reduced the ad valorem tariff duties in the United States, to the advantage of the British manufacturer and the American auctioneer. As a consequence auctioneers increased in number, wealth and influence in all the commercial cities. A course of trade which had thus been begun partly from temporary causes was found by experience to insure the British a very decided advantage in the competition with the American importer.

THE MENACE OF PEACE.

The Embargo of 1807, the Non-Intercourse Act of 1809, the higher tariff duties, and the restrictions on trade during the War of 1812 had caused a mushroom growth of manufactures of cottons, woolens, iron, glass, pottery, and other articles. The continuance of these war-born industries after 1815 depended largely upon the maintenance and extension of protection.10 A very distinct feeling had arisen in favor of manufactures and Congress made clear concessions in the tariff act of 1816 to protect textiles and other needy lines; this was in addition to the high level of duties for strictly fiscal purposes. Despite this measure the importations of British manufactures during 1816 and 1817 were excessively large. Exporting speculators and manufacturers found good markets in the United States until the fall of 1817 and thereafter found this the least costly mart in which to sacrifice their glut of wares. Not only did the sales net them more but sacrifices in America tended also to work an ultimate benefit; for, as Lord Brougham said, "it is well worth while to incur a loss upon the first exportation in order, by the glut. to stifle in the cradle those rising manufactures in the United States which had forced into existence, contrary to the natural course of things."" It was the common talk of the day that the British manufacturers were making a concerted, open and studied effort to defeat our rising manufactures by buying out and suppressing inventions and makers of machinery, by buying up our sheep, by dumping their manufactures on our market

"Annals of Congress, 15th Congress, 1st session, p. 50.

10 Taussig. Tariff History of the U. S., 16-8.

11

Hansard, Parliamentary Debates, 1st Series, XXXIII, 1099.

regardless of cost and pooling their losses which amounted to "several hundred thousand pounds sterling."

The machinery used to dump their wares was an arrangement by which agents of foreign manufacturers and merchant exporters (1) received consignments on more or less fictitious invoices and therefore largely evaded import duties, (2) paid the duties by signing customs bonds indorsed by fellow agents or auctioneers and (3) sold the goods by private treaty or more usually at auctions, for cash advanced by the purchaser or the auctioneer or on long credits of six, nine, or twelve months.13

The result of this natural and forced glut of our market was a serious industrial distress which reached its worst in the panic of 1819. The inflated state of the currency contributed mightily to this crisis. "Many of our manufacturers fell easy prey to their mighty rivals. First of all the newly erected manufactories of earthenware. . . In the same way went most of the glassfactories, and the manufactures of white and red lead. The manufacture of iron continued longer, but in a feeble way, dwindling every year. During the four years between 1817 and 1821, the holders of property in the United States were supposed to have suffered a depreciation of nearly $800,000,000."14 Sheep-raising declined rapidly as domestic factories closed and the wool produced was more largely exported.15 The one sustaining force was pronounced to be the protective tariff and the high sterling exchange rates, which together amounted to from 40 to 50% of the foreign cost of production. The iron interests were temporarily revived by a duty of $15 per ton imposed in 1818. The balance of trade went decidedly against the States; the premium on London exchange ranged in 1821-2 from 8 to 15%, and the country lost much of

16

12 Niles, 10: 322; 21: 4. The names of some of the alleged conspirators were Earl Grosvenor, Lord Folkstone, Mr. Brougham and Sir Robert Peele. Niles, 18: 151.

13 Niles, 18: 419; Bolles, I, 366, 488; Dewey, Financial History of U. S., 190.

14 Bolles, I, 370-371.

15 Bolles, I, 367.

16 Memorial of New York Chamber of Commerce, 1824, quoted in Bolles, I, 372.

its gold and silver by export.17 The commercial disadvantage of high exchange premium was, however, partly compensated for by the rapid turn-over made possible by more regular and speedy packet service.1

18

By 1823 dumping had done its worst and those manufactures which remained were thought to be on a sound economic footing or at least sufficiently protected by existing tariffs.19 The cotton manufactures were in prosperous condition20; even protectionists ascribed the prosperity to the extensive use of labor-saving machinery rather than the tariff.21 It is probable that the exhausted purchasing power and low state of credit and high exchange rates were strong factors in reducing foreign importations and in giving our manufactures a second wind. The winter of 1823-4 witnessed a reaction and Niles published a "view of the calamitous situation of the United States."22 This time the British woolen manufacturers in particular flooded our markets through the auction method at prices alleged to be below cost, and our woolen manufacturers called for government help lest they be swamped as quickly as the first set had been in 1817.23 The third period of dumping was 1827-8 and was occasioned by over-production of woolens, and of cottons to a less degree, in England and an unprecedented stagnation in trade and fall in prices. Large quantities of surplus woolens, some not suited to the home-market or made of inferior materials, were sacrificed on the American market at prices dictated by the desperate state of trade. The next period when auction dumping hurt again was when the tariff was reduced between 1833 and 1842.25 Thereafter auctions declined.

24

17 Niles, 22: 17; 23, 132; 23: 147.

18 Niles, 19: 424.

19

Niles, 24: 67, gives extensive list of manufactures exported, made from both domestic and foreign materials, in 1822.

20

Niles, 24: 103, 117; 21: 4, 39, 148, 163; 18: 266; Gallatin, Memorial of The Free Trade Convention, 1831; Tudor, Letters on the Eastern States (1819), 253-266; Holmes, An Account of the United States of America (1823), 201-8.

The auction system tended to defeat the protective tariff. Before 1816 auctions had played such an unimportant rôle that their evils were not mentioned in the memorials of manufacturers and chambers of commerce praying for protection to domestic producers.26 The first petitions listed in the Annals of Congress complaining of auctions and pleading for protection were two presented in February, 1817, one from "sundry inhabitants of the city of New York on behalf of domestic manufacturers" and a similar petition from the merchants of that city, and recommending a 10% tax on auction sales.27 This movement started naturally in New York where the abuses were most extensive and severe and spread rapidly to all commercial cities, even towns far inland.28 The manufacturers asked Congress for further protection in three ways: (1) to abolish customs credits on imports, (2) to alter and increase the duties on imported goods, and (3) to impose a restrictive, if not prohibitory, tax on sales at auction. The auction system was opposed with great fury for many years.29 The distress wrought by dumping after 1816 was a chief factor in inspiring the demand for a secure and stable "home market."30 The anti-auction movement was affiliated with the "American System" movement.31

26

2 For instance, the memorial of the mechanics and manufacturers in New York City for protection to manufacturers in 1800 (Annals of Congress, 6th Congress, 2d session, 1291); petition of the Philadelphia artisans and manufacturers in 1803 (Annals of Congress, 8th Congress, 2d session, 1467); petitions for protection in 1811-2 (Annals of Congress, 12th Congress, 1st and 2d session); Tench Coxe's report on manufactures in 1813 (Annals of Congress, 13th Congress, Vol. II, 2570-2642); petitions of the cotton manufacturers, in December, 1815, and February, 1816 (Annals of Congress, 14th Congress, Ist session, 1645-1656) gives a long list of difficulties under which cotton manufacturers were working but does not mention auctions.

"Annals of Congress, 14th Congress, 2d session, 848-51, contains the text of these petitions.

28 For example read the petition of the Berkshire County (Mass.) merchants assembled at Pittsfield and see how it appeals on the basis of protection. Given in Niles, 38: 94.

Bolles, I, 390; Niles, 37: 298.

30 Niles, 21: 147.

At a "Great meeting at New York" in 1828 of citizens supporting the "American System" and "friendly to national industry" adopted the resolution: "That we deprecate, as injurious to domestic industry,

Through the rise of auctions the native American importing merchants were placed in a most peculiar position relative to the tariff. Normally they would oppose the tariff since it was to their interest to have large importations, and the higher the duties the stronger would be their opposition.32 The rise of domestic industry would shift trade from the importing merchants to the jobbers. Some persuasion was needed to ally the merchants with the protectionists.33 But this alliance was effected because the system of foreign agents selling through auctioneers diverted a considerable trade to new groups of middlemen and gave them competitive advantages which tended to rob the merchants of their business. The merchants were therefore in the dilemma of losing business either to domestic jobbers by the stoppage of foreign trade as effected by the tariff and the abolition of auctions, or to British agents and auctioneers by the consignment and auction sales system. The diversion of trade to the British agents and auctioneers was more obvious, direct, sudden and offensive, and the merchants therefore supported the tariff program and its counterpart, the abolition of auctions.

VOLUME OF AUCTION SALES.

Except for the City and State of New York the statistics of sales at auction are wanting. The petitioners from other cities often made rough estimates of the total auction sales or of the proportion of the total sales of merchandise that were done by auction. Such estimates are questionable and probably exaggerate the importance of auctions. In New York, where auction.

the existing system of auctions; and that we will use all honorable exertions to suppress it." Niles, 35: 131. The same year a report of a citizens' committee in New York said: "The abolition of auctions is their best remedy. It would be worth ten tariffs. . . . The existing duties would be more than a sufficient protection, in the absence of auctions, which, alone, are fatal to native industry." Niles, 34: 258.

32 Niles, 20: 245, 298, 342; 18: 422.

33 Niles, 20: 66.

For the year 1818, when auctions were at about their best, it was estimated from auctioneers' reports that auction sales in New York City amounted to $14,000,000, and the total auction sales in the United States were at least $30,000,000. See petition from New York City, Dec. 20, 1819, in Annals of Congress, 16th Congress, 1st session, 2291.