COMMERCIAL PROTECTION.

The sum of our annual support bestowed upon the Navy, like that bestowed upon the Army, may be too close-fisted and disproportionate to our extended ocean boundaries, and to the value of American commerce afloat; yet whatever has been granted has been designed almost exclusively for the protection of our foreign commerce, and amounts in the aggregate to untold millions. Manufacturers do not complain that this is a needless and excessive favor to importers; and why, then, should importers object to some protection to a much larger amount of capital, and to far greater numbers embarked certainly in an equally laudable enterprise at home?

CHAPTER XIX.

THE ESTABLISHMENT OF PROTECTION IN THE

UNITED STATES.*

BY PROF. W. G. SUMNER,

Yale College.

N my last lecture I sketched the origin of the protective

IN

system in this country. I now proceed to describe its growth and establishment. This was brought about by incidents connected with the Napoleonic wars. The wars of the French revolution, and those which followed, produced great effects upon the trade of the civilized world. The United States, as the chief neutral carrier, saw its shipping multiplied and its mercantile interests enriched. The belligerents, in their struggles to injure each other, endeavored to put a stop to this neutral traffic, and inflicted great injury on the neutral who was carrying it on. Nevertheless, the profits were so great that the Americans continued it, in spite of losses. When war broke out again in 1803, the indignation here at the collisions which took place was so great, that measures of resistance and retaliation were sought. The federalists wanted to put the country in a state of defense and build a navy to protect commerce. They represented the Northeastern States and the shipping inter. ests. The administration, however, with the great majority from the Middle and Southern States, demanded a navy, sought to reduce expenditures, and turned its attention to

*History of Protection in the United States, Lecturc IV.

measures of coercion by commercial war. These measures had been tried with sad results during the Revolution. Mr. Madison had urged discriminating duties in the first tariff as a means of forcing foreign nations to grant reciprocity, and he had urged coercive and retaliatory measures of that kind during Washington's administration when hostilities in Europe first broke out. It is astonishing what faith was entertained in such measures. You see it still strong in the South when the civil war broke out, when it was believed that withholding cotton would force European nations to intervene.

In 1805 an act was passed for prohibiting the importation of English manufactures in order to force England to give up impressment, and in order to support Pinckney and Monroe in their efforts to make a treaty. In 1806 England blockaded the northern coast of Europe from Brest to the Elbe. Napoleon retaliated by the Berlin decree. In the next year England replied by the orders in council; Napoleon rejoined by the Milan decree, and England returned once more by more stringent prohibitions. The tenor of these decrees on the one side and on the other was to prohibit neutrals from trading with the enemy, or to put such trade under heavy restraints. Napoleon was trying to shut the continent against English manufactures, and England was trying to keep out of the continent provisions and colonial supplies. Between the two, neutral commerce suffered the greatest loss and vexation. The American shipowners complained and called on their government for protection. The measure adopted was the embargo of 1807, by which the shipowners were protected against foreign aggressors by being shut up at home. They had before incurred heavy risks, now their own government imposed certain ruin. It was necessary to pass one act after another, making the embargo more stringent and tyrannical in order to check evasions of it. It was repealed in a little over a

year, but non-intercourse and non-importation acts were substituted for it until war grew out of it in 1812.

We are concerned with this commercial war here, not on account of its folly or imbecility, although it well represents the folly of all restriction, but on account of its connec tion with the strand of history which we are following. Embargo, non-intercourse, and war, lasting from 1807 to 1815, created an entirely artificial state of things here, or, perhaps I should say, the United States was drawn into the distortion and perversion of industry and commerce which the great wars were producing in Europe. Manufactories of various kinds sprang up here to supply the wants of the people when cut off from the usual sources of supply by foreign exchange. They produced articles of inferior quality or design, generally speaking, but people had to be satisfied with them. In many cases also the products were dearer than those normally obtainable abroad. They were sustained by the artificial difficulties in foreign exchange, and by the diminished profits of other industries which would have been more profitable here. In 1810, Gallatin, Secretary of the Treasury, made a report in which he stated that manufactures of wood and leather, amongst other things, were exported beyond the imports, that the following industries. were "firmly established," iron and manufactures of iron, manufactures of cotton, wool, and flax, paper, printing types, books, several manufactures of hemp, and a few others. In that year (1810) some effort was made to get more protection through duties, but nothing came of it. The same effort played some share in bringing about the war, which was a product of intrigue, and as needless as it was fruitless. One of the first war measures was to double all duties and prohibit the import of English products. During the war the prices of manufactured articles were very high. Manufac turers made great profits and factories were built in large numbers. In 1814 all the banks suspended specie payments,

and then followed a reckless paper-money period which has never been equaled since. Prices rose higher than ever, and here we have again an illustration of the observation previously made that our currency and tariff errors have been intertwined throughout our history.

Observe now the outcome of all this for the matter of our investigation. Embargo and war had created a false and artificial state of things in which much capital had been invested in manufactures, and "industry" had been “encouraged." Under the false light in which they were viewed, embargo and war, therefore, seemed to be beneficial forces. The return of peace, if it reopened trade and let things return to their normal condition, would be a calamity. It was necessary to secure a continuance of the circumstances which had brought these industries into existence, in order to secure them from destruction. Such continuance could not be brought about without perpetuating for the great body of consumers the scarcity, loss, and distress of war, so far as war affected their power to procure and enjoy indus trial products. This then is exactly what the tariff, which was adopted in 1816, did do. It saved a part of the capital involved in manufactures, although most of it was swept away in the financial crisis which ensued in 1819, on the collapse of the paper system, but it burdened the nation with the same trammels which embargo and war had laid upon it.

The act of May 3, 1815, repealed all discriminating duties and tonnage taxes in favor of any nation which should take similar action with regard to American vessels and cargoes. Here we have a fact of interest to the general history which we are pursuing. This was what was known as the "American system," at this time. We saw how, in the treaty with France in 1778, the Americans set out to gain general reciprocity. That came to be called the " American system," viz., general reciprocity instead of the old commercial treaties. Now the plan of laying countervailing duties to enforce