[The Emperor] repeated to me the arguments which had been used by some of his ministers to dissuade him from a free-trade policy, particularly M. Mange, his Finance Minister, who had urged that if he merely changed his system from prohibition to . . . moderate duties which admitted a large importation of foreign merchandise, then, for every piece of manufactured goods so admitted to consumption in France, a piece of domestic manufacture must be displaced. I pointed out the fallacy of M. Mange’s argument in the assumption that everybody in France was sufficiently clothed, and that no increased consumption could take place. I observed that many millions in France never wore stockings, and yet stockings were prohibited. He remarked that he was sorry to say that tens of millions of the population hardly ever tasted bread, but subsisted on potatoes, chestnuts, etc.92
That Napoleon III was so receptive to free trade is no surprise; he had been exiled to England in 1846, just as repeal was enacted, and remained there for two years, a time when the nation was under the intellectual sway of Smith, Ricardo, and Cobden himself. French cotton manufacturers, devastated by cheaper and better English cloth, bombarded the emperor with protectionist special pleading, but he also heard from those who supported free trade: producers of wine, silk, and fine furniture, all eager to export their wares. Many French manufacturers who depended on foreign materials, such as machinery makers who consumed large amounts of imported iron, also pushed for lower tariffs.93
By the 1850s, the catechism of free trade had spread across the Channel; anti-tariff organizations sprang up in Belgium and France and inspired a generation of liberal economists. The most prominent of these was a professor of political economy who was also a deputy in the National Assembly, Michel Chevalier. He wrote:
Britain’s adoption of the freedom of trade is one of the greatest events of the century. When such a powerful and enlightened nation not only puts such a great principle into practice but is also well known to have profited by it, how can its emulators fail to follow the same way?”94
In 1860 Cobden and Chevalier guided the Anglo-French treaty through a hailstorm of opposition on both sides of the Channel, evoking this tribute to Cobden from the Liberal Party MP William Gladstone:
Rare is the privilege of any man who, having fourteen years ago rendered to his country one signal service, now again, within the same brief span of life, decorated neither by land nor title, bearing no mark to distinguish him from the people he loves, has been permitted to perform another great and memorable service to his sovereign and his country.95
The Cobden-Chevalier Treaty slashed import tariffs on both sides. Over the next several years, Italy, Switzerland, Norway, Spain, Austria, and the Hanseatic cities also entered into the spirit of the times. This period saw, for the first time, the widespread use of the most-favored-nation (MFN) clause. MFN status, which goes back to twelfth-century treaties, is similar to the “I will beat any price” offer from your local car dealership. The nation granting it promises tariff rates as low as that offered to any other country, and if, in the future, it further lowers tariffs for goods from another country, it must then do the same for all of its MFN partners. Once the MFN ball began to roll in the 1860s, tariff “disarmament” spread throughout the Continent. Duties that had been as high as 50 percent disappeared entirely on some manufactured goods.96
Between the publication of Wealth of Nations in 1776 and the repeal of the Corn Laws in 1846, Smith, Ricardo, and Cobden had laid the theoretical and political foundations of the new global economy, which had its heyday in the decades after the signing of the Cobden-Chevalier accord. Protectionists predicted a catastrophe for farmers because of cheap grain imported from abroad. At first, this did not happen, as Europe’s increasing population ensured high food prices. But a generation after repeal, an avalanche of inexpensive grain from the Americas, Australia, New Zealand, and Russia buried English and continental farmers. By 1913, England imported 80 percent of its wheat from abroad, but as the twentieth century dawned, no sane Englishman would have traded his nation’s industrial present for its agricultural past.97
The invasion of New World grain played out differently on the Continent, where the 1880s saw the beginnings of a devastating backlash against free trade that would last until the middle of the twentieth century. This nineteenth-century reaction against the new global economy speaks forcefully to the twenty-first: although free trade benefits mankind in the aggregate, it also produces losers who cannot be expected to passively accept the new order.
12
WHAT HENRY BESSEMER WROUGHT
If people would transport their manufactories to America or China whenever they could save a small percentage of their expenses by it, profits would be alike . . . all over the world, and all things would be produced in the places where the same labor and capital would produce them in the greatest quantity and quality. A tendency may, even now, be observed toward such a state of things.—John Stuart Mill, 1848.1
The dance of modern international manufacturing dazzles the imagination. The myriad of components in your laptop computer, digital music player, and automobile were designed, produced, and assembled on different continents, some making two or more transoceanic journeys before you purchased the final product.
Those who think that this is something new should visit the former copper mining town of Jerome in northern Arizona. Today, an old smelter sits in the middle of this tiny, picturesque tourist site, mute witness to a storied past. With a little coaxing, this squat, ugly machine yields up a remarkable narrative of global trade in the late nineteenth century.
Its tale begins during the late medieval period in the extreme west of Britain, where the Cornish and Welsh became leaders in mining and metallurgy. They had long provided the lion’s share of Europe’s copper, tin, and iron ores. Almost as important, their mines produced some of the world’s best sulfur-free coal, critical for the smelting process. By 1820, the efficient new reverberatory smelters (in which the flame and the mix of ore and coal or charcoal were separated) had begun to exceed the outputs of English and Irish mines. The smelting factories imported ore from wherever they could find it: first from Spain, Cuba, and Australia, and then around the Horn from Chile and Arizona. In return, the coal of western England filled the outgoing vessels.
The sleepy Welsh port of Swansea, with a shallow moorage guarded by a dangerous sandbar, was the center of this long-distance bulk trade. The peculiarities of its cargoes—coal and ore—and the primitive port facilities at both ends of the routes dictated vessels of shallow draft built for capacity, not speed. Ironically, though Wales produced and exported much of the world’s coal, the craft that carried it—the ore barques—were powered by sail until the dawn of the twentieth century.
The novelist and seaman Joseph Conrad captured the spirit of the trade after a visit to a dying former captain:
He had “served his time” in the . . . famous copper-ore trade of the old days between Swansea and the Chilean coast, coal out and copper in, deep-loaded both ways, as if in wanton defiance of the great Cape Horn seas—a work, this, for staunch ships, and a great school of staunchness of West-Country seamen. A whole fleet of copper-bottom barques, as strong in rib and planking, as well-found and great as ever was sent upon the seas, manned by hardy crews and commanded by young masters, was engaged in that now long-defunct trade.2
Both inbound and outbound cargoes could kill in unique ways. The rich copper ores of the New World were extraordinarily dense, sometimes containing more than 50 percent of the metal.3 If not tightly packed into special chests, the ore could shift and lethally unbalance a vessel. Further, iron and copper do not get along well, and ore that found its way to the hull’s bottom could sink a ship by corroding its nails.
Outbound from Swansea, coal brought its own peril—fire. The propensity of coal dust to spontaneously combust ensured that during an average year in the late nineteenth century, about six of the roughly 150 barques plying the trade burned at sea. A coal fire that smoldered deep in a hold, undetec
ted for days, was nearly impossible to put out, its one saving grace being that it often burned slowly enough to be jettisoned, or at least to allow the crew to abandon ship in orderly fashion.
At first, foreign ore, profitable because of its high purity, seemed to answer the prayers of the Welsh smelting industry. If factory owners were particularly lucky, the ore also contained a large amount of recoverable silver. As late as 1850, most of the world’s copper ore was still being smelted in south Wales.
In the long run, Cornwall and Wales could hardly expect to keep the profitable copper smelting industry to themselves. Their miners, made redundant by the closure of played-out pits, had long carried their skills with them across the ocean; few mining camps in the New World lacked a contingent of “Cousin Jacks” (as the Cornish men were known). In the late nineteenth century, Welsh smelting workers also began to migrate abroad. With their help, American refining technology soon surpassed that of the Old World factories.
With the arrival of the railroad in the copper regions of Montana, Utah, and Arizona, a new trading pattern arose. Jerome’s experience was typical. By 1882, smelting operations were under way there, and it became a major center of both mining and smelting operations.4 Fine Welsh coke (charred coal) went around the Horn to San Francisco; thence by rail to Ashfork, Arizona, where the tracks ended; and then by mule-drawn wagon the final sixty miles over the mountains to Jerome. There, the coke smelted the local ore into pure copper, which was shipped back to Europe via the reverse route—in all, a round-trip of over thirty-two thousand miles, a manufacturing cycle that would impress even a modern computer maker.5
The nineteenth century brought changes in world trade that would not be matched by even those of the twentieth. By 1900, transcontinental trade in both luxury and bulk commodities had become part of everyday life. Imagine for a moment two time travelers: the first sent from the year 1800 to the year 1900, and the second from 1900 to 2000. Our twentieth-century time traveler, starting out in 1900, would already be familiar with instantaneous global communication, passenger trains speeding at more than sixty miles per hour, and perishable foods sent from the antipodes in refrigerated railcars and ships. By contrast, our nineteenth-century time traveler, starting out in 1800, would never have seen information, people, or goods travel faster than the speed of a horse. For this traveler, the very idea of buying tulips grown across the continent, eating out-of-season strawberries from across the ocean, or reading the news the day it happened anywhere on the planet—all things that were everyday occurrences in 1900—would have seemed fantastic.
The story of the nineteenth-century trade revolution cannot be told in linear fashion, for it involves several interwoven, nearly simultaneous strands. The 1800s saw the advent of the steamship, the railroad, the telegraph, and novel systems of both natural and artificial refrigeration, all augmented by a new process for the production of cheap, high-quality steel. These combined to open up the New World, Australia, and the Ukraine to agricultural exploitation, which in turn aroused a violent protectionist reaction in continental Europe that lingers today.
At its birth in 1776, the United States was a small agrarian confederation strung along the eastern seaboard of North America, huddled hard by the Appalachian range. The northern and southern states were divided not only by the peculiar institution of slavery, but also by deep and abiding differences in trade policy. It is not much of an exaggeration to consider the fight over tariffs equal to that over abolition as a cause of the Civil War. Only a minority of southerners owned slaves, and an even smaller minority of northerners were abolitionists, but nearly all Americans either consumed or produced trade items. In the early 1830s, the dispute over tariffs nearly triggered that Armageddon prematurely, an eventuality prevented only by the political skill of Andrew Jackson, Henry Clay, and the elderly James Madison.
The British industrial juggernaut frightened the small but growing manufacturing concerns clustered in New England and the Mid-Atlantic states. Alexander Hamilton felt strongly that America’s infant industries needed protection from foreign behemoths, albeit in the form of subsidies, not tariffs. Almost as influential was a brilliant German-born economist, Georg Friedrich List, who had spent several years in America making his fortune in the railroad business. On his return to Germany in 1832 as an American consul, he applied himself to trade economics. Adam Smith and David Ricardo had erred, he thought; they had both written that nations benefited from a free-trade policy even in the face of protectionism from their neighbors, but List reckoned that retaliation served better. In the United States, he became enamoured of Hamilton’s American System—a plan for a national infrastructure, largely paid for with import duties. List also agreed with Hamilton about infant industries; nations should protect their young enterprises from stronger and more established competitors, such as England.6 List’s leading American disciple was the influential Henry Carey, a Philadelphian insurance tycoon and economist who felt even more strongly that the road to national prosperity was paved with high tariffs.
When times are hard, both farmers and workers demand protection. This was most definitely the case when grain prices fell in the aftermath of the Napoleonic wars. American farmers sought to keep the domestic grain market to themselves, and factory owners in New England demanded shelter from murderous competition from the Lancashire mills.
Before the adoption of the income tax during the twentieth century, import duties financed 90 percent of American government.7 This meant that tariffs had to be raised during economic depressions, precisely the wrong thing to do during a downturn. These three elements—the fear of British manufacturing, frequent economic downturns, and the need to raise revenue—drove the protectionism of the North, which would last well into the twentieth century.
The South, by contrast, favored free trade. The casual visitor to the ports of the antebellum South would have understood why this was so. On a single day in 1798, one observer counted no fewer than 117 vessels in Charleston harbor, either bearing goods from places like Liverpool, Glasgow, London, Bordeaux, Cádiz, Bremen, and Madeira, or outbound with cotton, tobacco, rice, and indigo, none of which needed even a whiff of tariff protection.8
Before 1820, the South had relatively little quarrel with the North; Dixie largely supported the American System. But that year the Missouri Compromise made the South aware of the ability of the growing Northern majority to restrict slavery. This in turn focused southerners’ attention on other disagreements with the North, prime among which was the tariff issue. Both issues ended the “Era of Good Feelings.”
Southern exports of cotton, indigo, and rice continued to flourish, but as the new nation’s North and West grew, European goods increasingly came to New York City. This growing metropolis was fast becoming the nation’s financial capital and, after 1825, the distribution point for the westward flow of export goods through the Erie Canal. Southerners smelled conspiracy in New York City’s ascendancy, and Congress added insult to injury when it passed a series of dramatic tariff increases in the 1820s. In the eyes of southerners, the most egregious of these were those on low-quality British wool, or “negro cloths,” worn by slaves. Members of the House of Representatives from the Mid-Atlantic states voted sixty to fifteen in favor of the act of 1824, whereas southerners voted sixty-four to three against it.9 Had a direct vote on abolition been placed before Congress that year, the outcome could hardly have been more polarized.
The two protagonists of the tariff controversy of the 1820s and 1830s were Andrew Jackson and South Carolina’s John Calhoun, the latter vice president under both Jackson and his predecessor, John Quincy Adams. Jackson’s coalition assured Calhoun that it would not pass the even more restrictive tariff act threatened by the Adams men. The promise was not kept. The Jackson coalition voted with the Adams men to pass the draconian 1828 Act, better known as the “Tariff of Abominations.” This legislation inflamed the growing estrangement between North and South.10
Nowhere was the anger greate
r than in South Carolina, which had been settled almost two centuries before by expatriate sugar planters from Barbados. Between the censuses of 1790 and 1830, the proportion of slaves had grown from 42 percent to 54 percent of the population. This made the state the American Sparta, with a tiny white elite sitting atop a massive population of black helots. South Carolina, anxious about both restive blacks at home and abolitionists in the North, led the opposition to the new tariffs and asserted the right of states to nullify those federal statutes it found unconstitutional. One South Carolinian congressman, the brooding George McDuffie, railed against the acts of 1824 and 1828 and propounded the “forty bale theory,” which fallaciously equated the 40 percent tariff on imported textiles with a 40 percent reduction in the living standard. “The manufacturer actually invades your barns and plunders you forty out of every hundred bales that you produce.”11
After the passage of the Tariff of Abominations in 1828, the South Carolina legislature asked Vice President Calhoun, the South’s finest constitutionalist, for advice on how the state could nullify the act. He did so, but in secret. For four years the South pushed hard for the easing of duties.
Andrew Jackson, who had been born in South Carolina and raised in Tennessee, assumed the presidency in 1829 determined to assuage the ill feelings of Southern slaveholders and free-traders. But he also wanted to retire the national debt, and that required maintaining tariff revenue. Balancing these two conflicting goals, he kept the nation together by maintaining a “middle and just course”: the moderate Tariff Act of 1832.12 Jackson was helped by the octogenarian James Madison, who warned his fellow southerners against pushing the North too hard. Madison focused his powers of persuasion on Henry Clay, leader of the newborn protectionist Whig Party and a staunch supporter of Hamilton’s American System.
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