Ciisfonis Credits 189 



sales to retailers it provided him free of cost with the active use 

 of government funds. ^"^ The importers were accordingly 

 strongly opposed to cash customs duties or shortened credits as 

 provided in the bill of 1820.^'^^ Undoubtedly the advantage from 

 this free continuing loan on government account did not accrue 

 wholly to the importers ; for. to the degree that they were in 

 competition, they would be forced to pass the advantage on to 

 the consumers, by way of lower prices of the products handled. 

 It is impossible to determine the exact extent of this percolation. 



It was argued that this generous provision of commercial 

 funds by the government was particularly advantageous to the 

 younger and smaller importers, and that the abolition of such 

 credits and the insistence upon cash payment of duties would 

 not only curtail importations but would create and retain a 

 monopoly of foreign trade in the hands of the large foreign 

 and home capitalists. ^°" This became the most popular defense 

 of customs credits ; but the small importers were willing to forego 

 customs credits if that would defeat the auction system.^"' By 

 1820 the country possessed considerable free capital which might 

 be borrowed by importers on practically the same security as 

 had to be given the government. ^°^ 



The customs credit system did not discriminate between goods 

 imported by American importers and on American account and 

 those imported on foreign account. It seems that customs credits 

 and auctions gave the British an advantage over the American 

 importer and increased his commercial capital by the amount of 

 duties."'' It was possible for the British agent to turn his goods 

 three times within the average period of the credits and his 



"*Niles, 18: 299; Annals of Congress, i6th Congress, ist session, p. 

 2305. Customs credits helped to make the fortunes of N. L. and G. 

 Griswold, John Jacob Astor, and Th. H. Smith. Barrett, Old Merchants, 

 I. 32. 



^"° See resolutions of merchant associations as reported, Niles, 18: 306; 

 19: 168, 222; 33: 380, and Annals of Congress, 15th Congress, ist session, 

 p. 368. 



^'"Bolles, I, 495; Xo. Am. Review, XII: 66; Annals of Congress, i6th 

 Congress, ist session, 2306. 



^''' See arguments against the bill of 1820, Niles, 18 : 305. 



^"^ Annals of Congress, i6th Congress, 2d session, p. 1652; Niles, 27: 305. 



^*" Niles, 18: 300, describes the manner of this. The Liverpool packets, 

 by increasing the turnover, added to this advantage. 



