Part 996

The assembling of the 50th Congress, on the 6th of December, 1887, was signalized by a message from President Cleveland which produced an extraordinary effect, decisively lifting the tariff question into precedence over all other issues in national politics, and compelling the Democratic Party to array its lines distinctly and unequivocally against the upholders of "protection" as an economic policy. He emphasized the "paramount importance of the subject" impressively by passing by every other matter of public concern, and devoting his message exclusively to a consideration of the "'state of the Union' as shown in the present condition of our Treasury and our general fiscal situation." The condition of the Treasury to which the President called attention was one of unexampled plethora. "On the 30th day of June, 1885, the excess of revenues over public expenditures, after complying with the annual requirement of the Sinking-Fund Act, was $17,859,735.84; during the year ended June 30, 1886, such excess amounted to $49,405,545.20; and during the year ended June 30, 1887, it reached the sum of $55,567,849.54." "Our scheme of taxation," said the President, "by means of which this needless surplus is taken from the people and put into the public treasury, consists of a tariff or duty levied upon importations from abroad, and internal-revenue taxes levied upon the consumption of tobacco and spirituous and malt liquors. It must be conceded that none of the things subjected to internal-revenue taxation are, strictly speaking, necessaries; there appears to be no just complaint of this taxation by the consumers of these articles, and there seems to be nothing so well able to bear the burden without hardship to any portion of the people. But our present tariff laws, the vicious, inequitable, and illogical source of unnecessary taxation, ought to be at once revised and amended. These laws, as their primary and plain effect, raise the price to consumers of all articles imported and subject to duty, by precisely the sum paid for such duties. Thus the amount of the duty measures the tax paid by those who purchase for use these imported articles. Many of these things, however, are raised or manufactured in our own country, and the duties now levied upon foreign goods and products are called protection to these home manufactures, because they render it possible for those of our people who are manufacturers to make these taxed articles and sell them for a price equal to that demanded for the imported goods that have paid customs duty. So it happens that while comparatively a few use the imported articles, millions of our people, who never use and never saw any of the foreign products, purchase and use things of the same kind made in this country, and pay therefor nearly or quite the same enhanced price which the duty adds to the imported articles. Those who buy imports pay the duty charged thereon into the public treasury, but the majority of our citizens, who buy domestic articles of the same class, pay a sum at least approximately equal to this duty to the home manufacturer. … The difficulty attending a wise and fair revision of our tariff-laws is not underestimated. It will require on the part of Congress great labor and care, and especially a broad and national contemplation of the subject, and a patriotic disregard of such local and selfish claims as are unreasonable and reckless of the welfare of the entire country. Under our present laws more than 4,000 articles are subject to duty. {3085} Many of these do not in any way compete with our own manufactures, and many are hardly worth attention as subjects of revenue. A considerable reduction can be made in the aggregate by adding them to the free list. The taxation of luxuries presents no features of hardship; but the necessaries of life used and consumed by all the people, the duty upon which adds to the cost of living in every home, should be greatly cheapened. The radical reduction of the duties imposed upon raw material used in manufactures, or its free importation, is of course an important factor in any effort to reduce the price of these necessaries. … It is not apparent how such a change can have any injurious effect upon our manufacturers. On the contrary, it would appear to give them a better chance in foreign markets with the manufacturers of other countries, who cheapen their wares by free material. Thus our people might have an opportunity of extending their sales beyond the limits of home consumption—saving them from the depression, interruption in business, and loss caused by a glutted domestic market, and affording their employes more certain and steady labor, with its resulting quiet and contentment. The question thus imperatively presented for solution should be approached in a spirit higher than partisanship. … But the obligation to declared party policy and principle is not wanting to urge prompt and effective action. Both of the great political parties now represented in the Government have, by repeated and authoritative declarations, condemned the condition of our laws which permits the collection from the people of unnecessary revenue, and have, in the most solemn manner, promised its correction. … Our progress toward a wise conclusion will not be improved by dwelling upon the theories of protection and free trade. This savors too much of bandying epithets. It is a condition which confronts us—not a theory. Relief from this condition may involve a slight reduction of the advantages which we award our home productions, but the entire withdrawal of such advantages should not be contemplated. The question of free trade is absolutely irrelevant."—The President's emphatic utterance rallied his party and inspired a more united effort in the House to modify and simplify the tariff. Under the chairmanship of Mr. Mills, of Texas, a bill was framed by the Committee of Ways and Means and reported to the House on the 2d of April, 1888. "We have gone as far as we could," said the Committee in reporting the bill, "and done what we could, in the present condition of things, to place our manufactures upon a firm and unshaken foundation, where they would have advantages over all the manufacturers of the world. Our manufacturers, having the advantage of all others in the intelligence, skill, and productive capacity of their labor, need only to be placed on the same footing with their rivals in having their materials at the same cost in the open markets of the world. In starting on this policy, we have transferred many articles from the dutiable to the free list. The revenues now received on these articles amount to $22,189,595.48. Three-fourths of this amount is collected on articles that enter into manufactures, of which wool and tin-plates are the most important. … The repeal of all duties on wool enables us to reduce the duties on the manufactures of wool $12,332,211.65. The largest reduction we have made is in the woolen schedule, and this reduction was only made possible by placing wool on the free list. There is no greater reason for a duty on wool than there is for a duty on any other raw material. A duty on wool makes it necessary to impose a higher duty on the goods made from wool, and the consumer has to pay a double tax. If we leave wool untaxed the consumer has to pay a tax only on the manufactured goods. … In the woolen schedule we have substituted ad valorem for specific duties. The specific duty is the favorite of those who are to be benefited by high rates, who are protected against competition, and protected in combinations against the consumer of their products. There is a persistent pressure by manufacturers for the specific duty, because it conceals from the people the amount of taxes they are compelled to pay to the manufacturer. The specific duty always discriminates in favor of the costly article and against the cheaper one. … This discrimination is peculiarly oppressive in woolen and cotton goods, which are necessaries of life to all classes of people." The ad valorem duty on woolen goods proposed by the committee in accordance with these views, ranged from 30 to 45 per cent., existing rates being reckoned as equivalent to about from 40 to 90 per cent. ad valorem. Duties on cottons were fixed at 35 to 40 per cent. On steel rails the bill proposed a reduction from $17 per ton to $11. It lowered the duty on pig-iron to $6 per ton. It diminished the tariff on common earthenware from 60 to 35 per cent.; on china and decorated earthenware from 60 to 45 per cent.; on window-glass from 93 and 106 to 62 and 68 per cent. It put tin plates on the free list, along with hemp, flax, lumber, timber, salt, and other materials of manufacture and articles in common use. These were the more important modifications contemplated in what became known as "the Mills Bill." After vigorous debate, it was passed by the Democrats of the House with a nearness to unanimity which showed a remarkable change in the sentiment of their party on the subject. Only four Democratic representatives were found voting in opposition to the measure. In the Senate, where the Republicans were in the majority, the measure was wrecked, as a matter of course. The protectionists of that body substituted a bill which revised the tariff in the contrary direction, generally raising duties instead of lowering them. Thus the issue was made in the elections of 1888.

TARIFF: (United States): A. D. 1890. The McKinley Act.

"In the campaign of 1888 the tariff question was the issue squarely presented. … The victory of the Republicans … and the election of President Harrison were the results. … The election was won by a narrow margin, and was affected by certain factors which stood apart from the main issue. The independent voters had been disappointed with some phases of President Cleveland's administration of the civil service, and many who had voted for him in 1884 did not do so in 1888. … On the whole, however, the Republicans held their own, and even made gains, throughout the country, on the tariff issue; and they might fairly consider the result a popular verdict in favor of the system of protection. But their opposition to the policy of lower duties, emphasized by President Cleveland, had led them not only to champion the existing system, but to advocate its further extension, by an increase of duties in various directions. … {3086} Accordingly when the Congress then elected met for the session of 1889-90, the Republican majority in the House proceeded to pass a measure which finally became the tariff act of 1890. This measure may fairly be said to be the direct result of Mr. Cleveland's tariff message of 1887. The Republicans, in resisting the doctrine of that message, were led by logical necessity to the opposite doctrine of higher duties. … Notwithstanding grave misgivings on the part of some of their leaders, especially those from the northwest, the act known popularly as the McKinley bill was pushed through."

_F. W. Taussig, Tariff History of the United States, chapter 5._

The bill was reported to the House of Representatives by the Chairman of its Committee on Ways and Means, Mr. McKinley, on the 16th of April, 1890. "We have not been so much concerned," said the majority of the Committee in their report, "about the prices of the articles we consume as we have been to encourage a system of home production which shall give fair remuneration to domestic producers and fair wages to American workmen, and by increased production and home competition insure fair prices to consumers. … The aim has been to impose duties upon such foreign products as compete with our own, whether of the soil or the shop, and to enlarge the free list wherever this can be done without injury to any American industry, or wherever an existing home industry can be helped without detriment to another industry which is equally worthy of the protecting care of the Government. … We have recommended no duty above the point of difference between the normal cost of production here, including labor, and the cost of like production in the countries which seek our markets, nor have we hesitated to give this quantum of duty even though it involved an increase over present rates and showed an advance of percentages and ad valorem equivalents." On the changes proposed to be made in the rates of duty on wool and on the manufactures of wool—the subject of most debate in the whole measure—the majority reported as follows; "By the census of 1880, in every county in the United States except 34, sheep were raised. In 1883 the number of sheep in the United States was over 50,000,000, and the number of persons owning flocks was in excess of a million. This large number of flock-masters was, to a considerable extent, withdrawn from the business of raising grain and other farm products, to which they must return if wool-growing cannot be profitably pursued. The enormous growth of this industry was stimulated by the wool tariff of 1867, and was in a prosperous condition prior to the act of 1883. Since then the industry has diminished in alarming proportions, and the business has neither been satisfactory nor profitable. … By the proposed bill the duties on first and second class wools are made at 11 and 12 cents a pound, as against 10 and 12 under existing law. On third-class wool, costing 12 cents or less, the duty is raised from 2½ cents a pound to 3½ cents, and upon wool of the third class, costing above 12 cents, the duty recommended is an advance from 5 to 8 cents per pound. … There seems to be no doubt that with the protection afforded by the increased duties recommended in the bill the farmers of the United States will be able at an early day to supply substantially all of the home demand, and the great benefit such production will be to the agricultural interests of the country cannot be estimated. The production of 600,000,000 pounds of wool would require about 100,000,000 sheep, or an addition of more than 100 per cent to the present number. … The increase in the duty on clothing wool and substitutes for wool to protect the wool growers of this country, and the well-understood fact that the tariff of 1883, and the construction given to the worsted clause, reduced the duties on many grades of woollen goods to a point that invited increasing importations, to the serious injury of our woollen manufacturers and wool growers, necessitate raising the duties on woollen yarn, cloth and dress goods to a point which will insure the holding of our home market for these manufactures to a much greater extent than is now possible. The necessity of this increase is apparent in view of the fact already stated that during the last fiscal year there were imports of manufactures of wool of the foreign value of $52,681,482, as shown by the undervalued invoices, and the real value in our market of nearly $90,000,000—fully one-fourth of our entire home consumption—equivalent to an import of at least 160,000,000 pounds of wool in the form of manufactured goods. In revising the woollen-goods schedule so as to afford adequate protection to our woollen manufacturers and wool growers we have continued the system of compound duties which have proved to be so essential in any tariff which protects wool, providing first for a specific compensatory pound or square yard duty, equivalent to the duty which would be paid on the wool if imported, for the benefit of the wool grower, and an ad valorem duty of from 30 to 50 per cent, according to the proportion of labor required in the manufacture of the several classes of goods, as a protection to the manufacturer against foreign competition, and 10 per cent additional upon ready made clothing for the protection of the clothing manufacturers. … In computing the equivalent ad valorem duty on manufactures of woollens, the combinations of both the specific duty, which is simply compensatory for the duty on the wool used, of which the wool grower receives the benefit, and the duty which protects the manufacturers, makes the average resultant rate of the woollen-goods schedule proposed 91.78 per cent."

_Report of the Committee on Ways and Means._

"Substantially as reported from the Committee on Ways and Means, it [the McKinley Bill] passed the House, after two weeks' debate, May 21 [1890]. The vote was a strictly party one, except that two Republicans voted in the negative. June 19 the bill was reported from the Senate Committee on Finance with a very large number of amendments, mainly in the way of a lessening of rates. After debating the project during nearly the whole of August and a week in September, the Senate passed it by a strict party vote, September 10. The differences between the houses then went to a conference committee. The bill as reported by this committee, September 26, was adopted by the House and Senate on the 27th and 30th respectively and approved by the President October 1. On the final vote three Republicans in each house declined to follow their party. The law went into effect October 6. {3087} Prominent features of the new schedules are as follows:

steel rails reduced one-tenth of a cent per lb.;

tin plates increased from one cent to two and two-tenths cents per lb., with the proviso that they shall be put on the free list at the end of six years if by that time the domestic product shall not have reached an aggregate equal to one-third of the importations;

unmanufactured copper substantially reduced;

bar, block and pig tin, hitherto on the free list, receives a duty of four cents per lb. to take effect July 1, 1893, provided that it be restored to the free list if by July 1, 1895, the mines of the United States shall not have produced in one year 5,000 tons;

a bounty of one and three-fourths and two cents per lb. upon beet, sorghum, cane or maple sugar produced in the United States between 1891 and 1905;

all imports of sugar free up to number 16, Dutch standard, in color and all above that one-half cent per lb. (formerly from three to three and a half cents), with one-tenth cent additional if imported from a country that pays an export bounty;

a heavy increase on cigar wrappers and cigars;

a general and heavy increase on agricultural products, e. g. on beans, eggs, hay, hops, vegetables and straw;

a heavy increase on woolen goods, with a new classification of raw wool designed to give more protection;

paintings and statuary reduced from 30 to 15 per cent.

The following (among other) additions are made to the free list: beeswax, books and pamphlets printed exclusively in languages other than English, blue clay, coal tar, currants and dates, jute butts and various textile and fibrous grasses, needles, nickel ore, flower and grass seeds and crude sulphur. … Among the 464 points of difference between the two houses which the conference committee had to adjust, some of the more important were as follows: paintings and statuary, made free by the House and kept at the old rate by the Senate, were fixed at half the old rate; binding twine, made free by the Senate in favor of Western grain-raisers but taxed by the House to protect Eastern manufacturers, fixed at half the House rate; the limit of free sugar fixed at number 16, as voted by the House, instead of number 13, as passed by the Senate, thus including in the free list the lower grades of refined as well as all raw sugar. The question of reciprocity with American nations was injected into the tariff discussion by Secretary Blaine in June. In transmitting to Congress the recommendation of the International American Conference for improved commercial relations, the secretary dilated upon the importance of securing the markets of central and South America for our products, and suggested as a more speedy way than treaties of reciprocity an amendment to the pending tariff bill authorizing the President to open our ports to the free entry of the products of any American nation which should in turn admit free of taxation our leading agricultural and manufactured products. In July Mr. Blaine took up the idea again in a public correspondence with Senator Frye, criticizing severely the removal of the tariff on sugar, as that on coffee had been removed before, without exacting trade concessions in return. He complained that there was not a section or a line in the bill as it came from the House that would open the market for another bushel of wheat or another barrel of pork. The Senate Finance Committee acted upon the suggestion of the secretary by introducing an amendment to the bill authorizing and directing the President to suspend by proclamation the free introduction of sugar, molasses, coffee, tea and hides from any country which should impose on products of the United States exactions which in view of the free introduction of sugar etc. he should deem reciprocally unequal and unreasonable. The rates at which the President is to demand duties upon the commodities named are duly fixed. This reciprocity provision passed the Senate and the conference committee and became part of the law."

_Political Science Quarterly: Record of Events, December, 1890._

TARIFF: (United States): A. D. 1894. The Wilson Act. Protected interests and the Senate.