The North Americans
After our historical examination of the commercial policy ofthe European nations, with the exception of those from which thereis nothing of importance to be learnt, we will cast a glance beyondthe Atlantic Ocean at a people of colonists which has been raisingitself almost before our eyes from the condition of entiredependence on the mother country, and of separation into a numberof colonial provinces having no kind of political union betweenthemselves, to that of a united, well-organised, free, powerful,industrious, rich, and independent nation, which will perhaps inthe time of our grandchildren exalt itself to the rank of the firstnaval and commercial power in the world.The history of the tradeand industry of North America is more instructive for our subjectthan any other can be, Because here the course of developmentproceeds rapidly, the periods of free trade and protection followclosely on each other, their consequences stand out clearly andsharply defined, and the whole machinery of national industry andState administration moves exposed before the eyes of thespectator.
The North American colonies were kept, in respect of trade andindustry, in such complete thraldom by the mother country, that nosort of manufacture was permitted to them beyond domesticmanufacture and the ordinary handicrafts.So late as the year 1750a hat manufactory in the State of Massachusetts created so greatsensation and jealousy in Parliament, that it declared all kinds ofmanufactories to be 'common nuisances,' not excepting iron works,notwithstanding that the country possessed in the greatestabundance all the requisite materials for the manufacture of iron.
Even more recently, namely, in 1770, the great Chatham, made uneasyby the first manufacturing attempts of the New Englanders, declaredthat the colonies should not be permitted to manufacture so much asa horseshoe nail.
To Adam Smith belongs the merit of having first pointed out theinjustice of this policy.
The monopoly of all manufacturing industry by the mothercountry was one of the chief causes of the American Revolution; thetea duty merely afforded an opportunity for its outbreak.
Freed from restrictions, in possession of all material andintellectual resources for manufacturing work, and separated fromthat nation from which they had previously been supplied withmanufactured goods, and to which they had been selling theirproduce, and thus thrown with all their wants upon their ownresources: manufactures of every kind in the North American freestates received a mighty stimulus during the war of revolution,which in its turn had the effect of benefiting agriculture to suchan extent that, notwithstanding the burdens and the devastationconsequent upon the then recent war, the value of land and the rateof wages in these states everywhere rose immensely but as, afterthe peace of Paris, the faulty constitution of the free states madethe introduction of a united commercial system impossible, andconsequently English manufactured goods again obtained freeadmission, competition with which the newly established Americanmanufactories had not strength enough to bear, the prosperity whichhad arisen during the war vanished much more quickly than it hadgrown up.An orator in Congress said afterwards of this crisis: 'Wedid buy, according to the advice of modem theorists, where we couldbuy cheapest, and our markets were flooded with foreign goods;English goods sold cheaper in our seaport towns than in Liverpoolor London.Our manufacturers were being ruined; our merchants, eventhose who thought to enrich themselves by importation, becamebankrupt; and all these causes together were so detrimental toagriculture, that landed property became very generally worthless,and consequently bankruptcy became general even among ourlandowners.'
This condition of things was by no means temporary; it lastedfrom the peace of Paris until the establishment of the federalconstitution, and contributed more than any other circumstance tobring about a more intimate union between the free states and toimpel them to give to Congress full powers for the maintenance ofa united commercial policy.Congress was inundated with petitionsfrom all the states -- New York and South Carolina not excepted --in favour of protective measures for internal industry; andWashington, on the day of his inauguration, wore a suit ofhome-manufactured cloth, 'in order,' said a contemporary New Yorkjournal, 'in the simple and impressive manner so peculiar to thisgreat man, to give to all his successors in office and to allfuture legislators a memorable lesson upon the way in which thewelfare of this country is to be promoted.' Although the firstAmerican tariff (1789) levied only light duties on the importationof the most important manufactured articles, it yet worked sobeneficially from the very first years of its introduction thatWashington in his 'Message' in 1791 was able to congratulate thenation on the flourishing condition of its manufactures,agriculture, and trade.
The inadequacy of this protection was, however, soon apparent;for the effect of the slight import duties was easily overcome byEnglish manufacturers, who had the advantage of improved methods ofproduction.Congress did certainly raise the duty on the mostimportant manufactured articles to fifteen per cent, but this wasnot till the year 1804, when it was compelled, owing to deficientcustoms receipts, to raise more revenue, and long after the inlandmanufacturers had exhausted every argument in favour of having moreprotection, while the interests opposed to them were equallystrenuous upon the advantages of free trade and the injuriouseffects of high import duties.