No. 216.] 377 



•which would fall to our share in its distribution. It is therefore ob* 

 vious that the interest especially requiring protection, is not any de» 

 scription of labor, not the manufacturers, but emphatically the 

 currency, next to that labor, and lastly capital j and it is pre- 

 cisely in this order that the influence of the want of protection is 

 developed. First, the excess of imports induces a drain of metal, 

 the basis of the currency; then follows a diminution of the demand 

 for labor, the currency which kept it in demand by furnishing the 

 mea'^s for its employment being withdrawn; next capital feels its 

 force, the value of capital depending upon the activity and scope af- 

 forded to labor. The necessity for protection is not confined to any 

 section of the nation, but is universal like the currency whose inter- 

 ests are primarily involved, and the sections of the country will be 

 subjected to its influence just in proportion to the character of their 

 respective currencies; most powerful where the currency is weakest, 

 and the west and south, where the currencies are most expanded and 

 least sustained by accumulated capital, suffer most severely by the re- 

 vulsions occasioned by want of protection. The same principles are 

 also indicated by observing the operation of an adverse condition of 

 exchanges consequent upon the want of protection inducing excess- 

 ive imports. 



The effect is first perceived at the points of contact with Europe, 

 the Atlantic cities, especially New-York, the great entrepot of foreign 

 commerce. Exchanges, which should rule at nine per cent, or real 

 par, rise to ten per cent, and continuing at that point, excite alarm 

 in the timid capitalist, a slight contraction of the currency takes 

 place, interest advances, and a ripple on the surface of the sea of 

 currency is observed. Exchange advances to ten and a half per cent, 

 specie begins to move towards the centres of exchange, the currency 

 is farther contracted by the banks withholding loans, interest rises to 

 a higher point, and the ripple is succeeded by a wave following its 

 predecessor over the nation; exchange advances to eleven per cent, 

 it is now profitable to export specie, alarm increases, the currency is 

 now rapidly contracted, interest continues to advance, and nothing 

 but the strongest securities will command money at any price. If 

 nothing occurs to check the alarm, it becomes a panic; capitalists 

 hoard, the banks struggle to reduce their liabilities, which only ag- 

 gravates the evil, till their heavy depositors becoming alarmed, sus- 

 pension closes the scene. No change in the real condition of the 

 country has occurred, there has been no loss of property, capital is 

 abundant, and the amount of the excess of imports is a paltry affair, 

 compared with the general wealth or the silm of the domestic ex- 



