FIRST CRISIS.
In 1819 the crisis came, as the inevitable consequence of a constant drain of specie to pay for the excess of importation. The Bank of the United States had been com pelled to import specie in the first sixteen months of its operations, to the amount of $7,250,000, at a cost of over $500,000; while merchants paid a high premium for gold and silver to pay for the excess of their importations. Our manufacturers ruined, our work shops closed, our money exhausted, then came the natural decline of labor and the value of our exports, since Europe cannot sell cheap goods and pay high prices for food and raw material; and the result was not only disastrous to the manufacturers, but to the merchant and the agriculturist. A general paralysis now fell upon all branches of industry; and for the distress which followed, no alleviation was found until the return to semi-protective duties in 1824. The banks suffered from a lack of specie, and bank ruptcies overwhelmed both the merchant and shipping interests. Merchandise could not be sold, and ships found nothing to carry. Farms were mortgaged, or sold at half their value; workshops and factories everywhere closed; manufacturers were forced to abandon their pursuits and sink their capital, while their experts were scattered, and forced to enter into competition with the farmer, and swell the products of the soil, for which there was no longer a market.
During 1822 our iron manufacturers were silent. The highest price of common bar iron from 1820 to 1824 was forty-six dollars, and the average price aboilt forty-two per ton. The importation of iron during this year from Great Britain was 15,000 tons,— a small amount from a present point of view, but an excessively large one then, almost before railroads came into existence. The imports were excessive in all manufactured articles; and while the duties were in excess of the requirements of the Government they were not sufficient to protect our domestic industry, from which not only had the life been crushed, but even the spirit of enterprise had departed from our people.
The grain-producing capacities of the country had been increased five to six fold since 1790; but the exports of provisions were not greater than they were during the five years of protection from 1790 to 1795! While foreign nations supplied us with cheap iron, &c., they did not want even our cheap flour, beef, and pork.
The great argument of free trade is, that duties enhance the prices to consumers, and "buy where you can buy cheapest" is its creed. The question of markets, or how we may sell, is entirely ignored. The fact that the ability to buy depends on our success in selling is lost sight of, though thousands of examples have taught us that bankruptcy invariably results from over-trading. We shall see, however, in the sequel, that we not only sell our staples cheap, but buy our goods dear, under the charm of free trade; not only because goods are dear at a shilling a yard when corn commands but ten cents a bushel, but because the price of foreign manufactured goods always advances as our own ability to produce them decreases. Let cotton cloth be an instance. That branch of our industry was inadvertently protected ; its manufacture was encouraged ; profits resulted; improvements introduced; capital increased; and in 1823, when the prices of all foreign manufactures were low, cotton cloth was made in this country with profit, while almost every other branch of industry languished. Protection enabled the poor man and the farmer to obtain his coarse cotton at half their former prices, while it supplied our people with employment, and gave a profitable home market in the com munity in which the manufactures existed. If such was the result in cotton, why not in every other staple article,—particularly iron, by which and through which every other branch of industry thrives?