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ESSAY No. CXXI. - Condy Raguet, The Principles of Free Trade [1835]

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The Principles of Free Trade illustrated in a series of short and familiar Essays originally published in the Banner of the Constitution, 2nd ed. (Philadelphia, 1840).

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Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


ESSAY No. CXXI.

january 25, 1832.

Remarks on Mr. Clay’s Speech in the Senate of the United States, delivered on the 11th of January, 1832. in favour of reducing certain duties, and altering the Tariff.

WE publish to-day the Speech of Mr. Clay, in the Senate of the United States, on the 11th instant, in relation to his scheme for relieving the wealthy consumers of luxuries from taxation, and for leaving the necessaries of life, consumed by the poor and labouring classes, permanently burdened with heavy duties. We propose to offer a few remarks on some of its prominent features, and where we can agree with the orator, we will say so.

That the policy of restriction is “deeply seated in the affections of a large majority of the people” of the Western and Northern States, is but too true; but that it “stands self-vindicated in the general prosperity, in the rich fruits it has scattered over the land, in the experience of all prosperous and powerful nations, present and past, and now in that of our own,” is one of those postulates that something more than bare assertion is requisite to establish. So far from its being a self-evident proposition, we think that the converse of it is nearer the truth. Most of the prosperity which now exists, at home and abroad, is the result of that portion of freedom which has been left, in every country, to some branches of its trade; and to ascribe, therefore, the prosperity of nations to a cause incapable of producing prosperity, is almost as sound an argument as it would be to insist that the ability of a labourer with one arm to earn his living, is due to the arm he has lost and not to the one that remains. This mode of reasoning, which belongs to the advocates of restriction, of taking for granted the whole matter in dispute, may do very well for the political arithmeticians; but we should have been better pleased had the orator told us whether, by “rich fruits” we are to understand the crisis of the government, brought on by the desperation of the South, or the twenty per cent. dividends of the New England manufacturing corporations.

The compliment paid to the late Mr. Lowndes was merited, and will no doubt be received in South Carolina as a species of balm to mollify the wounds inflicted by the chains which now gall the people of that state. But we cannot so readily admit the compliment paid to the Congress which passed “the abused Tariff of 1824.” From the mention made of it by Mr. Clay, a stranger, unacquainted with the motives which led to that act, might imagine that that Congress was composed of financiers, who, by great skill and wisdom in fiscal concerns, had drafted a bill designed to effect a speedy reduction of the Public Debt. Not so: nothing was further from their intentions. Their design, so far from being to raise a revenue, was to prevent a revenue from being raised. So far from wishing to pay the Public Debt, their object was to prevent its ever being paid. And is it not a high joke, that because the wants of the country were so great that the people were compelled to pay the increased price of commodities occasioned by that act, rather than do without them, thereby keeping up the public revenue, this undiminished income should be pronounced to have been the end in view, when it was merely an effect of a cause designed to produce an opposite result? In this position we think there is a want of that candour which ought to characterize one aspiring to an elevated post. What should we think of the fairness of a man who should throw another into a pit, with a view of breaking his neck, and who, finding the man come out unhurt with a bag of gold in his hand, found at the bottom, should attempt to cajole the injured man, by telling him that it was to enable him to become rich that he had cast him into the pit? That the revenue would have been greater, since 1824, without the increased duties, than with them, we flatter ourselves would not be denied by any sound financier; and, therefore, to ascribe the final extinguishment of the debt, in 1832, to a law preventing the increase of the revenue, when, without such law it would have been extinguished in 1830, is a droll way of displaying an acquaintance with financial concerns. In regard to the assertion, that “no administration can justly claim for itself” the merit of having paid the debt, we admit the correctness of it in one sense: neither the last nor the present administration assisted in bringing money into the Treasury. But we feel bound to say, that the present administration may justly claim for itself the merit of having applied funds to the payment of the debt, which could not have been devoted to that object had the Internal Improvement policy of the preceding administration been persevered in by General Jackson; and, hence, we conclude that his administration may justly claim to itself the merit of having greatly hastened the payment of the debt. For instance, when General Jackson came into office, the debt was about $58,000,000. Had he not set his face against the system of unconstitutional appropriations, the debt, this day, would still have been $58,000,000, and twenty years hence it would have been more. No man can doubt of this who recollects that schemes were on foot, and applications were before Congress, in 1830, for appropriations for Internal Improvements, and other public works, to the amount of upwards of ninety millions of dollars.

In regard to the payment of the three per cent. stock, we differ wholly from the views of the orator. That stock was created for debts due to public creditors, who were by the very acceptance of it, (bearing an interest of but three per cent., when money was richly worth six per cent.,) virtually deprived of nearly one-half of their capitals. The obligation of the government to pay that debt when all other stocks bearing a higher interest are paid off, is as much incumbent on it as the discharge of a similar debt would be upon an individual. The idea that the people, who forced the public creditors to submit to their terms of payment, are not bound to pay their debts when they are able, because, by keeping their creditors out of their just dues they can make a profit by speculating on other people’s money, appears to resemble the transaction of a merchant, of whom we once heard, who always, when he could get one per cent. a month for money in the market, used to let his bonds lie over at the custom-house, knowing that when judgment was obtained against him he was liable only to an interest of six per cent. per annum, and that he could thus pocket at the rate of six per cent. per annum, by his want of punctuality. We should be sorry to see any such doctrines introduced into the moral code of our Treasury, for we differ from the orator in his views of the “moral value of the payment of a National Debt.” The moral value consists in absolute payment, when there are the means at hand, and not in the mere existence of an ability to pay; and it is to a confidence in the payment of these three per cents, when the other stocks were paid off, that some of their present owners have paid for them very nearly the par value.

But let us see what is this mighty sum, which thirteen millions of people are to save annually by the course recommended, and which has excited this new-born zeal for the people? Precisely three cents a piece per annum, for the number of years which Mr. Clay would postpone the payment. The three per cent. stocks amount to $13,296,626.21, which is just one dollar a head upon the population. Now let us ask, is there in this community a single individual who would forego the satisfaction of seeing the nation wholly exempt from the Revolutionary Debt, now of forty years’ standing, merely that he might save three cents a year for a few years longer?—for we can hardly suppose that Mr. Clay would postpone the payment for ever. We think there is not such an individual, unless he be found amongst that class who consider a national debt as a national blessing, and the ability, without the will to pay, as a commendable trait in the character of a government. And we are not even a little astonished, that a man who thinks so little of abstracting “from the pockets of the people,” in the form of taxes upon consumption and bounties to manufacturers, at least five dollars a piece per annum, should display such extreme sympathy for them when called upon to pay three cents a year, the balance due of the sum paid for their liberty. If this is not straining at a gnat and swallowing a camel, we know not what can be so considered.

But although differing from Mr. Clay upon so many points, we are pleased to find in his speech some few sentiments to which we can fully subscribe.

He speaks of “the repeal or reduction of duties” “as relieving the consumption of the country.” This is an honest confession, and is sufficient to put to shame the whole herd of political arithmeticians, who are endeavouring to humbug the people with the notion that a reduction of duties has a tendency to raise prices. You shall hear a shallow pated writer proclaim, that “theory laughs at facts,” because the demand for coffee throughout the world has produced a rise in its price greater than our reduction of duties, which could not be met by an increased supply, owing to the fact that coffee cannot be spun or wove, but must be produced on trees which do not bear fruit in less than three years. To Mr. Clay, then, we are indebted for blotting out this nonsense from the Tariff argument—for after this admission we do not think any honest man will venture his reputation by re-asserting it.

In Mr. Clay’s opposition to a distribution of the surplus revenue, we also heartily concur. Upon that subject we have never had but one opinion, and that opinion has been repeatedly expressed in this journal. It is a pity, however, that Mr. Clay cannot perceive, that all the objections urged by him against raising a fund for distribution amongst the several states, are equally applicable to the raising of a fund for expenditures on Internal Improvements. It would be taken “from the pockets of one portion of the people, to be ultimately returned to the same pockets,” which would be expensive and “unwise,” or “collected from one portion of the people and given to another,” which would be “unjust.” And if one process is unconstitutional, because no authority for it is found in the Constitution, it is difficult to imagine why the other is not equally so, seeing that there is in that instrument the same silence observed in relation to it.

To do justice, however, to Mr. Clay, although he wishes a part of the revenue arising from imposts to go to Internal Improvements, yet he wishes that the principal fund should be derived from the sale of the public lands. We confess, however, that we do not see any sound reason why the money arising from the sale of the common property of the nation should be regarded as altering the character of the expenditure. It is still an expenditure of a fund coming out of the pockets of the people, and would be so as long as a dollar were derived from the custom-house. The proceeds of the sales of the public lands diminish the amount that must be raised by taxation, and the burden is not the less felt, whether two and a half millions be taken for Internal Improvements, from the money specifically raised from duties, or from the sale of lands. But we are not surprised to see the stand taken by the champion of the West for the advocates of taking Southern and Eastern money to make roads in the West. “As certain as you preside in that chair, or as the sun performs its diurnal revolution,” says Mr. Clay, “they will not be satisfied with an abandonment of the policy.” We think this quite probable. The Internal Improvement half of the American System party will die quite as hard as the Tariff half. No body likes to give up inordinate gains, and it is therefore quite natural, that those who expect to profit by a particular scheme of national policy, should hold on to their interests. It seems, however, that the West will not come to Washington in “a tone of menace or supplication, but in the language of conscious right.” We had thought the experienced Senator was too well acquainted with the practice of Congress, to suffer himself to be seduced by the vain idea that “the language of conscious right” can effect any thing there. An interested majority will never listen to such language; for like the Wellington Ministry, in reference to the Catholic Question, and like the present British House of Lords, in relation to Reform, they are to be moved by nothing but their fears. The fear that the Western states may some of these days insist upon holding all the national domain within their borders, in fee simple for their own especial and individual use, might possibly present the question in such a light as would have its influence; but this would be nothing more nor less than a measure brought about by the fear of the nullification of the land laws—an event which we consider quite likely to happen, notwithstanding the great hostility of the West to the nullification of any other laws, if they cannot accomplish their object in any other way.

As to the West having no “direct interest” in the expenditures for the navy or the fortifications, we apprehend the honourable Senator forgets that the great object of the navy is, to protect the agricultural interests of the country, and commerce only as secondary thereto—that the object of fortifications is to protect the National Independence, in which all feel an equal interest, from Maine to Louisiana, and from the Atlantic to the Rocky Mountains. But how he could assert that the West has no direct interest in the expenditure for the army, when it is known that many contracts for supplies are made in Ohio, and that a considerable portion of the army is employed to protect the West from the assaults of the Indians, we are not able to conceive. Such doctrines as this do more to weaken the confidence of the people in the blessings and benefits of the Union, than all the threats of disunion that could be uttered; for when the protection of the national honour and independence shall be supposed to be only of local interest, the days of the Republic may be considered as numbered.

In giving his projet for a modification of the Tariff, and for his assumption of the ground of a pacificator, Mr. Clay resorts to a curious expedient. He conjures up in his imagination an extreme position, which has never been assumed even by the most unconscionable of the Tariff party, which is that of augmenting the duties on the protected articles. We are not aware that any such ground has been assumed by any portion of the favoured monopolists. The most that the cotton and woollen manufactures, the iron masters, and the sugar planters, have desired, is, that the bounties in their favour may not be reduced. If an arbiter proposes to reconcile conflicting interests by splitting the difference, he is bound in fairness to take the demands of both the contending parties as they stand. He is not justified in taking higher ground for either than what is taken by himself, for the sake of favouring him in the striking of the happy medium, or juste milieu. This Mr. Clay has done, and this for the purpose of making it appear that in his proposition there are concessions made by his party.

And what is this juste milieu, think you, gentle reader? The advocates of the liberty of employment have never complained of the high duties on wine and silk stockings, upon spices and anchovies, upon olives and capers, upon jewellery and lace, upon court-plaister and billiard balls. The whole force of their opposition has been directed against the high duties on the necessaries of life, such as coarse cotton and woollen clothing, used chiefly by the working classes, upon iron, and sugar, and the various other commodities consumed in greater quantities by the poor than by the rich—whilst their opponents have assumed a ground diametrically the reverse. And now steps forward Mr. Clay, in the attitude of a self-constituted arbitrator, and says, in substance, “Gentlemen, there is a wide difference of opinion between you—I will settle it for you in the twinkling of an eye. Take off the duties from silk stockings and Champaigne and Burgundy, and the other luxuries and delicacies used by the rich, and leave the whole burden of supporting the government upon the shoulders of the poor. This mode is the most equitable and reasonable, and it presents an undebateable ground, on which I had hoped we could all safely tread, without difficulty. It exacts no sacrifice of principle from the opponent of the American System.” Hear him, hear him, ye People of the South!—hear him, hear him, ye People of the North who are not blinded by pecuniary interest or political prejudice! Is it possible that the great Statesman of the West should have paid so little attention to the discussions of the last ten years, as to have imbibed the notion that the Free Trade Party was contending for a reduction of the duties upon Imperial tea and Brussels lace? Why, the veriest tyro in politics could not have made such a mistake, and God help the country if ever such statesman-like views as these get into power. The idea of coaxing the Free Trade Party into these terms, is, to be sure, funny enough, coming from the chief of a party which claims, as the settled policy of the country, every scheme which enures to their especial benefit. Old birds are not to be caught with chaff. To this project, then, we reply in Mr. Clay’s own language, applied to a very proper mode objected to by him, “there are insuperable objections,”—and we have no hesitation in expressing our belief, that a more certain mode of fixing for ever on the country the chains of the Restrictive System could not be devised, than this very aristocratic scheme, which proposes to exempt the rich from taxation on their luxuries.

We are glad, however, to see that Mr. Clay is opposed to entire prohibition. This he acknowledges, and he therefore washes his hands of a large portion of his party, who believe that nothing but prohibition can keep up their monopolies. Mr. Clay is, however, in favour of going so close to the wind, as just to permit the introduction of as much of a foreign article as would be good for sore eyes. This, he thinks, would keep up “a salutary competition,” and he also thinks, that, if the door to importation “be hermetrically sealed, the danger is incurred of monopoly.” How precious does that word sound upon our ears! When has a Tariff man ever before pronounced monopoly as an evil to be guarded against? Surely Mr. Clay’s faith in the tenets of the Tariff Church lately held at N. York is not orthodox. He will run the risk of excommunication if he continues at this rate to let out the real belief of his heart.

There is, however, some allowance to be made for Mr. Clay’s inconsistency in connecting sound principles with unsound applications. It seems that it is not easy for him “to draw the line between luxuries and necessaries. It will be difficult to make the people believe that bohea tea is a luxury, and the article of fine broadcloths is a necessary of life.” Now, unfortunately for Mr. Clay, it so happens that nobody ever made the assertion which he so triumphantly disputes. The friends of low taxes, in Congress, all voted in favour of reducing the duty on bohea tea to 4 cents a pound, its present rate, which is low enough in all conscience, for mere revenue purposes; and whilst they have denounced the duty on coarse woollens as an unjustifiable tax, amounting as it does to from 45 to 225 per centum, they have scarcely ever mentioned the duty of 50 per centum upon the finest broadcloths, except for the purpose of showing the discrimination made, by the American System, between the poor and the rich. And here we cannot help remarking the Quixotic custom of the tariff reasoners. Instead of meeting and combating the positions of their opponents, they raise up wind-mills and attack and belabour them most lustily. This is a case in point, but it shows the miserable ground upon which the Tariff Party stand in relation to the rights of the poor. Bohea tea, now subject to the moderate duty of 4 cents a pound, which is about 15 per centum of its present market price, (28 cents,) is the only article in the whole list of foreign commodities consumed chiefly by the poor, which Mr. Clay has expressed his readiness to relieve from taxation. But if Mr. Clay finds it difficult to discriminate between luxuries and necessaries, there are some articles upon which he can possibly have no doubt. The following we consider to be of this class, and we publish it that others may see that there can be no such doubt:

Brown sugar, coarse cottons and calicoes, coarse flannels, baizes, and woollen cloths, such as are worn by the farmers and mechanics and their families—iron for implements of agriculture, ship building, and machinery, stoves and stove-pipes, and other such things.

If, however, Mr. Clay finds it difficult to distinguish between a luxury and a necessary of life, he will not have the same difficulty, we trust, in distinguishing between an excessive and a moderate duty; and upon this point we are pleased to notice that his views are favourable to the cause of Free Trade. “If it can be shown,” says he, “that in any instance, they are excessive or disproportionately burdensome on any section of the Union, for one, I am ready to vote for their reduction or modification.” Here we have a pledge, and one which cannot be departed from; and as we do know that documents are in a train of exhibition to Congress, which will prove most conclusively that the duties on cotton and woollen goods, iron, hemp, and various other articles, are excessive, we are gratified to have the assurance of Mr. Clay’s support in their reduction.

As to the necessity of a rigid enforcement of the revenue laws, urged by Mr. Clay, no one will dispute the propriety of their being so enforced—but many doubt the possibility of it. In our humble estimation, it is just as impossible to prevent the smuggling in a country like ours, so accessible by land and water, under exhorbitant duties, as it was for Spain to prevent the exportation of dollars, by the enactment of penal laws. Smuggling is, at this moment, a more profitable branch of “American industry” than lawful commerce, and every day new modes are discovered, and new temptations held out to men of doubtful consciences. There is no possible mode of having revenue laws faithfully executed but by removing the temptations to smuggling and fraud.

The plan suggested, of reducing the credit on duties, we think, might be advantageously adopted. The long credits now given, under such exhorbitant duties as those which exist upon various articles, furnish large capitals to many merchants who find the American System exceedingly convenient. To this circumstance may be ascribed no small share of the indifference to the existence of high duties, which is known to prevail in some of our commercial cities; and we are opposed to all measures of policy, the tendency of which is to strengthen the Tariff Party. Mr. Clay could not do a more unwise thing for the manufacturers, than reduce the credits on duties. Such a course would drive to the Free Trade side hundreds of merchants who are now excellent tariff men, and who would regard a reduction of the term of credit as injurious to them as a reduction of the duties themselves.

Our neighbour of the National Gazette, in speaking of this speech of Mr. Clay, says, “It is distinguished by comprehensive political wisdom.” We should like to know whether the following expression is thus distinguished:

“Whatever may be the qualifications to which the theory of the balance of trade may be liable, it may be safely affirmed, that when the aggregate of the importations from all foreign countries exceeds the aggregate of the exportations to all foreign countries considerably, the unfavourable balance must be made up by a remittance of the precious metals to some extent. Accordingly, we find the existence of the other fact to which I allude, the high price of bills of exchange on England.”

Now we really had thought that the doctrine of exchange was so well understood, that no individual, supposed to be distinguished for “political wisdom,” could have ventured, at this enlightened day, to ascribe the high price of bills of exchange upon England to the balance of trade. Why, even the philosophers of the restrictive school have given up that argument, and for the last two years have admitted that the true par of exchange on England was a nominal premium of 8 per cent.

Mr. Clay considers “a gradual reduction of duties” as “a slow, but certain poison.” If that be the case, he and his friends will not relish the proposition of Mr. Hayne, which is to reduce the duties gradually. It is well, however, to be remarked here, that the policy of a gradual reduction is not a sine qua non with the friends of Free Trade. If our opponents prefer an immediate reduction, we certainly shall not object to it; and we have always considered it as a cession upon our part, although it seems not to be so considered by Mr. Clay.

In reference to the Hon. Senator’s project of increasing the duties upon foreign distilled spirits, we enter a decided protest against it, not merely on account of its hostile bearing upon foreign commerce, but also on account of its injurious influence upon agriculture and public morals. Every gallon of spirits imported into this country from the West Indies, is as much the direct product of corn, and wheat, and other agricultural productions, as whiskey is the product of corn, rye, and potatoes. For every gallon of West India rum prohibited by a duty, there is the loss of the sale of an equal value of agricultural produce; and the same is true of brandy and Holland gin, although the exchange may not appear to be so direct. In regard to public morals, an increase in the price of foreign liquors has the certain effect of driving their consumers to whiskey; and when once the taste for liquor becomes so vitiated that it cannot discover the difference between cognac brandy and new whiskey just out of the still, the inevitable consequence is an increase of quantity. We have no doubt that the vast extent of intemperance which prevails throughout the country is, in a great degree, to be traced to high duties upon foreign liquors and wines; and if we wished to frustrate the benevolent exertions of the Temperance Societies, we would advocate Mr. Clay’s policy. If this be a part of the “political wisdom” for which this speech is distinguished, we do not envy its author the reputation it will give him.

Nor do we see much political wisdom in the following question, proposed by the Hon. Senator: “Is it material to the consumer, wherever situated, whether the collection be made upon a few or many objects, provided, whatever be the mode, the amount of his contribution to the public exchequer remains the same?” Its want of wisdom consists in its want of fairness. It is not putting the question, now at issue before the people, in its true shape. The question is this: If the public revenue be reduced to the sum required for the support of government, is it material whether it be raised upon all necessaries and all luxuries, or whether luxuries shall be exempt from taxation, and some of the necessaries of life alone be saddled with the whole expenses of supporting government—and this, not by an equitable ratio of ad valorem duties, but by a system of discriminating duties, intended still further to oppress the poor and labouring classes, by making them pay more than their fair share? This is the question, properly stated, and thus stated, we would willingly abide by the answer that would be given to it by nine out of ten of the community. How any gentleman can associate such views as this with the idea of conciliation, we are at a loss to imagine; and if we should be asked what we should consider an overture of conciliation, we would reply, Nothing short of an abandonment of the minimum system, and a reduction of all the high duties, whether upon the protected or unprotected articles.