Year: 1869

adding to the supply. But this effect III II
should take place. would be only TEMPORARY
for the demand would be answered by mn,
locking boarded gold, by checking the expor-
tation OF bullion, and by calling in as large a
supply from abroad as might be needed for
legitimate business.


1t has been objected that an act lepaIizinp
gold contracts would cause the holders of pro-
missory notes, mortgages, &C., to call in their
loans, and require borrowers to make new
contracts with them on good basis, thus
practically increasing the rate of interest.
The commissioner believes that this obiec-
ton is faliacious. The lender of money will
always charge the borrower for the risk of
depreciation of the currency in which the
loan IS payable. Such risk must always be
greaer IA an irredeemable paper currency
tnah III the precious me ais; therefore the
rate OF interest must be higher. Usury laws
may aggravate, but cannst overturn tbis
principle, which is as well established as any
fact in economical science. The rate of in
terest depends, in general, upon the demand
and supply OF loanable capital and in nartic
ular upon the nature of the security offered.
An act of Congress legalizing gold Contracts
will not alter the demand or supply of loan
able capital, but it will furnish higher seeu-
rity for loans. Payment cannot be demand
ed upon outstanding notea mortgages, &c.



the payers will settle with the payees accord
ing to these principles, and if new loans are
necessary the rate of interest will not be
higher by reason of security being better.


The commissioner recommends reduction
OF taxation, both tariff and internal revenue
where possible as the most efficient means of
encouraging industry, but states it as the con-
clusion of all his studies on industrial aues-
tionsithat the policy of moderate and6udicious
,,a.n fSn,a 1o. H. =.
the present, the policy best suited to subserre
the industrial interests of the uuhole countru.


Thus, it cannot be doubted that, so long as
the existing systems of the national, State.
and local taxation continue to impose heavy
burdens upon the American producer, such
burdens should not be allowed to work to the
advantage of the foreign competitors in the
domestic market.


So long, moreover, as a system of diversi-
fed manufacturing industry is recognized as
desirable in the United States, SO long it
is the duty of the national government to
guarantee to that interest the conditions of
stability. Such stability is not, however,
possible, II undue facilities are offered to the
European manufacturer of using the Ameri-
can markets tor temporary realization to
meet emergencies through the forced sale of
commodities; or for the disposal, at any sacri-
tice, of stock which may have happened to
constitute an unstable surplus in Europe.
The argument that if foreigners are willing
to sell goods under cost it is our interest to
receive them, loses in a great measure its
force, from the fact that such trade is not
regular and legitimate, but spasmodic and
exceptional, and renders success in MANY
branches of industry dependent upon aeci-
dent rather than upon the exercise of skill,
foresight, and prudence. In short such trade
is a perpetual menace to the domestic market
without producing any commensurate good.


During the period OF commercial depression
throughout Europe, in 1867, it is known to
the Commissioner that it became a question
with many of the continental manufacturers
whether to close their mills and allow their
their operatives to disperse, or 10 continue
their manufacturing operations at loss, re-
tanning thereby their supply of skilled labor
and in many instances the latter alternative
was decided to be the most advantageous. In
such cases the American market was regard
ed as the most available for the disposal of
the commodities thus manufactured, not only
without profit, but with an absolute loss,
even under the most favorable condition as
regards European prices for labor and materi-
al. Now, ihow far it is for the interests of
this country to allow itself to be made the
means of assisting foreign manufacturers to
tide over period of financial embarrassment
may be an open question, but the Commits.
missioner has no doubt that even the tenn
porary gain which might result to The United
States, from the opportunity to purchase
cheap commodities under such circumstan-
ces, would be more than compensated by the
disturbance which would be occasioned
thereby to legitimate domestic industry. 1t
should, however, be remarked, that the con-
dition of things as here described must be
necessarily of short duration in any particular
instance.


There is furthermore another view of this
question which cannot be overlooked in this
country--its social aspect. Free trade looks
only to the increase OF wealth. 1t takes no
account of social results; it does not even re-
gard the distribution of property. Even En-
gish economists admit that its axioms lead to
sameneSs of occupation, and sameness
of occupation means a tardy deVel-
opment OF society. But in this country every
man is citizen and nearly every citizen a
voter. As the possessors OF power we cannot
afford to have any class of the people igno-
rant or socially degraded. To insure safe
standard of education and of domestic COM
fort, there must be certain scale of wages,
and these must be relatively higher than are
paid to the competing laborer of Europe, to
whom power is not intrusted and education
is denied. These degraded laborers consti-
tute the Dangerous classes" but no danger
Gus classes ought to be suffered to exist in
America. Whatever discrimination, there
lore, may be necessary to keep up the social
status and the self respect of the American
voter, is a tax imposed by our political system
and it is a tax which the enjoyment of that
system amply repays. 9
CONCLUSION.


In what has thus been submitted the Com
missioner believes that he has sufficiently in
dicated his views in respect to the tariff.
He cannot resist the conclusion that as IL
now stands, 1t is in many respects injurious
and destructive, and does not afford to Amer
lean industry that stimulus and protection
which is claimed as its chief merit. He be-
lieves that to grant, in the main, the advan-
ces asked in the bills now pending before
Congress, would be but to aggravate the very
difficulties under which the country now la
bors to impair the revenues and hinder the
return of specie payments.


In fact, our present tariff is in many partic-
ulars apparently based upon the old fallacy
that, in the exchange of -mmodities between
nations, which constitute commerce, what
one gains the other loses. 1t needs but a
moments thought to be convinced that there
can be no permanent trade or commerce un-
less it is for the gain of both nations; all
trade is based upon the mntusiity of services,
and it is one of the evidences of the progress
of modern thought, that the inter-dependence
of nations is beginning TO be recognized.
This is eminently true in England, France,
and Germany, true in China and Japan, true
even in Spain, but yet not recognized in the
United States, if our laws are to be taken as
the evidence of our thought.


With these feelings and convictions he
would therefore prove untrue to his trust did
he not here enter his most earnest protest
against any further general increase of the
tariff, but would, on the contrary, recon-
mend


First: An enlargement of the free list.


Second: reduction of some rates of duty,
and, as an exception, an increase of few
others, with view to the increase of the re-
venue


Third: A reduction of some rates of duty
with view to an absolute abatement, on the
simple ground that the reduction of duty is
the reduction of a tax, and that the most ef-
1cient method of protecting home industry is
by the removal of obstacles in the form of
taxes.


Fourth: The conversion to the utmost pos
sible extent of the present ad valerem duties
into specifics, as the only practicable method
OF insuring certainty and equality in the as
sessment of duties and the prevention of un-
derYaluations and the abrogation of the priv
ilege which enables returning tourists to i'm
port free of duty an amount OF Goods cores
ponding to their real or supposed social posi-
tion.


In behalf of the conclusions thus expressed
the Commissioner confidently appeals to the
true friends of American industry for counte-
nance and support; for nothing can be more
certain than that unnecessary and iniquitous
burdens of taxation under the tariff continue
TO be laid upon the people, the day Is not far