The Tariff in Our Times

CHAPTER I. The Tariff As a War Tax

THE TARIFF AS A WAR TAX

If there was any public question on which the minds of the people of the United States were made up fifty years ago, it was that of the tariff. They had not been made up in a day. On the contrary, it had taken nearly seventy years of experimenting to bring them where they were—seventy years in which all forms of taxation on imported goods had been tried, from the supposed 8½ per cent of the first Congress to the 43 per cent of the “tariff of abominations” in 1828. Some of their experiments had been good and some bad, but out of them all they had struck a mean which was something like this: As a nation we intend to raise money to carry on our business by putting a duty on certain raw and manufactured goods brought from foreign countries. If we find we are getting too large a revenue we will cut down the duty, if too small we will raise it. In placing these duties we will do as Alexander Hamilton advised—that is, if there is a young industry in the country trying to produce something which is essential to war or on which our daily living depends, we will protect it from foreign competition until it is established—but no longer.

For ten years the country had been working on this tariff platform, and so satisfied were they with it that when they found in 1857 they were taking in more money than they needed for expenses, they promptly passed a bill cutting the duties down to an average of 20 per cent—the lowest they had been since 1816. The duty on many articles they removed entirely—thus, cheap raw wool was allowed to come in free. Nobody, except the Pennsylvanians, and a few New Englanders, objected strongly to the bill; even the majority of manufacturers and old Henry Clay tariff men agreed. Henry Clay had told them that protective duties were never meant to be perpetual, and they looked upon this lowering of taxes as a natural step in the process of gradual extinction which they had been taught to expect.

Not only was the mind of the country satisfied with lower duties and an increasing list of free goods, but it had accepted the idea that a Christian nation should establish as rapidly as possible reciprocal trade relations with its neighbors. For three years a reciprocity treaty between ourselves and Canada had been working. It was not as good a treaty as might be, and the Canadians were getting greater advantages from it than we; but it could be improved, and there was much pride in the country over the advance it was felt this treaty showed in national broad-mindedness and generosity.

That was fifty years ago. To-day the average tax on dutiable goods imported into the United States is nearer 50 per cent than 20. Instead of reciprocity with Canada we have had for fifty years in many cases prohibitive protection. Why is this? What has become of the theories and practices of fifty years ago?

The answer lies in a curious story—a story of a panic and a war and the natural penalties which panics and wars impose. The panic came first—in 1857, just after Congress had lowered duties to prevent the collection of more money than we needed for actual expenses. It was a logical enough panic—panics always are logical. For several years the country had been making money. It had lost its head over its growing wealth—had speculated, had built railroads faster than they were needed, had spent lavishly. Its expenses finally outran its income and a crash naturally came.

The tariff had nothing whatever to do with the disturbance, but the effect of the panic on the national income was soon evident; straitened for money the country bought less abroad, buying less the revenue was less. In 1857 it had been $64,000,000, but the year after it was but 42 millions, and the year after that (1859) but 48 millions. Instead of too much money, Congress saw itself with too little. Its credit was sadly disturbed, not only or chiefly because of this falling revenue, but because of the agitation of the slavery question and the increasing contention between North and South.

It was natural enough, of course, that when the revenues from imports continued to be too little to pay the government’s bills, there should be a demand for higher duties. This demand was headed by a member of the House of Representatives from Vermont, Mr. Justin S. Morrill.

Mr. Morrill was an able and honest man, who had been sent to Congress by the “Conscience Whigs” of his district—not because he had sought the office, but purely because they believed from what they had seen of him as a merchant in their community, they could trust him to represent them on the slavery question. Now, Mr. Morrill was one of the Whigs who had not been satisfied to see duties lowered in 1857, and who strenuously objected to letting in raw products free of duty. He wanted all wool protected. He wanted his Vermont marble protected. He wanted maple sugar protected. He was one of the few New England representatives who had spoken, as well as voted, against the bill of 1857, and his speech at that time had been very able. Indeed it made him the acknowledged head of the active protectionist sentiment left in the country, for he made no bones about declaring his faith. “Such articles of primary necessity,” he said, “as there is any hope of successfully producing should be waked into life, nursed into perennial vigor by moderate and steady discrimination in their favor, so long as their condition makes it proper, so long as there is a probable chance of ultimate success.”

Mr. Morrill saw the opportunity for reviving protection in 1858 when the revenues were insufficient, and he determined to prepare a new bill which should represent his views. But the interest in the subject at that moment was so little that he could not get a hearing from the House. The next session, however, gave him a rare chance. In the fall of 1859 a Congress largely Republican took its seat. After a fierce fight this Congress elected a Republican speaker, and this speaker put a young man destined to play a large part in National finances at the head of the Ways and Means Committee—John Sherman of Ohio. Mr. Sherman was just 37 years old, and as shrewd, as active, and as experienced a politician as the Republicans had in the House. He had begun his political life when about 21 years old with but two political tenets—hatred of the Democratic party and belief in protection of American industries. Political conscience had been unstirred within him until the repeal of the Missouri Compromise. That turned him into a Crusader. Sherman had been fighting solely against slavery extension for six years, when his appointment to the head of the Ways and Means Committee suddenly made it his duty to consider finances. At once his old faith in protection asserted itself, and he gave full support to Mr. Morrill, who was instructed by the Committee of Ways and Means to prepare a new tariff bill.

Mr. Morrill worked out his bill with great care and patience, and when it came out of committee early in 1860 it represented very nearly what he believed. Mr. Sherman, who from this time on had much to do with tariff bills, says in his autobiography that the Morrill Bill at the start was nearer meeting the double requirement of revenue and protection than any bill he was ever familiar with.

But good as the bill may have been when it came from the committee, it was soon assaulted right and left by those who had something to protect or those who were affected by what it protected. Much of the pressure, Mr. Morrill found, was impossible to resist. What can you do when a Senator of the United States, one so famous as Charles Sumner, “calls your attention” to letting cocoa in free (though according to the principle on which you are working it should pay a slight duty) because his friend, the head of an “eminent house” (the friend was Henry L. Pierce and the “eminent house” was his chocolate factory), wants his cocoa free? What are you to do when Pennsylvania iron men and Rhode Island manufacturers, who according to your theory of protection are established and whose duties should gradually be lowered, come down on you for higher rates, and your party colleagues tell you that if you refuse their requests the election may be lost and the cause of human freedom be retarded? Amendment after amendment was tacked on the bill, many of them in direct contradiction of Mr. Morrill’s principles. They destroyed the justice and the consistency of the measure, and he became so disgusted that he was ready to abandon it. Inconsistency was less troublesome to Mr. Sherman, however. He was a “practical politician,” something Mr. Morrill never was. He believed more revenue to be necessary; he believed in protection; he believed in winning votes for the party wherever and however he could. This bill contributed to all these ends, and he himself undertook to engineer it through the House. Mr. Sherman’s task was made the easier because in May, when the Republicans had met in Chicago to nominate their candidate for president, they had put into their platform a plank which pledged the party to support protection, though they did not have the courage to use the word. This plank was plainly a bid for the vote of communities which could be held to the party only by protection, preëminently the state of Pennsylvania. The great leaders of the party, Mr. Lincoln, Mr. Chase, and Mr. Seward, did not believe that the tariff should be taken up at all at this time. Indeed, only a few days before he was nominated as president Mr. Lincoln wrote to a correspondent that “the tariff question ought not to be agitated in the Chicago Convention.” Mr. Chase had always stood with the Democrats on the matter, and Seward had expressed his view in the Senate in 1857 when the tariff bill was up: “It is not wise, it is not just, to draw from the pockets of the people into the Treasury of the country an amount of money greater than the current expenses of the Treasury require.”

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