When the embargo, followed by war, withdrew the stimulus from American husbandry by destroying the market for our produce, and foreign commerce and ship-building were at a standstill, the people's minds were thrown back upon the manufacturing industries of the country, and American ingenuity set to work to improve and develop these. The tariff on imported goods, chiefly English, was increased, improved machinery was invented for working up raw products, especially in the cotton industry of the south, inland communication was improved by the building of better roads and the construction and operation of steamboats on the rivers. After the treaty of peace between England and the United States, which was signed at Ghent, December 24, 1814, and the defeat of Napoleon at Waterloo in the following spring, peace reigned universal on land and sea. The United States found itself able to compete with the monarchies of the old world in the race for commerce. Its vessels went again to all the harbors of Europe, and new avenues of trade were opened up. The exports of cotton to England showed a remarkable increase. In 1809 the number of bales exported was 14,000, in 1819 this export was 175,000 bales. Considerable quantities of grain, rice and tobacco were also sent to Europe, while to the West Indies we sent our staple, flour. Furs, hides and other products were sent to India and China to be exchanged for tea, some of which was exchanged again in Germany at a second profit. The one serious drawback of the times was a defective Commerce after the War Panic of 1819 financial system. Congress had refused to renew the Charter of the United States Bank in 1811. The war had drained off the specie, and the country was filled with depreciated paper currency. A new bank was organized in 1817 to improve the situation, but it was mismanaged and failed to bring about the resumption of specie payments. Finally in 1819 there was a panic and general financial collapse. Banks and business houses failed and there was general distress. This panic was coincident with the one in England.

In 1825 the Erie Canal, which furnished cheap transportation to market for the products of Western New York and the territory tributary to the Great Lakes was completed. About the same time the government built a military road from Baltimore, through Wheeling and Cincinnati to St. Louis, and thus the opening of routes of communication with the far west diverted much of the produce of those territories from New Orleans to New York. Agriculture improved, and the products of the soil increased in quantity and variety. Saxony sheep of the best breeds were imported for the improvement of the quality of American wool. Flax and hemp, hitherto chiefly supplied from Russia, were cultivated more extensively in order to supply the demand for these fibers by eastern shipbuilders for caulking ships, and also for the spinning and weaving of linen cloth. The cotton industry continued to increase at a marvelous rate, the price per pound fluctuating with a downward tendency, • but the gross value increased enormously. Massachusetts, Rhode Island, New York and Pennsylvania were the seats of the cotton industry, the largest mills being located at Lowell. The South was an agricultural section. Its slave labor was better suited to farming than to factory work, and there was a scarcity of skilled labor in the South. For these reasons the cotton mills were located in the North, where skilled labor could be had, and they were situated on the coast or on navigable rivers within easy reach of the sea coast, in order that the raw cotton could be advantage- . ously brought to the mills from the plantations of the South. Mining was another industry which began to be developed about this time (1815-1830). Rich as the country was in mineral wealth, for want of capital little had been done prior to this time to develop the mines of iron, coal, lead and the precious metals, and even now they were worked in a most inadequate degree. The introduction of steam as a motive power on steamboats and for propelling machinery in the factories, quickened the demand for coal, while the iron and steel industry began a development which has since outgrown all others in the diversity and importance of its finished product.

In order to maintain and encourage manufacturing enterprises, the United States early adopted the policy of protective duties on imports - a policy which has been a cause of discord between the North and the South. The Southern states were very fertile and possessed the doubtful advantage of slave labor -a class of labor suited best to agriculture. As a consequence those states, restricted to agriculture, were opposed to protection, while the Northern states, being devoted largely to manufacture, sought the support of protection. The planters were desirous of getting manufactured goods in the cheapest markets in exchange for the produce of their plantations. They were free traders, while the North was in favor of free labor and opposed to slavery. Slavery and trade protection thus became the bones of contention. The first tariff law, passed in 1789, imposed a duty of about five per cent. In 1812, to meet the demands of war, the rate of duty was increased to about fifteen per cent. A new law was passed in 1816 imposing different rates of duty upon different classes of products, but the average was about twenty-five per cent. In 1824 the manufacturers found it still difficult to maintain successful competition against English products, and clamored for further protection. The English had brought fresh skill and new inventions to bear upon their goods and were selling at very small profits. Notwithstanding the vigorous opposition of the planters of the South and consumers generally, Congress passed a new tariff law, raising the duties to thirty-three and one-third per cent. Again in 1828 the law was amended, increasing the duties to an average of forty-five per cent. The South was indignant, since it was not a sharer in the benefits of the tariff, but on the contrary suffered in consequence. The cotton, rice and tobacco of the South were shipped largely to Europe, and in European markets these commodities brought no higher prices on account of American tariffs, while the price of all manufactured articles which the agricultural states might consume was considerably increased. Carolina went so far as to threaten secession, but trouble was averted, and in 1832 the law was modified by taking off most of the merely revenue duties, and reducing the protective duties. In 1833 Henry Clay's Compromise Tariff Bill was passed, by which a gradual reduction in duties was provided for, down to a uniform level of twenty per cent, by the year 1842. In that year, however, the manufacturing interests in Congress violated their pledge and reimposed the old rates of duties. Thus the struggle over tariff and slavery went on, the latter becoming more acute until merged in the great Civil War of 1861.