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an American system of protection, giving poorer iron as she must, and poorer articles. The moment the tariff of 1846 passed, iron rose in England, and fell in the United States, proving that the lion was roused for his prey, and that his victim could not resist. If it proves that American prices, in this case were higher, it proves also, that English prices will not keep down. The level to which they tend, will be at the cost of this country, not only in the destruction of its labor, its business, and its capital, on an immense scale; not only in drawing off its cash; but ultimately, in the augmentation of the prices of the articles imported. The same may be said of coal, though not falling under the head of manufactures. Iron and coal are among the greatest and most important interests of the United States, the working of which was yet in a state of infancy, when the tariff of 1846 came to cripple giant twins, and strangle them in the cradle. They had begun to scatter their blessings with a liberal and profuse hand. No one felt himself to be taxed-no one was taxed; none were poorer; all were richer; even though prices current in England might be quoted to prove that prices were lower there. It proves nothing, except that England waits for another and better market, that she may raise her prices on her victims, which she will certainly do, when rivals are out of her path.
The commercial troubles of England, which came to a crisis in the latter part of 1847, left vast quantities of railroad and other iron in the English market, which must be disposed of. Under the reduction of duties on iron by the American tariff of 1846, it was found that orders on England, in such a state of things, could be executed for the American market at prices ruinous to the American manufacturer. These extreme low prices of English iron were the transient result of the want of money there to use it on the railroads for which it was prepared. It must necessarily be the same with other British merchandise, at such a time. But this does not militate against the above facts and reasoning; it only proves that surplus products, accumulated by bankruptcy and commercial distress, must be pushed off at any price. By the ad-valorem rule of the tariff of '46, the duty on iron which is $18 per ton when iron is $60, falls to $12 when iron falls to $40, and to $9 when it comes down to $30; so that protection, on this principle, is greatest when it is least needed, and least when it is most needed.
AN AMERICAN PROTECTIVE SYSTEM A RESCUE FROM FOREIGN
The Method and Rule of this Argument. as laid down by a Public Document and Joshua Gee.-A Showing, from the Principles of this Rule, and by Public Documents. of the foreign Taxation which the People of the United States have been and are still subjected to-Adam Smith's and M Culloch's Evidence on this Point -Taxes of foreign Nations, of whom we purchase, enter into the Prices of their Products to us.-The Prin ciples of the Tariff of 1846, as they bear on this Point -Returus of British Commerce as compared with those of the United States.-The Aggregate of foreign Taxes paid by the United States since 1791.-A Protective System the sure and only Way of Rescue from foreign Taxation.
HAVING shown in the preceding chapter, that protective duties are not taxes, but quite the contrary, it is also necessarily proved, by the same argument, that Free Trade is itself a tax, in proportion as Protection reduces the prices of manufactured articles; in proportion as it raises and sustains the prices of labor; in proportion as it raises and sustains the prices of agricultural products and other raw materials of home production; and in proportion as a protective system tends to promote and secure all the great and minor interests of the country, and the interests of all parties and persons therein, as shown in the preceding chapter, and elsewhere. But these great positive benefits of Protection are not what we now propose to notice, although their effect is a rescue from taxation, in all that the absence of Protection operates as a burden. Our design now is rather to consider how a well-adjusted protective system rescues us from a stupendous burden of foreign taxation.
The following extract from a public document, house of representatives, No. 296, 3d session, 27th Congress, pp. 500 and 501, will indicate both the material and method of our present line of argument:
"England levies no direct taxes upon her colonies, or rarely is it done. But by indirect taxes, they give four fifths of their productive wealth to the mother-country. It was that support which she derived from the thirteen [North American] colonies, and it was for that alone she resisted their independence. She desired to produce, and that they should be forced to consume; and of all that
they consumed [of imports from the mother-country], at least four fifths went into the national treasury at home, after supporting her farmers and mechanics. . . It is generally alleged, that a man pays 15 shillings for the use of government, out of every 20 shillings he spends in England. Some have stated the public tax at 17 shillings in the pound. Let us take one instance in the article of beer. The land pays a tax; the barley, when malted, pays an excise of 6 pence per bushel; hops pay one penny a pound; the beer, when brewed, pays an excise in some cases greater than the original value; all the persons who labor in the premises, contribute to the national revenue, by their sundry consumptions, to the amount of three fourths of the whole price of their labor. It follows, then, that the people of this country [the United States] contribute in like proportion to the support of foreign governments, upon all that they purchase. In 1836, we imported more than $70,000,000 worth of foreign articles free of duty. The effect was, that they who purchased [consumed] these articles, paid not one cent to the support of our own government, while at least four fifths [$56,000,000] of that amount went into the treasuries of foreign governments, to support kings on their thrones, parliaments that make laws prohibiting our productions, and foreign armies and navies!"
The principle of this rule is correct; but there is an error in supposing that the "four fifths" taxation of the colonies all goes into the public exchequer. It is divided between the government and those domestic parties who trade with the colonies. The government gets the smallest part directly; but indirectly, the wealth derived by these other parties from this source, is an essential part of the basis of the government. It matters not to the colonies, whether the taxation be direct through the government, or indirect through its commercial policy. It is taxation.
The specification here made of the different forms of tax on beer, is a good deal short of the truth. In M-Culloch's statistics of the British empire, will be found nineteen specifications of duty and excise on this article, and the whole amount of revenue raised from taxes on beer in 1834, not including the land tax, was over six millions sterling, or twenty-nine millions of dollars.
The above citation from a congressional document, is corroborated by Joshua Gee, as follows: "If we examine into the circumstances of the inhabitants of our plantations [the American colonies] and our own, it will appear, that not one fourth part of their own products redounds to their own profit; for out of all that they bring
here, they only carry back clothing and other accommodations for their families, all of which is of the merchandise and manufacture of this kingdom." Of course, the other three fourths, entering into the prices of these articles, were absorbed by the profits of British trade in the premises, and by the taxes of the domestic empire, and the colonists were compelled to pay four to one of the actual costs; or, as Gee says, more than four to one.
In the analysis of these statements, we have the picture of the manner in which the two thirds of the value of European labor, usurped as shown elsewhere, is absorbed by the governments and the superior classes of society; and beyond this, we are also compelled to observe, that the necessaries of life, purchased with the remaining third, called wages, to support the existence of the laborers, is burdened with that very system of taxation represented in the above extracts. "All the persons who labor in the premises, contribute to the national revenue, by their sundry consumptions, to the amount of three fourths of the whole price of their labor." The taxes, whatever they are, enter into the prices, even of the articles which the laborers consume, after they are deprived of two thirds of their fair reward.
Now it must be seen, that this stupendous system of taxation enters into the prices, and composes a part of the prices of all the articles imported from Europe to this country, and is borne by the American consumers. That is to say, these taxes are paid by us, to the extent of our consumption of these foreign products, and to the amount of the fractional parts of the prices which are composed of the taxes, they being the largest part. The statement in the first of the above extracts, is, that we paid $56,000,000 of these taxes in 1836, as we understand and have interpreted the rule in brackets, in that place. This result is obtained, first, by deducting the reexports of that year from the free imports-which, according to the official tables of 1845, were upward of $92,000,000—and then taking four fifths of the remainder. But nothing can be more evident than that we are taxed for imports paying duty, as well as for those free of duty. The principle of the rule, therefore, laid down in the public document, above cited, would simply require, first, the deduction of re-exports from the sum of imports, and four fifths of the remainder is the amount of taxes we pay the nations from which the imports are derived. Inasmuch as we have proved that protective duties do not augment, but reduce, the prices of manufactured articles; and if it be supposed that the reduction
of prices on protected articles be equal to the augmentation of prices on those not protected, in consequence of duties, then the imports paying and not paying duty, occupy precisely the same position under this rule. In any case, the difference between the reduction of prices on protected articles, and the augmentation of prices by duties on the unprotected, if there be any, and so far as there is, is too trifling to be worthy of consideration here.
Applying this rule, as here explained, to the official tables of 1845 (Ex. Doc. No. 6, pp. 942 and 943), omitting fractions of millions, and counting a million when the fraction is over 500,000, we come to the following result:—
That, for the imports of 1821, we paid foreign taxes to the amount of $33,000,000 For those of 1822.....
For those of 1823..
For those of 1824..
For those of 1833..
For those of 1834.
For those of 1836..
For those of 1844..
For those of 1845...
It is not meant that the whole amount of this showing has been a positive tax to the United States. How far it was so, will appear by-and-by.
These results, it will be observed, are obtained by the rule of taxation alleged in the document above cited, viz., that an average of four fifths of the prices of these imports, before they start for our market, is composed of taxes, in one form or another. But suppose it is not more than three fourths, which is the proportion specified by Joshua Gee, as above cited, who is a British authority
that had no motive for stating it too large, but the contrary—then