CHAPTER II

THE TARIFF OF 1816

[PROTECTION OR REVENUE?]

Revenue Measures at the Close of the War of 1812-Protective Tariff Bill Is Introduced in the House-Debate: in Favor, John C. Calhoun [S. C.], Henry Clay [Ky.], Thomas R. Gold [N. Y.]; Opposed, John Ross [Pa.], Robert Wright [Md.], Thomas Telfair [Ga.], John Randolph [Va.]; Daniel Webster [N. H.] Compromising-Bill Passes Both Houses and Is Approved by the President.

A

T the close of the War of 1812 the finances of the country were in such a deplorable condition that it was found necessary to continue several of the special taxes which had been laid during the war and were about to expire.

On April 19, 1816, President James Madison approved an act replacing the existing excise duties with licenses. on stills and their output, which method still forms the basis of the system of collecting internal revenue.

The revenue bill which created the most discussion was a new tariff laid on manufactures of almost every description, with ad valorem duties on some articles and specific duties on others. This bill was proposed as the result of a report of the Congressional Committee on Trade and Manufactures. In this report, which was drafted by John C. Calhoun [S. C.], a protective tariff was strongly advocated. It is interesting to note that Calhoun, who was later to oppose protection to the verge of leading his State out of the Union, was at this time. not only a protectionist but an ardent Unionist. The committee, in its report, said as follows:

PROTECTION AND UNION

JOHN C. CALHOUN, M. C.

The inducements to industry in a free government are numerous and inviting. Effects are always in unison with their causes. The inducements consist in the certainty and security which every citizen enjoys of exercising exclusive dominion over the creations of his genius, and the products of his labor; in procuring from his native soil, at all times, with facility, the raw materials that are required, and in the liberal encouragement that will be accorded by agriculturists to those who, by their labor, keep up a constant and increasing demand for the produce of agriculture.

Every State will participate in those advantages. The resources of each will be explored, opened, and enlarged. Different sections of the nation will, according to their position, the climate, the population, the habits of the people, and the nature of the soil, strike into that line of industry which is best adapted to their interest and the good of the whole; an active and free intercourse, promoted and facilitated by roads and canals, will ensue; prejudices, which are generated by distance, and the want of inducements to approach each other and reciprocate benefits, will be removed; information will be extended; the Union will acquire strength and solidity, and the Constitution of the United States, and that of each State, will be regarded as fountains from which flow numerous streams of public and private prosperity.

Our wants being supplied by our own ingenuity and industry, exportation of specie, to pay for foreign manufactures, will cease. The value of American produce, at this time exported, will not enable the importers to pay for the foreign manufacture imported. Whenever the two accounts shall be fairly stated, the balance against the United States will be found many millions of dollars. Such is the state of things that the change must be to the advantage of the United States. The precious metals will be attracted to them; the diffusion of which, in a regular and uniform current, through the great arteries and veins of the body politic, will give to each member health and vigor.

In proportion as the commerce of the United States depends on agriculture and manufactures as a common basis, will it increase and become independent of those revolutions and fluctuations, which the ambition and jealousy of foreign govern

ments are too apt to produce. Our navigation will be quickened, and, supported as it will be by internal resources never before at the command of any nation, will advance to the extent of those resources.

The manufacturers of cotton, in making application to the National Government for encouragement, have been induced to do so for many reasons. They know that their establishments are new and in their infancy, and that they have to encounter a competition with foreign establishments, that have arrived at maturity, that are supported by a large capital, and that have from the Government every protection that can be required. The foreign manufacturers and merchants will put in requisition all the powers of ingenuity; will practice whatever art can devise, and capital can accomplish, to prevent the American manufacturing establishments from taking root and flourishing in their rich and native soil. By the allowance of bounties and drawbacks, the foreign manufacturers and merchants will be furnished with additional means of carrying on the conflict, and of insuring success.

Should the National Government not afford the American manufacturers protection, the dangers which invest and threaten them will destroy all their hopes, and will close their prospects of utility to their country. A reasonable encouragement will sustain and keep them erect, but if they fall, they fall never to rise again, since their mouldering piles-the visible ruins of a legislative breath-will warn all who shall tread in the same footsteps of the doom, the inevitable destiny, of their establishments.

But, should the National Government, pursuing an enlightened and liberal policy, sustain and foster the manufacturing establishments, a few years would place them in a condition to bid defiance to foreign competition, and would enable them to increase the industry, wealth, and prosperity of the nation; and to afford to the Government, in times of difficulty and distress, whatever it may require to support public credit, while maintaining the rights of the nation.

The bill was laid before the House of Representatives by Albert Gallatin [Pa.], Secretary of the Treasury, on February 13, 1816, and referred to the Committee on Ways and Means. On March 23 Mr. Calhoun, of the committee, laid the bill before the House. It was debated until April 8, when it was passed by a vote of 88 to 54.

The schedules that were chiefly objected to were the woolen and cotton manufactures, upon which a duty of twenty-five per cent. ad valorem was laid. It was the evident design in these schedules, and, indeed, though in a minor degree, in all the schedules, to "protect" domestic manufacturing industries that had arisen during the war, and which, upon its cessation, had been forced to reduce their prices by competing with foreign industries, chiefly English (including East Indian manufactures of cotton).

Leading speakers in favor of the principle of protection in the bill were Mr. Calhoun, Henry Clay [Ky.], and Thomas R. Gold [N. Y.]. Those speakers who were in favor of a tariff mainly for revenue were John Ross [Pa.], Robert Wright [Md.], Thomas Telfair [Ga.], and John Randolph [Va.]. Daniel Webster [N. H.] supported the protective principle under the special circumstances of the case. He did not vote on the final passage of the bill.

The bill passed the Senate on April 19 by a vote of 25 to 7, and was approved by the President on April 27.

PROTECTION OR REVENUE?

HOUSE OF REPRESENTATIVES, MARCH 23-APRIL 8, 1816

MR. WEBSTER proposed a stated graduated reduction upon the duties. He said that he was not prepared to say that the Government was bound to adopt a permanent protection, or one which would exclude those goods already in the country. From the course pursued by the Government for some years back, the community had a right to expect relief from the danger to which the sudden change of circumstances exposed our manufactures, but Government had a right to say whether that relief should be permanent or not, and to reduce the protecting duties if it thought proper.

MR. CALHOUN hoped the amendment proposed by Mr. Webster would not prevail. He believed the policy of the country required protection to our manufacturing establishments.

MR. CLAY said the object of protecting manufactures was that we might eventually get articles of necessity made as cheap at home as they could be imported, and thereby to pro

duce an independence of foreign countries. In three years, he said, we could judge of the ability of our establishments to furnish those articles as cheap as they were obtained from abroad, and could then legislate with the lights of experience. He believed that three years would be sufficient to place our manufacturers on this desirable footing, and others would not hesitate to enter into the business, because they would look to that liberal and enlarged policy which they might anticipate from the Government at a future period.

Mr. Ross desired the independence of the people as well as national independence, and wished not to see one class of the community enslaved by another. If the extravagant duties proposed were not necessary for revenue, he could see no strong necessity for them. The failure of certain manufacturers was no reason for them, because some individuals of all professions were unfortunate in the best times, and no sympathy was felt for the merchants who failed. Adverting to a remark that some manufactories were worked in Kentucky by slaves, Mr. Ross said all manufactories were conducted with slaves, because the occupation had a tendency to degrade and debase the human mind. It was, he argued, a vain attempt to carry manufactures to such extent in this country, while there were so many inducements to seek an independent support by agriculture, and other beneficial pursuits. The only kind of manufactures he wished to see flourish were those conducted in families; any other would prove destructive to the liberties of this Republic, by combinations effecting a revolution in this House and in the Government.

Mr. Webster's amendment was agreed to by a large majority.

When the schedules of cotton and woolen goods were reached Mr. Wright moved to exclude from voting all members concerned in their manufacture, but, upon the earnest protest of his colleague, Mr. Smith, withdrew the motion.

MR. TELFAIR spoke as follows: On the subject of impost I hold it a sound general rule that no other or higher duties should be laid than are both necessary and proper for the purposes of revenue. To attempt more necessarily increases the inducements to smuggling; and if the encouragement of manufactures be the object, it is, in effect, to plunge on the