efficient of all the causes in the reduction of the prices of
manufactured articles, and that is COMPETITION. By competition the
total amount of the supply is increased, and by increase of the supply a
competition in the sale ensues, and this enables the consumer to buy at
lower rates. Of all human powers operating on the affairs of mankind,
none is greater than that of competition. It is action and reaction. It
operates between individuals of the same nation, and between different
nations. It resembles the meeting of the mountain torrent, grooving, by
its precipitous motion, its own channel, and ocean's tide. Unopposed,
it sweeps every thing before it; but, counterpoised, the waters become
calm, safe, and regular. It is like the segments of a circle or an arch:
taken separately, each is nothing; but in their combination they produce
efficiency, symmetry, and perfection. By the American system this vast
power has been excited in America, and brought into being to act in
cooperation or collision with European industry. Europe acts within
itself, and with America; and America acts within itself, and with
Europe. The consequence is the reduction of prices in both hemispheres.
Nor is it fair to argue from the reduction of prices in Europe to her
own presumed skill and labor exclusively. We affect her prices, and she
affects ours. This must always be the case, at least in reference to any
articles as to which there is not a total non-intercourse; and if our
industry, by diminishing the demand for her supplies, should produce a
diminution in the price of those supplies, it would be very unfair to
ascribe that reduction to her ingenuity, instead of placing it to the
credit of our own skill and excited industry.
Practical men understand very well this state of the case, whether
they do or do not comprehend the causes which produce it. I have in my
possession a letter from a respectable merchant, well known to me, in
which he says, after complaining of the operation of the tariff of 1828,
on the articles to which it applies, some of which he had imported, and
that his purchases having been made in England before the passage of
that tariff was known, it produced such an effect upon the English
market that the articles could not be resold without loss, and he adds:
"For it really appears that, when additional duties are laid upon
an article, it then becomes lower instead of higher!" This would not
probably happen where the supply of the foreign article did not exceed
the home demand, unless upon the supposition of the increased duty
having excited or stimulated the measure of the home production.
The great law of price is determined by supply and demand. What affects
either affects the price. If the supply is increased, the demand
remaining the same, the price declines; if the demand is increased, the
supply remaining the same, the price advances; if both supply and demand
are undiminished, the price is stationary, and the price is influenced
exactly in proportion to the degree of disturbance to the demand or
supply. It is, therefore, a great error to suppose that an existing or
new duty necessarily becomes a component element to its exact amount of
price. If the proportions of demand and supply are varied by the duty,
either in augmenting the supply or diminishing the demand, or vice
versa, the price is affected to the extent of that variation. But
the duty never becomes an integral part of the price, except in the
instances where the demand and the supply remain after the duty is
imposed precisely what they were before, or the demand is increased, and
the supply remains stationary.
Competition, therefore, wherever existing, whether at home or abroad,
is the parent cause of cheapness. If a high duty excites production at
home, and the quantity of the domestic article exceeds the amount which
had been previously imported, the price will fall. * * *
But it is argued that if, by the skill, experience, and perfection which
we have acquired in certain branches of manufacture, they can be made as
cheap as similar articles abroad, and enter fairly into competition with
them, why not repeal the duties as to those articles? And why should we?
Assuming the truth of the supposition, the foreign article would not be
introduced in the regular course of trade, but would remain excluded
by the possession of the home market, which the domestic article had
obtained. The repeal, therefore, would have no legitimate effect. But
might not the foreign article be imported in vast quantities, to glut
our markets, break down our establishments, and ultimately to enable the
foreigner to monopolize the supply of our consumption? America is the
greatest foreign market for European manufactures. It is that to which
European attention is constantly directed. If a great house becomes
bankrupt there, its storehouses are emptied, and the goods are shipped
to America, where, in consequence of our auctions, and our custom-house
credits, the greatest facilities are afforded in the sale of them.
Combinations among manufacturers might take place, or even the
operations of foreign governments might be directed to the destruction
of our establishments. A repeal, therefore, of one protecting duty,
from some one or all of these causes, would be followed by flooding the
country with the foreign fabric, surcharging the market, reducing the
price, and a complete prostration of our manufactories; after which
the foreigner would leisurely look about to indemnify himself in the
increased prices which he would be enabled to command by his monopoly
of the supply of our consumption. What American citizen, after the
government had displayed this vacillating policy, would be again tempted
to place the smallest confidence in the public faith, and adventure once
more into this branch of industry?
Gentlemen have allowed to the manufacturing portions of the community
no peace; they have been constantly threatened with the overthrow of
the American system. From the year 1820, if not from 1816, down to
this time, they have been held in a condition of constant alarm and
insecurity. Nothing is more prejudicial to the great interests of a
nation than an unsettled and varying policy. Although every appeal to
the National Legislature has been responded to in conformity with the
wishes and sentiments of the great majority of the people, measures of
protection have only been carried by such small majorities as to excite
hopes on the one hand, and fears on the other. Let the country breathe,
let its vast resources be developed, let its energies be fully put
forth, let it have tranquillity, and, my word for it, the degree of
perfection in the arts which it will exhibit will be greater than that
which has been presented, astonishing as our progress has been. Although
some branches of our manufactures might, and in foreign markets now do,
fearlessly contend with similar foreign fabrics, there are many others
yet in their infancy, struggling with the difficulties which encompass
them. We should look at the whole system, and recollect that time, when
we contemplate the great movements of a nation, is very different from
the short period which is allotted for the duration of individual life.
The honorable gentleman from South Carolina well and eloquently said,
in 1824: "No great interest of any country ever grew up in a day; no new
branch of industry can become firmly and profitably established but in a
long course of years; every thing, indeed, great or good, is matured by
slow degrees; that which attains a speedy maturity is of small value,
and is destined to brief existence. It is the order of Providence,
that powers gradually developed, shall alone attain permanency and
perfection. Thus must it be with our national institutions, and national
character itself."
I feel most sensibly, Mr. President, how much I have trespassed upon the
Senate. My apology is a deep and deliberate conviction, that the great
cause under debate involves the prosperity and the destiny of the Union.
But the best requital I can make, for the friendly indulgence which has
been extended to me by the Senate, and for which I shall ever retain
sentiments of lasting gratitude, is to proceed with as little delay as
practicable, to the conclusion of a discourse which has not been more
tedious to the Senate than exhausting to me. I have now to consider the
remaining of the two propositions which I have already announced. That
is
Second, that under the operation of the American system, the products of
our agriculture command a higher price than they would do without it,
by the creation of a home market, and by the augmentation of wealth
produced by manufacturing industry, which enlarges our powers of
consumption both of domestic and foreign articles. The importance of
the home market is among the established maxims which are universally
recognized by all writers and all men. However some may differ as to the
relative advantages of the foreign and the home market, none deny to the
latter great value and high consideration. It is nearer to us;
beyond the control of foreign legislation; and undisturbed by those
vicissitudes to which all inter-national intercourse is more or less
exposed. The most stupid are sensible of the benefit of a residence
in the vicinity of a large manufactory, or of a market-town, of a good
road, or of a navigable stream, which connects their farms with some
great capital. If the pursuits of all men were perfectly the same,
although they would be in possession of the greatest abundance of the
particular products of their industry, they might, at the same time, be
in extreme want of other necessary articles of human subsistence. The
uniformity of the general occupation would preclude all exchange, all
commerce. It is only in the diversity of the vocations of the members
of a community that the means can be found for those salutary exchanges
which conduce to the general prosperity. And the greater that diversity,
the more extensive and the more animating is the circle of exchange.
Even if foreign markets were freely and widely open to the reception of
our agricultural produce, from its bulky nature, and the distance of the
interior, and the dangers of the ocean, large portions of it could
never profitably reach the foreign market. But let us quit this field
of theory, clear as it is, and look at the practical operation of the
system of protection, beginning with the most valuable staple of our
agriculture.
In considering this staple, the first circumstance that excites our
surprise is the rapidity with which the amount of it has annually
increased. Does not this fact, however, demonstrate that the cultivation
of it could not have been so very unprofitable? If the business were
ruinous, would more and more have annually engaged in it? The quantity
in 1816 was eighty-one millions of pounds; in 1826, two hundred and
four millions; and in 1830, near three hundred millions! The ground of
greatest surprise is that it has been able to sustain even its present
price with such an enormous augmentation of quantity. It could not have
been done but for the combined operation of three causes, by which the
consumption of cotton fabrics has been greatly extended in consequence
of their reduced prices: first, competition; second, the improvement of
labor-saving machinery; and thirdly, the low price of the raw material.
The crop of 1819, amounting to eighty-eight millions of pounds, produced
twenty-one millions of dollars; the crop of 1823, when the amount was
swelled to one hundred and seventy-four millions (almost double of that
of 1819), produced a less sum by more than half a million of dollars;
and the crop of 1824, amounting to thirty millions of pounds less than
that of the preceding year, produced a million and a half of dollars
more.
If there be any foundation for the established law of price, supply,
and demand, ought not the fact of this great increase of the supply to
account satisfactorily for the alleged low price of cotton? * * *
Let us suppose that the home demand for cotton, which has been created
by the American system, should cease, and that the two hundred thousand
bales which the home market now absorbs were now thrown into the glutted
markets of foreign countries; would not the effect inevitably be to
produce a further and great reduction in the price of the article?
If there be any truth in the facts and principles which I have before
stated and endeavored to illustrate, it cannot be doubted that the
existence of American manufactures has tended to increase the demand
and extend the consumption of the raw material; and that, but for this
increased demand, the price of the article would have fallen possibly
one half lower than it now is. The error of the opposite argument is
in assuming one thing, which being denied, the whole fails--that is, it
assumes that the whole labor of the United States would be profitably
employed without manufactures. Now, the truth is that the system excites
and creates labor, and this labor creates wealth, and this new wealth
communicates additional ability to consume, which acts on all the
objects contributing to human comfort and enjoyment. The amount of
cotton imported into the two ports of Boston and Providence alone during
the last year (and it was imported exclusively for the home manufacture)
was 109,517 bales.
On passing from that article to others of our agricultural productions,
we shall find not less gratifying facts. The total quantity of flour
imported into Boston, during the same year, was 284,504 barrels, and
3,955 half barrels; of which, there were from Virginia, Georgetown, and
Alexandria, 114,222 barrels; of Indian corn, 681,131 bushels; of oats,
239,809 bushels; of rye, about 50,000 bushels; and of shorts, 63,489
bushels; into the port of Providence, 71,369 barrels of flour; 216,662
bushels of Indian corn, and 7,772 bushels of rye. And there were
discharged at the port of Philadelphia, 420,353 bushels of Indian corn,
201,878 bushels of wheat, and 110,557 bushels of rye and barley.
There were slaughtered in Boston during the same year, 1831, (the only
Northern city from which I have obtained returns,) 33,922 beef cattle;
15,400 calves; 84,453 sheep, and 26,871 swine. It is confidently
believed that there is not a less quantity of Southern flour consumed
at the North than eight hundred thousand barrels, a greater amount,
probably, than is shipped to all the foreign markets of the world
together.
What would be the condition of the farming country of the United
States--of all that portion which lies north, east, and west of James
River, including a large part of North Carolina--if a home market did
not exist for this immense amount of agricultural produce. Without that
market, where could it be sold? In foreign markets? If their restrictive
laws did not exist, their capacity would not enable them to purchase
and consume this vast addition to their present supplies, which must
be thrown in, or thrown away, but for the home market. But their laws
exclude us from their markets. I shall content myself by calling the
attention of the Senate to Great Britain only. The duties in the ports
of the united kingdom on bread-stuffs are prohibitory, except in times
of dearth. On rice, the duty is fifteen shillings sterling per hundred
weight, being more than one hundred per centum. On manufactured tobacco
it is nine shillings sterling per pound, or about two thousand per
centum. On leaf tobacco three shillings per pound, or one thousand two
hundred per centum. On lumber, and some other articles, they are from
four hundred to fifteen hundred per centum more than on similar articles
imported from British colonies. In the British West Indies the duty on
beef, pork, hams, and bacon, is twelve shillings sterling per hundred,
more than one hundred per centum on the first cost of beef and pork in
the Western States. And yet Great Britain is the power in whose behalf
we are called upon to legislate, so that we may enable her to purchase
our cotton. Great Britain, that thinks only of herself in her own
legislation! When have we experienced justice, much less favor, at
her hands? When did she shape her legislation with reference to the
interests of any foreign power? She is a great, opulent, and powerful
nation; but haughty, arrogant, and supercilious; not more separated
from the rest of the world by the sea that girts her island, than she
is separated in feeling, sympathy, or friendly consideration of their
welfare. Gentlemen, in supposing it impracticable that we should
successfully compete with her in manufactures, do injustice to the
skill and enterprise of their own country. Gallant as Great Britain
undoubtedly is, we have gloriously contended with her, man to man, gun
to gun, ship to ship, fleet to fleet, and army to army. And I have no
doubt we are destined to achieve equal success in the more useful, if
not nobler, contest for superiority in the arts of civil life.
I could extend and dwell on the long list of articles--the hemp, iron,
lead, coal, and other items--for which a demand is created in the home
market by the operation of the American system; but I should exhaust
the patience of the Senate. Where, where should we find a market for all
these articles, if it did not exist at home? What would be the condition
of the largest portion of our people, and of the territory, if this
home market were annihilated? How could they be supplied with objects of
prime necessity? What would not be the certain and inevitable decline in
the price of all these articles, but for the home market? And allow me,
Mr. President, to say, that of all the agricultural parts of the United
States which are benefited by the operation of this system, none are
equally so with those which border the Chesapeake Bay, the lower parts
of North Carolina, Virginia, and the two shores of Mary-land. Their
facilities of transportation, and proximity to the North, give them
decided advantages.
But if all this reasoning were totally fallacious; if the price of
manufactured articles were really higher, under the American system,
than without it, I should still argue that high or low prices were
themselves relative--relative to the ability to pay them. It is in vain
to tempt, to tantalize us with the lower prices of European fabrics than
our own, if we have nothing wherewith to purchase them. If, by the home
exchanges, we can be supplied with necessary, even if they are dearer
and worse, articles of American production than the foreign, it is
better than not to be supplied at all. And how would the large portion
of our country, which I have described, be supplied, but for the
home exchanges? A poor people, destitute of wealth or of exchangeable
commodities, have nothing to purchase foreign fabrics with. To them
they are equally beyond their reach, whether their cost be a dollar or a
guinea. It is in this view of the matter that Great Britain, by her vast
wealth, her excited and protected industry, is enabled to bear a burden
of taxation, which, when compared to that of other nations, appears
enormous; but which, when her immense riches are compared to theirs, is
light and trivial. The gentleman from South Carolina has drawn a lively
and flattering picture of our coasts, bays, rivers, and harbors; and he
argues that these proclaimed the design of Providence that we should be
a commercial people. I agree with him. We differ only as to the means.
He would cherish the foreign, and neglect the internal, trade. I would
foster both. What is navigation without ships, or ships without cargoes?
By penetrating the bosoms of our mountains, and extracting from them
their precious treasures; by cultivating the earth, and securing a home
market for its rich and abundant products; by employing the water power
with which we are blessed; by stimulating and protecting our native
industry, in all its forms; we shall but nourish and promote the
prosperity of commerce, foreign and domestic.
I have hitherto considered the question in reference only to a state of
peace; but who can tell when the storm of war shall again break forth?
Have we forgotten so soon the privations to which not merely our brave
soldiers and our gallant tars were subjected, but the whole community,
during the last war, for the want of absolute necessaries? To what an
enormous price they rose! And how inadequate the supply was, at any
price! The states-man who justly elevates his views will look behind
as well as forward, and at the existing state of things; and he will
graduate the policy which he recommends to all the probable exigencies
which may arise in the republic. Taking this comprehensive range, it
would be easy to show that the higher prices of peace, if prices were
higher in peace, were more than compensated by the lower prices of war,
during which supplies of all essential articles are indispensable to its
vigorous, effectual, and glorious prosecution. I conclude this part
of the argument with the hope that my humble exertions have not been
altogether unsuccessful in showing:
First, that the policy which we have been considering ought to continue
to be regarded as the genuine American system.
Secondly, that the free-trade system, which is proposed as its
substitute, ought really to be considered as the British colonial
system.
Thirdly, that the American system is beneficial to all parts of the
Union, and absolutely necessary to much the larger portion.
Fourthly, that the price of the great staple of cotton, and of all our
chief productions of agriculture, has been sustained and upheld, and a
decline averted, by the protective system.
Fifthly, that if the foreign demand for cotton has been at all
diminished, the diminution has been more than compensated in the
additional demand created at home.
Sixthly, that the constant tendency of the system, by creating
competition among ourselves, and between American and European industry,
reciprocally acting upon each other, is to reduce prices of manufactured
objects.
Seventhly, that, in point of fact, objects within the scope of the
policy of protection have greatly fallen in price.
Eighthly, that if, in a season of peace, these benefits are experienced,
in a season of war, when the foreign supply might be cut off, they would
be much more extensively felt.