A history of commerce

by Clive Day

650. Sluggish development of the iron industry.—While the use of coal is perhaps the best index of a country’s development in the modern forms of manufacturing and transportation, the use of iron is also certainly of great significance; iron is the fulcrum through which the power of steam is applied, to repeat Jevons’ figure of speech. Great importance attached, therefore, as has been noted in previous chapters, to the improvements introduced in the English iron manufacture towards 1800, by which it was freed from dependence on charcoal, and was enabled to turn out increased quantities of pig and bar iron at reasonable prices. American iron makers showed a slackness which we find it hard now to forgive in adopting the improved processes. Coal and coke were not used in the American iron manufacture until about 1840, and the new methods of puddling and rolling, which had transformed the English iron industry, were applied in this country only shortly before that date, about half a century after their introduction in England. Some excuse can be found for our delay in the lack of transportation facilities for bringing the iron ore and coke together. The result, at any rate, was unfortunate. A heavy duty was laid on imported iron, to protect the home producer, but did not make up for his inefficiency. It was necessary, therefore, throughout the period, to import a considerable part of the necessary pig and bar iron and steel, paying the higher prices caused by the tariff; and the machine industries could not but suffer from the added expense. Down to 1860 our iron industry was not strong enough to export crude iron in any quantity, though American ingenuity succeeded in finding a market for considerable quantities of iron manufactures.

651. Success of the cotton manufacture.—With one of the branches of textile manufacture, that of cotton, the Americans had more success. Thanks to the alertness of the cotton manufacturers in introducing improved machinery, and to the advantages they enjoyed in their supply of raw material, they had soon outgrown the need of protection. The higher wages which they paid to American laborers were more than offset by the quantity of work turned out, and in the manufacture of the common sorts of piece goods they did not fear the competition of any other country. Large manufacturing towns grew up in New England to meet the demand for cloth which formerly had been made in the household of the consumer, and by 1850 there were as many cotton spindles at work in New England as there were inhabitants. American cottons were sold so readily in South America and other foreign markets that English manufacturers condescended to imitate them, and our exports of cotton manufactures in 1860 amounted to over ten million dollars, more than double the export of fish products, and not far below the export of forest products. The strength of the American cotton manufacture lay in the production of plain cloth; the bulk of the imports consisted of finer and fancy products.

652. Failure to establish a strong woolen manufacture.—The United States was, of course, peculiarly fortunate in its supply of raw material for the cotton manufacture. It enjoyed no such advantage with respect to wool. The wool fibers from American sheep were comparatively short, and unsuited to the manufacture of the finer woolens and worsteds. Manufacturers were hampered in their use of other wools by a tariff designed to protect the sheep growers, and paid for other raw materials higher prices than their competitors in England, while they could not, as in the cotton industry, make up for the higher wages in this country by the skilful application of machinery. Under these conditions the duties designed to check the importation of woolen manufactures from abroad were only a partial protection to the American producer; and the woolen manufacture did not flourish in this country. We could in large part supply the demand of the home market for coarser fabrics (flannels, blankets, etc.), but we manufactured no wool for export, and we continued to import the finer fabrics.

653. Other manufactures.—In the manufacture of other textile products which were imported in considerable amounts, silk and linen, the United States made no important progress during this period. Sewing silk and silk trimmings were made in the country, but the great bulk of silk manufactures were bought in France and England, while there were only the beginnings of a linen manufacture in this country before the Civil War.

Other manufactures existed besides those named, but the most important of them were devoted chiefly to the first processes in working up raw materials, and scarcely correspond to our ideas of manufacturing at the present time. This point is illustrated by the list of domestic manufactures exported from the country in 1860, as given by the government. Of the total of 37 millions, the items cotton 10.9 and iron 5.7 were the product of developed manufacture, and the same may be said, perhaps, of the item copper and brass and their manufactures, 1.6. Among the other items, however, the leading products were of a different character, and showed strength in raw materials rather than in manufacture (manufactured tobacco 3.3, spirits of turpentine 1.9, oil cake 1.6, household furniture 1.0).

654. Dependence of the South on the North for manufactured wares.—It is noteworthy that most of the manufactures which grew up in the United States in this period were established in the North. The prevalence of slavery in the South and the attractions of agriculture in that section prevented the rise of any considerable manufacturing industry; and the South manufactured even of its staple product, cotton, less than one fifth as much as the mills of the North. Conditions were thus adapted to the triangular trade, as it has been termed above, by which surplus shipments from the North to the South balanced surplus shipments from the South to Europe. The results were set forth in the following extract from a book published by a Southerner in 1857:

“In one way or another we are more or less subservient to the North every day of our lives. In infancy we are swaddled in Northern muslin; in childhood we are humored with Northern gewgaws; in youth we are instructed out of Northern books; at the age of maturity we sow our ‘wild oats’ on Northern soil; ... in the decline of life we remedy our eyesight with Northern spectacles; in old age we are drugged with Northern physic; and, finally, when we die, our inanimate bodies, shrouded in Northern cambric, are stretched upon the bier, borne to the grave in a Northern carriage, entombed with a Northern spade, and memorized with a Northern slab!”

We shall see in the following sections, reviewing the course of tariff policy, that the North and the South took opposite sides with respect to the protective tariff. The South, which had practically no manufactures, desired free trade, that it might make its purchases in the cheapest market, while the North desired protection for its growing manufactures.

655. Beginning of the system of protective tariffs, 1816.—In previous sections (609-611) attention was directed to the fact that the earliest tariffs were but slightly protective. The establishment of manufactures was stimulated much more by the interruption of commerce at the time of the embargo and of the war with England than by any deliberate policy of protection. At the close of the war of 1812, however, the time seemed to have come for the legislators to intervene in favor of American manufacturing industries. The privations of the war period awakened people to the dependence of the United States on Europe, which seemed unworthy of a free state and which seemed unsafe from the military standpoint. The manufactures which had grown up during the war were exposed, at the return of peace, to a flood of imports which threatened to reconquer the American market for the foreign manufacturer. The tariff of 1816, therefore, included a number of duties designed to restrict imports for the benefit of the American producer; the scale of duties was moderate, the highest permanent duty being 20 per cent.

656. Course of tariff policy, 1816-1860.—The conflict of interests between different sections of the country led to many changes in the tariff schedules, and occasioned some bitter political contests. Without attempting to recount the details, it may be said in summary that the course of the tendency was toward higher duties till about 1830, when some of the duties amounted to 40 per cent and 50 per cent or more.