A Brief History of Panics | Page 4

reaction in
sentiment took place, and the "Compromise Tariff" was passed and
duties were lowered. From this period, the advocacy of a high tariff in
order to protect "Infant Industries," no longer "Infant" was largely
abandoned, and its advocacy was generally based upon the fallacy, less
obvious then than now, of securing high wages to laborers by means of
high import duties. This plea for high duties the laborer found to be
fallacious.
They (agriculturists mainly) found that they had to pay more for
manufactured goods, so that the manufacturers could still buy their raw
materials at the advanced prices, pay themselves the accustomed or
increased profits, and then possibly pay the laborer a small advance in
wages.
The advance did not compensate for increased cost of necessaries of
life. If competition reduced the manufacturers' profit, the first reduction
of expenses was always in the laborer's pay. The recognition of these
truths brought about the further reduction of duties until 1842, in which
year the tariff was once more raised. It was not until 1846 that we
enjoyed a tariff which sought to eliminate the protective features. It is
significant that a period of greater profit and stability among our
business men, but especially among our farmers, was then inaugurated.
This was the first tariff, since that of 1816, not affected by politics. It
lasted-until 1857, and the country flourished marvellously under it.
From 1816, when protection was first resorted to, until today, tariff
rates have been almost continually raised, mainly by votes of the
agriculturists, misled by the manufacturers and politicians, influenced
by the manufacturers' money. And a fact worth noting is that financial
panics have come quick and furious. They came in 1818, and in
1825-26, in 1829-30, and so on, (see page 13). Sudden changes in our
tariff rates have unvaryingly been followed by financial panics within a
short period. Changes to lower rates have not brought panics so quickly
as changes in the reverse direction.
Low tariff without protective features, maintained steadily, has been
coincident with constantly increasing prosperity to the country at large:
but most especially to the agriculturists. This is readily understood, for
purchases of imported and manufactured goods and all outfit needed
for the farmers' land and family can be made at low--and owing to the

competition that always arises to supply a steady and natural
market--lowering prices. Moreover, the settled prices prevailing
throughout the country allow of assured calculations and precautions as
to business ventures, and permit such a ratio to be established between
expenses and income, that at the end of the fiscal year a profit, not a
loss, may be counted upon.
This was the experience of our agriculturists during the second and last
prosperous time of our farmers, 1846-60. During that period agriculture
flourished; the tariff was low and there were only two panics, that of
1848, and the one of 1857, and the first (a non-protective one) should
not be considered as precipitated by the tariff of 1846, except that some
few suffered briefly in readjusting themselves to the changed, (though
better), condition of the new tariff. The vast majority of the nation
reaped enormous benefits from the changes inaugurated.
The panic of 1857 was caused by over-activity in trade speculation, and
over-banking, and the tariff of the same year was really passed to help
avert the panic threatening. It had the contrary effect, it is believed, for
it still further, of course, unsettled rates for goods, when prices were
already unstable. But the point is to be noted that in reality tariff change
followed practical panic in this instance rather than practical panic
tariff change. The high protective war tariffs, beginning in 1860, and
increased for war purposes and granted largely as an offset for those
internal revenue taxes laid to carry on the war, have been continued as
a body ever since, as is well known, despite the internal revenue taxes
having been abolished except on whiskey and tobacco. It is equally
well known that farming has grown less and less remunerative since
1860, and that the panics of 1864, 1873, and 1884 have been
unfortunate culminations of almost unceasing financial discomfort,
which has been most forcibly exemplified during the last two months.
Even now the financial fabric is in unstable equilibrium, and this latest
monstrosity--the McKinley Bill--imposing the highest tariff we have
ever exacted--an average duty of 60 per cent., and coming when a panic
was due, bids fair to hurry us into another and a terrible financial panic.
If it does not do so, it will be because our crops are too bountiful to
allow it, but it will at least have made the agriculturists and all buyers
of other commodities than agricultural produce pay more for all
purchases. It will bring no more money