Twenty Years of Congress, Vol. 1 / From Lincoln to Garfield, with a Review of the Events Which Led to the Political Revolution of 1860

by James Gillespie Blaine

The opinions of Mr. Madison as thus shown in the first legislation by Congress are the more significant from the fact that he belonged in the Jeffersonian school, believed in the strictest construction of granted power, was a zealous Republican in the partisan divisions of the day, and was always opposed to the more liberal, or, as he would regard them, the more latitudinarian views of the Federal party. In regard to the protection and encouragement of manufactures there seemed to be no radical difference between parties in the early period of the government. On that issue, to quote a phrase used on another occasion, "they were all Federalists and all Republicans." Mr. Hamilton's celebrated report on Manufactures, submitted in answer to a request from the House of Representatives of December, 1790, sustained and elaborated the views on which Congress had already acted, and brought the whole influence of the Executive Department to the support of a Protective Tariff. Up to that period no minister of finance among the oldest and most advanced countries of Europe had so ably discussed the principles on which national prosperity was based. The report has long been familiar to students of political economy, and has had, like all Mr. Hamilton's work, a remarkable value and a singular application in the developments of subsequent years.

MR. HAMILTON'S PROTECTION VIEWS.

Mr. Hamilton sustained the plan of encouraging home manufactures by protective duties, even to the point in some instances of making those "duties equivalent to prohibition." He did not contemplate a prohibitive duty as the means of encouraging a manufacture not already domesticated, but declared it "only fit to be employed when a manufacture has made such a progress, and is in so many hands, as to insure a due competition and an adequate supply on reasonable terms." This argument did not seem to follow the beaten path which leads to the protection of "infant manufactures," but rather aimed to secure the home market for the strong and well-developed enterprises. Mr. Hamilton did not turn back from the consequences which his argument involved. He perceived its logical conclusions and frankly accepted them. He considered "the monopoly of the domestic market to its own manufacturers as the reigning policy of manufacturing nations," and declared that "a similar policy on the part of the United States in every proper instance was dictated by the principles of distributive justice, certainly by the duty of endeavoring to secure to their own citizens a reciprocity of advantages." He avowed his belief that "the internal competition which takes place, soon does away with every thing like monopoly, and by degrees reduces the price of the article to the minimum of a reasonable profit on the capital employed. This accords with the reason of the thing and with experience." He contended that "a reduction has in several instances immediately succeeded the establishment of domestic manufacture." But even if this result should not follow, he maintained that "in a national view a temporary enhancement of price must always be well compensated by a permanent reduction of it." The doctrine of protection, even with the enlarged experience of subsequent years, has never been more succinctly or more felicitously stated.

Objections to the enforcement of the "protective" principle founded on a lack of constitutional power were summarily dismissed by Mr. Hamilton as "having no good foundation." He had been a member of the convention that formed the Constitution, and had given attention beyond any other member to the clauses relating to the collection and appropriation of revenue. He said the "power to raise money" as embodied in the Constitution "is plenary and indefinite," and "the objects for which it may be appropriated are no less comprehensive than the payment of the public debts, the providing for the common defense and the general welfare." He gives the widest scope to the phrase "general welfare," and declares that "it is of necessity left to the discretion of the national Legislature to pronounce upon the objects which concern the general welfare, and for which under that description an appropriation of money is requisite and proper." Mr. Hamilton elaborates his argument on this head with consummate power, and declares that "the only qualification" to the power of appropriation under the phrase "general welfare" is that the purpose for which the money is applied shall "be general, and not local, its operation extending in fact throughout the Union, and not being confined to a particular spot." The limitations and hypercritical objections to the powers conferred by the Constitution, both in the raising and appropriating of money, originated in large part after the authors of that great charter had passed away, and have been uniformly stimulated by class interests which were not developed when the organic law was enacted.

Some details of Mr. Hamilton's report are especially interesting in view of the subsequent development of manufacturing enterprises. "Iron works" he represents as "greatly increasing in the United States," and so great is the demand that "iron furnished before the Revolution at an average of sixty-four dollars per ton" was then sold at "eighty." Nails and spikes, made in large part by boys, needed further "protection," as 1,800,000 pounds had been imported the previous year. Iron was wholly made by "charcoal," but there were several mines of "fossil coal" already "worked in Virginia," and "a copious supply of it would be of great value to the iron industry." Respecting "cotton" Mr. Hamilton attached far more consideration to its manufacture than to its culture. He distrusted the quality of that grown at home because so far from the equator, and he wished the new factories in Rhode Island and Massachusetts to have the best article at the cheapest possible rate. To this end the repeal of the three-cent duty on cotton levied the preceding year was "indispensable." He argued that "not being, like hemp, an universal production of the country, cotton affords less assurance of an adequate internal supply." If the duty levied on glass should not prove sufficient inducement to its manufacture, he would stimulate it "by a direct bounty."

Mr. Hamilton's conceptions of an enlarged plan of "protection" included not only "prohibitive duties," but when necessary a system of "bounties and premiums" in addition. He was earnestly opposed to "a capitation-tax," and declared such levies as an income-tax to be "unavoidably hurtful to industry." Indirect taxes were obviously preferred by him whenever they were practicable. Indeed upon any other system of taxation he believed it would prove impossible for the Republic of 1790 to endure the burden imposed upon the public treasury by the funding of the debt of the Revolution. More promptly than any other financier of that century he saw that ten dollars could be more easily collected by indirect tax than one dollar by direct levy, and that he could thus avoid those burdensome exactions from the people which had proved so onerous in Europe, and which had just aided in precipitating France into bloody revolution.

THE WAR TARIFF ENACTED IN 1812.

Important and radical additions to the revenue system promptly followed Mr. Hamilton's recommendations. From that time onward, for a period of more than twenty years, additional tariff laws were passed by each succeeding Congress, modifying and generally increasing the rate of duties first imposed, and adding many new articles to the dutiable list. When the war of 1812 was reached, a great but temporary change was made in the tariff laws by increasing the entire list of duties one hundred per cent.—simply doubling the rate in every case. Not content with this sweeping and wholesale increase of duty, the law provided an additional ten per cent. upon all goods imported in foreign vessels, besides collecting an additional tonnage-tax of one dollar and a half per ton on the vessel. Of course this was war-legislation, and the Act was to expire within one year after a treaty of peace should be concluded with Great Britain. With the experience of recent days before him, the reader does not need to be reminded that, under the stimulus of this extraordinary rate of duties, manufactures rapidly developed throughout the country. Importations from England being absolutely stopped by reason of the war, and in large part excluded from other countries by high duties, the American market was for the first time left substantially, or in large degree, to the American manufacturers.

With all the disadvantages which so sudden and so extreme a policy imposed on the people, the progress for the four years of these extravagant and exceptional duties was very rapid, and undoubtedly exerted a lasting influence on the industrial interests of the United States. But the policy was not one which commanded general support. Other interests came forward in opposition. New England was radically hostile to high duties, for the reason that they seriously interfered with the shipping and commercial interest in which her people were largely engaged. The natural result moreover was a sharp re-action, in which the protective principle suffered. Soon after the Treaty of Ghent was signed, movements were made for a reduction of duties, and the famous tariff of 1816 was the result.

In examining the debates on that important Act, it is worthy of notice that Mr. Clay, from an extreme Western State, was urging a high rate of duties on cotton fabrics, while his chief opponent was Daniel Webster, then a representative from Massachusetts. An additional and still stranger feature of the debate is found when Mr. Calhoun, co-operating with Mr. Clay, replied to Mr. Webster's free-trade speech in an elaborate defense of the doctrine of protection to our manufactures.