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Henry Charles Carey — news, coverage & facts — IJR

Economist

In 1835, Carey read the published 1829–30 lectures of Nassau William Senior titled The Rate of Wages and The Cost of Obtaining Money and published his refutation Essay on the Rate of Wages, with an Examination of the Differences in the Condition of the Laboring Population throughout the World. Carey agreed with Senior's principles and main propositions but criticized Senior's failure to adjust for real wage rates. He remained an advocate of free trade in the essay, writing that "Laissez nous faire is the true doctrine ... it is now so fully understood that the true policy of the United States is freedom of trade and action, that there will be every day less disposition to interfere with it." Nevertheless, his intensely nationalist tone conflicted with economic orthodoxy; Carey identified the purpose of political economy as the promotion of the happiness of nations and the application of national labor for the comfort of workers.

The same year that Essay on the Rate of Wages was published, Carey retired from active business with a fortune and devoted his time to economics and related work. He began work on a text, The Harmony of Nature, which he did not feel adequate for wider publication but which became central to his later thinking. Setting this work aside, he began Principles of Political Economy in 1837, an expansion of his refutation of Senior. He completed the three-volume work in 1840. This work was largely adapted by the French economist Frédéric Bastiat in his own Harmonie Economiques in 1849, with some later accusing Bastiat of plagiarism. The first volume explained Carey's labor theory of value. Its second volume, a comparative study of credit systems in France, Great Britain, and the United States, reads as a defense of the American free banking system, particularly as practiced in New England, in the wake of the Panic of 1837. It was cited favorably by John Stuart Mill in defense of his own arguments for a similar system in Britain. Carey continued to ground his thinking in standard laissez faire doctrine, writing that "Governments have arrogated to themselves the task of regulating the currency, and the natural effect is that nothing is less regular." He would soon thereafter abandon the doctrine.

Rejection of free trade

Following the Panic of 1837 and the success of the protectionist Tariff of 1842, Carey became an open critic of free trade.

Carey's newfound skepticism was based on his empirical observation of tariff history and his belief that some economic law must exist to explain prosperity under protection and bankruptcy under free trade. By Carey's own account, he initially expected the 1842 tariff would prolong the recession; when it did not, he sought an explanation and became convinced "as with a flash of lightning, that the whole Ricardo-Malthusian system is an error and that with it must fall the system of British free trade." Subsequent scholars have challenged Carey's claim of a sudden change of heart by pointing to his earlier opposition to the English occupations of Ireland and India and his support for Friedrich List and the German Zollverein. He may have also been influenced by his own personal experience; between 1837 and 1840, he invested a portion of his publishing wealth in a paper mill that became completely bankrupt. By the end of 1843, Carey was engaged in a public debate with former Vice President John C. Calhoun, a leading advocate for tariff reduction. In 1845, in a pamphlet entitled Commercial Associations in France and England, Carey began to reject wholesale the "British" economics of Thomas Malthus and David Ricardo altogether and sought to develop a critique of their underlying assumptions. At the same time in England, the Manchester school of liberal capitalism reached the apex of its influence with the repeal of the Corn Laws.

Over the course of ninety days in 1848, Carey expanded on this view by writing Past, Present, and Future, which he said was "designed to demonstrate the existence of a simple and beautiful law of nature, governing man in all his efforts for the maintenance and improvement of his condition ... which, nevertheless, has hitherto remained unnoticed." The work argued in favor of a marriage of industry with capital and the necessity of maintaining domestic markets to promote prosperity; it was met with derision from Manchester school economists. The same year, while living in Burlington, New Jersey, Carey founded The Plough, the Loom, and the Anvil, a periodical journal of economic development, with John Stuart Skinner serving as its publisher. Selections of Carey's writings in the journal were compiled into his next work, The Harmony of Interests.

Panic of 1857 and 1860 election

After the United States entered another economic recession, Republicans began to take a new interest in economic policy. Revived calls for protective tariffs enhanced Carey's standing. Senator Simon Cameron was elevated as Pennsylvania's candidate for president on a protectionist platform, and David Wilmot agreed to stand for Pennsylvania's other Senate seat on the same platform. Cameron's campaign was premised on a proposition that no candidate could win without Pennsylvania, and no candidate could win Pennsylvania without supporting protection.

As Carey's influence in the party grew, he began to draw connections between slavery and international trade. In a public debate of letters with William Cullen Bryant on the causes of the Panic, its relationship to slavery, and the Republican response, Carey argued that, "In [Pennsylvania and New] Jersey, the tariff is the one and almost the only question." He positioned slavery as one phase of an international economic system. "Slavery," he argued, "must stand or fall with free trade." Protection would bring about abolition through industrialization, an end to the plantation economy and cotton exports, and the establishment of a Southern middle class.

By 1860, Republicans outside of Pennsylvania remained reluctant to embrace protection. In most Western states, the party was divided, and Senator Henry Wilson, who previously pledged New England's support, urged Carey to be cautious. Republicans in the United States House, led by Justin S. Morrill and James H. Campbell, passed a protective tariff at Carey's urging, though it languished in the Senate into winter.

The platform ultimately declared, "while providing revenue for the support of the general government by duties upon imports, sound policy requires such an adjustment as to encourage the development of the industrial interests of the whole country." Biographer George Winston Smith claimed Carey personally drafted the plank through Pennsylvania judge William Jessup, the platform chair, while Gustave Koerner later claimed it was developed at the behest of Horace Greeley to avoid alienating free trade proponents. Regardless, Republicans in Pennsylvania, led by Carey, made protection the central issue of the campaign and carried the state in the fall elections. Though Abraham Lincoln, the Republican President-elect and former Whig, publicly expressed ignorance on tariffs and pledged to "endeavor to comprehend it more fully," Lincoln historian Reinhard H. Luthin claims that by the time of his election, Lincoln had almost certainly read Carey's work on the subject.

Advisor to Lincoln and Chase

After his election, Abraham Lincoln sought Carey's advice on whether he should nominate Simon Cameron for Secretary of the Treasury. Lincoln initially sought Carey out for his expertise on Pennsylvania politics and Cameron's reputation for corruption, which Carey confirmed despite their prior alliance. Lincoln soon began to consult with Carey on tariff policy. At the same time, Carey backed Lincoln's alternative for Treasury, Salmon P. Chase. Though Chase did not respond to Carey's letters and had a background as a supporter of free trade, Carey preferred to persuade Chase than trust Cameron. Via a sustained correspondence through the summer of 1861, Chase and Lincoln consulted Carey on the tariff, domestic taxation, and financial matters generally. By July, Morrill reported to Carey that although "[Chase's] Philosophy is Free trade or ad valorems," he was "willing to yield" on tariff policy amid the growing cost of the American Civil War. "I think Chase, considering his antecedents, should receive generous treatment by all our friends," Morrill wrote. "He is doing the best he can practically." Carey also used his influence to secure key appointments in the Treasury Department for protectionists, including his trusted adviser Dr. William Elder as the lead tariff architect in the administration.

In the winter of 1860–61 amid Southern secession, Morrill and Campbell pressed tariff protection in the lame duck Congress, and Carey personally went to Washington to direct lobbying efforts. John Sherman, now serving as Chair of Ways and Means, was persuaded to the cause. With most free trade advocates leaving Congress as the result of secession, the bill passed with some amendments in the session's final days. George W. Scranton of Pennsylvania also distributed Carey's writings to all members-elect in the incoming Congress; Carey continued to influence tariff policy in Congress throughout the war, and his views remained dominant in the party long after.

Views

Carey's views are generally described as nationalist and have been described more particularly as associationist and collectivist for his opposition to economic restraints without distinction between private and state monopoly. Carey argued that ultimately, a causal chain could be drawn through "separation of [men], centralization of the mass, subjection of the many to the powerful few, slavery, stagnation, [and] decrease of real civilization." Instead, the chain should be reversed at its start with "association, complexity of interests, decentralization, [and] harmonious increase of power."

Carey's rejection of orthodox English economic theory was borne of a belief that the state, as the coordinating power in society, must intervene to prevent private advantage from working public mischief. Carey argued for developmentalism, positing that state intervention was necessary to remove "the obstacles to the progress of younger communities created by the action of older and wealthier nations."

Carey's philosophy is condensed and summarized in his work The Principles of Social Science, which frames social science and political economy from the perspective of the economic development of the citizen, that is, one belonging to and responsible to a social community. In his Principles of Social Science, Carey appealed to natural law to argue life must be intentionally oriented toward happiness and peace, and suffering is the result of willful ignorance of natural law. One way in which suffering is brought about is by obscuring the "real" man in favor of the "politico-economical man," a two-dimensional monster who "can be made to work, must be fed, and will procreate." Carey therefore defined social science as "the science of laws which govern man in his efforts to secure for himself the highest individuality and the greatest power of association with his fellow men." Political economy is thus the subset of social science that considers the measures that give these natural laws their fullest effect.

Economic nationalism and trade

A common theme in Carey's writing is the limits of international economic association and the necessary of national association, and his best-known policy position was his defense of protective tariffs. He was described by an admirer as "rigid, devoted, and uncompromising" on the issue, and as "a Cato hammering on his one theme." Critics accused Carey of Anglophobia for his hostility to the system of free trade under the British Empire and British theories of political economy in general.

Consistent with the law of comparative advantage, Carey argued global centralization required an international division of labor by which each nation developed only those resources in which it possessed a natural advantage. This system placed despotic power in the hands of those controlling the mediums of exchange; the places these middlemen congregated became the global marketplace. Carey argued this theory was the basis for the British policy of imperialism and free trade, by which the Empire intended to establish a global monopoly on both manufacturing and shipping centered on London, while other nations were resigned to exporting raw materials. To check centralization, Carey thus emphasized the need for human association; in Carey's writing, the natural form of association was the nation, an association of citizens. He suggested that the United States and other nations should interpose protective tariffs between themselves and London, increasing the cost of their raw materials, fostering domestic manufacturing, and depriving British manufacturers of a monopoly on finished goods. This would enable the establishment of a middle class, the abolition of chattel slavery, and the encouragement of patriotic feeling.

Carey emphasized that the final result of industrialization would be the establishment of "perfect free trade" between developed nations, whose range of production would be limited only by absolute natural barriers. His utopian vision was laid out in writing:

"Of the advantage of perfect free trade there can be no doubt. What is good between the states ought to be good the world over. But free trade can be successfully administered only after an apprenticeship of protection. Strictly speaking, taxation should all be direct. Tariff for revenue should not exist. Interference with trade is excusable only on ground of self-protection. A disturbing force of prodigious power pre- vents the loom and spindle from taking and keeping their proper places by the plow and harrow. When the protective regime has counteracted the elements of foreign opposition, obstacles to free trade will disappear and the tariff will pass out of existence. Wars will cease; for no chief magistrate will dare to recommend an increase of direct taxation."

Carey further contrasted this theory of "perfect" free trade to the English system in a letter to Henry Wilson: "Free trade, as ultimated in England, is the most debased ignorance, the most abhorrent cruelty, the most disgusting vice and the most heart-breaking misery that can be seen in any country calling itself civilized and Christian." Despite this stated utopian view, Carey never backed down from his support for high tariffs within his lifetime, believing that the United States had not reached complete economic development.

In addition to his long advocacy for protectionism to obstruct international trade, Carey also opposed the institution of an international copyright law, which he argued would dissolve national boundaries and lead to the formation of publishing monopolies. This would in turn lead to a decline in the quality of literary writing, as the best authors did not write for wide audiences and would derive no benefit from a global market.

Criticism of Ricardo and Malthus

In Principles of Social Science, Carey delivers a lengthy rebuke of David Ricardo and Thomas Malthus. He sharply distinguishes value, "man's power to command the always gratuitous services of nature," from utility, the measure of man's power over nature. Value is limited by reproduction and declines with the increase of combination among men, while utility grows with the extension of human association. Because value is constantly decreasing, Carey posits the power and wealth of the laborer will tend to increase both absolutely and relative to that of capital as population and association increase; he calls this "the most beautiful of all the laws recorded in the book of science. As rents continually diminish, the farmer or laborer finds it easier to make his living. Further, Carey believed that the history of human civilization demonstrated that human progress was from poorer to richer soils, while Ricardo's law of comparative advantage is dependent on the opposite assumption. Charles Herbert Levermore compares Carey's reasoning to that of Pierre Paul Leroy-Beaulieu a half century later.

Malthus, Carey says, "teaches that a monopoly of the land is in accordance with a law of nature. Admiring morality, he promotes profligacy by encouraging celibacy ... Desirous to uplift the people, he tells the landowner and the laborer that the loss of the one is the gain of the other. His book is the true manual of the demagogue, seeking power by means of agrarianism, war and plunder." Carey also criticizes Malthus for failing to prove his ratios of production and consumption, given variation in the growth cycle of plants and the diets of humans over time, and for contradicting the Christian belief of the goodness of God, who would be malicious to create a world which could not sustain the proliferation of humanity. Carey also cites Herbert Spencer to argue "the degree of fertility varies inversely [against the development of] the nervous system," which suggests that resource scarcity is a greater restraint in less developed societies and population is self-regulative.

Essays and pamphlets

Carey wrote an estimated three thousand pages of pamphlets and articles for the New York Tribune; The Plough, the Loom, and the Anvil; the Philadelphia North American, and other publications. Below is a selection of his work.

What Constitutes Currency? What are the Causes of Unsteadiness in the Currency? and What is the Remedy?, 1840.

Commercial Associations of France and England, 1845.

What Constitutes Real Freedom of Trade?, American Whig Review 6, no. 2, 1850.

What the North Desires, —.

Two Diseases Raging in the Union: Anti-Slavery and Pro-Slavery, —.

The Prospect, Agricultural Manufacturing, Commercial, and Financial at the Opening of the Year, 1851.

How to Increase Competition for the Purchase of Labor and How to Raise the Wages of Labor, 1852.

Two Letters to a Cotton Planter, —.

Ireland's Miseries and their Cause, —.

The Working of British Free Trade, —.

British Free Trade in Ireland, —.

Letter to a Farmer of Ohio, —.

Three Letters to Hon. R. M. T. Hunter, —.

The Present Commercial Policy of the County, —.

Letters on International Copyright, Philadelphia, 1853, (2nd ed. 1868).

The North and the South, New York, Ann Arbor, Office of the Tribune, 1854.

Coal: Its Producers and Consumers, —.

American Labor Versus British Free Trade, Philadelphia, 1855.

The True Policy of the South, –.

Present Situation and Future Prospects of American Railroads, –.

Money: A Lecture Delivered before the New York Geographical and Statistical Society, Philadelphia, 1856, (2nd ed. 1860).

The French and American Tariffs Compared, 1861.

Contraction or Expansion? Repudiation or Resumption?, Philadelphia, 1866.

Resources of the Union: A Lecture Before the American Geographical and Statistical Society, 1866.

The National Bank Amendment Bill, –.

The Public Debt, Local and National, Philadelphia, –.

Review of the Decade 1857–67, Philadelphia, —.

The Finance Minister, the Currency, and the Public Debt, 1868.

Resumption: How It May Be Profitably Brought About, 1869.

How protection, increase of public and private revenues, and national independence, march hand in hand together, Philadelphia, 1869.

Review of the Farmer's Question, 1870.

Wealth: Of What Does it Consist?, —.

A Memoir of Stephen Colwell: Read before the American Philosophical Society, Philadelphia, 1871.

The International Copyright Question Considered, 1872.

The Rate of Interest and its Influence on the Relations of Capital and Labor, 1873. (speech to the Pennsylvania Constitutional Convention).

Capital and Labor, 1874. (Report of the Committee on Industrial Interests and Labor in the Pennsylvania Constitutional Convention).

The British Treaties of 1871 and 1874, —.

The Senate Finance Bill, 1875.

Manufactures: At Once an Evidence and a Measure of Civilization, —.

To the Friends of the Union Throughout the Union, 1876.

Appreciation of the Price of Gold: Evidence Before the U.S. Monetary Commission, —.

The Three Most Prosperous Countries in the World, 1877.

Resumption: When and How will it End?, —.

Repudiation: Past, Present, and Future, 1879.