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southern states; as are, hitherto, lead and coal ; flax and hemp are or may be raised in greater abundance there, than in the more northern states; and the wool of Virginia is said to be of better quality than that of any other state: a circumstance rendered the more probable by the reflection, that Virginia embraces the same latitudeg with the finest wool countries of Europe. The climate of the south is also better adapted to the production of silk.
The extensive cultivation of cotton can perhaps hardly be expected, but from the previous establishment of domestic manufactories of the article; and the surest encouragement and vent, for the others, would result froin similar establishments in respect to them.
A full view having now been taken of the inducements to the pro. motion of manufactures in the United States, accompanied with an examination of the principal objections which are commonly urged in opposition, it is proper, in the next place, to consider the means by which it may be effected, as introductory to a specification of the objects which, in the present state of things, appear the most fit to be encouraged, and of the particular measures which it may be advisable to adopt, in respect to each.
In order to a better judgment of the means proper to be resorted to by the United States, it will be of use to advert to those which have been employed with success in other countries. The principal of these are
I. Protecting duties—or duties on those foreign articles which are the rivals of the domestic ones intended to be encouraged.
Duties of this nature evidently amount to a virtual bounty on the domestic fabrics, since, by enhancing the charges on foreign articles, they enable the national manufaeturers to undersell all their foreign competitors. The propriety of this species of encouragemeut need not to be dwelt upon; as it is not only a clear result froin the nuinerous topics which have been suggested, but is sanctioned by the laws of the United States, in a variety of instances: it has the additional recommendation of being a resource of revenue. Indeed all the duties imposed on imported articles, though with an exclusive view to revenue, have the effect in contemplation, and, except where they fall on raw materials, wear a beneficent aspect towards the manufactares of the country.
II. Prohibitions of rival articles, or duties equivalent to prohibitions.
This is another and an efficacious means of encouraging national manufactures : but in general it is only fit to be employed when a manufacture has made such a progress, and is in so many hand, as to insure a due competition, and an adequate supply, on reasonable terms. Of duties equivalent to prohibitions, there are examples in the laws of the United States, and there are other cases, to which the principle may be advantageously extended : but they are not numerous.
Considering a monopoly of the domestic market to its own manufacturers as the reigning policy of manufacturing nations, a similar policy, on the part of the United States, in every proper instance, is dictated, it might almost be said, by the principles of distributive justice; certainly by the duty of endeavouring to secure to their own citizens a reciprocity of advantages.
IN. Prohibitions of the exportation of the materials of manufactures.
The desire of securing a cheap and plentiful supply for the national workmen, and, where the article is either peculiar to the country, or of peculiar quality there, the jealousy of enabling foreign workmen to rival those of the nation, with its own materials, are the leading motives to this species of regulation. It ought not to be affirmed that it is in no instance proper ; but it is certainly one which ought to be adopted with great circumspection, and only in very plain cases. It is seen at once, that its immediate operation is to abridge the demand and keep down the price of the produce of some other branch of industry, generally speaking, of agriculture, to the prejudice of those who carry it on; and though, if it be really essential to the prosperity of any very important national manufacture, it may happen that those who are injured in the first instance, may be eventually indemnified, by the superior steadiness of an extensive domestic market depending on that prosperity: yet in a matter, in which there is so much room for nice and difficult combinations, in which such opposite considerations combat each other, prudence seems to dictate, that the expedient in question, ought to be indulged with a sparing hand.
IV. Pecuniary bounties.
This has been found one of the most efficacious means of encouraging manufactures, and it is, in some views, the best. Though it has not yet been practised upon by the government of the United States, (unless the allowance on the exportation of dried and pickled fish and salted meat could be considered as a bounty) and though it is less favoured by public opinion than some other modes—its advantages are these
1. It is a species of encouragement more positive and direct than any other, and for that very reason, has a more immediate tendency to stimulate and uphold new enterprises, increasing the chances of profit, and diminishing the risks of loss, in the first attempts.
2. It avoids the inconvenience of a temporary augmentation of price, which is incident to some other modes, or it produces it to a less degree; either by making no addition to the charges on the rival foreign article, as in the case of protecting duties, or by making a smaller addition. The first happens when the fund for the bounty is derived from a different object" (which may or may not increase the price of some other article, according to the nature of that object); the second, when the fund is derived from the same or a similar object of foreign manufacture. One per cent. duty on the foreign article, converted into a bounty on the domestic, will have an equal effect with a duty of two per cent. exclusive of such bounty; and the price of the foreign commodity is liable to be raised, in the one case, in the proportion of one per cent. in the other, in that of two per cent. Indeed the bounty, when drawn from another source, is calculated to promote a reduction of price; because, without laying any new charge on the foreign article, it serves to introduce a competition with it, and to increase the total quantity of the article in the market.
3. Bounties have not, like high protecting duties, a tendency to produce scarcity. An increase of price is not always the immediate, though, where the progress of a domestic manufacture does not counteract a rise, it is commonly the ultimate effect of an additional duty. In the interval, between the laying of the duty and a proportionable increase of price, it may discourage importation, by interfering with the profits to be expected from the sale of the article.
4. Bounties are sometimes not only the best, but the only proper expedient, for uniting the encouragement of a new object of agriculture, with that of a new object of manufacture. It is the interest of the farmer to have the production of the raw material promoted, by counteracting the interference of the foreign material of the same kind-It is the interest of the manufacturer to have the material abundant or cheap. ' If, prior to the domestic production of the material, in sufficient quantity, to supply the manufacturer on good terms, a duty be laid upon the importation of it from abroad, with a view to promote the raising of it at home, the interest both of the farmer and manufacturer will be disserved. By either destroying the requisite supply, or raising the price of the article, beyond what can be afforded to be given for it, by the conductor of an infant manufacture, it is abandoned or fails; and there being no domestic manufac- . tories to create a demand for the raw material, which is raised by the farmer, it is in vain, that the competition of the like foreign article, may have been destroyed.
It cannot escape notice, that a duty upon the importation of an article can no otherwise aid the domestic production of it, than by giving the latter greater advantages in the home market. It can have no influence upon the advantageous sale of the article produced, in foreign markets; no tendency, therefore, to promote its exportation.
The true way to conciliate these two interests is to lay a duty on foreign manufactures of the material, the growth of which is desired to be encouraged, and to apply the produce of that duty by way of bounty, either upon the production of the material itself, or upon its manufacture at home, or upon both. In this disposition of the thing, the manufacturer commences his enterprise, under every advantage, which is attainable as to quantity, or price of the raw material: and the farmer, if the bounty be immediately given to him, is enabled by it to enter into a successful competition with the foreign material: if the bounty be to the manufacturer on so much of the domestic material as he consumes, the operation is nearly the same; he has a motive of interest to prefer the domestic commodity, if of equal quality, even at a higher price than the foreign, so long as the difference of price is any thing short of the bounty, which is allowed upon the article.
Except the simple and ordinary kinds of household manufacture, or those for which there are very commanding local advantages, pecuniary bounties, are in most cases indispensable to the introduction of a new branch. A stimulus and a support not less powerful and direct is, generally speaking, essential to the overcoming of the obstacles which arise from the competitions of superior skill and maturity elsewhere. Bounties are especially essential, in regard to articles, upon which those foreigners who have been accustomed to supply a country, are in the practice of granting them.
The continuance of bounties on manufactures long established, must almost always be of questionable policy: because a presumption would arise in every such case, that there were natural and inherent impediments to success. But in new undertakings, they are as justifiable, as they are oftentimes necessary.
There is a degree of prejudice against bounties, from an appearance of giving away the public money, without an immediate consideration, and from a supposition, that they serve to enrich particular classes, at the expense of the community.
But neither of these sources of dislike will bear a serious examination. There is no purpose to which public money can be more beneficially applied, than to the acquisition of a new and useful branch of industry; no consideration more valuable than a permanent addition to the general stock of productive labour.
As to the second source of objection, it equally lies against other modes of encouragement which are admitted to be eligible. As often as a duty upon a foreign article makes an addition to its price, it causes an extra expense to the community, for the benefit of the domestic manufacturer. A bounty does no more. But it is the interest of the society, in each case, to submit to a temporary expense, which is more than compensated, by an increase of industry and wealthby an augmentation of resources and independence--and by the circumstance of eventual cheapness, which has been noticed in another place.
These are of a nature allied to bounties, though distinguishable from them in some important features.
Bounties are applicable to the whole quantity of an article produced or manufactured, or exported, and involve a correspondent expense; premiums serve to reward some particular excellence or superiority, some extraordinary exertion or skill, and are dispensed only in a small number of cases. But their effect is to stimulate general effort: contrived so as to be both honorary and lucrative, they address themselves to different passions; touching the chords as well of emulation as of interest. They are accordingly a very economical mean of exciting the enterprise of a whole community.
There are various societies in different countries, whose object is the dispensation of premiums for the encouragement of agriculture, arts, manufactures, and commerce; and though they are, for the most part, voluntary associations, with comparatively slender funds, their utility has been immense. Much has been done by this mean in G. Britain: Scotland in particular, owes materially to it a prodigious amelioration of condition. From a similar establishment in the United States, supplied and supported by the government of the union, vast benefits might reasonably be expected. Some further ideas on this head, shall accordingly be submitted in the conclusion of this report.
VI. The exemption of the materials of manufactures from duty.
The policy of that exemption, as a general rule, particularly in reference to new establishments, is obvious. It can hardly ever be ad. visable to add the obstructions of fiscal burdens to the difficulties which naturally embarrass a new manufacture; and where it is matured and in condition to become an object of revenue, it is, generally speaking, better that the fabric, than the material, should be the subject of taxation. Ideas of proportion between the quantum of the tax and the value of the article can be more easily adjusted in the former
than in the latter case. An argument for exemptions of this kind in the United States, is to be derived from the practice, as far as their necessities have permitted, of those nations whom we are to meet as competitors in our own and in foreign markets.
VII. Drawbacks of the duties which are imposed on the materials of manufactures.
It has already been observed, as a general rule, that duties on those materials ought, with certain exceptions, to be forborne. Of these exeeptions, three cases occur, which may serve as examples-one, where the material is itself an object of general or extensive consumption, and a fit and productive source of revenue: another, where a manufacture of a simpler kind, the competition of which with a like domestic article is desired to be restrained, partakes of the nature of a raw material, from being capable by a further process, to be converted into a manufacture of a different kind, the introduction or growth of which is desired to be encouraged: a third, where the material itself is a production of the country, and in sufficient abundance to furnish a cheap and plentiful supply to the national manufacturers.
Under the first description comes the articles of molasses. It is not only a fair object of revenue, but being a sweet, it is just that the consumers of it should
pay a duty as well as the consumers of sugar. Cottons and linen in their white state fall under the second description-a duty upon such as are imported is proper to promote the domestic manufacture of similar articles in the same statema drawback of that duty is proper to encourage the printing and staining at home of those which are brought from abroad. When the first of these manufactures has attained sufficient maturity in a country, to furnish a full supply for the second, the utility of the drawback ceases.
The article of hemp either now does or may be expected soon to exemplify the third case, in the United States.
Where duties on the materials of manufactures are not laid for the purpose of preventing a competition with some domestic production, the same reasons which recommend, as a general rule, the exemption of those materials from duties, would recommend, as a like general rule, the allowance of drawbacks in favour of the manufacturer: accordingly, such drawbacks are familiar in countries which systematically pursue the business of manufactures; which furnishes an argument of the observance of a similar policy in the United States; and the idea has been adopted by the laws of the union, in the in"stances of salt and molasses. It is believed that it will be found ad. vantageous to extend it to some other articles.
VIII. The encouragement of new inventions and discoveries, at home, and of the introduction into the United States of such as may have been made in other countries; particularly those which relate to machinery
It is customary with manufacturing nations to prohibit, under severe penalties, the exportation of implements and machines, which they have either invented or improved. There are already objects for a similar regulation in the United States; and others may be ex