Cast your eyes where you will over the face of the earth, trace back the History of Man and of Nations to the earliest recorded periods, and I think you will find this rule uniformly prevailing, that the nation which is eminently Agricultural and Grain-exporting,—which depends mainly or principally on other nations for its regular supplies of Manufactured fabrics,—has been comparatively a poor nation, and ultimately a dependent nation. I do not say that this is the instant result of exchanging the rude staples of Agriculture for the more delicate fabrics of Art; but I maintain that it is the inevitable tendency. The Agricultural nation falls in debt, becomes impoverished, and ultimately subject. The palaces of “merchant princes” may emblazon its harbors and overshadow its navigable waters; there may be a mighty Alexandria, but a miserable Egypt behind it; a flourishing Odessa or Dantzic, but a rude, thinly peopled southern Russia or Poland; the exchangers may flourish and roll in luxury, but the producers famish and die. Indeed, few old and civilized countries become largely exporters of grain until they have lost, or by corruption are prepared to surrender, their independence; and these often present the spectacle of the laborer starving on the fields he has tilled, in the midst of their fertility and promise. These appearances rest upon and indicate a law, which I shall endeavor hereafter to explain. I pass now to my
Proposition II. There is a natural tendency in a comparatively new Country to become and continue an Exporter of Grain and other rude Staples and an Importer of Manufactures.
I think I hardly need waste time in demonstrating this proposition, since it is illustrated and confirmed by universal experience, and rests on obvious laws. The new country has abundant and fertile soil, and produces Grain with remarkable facility; also, Meats, Timber, Ashes, and most rude and bulky articles. Labor is there in demand, being required to clear, to build, to open roads, &c., and the laborers are comparatively few; while, in older countries, Labor is abundant and cheap, as also are Capital, Machinery, and all the means of the cheap production of Manufactured fabrics. I surely need not waste words to show that, in the absence of any counteracting policy, the new country will import, and continue to import, largely of the fabrics of older countries, and to pay for them, so far as she may, with her Agricultural staples. I will endeavor to show hereafter that she will continue to do this long after she has attained a condition to manufacture them as cheaply for herself, even regarding the money cost alone. But that does not come under the present head. The whole history of our country, and especially from 1782 to ’90, when we had no Tariff and scarcely any Paper Money,—proves that, whatever may be the Currency or the internal condition of the new country, it will continue to draw its chief supplies from the old,—large or small according to its measure of ability to pay or obtain credit for them; but still, putting Duties on Imports out of the question, it will continue to buy its Manufactures abroad, whether in prosperity or adversity, inflation or depression.
I now advance to my
Proposition III. It is injurious to the New Country thus to continue dependent for its supplies of Clothing and Manufactured Fabrics on the Old.
As this is probably the point on which the doctrines of Protection first come directly in collision with those of Free Trade, I will treat it more deliberately, and endeavor to illustrate and demonstrate it.
I presume I need not waste time in showing that the ruling price of Grain (as any Manufacture) in a region whence it is considerably exported, will be its price at the point to which it is exported, less the cost of such transportation. For instance: the cost of transporting Wheat hither from large grain-growing sections of Illinois was last fall sixty cents; and, New York being their most available market, and the price here ninety cents, the market there at once settled at thirty cents. As this adjustment of prices rests on a law obvious, immutable as gravitation, I presume I need not waste words in establishing it.
I proceed, then, to my next point. The average price of Wheat throughout the world is something less than one dollar per bushel; higher where the consumption largely exceeds the adjacent production, lower where the production largely exceeds the immediate consumption (I put out of view in this statement the inequalities created by Tariffs, as I choose at this point to argue the question on the basis of universal Free Trade, which is of course the basis most favorable to my opponents). I say, then, if all Tariffs were abolished to-morrow, the price of Wheat in England—that being the most considerable ultimate market of surpluses, and the chief supplier of our manufactures—would govern the price in this country, while it would be itself governed by the price at which that staple could be procured in sufficiency from other grain-growing regions. Now, Southern Russia and Central Poland produce Wheat for exportation at thirty to fifty cents per bushel; but the price is so increased by the cost of transportation that at Dantzic it averages some ninety and at Odessa some eighty cents per bushel. The cost of importation to England from these ports being ten and fifteen cents respectively, the actual cost of the article in England, all charges paid, and allowing for a small increase of price consequent on the increased demand, would not in the absence of all Tariffs whatever, exceed one dollar and ten cents per bushel; and this would be the average price at which we must sell it in England in order to buy thence the great bulk of our Manufactures. I think no man will dispute or seriously vary this calculation. Neither can any reflecting man seriously contend that we could purchase forty or fifty millions’ worth or more of Foreign Manufactures per annum, and pay for them in additional products of our Slave Labor—in Cotton and Tobacco. The consumption of these articles is now pressed to its utmost limit,—that of Cotton especially is borne down by the immense weight of the crops annually thrown upon it, and almost constantly on the verge of a glut. If we are to buy our Manufactures principally from Europe, we must pay for the additional amount mainly in the products of Northern Agricultural industry,—that is universally agreed on. The point to be determined is, whether we could obtain them abroad cheaper—really and positively cheaper, all Tariffs being abrogated—than under an efficient system of Protection.
Let us closely scan this question. Illinois and Indiana, natural grain-growing States, need cloths; and, in the absence of all tariffs, these can be transported to them from England for two to three per cent. of their value. It follows, then, that, in order to undersell any American competition, the British manufacturer need only put his cloths at his factory five per cent. below the wholesale price of such cloths in Illinois, in order to command the American market. That is, allowing a fair broadcloth to be manufactured in or near Illinois for three dollars and a quarter per yard, cash price, in the face of British rivalry, and paying American prices for materials and labor, the British manufacturer has only to make that same cloth at three dollars per yard in Leeds or Huddersfield, and he can decidedly undersell his American rival, and drive him out of the market. Mind, I do not say that he would supply the Illinois market at that price after the American rivalry had been crushed; I know he would not; but, so long as any serious effort to build up or sustain manufactures in this country existed, the large and strong European establishments would struggle for the additional market which our growing and plenteous country so invitingly proffers. It is well known that in 1815–16, after the close of the last war, British manufactures were offered for sale in our chief markets at the rate of “pound for pound,”—that is, fabrics of which the first cost to the manufacturer was $4.44 were offered in Boston market at $3.33, duty paid. This was not sacrifice—it was dictated by a profound forecast. Well did the foreign fabricants know that their self-interest dictated the utter overthrow, at whatever cost, of the young rivals which the war had built up in this country, and which our government and a majority of the people had blindly or indolently abandoned to their fate. William Cobbett, the celebrated radical, but with a sturdy English heart, boasted upon his first return to England that he had been actively engaged here in promoting the interests of his country by compassing the destruction of American manufactories in various ways which he specified—“sometimes (says he) by Fire.” We all know that great sacrifices are often submitted to by a rich and long established stage owner, steamboat proprietor, or whatever, to break down a young and comparatively penniless rival. So in a thousand instances, especially in a rivalry for so large a prize as the supplying with manufactures of a great and growing nation. But I here put aside all calculations of a temporary sacrifice; I suppose merely that the foreign manufacturers will supply our grain-growing states with cloths at a trifling profit so long as they encounter American rivalry; and I say it is perfectly obvious that, if it cost three dollars and a quarter a yard to make a fair broadcloth in or near Illinois in the infancy of our arts and a like article could be made in Europe for three dollars, then the utter destruction of the American manufacture is inevitable. The foreign drives it out of the market and its maker into bankruptcy; and now our farmers, in purchasing their cloths, “buy where they can buy cheapest,” which is the first commandment of free trade, and get their cloth of England at three dollars a yard. I maintain that this would not last a year after the American factories had been silenced—that then the British operator would begin to think of profits as well as bare cost for his cloth, and to adjust his prices so as to recover what it had cost him to put down the dangerous competition. But let this pass for the present, and say the foreign cloth is sold to Illinois for three dollars per yard. We have yet to ascertain how much she has gained or lost by the operation.
This, says Free Trade, is very plain and easy. The four simple rules of arithmetic suffice to measure it. She has bought, say a million yards of foreign cloth for three dollars, where she formerly paid three and a quarter for American; making a clear saving of a quarter of a million dollars.