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Under the Constitution, two sources were available for replenishing the Treasury: customs duties and excise * The former could be derived from goods and merchandise in bulk or as cargoes, while the latter was obtainable from subdivided goods or merchandise. Among the objections to a Federal excise were espionage, a multiplicity of officers necessary to collect the tax, and the invasion of State rights; yet the method of collecting customs duties was neither costly, burdensome nor cumbersome. Furthermore, it was a part of the commercial system the regulation of which had been confided to the Union. By law, duties could not be levied on exports, but it was expected that a handsome income would be derived by taxing imports.†

When the revenue system of 1783 was enacted into law there were comparatively few manufactures in the country, and for some time thereafter the great quantities of goods imported from Europe rendered our own manufactures almost useless. By the time. the new government was inaugurated, however, great changes had taken place. Several causes had united to give impetus to our domestic manufactures, so that in 1789 there were some kinds of manufactures sufficient to supply the consumption of the

*Davis R. Dewey, in his Financial History of the United States, pp. 60-74, gives an excellent brief discussion of the financial provisions of the Constitution, with a bibliography.

Schouler, United States, vol. i., p. 97.

whole Union, while others were growing so rapidly that it appeared not unlikely that our own materials could be worked up to a point at which articles made in this country could be exported profitably. Hence it was contended that the question of protection. must be met at the threshold of legislation.

Mr. Madison's plan was to lay specific duties, or duties according to quantity, on certain articles, chiefly those which might be termed luxuries (such as spirituous liquors, wines, teas, coffee, sugar, molasses, cocoa, spices and pepper); and an ad valorem duty, or a percentage on their actual value, on all other importations.* This plan comprehended also a tax on the tonnage of vessels, the rate to be lower on American vessels built and owned in the United States, and a discrimination was made in favor of such nations as had entered into commercial treaties with the United States.†

Madison's speech was well received and the subject he discussed was immediately taken up. The next day (April 9), Thomas Fitzsimons, of Pennsylvania, moved that a few manufactured articles be added for specific duties, and Hartley, also

* Edward Stanwood, American Tariff Controversies of the Nineteenth Century, vol. i., p. 39; Schouler, United States, vol. i., p. 97.

† Hunt, Life of Madison, pp. 169-170; Bolles, Financial History, p. 74.

William Hill, First Stages of the Tariff Policy of the United States, in Publications of the American Economic Association, vol. viii., no. vi.,

of that State, in supporting Fitzsimons, said that the object was to encourage home manufactures, which had sprung up since 1783 and were now rapidly increasing. He said that it appeared to be

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"in the contemplation of some to enter on this business in a limited and partial manner, as it relates to revenue alone; but for my own part I wish to do it on as broad bottom as is at present practicable. If we consult the history of the ancient world we shall see that they have thought proper, for a long time past, to give great encouragement to the establishment of manufactures by laying such partial duties on the importation of foreign goods as to give the home manufactures a considerable advantage in the price when brought to market. I think it both politic and just that the fostering hand of the general government should extend to all those manufactures that will tend to national unity."

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Madison did not object to encouraging home manufactures, for he said:

"I own myself the friend to a very free system of commerce, and hold it as a truth that commercial shackles are generally unjust, oppressive, and impolitic. It is also a truth that if industry and labor are left to take their own course, they will generally be directed to those objects which are most productive, and this in a more certain and direct manner than the wisdom of a most enlightened legislature could point out. Nor do I think that the national interest is more promoted by such restrictions than that the interest

of individuals would be promoted by legislative interference directing the particular application of its industry. If my general principle

p. 110. The articles were beer, ale, porter, cider, beef, pork, butter, cheese, candles, soap, cables; cordage, leather, salt, tobacco, snuff, hats, slit and rolled iron, iron castings, nails, unwrought steel, paper, cabinet-ware, thread, boots, shoes, buttons, carriages, certain fruits and spices, and castings. Goodhue suggested that anchors, wool-cards and tinware deserved protection.- Bishop, History of Manufactures, vol. ii., p. 17; Benton, Abridg ment of Debates, vol. i., pp. 24-25.

*Annals of Congress, 1st Congress, 1st session, p. 105 et seq.

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is a good one that commerce ought to be free, and labor and industry left at large to find its proper object—the only thing which remains will be to discover the exceptions that do not come within the rule I have laid down. #

"Duties laid on imported articles may have an effect which comes within the idea of national prudence. It may happen that materials for manufactures may grow up without any encouragement for this purpose; it has been the case in some of the States, but in others regulations have heen provided, and have succeeded in producing some establishments which ought not to perish from the alteration which has taken place; it would be cruel to neglect them and divert their industry to other channels."*

He said, however, that those industries which were already established and others which would naturally spring up must be protected, and that an embargo in time of war was a necessity. He thought a discriminating tonnage tax ought to be laid because other nations discriminated against us, and that if we treated all foreign nations alike we were practically discriminating against our own ships, adding that we ought to encourage transportation facilities and should enlarge our markets f

On April 11 Smith, of Maryland, presented a petition from 700 mer

* Annals of Congress, 1st Congress, 1st session, pp. 112-113; Hunt, Life of Madison, p. 170; Thompson, History of Protective Tariff Laws, pp. 52–54, 62–63; Curtis, Constitutional History, vol. ii., pp. 169–170.

Annals of Congress, 1st Congress, 1st session, p. 210 et seq. W. G. Sumner, in a little book entitled Protectionism, gives the arguments on both sides, but thinks protectionism is a fallacy. See also John H. Allen, The Tariff and Its Evils: Both Sides of the Tariff Question by the World's Leading Men; Franklin Pierce, The Tariff and the Trusts (1907).

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"That, since the close of the late war and the completion of the Revolution, your petitioners had observed with serious regret the manufacturing and trading interests of the country rapidly

declining, and the attempts of the State Legis

latures to remedy the evil failing of their object; that, in the present melancholy state of our country, the number of poor increasing for want of employment, foreign debts accumulating, houses and lands depreciating in value, and trade and manufactures languishing and expiring, they look up to the Supreme Legislature of the United States as the guardians of the whole empire, and from their united wisdom and patriotism and ardent love of their country, expect to receive that aid and assistance which can alone dissipate their just apprehensions and animate them with hopes of success in future, by imposing on all foreign articles which can be made in America such duties as will give a just and decided preference to their labor; discountenancing that trade which tends so materially to injure them and impoverish their country; that they have annexed a list of such articles as are or can be manufactured among them, and humbly trust in the wisdom of the legislature to grant them, in common with the other mechanics and manufactures of the United States, that relief which may appear proper."

Fisher Ames succeeded in having wool-cards introduced into the schedule, because they were "manufactured to the eastward as good and cheap as the imported ones." At the suggestion of Clymer, steel was placed in the schedule without much

*Annals of Congress, vol. i., p. 115; American State Papers, Finance, vol. i., pp. 5-8. Memorials were received also from the merchants, manufacturers, mechanics and others in New York, Boston, and various places in New Jersey and from the shipbuilders of Philadelphia and Charleston. See Bishop, History of Manufacturers, vol, ii., p. 10; American State Papers, Finance, vol. i., pp. 9-11. See also R. W. Thompson, The History of Protective Tariff Laws, p. 38 et seq.; Annals, p. 123.

Ibid, p. 168.

objected, saying, " Then certainly you lay a tax on the whole community, in order to put the money in the pockets of a few, whenever you burden the importation with a heavy impost." †

Heading the list of articles on

which special duties were to be laid was Jamaica rum, which, on motion, was changed to distilled spirits of Jamaica proof. Around this the debate finally centered. As two duties were suggested-15 and 12 cents per gallon -the committee was divided into high and low tariff advocates. One of the low tariff men suggested that the higher the duty the less likelihood there would be of collecting it. He said:

"I trust it does not require much illustration to prove to the satisfaction of the committee that if you lay your duties too high, it will be a temptation to smuggling; for in the proportion which that sum bears to the value of the article will be the risk run in every attempt to introduce it in a clandestine manner, and, if this temptation is made too strong, the article will furnish no revenue. I believe if the committee shall impose a duty of fifteen cents that we shall lose our revenue altogether, or be compelled to use a mode of collection [which will] absorb the whole produce." ‡

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before you is more likely to be productive than this one; but a high duty may also discourage the use of ardent spirits, if not, it may discourage the West Indies from turning their molasses into rum. This being the case, they have no other market for molasses than this country, and our own distilleries, with the advantages arising therefrom, will be able to rival them in the manufacture of that article."*

Fisher Ames then attacked Boudinot's remarks on the moral effects of the tax, reminding the committee that they were not in church or at school listening to "harangues of speculative piety." He further said:

"We are to talk of the political interests committed to our charge. When we take up the subject of morality, let our system look towards that object, and not confound itself with revenue and protection of manufactures. If gentlemen conceive that a law will direct the tastes of the people from spirituous to malt liquors, they must have more romantic notions of legislative influence than experience justifies." †

John Lawrence of New York, a low tariff man, argued that rum, not morality, was to be taxed, and that money, not sobriety, was the object of the tax. He claimed also that, unless the government undertook a system of tax-gathering which would be odious to all, smuggling would be prevalent. It would be necessary, he thought, to have a navy of revenue cutters to board and search every vessel that came within sight and an army of custom house officers, tidewaiters and gaugers, and doubted not that under such a system, when the books had been balanced, the cost of

* Annals of Congress, p. 127; Benton, p. 28. Annals of Congress, vol. i., pp. 222-223. McMaster (vol. i., p. 546) gives a different version.

Annals of Congress, vol. i., pp. 197, 202-204.

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collecting the imposts would greatly exceed the duties collected, thus being a drain upon the Treasury, instead of a benefit to it. Nevertheless the committee placed the tax at the higher amount-15 cents.*

Molasses, every gallon of which was imported, was the next article considered. As the country's consumption of this was large and as Madison opposed an excise, being ready to agree to almost any import duty, rather than resort to internal taxation, a duty of 8 cents per gallon

was

proposed. Immediately the New England members protested, because the importation in that section was great, Massachusetts alone importing 40,000 hogshead of molasses, part of which was made into rum and. Hence Ames part consumed raw. said that the tax would have to be paid almost exclusively by Massachusetts. The New Englanders argued also that the fishing industry would be ruined, as a large portion of each year's catch of fish was exchanged for molasses in the French West Indies; but if molasses were taxed highly, the French would not exchange it for fish, and as the West Indies was the only market for fish and as molasses was the only exchangeable product of these islands, two industries would thus be ruined.||

The distilling industry had tied up

*Stanwood, Tariff Controversies, vol. i., p. 43. Ibid, vol. i., p. 44.

Gay, Life of Madison, p. 133.

McMaster, United States, vol. i., pp. 547-549.

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a capital of about $500,000 and the fishing fleet of Massachusetts alone. numbered 480 smacks.* Hence, if rum and molasses were burdened with a high duty, the fishermen would be unable to exchange their fish for these articles; and if no raw materials were imported, the distilleries would cease operations, fish would no longer be caught for lack of a market and the men engaged in these industries would be compelled to seek other employment.

After much deliberation, the committee reduced the duty to 6 cents.†

The remaining items of the list were now considered, some articles being taxed without debate while others were discarded altogether. Some, however, such as malt, salt, cordage, hemp, candles, and steel, gave rise to long and acrimonious discussion. A duty of 9 cents per bushel on malt was proposed. Fitzsimons thought the malt industry ought to be encouraged, for, said he, "if the morals of the people were to be improved by what entered into their diet, it would be prudent in the national legislature to encourage the manufacture of malt liquors." Others thought the high rate would prohibit the importation of foreign beer, would give a decided preference to American beer, and encourage agriculture by inducing the cultivation of malt

* Bishop, History of Manufactures, vol. ii., pp. 17-18.

Gay, Life of Madison. p. 138; Stanwood, Tariff Controversies, vol. i., p. 45.

and hops. Madison favored a duty of 8 cents, which rate was agreed upon at first, but was afterwards raised to 10 cents.* When a duty of 2 cents a pound on tallow candles was proposed, Thomas T. Tucker, of South Carolina, opposed it because it bore heavily upon those States which were obliged to import their candles. Fitzsimons retorted that Tucker moved to strike out every article imported. into South Carolina on which it was proposed to raise a duty, and after several favorable speeches the duty was voted.‡

When steel was taken under consideration, Lee, of Virginia, moved that it be struck from the list, which action would have thrown that article back into that class charged 5 per cent. ad valorem. He argued that, since the consumption could not be met by domestic manufactures, its taxation would operate as an indirect and oppressive tax on agriculture. Tucker said a bounty, instead of a tax, ought to be imposed, since the former would increase the quantity, while the latter would decrease the quantity and raise the price.§ Clymer, of Pennsylvania, admitted that the industry was in its infancy, but, inasmuch as all the raw materials could be found in this country, he thought

* Stanwood, Tariff Controversies, vol. i., p. 45. Annals of Congress, vol. i., p. 146. Stanwood, Tariff Controversies, vol. i., pp.

45-46.

Annals of Congress, vol. i., p. 147; Dewey, Financial History, p. 81.

Annals of Congress, vol. i., p. 147.