abandoned, whereby their proprietors, who placed reliance on the protection of government, are ruined. Our commerce is almost equally prostrate, and the capital of the country, engaged in that useful branch, reduced, since the war, at least one-third, probably one-half. The balance of trade, in consequence of excessive importations, has been, and continues, most ruinously against us, whereby, after having remitted an immense amount of our government and bank stock in payment, which subjects the nation to a heavy, permanent annual tax-we have been and are alarmingly drained of our circulating medium, in consequence of which our monied institutions are impoverished and crippled in their operations; agriculture, manufactures, trade, and commerce paralized: and all classes of our citizens more or less injuriously affected in their pursuits. Real estate has depreciated throughout the union from fifteen to thirty-five per cent.; and in many cases fifty or sixty. The subscribers are impressed with a conviction, that for all these alarming evils there is no adequate remedy but a reduction of the amount of our imports within that of our exports; it being undeniably true, that nations, like individuals, which buy more than they sell, or, in other words, expend beyond their income, must be reduced to bankruptcy. To depend on this salutary effect being produced by the restoration of the spirit of economy which is to result from general distress, or from the forbearance of our merchants to import, is to allow a violent fever to rage in the body politic, and exhaust itself, or the national strength, without the application of any remedy to arrest its destructive ca reer. Even if our own merchants were to reduce their importations within those bounds which our means of payment would require, this would afford no security: as our markets would probably continue to be, as they have been, inundated with goods consigned by foreign merchants, which would perpetuate the calamitous situation into which our country is plunged. A radical remedy to the evil, can only be applied by the legislature of the United States, in such a revision and regulation of the tariff, as shall reduce our importations, and effectually protect national industry.. In England, France, Germany, Russia and Prussia, and most other countries in Europe, national industry is adequately protected by prohibitions and heavy duties; whereas, while many of our agricultural productions, and almost all our manufactures, are excluded from nearly all the markets of the world; our markets are open to those of all other nations, under duties by no means affording sufficient protection; a case probably without example in the annals of mankind. We therefore respectfully pray that you will be pleased to convene congress as early as circumstances may permit.* NO. VII. Philadelphia, May 20th, 1819. ON almost every subject of discussion, fellow-citizens, there are certain hacknied phrases, which pass current as oracular, and though extremely fallacious, are received with scarcely any investigation. There is probably no science that has been more distorted in this respect than that of political economy, on which so much of human happiness depends. We propose, in the present number, to consider a maxim of this description, fraught with destruction to any nation by which it is adopted; but which is implicitly believed in by a large portion of our citizens, and has had considerable in fluence on the legislature of the union. This specious maxim is, that "TRADE WILL REGULATE ITSELF," which, in all probability, led to that refusal of adequate pro tection to the national industry, which has overspread the nation with distress-lowered the price of some of our chief staples, by depriving them of a domestic market-bankrupted so many of our merchants and traders-deprived so many thousands of our citizens of employment—and, in a word, reduced us from the most towering prospects to a most calamitous reverse. It will be perceived that this is a vital part of Adam Smith's doctrine-indeed, the basis on which he has raised his great superstructure; and that we have already animad To this memorial no attention whatever was paid, except by a few printers of newspapers, who united in clamour against it. verted on it incidentally. But its immense influence on the fate of nations, and its most destructive tendency, demand a more minute investigation, to which we now solicit your attention. How far its advocates deem it proper to have it carried, we are not quite certain. In its strict acceptation, it means a total exclusion of all regulations of commerce, so that the intercourse between nations should be as free as between different provinces of the same empire. In fact, if it does not mean this, it is difficult to define what it can mean; for if a government enacts any regulation whatever, it cannot with truth or justice be said, that " trade regulates itself." We shall, therefore, consider it in its utmost latitude, as excluding all regulations The result, however, would not be materially affected by any modification, or restriction of its provisions, short of effectual protection of national industry. These would, as the case might be, only accelerate or procrastinate the final catastrophe, to which it infallibly leads. This maxim ought to have been consigned to oblivion centuries since, by the consideration that no trading or commercial nation has ever prospered without," regulation of trade;" that those nations which have devoted the most scrupulous attention to its regulation, have been the most prosperous; and that in proportion as it has been neglected, just in the same proportion have nations gone to decay. The cases of England, France, Spain, and Portugal, offer powerful illustrations of these positions. But we shall not rest satisfied with this mode of defence. We shall trace the operation of the maxim in its full extent. As it would be nugatory to suppose that the existing regulations of commerce could, by any convention, be annulled, and its entire freedom be universally established, we shall merely suppose it adopted only by a portion of the commercial world, and see what would be its effects on those nations wherein it was carried into operation? To form an accurate idea on this or any other subject, the safest and best mode is to state the case on a small scale, which the mind can readily embrace without distraction, and thence to argue to the widest range to which the subject extends. We will, therefore, here confine our view to two nations, France and Spain, and suppose that in the latter country the maxim we combat is carried into full operation, and trade is allowed" to regulate itself" but that in the former, it is "regulated" by the government, for the protection and encouragement of national industry, after the example of Great Britain, and indeed almost every other country in Christendom. In order to do the maxim justice, we will assume, that both nations are on a perfect equality in every other respect than the "regulation of trade." We will further assume that at the commencement of the rivalry between them, each nation possesses a circulating medium of 20,000,000 of dollars, and has 200,000 people employed in the cotton, and as many in the woollen manufacture, who produce annually four millions of yards of each kind of goods, which are exactly adequate to their consumption. To simplify the discussion, we confine ourselves to those two branches. But the reasoning will equally apply to every other species of manufactures. 4,000,000 yards of cotton goods, say a 50 cents $2,000,000 4,000,000 ditto of woollen, a 6 dollars On which they realize a profit of twelve and a 24,000,000 26,000,000 - $3,250,000 To the French manufacturers, according to our hypothesis, the home market is secured. All foreign competition is effectually cut off. They have, therefore, every encouragement to extend and improve their fabrics; and in the first year of rivalship, having a surplus on hand, they export, we will suppose, 400,000 yards of each kind to Spain, and increase the exportation annually an equal amount. This operation produces the treble effect of lowering the price of the Spanish goods by the competition; circumscribing their sale; and depriving, during the first year, about 40,000 people of employment. It being our determination to afford as little room for objection, as possible, we will suppose the reduction of price to be only seven and half per cent. which is far less than is usual in such cases.* Let us see the situation of the parties at the end of the * Instances have recently occurred of domestic goods being reduced at once, ten, fifteen, and twenty per cent. in our markets, in consequence of great quantities of similar articles suddenly introduced from Europe. This is the operation in the very first year, producing a difference at once of about 2,300,000 dollars of actual profit against the infatuated nation, which allows "trade to regulate itself," and, according to Adam Smith, buys where "goods can be had the cheapest." The second year commences with increased energy on the part of the French, and dismay and discouragement on that of the Spanish manufacturers. The former double their exportations, and send 800,000 yards into the rival markets, amounting to $5,200,000, of which we trace the operation. *This view of the effect of the rivalry has, we apprehend, almost wholly escaped the notice of our political economists. When the prices of our manufactures are reduced in the home market by foreign competition, the reduction is on the whole we offer for sale. Whereas the reduction to the rival nation is only on such part of her's as she exports to us. The contest is therefore carried on at an immense inequality. |