This section is from the "The Science Of Wealth" book, by Amasa Walker.
Many persons are of the opinion, that an export duty, or its equivalent in the form of excise, might be laid upon cotton without any detriment to the general interest of the trade of the country, while it would produce a considerable revenue at the expense of the foreign consumers.
It is, then, an important economical and financial question to the people of the United States, whether the peculiar advantages they have over all other cotton-growing countries give them such a monopoly as to enable them to lay an export duty upon it, without any immediate or remote injury to themselves.
There are several considerations which go to prove that such is the case, some of which we shall notice.
I. Universal Demand For Cotton.*
"There are only four articles of any considerable importance used in the manufacture of clothing. These are wool, silk, flax, and cotton; two animal and two vegetable productions. The first of these, though quite indispensable in the high latitudes, is only partially available in the lower, and can be used but little in the tropics. Silk, while an article from which beautiful and elegant fabrics can be made, is not adapted to general use, and being, like wool, an animal product, cannot be furnished in sufficient quantity, or at so low a rate as to be made available for the greater part of mankind. Flax being a vegetable production, and its culture adapted to a great variety of soils and climates, might doubtless be produced in any desired quantity; but, like silk, it would but partially meet the wants of that large portion of the population of the globe where snows and frost prevail a considerable part of the year
* Extract from the author's speech in Congress, Feb. 18, 1863.
"After looking at these several commodities, then, we find that an article is needed which shall, as nearly as possible, combine the peculiar properties and advantages of all of them; one that can be cheaply and bountifully produced, and that may most readily be converted into clothing, having, at pleasure, the warmth of wool, or the elegance or lightness of silk or linen. Cotton we find to be just that article, combining in a most wonderful degree the advantages of wool, silk, and flax. The earth has one thousand million inhabitants, and each and every one of these need cotton. There is no exception. Not, indeed, that human beings cannot possibly exist without it, but their welfare and happiness are promoted by its use."
"While cotton is one of the greatest necessities of mankind, we find its successful culture confined to a very limited portion of the earth's surface. I say successful culture; for although it may be raised in India, Egypt, and other countries in similar latitudes, yet the quality is so inferior, the quantity to the acre so limited, and the labor so ineffective, that the countries in question do little more than supply their own wants.
"It is reserved to the States of the American Union lying in immediate proximity to the Gulf of Mexico to furnish the world with the article in such quantities, and of such quality, as to meet the general demand. The culture of the article began prior to the Revolution; but it did not become an article of foreign export till 1784, when eight bales were shipped to Liverpool. These were seized by the custom-house officers, on the ground that they could not be of American production."
"No very great extension of the cultivation of cotton was realized until 1792, when Eli Whitney invented the cotton-gin; but, from that moment, it increased with wonderful rapidity. The value of the export of cotton was, —
In 1821.................. $20,900,000
In 1860.................. 191,000,000
"This amount, it will be observed, is over and above the amount consumed in the United States. The whole product in 1850 was 2,096,706 bales; in 1860, 4,669,770 bales. Mark especially the great increase from 1850 to 1860, of one hundred and thirty per cent!
"But the more striking and noticeable fact is, that, while the production had increased at this enormous rate, the prices also had advanced twenty-five per cent. According to the financial report of 1861, the average price of cotton from 1840 to 1850 was but 8.2 cents per pound; while, from 1850 to 1860, the average price was 10.5 cents per pound, — a difference, it will be seen, of a little over twenty-five per cent.
"The difference between the value of the entire crop of cotton, including all consumed at home and exported, is still more remarkable. In 1850 it amounted to but $117,619,947; while, in 1860, it was $308,865,280, — showing an increase of value of nearly two hundred per cent, owing, of course, to the increase of quantity and the advance of price.
"Here, then, is the singular fact, unparalleled, perhaps, in the commercial history of the world, that, while the production was increasing at a rate so prodigious, the price was constantly advancing. This is contrary to all the ordinary laws of trade. As production increases, prices fall; but in this case, instead of a decline, we find a great advance of price."
Do not these facts and considerations show conclusively, that the United States have such advantages over all others in raising cotton that they may to a certain extent dictate the terms of sale? In just so far as this is true, might an export duty be laid which would fall entirely on the foreign consumer, without any injury to the American cotton-grower.
Suppose an export duty of five cents per pound. The superiority and desirableness of the American article are so great that it cannot be supposed the demand would be lessened in any appreciable degree. From what we have seen during the Rebellion, need we fear that the demand would be perceptibly curtailed? If not, then no damage would come to the grower; while a large revenue would be secured by the government at the expense of the foreign consumer.
The whole cotton crop of 1860 was 4,669,770 bales, which, at 500 pounds to a bale, give a total of 2,334,500,000 pounds, which at five cents duty, or excise, would yield $116,725,000. To determine what rate of duty or excise should be laid must be a matter of experiment. If the rate were found too high, — that is, so high as to reduce consumption, — it should be lowered; or, if too low, it could be raised.
The immense extent to which the cultivation of cotton in the United States may and doubtless will be carried is shown by Edward Atkinson, Esq., of Boston, a most reliable statistician, in his map of the cotton kingdom; from which it appears that while the whole area within the United States,adapted to profitable cotton culture is 666,196 square miles, only 10,888 are in actual use for that purpose, or but 1.634 per cent; that is, less than two per cent. He remarks, that, "with free labor, the capacity of the South to raise cotton cannot be less than one hundred million bales" against about four and a half millions in 1860; so that less than one-twentieth of the capacity of the country has yet been developed.
The principal point to be considered in regard to cotton, or any other domestic product, is whether an export or excise duty will essentially restrict the consumption of the article, either at home or abroad.