later than this, or in 1857, a bill making a further reduction was passed. This brought the general line of duties to a lower level than it had touched since before the war of 1812. A few months after the cut in duties in 1857 the panic of that year occurred, but it was not wholly due to the cut. Speculation in lands in the West, and the vicious banking system with its "wild-cat" currency in operation throughout a large part of the West and South, helped to bring on the convulsion. The balance of trade was against the country during almost the entire life of the tariffs of 1846 and 1857, and in nearly every year of the period the gold exportation was heavy. Though the merchandise imports were larger, the duties under the act of 1857 were so low that the Government's revenue fell short of its expenditures, loans had to be made and the debt was increased. Manufacturers at the same time cried out for higher duties for the purpose of protection. With the In the Vermont State Convention, which met on July 13, 1854, and Vermont Leads which adopted the name Republican for the new party which was just arising to keep slavery out of Kansas, there was framed a declaration of principles in which appears this demand: "A tariff for revenue, with proper discrimination in favor of American industry." This was the earliest tariff plank ever placed in a Republican platform. Other States in the next few years made similar declarations, but none were incorporated in a platform of a National Convention until the party was six years old. Here is the first tariff plank which ever appeared in a Republican national platform: "That, while providing revenue for the support of the General Government by duties upon imports, sound policy requires such an adjustment of these imposts as to encourage the development of the industrial interests of the whole country." This declaration was made by the Republican National Convention of 1860. It was said at the time that this utterance was for the purpose of winning Pennsylvania's vote for the party. It should be remembered, however, that the Whig element of the Republican party, which was its largest ingredient, and which comprised such leaders as Seward, Lincoln, Sherman, Greeley, Weed, Fessenden, Collamer and Corwin, always had leanings toward protection as a policy. First Republi- The Morrill But before the Republican Convention of 1860 met, a measure passed the House which was discussed oftener and longer in the coming years than any other act of its class ever placed on the national statute book. This was the Morrill tariff. It received this name from Justin S. Morrill, a member of the sub-committee of the Ways and Means Committee, who reported the bill and who took a prominent part in framing it. The object of the bill was revenue and incidental protection, both of which were assailed by the law of 1857. "The Morrill tariff bill," said an eminent statesman, then and still in Congress, 'came nearer than John Sherman any other to meeting the double requirements of providing ample revenue for the support of the Government and of rendering the proper protection vol. i., p. 188. to home industries." in "Recollections of Forty Years," tion of the War Period. The Morrill tariff bill passed the House, in which the Republicans had a plurality, on May 11, 1860, by a vote of 105 to 64, but it was obstructed in the Democratic Senate until after the withdrawal of many Southern members on the secession of their States, when it went through that body by a vote of 25 to 14, on February 20, 1861, and was signed by President Buchanan on March 2. The act changed, as far as practicable, the ad valorem rates of the tariff of 1857 to the specific form, and advanced most of them. The principal increase was on iron and wool and the products of each. At the time when it was framed, however, there was no serious expectation of war, and it proved inadequate for the revenue demands. which the creation and support of large armies and a strong navy entailed. Mr. Morrill estimated that it would produce $65,000,000 a year, which would be sufficient for the requirements of peace, but which was far below the needs of war even in the first six months of the conflict. Every possible source of revenue was utilized during the war, and Tariff Legisla- the tariff, as a consequence, was changed often, usually, of course, increased. On some articles the rates of duties defeated the purpose of their imposition by being pushed so high as to be prohibitive. The tariff was changed more than forty times between March 2, 1861, and March 3, 1883, often only slightly, however, the entire series of acts and modifications of acts, except that of 1883, which made a general revision of the entire list of duties and internal taxes, being known as the Morrill tariff. Internal Revenue and Income Taxes. Ellis H. Roberts' "Govern ment Rev enue," p. 122. August 5, 1861, during the extra session, the first change was had. It made an advance on most of the rates established on March 2 of that year, and added some commodities to the dutiable list. An internal revenue act was passed July 1, 1862, putting a tax on many articles of home production, and the articles and the rates were often increased in the next few years. Taxation of incomes began with an act of August 5, 1861, and, with many changes, was continued until 1872, when it was abolished. A few industries were taxed out of existence by the internal revenue tax. The first tax on incomes was 3 per cent on all incomes The lowest amount exempted in the various changes over $800 a year. During the latter part of the war "every mode of taxation known to men was adopted except the French octroi, Government monopolies in necessaries of life and public lotteries." The situation in the United States at that time was very much like that described in England by Sydney Smith: "Taxes upon every article which enters into the Sydney Smith mouth or covers the back, or is placed under the foot-taxes upon everything which is pleasant to see, hear, feel, smell or taste-taxes upon warmth, light and locomotion-taxes on everything on earth and the waters under the earth, on everything that comes from abroad or is grown at home-taxes on the raw material-taxes on every fresh value on British Taxes. that is added to it by the industry of man-taxes on the sauce which pampers man's appetite, and the drug that restores him to health-on the ermine which decorates the judge and the rope which hangs the criminal-on the poor man's salt and the rich man's spice--on the brass nails of the coffin and the ribbons of the bride-at bed or board, couchant or levant, we must pay." On March 2, 1867, when duties on wool and woolen goods were advanced, the war imposts reached their highest point. A turn toward lower rates was made soon afterward. A reduction in internal taxes began in 1866 and continued to 1883, the act of March 3 of that year abolishing all these except on spirits, fermented liquors, tobacco, and bank circulation, to which, in 1886, oleomargarine was added. A decided downward tendency in duties began with the law of July 14, 1870, affecting many articles. Tea and coffee were placed on the free list May 1, 1872; and June 1, 1872, a cut of 10 per cent in duties was made on most of the commodities on the tariff schedules, while July 1, 1879, quinine was made free. Before the latter date, however, an upward swing in duties set in. The panic of 1873 reducing the Government's income, the 10 per cent cut from the duties in 1872 was restored March 3, 1875. A few changes, generally of minor importance, were made in the next few years, and on March 3, 1883, an act based in a general way on a report of the Tariff Commission appointed by President Arthur was signed. Edinburgh Review, 1820. The Tariff's Taxes Turn Duties Temporarily Advanced. This act has a curious history. The Tariff Commission appointed Tariff of 1883. under the act approved May 15, 1882, made a report which went over all the tariff schedules, and recommended reductions ranging from 5 or 6 per cent up to 40 or 50 per cent, the general average of the cut being about 20 per cent. These reductions were in line with suggestions made by the President. On the basis of the commission's report the Committee of Ways and Means reported a bill to the House January 16, 1883. Meantime a bill to reduce internal revenue taxation, which had previously passed the House, was reported by the Finance Committee to the Senate January 4, 1883, with amendments in line with the Tariff Commission's suggestions covering all the tariff, and was passed by that body February 19 by a vote of 42 to 19. The House abandoned its own bill, but was disposed to resent this action of the Senate as being contrary to the provision of the Constitution which declares that "all bills for raising revenue shall originate in the House of Representatives,” and non-concurred in the Senate's amendments. A conference committee of members of both branches took the matter up and agreed upon a report, leaving the bill in form and scope substantially as the Senate framed it, but advancing some of the duties above the Senate's figures. The Treasury surplus or excess of receipts over ordinary expenditures, which amounted to $100,000,000 in the fiscal year 1881, $145,000,000 in 1882, and $133,000,000 in 1883, dictated the reduction Treasury Surpluses. See Chapter X. in the last named year. The surpluses were a perplexing problem from 1881 to 1890. But Frederick D. Grant was right when he said that surpluses are easier to manage than deficits. Often and often since the end of the fiscal year 1892 has a return of this problem which disturbed Secretaries Folger, Gresham, Manning, Fairchild and Windom been sighed for by Treasury chiefs. This is a rapid survey of the general tariff and internal revenue legislation from the beginning of the war down to and including 1883. The tariff was not changed again until 1890, when the McKinley act was passed. This act will be treated in a subsequent chapter. 44 |