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MADISON ON THE TARIFF. - Jonathan Elliot, The Debates in the Several State Conventions of the Adoption of the Federal Constitution, vol. 4 (Nth. and Sth. Carolina, Resolutions, Tariffs, Banks, Debt) 
The debates in the several state conventions on the adoption of the federal Constitution, as recommended by the general convention at Philadelphia, in 1787. Together with the Journal of the federal convention, Luther Martin’s letter, Yates’s minutes, Congressional opinions, Virginia and Kentucky resolutions of ‘98-‘99, and other illustrations of the Constitution … 2d ed., with considerable additions. Collected and rev. from contemporary publications, by Jonathan Elliot. Pub. under the sanction of Congress. (1836), 5 vols.
Part of: The Debates in the Several State Conventions of the Adoption of the Federal Constitution, 5 vols.
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MADISON ON THE TARIFF.
Montpelier,September 18, 1828.
Your late letter reminds me of our conversation on the constitutionality of the power in Congress to impose a tariff for the encouragement of manufactures, and of my promise to sketch the grounds of the confident opinion I had expressed that it was among the powers vested in that body.
The Constitution vests in Congress, expressly, “the power to lay and collect taxes, duties, imposts, and excises,” and “the power to regulate trade.”
That the former power, if not particularly expressed, would have been included in the latter as one of the objects of a general power to regulate trade, is not necessarily impugned by its being so expressed. Examples of this sort cannot sometimes be easily avoided, and are to be seen elsewhere in the Constitution. Thus the power “to define and punish offences against the law of nations” includes the power, afterwards particularly expressed, “to make rules concerning captures, &c., from offending neutrals.” So also a power “to coin money” would doubtless include that of “regulating its value,” had not the latter power been expressly inserted. The term taxes, if standing alone, would certainly have included duties, imposts, and excises. In another clause, it is said, “no tax or duties shall be laid on exports,” &c. Here the two terms are used as synonymous. And in another clause, where it is said, “No state shall lay any impost, or duties,” &c., the terms imposts and duties are synonymous. Pleonasms, tautologies, and the promiscuous use of terms and phrases, differing in their shades of meaning, (always to be expounded with reference to the context, and under the control of the general character and manifest scope of the instrument in which they are found,) are to be ascribed, sometimes to the purpose of greater caution, sometimes to the imperfections of language, and sometimes to the imperfection of man himself. In this view of the subject, it was quite natural, however certainly the general power to regulate trade might include a power to impose duties on it, not to omit it in a clause enumerating the several modes of revenue authorized by the Constitution. In few cases could the “ex majori cautela” occur with more claim to respect.
Nor can it be inferred that a power to regulate trade does not involve a power to tax it, from the distinction made in the original controversy with Great Britain, between a power to regulate trade with the colonies, and a power to tax them. A power to regulate trade between different parts of the empire was confessedly necessary, and was admitted to lie, as far as that was the case, in the British Parliament; the taxing part being at the same time denied to the Parliament, and asserted to be necessarily inherent in the colonial legislatures, as sufficient, and the only safe depositories of the taxing power. So difficult was it, nevertheless, to maintain the distinction in practice, that the ingredient of revenue was occasionally overlooked or disregarded in the British regulations, as in the duty on sugar and molasses imported into the colonies. And it was fortunate that the attempt at an internal and direct tax, in the case of the stamp act, produced a radical examination of the subject before a regulation of trade, with a view to revenue, had grown into an established authority. One thing at least is certain — that the main and admitted object of the parliamentary regulations of trade with the colonies was the encouragement of manufactures in Great Britain.
But the present question is unconnected with the former relations between Great Britain and her colonies, which were of a peculiar, a complicated, and, in several respects, of an undefined character. It is a simple question, under the Constitution of the United States, whether “the power to regulate trade with foreign nations,” as a distinct and substantive item in the enumerated powers, embraces the object of encouraging by duties, restrictions, and prohibitions, the manufactures and products of the country. And the affirmative must be inferred from the following considerations: —
1. The meaning of the phrase “to regulate trade” must be sought in the general use of it; in other words, in the objects to which the power was generally understood to be applicable when the phrase was inserted in the Constitution.
2. The power has been understood and used, by all commercial and manufacturing nations, as embracing the object of encouraging manufactures. It is believed that not a single exception can be named.
3. This has been particularly the case with Great Britain, whose commercial vocabulary is the parent of ours. A primary object of her commercial regulations is well known to have been, the protection and encouragement of her manufactures.
4. Such was understood to be a proper use of the power by the states most prepared for manufacturing industry, whilst retaining the power over their foreign trade.
5. Such a use of the power by Congress accords with the intention and expectation of the states, in transferring the power over trade from themselves to the government of the United States. This was emphatically the case in the Eastern, the more manufacturing members of the confederacy. Hear the language held in the Convention of Massachusetts.
By Mr. Dawes, an advocate for the Constitution, it was observed — “Our manufactures are another great subject which has received no encouragement by national duties on foreign manufactures, and they never can by any authority in the old Confederation.” Again — “If we wish to encourage our own manufactures, to preserve our own commerce, to raise the value of our own lands, we must give Congress the powers in question.”
By Mr. Widgery, an opponent — “All we hear is, that the merchant and farmer will flourish, and that the mechanic and tradesman are to make their fortunes directly, if the Constitution goes down.”
The Convention of Massachusetts was the only one in New England whose debates have been preserved.* But it cannot be doubted that the sentiment there expressed was common to the other states in that quarter, more especially to Connecticut and Rhode Island, the most thickly-peopled of all the states, and having, of course, their thoughts most turned to the subject of manufactures. A like inference may be confidently applied to New Jersey, whose debates in Convention have not been preserved. In the populous and manufacturing state of Pennsylvania, a partial account only of the debates having been published, nothing certain is known of what passed in her Convention on this point. But ample evidence may be found elsewhere, that regulations of trade, for the encouragement of manufactures, were considered as within the powers to be granted to the new Congress, as well as within the scope of the national policy. Of the states south of Pennsylvania, the only two in whose Conventions the debates have been preserved are Virginia and North Carolina; and from these no adverse inferences can be drawn; nor is there the slightest indication that either of the two states farthest south, whose debates in Convention, if preserved, have not been made public, viewed the encouragement of manufactures as not within the general power over trade to be transferred to the government of the United States.
6. If Congress have not the power, it is annihilated for the nation — a policy without example in any other nation, and not within the reason of the solitary one in our own. The example alluded to is the prohibition of a tax on exports, which resulted from the apparent impossibility of raising, in that mode, a revenue from the states, proportioned to the ability to pay it — the ability of some being derived, in a great measure, not from their exports, but from their fisheries, from their freights, and from commerce at large, in some of its branches altogether external to the United States; the profits from all which, being invisible and intangible, would escape a tax on exports. A tax on imports, on the other hand, being a tax on consumption, which is in proportion to the ability of the consumers, whencesoever derived, was free from that inequality.
7. If revenue be the sole object of a legitimate impost, and the encouragement of domestic articles be not within the power of regulating trade, it would follow that no monopolizing or unequal regulations of foreign nations could be counteracted; that neither the staple articles of subsistence, nor the essential implements for the public safety, could, under any circumstances, be insured or fostered at home, by regulations of commerce, the usual and most convenient mode of providing for both; and that the American navigation, though the source of naval defence, of a cheapening competition in carrying our valuable and bulky articles to market, and of an independent carriage of them during foreign wars, when a foreign navigation might be withdrawn, must be at once abandoned, or speedily destroyed; it being evident that a tonnage duty, in foreign ports, against our vessels, and an exemption from such a duty in our ports, in favor of foreign vessels, must have the inevitable effect of banishing ours from the ocean.
To assume a power to protect our navigation, and the cultivation and fabrication of all articles requisite for the public safety, as incident to the war power, would be a more latitudinary construction of the text of the Constitution, than to consider it as embraced by the specified power to regulate trade — a power which has been exercised by all nations for those purposes, and which effects those purposes with less of interference with the authority and conveniency of the states than might result from internal and direct modes of encouraging the articles, any of which modes would be authorized, as far as deemed “necessary and proper,” by considering the power as an incidental power.
8. That the encouragement of manufactures was an object of the power to regulate trade, is proved by the use made of the power for that object, in the first session of the first Congress under the Constitution; when among the members present were so many who had been members of the Federal Convention which framed the Constitution, and of the state Conventions which ratified it; each of these classes consisting also of members who had opposed, and who had espoused, the Constitution in its actual form. It does not appear, from the printed proceedings of Congress on that occasion, that the power was denied by any of them; and it may be remarked that members from Virginia, in particular, as well of the anti-federal as the federal party, — the names then distinguishing those who had opposed and those who had approved the Constitution, — did not hesitate to propose duties, and to suggest even prohibitions in favor of several articles of her productions. By one a duty was proposed on mineral coal, in favor of the Virginia coal-pits; by another, a duty on hemp was proposed, to encourage the growth of that article; and by a third, a prohibition even of foreign beef was suggested, as a measure of sound policy.
A further evidence in support of the constitutional power to protect and foster manufactures by regulations of trade, — an evidence that ought of itself to settle the question, — is the uniform and practical sanction given to the power, by the general government, for nearly forty years, with a concurrence or acquiescence of every state government throughout the same period, and, it may be added, through all the vicissitudes of party which marked the period. No novel construction, however ingeniously devised, or however respectable and patriotic its patrons, can withstand the weight of such authorities, or the unbroken current of so prolonged and universal a practice. And well it is that this cannot be done without the intervention of the same authority which made the Constitution. If it could be so done, there would be an end to that stability in government, and in laws, which is essential to good government and good laws — a stability, the want of which is the imputation which has at all times been levelled against republicanism, with most effect, by its most dexterous adversaries.
The imputation ought never, therefore, to be countenanced, by innovating constructions, without any plea of precipitancy, or a paucity of the constructive precedents they oppose; without any appeal to material facts newly brought to light; without any claim to a better knowledge of the original evils and inconveniences for which remedies were needed — the very best keys to the true object and meaning of all laws and constitutions.
And may it not be fairly left to the unbiased judgment of all men of experience and of intelligence, to decide, which is most to be relied on for a sound and safe test of the meaning of a constitution, — a uniform interpretation by all the successive authorities under it, commencing with its birth, and continued for a long period, through the varied state of political contests; or the opinion of every new legislature, heated as it may be by the strife of parties — or warped, as often happens, by the eager pursuit of some favorite object — or carried away, possibly, by the powerful eloquence or captivating addresses of a few popular statesmen, themselves, perhaps, influenced by the same misleading causes? If the latter test is to prevail, every new legislative opinion might make a new constitution, as the foot of every new chancellor would make a new standard of measure.
It is seen, with no little surprise, that an attempt has been made, in a highly-respectable quarter, and at length reduced to a resolution, formally proposed in Congress, to substitute, for the power of Congress to regulate trade so as to encourage manufactures, a power in the several states to do so, with the consent of that body; and this expedient is derived from a clause in the 10th section of article 1st of the Constitution, which says, “No state shall, without the consent of Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws; and the net produce of all duties and imposts, laid by any state on imports and exports, shall be for the use of the treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.”
To say nothing of the clear indications in the Journal of the Convention of 1787, that the clause was intended merely to provide for expenses incurred by particular states, in their inspection laws, and in such improvements as they might choose to make in their harbors and rivers, with the sanction of Congress, — objects to which the reserved power has been applied, in several instances, at the request of Virginia and Georgia, — how could it ever be imagined that any state would wish to tax its own trade for the encouragement of manufactures, if possessed of the authority — or could, in fact, do so, if wishing it?
A tax on imports would be a tax on its own consumption; and the net proceeds going, according to the clause, not into its own treasury, but into the treasury of the United States, the state would tax itself separately for the equal gain of all the other states; and as far as the manufactures, so encouraged, might succeed in ultimately increasing the stock in market, and lowering the price by competition, this advantage, also, procured at the sole expense of the state, would be common to all the others.
But the very suggestion of such an expedient to any state would have an air of mockery, when its experienced impracticability is taken into view. No one, who recollects or recurs to the period when the power over commerce was in the individual states, and separate attempts were made to tax, or otherwise regulate it, need be told that the attempts were not only abortive, but, by demonstrating the necessity of general and uniform regulations, gave the original impulse to the constitutional reform which provided for such regulations.
To refer a state, therefore, to the exercise of a power, as reserved to her by the Constitution, the impossibility of exercising which was an inducement to adopt the Constitution, is, of all remedial devices, the last that ought to be brought forward. And what renders it the more extraordinary is, that, as the tax on commerce, as far as it could be separately collected, instead of belonging to the treasury of the state, as previous to the Constitution, would be a tribute to the United States, the state would be in a worse condition, after the adoption of the Constitution, than before, in reference to an important interest, the improvement of which was a particular object in adopting the Constitution.
Were Congress to make the proposed declaration of consent to state tariffs in favor of state manufactures, and the permitted attempts did not defent themselves, what would be the situation of states deriving their foreign supplies through the ports of other states? It is evident that they might be compelled to pay, in their consumption of particular articles imported, a tax for the common treasury, not common to all the states, without having any manufacture or product of their own, to partake of the contemplated benefit.
Of the impracticability of separate regulations of trade, and the resulting necessity of general regulations, no state was more sensible than Virginia. She was accordingly among the most earnest for granting to Congress a power adequate to the object. On more occasions than one, in the proceedings of her legislative councils, it was recited, “that the relative situation of the states had been found, on trial, to require uniformity in their commercial regulations, as the only effectual policy for obtaining, in the ports of foreign nations a stipulation of privileges reciprocal to those enjoyed, by the subjects of such nations, in the ports of the United States; for preventing animosities which cannot fail to arise among the several states from the interference of partial and separate regulations; and for deriving from commerce such aids to the public revenue as it ought to contribute, &c.
During the delays and discouragements experienced in the attempts to invest Congress with the necessary powers, the state of Virginia made various trials of what could be done by her individual laws. She ventured on duties and imposts as a source of revenue; resolutions were passed, at one time, to encourage and protect her own navigation and ship-building; and in consequence of complaints and petitions from Norfolk, Alexandria, and other places, against the monopolizing navigation laws of Great Britain, particularly in the trade between the United States and the British West Indies, she deliberated, with a purpose controlled only by the inefficacy of separate measures, on the experiment of forcing a reciprocity by prohibitory regulations of her own.
The effect of her separate attempts to raise revenue by duties on imports soon appeared in representations from her merchants that the commerce of the state was banished by them into other channels, especially of Maryland, where imports were less burdened than in Virginia.
Such a tendency of separate regulations was, indeed, too manifest to escape anticipation. Among the projects prompted by the want of a federal authority over commerce, was that of a concert, first proposed on the part of Maryland, for a uniformity of regulations between the two states; and commissioners were appointed for that purpose. It was soon perceived, however, that the concurrence of Pennsylvania was as necessary to Maryland as of Maryland to Virginia, and the concurrence of Pennsylvania was accordingly invited. But Pennsylvania could no more concur without New York than Maryland without Pennsylvania, nor New York without the concurrence of Boston, &c.
These projects were superseded, for the moment, by that of the Convention at Annapolis in 1786, and forever by the Convention at Philadelphia in 1787, and the Constitution which was the fruit of it.
There is a passage in Mr. Necker’s work on the finances of France which affords a signal illustration of the difficulty of collecting, in contiguous communities, indirect taxes, when not the same in all, by the violent means resorted to against smuggling from one to another of them. Previous to the late revolutionary war in that country, the taxes were of very different rates in the different provinces; particularly the tax on salt, which was high in the interior provinces and low in the maritime, and the tax on tobacco, which was very high in general, whilst in some of the provinces the use of the article was altogether free. The consequence was, that the standing army of patrols against smuggling had swollen to the number of twenty-three thousand; the annual arrest of men, women, and children, engaged in smuggling, to five thousand five hundred and fifty; and the number annually arrested on account of salt and tobacco alone, to seventeen or eighteen hundred, more than three hundred of whom were consigned to the terrible punishment of the galleys.
May it not be regarded as among the providential blessings to these states, that their geographical relations, multiplied as they will be by artificial channels of intercourse, give such additional force to the many obligations to cherish that union which alone secures their peace, their safety, and their prosperity! Apart from the more obvious and awful consequences of their entire separation into independent sovereignties, it is worthy of special consideration, that, divided from each other as they must be by narrow waters and territorial lines merely, the facility of surreptitious introductions of contraband articles would defeat every attempt at revenue, in the easy and indirect modes of impost and excise: so that, whilst their expenditures would be necessarily and vastly increased by their new situation, they would, in providing for them, be limited to direct taxes on land or other property, to arbitrary assessments on invisible funds, and to the odious tax on persons.
You will observe that I have confined myself, in what has been said, to the constitutionality and expediency of the power in Congress to encourage domestic products by regulations of commerce. In the exercise of the power, they are responsible to their constituents, whose right and duty it is, in that as in all other cases, to bring their measures to the test of justice and of the general good.
With great esteem and cordial respect,
Jos. C. Cabell, Esq.
Montpelier,October 30, 1828.
In my letter of September 18th, I stated briefly the grounds on which I rested my opinion, that a power to impose duties and restrictions on imports, with a view to encourage domestic productions, was constitutionally lodged in Congress. In the observations then made was involved the opinion, also, that the power was properly there lodged. As this last opinion necessarily implies that there are cases in which this power may be usefully exercised by Congress, — the only body within our political system capable of exercising it with effect, — you may think it incumbent on me to point out cases of that description.
I will premise that I concur in the opinion, that, as a general rule, individuals ought to be deemed the best judges of the best application of their industry and resources.
I am ready to admit, also, that there is no country in which the application may, with more safety, be left to the intelligence and enterprise of individuals, than the United States.
Finally, I shall not deny, that, in all doubtful cases, it becomes every government to lean rather to a confidence in the judgment of individuals, than to interpositions controlling the free exercise of it.
With all these concessions, I think it can be satisfactorily shown that there are exceptions to the general rule, now expressed by the phrase “Let us alone,” forming cases which call for the interposition of the competent authority, and which are not inconsistent with the generality of the rule.
1. The theory of “Let us alone” supposes that all nations concur in a perfect freedom of commercial intercourse. Were this the case, they would, in a commercial view, be but one nation, as much as the several districts composing a particular nation; and the theory would be as applicable to the former as to the latter. But this golden age of free trade has not yet arrived; nor is there a single nation that has set the example. No nation can, indeed, safely do so, until a reciprocity, at least, be insured to it. Take, for a proof, the familiar case of the navigation employed in a foreign commerce. If a nation, adhering to the rule of never interposing a countervailing protection of its vessels, admits foreign vessels into its ports free of duty, whilst its own vessels are subject to a duty in foreign ports, the ruinous effect is so obvious, that the warmest advocate for the theory in question must shrink from a universal application of it.
A nation leaving its foreign trade, in all cases, to regulate itself, might soon find it regulated, by other nations, into a subserviency to a foreign interest. In the interval between the peace of 1783 and the establishment of the present Constitution of the United States, the want of a general authority to regulate trade is known to have had this consequence. And have not the pretensions and policy latterly exhibited by Great Britain given warning of a like result from a renunciation of all countervailing regulations on the part of the United States? Were she permitted, by conferring on certain portions of her domain the name of colonies, to open from these a trade for herself to foreign countries, and to exclude, at the same time, a reciprocal trade to such colonies, by foreign countries, the use to be made of the monopoly need not be traced. Its character will be placed in a just relief by supposing that one of the colonial islands, instead of its present distance, happened to be in the vicinity of Great Britain; or that one of the islands in that vicinity should receive the name and be regarded in the light of a colony, with the peculiar privileges claimed for colonies. Is it not manifest that, in this case, the favored island might be made the sole medium of the commercial intercourse with foreign nations, and the parent country thence enjoy every essential advantage, as to the terms of it, which would flow from an unreciprocal trade from her other ports with other nations?
Fortunately, the British claims, however speciously colored or adroitly managed, were repelled at the commencement of our commercial career as an independent people, and at successive epochs under the existing Constitution, both in legislative discussions and in diplomatic negotiations. The claims were repelled on the solid ground that the colonial trade, as a rightful monopoly, was limited to the intercourse between the parent country and its colonies, and between one colony and another; the whole being, strictly, in the nature of a coasting trade from one to another port of the same nation — a trade with which no other nation has a right to interfere. It follows, of necessity, that the parent country, whenever it opens a colonial port for a direct trade to a foreign country, departs, itself, from the principle of colonial monopoly, and entitles the foreign country to the same reciprocity, in every respect, as in its intercourse with any other ports of the nation.
This is common sense and common right. It is still more, if more could be required. It is in conformity with the established usage of all nations, other than Great Britain, which have colonies. Some of those nations are known to adhere to the monopoly of their colonial trade, with all the vigor and constancy which circumstances permit. But it is also known that, whenever, and from whatever cause, it has been found necessary or expedient to open their colonial ports to a foreign trade, the rule of reciprocity in favor of the foreign party was not refused, nor, as is believed, a right to refuse it pretended.
It cannot be said that the reciprocity was dictated by a deficiency in the commercial marine. France, at least, could not be, in every instance, governed by that consideration; and Holland still less, to say nothing of the navigating states of Sweden and Denmark, which have rarely, if ever, enforced a colonial monopoly. The remark is, indeed, obvious, that the shipping liberated from the usual conveyance of supplies from the parent country to the colonies might be employed, in the new channels opened for them, in supplies from abroad.
Reciprocity, or an equivalent for it, is the only rule of intercourse among independent communities; and no nation ought to admit a doctrine, or adopt an invariable policy, which would preclude the counteracting measures necessary to enforce the rule.
2. The theory supposes, moreover, a perpetual peace — a supposition, it is to be feared, not less chimerical than a universal freedom of commerce.
The effect of war, among the commercial and manufacturing nations of the world, in raising the wages of labor and the cost of its products, with a like effect on the charges of freight and insurance, need neither proof nor explanation. In order to determine, therefore, a question of economy, between depending on foreign supplies and encouraging domestic substitutes, it is necessary to compare the probable periods of war with the probable periods of peace, and the cost of the domestic encouragement in time of peace with the cost added to foreign articles in time of war.
During the last century, the periods of war and peace have been nearly equal. The effect of a state of war in raising the price of imported articles cannot be estimated with exactness. It is certain, however, that the increased price of particular articles may make it cheaper to manufacture them at home.
Taking, for the sake of illustration, an equality in the two periods, and the cost of an imported yard of cloth in time of war to be nine and a half dollars, and in time of peace to be seven dollars, whilst the same could at all times be manufactured at home for eight dollars, it is evident that a tariff of one dollar and a quarter on the imported yard would protect the home manufacture in time of peace, and avoid a tax of one dollar and a half imposed by a state of war.
It cannot be said that the manufactures which could not support themselves against foreign competition, in periods of peace, would spring up of themselves at the recurrence of war prices. It must be obvious to every one, that, apart from the difficulty of great and sudden changes of employment, no prudent capitalists would engage in expensive establishments of any sort, at the commencement of a war of uncertain duration, with a certainty of having them crushed by the return of peace.
The strictest economy, therefore, suggests, as exceptions to the general rule, an estimate, in every given case, of war and peace, periods and prices, with inferences therefrom of the amount of a tariff which might be afforded during peace, in order to avoid the tax resulting from war; and it will occur at once that the inferences will be strengthened by adding, to the supposition of wars wholly foreign, that of wars in which our own country might be a party.
3. It is an opinion in which all must agree, that no nation ought to be unnecessarily dependent on others for the munitions of public defence, or for the materials essential to a naval force, where the nation has a maritime frontier, or a foreign commerce, to protect. To this class of exceptions to the theory may be added the instruments of agriculture, and of the mechanic arts which supply the other primary wants of the community. The time has been, when many of these were derived from a foreign source, and some of them might relapse into that dependence, were the encouragement of the fabrication of them at home withdrawn. But, as all foreign sources must be liable to interruptions too inconvenient to be hazarded, a provident policy would favor an internal and independent source, as a reasonable exception to the general rule of consulting cheapness alone.
4. There are cases where a nation may be so far advanced in the prerequisites for a particular branch of manufactures, that this, if once brought into existence, would support itself; and yet, unless aided, in its nascent and infant state, by public encouragement and a confidence in public protection, might remain, if not altogether, for a long time, unattempted without success. Is not our cotton manufacture a fair example? However favored by an advantageous command of the raw material, and a machinery which dispenses in so extraordinary a proportion with manual labor, it is quite probable that, without the impulse given by a war cutting off foreign supplies, and the patronage of an early tariff, it might not even yet have established itself; and pretty certain that it would be far short of the prosperous condition which enables it to face, in foreign markets, the fabrics of a nation that defies all other competitors. The number must be small that would now pronounce this manufacturing boon not to have been cheaply purchased by the tariff which nursed it into its present maturity.
5. Should it happen, as has been suspected, to be an object, though not of a foreign government itself, of its great manufacturing capitalists, to strangle in the cradle the infant manufactures of an extensive customer, or an anticipated rival, it would surely, in such a case, be incumbent on the suffering party so far to make an exception to the “let alone” policy, as to parry the evil by opposite regulations of its foreign commerce.
6. It is a common objection to the public encouragement of particular branches of industry, that it calls off laborers from other branches found to be more profitable; and the objection is in general a weighty one. But it loses that character in proportion to the effect of the encouragement in attracting skilful laborers from abroad. Something of this sort has already taken place among ourselves, and much more of it is in prospect; and, as far as it has taken or may take place, it forms an exception to the general policy in question.
The history of manufactures in Great Britain, the greatest manufacturing nation in the world, informs us that the woollen branch — till of late her greatest branch — owed both its original and subsequent growths to persecuted exiles from the Netherlands; and that her silk manufactures — now a flourishing and favorite branch — were not less indebted to emigrants flying from the persecuting edicts of France. — Anderson’s History of Commerce.
It appears, indeed, from the general history of manufacturing industry, that the prompt and successful introduction of it into new situations has been the result of emigration from countries in which manufactures had gradually grown up to a prosperous state; as into Italy on the fall of the Greek empire; from Italy into Spain and Flanders, on the loss of liberty in Florence and other cities; and from Flanders and France into England, as above noticed. — Franklin’s Canada Pamphlet.
In the selection of cases here made as exceptions to the “let alone” theory, none have been included which were deemed controvertible. And if I have viewed them, or a part of them only, in their true light, they show, what was to be shown, that the power granted to Congress to encourage domestic products, by regulations of foreign trade, was properly granted, inasmuch as the power is, in effect, confined to that body, and may, when exercised with a sound legislative discretion, provide the better for the safety and prosperity of the nation.
With great esteem and regard,
Jos. C. Cabell, Esq.
Dated Montpelier,February 22, 1831.
I have received your letter of January 21, asking —
1. Is there any state power to make banks?
2. Is the federal power, as has been exercised, or as proposed to be exercised, by President Jackson, preferable?
The evil which produced the prohibitory clause in the Constitution of the United States, was the practice of the states in making bills of credit, and, in some instances, appraised property, a “legal tender.” If the notes of state banks, therefore, whether chartered or unchartered, be made a legal tender, they are prohibited; if not made a legal tender, they do not fall within the prohibitory clause. The number of the Federalist referred to was written with that view of the subject; and this, with probably other contemporary expositions, and the uninterrupted practice of the states in creating and permitting banks, without making their notes a legal tender, would seem to be a bar to the question, if it were not inexpedient now to agitate it.
A virtual and incidental enforcement of the depreciated notes of the state banks, by their crowding out a sound medium, though a great evil, was not foreseen; and, if it had been apprehended, it is questionable whether the Constitution of the United States, (which had many obstacles to encounter,) would have ventured to guard against it, by an additional provision. A virtual, and, it is hoped, an adequate remedy, may hereafter be found in the refusal of state paper, when debased, in any of the federal transactions, and the control of the federal bank; this being itself controlled from suspending its specie payments by the public authority.
On the other question, I readily decide against the project recommended by the President. Reasons, more than sufficient, appear to have been presented to the public in the reviews, and other comments, which it has called forth. How far a hint for it may have been taken from Mr. Jefferson, I know not. The kindred ideas of the latter may be seen in his Memoirs, &c., vol. iv. pp. 196, 207, 526;* and his view of the state banks, vol. iv. pp. 199, 220.
There are sundry statutes in Virginia, prohibiting the circulation of notes, payable to bearer, whether issued by individuals, or unchartered banks.
[* ]Except a portion of the Convention of Connecticut. See vol. ii.
[* ]Extract from President Jackson’s Message of December 7, 1830. — “It becomes us to inquire, whether it be not possible to secure the advantages afforded by the present bank, through the agency of a bank of the United States, so modified, in its principles and structure, as to obviate constitutional and other objections. It is thought practicable to organize such a bank, with the necessary officers, as a branch of the treasury department, based on the public and individual deposits, without power to make loans or purchase property, which shall remit the funds of the government, and the expenses of which may be paid, if thought advisable, by allowing its officers to sell bills of exchange to private individuals, at a moderate premium. Not being a corporate body, having no stockholders, debtors, or property, and but few officers. It would not be obnoxious to the constitutional objections which are urged against the present bank; and having no means to operate on the hopes, fears, or interests, of large masses of the community, it would be shorn of the influence which makes that bank formidable. The states would be strengthened by having in their hands the means of furnishing the local paper currency through their own banks; while the Bank of the United States, though issuing no paper, would check the issues of the state banks, by taking their notes in deposit, and for exchange, only so long as they continue to be redeemed with specie.”