The Civil War wrought many changes in the people of the United States, and none more amazing than that in their attitude toward money—the amount they could spend—the methods by which it could be raised. Here was a people who in 1859 had looked with dismay on a debt of $58,000,000 facing confidently one of $2,800,000,000; a people to whom in 1860 raising an income of $62,000,000 had seemed difficult, actually provided in 1866 one of $559,000,000; a people to whom direct taxes had always been abhorrent and who had repudiated high tariffs, submitting patiently to both as one of the dire necessities of war. The war was over, but the debt and the extraordinary expenses remained, and to meet them harsh and sweeping taxation must be continued. This was plain to everybody, but it was equally plain to those who studied the balance sheet of the treasury that many things could be done to equalize and reduce the taxation. The debt itself could be readjusted to be much less burdensome. As it stood it was made up of some twenty different kinds of paper;—bonds, treasury notes, certificates of indebtedness of all kinds due at nearly twenty different dates, and drawing almost as many different rates of interest. The paper currency which kept the money market in a constant state of unrest could be redeemed. Great economies could be made in the administration of the government. These things done and a careful estimate of essential expenses computed, nobody had any doubt but that the people would That the revision of the revenue was work for experts, not for politicians, had been realized before Mr. Lincoln’s death, and in March, 1865, a commission had been appointed to look into the whole subject and report. The head of this commission was a man who was to wield a big influence in the country in the next few years, and one to whom we owe more credit than he has ever received, David A. Wells. Mr. Wells was a New England man, who had first attracted attention by planning and constructing in the printing office of the Springfield Republican, where he wrote editorials, the first machine ever made for folding newspapers. He made money from his invention, and used some of it in giving himself a scientific training at Harvard as a special pupil of Louis Agassiz. In 1864 Mr. Wells, who had become interested in economic problems, wrote a pamphlet, called “Our Burden and Our Strength,” which attracted general attention, both here and abroad, and led naturally enough to his choice as one of the revenue commission referred to above. There were two other members on the commission, but from the beginning Mr. Wells dominated it, and his first report, made January 1, 1866, showed in a very clear way what was before the country. By his calculations the taxes and tariffs then in force ought to yield in the year ending June 30, 1867, $435,000,000. Now the Secretary of the Treasury had estimated that we could get along that year on $284,000,000. Let us say three hundred millions, proposed Mr. Wells, and then let us set aside fifty millions a year for reducing the debt—that still leaves $85,000,000 to be taken off the taxes. Where should it be applied? To the internal taxes or to the custom duties? Mr. Wells knew the feeling of the people. They hated direct taxation, they preferred duties on imports, and he worked But while there were cases where the tariff did not compensate for the tax there were more where it had been forced far beyond it. If these tariffs had increased the revenue, they might, under the circumstances, have been justified, but they did not do that. They limited importation and enabled the home manufacturer to put up his prices, and it was he, not the government, who got the extra money. At the same time it cost the government a great deal to collect the small sums realized on these over-protected articles, often more than the sum itself. If the government could get on with $85,000,000 less than it could collect, it seemed obvious that it ought to begin cutting down those internal taxes which were so much too high for the tariffs. It seemed obvious, too, that unremunerative tariffs ought to be cut off. But no sooner did the talk of reducing tariffs on any article begin than there came a loud outburst from many manufacturing centres against any reduction. The internal taxes must come off at once—that they demanded, but no tariffs should be lowered. The cry to preserve the tariffs soon turned in many mouths to one to raise them. Copper (in blocks), which under the bill of 1864 had had a duty of 2½ cents a pound, now asked for double that. Iron rails which already were carrying a duty of 70 cents a hundred pounds and selling in New York for over $80 a ton, while they cost only about $32 in Wales, asked a higher duty. The salt miners of Michigan and New York, whose profits at the moment were enormous, demanded still greater protection. As soon as the House Committee of Ways and Means got to work on a tariff bill, which was early That there were grave embarrassments in the business of the country could not be denied. Five hundred thousand men, young men at that, had been taken permanently from the ranks of breadwinners by the war—and those dependent upon them were now the country’s wards. Immigration to which the government had looked for reËnforcements for labor was falling off. The tremendous demand which a great army makes upon manufactures of all kinds was at an end. Particularly did the iron mills, the woollen factories, the railroads, the produce merchants, feel this sudden cessation of trade. Prices were probably 90 per cent higher than before the war, although wages were not over 60 per cent higher. But these embarrassments were the inevitable results of war—as logical as the debt or the disabled soldier. Somehow the transition from the abnormal condition of war to the normal one of peace had to be made; somehow for the artificial demand and cost the natural must be substituted. It meant economy, curtailment, lower prices, lessened output; hard times, in short, for a period. There was no class in the country from whom patient endurance of the difficulties of the situation could be more fairly asked than the manufacturers. They had for the most part enjoyed four as fat years as ever fell to the lot of man. It is doubtful indeed if any industry at any period of the world’s history had reaped so great rewards in so short a time as that of iron in the Civil War. The difficulty now was that these manufacturers were not willing to pay their share of the cost of the war. They demanded higher protection that they might make their prices higher, and thus ease as much as possible the necessarily As it happened the demands for a higher protection were made on a Congress under the dictatorship of a man for whom no tariff could ever be too high—that was Thaddeus Stevens. When the first tariff bill was presented to the House in June, 1866, by Mr. Morrill, everybody knew Stevens was near his end, but emaciated, white, and suffering as he was, his nerve was still superb. Too weak to walk up the Capitol steps, two stalwart negroes carried him. “Who will carry me when you are dead, boys?” he said to them one day with a chuckle. The fight between Congress and President Johnson over Reconstruction had developed, and Johnson had already singled out Stevens as his chief enemy. He was soon to begin to ask as he “swung around the circle,” “Why not hang Thad Stevens?” Johnson was not mistaken in placing the responsibility. Stevens had always disliked him. “Can’t you find a candidate for vice-president of the United States without going down to one of those damned rebel provinces to pick up one?” he had asked Colonel McClure in 1864. His dislike had grown to open opposition, and he was now leading the Congressional fight with spirit, ability, and bitterness. Yet weak as he was, and absorbed as he was in the undoing of the sullen suffering man at the other end of Pennsylvania Avenue, no measure escaped his dictation, least of all a measure which touched a doctrine so dear to his heart as the protection of American industry. The bill was not in before it was evident Stevens was dissatisfied with it. It was, he declared vehemently, a free-trade measure. As a matter of fact no bill the United States Congress had seen up to this date had less consolation for the free-trader in it than the one Mr. Morrill now introduced. Although just before the bill was reported Mr. Morrill’s doleful apology for raising duties was entirely misplaced as far as the dominant factor in Congress was concerned. It was not the higher duties which stirred that body to protest against the bill, it was the lower; it was not the extravagant increases, it was the moderate ones; it was not the articles added, it was those omitted. Thus, among other items in the schedule was one making the duty on Nova Scotia coal 50 cents a ton, although the duty on coal from other points was $1.25 a ton. This discrimination But bold, able, and determined as the protectionist sentiment in the House showed itself, it was not to go unchallenged. A species of three-cornered fight developed within the party. There was Mr. Morrill defending while deploring the bill, on the ground that paper currency made it necessary,—there were the high protectionists led by Mr. Stevens in spirit and Mr. Kelley in speech, and there was a most interesting body of moderate protectionists, led by three representatives from Mr. Raymond, who was indignant over the increased duty on railroad iron—a duty which he declared would increase the annual expenses of the two roads in his state, the Erie and the Central, at least $2,000,000—exclaimed: “If the bill of 1865 is not sufficient protection, what in Heaven’s name will be? We were told at the beginning if we protected this infant industry it would soon stand alone. We have been doing it for thirty or forty years, and yet every session of Congress witnesses new demands for increased protection.” It was Mr. Kasson who did perhaps the most effective service against the measure. He wished simply “to foster the incipient industries of America until they were able to take care of themselves without help, in fair competition with the industries of foreign countries.” To make the duties so high that foreign competition was removed, was, in Mr. Kasson’s judgment, to encourage monopoly. This was a bill “to prevent the diffused blessings of Providence from being enjoyed by the people of the United States,” he declared. Who were the handful of wool-growers in the country that 34,000,000 consumers should be taxed to support them? Mr. Kasson was especially bitter against the higher prices the bill would undoubtedly make for farmers. “What does this bill do?” he asked. “It raises the tariff on lumber, which The majority of the Western representatives were with him in the feeling that the bill was unjust to the farmer. “Long John” Wentworth of Illinois, a Republican of Democratic antecedents, did some sensible, pointed arguing against the higher duties on the ground that they were against the very men (the farmers) “who do most of the tax-paying in peace and most of the fighting in war.” He warned emphatically that not only was the bill a discrimination, but that it was certain to encourage interstate combinations—a warning which was repeatedly dropped during the debate, and to which the tendency to combination in the salt, iron, and copper industries gave particular force. When Wentworth and the Westerners found that there was little chance of defeating the bill they declared that it must be made just all around—there must be protection for the farmer and they asked for 30 per cent on cattle, 50 per cent on fruit, more on grain, duties which raised strong protests from Pennsylvania and other manufacturing centres. This That members of the Republican party should dare in his presence to talk such doctrine was gall and wormwood to Mr. Stevens, and he flung at them, and at Mr. Kasson particularly, an epithet which in his mouth was only one degree less opprobrious than that of “slave-holder” and “rebel”—“free trader,” and he could prove it, for here was Mr. Kasson’s name on one of the circulars of the Free Trade League. Mr. Kasson did not deny the charge: “I have the distinguished honor,” he replied, “of being a councillor-elect to it, and I am giving my counsel to it (the League), and to all the people of the United States.” The bill passed the House by a large majority—the high duties on farm products which the Westerners asked tacked to it. It was evident that Congress, as a whole, had broken with the avowed tariff policy of the past 20 years. It was the middle of July, 1866, when the bill reached the Senate—too hot for tariffs, the Senators decided. It was several months indeed before it came before them. Along with it came a bill prepared by Mr. Wells, who had been greatly disturbed by the outbreak of high protectionism. A moderate protectionist himself—he appreciated the injustice and the dangers in recklessly and generally increasing duties. He had carefully studied the schedules, and he knew how inevitably disaster must follow to some interests from the sweeping changes proposed. He accordingly prepared a bill much more moderate in its duties, which he claimed would give the necessary revenue and at the same time protect as far as was just. It met the hearty approval of the Senate, where there had been much sarcasm spent on the House Mr. Wells’s bill was made an amendment to the revised House bill, and sent back. Mr. Morrill advised its acceptance, and promptly. The time had come when, in his opinion, it was “reasonable to have an unreasonable tariff.” But there were few of the members, particularly of the Western members, who agreed with Mr. Morrill. The bitter feeling that the East was legislating for itself to the injury of the farmer broke out hotly. A genuine struggle of sections followed, to the disgust and alarm of Stevens, who knew that if the Westerners could not or would not accept the “home market” argument, high protection was a lost cause. That his own side should imperil the bill was particularly trying to him. “If the gentlemen who are in favor of a tariff bill hold their tongues and vote,” he snarled, “letting the other side do the talking, they may get a tariff, but they never will if they keep up their debate.” But they would not hold their tongues, and they did not get the bill. In the general dissatisfaction it failed. But high protection did not end with it. The failure to pass the bill was the signal for a move of far-reaching consequences. The morning after the House dropped the bill Mr. John Sherman asked the Senate to consider a measure for raising revenue by putting up the duties on wool and woollen goods. As a matter of fact the bill now so suddenly sprung on the Senate had been lying in wait for some seven months for just such a contingency as the failure of the tariff bill—a fine example of business foresight! This was its history: In July, 1866, when the Senate postponed taking up the tariff Judge Bingham of Ohio had brought into the House a bill providing for higher duties on wool and woollens. It was evidently framed to take care of the wool-growers of his state. Certain woollen manufacturers, who had known nothing of his intention, saw the danger of the bill antagonizing both Congress and those manufacturers who were advocating free wool, and persuaded Judge Bingham to allow it to be sidetracked until the fate of the general tariff was decided. This was done, the bill being quietly passed on to the Senate, where nobody but Mr. Sherman seems to have known or remembered anything about it. When the tariff bill dropped, the wool interests immediately asked that their special measure be presented, and Mr. Sherman agreed. Part of the dismay that the Senate showed at the presentation of the measure was no doubt due to its familiarity with the solid organization and effective lobbying of the wool manufacturing interests of that day as well as with their reputation for unsavory lobbying in the past. It was not yet forgotten how in the forties and fifties the wool interests had combined with the Pennsylvania iron men to force Western representatives, who The insistent demands of the wool men, for years, had been such, that even good Mr. Morrill had grown tired of them. “Their evils somehow never disappear,” he said, querulously, when he presented his bill in ’66, and he went on then to say that never since he had been in Congress had so large a number of petitions for help been received as had been coming from the wool interests East and West. The wool men, as a matter of fact, were organized then as probably no interest in the country had ever been before. The chief organization was the National Association of Wool Manufacturers, having at its head as able a lobbyist and promoter as the country has ever produced—this was John L. Hayes—a New Englander—a graduate of Dartmouth and of the Harvard Law School, a man of wide and varied experience. He had been counsel for Canada when the reciprocity treaty of 1854 was framed. He had founded iron works in Maine and promoted a railroad in Mexico. He had been in politics. He had held office in Washington. He was a natural scientist of no mean order—a man versatile, knowing, engaging, and This was the basis of the wool schedule which had been embodied in Mr. Morrill’s bill and also of the bill which Mr. Sherman had sprung on the Senate. That the Senate did not like the wool bill was evident. On all sides there was strenuous opposition to protecting one industry and not another, and yet the bill went through. It is worth nothing in view of the support of the scandalous wool schedule of 1909 by both the Senators from Massachusetts, that both Senators Summer and Wilson of Massachusetts voted against the wool bill of 1867 and that Senators Morrill and Fessenden absented themselves. A few hours before the end of the session the wool bill was received by the House and passed. But its fate was by no means decided. It still The passage of the wool bill proved that an industry, if strongly enough organized and headed by a sufficiently able and respectable lobbyist, could secure from the Congress of the United States protective favors which could not be secured for the whole mass of industries. The lesson had immediate effect. The next year (1868) Congress was asked to pass a similar bill, favoring the Lake Superior copper industry. The rich mines in that section had been in operation for several years, and in the last two or three years their output had been increasing rapidly. As was natural, there had been a great amount of speculation in copper mining stocks. The public had subscribed almost as much to wildcat and bogus copper schemes in this period as to the same kind of oil The bill finally passed and by large majorities, and in February, 1869, went to President Johnson. Whatever the influences which had induced Johnson to sign a bill which must have been so repugnant to him as the wool bill, there was little chance that they would have any effect upon him now. His term was almost over. In a few days he was to yield the White House to “that little fellow Grant,” as he called him, and go back to his Tennessee home to hoe potatoes and discuss politics with his neighbors in his son-in-law’s village store. He was going out in a sense victorious, for he had not been convicted, and his arch-enemy Stevens was dead, and yet it is doubtful if the end of his terrific fight with Congress gave him much happiness, if indeed anything could give him real happiness. Certainly Johnson suffered throughout his four years as President as few people at the time realized. One of his secretaries once said that in the two years he was with him in the White House he never saw him smile but once. Ill himself, his beloved wife a bed-ridden invalid, unfitted for companionship, suspicious of his associates, narrow in mind, bitter and resentful in heart, there was little reason indeed why Throughout his administration Johnson had fought with little effect the horde of lobbyists, speculators, land grant agents, and other suppliants for government aid, whom the war had brought together and Congress had rather encouraged than discouraged. The bills granting tariffs to special interests belonged to this category unquestionably, however respectable their supporters, and it was to be expected that Johnson would veto the copper bill, and he did, sending with his veto the following message—not his own, however. The letter was written by Mr. Wells. Feb. 23, 1869. To the House of Representatives: The accompanying bill, entitled “An Act regulating the duties on imported copper and copper ores,” is, for the following reasons, returned, without my approval, to the House of Representatives, in which branch of Congress it originated. Its immediate effect will be to diminish the public receipts, for the object of the bill cannot be accomplished without seriously affecting the importation of copper and copper ores, from which a considerable revenue is at present derived. It is represented, and the declaration seems to be sustained by evidence, that the duties for which this bill provides are nearly or quite sufficient to prohibit the importation of certain foreign ores of copper. Its enactments, therefore, will prove detrimental to the shipping interests of the nation, and at the same time destroy the business, for many years successively established, of smelting home ores in connection with a smaller amount of the imported articles. This business, it is credibly asserted, has heretofore yielded the larger share of the copper production of the country, and thus the industry which this legislation is designed to encourage is actually less than that which will be destroyed by the passage of the bill. It seems also to be evident that the effect of this measure will be to enhance by 70 per cent the cost of blue vitriol—an article extensively used in dyeing and in the manufacture of printed and colored cloths. To produce such an augmentation in the price of this commodity will be to discriminate against other great branches of domestic industry, and by increasing their cost expose them most unfairly to the effects of foreign competition. Legislation can be neither wise nor just which seeks the welfare of a single interest at the expense and to the injury of many and varied interests at least equally important and equally deserving the consideration of Congress. The enactment of such a law is urged as necessary for the relief of certain mining interests upon Lake Superior, which, it is alleged, are in a greatly depressed condition, and can only be sustained by an enhancement of the price of copper. If this result should follow the passage of the bill, a tax for the Although providing for an increase of duties, the proposed law does not even come within the range of protection in the fair acceptance of the term. It does not look to the fostering of a young and feeble interest, with a view to the ultimate attainment of strength and the capacity of self-support. It appears to assume that the present inability for successful production is inherent and permanent, and is more likely to The true method for the mining interests of Lake Superior to obtain relief, if relief is needed, is to endeavor to make their great natural resources fully available by reducing the cost of production. Special or class legislation cannot remedy the evils which this bill is designed to meet. They can only be overcome by laws which will effect a wise, honest, and economical administration of the government, a reestablishment of the special standard of values and an early adjustment of our system of state, municipal, and national taxation (especially the latter) upon the fundamental principle that all taxes, whether collected under the internal revenue or under a tariff, shall interfere as little as possible with the productive energies of the people. The bill is therefore returned, in the belief that the true interest of the government and of the people require it should not become a law. Andrew Johnson. Of course Congress passed the bill over Johnson’s veto. Mr. Pike of Maine, who regarded the bill as “class legislation of the worst kind,” and knew the feeling that one of the President’s vetoes inspired, begged his colleagues “to vote on the measure and not on Andrew Johnson,” but no remonstrance or argument had any effect. The bill was passed over the veto by a large majority. It was again demonstrated that any private interest which could secure the backing of a powerful Senator or Representative like Sherman of Ohio, Chandler of Michigan, Kelley of Pennsylvania, could obtain what it wanted from the Congress The demonstration was not lost. By 1870 the tariff was a conglomeration of special favors. The duties were not for revenue—many of them, like copper, cut down the revenue. They had no relation any longer to the excise, for while that had been steadily decreased the promise to decrease the tariff at the same time had been broken. The duties had no relation to each other; that is, the cost of manufacturing an article might be materially increased by the duty on copper or iron or soda ash, but it received no compensating help—not until it had organized a lobby and laid siege to Congress. These unjust and unscientific duties had not been laid without protest. Men like Morrill, Garfield, Fessenden, Allison, Kasson, Raymond, and Sumner had warned against the outbreak. “It smells of monopoly,” they said again and again, and yet most of them when it came to the test voted with their party. Many of the ablest Republican newspapers, especially those in the West, harangued incessantly against the unfairness of the legislation. But remonstrance, even an attempt at discussion, only aroused the angry cry of “free-trader” from the dominant faction in Congress. “It has become impossible,” said Mr. Wells, in his report of December, 1869, for one “to suggest any reduction or modification whatever looking to the abatement of prices artificially maintained in the interest of special industries without being immoderately assailed with accusations of corrupt and unpatriotic motives.” The tariff legislation was but a part of the deplorable and general attempt which followed the war to make Congress do for the individual what it was his business to do for himself. |