VIII.

FREE TRADE AND PROTECTION.

THE periods into which this series has been divided will furnish, perhaps, some key to the brief summary of tariff discussion in the United States which follows. For it is not at all true that tariff discussion or decision has been isolated; on the contrary, it has influenced, and been influenced by, every other phase of the national development of the country.

Bancroft has laid none too great stress on the influence of the English mercantile system in forcing the American Revolution, and on the attitude of the Revolution as an organized revolt against the English system. One of the first steps by which the Continental Congress asserted its claim to independent national action was the throwing open of American ports to the commerce of all nations-that is, to free

trade. It should, however, be added that the extreme breadth of this liberality was due to the inability of Congress to impose any duties on imports; it had a choice only between absolute prohibition and absolute free trade, and it chose the latter. The States were not so limited. Both under the revolutionary Congress and under the Confederation they retained the entire duty power, and they showed no fondness for free trade. Commerce in general was light, and tariff receipts, even in the commercial States, were of no great importance; but, wherever it was possible, commercial regulations were framed in disregard of the free-trade principle. In order to retain the trade in firewood and vegetables within her own borders, New York, in 1787, even laid prohibitory duties on Connecticut and New Jersey boats; and retaliatory measures were begun by the two States attacked.

The Constitution gave to Congress, and forbade to the States, the power to regulate comAs soon as the Constitution came to

merce.

be put into operation, the manner and objects of the regulation of commerce by Congress became a public question. Many other considerations were complicated with it. It was necessary for the United States to obtain a revenue, and this could most easily be done by a tariff of duties on imports. It was necessary for the Federalist majority to consider the party interests both in the agricultural States, which would object to protective duties, and in the States which demanded them. But the highest consideration in the mind of Hamilton and the most influential leaders of the party seems to have been the maintenance of the Union. The repulsive force of the States toward one another was still sufficiently strong to be an element of constant and recognized danger to the Union. One method of overcoming it, as a part of the whole Hamiltonian policy, was to foster the growth of manufactures as an interest entirely independent of State lines and dependent on the national government, which would throw its whole influence

for the maintenance of the Union. This feeling runs through the speeches even of Madison, who prefaced his remarks by a declaration in favor of "a trade as free as the policy of nations would allow." Protection, therefore, began in the United States as an instrument of national unity, without regard to national profit; and the argument in its favor would have been quite as strong as ever to the mind of a legislator who accepted every deduction as to the economic disadvantages of protection. Arguments for its economic advantages are not wanting; but they have no such form and consistency as those of subsequent periods. The result of the discussion was the tariff act of July 4, 1789, whose preamble stated one of its objects to be "the encouragement and protection of manufactures." Its average duty, however, was but about 8.5 per cent. It was followed by other acts, each increasing the rate of general duties, until, at the outbreak of the War of 1812, the general rate was about 21 per cent. The war added about 6 per cent. to this rate.

Growth toward democracy very commonly brings a curious bias toward protection, contrasted with the fundamental free-trade argument that a protective system and a system of slave labor have identical bases. The bias toward a pronounced protective system in the United States makes its appearance with the rise of democracy; and, after the War of 1812, is complicated with party interests. New England was still the citadel of Federalism. The war and its blockade had fostered manufactures in New England; and the manufacturing interest, looking to the Democratic party for protection, was a possible force to sap the foundations of the citadel. Dallas, of Pennsylvania, Secretary of the Treasury, prepared, and Calhoun carried through Congress, the tariff of 1816. It introduced several protective features, the "minimum" feature, by which the imported article was assumed to have cost at least a certain amount in calculating duties, and positive protection for cottons and woollens. The duties paid under this tariff were about 30 per