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Mr. MARSHALL. Yes, but neither have we made the gains.

The CHAIRMAN. Could not the English have, all the time, underworked us in point of transportation ? Would not the preponderance of economy be in favor of English transportation, just as it is in every form of manufacture which they make in competition with us, except in those things where we have special natural advantages ?

Mr. MARSHALL. I think, of course, that we are placed at a disadvantage so far as high rate of interest on capital is concerned, and also so far as the working expenses of vessels are concerned, but, in spite of that, American ship-owners would have been able, if they had bad an opportunity of purchasing their vessels cheaply and on the samé terms as their English rivals, to compete with the English on better terins than they have bad in consequence of the navigation laws, which forbade the purchase of ships abroad.

The CHAIRMAN. But would the American ship-owner have been on such terms of equality as that he could have made any material impression on the ability of the English ship-owner to do business cheaper than the American can do it for

Mr. MARSHALL. I think that we might not have advanced as rapidly as we would have if all those conditions had been eqnalized, but I believe that we should have shown a sensible advance in any event if the navigation laws had been repealed.

The CHAIRMAN, Suppose that the coast-trade had been open at the same time, would not the English have displaced from our coasting-trade a very much larger amount of tonnage than we could have gained from them on the ocean?

Mr. MARSUALL. I should like to say, in regard to the coast-trade, that this trade has been a monopoly ever since the foundation of this government, and that even a voyage from bere to San Francisco (15,000 miles) is regarded as part of the coasting-trade. I would not be in favor of immediately throwing open the coasting-trade to foreign competitors, because it is a very large interest. It is an interest that has been built up by protection and monopoly, so to speak, and I am not in favor of immediately throwing down the barriers which surround that monopoly. I would wait until we make more advance in iron-ship building, and until the business of our commercial marine is firmer, before throwing open the coasting-trade to the competition of foreign nations. I think, as a matter of principle, that it should be free, and that it ultimately will be; but I am not in favor of having it opened to all at the present time.

The CHAIRMAN. Do not the laws in regard to the coasting-trade make it more expensive to transportation; and, to that extent, is not the consumer damaged ?

Mr. MARSHALL. Undoubtedly. It is like all protected interests. They must be protected at the expense of somebody; and the coasting-trade is undoubtedly protected at the expense of the transporters of merchandise. They have to pay higher freight than they would pay if that trade was open to all competitors.

The CHAIRMAN. Of course in these modern days captal is mobilized. It goes where it pays best. If yon repeal the navigation laws and give free trade in ships, would not the English capital, wbich is more abundant and cheaper than capital here, absorb that business as against American competition because our capital is not so abundant and not so cheap You do not, for instance, put your money (which you can employ in some other way at 7 per cent.) into ships where you could only get 5 per cent. for it. You would not, for the mere sake of owning a ship, put your money in it unless you could get sufficient returns for it.

Mr. MARSHALL. No, indeed, sir. I have done it many times, and I have had sufficient experience of it.

The CHAIRMAN. Can you alter these great underlying laws which give the business to the man who can do it cheapest ?

Mr. MARSHALL. Certainly not. You cannot go in the face of those laws, and you cannot expect to have competition on an equal plan until all conditions are equalized. But there is a certain amount of ship-building going on in this country for the foreign trade. These ships, however, are built of wood. If the navigatiou laws were repealed those ships would be built of iron, the wooden vessels would be replaced by iron vessels, and my impression is that wooden-ship building in this country will come to an end certainly within the next one or two years. No more wooden ships of consequence will be built for the foreign trade, becanse a wooden ship is at a great disadvantage with its iron competitor. I do not mean to say that the Ainerican ship-owner, even when his ships are of iron, will be on a parity with his foreign competitor, because, as yon say, the English and the German and the French ship-owners have cheap capital which is content with smaller remuneration, and they also have the advantage of being able to run their ships cheaper than we can run ours. But before 1860, although the wages which we paid to our crews, and the supplies which we provided for our ships, and the salaries which we paid to our officers were intinitely better than those paid by England, and the expenses of running our ships were larger, still we steadily progressed in a maritime point of view, and we went on increasing our toppage. Wo had the same disadvantages then as to capital, wages, and supplies as we have now, if not greater ones.

The CHAIRMAN. But did we not have an enormous advantage in the fact that we had a monopoly in the coasting trade, so that when the great mass of transient ships found that they could not get employment on the ocean, they could pick up a coastwise trade!

Mr. MARSHALL. No; I think that the class of vessels built for the foreign trade was a class per se.

The CHAIRMAN. Take that class of packets that used to trade between New York and New Orleans, New York and Savannah, and New York and Mobile; did they not also make ocean trips ?

Mr. MARSHALL. They may have done so in some instances; but still the classes of ocean ships and coastwise vessels were clearly defined.

The CHAIRMAN, I know that I crossed the Atlantic twice in just such vessels, but unfortunately one of them went to the bottom. These vessels were very often transferred from one trade to the other.

Mr. MARSHALL. It may have been so in some instances.

The CHAIRMAN. Is it not an advantage to the American producer of food products who wants to sell his products abroad to have them carried abroad at the cheapest possible rate? Is the net result not better for him! Mr. MARSHALL. Certainly.

The CHAIRMAN. And is it not of advantage to the American consumer of foreign products to have them brought over here at the cheapest possible rate ? Mr. MARSHALL. Certainly.

The CHAIRMAN. Then transportation on the ocean is a tax as well upon the American consumer as upon the American producer. It is a tax pro tanto.

Mr. MARSHALL. It is the freight added to the primary cost of the article.

The CHAIRMAN. Is not the lesson from that, to let the business be done by whoever will do it the cheapest Mr. MARSHALL. Yes; on equal terms. The CHAIRMAN. We gain by having it done at the cheapest rate. Mr. MARSHALL. Yes ; after removing all restrictive legislation.

The CHAIRMAN. In that case, will not American capital seek the occupation that will pay it best? Mr. MARSHALL. It will.

The CHAIRMAN. And if it finds that ocean transportation will not pay it as well as manufactures or some other branch of industry, it will abandon the ocean business to other countries? Mr. MARSHALL. It will.

The CHAIRMAN. Would there be any disadvantage to this country in that direction! Would we not gain by it! Would it not be a positive advantage if somebody would do that business at a lower rate than we can do it ourselves !

Mr. MARSHALL. Undoubtedly it would. But what I complain of, so far as our competition is concerned, is that we are not allowed to follow the natural channel into which capital would have found its way, but that we have been restricted by legislation from placing ourselves on a parity with foreign nations.

The CHAIRMAN. Have you not bad a corresponding advantage in the monopoly of the coast trade, which absorbs the larger portion of our tonnage 1

Mr. MARSHALL. No, sir; the coast trade can only absorb a certain amount of tonnage profitably.

The CHAIRMAN. Has it not always absorbed a large proportion of American tonnage?

Mr. MARSHALL. Larger than has been engaged in the foreign trade, but not so very much larger. In 1855 the tonnage engaged in foreign trade was $2,348,358, and in the coast trade only $2,491,000.

The CHAIRMAN. Is it not an enormous advantage to have a monopoly of 50 per cent. of the entire ship business of the country !

Mr. MARSHALL. It is an enormous advantage to the people engaged in that business, I grant you. The class of ressels engaged in the coast trade is entirely different from the vessels engaged in the foreign trade. There may be exceptional cases, as in the instance of that shipin which you crossed the ocean and which came to such an untimely end; but the class of vessels is different, so far as the coast trade is concerned, except in the trade from here to San Francisco.

Mr. Rice. The reason which you give in favor of free ships would apply equally in favor of free trade in regard to all manufactured products.

Mr. MARSHALL. Certainly, sir. I am a free-trader; that is, I am in favor of a tariff for revenue. I believe that the restrictive tariff is one cause which has operated against the development of our commercial marine as well as against all our other interests.

Mr. Rice. Free ships would tend to reduction of interest upon capital and to a reduction of wages of labor, and would bring labor to the same level that it is in England. Mr. MARSHALL. I think it would tend to equalize these conditions.

Mr. Rice. How was it in England when she was building up her ships and her great superiority on the sea to other nations ? Did she have these navigation laws at that time?

Mr. MARSHALL She did have navigation laws till 1849. In 1854 the restrictions on the coasting trade were removed.

Mr. RICE. Were they as strict or stricter than any navigation laws which we have ?

Mr. MARSHALL. They were certainly as strict; and the ship-owners of England predicted ruin and disaster to all their interests in consequence of the repeal of those restrictions.

Mr. Rice. They were repealed, but not until England had acquired superiority on he sea.

Mr. MARSHALL. She had acquired superiority, or had the superiority relatively up to a certain period, when she began to lose her superiority.

Mr. Rice. Is it your opinion that the navigation laws, under which she operated, tended to give her that superiority while she was building up her trade.

Mr. MARSHALL. No; I think not.

Mr. Rice. You think that if she started without navigation laws, that her ultimate condition would have been as good as it is now?

Mr. MARSHALL. I certainly do.

Mr. Rice. So tbat you do not think navigation laws would aid us in building up our marine now that it is in this depressed condition ?

Mr. MARSIIALL. I do not think they would aid us in building up our merchant marine. On the contrary, I think that they are a direct disadvantage to us. Whatever vitality there is in that industry is crushed out by the restrictive legislation which now hampers it; and, in that legislation, I would instance the tariff as well as the navigation laws. I think that the tariff is an impediment to trade generally, and is tanto quanto an impediment to our commercial marine. Mr. RICE. Do you think that the tariff is an impediment to our manufactures ? Mr. MARSHALL. Yes, I think so.

Mr. Rice. Do you think that we should produce as much or more without it than we do with it?

Mr. MARSHALL. I think that we should have produced more of articles which it is to our profit to produce, under free trade or under a revenue tariff, than we have produced with all the restrictions to which we have been compelled to submit.

Mr. Rice. You do not believe in seeking to confine to our own country any kind of manufactures in which we cannot freely compete with other countries without a protective tariff?

Mr. MARSHALL. No, sir. The primary effect of protective legislation may be to benefit the people engaged in those industries; but the ultimate effect will be disaster and loss. We have a strong instance of that in the present condition of the protected industries of this country.

The CHAIRMAN. Do you attribute the depression in the general manufacturing industries of the country to the fact that they have been protected to death

Mr. MARSHALL. Not wholly ; but protection, so called, is responsible for a large share of it.

The CHAIRMAN. Well, protected to their injury? Mr. MARSHALL. It is not wholly due to restrictive legislation, but I regard protection as one of the influences which have tended to bring about the depression in business.

The CHAIRMAN. How do you acconnt for the depression in all similar branches of industry in England, which is under the free-trade system? There the depression is equally as great as it is here in every staple branch of manufacture.

Mr. MARSHALL. The chairman will recollect that the industrial depression of the world is now very great, and that England shares in that industrial depression equally with other countries. The United States having been one of the largest consumers of English products is no longer a consumer to any great extent. We import no iron or coal or cottons from England at present. There are many other articles which Eng. land produces, and for which she has now no demand in this country. England, therefore, has shared in the general depression ; but, in spite of that, she shows a degree of prosperity which is very remarkable under those circumstances. Pauperism has de«creased since last year in England, according to the statistics.

The Chairman. Do you think that the depression has affected England less seriously than it has affected this country! Mr. MARSHALL. I think it has. The CHAIRMAN. Do you think that pauperism has increased here and diminished

there?

Mr. MARSHALL. Pauperism has decidedly increased here, and it bas diminished there.

The CHAIRMAN. Do you know anything about the volume of business there—whether it is as great as ever, or whether it bas been reduced ? I mean the imports and exports.

Mr. MARSIIALL. The volume of exports and imports I think is greater now than it was.

The CHAIRMAN. The volume of last year shows it to be really in excess. How is the volume of exports and imports in the United States for the last year ! Does it not also exhibit a great increase ?

Mr. MARSHALL. Yes; the volume of imports and exports does exhibit an increase in the United States, although whether or not that increase is relatively as large as that of Great Britain I am not able to say.

The CHAIRMAN. In Great Britain the value of imports and exports is less, but the volume is greater ; but in the United States both value and volume are greater. Mr. MARSHALL. And we have undoubtedly increased our export business. The CHAIRMAN. Is not that healthy ! Mr. MARSHALL. Certainly. The CHAIRMAN. If we brought back as much as we sent out, it would be better still ? Mr. MARSHALL. Yes.

The CHAIRMAN. That is to say, we would have a greater quantity of goods which the country needs than we now have. What is the reason that we are not buying as much as we did i

Mr. MARSHALL. Because we are engaged in paying our debts. We are liquidating.
There is no doubt about that.
Mr. Rice. That is a healthy thing to do.

Mr. MARSHALL. Yes; it is a healthy thing to do, but it is not a comfortable thing to do.

The CHAIRMAN. And hence we have this very remarkable fact-enormous increase of exports; great balance of trade in our favor; and a very great depression hereall at the same time; because we are paying for something which we have heretofore consumed and destroyed. Mr. MARSHALL, Exactly. We are working, as the sailors say, for a dead horse. The CHAIRMAN. Is some of that due to the expenditures of the war! Mr. MARSHALL. Undoubtedly. The large amount of depression is due to that cause. The CHAIRMAN. Is some of it due to the era of speculation that succeeded the war?

Mr. MARSHALL. Yes; and to the over-building of railroads and various other speculative enterprises in which people have lost their money.

The CHAIRMAN. Can you give us an idea of what caused that speculative era; whether anything has been done by legislation to bring it about, or whether anything can be done by legislation to prevent its recurrence ?

Mr. MARSHALL. With all due deference to the body of which you, Mr. Chairman, are a member, I must say that most of the evils to society result from legislation.

The CHAIRMAN. You need not be at all delicate in hitting the body of which we are members. We are generally doing that ourselves; and, when we are not, the newspapers are doing it for us.

Mr. MARSHALL. I think that wise legislation is true philanthropy undoubtedly, but I think that the absence of legislation is almost better. And there are a great many evils which affect this country at present that have flowed from the disastrous consequences attendant upon imperfect legislation-legislation not based upon science and experience, or on the fundamental principles which control society. And here let me say that I think that these gentlemen who represented the workingmen who appeared before this committee, prior to the appearance of the persons who have been invited to come here, make a great mistake in appealing to the government for more legislation. I should rather appeal to the government for the legislation; I should rather appeal to the government for more freedom than ask it to curtail that freedom. I was rather amused the other day by the testimony of Mr. Graham before this committee, in which he laid it down as a fundamental principle that the best government is the government that governs least; and then went on to advocate all sorts of interference on the part of the government, which was, to say the least, inconsistent with the theory which he had laid down.

The CHAIRMAN. We have been legislating since 1789; and this speculation which came in 1873 may have been the culmination of all that legislation, or it may have been due to some more immediate and special legislation. What I want to know is, whether there has been anything done by legislation within a recent period tending to produce the speculation which culminated in the crisis of 18731 .

Mr. MARSHALL. The special legislation which has brought about the speculation and its attendant consequences to which you refer is the legislation consequent on the events of the war. We embarked in 1861 in a war of gigantic magnitude, in which the government was obliged to issue (or did either rightfully or wrongfully issue) a currency of its own, which currency steadily depreciated so that prices of commodities went up very much in value, and a speculative era was inaugurated during the war and for some time after the war.

The CHAIRMAN. We are told that the country was very prosperous during that time; that every body made money; that both capital and labor reaped ample returns, and that that was an era of such great prosperity that we should get it back again as quick as possible.

Mr. MARSHALL. Yes, so it is said ; but the prosperity was certainly hollow and unsubstantial. It was a prosperity which was paid for by the people at large. In other words, it was paid for by the government. The government was issuing its obligations and was spending money; and that money produced an appearance of prosperity which we had in every industry, but which in the long run was sure disaster.

The CHAIRMAN. But they say that we could have kept on spending money; and we are invited now to inaugurate great public enterprises and to pay for them in legaltender notes ; and we are told that the prosperity which we had before only came to an end because the government ceased to issue this paper money. They say that up to that time everything was lovely, and now that everything is become gloomy and that ruin has overtaken the country.

Mr. MARSHALL. A man can keep himself in a state of intoxication for a certain period, but he cannot keep drunk always. The day must come when he will be obliged to become sober, and to resort to the remedies that bring about a normal state of health. Mr. RICE. Unless he prefers to have delirium tremens.

The CHAIRMAN. And these gentlemen deny that there was any intoxication. They insist that it was a healthy and salubrious state of affairs in every way; and they say that all that is necessary now is to pay off the debt in legal-tender money-$2,000,000,000—and that bondholders who receive that money will take it and employ it in business which will give occupation and abundant wages for labor. You are a bondholder. Suppose you were compelled to take legal-tender notes for your bonds; what would you do with the money ?

Mr. MARSHALL. I think I should take my legal tenders and convert them into gold at the current rate, and take the next steamer for Europe, where I should remain.

The CHAIRMAN. Suppose everybody tried to do that at the same time, what would be the consequence? Where would gold go to ?

Mr. MARSHALL. I am not prepared to say what point it would reach.
The CHAIRMAN. But it would advance in price very rapidly.
Mr. MARSHALL. Certainly.
The CHAIRMAN. And it would have to leave the country.
Mr. MARSHALL. Undoubtedly.
The CHAIRMAN. And then we should have here only paper for currency.
Mr. MARSHALL. Yes.

The CHAIRMAN. The proposition is that money is simply the fruit of legislation; that the government has only to decree that a piece of paper is a dollar, and it is so for all purposes ; that it will pay debts, buy property, and perform all the functions of society, simply because the government has put its stamp upon it. Suppose that is done; would people who have property, farms, houses, manufactories, be likely to part either with their property, or the fruit of it, for these pieces of paper, if they were in unlimited quantity, or to the amount of $2,000,000,000 7° What would they do with their property ?

Mr. MARSHALL. I think they would require a great deal of paper in exchange for it, if they wanted to sell.

The CHAIRMAN. Would they be inclined to bold on to their property?
Mr. MARSHALL. Certainly.
The CHAIRMAN. And to stop business?
Mr. MARSHALL. They would stop business, certainly.

The CHAIRMAN. And that would produce a paralysis in society and business transactions : Mr. MARSHALL. It wonld produce a paralysis in society and business transactions.

The CHAIRMAN. And the result would be that the whole work of issuing paper by the government would have to be undone ! Mr. MARSHALL. Yes, sooner or later. The CHAIRMAN. And that gold would have to be brought back from abroad! Mr. MARSHALL. Gold would have to be brought back.

The CHAIRMAN. How would we get it back? Would we not have to go to work and produce things which would bring back that gold?

Mr. MARSHALL. Certainly.

The CHAIRMAN. Have you found that the fluctuations in the currency (I mean the value of paper redeemable in gold) have been a sore impediment to the regular conduct of business and employment of labor

Mr. MARSHALL. Undoubtedly. It has been one of the most serious impediments to the proper course of business.

The CHAIRMAN. Have you found it difficult or dangerous, or doubtful, in regard to giving credits often to solvent purchasers ?

Mr. MARSHALL. Yes, sir; and every man must be in doubt if he has to deal with a fluctuating currency. He must always charge to cover those fluctuations to the utmost extent.

The CHAIRMAN. Has it tended to make business speculative in its very nature !
Mr. MARSHALL. It has; and business has undergone a complete revolution in this

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