many cotton-producing sections; buildings had been destroyed or had deteriorated; tools had been lost or broken; live-stock had been lost or confiscated; there was not food enough on some plantations to feed the owner and his former slaves until a new cotton crop had been harvested. To repair these losses and to secure the necessary capital required time. The abolition of slavery, aside from the monetary loss entailed, overthrew the existing industrial structure. The situation appeared so hopeless that a general decline in southern land values occurred, causing the further impoverishment of the much-tried cotton planter. Great difficulty was experienced with the labor problem. To many negroes freedom meant idleness, and both for this reason and because of the difficulty of paying regular weekly or monthly wages, the "wage system" proved unsatisfactory. The plan generally adopted was the "cropping system," which took different forms, but was based upon the idea of giving the laborer an interest in the crop. Soon also there began a decided movement to change from the plantation system to that of smaller cotton farms owned by the individual cotton growers or worked by tenants. The number of farms of less than 100 acres in the cotton-belt grew from 333,000 in 1860 to 517,000 in 1870, and the average size of cotton farms declined from 401.7 to 229.8 acres. The change from plantation to small farm required a new agricultural credit system. Even before the war large planters had sometimes borrowed money from the port factors, or from large interior bankers, with the growing crop as collateral. After the break-up of the large plantations, however, the need of loans to tide the smaller growers over the planting, growing, and harvesting seasons became widespread, and as the amounts needed by individual growers were too small to warrant dealing with distant port factors, they turned instead to the local merchant, banker, and landlord. The loaning system was expensive, although necessary at the time, and it still prevails throughout many sections of the Eastern cotton-belt. After the war, also, the system of marketing directly through port "factors" was largely displaced by the system of sales to interior merchants; a practice which involved the use of many middlemen. The grower sold to the local merchant, landlord, or banker to whom he had pledged all or part of his crop. Then the cotton exported to England often passed successively from the local buyer to the commission men at the larger interior centers, to the dealers at the ports of export, to the local agents of exporting companies, to importers at Liverpool, and finally through Liverpool brokers to the spinners at Manchester. Since the later seventies the tendency has been to eliminate superfluous dealers, but during the transition period and until the financial condition improved, until the Atlantic cable made possible direct sales, and until the competition between spinners became more general, the expensive system of conducting business through many middlemen prevailed. (2) For many years after the close of the war, the import trade of the Southern States was in a crippled condition. The purchasing power of the cotton planters had been greatly reduced, and the negroes were without resources. While the practice of growing almost nothing but cotton was conducive to the development of the import trade, the limited ability to purchase prevented its attaining a large volume. (3) The crushing effect of the Civil War upon the American merchant marine was more than temporary. Probably the marine would ultimately have declined even had there been no war, but, coming at a critical time, the four years of competition with neutral vessels, transfer to foreign flags, Confederate captures, and high insurance rates and tonnage taxes constituted a blow from which the deep-sea fleet has never recovered. The war came at the time when the shift from steam to sail and from wood to iron and steel had begun to make headway in the ship-building industry, and when other fields of investment began to attract capital. The Government did almost nothing to assist the ship-owners in their hour of need. Congress refused to readmit to American registry the vessels that had been transferred to foreign standards, did not repeal the war tonnage taxes until 1868, did not permit the free importation of materials for wooden sailing-vessels until 1872 and for iron and steel vessels until 1890, and made no provision for liberal ocean mail payments. But three unimportant mail payment contracts were let during the entire period from the Civil War to 1891. During the decade 1865 to 1875, when foreign vessels were no longer benefited by a condition of neutrality, the American proportion of the total vessel movement in the foreign trade, instead of recovering, declined from 47 per cent to 30 per cent; the proportion of the foreign trade carried in American bottoms fell from 27.7 per cent to 26.1 per cent; and the registered merchant fleet of the United States dropped from 1,602,000 to 1,554,000 gross tons. (4) The Civil War did much to strain the friendly relations which had existed between the United States and Great Britain. For commercial reasons, if not for other purposes, the British Government had sympathized with the Southern States. She had granted them the rights of a belligerent, had permitted the construction and equipment of Confederate warships at British ports, and had connived in the practice of blockade-running. The British West Indies, the Bermudas, and Nassau had been favored havens of southern blockade-runners, and Canada had been a base for a number of unimportant southern attacks in New York and Vermont. Though the more conservative public leaders in the United States successfully discouraged the desire to retaliate, the feeling of resentment ran high. It was partly for this reason that the reciprocity treaty with Canada was not renewed in 'Johnson, Ocean and Inland Water Transportation, chap. xx. 1866. The road returning to friendship was not paved until 1872, when the arbitration tribunal at Geneva awarded $15,500,000 to the United States for vessels destroyed by Confederate men-of-war built in British ports. (5) The high import duties which had been imposed for revenue purposes during the war were maintained after the return of peace in pursuance of a protective tariff policy. Low tariffs had prevailed during the years 1846 to 1860, but the war made higher duties a necessity and protective sentiment was sufficiently strong to maintain and even to increase the high duties after the war ended. The South, which had for many years been the chief opponent of protection, was for a time unable to offer serious opposition, and the West and East, respectively, were generally in favor of home markets for farm products and protection for industries. The high duties were a partial barrier against foreign imports, and to whatever extent they developed home markets, they tended to restrict the exportation of farm products. In the proportion that they contributed to the growth of the manufacturing industries, they may have led the way to a larger export trade in manufactured goods. (6) The Civil War affected the foreign trade not only through its influence upon the tariff policy, but also by encouraging the concentration of capital. The expansion of business in the Northern States, which occurred during the war, caused the free competitive system to begin to break down. During the war consolidation began, and the process has continued to the present in almost every branch of business except agriculture. Its effects on commerce, domestic and foreign, have been manifold. Aside from the many effects which are the subject of controversy, it has been clear that the large producers have been better able to compete successfully with producers of foreign wares; and that, with certain exceptions, the rapid progress which has been made in the exportation of manufactures has been brought about largely through the efforts of the great industrial consolidations. (7) It was during the war that the first effective encouragement was given to the long-discussed construction of transcontinental railroads. For reasons, partly commercial and partly political and military, the Federal Government subsidized the Union Pacific-Central Pacific line with land grants of 20,000,000 acres and loans of $55,000,000 in government bonds. The hopes of developing Oriental commerce, of increasing trade between the Pacific coast and the Middle West and the East, of building up local traffic by developing the far western country, and of realizing profit from the sale of land were the commercial motives of the undertaking, but the reason why men of political prominence took an unusual interest in the project was the desire to connect the West with the East, to tie California and the northwest country to the settled regions of the Union and thereby prevent the likelihood of foreign invasion or secession. The policy of subsidizing transcontinental railroads once being established, various other lines also obtained extensive grants of public land, and the opening of the West was hastened, with obvious effects upon the foreign as well as the internal commerce of the entire country. (8) Wildcat banking was at its height during the first part of the Civil War, but when effective financing was essential to the successful prosecution of the war, the Federal Government provided for the regulation of the banking system of the country. The enactment of the national banking act in 1863 proved of incalculable aid to commerce, but since its influences were not peculiar to the foreign trade, it need not be more fully discussed at this point. Numerous States and many voluntary banking associations also undertook banking and currency reforms during the war, and a general effort was made-State and nationalto suppress counterfeiting. The Civil War was in many ways epochal in the history of the foreign commerce of the United States, though it can not be said that the results of the conflict taken as a whole worked directly towards a greater foreign trade. For many years to come the conscious policy of the nation was the development of American industries and the creation of home markets. Internal development, however, so increased the volume of the agricultural crops and the output of the forest, mining, and manufacturing industries, that a growth of exports became inevitable and the consequent increase in the purchasing power of the people and the growing need for the raw materials from other lands laid the basis for a greater import trade. The Civil War also emphasized the vastness of the country's resources. Four years of the bitterest conflict caused scarcely a ripple in the course of economic progress in the Northern States. Foreign markets replaced the domestic markets which were temporarily lost or shrunken, and the development of resources and industries which began before the war was continued. The South, which was stricken with all the losses incident to a crushing defeat, quickly recovered. Her staple crop is again the king of exports; her lumber, her naval stores, and her tobacco are of international importance. Her fruit, rice, sugar, iron, oil, coal, and phosphate, each in its way, influence the course of foreign trade, some products being exported, while others have displaced foreign commodities which would otherwise be imported from abroad. CHAPTER XXVI. THE FOREIGN TRADE FROM THE CIVIL WAR TO THE CLOSE OF THE NINETEENTH CENTURY. Increase in import and export trade, 64. Price fluctuations, 1870-1900, 65. At the close of the Civil War there was a brisk recovery of the foreign trade of the United States. The imports and exports of the Northern States, which had been maintained even during the war, took an upward course, and those of the Southern States soon recovered much of their former volume. As soon as the ruined cotton plantations could be reorganized, the exports of cotton shipped from southern ports again increased, and other southern commodities were shipped abroad; but the import trade of the South lagged behind because the purchasing power of the population had been greatly reduced by the ravages of the war. The value of the total exports of merchandise quickly rose from $166,029,000 in 1865 to $348,859,000 in 1866, and imports grew from $238,745,000 to $434,812,000. This sudden advance was, to some extent, abnormal, both exports and imports consisting in part of cargoes which had been held back by merchants awaiting the return of peace; moreover, the increase was apparent rather than real, the augmented value being due partly to an abnormal rise of prices. For several years thereafter the foreign trade remained at a somewhat lower level, but by 1870 there was a widespread recovery. Imports of merchandise in that year aggregated $435,958,000 and exports $392,772,000. From 1870 to the end of the nineteenth century there was a pronounced, though at times irregular, growth in the foreign trade. Imports of merchandise increased to a value of $667,955,000 in 1880 and to $849,941,000 in 1900. Exports of merchandise increased even more rapidly, and with almost uniform regularity they exceeded the value of imports. In 1880 they amounted to $835,639,000 and in 1900 $1,394,483,000. The value of the annual imports of merchandise increased 95 per cent from 1870 to 1900, and that of exports 255 per cent. The total entrances and clearances at American ports of shipping engaged in the foreign trade, as is shown in table 55, increased from 18,325,000 tons in 1870 to 56,444,000 in 1900, an advance of 208 per cent. The wide fluctuations in the prices of commodities which occurred during the period 1865 to 1900 exerted a direct influence upon the value |