[8.] Wash. Union, Nov. 30, 1846. N. Y. Herald (weekly), May 16; June 6, 1846; June 19, 1847. Scott, Repudiation, 37, 47, 162. Green, Repudiation, 11, 13, 15. Niles, Dec. 4, 1847, p. 218. (Sévigné) Buchanan, Works, vii, 66. London Spectator, May 30, 1846. [354]Welles papers. Dewey, Financial History, 245. Bolles, Financial History, 580–2. Journ. Mil. Serv. Instit., xiv, 198.
The huge state debts were mostly due to extravagant enterprises often supported by fraudulent banking. Delinquency was in reality a salutary suspension of payments that prevented bankruptcy, but the creditors did not know this at the time, and felt little disposed to be charitable.
[9.] Taussig, Tariff Hist., 113–5. Niles, June 6, 1846, p. 212; Aug. 1, 1846, p. 345; Aug. 14, 1847, p. 369. Boston Atlas, Jan. 6, 1847. Ambler, Ritchie, 264. Webster, Letters, 337–9. [308]Shields to Walker, Aug. 3, 1846. Sen. 105; 29, 2 (Walker to Dallas, Feb. 1, 1847). Ho. 227; 29, 1. Ho. 7; 30, 2 (Walker, report, Dec. 9, 1848). (Walker, Jarnagin) Welles papers. (Haywood) [1]Allen to “Effie,” July 25, 1846; [210]McDuffie to Hammond, July 20, 1846. N. Y. Herald (weekly), Aug. 1, 29; Dec. 19, 1846; Jan. 29, 1848. N. Y. Globe, Jan. 9, 1847. Bankers’ Mag., i, 136; ii, 74. Ho. 6; 29, 1 (Walker, report, Dec. 3, 1845). Sen. 2; 29, 2 (Id.., report, Dec. 9, 1846). U. S. Stat. at Large, ix, 42, 53, 59, 106. Lalor, Cyclop., ii, 495; iii, 864. Phila. No. American, July 16, 1846.
Walker’s report of December 3, 1845, enunciated and defended his tariff principles (Ho. 6; 29, 1). These were: 1, to collect only enough revenue for the economical administration of the government; 2, to have no duty higher than the lowest rate that will yield the greatest revenue (e.g. some luxuries are so easily smuggled in that a high duty would produce little); 3, below such a rate to permit discrimination, if thought desirable (e.g. less on necessaries than on luxuries); 4, to lay the maximum rate on luxuries; 5, to have only ad valorem duties; and, 6, to discriminate against no section or class of the nation. He expressed the opinions that many of the high duties were becoming prohibitive and therefore unprofitable, and that the increased risk and costs of transportation during a war would cause nearly all of them to become so. Besides, he said, “at least two thirds of the taxes imposed by the present tariff are paid, not into the treasury, but to the protected classes” (Niles, Aug. 1, 1846, p. 349). Walker also charged that the specific duties, which formed a part of the 1842 tariff, taxed most highly the cheapest articles and therefore produced relatively little (Sen. 105; 29, 2: to Dallas). It was argued by others that war would sufficiently hinder importing to make a protective tariff unnecessary (Wash. Union, May 28, 1846).
The essential idea underlying the tariff of 1846, though it was not strictly a revenue tariff, was that it would increase the revenue by stimulating importation. But opponents argued that unless Europe should take a greatly increased quantity of our agricultural products—which there was no reason to expect—we could not pay for larger imports; while, should foreign goods be “dumped” at low prices upon our markets, American manufacturers would be ruined. Even in the year ending June 30, 1845, the balance of trade had been $7,251,589 against us, and we had exported $8,606,495 in specie (Bankers’ Mag., i, 136). Under the tariff of 1842 the average rate of duty was 24 per cent; under that of 1846, 18 per cent.
One natural effect of the uncertainty caused by the new fiscal laws was to check business, but this was offset by its tendency to check speculation and inflation. The specie feature tended to contract the currency, and many deemed this unfortunate in view of the large calls for money likely to result from the war. Good judges thought its enforcement would have to be deferred, therefore. A special cause of alarm was that in preparing for the second war with England the duties had been increased instead of reduced. Senator Haywood of North Carolina opposed the new scale of duties as sure to plunge the country into debt, opposed putting them into effect so promptly (Dec. 1, 1846), and opposed the adoption of such a combination of new financial measures (Wash. Union, Aug. 18, 1846). He therefore resigned, and this endangered the plan of the administration.
The warehouse system consisted in deferring the payment of assessed duties without an interest charge, the government retaining the goods meanwhile as security for the eventual payment of them. Goods could therefore wait for a purchaser, instead of going—if not at once in demand—for what they would bring at a forced sale. This encouraged importation and built up extensive stocks, which in turn attracted purchasers from afar (Walker, report, Dec. 9, 1846, in Sen. 2; 29, 2). This system, like that of the sub-treasury, proved highly advantageous. The specie provision of the sub-treasury bill required the government to accept only specie after Dec. 31, 1846, and to pay out only specie after Mar. 31, 1847 (U. S. Stat. at Large, ix, 64), with the exception of treasury notes.
[10.] N. Y. Tribune, Jan. 24, 1848. Sen. 105; 29, 2 (Walker to Dallas, Feb. 1, 1847). Sen. 392; 29, 1 (Polk, Message, June 16; Walker, June 15, 1846, etc.). Polk, Diary, Sept. 29, 1846. Ho. 6; 29, 1 (Walker, report, Dec. 3, 1845). Sen. 2; 29, 2 (Id.., report, Dec. 9, 1846). Ho. 6; 30, 1 (Id.., report, Dec. 8, 1847). Ho. 2 and 10; 29, 2. Ho. 9, 51, 56, 81, 82; 29, 1. Sen. 1; 29, 2, p. 395. Sen. 27; 30, 1.]
The warehouse bill also delayed the payment of duties. Walker’s estimate of the customs revenue for 1846–7 was $27,835,731 (report, Dec. 9, 1846, in Sen. 2; 29, 2). The receipts were actually $23,747,865 (report, Dec. 8, 1847, in Ho. 6; 30, 1). Walker pointed out that nearly half a million was due on warehoused goods (Niles, July 31, 1847, p. 337); but these goods might not all have been imported, had it been necessary to pay the duties at once, and some of them were practically sure to be exported, and hence not all the duties assessed upon them could be considered a part of the revenue, as Walker intimated. The Democrats feared that taxes would make the war unpopular, and the Whigs hoped to obtain that result by less expensive methods.
[11.] Sen. 392; 29, 1 (Walker to Polk, June 15, 1846). Gallatin, War Expenses, 15–6. Niles, Sept. 19, 1846, p. 48; Oct. 3, 1846, p. 80. Bankers’ Mag., i, 193–4, 322. N. Y. Herald (weekly), July 18; Aug. 15; Sept. 19; Oct. 31, 1846; Jan. 9, 1847. Bayley, National Loans, 70–2. Polit. Sci. Qtrly., i, 375–84. N. Y. Tribune, Jan. 24, 1848. U. S. Stat. at Large, ix, 39. Knox, U. S. Notes, 63–4.