trick and intelligence, what, in the goodness of God to them, the others can never have." 508. The Tariff of 1816 was enacted by a two-thirds vote as an avowed protective measure. Revenue had become the incident. Imported cottons and woolens were taxed 25 per cent; and manufactured iron, slightly more. On cheap grades of cloth the rate was really much higher than 25 per cent, disguised by a "minimum-price" clause. That is, the bill provided that, for purposes of taxation, no cotton cloth should be valued at § 510] PROTECTIVE TARIFFS, 1816-1828 431 less than 25 cents a yard. If the cloth was really worth only 13 cents, the tariff was still 64 cents, or, in reality, fifty per cent. This effective device for placing the chief tariff burden upon the poorest classes was much practiced in later tariffs. These rates proved too low for their purpose. English warehouses were heavily overstocked with the accumulations of the years of European wars, during which the markets of the world had been closed to them; and now these goods were dumped upon America at sacrifice prices. ... 509. Moreover, in 1819, came the first world-wide industrial depression. Senator Thomas H. Benton describes the years 18191820 as "a period of gloom and agony. No money no price for property or produce. No sales but those of the sheriff. No purchaser but the creditor or some hoarder of money. No employment for industry." Niles' Register, a paper representing the interests of capital, confessed in August, 1819, that 20,000 men were daily hunting work on the streets of Philadelphia, more than half the adult male population. The American causes for this depression of 1819 resembled those of later "crises." (1) The promise of the tariff itself had caused overinvestment in factories in the East; and (2) in the West there had been reckless overinvestment in public lands by thousands of poor immigrants who were unduly allured by the "credit system" of purchase (§ 458). A third cause, which intensified the evil, was the recent multiplication of "wild-cat" State banks (after the expiration of the first National Bank in 1811), which had loaned money in extravagant amounts, and so had encouraged all sorts of speculation. When at length these banks found themselves forced to call in their loans, or to close their doors, they spread panic and confusion throughout society. The manufacturing interests, however, ascribed all the depression to insufficient "protection," and clamored for more. 510. The Tariff of 1824 found its leading champion in Clay, who now glorified the protective policy with the name, the American System. The chief opposition in debate came from Webster, who represented a commercial district in Massachusetts, and who took his stand upon absolute free-trade policy. In general, New England was divided, wavering between manufactures and a return to its old shipping interests. The South had been almost solid for protection in 1816, but 1 Webster followed the teachings of all "the Fathers," except Hamilton. The Revolution, in no small degree, was fought for the right to trade at will with the world. For a generation afterward, this fact gave a free-trade bias to our thought. now it was solid in opposition,' and it loudly denied the constitutionality of such laws. The bill passed by bare majorities, through the union of the manufacturing Middle States and the agricultural West, which 1 The South found that slavery shut her out from manufacturing industry, and her agricultural exports could not be sold to advantage unless the United States enjoyed a large and free commerce with other nations. The tariff threatened to shut off such trade, besides increasing the cost of manufactured articles. 433 |