Art. VI. THE TARIFF OF 1842.

IN the report of Mr. Walker, Secretary of State, upon the finances of the United States, and his recommendation for the improvement of the revenue, which by law he is required to make, he has adopted some new principles which are worthy of great consideration. They are directly opposed to the principle upon which the revenue has been levied and collected since the adoption of the constitution. They are worthy of the grave consideration of the whole body of the merchants, as their business will be greatly affected. The first we propose to notice, is the abolition of specific duties and the substitution of ad valorem duties.

Upon this great change in the collection of the revenue, we hazard the opinion that no merchant practically acquainted with mercantile pursuits, will agree with him. The great argument in favor of specific duties is, that all will pay an equal duty, and in case of a drawback of the duties, all will know what it is. With respect to ad valorem duties, every person who makes a shipment of merchandise to the United States, fixes his own valuation. Let us suppose a planter in the island of Cuba to make å shipment of the produce of his plantation, consisting of sugar, to this country. He will invoice it at the lowest price that in his opinion it will pass through our custom-house without seizure. The sugars of Brazil, other ports of South America, and the West Indies, will be invoiced at different prices, however fair and honorable the shippers may be. The drawback of duties, in case of exportation, will be different upon each shipment. In many instances, from the difference in the cost of production, and the reduction for the purpose of evading the duties, it will be very great. Upon exportation, therefore, a merchant must ascertain the amount of the duties, to know the amount of the drawback.

Notwith

Let us now view the actual state of our trade with France. standing the tariff of 1842 imposed specific duties, as far as was practicable, on silks by the pound, yet many articles, indeed a great majority, pay an ad valorem duty. Availing himself of the ad valorem duty, the French manufacturer fixes his own valuation to his shipments to this country. They may be invoiced 20 or 25 per cent less than he sells to the Ameri can merchant, or even more, if in his opinion the invoice will pass our custom-house. With respect to French fancy goods, there is not a definite and certain value affixed; as to other articles of merchandise, there is therefore less risk of seizure. But the consequence is, that the great part of the merchandise from France paying an ad valorem duty, is shipped by French manufacturers, and the business is engrossed by them. The American agents, who have been for years resident in Paris to purchase French manufactures, are obliged to leave their business and return to the United States. The same remark may be made with respect to the trade with England. By far the greatest proportion is monopolized by the English manufacturer. The respectable and numerous class of American merchants, who have imported the ad valorem goods from England and France, is now diminishing every year.

It is of some importance to mention the fact, that public opinion in Europe rather sustains any one who makes an advantageous mercantile operation in a foreign country in this manner. It is supposed to be the evidence of ability to transact business advantageously. In this country,

we are conscious that the duties paid to the custom-house, are paid to the support of the government of our choice, and are honestly devoted to it. But public opinion in Europe is very different, as the duties are mostly levied for the support of the kings and nobility.

The Secretary of the Treasury assumes another principle in his report, which is at variance with the experience of this country and the nations of Europe. "Experience proves, that as a general rule, a duty of 20 per cent ad valorem will yield the largest revenue. Now, in the year 1842, the tariff was reduced by the compromise to an average of 24 per cent on the whole amount of merchandise imported, paying duty. What was the result? Not an increase of duties, but a reduction of the duties to a sum less than $13,000,000. The amount was so much less than had been previously received, that the government was nearly bankrupt. What is the experience of the nations of Europe of the effect of high duties? England and France derive immense revenue from duties upon tobacco, spirits, sugar, coffee and tea, varying from 50 to 1600 per cent; upon each of these articles, many millions of dollars. Considered in any respect, the principle is unsound, and at variance with the experience of all nations.

It is stated in his argument upon the tariff, "that the wages of labor had not augmented, since the tariff of 1842, and that in some cases, they have diminished." This assertion is not sustained by any proofs. Now the price of labor in Lowell, regulates the rate in New England. In 1842, the six or seven thousand females who are employed in the factories received $1 50 a week and their board. They now receive $2 a week and their board. The difference is 33 1-3 per cent. Many other instances might be mentioned, but it is unnecessary to adduce more. Now every establishment is in full operation, and there is a great demand for labor at full prices. In 1842, one-half of the mills were stopped, and the wages were reduced.

With respect to the minimums, the Secretary recommends the entire abolition, upon the ground, "that in some instances the cottons pay a duty of 131 per cent, and that there is an average discrimination against the poor, on cotton imports, of 82 per cent, beyond what they would be, if assessed on the actual value." Now, what is the actual state of the case? These low cottons are manufactured here as low, and sold as low, as they are in Great Britain. The poor are supplied at lower prices than they would be, if there was no duty on them by the charges of importa tion, instead of 131 per cent duty. This is known to every merchant of any intelligence, and is proved by the shipment of several millions in value of these cottons, annually, to Asia, Africa, and South America. In these markets, they stand a fair competition with English cottons, and in some instances have driven them out of the market. Indeed, three or four thou sand bales are annually sold in Calcutta, a British possession, under a duty of 15 per cent, which has been recently levied.

The question will be, naturally, why these minimums were introduced into the tariff. The minimum value was prepared by Mr. Lowndes, distinguished politician of South Carolina, with a view to encourage the manufacture of cotton. The minimum value of 20 cents the square yard was fixed upon, with a view to prevent the importation of coarse cottons from India, which in some instances were purchased at a lower rate. The United States were at that period exclusively supplied with coarse cottons from India. The result of the introduction of these minimums into

the tariff, is the entire change of the course of trade. We now ship cargoes of these cottons to the same places from which we imported them twenty years since.

The minimums are now useless and inoperative, with respect to cottons, as we have acquired so much skill in the manufacture, that they cannot be imported at any duty. They are, however, important to the general interest of the manufacturer; they secure the home market, and prevent frauds upon the revenue, by undervaluation; but principally in the manufacture of fine cottons, particularly printed calicoes, in which so much skill has not yet been attained, as to be well sustained without them. The time is rapidly approaching, when, from improvements in machinery, and more experience, they may be with safety abolished.

The charge of the Secretary of the Treasury against the tariff of 1842, that it operates oppressively upon the poor, does not appear to be sustained. So far from it, the greatest part of the cottons consumed in the United States, are purchased as low as they are sold in England. Indeed, the cottons are purchased 50 per cent lower, than they could have been, without a protective tariff, as they would have been subject to a duty, and charges of importation. The protective tariff directed the skill and capital of our people to the manufacture. These remarks will apply to every article which is manufactured by the power-loom, of which we produce the raw material; especially wool. We now produce some articles of woollen manufacture as low as they are produced in England. The woollen manufactures some years since were prostrated by the high duty upon foreign wool. This duty on wool nearly neutralized the protective duty of 40 per cent upon imported woollens. In consequence, one-half of the establishments for the woollen manufacture were for a time abandoned. As the United States did not then produce sufficient wool for the consumption of the manufacturer, the price of wool was graduated by the price at which it could be imported from England, the greatest market. The American manufacturer then paid nearly 50 per cent more for his wool than the English manufacturer. But owing to the operation of the tariff, by its high duty on wool, for the protection of the farmer, we now export wool to a considerable extent to England. The American manufacturer now purchases his wool as low, or lower, than the English manufacturer. As the same causes produce the same effects, with the same improvements in machinery in the woollen manufacture, that we have in the cotton, we may anticipate the same result; not only a supply of our own market at reduced prices, but a considerable export. These advantages are sure to be realized, unless the tariff is so much reduced as to break down the manufacturing establishments.

H. G. R.

MERCANTILE LAW CASES.

BILLS OF EXCHANGE, ETC.-AN IMPORTANT DECISION.

In the Commercial Court, (New Orleans.) Judge Watts presiding.-A. Lanfear & Co. v. R. D. Blossman.

It is not a little singular that a court on the banks of the Mississippi should be called upon to give law to London; nevertheless, as they have seen fit to invoke the aid of this tribunal, I shall proceed to decide upon the rights of the parties, according to the best of my ability. I acknowledge myself greatly indebted to the counsel for the assistance which they have rendered to the court in the argument of the cause. It is proper to observe that a special jury of merchants was summoned in the case, but the parties have seen fit to waive the jury, and refer the matter to the decision of the court, as well upon the facts as the law.

On the 23d day of February, 1843, the defendant, Blossman, applied to Lanfear & Co., discounters, or buyers of bills of exchange, to cash his draft, or bill of exchange, of that date, on De Tastet & Co., of London, for the sum of £3,324 4s. 3d. sterling. The bill was drawn in the usual form, to the order of the drawer, at sixty days after sight, and endorsed by him in blank; the bill of exchange was accompanied by a bill of lading for 344 bales of cotton, shipped by the "Provincialist." The bill of lading was filled to deliver to the order of Blossman, and endorsed by him also in blank. The bill of exchange, thus accompanied, was negotiated to Prime, Ward & King, of New York, and by them, as is alleged, negotiated to Barings & Co. of London. De Tastet & Co. offered to accept the bills of exchange, when presented to them for that purpose, provided Barings & Co. would deliver up the bills of lading; the bills of lading being refused, the bills of exchange were protested for non-acceptance, and ultimately for non-payment, and Blossman duly notified thereof. The cotton was taken possession of and sold by Barings & Co., but did not produce a sufficient sum to cover the bills of exchange. It is alleged that Prime, Ward & King paid the deficiency to the Barings, and that Lanfear & Co. have refunded this sum to Prime, Ward & King, and the real object of the present action is to recover the deficiency so paid, with damages, interest, cost of protest, etc. I see nothing special in the particular circumstances of the present case, but consider that the court is called upon to decide the naked and abstract question as to what are the rights of a holder of a bill of exchange, acompanied by a bill of lading, to wit: whether, as a general rule, such holder is bound to give up the bill of lading, on the acceptance of the bill of exchange, or whether he is entitled to retain it until the payment of the bill of exchange; and on the other hand, whether, suppose that the drawee is bound in other respects to accept the bill of exchange, he can refuse such acceptance, if the bill of lading be withheld, and thus throw the shipment, and all the consequent damages, on the holder of the bill of exchange, by reason of his refusal to deliver up the bill of lading. For the purpose of deciding this question, we shall at first assume that the drawee is in good mercantile standing, and that his credit has not been impaired since the bill was drawn, so as to place him in failing cir

cumstances.

The grand division of contracts is into express and implied. Express contracts are those in which the parties have minutely provided for all the details of their agreement. Implied contracts are those in which, from one or two substantive acts of the parties, there flow a variety of consequences and inferences which materially affect their rights. Commercial contracts are so numerous, multifarious and transitory, that business could not be transacted if the parties were required to reduce to express agreement, either verbal or written, all the details of their contracts. Hence they are left to be governed by direct inferences from one or two substantive acts of the parties, or by such customs and usages as are found convenient in the transaction of business. Commercial contracts are not out of the pale of the principles of law relative to contracts generally, but those

principles of the law of contracts receive modifications from the customs and usages of trade, and even the most positive rules of law bend to such usages when they are clear and explicit.

I shall examine the question presented in this case under both points of view. First-What are the legal consequences and inferences to be deduced from the act of the drawer of a bill of exchange and shipper of cotton presenting such bill of exchange accompanied by a bill of lading to a capitalist or banker for discount? In such an act, there is a direct implication that the bill of exchange is drawn against the property covered by the bill of lading; in such cases the property covered by the bill of lading, or to avoid periphrasis, we will say the cotton, is either bought by virtue of orders given by the foreign house on whom the bill is drawn; in which case, the bill of exchange is to be considered as drawn to pay for the cotton, or else it is a shipment by the drawer of the bill of exchange, of cotton bought for his own account and risk; and the bill of exchange is to be considered as a demand on the English house, to make an advance upon the cotton thus shipped to their consignment. If the cotton has been bought by virtue of orders given, it is easy to perceive that the English house may refuse to accept, on the ground that their orders have been violated or departed from in some particulars, which authorizes them to refuse acceptance. In the present case, a very intelligent witness gave it as his opinion that the orders had been violated so as to authorize De Tastet & Co. to refuse acceptance; perhaps I do not concur in this opinion, and I do not cite it as bearing upon the case, because acceptance was not refused on the ground, but only to illustrate the general principle of the risk which the buyers of those bills run, when they purchase or discount them. On the other hand, if the bill of exchange is a demand for an advance on the shipment, made on the shipper's account, the house on whom the bill of exchange is drawn, may refuse to accept, because it considers the advance exceeds the value of the property, which may also come to a falling market, and the house may be unwilling to become the creditors of the drawer of the bill of exchange. The bill of exchange, in its inception, is an incomplete contract, and is only rendered complete by the acceptance of the person on whom it is drawn.

It is manifest that such are the facts and circumstances out of which the double contract springs, and that they ought to regulate and govern the rights of the parties.

From these various facts and circumstances, to wit: 1st. That when a bill of exchange is accompanied by a bill of lading, there is a direct implication that the bill of exchange is drawn for the payment of, or as an advance upon the shipment; 2nd. That the bill of exchange at the place where it is drawn, is an incomplete contract; and for the reasons above stated, may never be completed by the acceptance; I draw the direct inference that the bill of lading accompanies the bill of exchange, in order to insure the completion of the contract; or if it should be refused, to protect the holder and the drawer of the bill of exchange from the consequences of the refusal to accept, by applying the proceeds of the property upon which the bill of exchange was grounded, to the discharge of the obligation of the drawer. There is another point of view strongly illustrative of the rights of the parties. Blossman is a vender, or a quasi vender of the cotton, on a credit of sixty days, after the presentation of the bills of exchange for acceptance. If he presented himself in person, or through an agent, he would have a right to demand the acceptance of the bills, but he must surrender the property, to wit: the bill of lading; he would not have a right to demand payment, or to retain bills of lading until payment; such a proceeding would be contrary to the rights of De Tastet & Co. on the face of the papers, as it would be turning a credit contract into a cash one. Lanfear & Co., and any subsequent holder of the bill, only acquired the rights of Blossman, and are subject to the same obligations. The corollary from these premises is, that when the main contract is completed, to wit: the bill of exchange is accepted, the holder is immediately bound to surrender the bill of lading to the accepter. These principles seem to be so plain, simple and conclusive, that it appears extraordinary that any difference of opinion should exist on the subject. Having arrived at this conclusion, it may