Something to ponder:—
many of the great advocates of "protective" tariff were also advocates of a privately owned central bank; the protective tariff mainly helped present and future monopolies, benefit to the workers were incidental. Henry Clay the leading figure of tariff agitation was also a leading figure of bank agitation --in 1811 Henry Clay delivered the best speech against a central bank, a few years later he changed his mind. In 1816 Daniel Webster voted against the charter of the second bank of the United States; in 1824 delivered a long speech in the House in opposition to the proposed tariff; later, he, too, changed his mind, and became a leading advocate of bank and tariff.
"Of late years American Manufacturers have had fearful odds to contend with;-- nothing less than all the State Governments, (the few excepted that have not run in debt abroad,) and all the Banks in the country.
"They have had the State Governments to contend with, because the proceeds of the greater part of the loans that have been negotiated in Europe have been brought to the United States, in the form of manufactured articlee. British and American manufacturers have not been suffered to enter into fair and free competition in our home market. The State Governments have interfered in favor of the former, and by mortgaging all the land and all the productive powers of the people, to pay for imported goods, have given the British manufacturer great advantages over the American.
"But our manufacturers have had still more fearful enemies in the Banks. By their excessive issues, these institutions have made the country a good one for foreigners to sell in and a poor one for them to buy in. They have thus increased importation and dimished exportation. They have done more than this. By their "expansions" they have increased prices when the manufacturer was under the necessity of buying, and by their "contractions" they have diminished prices when he was under the necessity of selling. They have, also, by conferring credit on men who never were justly entitled to credit, induced our manufacturers to trust them to large amounts. Full nine-tenths of the losses our manufacturers have sustained, through bad debts, are to be attributed to the Banks.
"Under such circumstances, we cannot wonder that manufacturing industry is depressed. Neither can we wonder that manufacturers are crying out for "additional protection." This is only a repetition of what occurred in the former bank revulsion.
"Adequate protection cannot, however, be obtained by means of a tariff, owing to the following reasons.
"1st. A protective tariff, in order to be effective, must be permanent, or must at least endure for a number of years without change. The corn growers in England have such a tariff, because political power is in their hands. But political power in this country is not in the hands of the manufacturers; and if a protective tariff should be established, but a few years would elapse before it would, in all probability, be abolished.
"2nd. Our extensive coast, and our extensive inland frontier, afford such facilities for smuggling, that if the duties on most articles should be raised to what is regarded as the protective point, contraband trade would, to a great extent, take the place of legitimate commerce. We cannot do what the French do, that is, employ an army of one hundred thousand men to guard the revenue from smugglers.
"3rd. Just in proportion as the duties on imports are raised; the ability of the banks to expand is increased. The prices of foreign goods are enhanced accordingly: and the foreign manufacturer enters our market and sells his goods at as much profit as before. The rise of prices produced by the inflation of the currency, more than covers the addition to the duties.
"These three causes must ever prevent our having a tariff that will afford efficient protection, and not a few of the manufacturers in this vicinity are well convinced of this truth. They have watched closely the operation of former tariffs. And they have thereby found that though additional duties raised the price of what they had to sell, the inflation of currency which followed raised the price of every thing they had to buy, so that instead of being gainers they were losers by the change.
"What then is to be done ? Manufactures are a very important branch of industry, and we have every natural facility for carrying them on to great advantage. But efficient protection cannot, as we have seen, be secured for them by means of a tariff. How then is this desirable object to be attained ?
"It can be attained in one way, and in one way only, and that is through a sound currency and sound credit system. This is the only protection American manufactures want, and the only one that can possibly prove effective.
"Here it is proper to observe, that we do not believe that the adoption of a sound currency system would sink the money rate of wages as low as many imagine. Should it, however, have such an effect, the working man would not be injured thereby, because other things would fall in the same ratio. When wages are at half a dollar a day and flour at five dollars a barrel, and other things in proportion, the working man is just as well off as when wages are at a dollar a day and flour at ten dollars a barrel. The man who cannot see this, is not qualified to exercise the rights of an American citizen, and ought at once to migrate to some other country.
"But, as already observed, we do not believe that the adoption of a sound currency system would sink the money rate of wages as some imagine. A day's labor in America would then purchase more gold or silver than it would in most countries of Europe, for the same reason that it now purchaeee more wheat. If a day's labor in the United States will produce a bushel of wheat or its equivalent, and if a day's labor in Poland will produce but one-tenth part of a bushel of wheat or its equivalent, it is plain that the money rate of wages will be ten times as high in the United States as in Poland.
"The adoption of a sound currency system would benefit American manufactures, not so much by causing a fall of prices, as by giving steadiness to prices. It has been found by experience in both Europe and America, that banking expansions and contractions, have the most sensible and most direct, if not the most ruinous effects on manufacturing operations. So easy is production with modern machinery, that a very small rise of prices causes a great increase of fabrics. But the manufacturer has hardly time to bring them to market, before there is a bank contraction. Then there is a glut of commodities and a scarcity of money.
"The God of Nature has caused the interests of the planter of the south, and of the manufacturer of the north, to harmonize exactly. He has given to the one peculiar facilities for producing the raw material, and to the other peculiar facilities for converting it into manufactures. Through our banking system
, have these two parties been set at variance. Let them cease their disputes about the tariff, and turn their arms on the common enemy, paper-money banking
. Without a system of sound currency and sound credit, it is impossible for either planter or manufacturer to enjoy permanent prosperity."