Front Page Titles (by Subject) GALLATIN TO WILLIAM DRAYTON, M.C. - The Writings of Albert Gallatin, vol. 2
The Online Library of Liberty
A project of Liberty Fund, Inc.
GALLATIN TO WILLIAM DRAYTON, M.C. - Albert Gallatin, The Writings of Albert Gallatin, vol. 2 
The Writings of Albert Gallatin, ed. Henry Adams (Philadelphia: J.B. Lippincott, 1879). 3 vols.
About Liberty Fund:
Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.
The text is in the public domain.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
GALLATIN TO WILLIAM DRAYTON, M.C.
New York, 7th April, 1832.
I would have acknowledged long ago your letter of 9th ult. had I anticipated the delay which would attend my answer. In the view which I had taken of the tariff, my attention had been, with few exceptions, drawn only to the examination of general principles; and when, in compliance with your request, I attempted to prepare the sketch of a bill, I found it necessary to investigate a number of details. The inquiry was much more laborious and difficult than had been expected, and the result which I now submit to you is very far from being satisfactory to myself. In forming an estimate not merely of the average value of the whole amount but of that of the several species of foreign goods annually consumed in the United States, much must necessarily rest on probabilities; and the difficulty is greatly increased by the complexness of our revenue laws, and by the imperfect materials on which we must rely.
When the object is only to estimate the value of the gross amount of the annual consumption of foreign articles, I am confident that we will come nearer the truth by resorting to the annual average value of the exports of domestic produce than by any other mode. It seems, indeed, to be expected that those exports will be considerably increased by a reduction of the duties on importations. This may be true, but to a much less extent than is generally apprehended. For the demand for our produce is regulated much more by the wants than by the ability to pay of foreign nations. In support of this assertion I beg leave to refer to the enclosed statement of the quantities of the principal articles of domestic exports from 1796 to 1830; which clearly shows that there has not been (notwithstanding the increased population at the rate of 100 : 280) any material increase in any other article but cotton; and, from the low price of this, it may be conjectured that the supply has now rather overreached the demand, and that any increase in quantity will be attended but with a very moderate increase of value.
This view of the subject deserves particular attention in other respects. By looking at the annexed summary statement of the average value of all the domestic exports for several successive periods, you will perceive that, deducting cotton, the annual average value of all the other articles was—
It is evident that unless the States north of the cotton-growing States had substituted in a considerable degree domestic to foreign manufactures, the wants of one-half of their population could not have been supplied. However differing with respect to the means by which it has been attempted to effect the object, the necessity of manufactures in the middle and northern portions of the Union appears to me undeniable; and this will amply account for the support so generally given to a system of duties which the people would easily believe calculated to afford them relief. In the mean while, the cotton-growing States were improving with great rapidity and could bear additional burdens. But now that the fall in the price of their staple and, as respects the Southern Atlantic States, the powerful rivalship of the virgin soil of Alabama and other Western districts have placed those States in a still worse situation than that of the Middle and Northern States in 1815-1824, without the possibility of remedying the evil by the establishment of manufactures, the present tariff has become intolerable. Men must, and therefore will, cheerfully submit to evils which arise from natural causes, but not to those which are inflicted by others. All I would infer is that each party should calmly consider the true situation and grievances of the other, as an indispensable preparatory step to a conciliatory arrangement.
The same summary statement also shows that there has been, during the last eight years, an average annual diminution of near five millions in our domestic exports other than cotton, and of more than seven millions in the articles other than cotton and domestic manufactures. Between that and the next preceding period of eight years there was no other difference to which that result can be ascribed than the effect of the tariff and the enhanced value of breadstuffs caused by the deficient European crop of 1816. And as this last circumstance does not make a difference of much more than eight millions, or one million in the average, it may be fairly inferred, 1st, that whatever advantages may in other respects have been derived from the late tariff laws, the agricultural interest of the Middle and Northern States has lost a foreign market for at least five millions of its produce; and, 2dly, that our exports may probably be increased to that extent by a return to a system of moderate duties.
When the object is, instead of a uniform duty, to lay different rates and to calculate the amount of the different species of imported commodities respectively consumed, the Treasury documents heretofore published afford us correct data only in reference to the articles paying specific duties. The statements annexed to the annual report on finances of the Secretary of the Treasury give the quantities, whether consumed or exported, without benefit of drawback, on which the duties have been collected; the tables of importations and foreign exports, in the annual statement of commerce and navigation, show the quantities actually consumed and those on which, though exported, duties are collected; and the values of those quantities respectively are given with considerable accuracy in the same tables of importations, although no reliance can be placed, in that respect, on the corresponding tables of exports, where the value is almost invariably returned at a much higher rate than in the tables of imports. It is for this reason that those commercial tables do not afford means of ascertaining the value of the articles paying duties ad valorem which are consumed or on which the duties are collected. For they show only the value and not the quantities imported or re-exported; and if the re-exportations of articles exported with benefit of drawback are deducted from the importations, the difference always gives an amount in value less than the truth, that of the re-exportations being almost always overrated. More correct results may perhaps be drawn from the returns of duties and drawbacks compared; but of this I am not sure, and those tables are not within my reach. On the other hand, the tables annexed to the annual report on finances of the Secretary of the Treasury, which were very correct till the year 1816, have ceased to be so with respect to articles embraced by the system of minimums. The reason is that, though paying nominally a duty ad valorem, those articles are in fact charged with a specific duty and ought to have been classed as such.
Thus, all the manufactures of cotton, the prime cost of which did not exceed 25 cents the square yard, were to be estimated by the tariff of 1816 as if they had cost 25 cents; that is to say, that all such manufactures not exceeding that price were charged with the invariable specific duty of 6¼ cents the square yard, whether the prime cost was 10 cents, 15 cents, or any other price not exceeding 25 cents; and all such manufactures are valued (in the tables accompanying the annual report of the Secretary of the Treasury) not according to their actual prime cost, but at that artificial rate of 25 cents so long as that minimum was in force, and afterwards at 30 and 35 cents as the minimum was raised to those rates. The same system has been pursued since 1828 with respect to the woollen manufactures embraced by the minimum duties, and the consequence is that all goods of that description (that is to say, included within the minimum provisions) are greatly overrated in the tables in question.
We can therefore make only an approximate estimate of the respective value of the several species of the goods paying duties ad valorem; and I am sensible that mine is very imperfect. You will see that I have estimated the value of those goods at 40 millions; but, as nearly two millions now paying such duties are added to the class of those free of duty, that estimate is tantamount to a valuation of 42 millions for the goods now paying duties ad valorem. That value, deduced from the commercial statements for the six years ending 30th September, 1830, is, including goods exported without privilege of drawback, 36,040,000 dollars; and deduced from the tables annexed to the annual report of the Secretary of the Treasury, 45,310,000. I think that the probable increase of importations arising from lessened duties will fall more on those paying specific duties on which a great reduction is made or proposed (teas, coffee, molasses, wines, &c.) than on those paying duties ad valorem. Yet on a revision of the whole I apprehend that I may have underrated these perhaps 2 millions of dollars, and that the difference will for one-half of that amount fall on the cotton goods.
But after you shall have made such corrections in the estimate of the respective value of the several descriptions of goods as may be suggested by more correct documents and further investigation, still greater difficulties must be surmounted in the proper distribution of the several rates of duties. The first, which I have not been able to overcome, and which has been the principal cause of the delay in the transmission of the enclosed sketch, is the limitation you suggested of a revenue derived from customs not greater than ten millions.
I feel, indeed, most sensibly the necessity of allaying the excitement of the South; and I may with perfect truth say that no other motive but one connected with the permanence of the Union could again have drawn me into the field of active politics. But the object can in no other way be attained than by a compromise. What effect that which I think sound reasoning sustained by incontestable facts may ultimately have on public opinion, biased as it is by private interest and party feelings, it is impossible to predict. But it is certain that at this time the tariff system is supported by a majority of the people and of both Houses in Congress. And when an appeal is made to the patriotism of that majority, when they are requested to yield their own opinions and to sacrifice a part of what they consider their interest, success cannot be hoped for without a corresponding and still greater spirit of concession on the part of the minority. The greatest apparent obstacle to this is the belief in the unconstitutionality of the tariff; that is to say, of duties raised not for the sake of revenue, but for that of protecting certain branches of industry. I cannot judge of the extent of concession necessary on the part of the moderate friends of that system in order to arrest the alarming state of things in the South; but I am confident that no greater can be expected than is suggested in the enclosed sketch. However objectionable a revenue larger than we think necessary may be, it is not liable to the constitutional objection; and, since it is evident that the respective rates of duty will be higher in proportion as the whole revenue will be greater, I cannot perceive any more eligible mode of conceding to the supporters of the tariff so much as is absolutely necessary in order to effect a compromise, than by agreeing to a larger revenue than might otherwise be deemed proper. I did try, but in vain, to devise a plan that could have any chance of proving acceptable within your limits; and I concluded it best to submit to your consideration one founded in mutual concession, without calculating in the first instance what would be the amount of revenue produced by the proposed duties. That estimate was the last thing I did, and amounts, as you will perceive, to 12,600,000 gross, or about 12,000,000 net, revenue. But, for the reasons already mentioned, I think it probable that it would yield at least 13,000,000. If it is deemed necessary to make it less, thinking as I do that lower rates of duties on the protected articles cannot possibly be obtained, and of two evils choosing the least, I would agree to the total repeal of the duties on the articles proposed by the Senate, if through that measure a conciliatory arrangement can be effected.
There are two items amongst the specific duties which constitute so large a portion of the whole that it would be very desirable, if practicable, to reduce them. These are spirits and sugar. The first pay a most exorbitant duty; but how to reduce this without increasing the consumption is the difficulty. Was it not for the strong and on our part insuperable objection against prohibitions, I would have been tempted to suggest that of spirits from grain. The duty of two cents on sugar is, according to the present price of that article, higher than that proposed on any other of the protected articles. But this is a commodity respecting which it may be doubted whether the quantity produced in the United States is not such as to affect its price generally; and it seems prudent to make at first but a moderate reduction, and to judge from experience how far the doubt suggested has any foundation. The observation applies neither to iron, woollen goods, nor any other protected article the production of which may be increased in foreign countries to any extent required by our demand without increasing the price.
We are less prepared to make coarse than fine woollen goods, principally because we cannot raise profitably the cheaper kinds of wool. For that reason, and as essential to the South and to the poorer classes everywhere, I have thrown the coarser woollens in a much lower class of duties than the finer. We are, on the contrary, much better fitted to manufacture the coarser than the finer species of cotton goods; and it may be found practicable to obtain a reduction of duties (below 25 per cent.) on such of those goods as are worth more than 30 cents the square yard, and also on cotton hosiery.
A great defect of the enclosed plan is its want of simplicity. This, though quite contrary to my own opinion in the abstract, arises from the necessity of adopting such modifications as may lead to a compromise. But in attempting this I was guided only by general information, and wanted the knowledge which you may obtain of the items on which the moderate friends of the tariff may be disposed to yield, and of those on which they are inflexible. When this shall have been ascertained, it may be found more eligible to bring in amendments to the existing system rather than to propose an entirely new law. It seems, indeed, impracticable to overset in one session a system consolidated by the progressive legislation of a number of years; and was it not for the threatening attitude of the South, to check the progress of the system and to divest it of its most obnoxious features would be a great deal for one session, and perhaps enough altogether. Respecting the gradual reduction of duties, and the time necessary to effect it without inflicting a severe injury on vested interests, I have made no suggestion, as this must necessarily be arranged by mutual agreement on the spot. The rates of duties I have suggested are those to be, in my opinion of a compromise, ultimately and permanently adopted.
Under existing circumstances I would almost despair of succeeding in effecting a compromise without the aid of the Executive. Whatever the abstract opinions of the President may be respecting the policy of the tariff, I have no doubt of his disposition, in the present crisis, to promote such conciliatory plan as will appear to him rational.
In what manner this should be done it is not for me to say; but it is extremely desirable that you should, so far as is practicable, act in concert with the Secretary of the Treasury. I cannot but believe, also, that you will find a disposition to conciliate on the part of the Senators and of several members of the delegations of Pennsylvania and New York. The most difficult and yet the most important point to obtain is a great reduction of the duty on wool. I see with satisfaction that that on flax is abandoned. The principle is the same with respect to hemp, and more or less to every raw material. I insist the more on that point, because my agricultural bias had originally induced me [to] lean to a contrary opinion, and it is experience which has satisfied me of my mistake, and that on that point, at least, the general opinion was correct.
Permit me to add that such is your high and justly-deserved standing with all parties, that if you fail in the attempt there is indeed but little hope of a satisfactory arrangement of this momentous question. Entertaining a just sense of the confidence you have placed in me by applying for such information on the subject as I might possess, I cannot but regret my not being able to supply you with better materials. Any further explanation within my power will be cheerfully given at any time when requested.
I have the honor, &c.