necessary to the support of Government. Although they may, to that extent, by diverting national industry from its natural channels, render it less productive; although they may, to that extent, lay a tax on the consumers in addition to that which is paid to Government; although they operate unequally on different sections of the country; all your memorialists ask, is, that the evil shall not be aggravated by an inequality in the rates of duty. The question then at issue is, simply whether the amount wanted shall be so raised as to fall equally upon all the consumers, or, in other words, on the community, and so as to encourage equally every branch of industry, or whether certain branches shall receive special protection by high and sometimes prohibitory duties. . . .

Let it, however, be recollected, that even the general benefit arising to the country at large, may not always be a sufficient justification of great and important deviations from the equal and uniform system of taxation. A government which acknowledges the principle that no individual can be divested of his property for public purposes without indemnity, cannot claim the right to do that indirectly, which it is forbidden to do directly. A system calculated to lay permanent burdens, greatly unequal and oppressive on some classes of society, or on a particular section of the country, would be radically unjust, and altogether indefensible, even though it might be, attended with some advantages to the community, considered as a whole. But whether such advantages are in fact realized; whether, on any supposition, they ever can produce a profit equal to the actual national loss arising even from the indispensable duty of 20 to 25 per cent., must be first examined.

It is self-evident that the industry of a country is most profitably employed, or, in other words, that a country acquires the greatest wealth, and its general prosperity is most advanced, in proportion as its capital and labor are most productive.

It is not less obvious that, if a given amount of capital and labor produces in the same time, a less quantity of a certain commodity than could have been purchased with that quantity of another article which might have been produced in the same time by the same amount of capital and labor, there has been a misapplication of such capital and labor, and a national loss equal to the difference between the quantity produced, and that which might have been purchased, with the proceeds of the same capital and labor otherwise applied.

If the price at which a commodity can be afforded by the person who undertakes to produce it is higher than that at which it may be,

or might have been purchased from others, the difference of price is the measure of the national loss incurred by his misapplication of capital and labor to the production of that commodity.

The difference between the price at which a manufacturer can afford to sell the whole amount of the commodities produced by him. in one year, and that at which the same quantity of the same articles may be, or might have been, purchased from others, is therefore equal to the annual national profit or loss resulting from his application of capital and labor to that instead of any other branch of industry.

When the new manufacturer has to compete with others of the same country, or, if there is no duty on imports, with foreign manufacturers, as it is impossible for him to sell cloth of the same quality at a higher price than it can be obtained from others, the loss must necessarily fall on him. This is not the less a public loss on that account. On whomsoever this may fall, a diminution of the quantity or exchangeable value of the commodities which, with the same capital and labor, otherwise applied, might have been produced, is so much retrenched from what would otherwise have been an accumulation of capital or national wealth. .

It is impossible that the state of the country should have been such as that its capital and labor could not have been more advantageously applied, than to branches of industry, which, left to themselves, were attended with actual loss, without a corresponding great and sensible diminution in the demand for capital and the wages of labor, neither of which has been felt. So long as those wages suffer no diminution, and so long as those employed in commercial and even agricultural pursuits continue to borrow large capitals at the rate of six per cent. a year, it is clear proof that those pursuits afford profits at least equal to that rate of interest, and that an application of capital and labor to the production of objects, on which, if not artificially protected, a loss is experienced, is not at all necessary.

By 1832 the issue of a protective tariff had become distinctively sectional. The south felt that it was being discriminated against by Congress. The southern

1 Thirty Years' View. By Thomas H. Benton (New York, 1854-6), I, 97,

states lagged behind their northern neighbors industrially, and the protective tariff was assigned by their statesmen as the reason for this difference in prosperity. Senator Benton of Missouri put the claim of the south as follows:

The question of a protective tariff had now not only become political, but sectional. In the early years of the federal government it was not so. The tariff bills, as the first and the second that were passed, declared in their preambles that they were for the encouragement of manufactures, as well as for raising revenue; but then the duties imposed were all moderate such as a revenue system really required; and there were no "minimums," to make a false basis for the calculation of duties, by enacting that all which cost less than a certain amount should be counted to have cost that amount; and be rated at the custom-house accordingly. In this early period the Southern States were as ready as any part of the Union in extending the protection to home industry which resulted from the imposition of revenue duties on rival imported articles, and on articles necessary to ourselves in time of war; and some of her statesmen were amongst the foremost members of Congress in promoting that policy. As late as 1816, some of her statesmen were still in favor of protection, not merely as an incident to revenue, but as a substantive object: and among these was Mr. Calhoun, of South Carolina - who even advocated the minimum provision then for the first time introduced into a tariff bill, and upon his motion and applied to the cotton goods imported. After that year (1816) the tariff bills took a sectional aspect the Southern States, with the exception of Louisiana (led by her sugar-planting interest), against them: the New England States also against them: the Middle and Western States for them. After 1824 the New England States (always meaning the greatest portion when a section is spoken of) classed with the protective States leaving the South alone, as a section, against that policy. . . .

Allusions were constantly made [in the debates] to the combination of manufacturing capitalists and politicians in pressing this bill. There was evidently foundation for the imputation. The scheme of it had been conceived in a convention of manufacturers in the State of Pennsylvania, and had been taken up by politicians, and was pushed as a party measure, and with the visible purpose of influencing the presidential election. In fact these tariff bills, each exceeding the other in its degree of protection, had become a regular appendage of our presidential elections - coming round in every cycle of four years, with that returning event. The year 1816 was the starting point:

1820, and 1824, and now 1828, having successively renewed the measure, with successive augmentations of duties. The South believed itself impoverished to enrich the North by this system; and certainly a singular and unexpected result had been seen in these two sections. In the colonial state, the Southern were the rich part of the colonies, and expected to do well in a state of independence. They had the exports, and felt secure of their prosperity: not so of the North, whose agricultural resources were few, and who expected privations from the loss of British favor. But in the first half century after Independence this expectation was reversed. The wealth of the North was enormously aggrandized: that of the South had declined. Northern towns had become great cities: Southern cities had decayed, or become stationary; and Charleston, the principal port of the South, was less considerable than before the Revolution. The North became a money-lender to the South, and southern citizens made pilgrimages to northern cities, to raise money upon the hypothecation of their patrimonial estates. And this in the face of a southern export since the Revolution to the value of eight hundred millions of dollars! a sum equal to the product of the Mexican mines since the days of Cortez! and twice or thrice the amount of their product in the same fifty years. The Southern States attributed this result to the action of the federal government its double action of levying revenue upon the industry of one section of the Union and expending it in another — and especially to its protective tariffs. To some degree this attribution was just, but not to the degree assumed; which is evident from the fact that the protective system had then only been in force for a short time since the year 1816; and the reversed condition of the two sections of the Union had commenced before that time. Other causes must have had some effect: but for the present we look to the protective system; and, without admitting it to have done all the mischief of which the South complained, it had yet done enough to cause it to be condemned by every friend to equal justice among the States - by every friend to the harmony and stability of the Union - by all who detested sectional legislation - by every enemy to the mischievous combination of partisan politics with national legislation. And this was the feeling with the mass of the democratic members who voted for the tariff of 1828, and who were determined to act upon that feeling upon the overthrow of the political party which advocated the protective system; and which overthrow they believed to be certain at the ensuing presidential election.

VII. A TEMPORARY ADJUSTMENT OF CONFLICTING INTERESTS

The Compromise Tariff of 18331

South Carolina's opposition to the tariff measure of 1832, and her threat to withdraw from the Union unless the tariff was modified, caused Congress in 1833 to lower the duties on imported articles. Mr. Clay brought forward a compromise measure, in which, many of his friends declared, he abandoned his American system. Clay, himself, denied that such was the case; he insisted that a modification of the tariff would not destroy the system, but save it; that it would allay distrust and allow time for its principles to become known throughout the country. Portions of Mr. Clay's speech are as follows:

In presenting the modification of the tariff laws which I am about to submit, I have two great objects in view. My first object looks to the tariff. I am compelled to express the opinion, formed after the most deliberate reflection, and on a full survey of the whole country, that, whether rightfully or wrongfully, the tariff stands in imminent danger. . . . The fall of the policy, sir, would be productive of consequences calamitous indeed. When I look to the variety of interests which are involved, to the number of individuals interested, the amount of capital invested, the value of the buildings erected, and the whole arrangement of the business for the prosecution of the various branches of the manufacturing art which have sprung up under the fostering care of this government, I cannot contemplate any evil equal to the sudden overthrow of all those interests. History can produce no parallel to the extent of the mischief which would be produced by such a disaster. . . .

It is well known that the majority of the dominant party is adverse to the tariff. . . . But for the exertions of the other party, the tariff would have been long since sacrificed. Now let us look at the composition of the two branches of Congress at the next session. In this body we lose three friends of the protective policy, without being sure of gaining one. Here, judging from the present appearances, we shall, at the next session, be in the minority. In the House it is notorious that there is a considerable accession to the number of the dominant party. How, then, I ask, is the system to be sustained against numbers, against the whole weight of the administration, against the united South, and against the increased impending danger or civil war? . . .

. . . I have been represented as the father of this system, and I am charged with an unnatural abandonment of my own offspring. 1 Congressional Debates, 1832-3 (Washington, 1833), 462, 733.