" Suppose that a certain kind of broadcloth can be afforded by the foreign manufacturer, delivered at New York, for two dollars per yard; the same article might be made in this country, but would cost two dollars a yard, without any profit whatever. Of course, then, we cannot afford to make the article. The government, in order to encourage its production here, lays a duty upon the imported article of fifty cents per yard; but, at the same time, establishes banks which manufacture a mixed currency, and double the natural amount of money. The American manufacturer now proceeds to erect his mills; but wages and materials have so advanced in price, by the expansion of the currency, that it costs him twenty-five to fifty per cent more than it otherwise would have done. He builds machinery; but this also costs him proportionably high. He proceeds to purchase raw materials, and employ labor in manufacturing; but all are advanced in price for the same reason. His own expenses for living are also greater; and, should he be obliged to hire money, that will generally be found to have advanced in price, or rate of interest. Under these circumstances, he cannot make the cloth so as to afford a profit; and it will not be surprising if he should clamor for more protection. But it may be said, that the same causes that have advanced the expenses of living, and, consequently, of labor, will equally have advanced the price of broadcloth. Not so. The price of the broadcloth will be determined by the rate at which it can be afforded by the foreign manufacturer; and if he can pay the duty of fifty cents per yard, and yet obtain a fair profit, he will send all the market demands.

" There is another view of the matter. Suppose we would export our plain cottons, for example, to India. We there meet the English article, made under a currency more valuable than our own, which can consequently be afforded for less; since, with the same amount of the money of India (i.e., value money), the English manufacturer can pay for much more labor in England than the American manufacturer can in America. It is true that the rate of wages is lower in England than in this country; but, in addition to this, England has the very great advantage of a currency nearer the currency of international exchange, which is always strictly value money. In such a state of things, not all the tariffs that ever were or ever will be imposed can adequately protect our manufactures. So far as they have arisen or flourished, it has been in spite of these disadvantages."*

During the continuance of the compromise tariff, established in 1832, and which terminated in 1842, the currency varied from $11.82 to $17.61 per capita, equal to an expansion of more than fifty per cent; while, during the same period, prices (as shown by table V., page 177) fluctuated to a greater extent. The variation in prices was larger even than the percentage of protective duties.

So the tariff of 1842, which began to take effect in 1843, when the currency was $6.18 per capita, was more than counterbalanced by the expansion of the currency to $9.94 in 1846. But the manufacturer suffered as much from the periodical contractions as from the expansions that preceded them; for while, by the latter, the duties were rendered nugatory, all business men met great losses from the failures and the general derangement and stagnation which the former produced. No tariff of reasonable extent, such as the people of the whole nation would endure, can ever place the domestic manufacturer in a position of security and of reliable profit, while competing with such an immense advance in prices as must certainly accompany an expansion of the currency. Nor can it fail to be true, that the normal industrial development of any country, in which such a currency exists, must, to a very great degree, be interrupted or distorted. All ordinary business calculations are overturned. An element of hazard is introduced, fatal to the shrewdest schemes.

* Walker on Money and Mixed Currency, p. 39.

Different Tariffs of the United States with corresponding Merchandise.

The terrific struggles through which American manufacturers have passed, ever since the establishment of the first tariff in 1816, have been caused, not by foreign competition, solely or mostly, but by a false and delusive domestic currency. Fully as we are opposed to the policy of protective duties, we are still more opposed to that system of currency which- neutralizes them, and renders the legitimate success of home manufactures impossible, even after so great sacrifices to introduce them.

There is a still more striking view of the connection between protection and currency.

It is generally believed that high tariff duties restrict the importation and consumption of foreign merchandise. It is a popular cry, that " government ought to lay heavy duties, so as to prevent an adverse balance of trade, and the consequent shipment of specie abroad."

It is true, as a principle, that, the greater the price, the less the consumption; and that, as the imposition of taxes on the foreign article increases price, so it must, other things equal, decrease consumption. But other things are not equal. They have not been so in this country during this century. The facts in the case do not show that heavy duties necessarily reduce the consumption of foreign articles. On the contrary, it is found that the largest importation has often taken place during the existence of the highest tariffs. Diagram No. 7 will exhibit the relations of the tariffs to the amount of imports, from 1816 to 1861.

Of this diagram, showing the tariffs and the consumption of foreign commodities under each, it must be remarked, that the line indicating the different tariffs does not express with precision the actual percentage of tax imposed by each, because that is not practicable: it is only given as an approximation. Each of the tariffs imposed different rates per centum on different items; and some of the tariffs have a large proportion of specific duties, or so much per yard, gallon, or pound; so that the exact per centum cannot be ascertained, nor is this necessary to our purpose. We are able to determine, with sufficient accuracy, the general percentage of each tariff, to enable us to judge whether the consumption rises and falls in correspondence.