History of Buchanan County, Iowa, with illustrations and biographical sketches, Part 128

Author: Williams bros., Cleveland, pub. [from old catalog]; Riddle, A. G. (Albert Gallatin), 1816-1902
Publication date: 1881
Publisher: Cleveland, Williams brothers
Number of Pages: 574

USA > Iowa > Buchanan County > History of Buchanan County, Iowa, with illustrations and biographical sketches > Part 128

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But there is another point to which I desire to call attention. What- ever may have been our opinions and wishes hitherto, since this session began the supreme court of the United States has made a decision which adds a new and important element to this question. The court has declared that the legal tender notes are not, and cannot be made, a legal tender for debts contracted before their issue. Now, I ask gen- tlemen to remember that my friend from Illinois [Mr. Ingersoll] who is the champion of greenback issues on this side of the house, realized at once the importance and effect of that decision; for within two or three days after the decision was announced-I believe it was the very next day-he proposed an amendment to the constitution of the United States, providing that it should be lawful for congress to authorize the issue of treasury notes, and make them a legal tender in the payment of all debts, thereby admitting that he believed such an amendment necessary, in order that such an issue could be made. * * * * *

Mark the conclusive force of these paragraphs:

' There is another consideration which I desire to present to the house, and it is this: we are not permitted to choose between banks and no banks. We are not permitted to choose between a National banking system managed immediately by the officers of the treasury. The Na- tional banks exist now only because they occupy the field and the ten per cent. tax on State circulation prevents the issue of State bank notes.

If we abolish the National banks, and undertake to conduct the busi- ness of this country by the issues of greenback currency, the influence of State banks and of banking capital will soon compel the repeal of the ten per cent. tax; and then will spring up again all the wild-cat banks against which the gentleman from Illinois [Mr. Ingersoll] de- claimed so eloquently a few days ago.

We are shut up, in my judgment, to one of two things; either to maintain, extend, and amend the present National banking system, or to go back to the old system under which every State was tinkering at the currency, without concert of action and uncontrolled by any gen- eral law. Then banks were established under the laws of twenty-nine different States, granted different privileges, subjected to different re- strictions, and their circulation was based on a great variety of securi- ties, of different qualities and quantities. In some States the bill- holder was secured by the daily redemption of notes in the principal city; in others by the pledge of State stocks, and in others by coin re- serves. But as State stocks differed greatly in value, all the way from the repudiated bonds of Mississippi to the premium stock of Massa- chusetts, there was no uniformity of security, and the amount of coin reserves required in the different States was so various as to make that security almost equally irregular.

This is followed with a series of pictures of the explo- sions of the State banking systems, already sketched, concluding with this:

Thus it appears there were more than six thousand five hundred va- rieties of fraudulent notes in circulation; and the dead weight of all the losses occasioned by them, fell at last upon the people, who were not expert in such matters. There were in 1862 but two hundred and fifty- three hanks whose notes had not been altered or imitated.

The results of State banking are thus grouped and contrasted with the stability and usefulness of the Na- tional banks.

In obedience to a resolution of congress, adopted January 7, 1841, the secretary of the treasury made a report, showing that from 1789 to 1841 three hundred and ninety-five banks had become insolvent, and that the aggregate loss sustained by the government and people of the United States was three hundred and sixty-five million four hundred and fifty-one thousand four hundred and ninety-seven dollars. The re- port also showed that the total amount paid by the people of the United States to the banks, for the use of them, during the ten years preceding 1841, amounted to the enormous sum of two hundred and eighty-two millions of dollars.

Startling as these figures are, they fall far short of exhibiting the magnitude of the losses which this system occasioned. The financial journals of that period agree in the following estimate of the losses oc- casioned by the revulsion of 1837:

On bank circulation and deposits. $ 54.000.000 Bank capital, failed and depreciated. 248,000,000

State stock depreciated 100,000,000 Company stock depreciated 80,000,000 Real estate depreciated 300,000,000

Total. $782,000,000

The State bank system was a chaos of ruin, in which the business of the country was again and again ingulfed. The people rejoice that it has been swept away, and they will not consent to its re-establishment. In its place we have the National bank system, based on the bonds of the United States and sharing the safety and credit of the government. Their notes are made secure, first, by a deposit of government bonds worth at least ten per cent. more than the whole value of the notes; second, by a paramount lien on all the assets of the banks; third, the personal liability of all the shareholders to an amount equal to the capital they hold; and fourth, the absolute guarantee by the govern- ment to redeem them at the national treasury if the banks fail to do so. Instead of seven thousand different varieties of notes, as in the State system, we have now but ten varieties, each uniform in character and appearance. Like our flag, they bear the stamp of nationality, and are honored in every part of the Union. .

Now, I do not speak for the banks; I have no personal interest in them; but I speak for the interests of trade and the business of the country, which demand that no measure shall pass this house which may rudely shock those interests. These twenty-five million dollars, which are not likely soon to be required, will be taken when needed, from States having a great surplus. About nine million dollars will come from the banks of New York that have over one million dollars of circulation each, and the balance will come from about eighty-four banks in three other States which have still a great excess above their proper proportion. I shall reserve for a later period in this discussion my remarks on the funding provision of this bill embodied in the third, fourth, and fifth sections.

I thank the house for its indulgence and the patient attention with which I have been honored.

'Thus dismembered, we produce but broken fragments of this massive production, simple and severe in its out- lines and solidity, like a doric temple, and as enduring. This was in 1860. Many years were to intervene, much labor, much exposition, by the clear, far-seeing financier, whose career we are yet to trace, beginning on this sub- ject in the house, in March, 1866, casting down his gage

POLITICAL ECONOMY.

to his own people in Jefferson in 1867, and covering a part of the field by the speech just brought to the read- er's notice.

Again on the floor January 23, 1872, and in March, 1874, and most effectively in April following. Finally, the great measure authorizing resumption became a law, which had to be defended against all comers, and never more ably than by him November 16, 1877. Then in the form of fiat money, in reply to Mr. Kelly, in March, 1878, and so in his own State in the great campaigns, and where alone he fought the battle in the silver phase of the maney-hued contest afterward. By special re- quest, he wrote a strong exposition, with ample historical illustration, in the Atlantic Monthly of February, 1876. He made a great speech at Chicago, and another in old Faneuil, in Boston. Both were pronounced great, and those who heard either pronounced it greater than the other. And thus largely has he borne the burdens of this great multiform issue, to the consummation of the labors of himself and the band of the sagacious, far-see- ing, steady statesmen who wrought with him, and which now, in the leisure of the prosperity thus secured to the country, his enemies find time and opportunity to assail him.

CHAPTER VI.

POLITICAL ECONOMY.

The Tariff .- Politics at Williams. - Free Trade. Protection. - His Williams Speech .- Speech of April, 1870 .- Elementary Prices .- Expenditure and Prices .- High home prices close the Foreign Mar- ket .- Reduction of Prices .- Internal Revenue and the Tariff .- Speech of 1872 .- Speech on Sugar Tariff, 1879 .- Subject exhaust- ively treated .- Hoop Iron .- Transportation .- The Locomotive .- Railroad System considered.

Certainly political economy is not an exact science, nor is scarcely any branch of it. Like our common law, its texts are clear and its rules certain. The facts depend on human testimonies, and hence are the most uncertain of things. This is charged against the law as a defect, residing in itself, when it consists almost entirely in the difficulty of ascertaining the facts. The practical appli- cation of the doctrines of either the two schools of polit- ical economy, to industries and trade, encounter the same difficulty, in an exaggerated degree. The determining the conditions of things, and properly estimating results under given rules, by which servitudes are laid upon or omitted from given productions is most difficult. So what is meant by free trade, is sometimes in practice

not clearly defined. A slight duty leaves it freer than a heavy one, compared with which it is free. So what is meant by protection is clouded by the same obvious uncertainty. Each under certain conditions seems pref- erable to the other. Can there be found a resting place which shall so far embody the best of the one, as to per- mit the existence in moderate measure, of what is good in the other ? Each school will declare this impossible.

When at Willams, on the nomination of Fremont, a gathering of students called on Garfield for a speech. In response he declared that he had never voted. His horror of slavery was so great. that he would unite with neither of the old parties, while the disunion teachings of the abolitionists, kept him from acting with them. With the Fremont men he could unite and did. So he was a Republican by birth as well as by instinct and reflection.

In the class-room, the professor stated clearly the abstract theories of the free traders and protectionists, and called for an expression of opinion of their respective merits. Garfield ventured to say, that to him free trade seemed to be absolutely right, but, for the United States, protection seemed an absolute necessity. When called upon for a practical solution, he replied in effect that he would be a protectionist till he could become a free trader. I do not know that this is a key to his views and leadings in congress. That he early studied the subject thoroughly, and thought of it comprehensively, we know.

On the first of April, 1870, he delivered the first of any considerable speech on the tariff. He said that he felt the embarrassment of a man who was to add to the forty-two speeches already delivered in the committee (of the whole house). It had been an able, searching debate. He quoted Coleridge's declaration that the human race had suffered more from abstract definitions than from war, pestilence and famine. He was not pre- pared to question the poet-philosopher's declaration.

There were two practical points from which no wide departure was permissible. The needs of the revenue, and the wants of our industries. In a sea of abstrac- tions, these were very real, and ever present. Modern scholarship was on the side of free trade.

Mr. Kelly, the champion of protection, denied this, and mentioned Henry C. Carey, and the acceptance of his teachings in Germany. Mr. Garfield admitted what was due to Mr. Carey, but insisted that if England was struck out, half at least of the light of civilization would disappear. Mr. Carey was in the minority. While what he stated was true, every modern nation had in some form enforced the principle of protection. He then

LIFE OF JAMES A. GARFIELD.

presented a rapid and forcible review of the career of American industry. Like liberty, it had won its way by great struggles. The sketch of its colonial fortunes, like all his studies of English history, was very happy. He then defined and illustrated what he meant by American industry, and is forable, as he always is, when remitted to broad generalization. This brought him to the consider- ation of prices. The study of them requires a knowl- edge of whatever influences them. When the war begun, our debt sixty-five million dollars ; our annual ex- penditures, on an average for eight years, ninety-five million dollars per annum ; one year of the war consumed one billion, two hundred and ninety million dollars; at the end we owed three billion dollars. Prices advanced, and were highest in 1866. During the last four years (from 1870) the expenditures averaged three hundred and sixty million dollars per annum. From 1866 we have tended to the ante bellum prices. The result-we have furnished a good market for foreign goods, but have lost the foreign market for most of ours. Cotton and provisions only do well abroad, and exceed in value all our other exports. Before the war we exported mann- factures amounting to forty-two million dollars a year; during the war but thirty-three million dollars. He pur- sued this subject to our trade with Canada, the Sandwich Islands, and, contrasting the years 1860 and 1869, showed an exportation of seventeen million dollars for the first and five million dollars for the last. Our indus- tries need extended markets. "To do that, prices here must be so adjusted as to open to our trade more of the markets of the new world." They can now buy cheaper of foreigners. A further decline of our prices will finally bring that relief. Then the channels of trade will open. It will take many years. While we raise two hundred and fifty million dollars of taxes, prices can never fall to a standard of sixty million dollars of taxes. The leg- islation which does not notice this economic law will be mistaken. When prices descend to a rate where the laborer can still save on a smaller wage, relief will begin. The laborer cannot suffer by this; ultimately will gain. Congress has done much to reduce taxation, and thus reduce prices. In the Thirty-ninth congress, we reduced the internal revenue one hundred million dollars; in the Fortieth, seventy million dollars more. We simplified the tax, removed it from industry, and imposed it on vice and luxury.

The large internal revenue tax on our own manufact- ures was met by an increase of duty on the foreign com- peting articles. Since we have removed this internal tax we may well reduce the protecting duty. The war tax . has disappeared. It is reasonable that the war tariff go

also. Custom duties should be so adjusted as to avoid duplicate taxation.

This furnishes but an imperfect outline of the unfold- ing of the principles on which the bill was framed. He then proceeds to a discussion of details, answering ques- tions, and making explanations. It is rare that a man with such grasp and power over great subjects, in their broad relations, has also such a mastery of details. No one ever escapes him, and from a full development of the large scope and design of an important measure, he at once descends, in an easy, graceful way, to the minut- est detail, and never leaves a question unanswered, or a detail unexplained.

The tariff, internal revenue, taxation, in all their com- plex relations to home and foreign policies, became as much a specialty with General Garfield as the currency and banking; and he was at an early day received as au- thority upon the subject.

Some aspects of the complex subject received so much light from his great speech of January 22, 1872, on public expenditure, that we must here refer the reader to the next chapter, and ask him to consider it in connec- tion with his views upon the tariff here briefly brought to notice. His speech of February, 1879, on the sugar tariff bill is a copious discussion of the then interesting subject in connection with the broader and general one, and treated in his usual way. The reader should study it.

After some introductory remarks he says:

The pending bill, like all bills which relate to customs duties, should be considered in its relation to four great interests: the revenues, home industries, foreign trade, and the interests of consumers. First, as a source of revenue for the support of the government, we are receiving about thirty-seven million dollars in coin per annum from duties on sugar in its various forms. That is about one-sixth of all our revenues from all sources. The effect of any measure upon so large a part of the revenue is vital to our finances and to the fiscal credit of the government.

Second, it affects two great producing industries of our people. The first of these is the growth of cane and the production of cane sugar, to foster which congress has for a long time levied a discriminating duty, though only a single State is pursuing the industry. Notwith- standing the fact that sugar is one of the necessities of the daily life of our people, they have consented to pay a tax which, under existing laws, averages about sixty-two and one-half per cent. ad valorem upon all the sugar they consume. This burden is horne cheerfully for the purpose of protecting and promoting a great home industry in one of our southern States.

A second important industry which has grown up in connection with the sugar trade and has developed to a great magnitude in recent years is the business of refining. It is one of the interesting evidences of the progress of civilization that people are using less and less of the raw sugars of commerce, and more and more of refined sugars. And this change of habit is not merely a refinement of luxury but is demanded by a better knowledge of the laws of health. In a recent investigation made by the Analytical Sanitary Commission of England, appointed to examine the various kinds of food, Dr. Hassell, the chairman, reported among other things the following:

POLITICAL ECONOMY.

"We feel, however reluctantly, that we have come to the conclusion that the sugars of commerce are in general in a state wholly unfit for consumption."

That is the latest voice of science in England on the subject of unre- fined sugar. And if gentlemen will turn to the Popular Science Month- ly, of New York, for February, 1879, they will find a very interesting scientific discussion of the various insects that infest food, and on pages 508 and 509 occurs a passage relating to sugars, which I quote:

" The sugar-mite, T. sacchari, (a magnified wood-cut of which ac- companies the passage), is most commonly found in brown sugar. It is large enough to be seen with the naked eye, and sometimes appears as white specks in the sugar. It may be discovered by dissolving two or three spoonfuls of sugar in warm water and allowing the solution to stand for an hour or so. At the end of the time the acari will be found floating on the surface, adhering to the sides of the glass, and lying mixed with the grit and dirt that always accumulate at the bottom. In ten grains of sugar as many as five hundred mites have been found, which is at the rate of three hundred and fifty thousand to the pound. Those who are engaged in handling raw sugars are subject to an erup- tion known as 'grocers' itch,' which is doubtless to be traced to the presence of these mites. They are almost invariably present in unre- fined sugars, and may be seen in all stages of growth and in every con- dition, alive and dead, entire or broken in fragments. Refined sugars are free from them. This is in part due, perhaps, to the crystals being so hard as to resist their jaws, but principally to the absence of albumen, for without nitrogenous matter they cannot live. * *

"These degrading and disgusting forms are not proper food-stuffs, nor is their consumption unavoidable. Pure articles, in an undamaged condition, do not contain them, and their presence in numbers in any article of food is proof that it is unfit for human use and should be rejected."

This scientific testimony is corroborated by the experience of all per- sons who manipulate raw sugars, while no such effects result from the handling of refined sugars. For these reasons the consumption of raw sugars in this and in all other civilized countries has rapidly fallen off. And so, although in former years a large quantity of what is known as grocers' sugars went directly into consumption without going through the process of refining, the amount of sugars of that class now used has been reduced to almost nothing.

To exhibit something of the magnitude of this industry, 1 state a few facts: omitting maple, sorghum, and beet sugar, we consumed last year in round numbers one billion seven hundred million pounds of cane sugar. Of this amount we produced in our own country two hundred million pounds; the remaining one billion five hundred millions were imported. Reduce the whole to tons, the people of the United States consumed seven hundred and forty thousand tons of cane sugar last year, or an average of about forty-five pounds to each inhabitant. Of all this vast amount of sugar not two per cent. was consumed in the raw or unrefined state. Nearly all of it passed through some process of refining to fit it for the use of our people.

From this it will be seen that in addition to the business of cane- planting and sugar-making there has grown up in this country a second industry of sugar refining, the importance of which may be shown by a few additional facts. There are twenty-five thousand laborers in the United States to-day employed in the business of refining sugar and fitting it for use, in addition to those employed by the sugar producers. In this work they employ coopers, blacksmiths, mechanies, machinists, and other classes of laborers. They consume thirty millions of pounds of bone-dust, eighteen thousand kegs of nails, thirty thousand car- loads of staves, and three hundred thousand tons of coal.

In this statement I do not take into account the refining done by Louisiana planters in preparing their products for market, though a large majority of the sugar growers, have connected with their mills

some form of refining. I have stated these facts to show the extent of the two home industries, which we should keep in view in any legisla- tion on the subject.

The third interest to be considered is our foreign commerce, of which only a word needs to be said. We are compelled to buy abroad about eighty-five per cent. of all our sugar. We buy it from tropical coun- tries with which, on every ground of public policy, we ought to main- tain healthy and active relations of trade. If we are able, by our supe- rior skill, to refine their low-grade sugars more cheaply than our neigh- bors and send them back with the added value of American labor, it will strengthen us industrially and commercially; and the fact that our refin ing interest has grown to such perfection that we have been able to sell in a single year to tropical countries about seventy million pounds of re- fined sugar, is a gratifying one on every account. No change should be made in the law which will injure our commercial prospects in this direc- tion.

The fourth interest, one of vital importance, is that of the consumers of sugar. They are not a class; they are the whole population of the United States; and there must be reasons of controlling strength that will justify any considerable tax on an article of food of universal con- sumption and of such prime necessity as sugar. That reason has been found partly in the necessity for revenue, but chiefly in the purpose of enabling our people to become self-supporting, and as far as possible to produce their own sugars, that they may not be dependent upon foreign countries for so important an article of food. In short, the chief reason for the tax is that American labor may find employment in producing and preparing food for American tables.

The duty on sugar has been levied in various forms. Up to 1846 sugars were classified into raw and refined sugars, with a low rate on the raw and a higher rate on the refined. But as the processes of manufacture and refining have been improved, additional grades have been added to the law from time to time to meet the new conditions. It was found in 1870 that the lower grades embraced so wide a range of products that a uniform tax upon one whole class was neither equit- able nor just ; and hence the law was so amended as to increase the number of classes and make the tax ad valorem in principle but specific in form; that is, sugar in all its forms was graded into seven classes, arranged in the order of its value, and a specific duty was levied upon each class, the lowest rate being imposed upon sugars of lowest value and a higher rate upon each successive class. The tax thus adjusted has been an efficient means of raising revenue. I have already shown that it produces more than thirty-seven million dollars a year. That it has afforded sufficient protection to the producers and refiners of sugar will not be denied. The theory of protection may perhaps be thus summarized: on any imported article which comes in competition with an American product the rate of tax should be proportionate to the amount of human labor which has been expended upon it at the time of importation. That which represents the least labor should bear the

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History of Buchanan County, Iowa, with illustrations and biographical sketches, Part 128

Author: Williams bros., Cleveland, pub. [from old catalog]; Riddle, A. G. (Albert Gallatin), 1816-1902 Publication date: 1881 Publisher: Cleveland, Williams brothers Number of Pages: 574

Author: Williams bros., Cleveland, pub. [from old catalog]; Riddle, A. G. (Albert Gallatin), 1816-1902
Publication date: 1881
Publisher: Cleveland, Williams brothers
Number of Pages: 574