THE BUSINESS MAN TAKES CHARGE
The bill of 1875 took away from the tariff reformers of the Republican
party practically all they had won in an eight years’ fight. The duties
were again on a war basis, and while the need of revenue had been the
plea for putting them back, everybody knew that the real victory was to
the high protectionists. What could the Republican revenue-reformers do?
The question came home with force now, for they were on the eve of a
presidential campaign. It became still more difficult to answer with the
appearance of the platform of the Democratic party, which for the first
time in twenty years came out boldly on the tariff question. That it did
so was due largely to the sagacity and fire of a young Southerner who
was to play a large part in the coming struggles on the question—Henry
Watterson, editor of the Louisville (Ky.) _Courier-Journal_.
Mr. Watterson was what may properly be called a “born journalist.” His
father before him had been an active newspaper man and almost constantly
since he was sixteen, when he had edited a juvenile sheet whose
political editorials had been copied all over Tennessee, he had been
connected in one way or another with a newspaper. At eighteen he had
written for _Harper’s Weekly_ and _The Times_ in New York. At twenty he
was serving under Roger A. Pryor in Washington. After the war broke out
he had not been able to resist the army, but even there he broke ranks
once to establish at Chattanooga a semi-military daily which he called
_The Rebel_, and which for a year he made the delight of the Confederate
army. At the close of the war Mr. Watterson started a paper in
Nashville, but in 1868 he was asked to take a position on the Louisville
_Journal_—a paper made famous by George D. Prentice. He did so, and from
the start his influence was magnetic. The paper grew in popularity and
power until its editor, with good reason, was called the Dictator not
only of his state but of his party. Politics was his element, and he
fought for whatever cause he championed with a vigor, a wit, an
eloquence that were the terror of his opponents. His opinions on the
tariff were uncompromising. He had no patience with anything but “tariff
for revenue only,” and he went to the Convention of 1876 resolved to
have his way on that point, and he had it by writing in the plank
himself. It was a very characteristic bit of Wattersonian literature:
Reform is necessary in the sum and modes of Federal taxation to the
end that capital may be set free from distrust and labor lightly
burdened. We denounce the present tariff levied upon nearly 4000
articles as a masterpiece of injustice, inequality, and false
pretence. It yields a dwindling and not a yearly rising revenue.
It has impoverished many industries to subsidize a few.
It prohibits imports that might purchase the products of American
labor.
It has degraded American commerce from the first to an inferior rank
on the high seas.
It has cut down the sales of American manufacture at home and
abroad, and depleted the returns of American agriculture—an industry
followed by half our people.
It costs the people five times more than it produces to the
treasury, obstructs the processes of production, and wastes the
fruit of labor.
It promotes fraud, fosters smuggling, enriches dishonest officials,
and bankrupts honest merchants. We demand that all custom-house
taxation shall be only for revenue.
It is evident from what we have seen of the record of the Republican
tariff-reformers that no great number of them would follow the Democrats
in any such radical program as Mr. Watterson’s. Wells and Brinkerhoff,
in fact, were about the only prominent tariff leaders of 1872 who turned
to the Democrats in 1876. Carl Schurz, Murat Halstead, and Horace White
all stayed with the party. But there was an even more important question
than what the Republicans would do. It was what the Democrats themselves
would do. Were they ready as a party to stand by “tariff for revenue
only”? The question of Mr. Hayes’s election was no sooner settled than
it became evident that they were not. The Democrats in the House divided
completely on the question, the wing following the party platform being
led by Colonel W. R. Morrison of Illinois and Roger Q. Mills of
Texas—the protectionist wing being led by Samuel J. Randall of
Pennsylvania.
Mr. Randall was an avowed protectionist-Democrat, and a man who, his
colleagues had learned, usually was able to get his way. Randall had
first entered Congress in 1862. He was a quiet, persistent, hard-working
person who attracted little attention for several years; then the
Republicans, sure of their majority and wishing to expedite business,
undertook to adopt rules which would prevent obstruction. The quiet Mr.
Randall set himself against the attempt. He led the small Democratic
minority with a skill so unusual that more than once he blocked the
Republicans’ way until it was too late to pass the measure. His
endurance seemed unlimited. From one session lasting 46 hours and 25
minutes where Randall had forced the roll to be called seventy-five
times, he came out as fresh as he went in. At another time in the fight
over the “Force Bill” he was on the floor for seventy-two consecutive
hours. After his party secured the House in 1874, Randall was put at the
head of the Committee on Appropriations, where he cut down
appropriations some $30,000,000. He came to the Speaker’s chair in time
to preside through one of the most critical episodes in the history of
Congress—the dispute over the Tilden-Hayes election. His conduct at this
time was eminently cool, wise, and fair, and greatly strengthened his
position in the country. It was not alone his parliamentary skill which
won him followers. His presence counted for much. Randall was one of the
handsomest men of his day—with a face chiselled like an old Roman’s and
lit by a pair of large dark eyes of amazing fire and softness. Speak of
Sam Randall to-day to one of his old colleagues and it will not be long
before he will tell you with softened voice of “those wonderful eyes,”
“that classic face.” Randall’s force and charm were such that they
overcame a lack of studious habits, of reflection, and of broad views.
But as has been said, Randall was a protectionist, and he put now at the
head of the Ways and Means Committee a man of moderate protectionist
leanings, an old-time shipping merchant of New York City, Fernando Wood.
Wood was a picturesque character, who had made a name for himself
politically as the mayor of New York from 1854 to 1858, when the town
needed reform quite as badly as it ever has since. He succeeded in
getting himself reëlected mayor again in 1861, when he stirred up the
ire of the North by proposing seriously that New York City secede and
set up as a free town! Wood at once went to work on a tariff bill, but
he took few of his party into his confidence, and he ignored those who,
like Wells, were considered experts. Indeed, he went his way so
arrogantly that the opposing wing of his party broke out in
expostulation in December, 1877, Roger Q. Mills introducing the
following resolution:
“That the Committee of Ways and Means be instructed so to revise the
tariff as to make it purely a tariff for revenue, and not for
protecting one class of citizens by plundering another.”
The resolution stirred up Mr. Wood considerably. It was “nonsense,” he
said. The Committee of Ways and Means would discharge its duty
faithfully, irrespective of the resolution. It would in due time report
the results of its deliberations to the House, and in the meantime it
required no instructions of any kind in the matter. A more menacing sign
of unrest over the Wood Bill than Mr. Mills’s resolution, came about the
same time—a flood of petitions against any revision of the tariff not
made by its friends. By actual count 177 petitions were introduced. They
came from twenty-nine different States: from New York 22, from
Pennsylvania 28, from Massachusetts 17, from Maine 15. That they
originated with a protective steering committee somewhere in the
background—that is, that they were not spontaneous outbreaks—was evident
from the fact that the phrasing of the whole 177 was practically
identical. Whether they came from Alabama or Maine, Pennsylvania or
Kansas, whether they pleaded for iron, or lumber, or cotton, or copper,
or paper, or silk, they nearly all plead in identical terms that
Congress would take no action concerning a revision of tariff duties
“until after it shall have ascertained by an official inquiry the
condition of the industries of the country and the nature of such tariff
legislation _as in the opinion of practical business men_ would best
promote the restoration of general prosperity.”
Whether it was known to Congressmen generally or not where this flood of
petitions originated, it must have been to many. As a matter of fact the
“steering committee” behind it was the most powerful protective
organization the country had seen at that time—the Industrial League of
Pennsylvania. Formed about 1867, the League was intended to be national
in extent and to represent all protected industries. Its first president
was Peter Cooper, and its executive committee was made up of the
foremost manufacturers of the day. From the beginning the Pennsylvania
branch dominated in the League largely because of the energy of its
president, the Hon. Daniel J. Morrell, and of its secretary, Cyrus
Elder, and of the ability and far-sightedness of its Executive Council,
including Mr. Joseph Wharton and Mr. Henry C. Lea of Philadelphia.
At once on its organization the League had become a power in Washington.
The rapid removal of the internal war taxes had been due to its
pressure. The Schenck Bill of 1870 had been practically written by the
chairman of its Executive Council, Mr. Joseph Wharton. The League’s
latest achievement had been the restoration of the 10 per cent reduction
of duties made in 1872. It thus came to its new attack—a tariff made by
“practical business men”—with all the prestige of an important victory.
The methods used by the League in carrying on campaigns were simple
enough. It had secured, after much careful selection, a body of
correspondents in manufacturing centres, chiefly laboring men. These
correspondents circulated the League’s literature and secured names to
its petitions. The petitions once filled out were returned to the
headquarters of the League, and from there forwarded to the proper
Congressman, who, so far as any printed sign went, might have supposed
the document spontaneous in his district. The petitions were then
followed up by personal letters from individual workingmen, sent direct
to the Congressmen, and by personal visits from manufacturers. It was
one of the most extensive and thorough organizations for bringing
apparently spontaneous pressure to bear on Congressmen which the country
has ever seen. It goes without saying that the political power of the
organization was enormous—particularly in Pennsylvania, where it
practically dictated who should be elected. Already Mr. Blaine himself
had recognized the influence of the Pennsylvania branch by consulting
the head of the Executive Council of Pennsylvania, Mr. Joseph Wharton,
about whom he should make chairman of the Ways and Means Committee in
1871. It was this powerful association which now came out for no
revision until after the “opinions of practical business men” had been
secured.
It was not until March (1878) that Mr. Wood brought in his bill. He
tabulated interestingly his objections to the tariff in operation. They
were: Too many articles mentioned (2172); compound duties; ambiguity;
the articles for the rich less highly taxed than those of the poor;
encouragement of fraud; prohibitory duties, causing loss of revenue and
enhanced prices to consumers; cumbersome machinery of operation;
expensive collections. He confessed that the bill he presented did not
deal with these demerits as they deserved, that he would cut the duties
50 per cent, if he could, instead of 15 per cent, as he had, but he had
done the best he could.
The features of the Wood Bill were novel and interesting. It had but one
list—the dutiable; any article not mentioned there was supposed to be
free. It reduced the number of dutiable articles from 1524 to 575. It
put duties on many raw materials. It imposed but _one_ kind of duty on
an article—ad valorem or specific as seemed to him best. It levied a
retaliatory duty of 10 per cent on goods coming from countries which
discriminated against the United States. It allowed a drawback on all
exported goods containing foreign materials. It allowed the purchase of
foreign-built ships by Americans and the free importation of
ship-building materials. The general object of the bill Mr. Wood said
was to revive commerce without materially affecting manufacturing
interests whose right to protection for a still longer time Mr. Wood
recognized. He considered his bill merely a beginning of a new policy in
tariffs, looking toward the final complete withdrawal of the system of
taxing consumers for the good of private individuals.
From the first the Wood Bill was cursed by the indifference of a large
number of his own party,—men like S. S. Cox and Morrison, who did not
speak at all on it,—by the open opposition of the moderate Republican
tariff men like Garfield and Kasson, and by the bitter condemnation of
the Industrial League, which called it “blundering,” “ignorant,” “an
attempt to overthrow the industrial system of the country.” Naturally,
under these circumstances the debate upon it languished. Indeed, the
only personal incident in the debate which is interesting from this
range is that at this time William McKinley of Ohio made his first
speech in support of protection of American industry. It was a strictly
orthodox speech calculated to give comfort to Mr. Kelley, and it was
used as an opportunity for presenting a petition which the Democrats had
been trying to keep out signed by over 100,000 laboring men of seventeen
different States, praying for a 10 per cent _increase_ of duties.
The character of the bill as well as the lukewarm attitude of the House
toward it made a fine opening for Mr. Kelley, and he thoroughly enjoyed
himself riddling it. He was an impressive speaker with a sonorous voice
which had been carefully trained, for Kelley once had thought of going
on the stage, and in preparation had studied with both Booth and
Barrett. He now went at the measure with joy, and in the course of his
speech gibed Wood unmercifully for yielding to a rhetorical temptation
which seems to beset every writer who speaks on taxation; that is,
imitating Sydney Smith’s famous paragraph on the overtaxed English
farmer.
In introducing his bill Wood had said:
“The farmer in the West, where lumber is scarce, pays a tax of 20
per cent on the lumber his house is built of; a tax of 35 per cent
on the paint it is painted with; of 60 per cent on his window glass;
of 35 per cent on the nails; of 53 per cent on the screws; of 30 per
cent on the door-locks; of from 35 to 40 per cent on the hinges; of
35 per cent on the wallpaper; of from 60 to 70 per cent on his
carpet; of 40 per cent on his crockery; of 38 per cent on his iron
hollowware; of 35 per cent on his cutlery; 40 per cent on his
glassware; of from 35 per cent to 40 per cent on the linen he uses
in his household; of 51 per cent on the common castile soap he uses;
48 per cent on the starch—”
And so on, ending up:
“Suffice it to say that the furnishings of his child’s cradle and
the coffin in which he is finally buried pay a direct tax or one
enhanced in price by our tariff system.”
Kelley sat smiling through the passage, and when he came to discuss the
bill said:
“I was amused by the chairman’s expression of sympathy with the
overtaxed farmer.... It was so amusing to note the gravity and
pathos with which he started his poor farmer out to buy taxed
hardware, shoes, etc., for himself and clothes and medicine for his
wife. When I first read that gem of his speech in my youth, or
earliest manhood, just after Sydney Smith had produced it, it made
an impression on my mind that still lingers. But I have become so
used to hearing it that when he commenced its delivery with such
fine effect I found myself in the condition of Diggory in ‘She
stoops to Conquer’: ‘Diggory, you talk too much,’ the squire said;
‘you must neither talk nor laugh while attending on this party,’
‘Ecod, Squire, then you must not tell that story of old Grouse in
the gun-room, because I have been so used to laughing at that story
for the last twenty years that I am afraid I can’t hold myself.’
“Sir, for the last twenty years I have been so in the habit of
laughing, at least in my sleeve, when hearing gentlemen reproduce
that admirable novelty that I could not help doing so when the
chairman of my committee startled me by reciting it. I have it
before me as uttered by the gentleman, then from Ohio, but who was
carpet-bagged to New York, and who is sometimes known by the
_sobriquet_ of ‘Sunset,’ as he delivered it in 1864.... It was
quoted the other evening by the gentleman from Mississippi....
Subsequently I heard it from my friend, the late James Brooks. Then
from our friend, S. S. Marshall, of Illinois, and there has never
been a tariff bill under discussion that I have not heard it three
or four times; and I repeat I could not help laughing when the
chairman of the committee got it off with such solemnity.”
The Wood Bill never got out of the House, but it was not because
interest in the tariff was abating. There was a deep unrest in the
country on the subject, and it was stirred by a band of tariff-reformers
of great ability. It is doubtful, indeed, if we have ever had as able a
group of teachers as those who kept up their hammering in the ’80’s,
undismayed by the disaster of ’72. To Perry and Wells and Horace White,
whom we have already met, should be added two in particular, William G.
Sumner and Joseph S. Moore.
Mr. Sumner, who since 1872 had held the chair of history and economics
in Yale University, was a young man educated at Geneva, Göttingen, and
Oxford. He had begun his career as a clergyman of the Protestant
Episcopal Church, but had left it for academic work. A few years ago at
a dinner in New York, Mr. Sumner explained how he became interested in
the tariff question: “Thirty-five or forty years ago,” he said, “I
became a free trader for two great reasons as far as I can now remember.
One was because as a student of political economy my whole mind revolted
against the notion of magic that is involved in the notion of a
protective tariff.... The other reason was because it seemed to me that
the protective tariff system nourished erroneous ideas of success in
business and produced immoral results in the minds and hopes of the
people.”
Mr. Sumner did not add at this time another interesting fact—that he was
first aroused to active public efforts against protection by Grant’s
suspension of the office of Special Commissioner of Revenue in order to
get rid of the reports of David A. Wells. It was a very good
illustration of the effect of trying to silence honest speech on a
question of public interest. The high protectionists, in ridding
themselves of Wells in Congress, turned him into the public forum, where
he was immediately reënforced by Mr. Sumner. Two voices were raised
where there had been one.
In journalism the most effective writer at this time was the “Parsee
Merchant,” Joseph S. Moore. Moore was a clever German-Hebrew, who had
come to New York from Bombay and had secured a place in the New York
Custom House. He had first attracted attention in 1869 by a series of
letters to the New York _World_, signed “Adhersey Curiosibhoy.” These
letters, addressed to “Sahib Greeley,” told of the adventures of a
Parsee merchant who came to New York from India to buy goods. His theory
in coming, he said, was that as the United States was the land where
certain things his firm traded in were raised they ought to be cheaper
there; and as the United States bought jute, seeds, gums, etc., from
India, he could establish a direct trade instead of the indirect through
London. He wanted copper, but copper he found cost five cents more a
pound in New York than in London. He wanted cotton prints, but they were
25 per cent dearer here than in England. He wanted enamelled hides, but
they cost 25 per cent more than in England. He went to New Haven to buy
carriages, but the price was $1100 in currency against 90 guineas in
London. He wanted iron; it cost 80 cents more than in England, 60 per
cent more than in Bombay. He wanted wood-screws, but the “wood screw
sahib” laughed and told him he had a better market at home than any the
Parsee could bring him and in it he could sell all he could make at from
70 to 100 per cent more than the foreigner paid. Discouraged, the Parsee
wrote a series of over forty letters to “Sahib Greeley,” begging him to
reflect and weigh the facts in his “great political economical mind” and
explain to him why a policy which produced such prices for the people of
America and made trade with foreigners impossible, was not stupid.
So effective was the Parsee that he greatly incensed the Industrial
League. The Executive Council declared him to be subsidized by British
gold and attributed to him much for which he was in no way responsible;
for instance, the Wood Bill, of which Moore really disapproved, they
characterized as a “crazy structure contrived by a foreigner who has
been so long tolerated in the New York Custom House that he has grown to
imagine himself an authority.” The opposition to the Parsee was so
strong that Secretary Sherman finally removed him.
The only effective bit of tariff legislation in this period, 1876 to
1882, was due largely to the Parsee Merchant—the removal of the duty on
quinine. The wholesale price of this medicine, enormous quantities of
which were consumed, particularly in the Middle West, had risen in 1877
and 1878 as high as $4.75 an ounce, the highest point recorded in the
history of the business. The Parsee merchant took up the matter in the
press. The duty on quinine—40 per cent—was, he declared, “a sickening,
disgraceful blood tax.” It was made by only four houses in the United
States, all of them manufacturing chemists who were growing enormously
rich—which was true. They brought in their bark free, and they were able
to make their own price for the product. The press took up the cry.
Frightened by the popular indignation, one firm of quinine manufacturers
offered Moore $100,000 to withdraw his opposition. Several young
Congressmen saw the chance, and in rapid succession ten different bills
repealing the duty on quinine were brought into the House. The one
brought to vote was introduced by James McKenzie, a young Kentuckian. It
went through without debate, a victory which earned for Mr. McKenzie a
name by which he is called to-day in Kentucky—“Quinine Jim!”
The Senate was less in a hurry about the quinine bill, for there it met
the opposition of Mr. Morrill, who on principle had always fought
against legislating a duty off or on a single article without
considering those related to it. He pointed out now that the makers of
quinine used several articles on which they had to pay duty—fusel-oil,
distilled spirits, soda ash, East India bark (if they used that variety,
which few of them did). To compel the manufacturers to pay these duties
and give them no compensating duty on their product was unfair. But the
tide was against him. “Raise a cry of ‘mad dog,’” Mr. Morrill commented,
“and the dog is sure to die.” And he did—the bill passed.
As a matter of fact the effect of the removal of the duty was magical.
In five years from the date the bill became a law—July, 1879—quinine had
fallen from $3.40 per ounce to $1.23, and in ten years, July, 1889, to
35 cents, in 1905 to 21 cents. The quinine manufacturers were
thunderstruck. They declared that they were ruined, and very likely they
believed so. At all events, they discharged their hands and closed their
works. As the country was not moved to tears by the spectacle, they
gradually reopened their factories and resumed business, and eventually
became more prosperous on a free-trade basis than they had been before.
They remain a bright and shining example of the ability of Americans to
compete with foreigners in a fair field and without favor in any
industry not forbidden by our soil and climate. The quinine bill was the
one tariff result the Democrats had to show for the four years they had
held the House!
The presidential campaign of 1880 did not change the attitude of the two
parties at all on the question. The Democrats repeated their “tariff for
revenue only” plank, the Republicans their declaration that “duties
levied for the purpose of revenue should discriminate so as to favor
American labor.” It is doubtful if either party expected at the time of
their conventions that the tariff would cut much of a figure in the
campaign. Garfield, from whom if from any Republican of good party
standing, sound counsel on the question should be expected, kept
suspiciously silent. He knew as well as anybody, since Greeley had long
ago told him, that the only objection the dominant faction of the party
had against him was that he was not “sufficiently protective.”
By instinct and training indeed Garfield was a free trader. He was a
Williams College man, and there had come under the influence of
Professor Perry’s vigorous and clear reasoning. He came out of college
committed to Perry’s ideas. From the beginning of his public life
finance interested him, and he lost no chance to familiarize himself
with the subject. In 1862, being called to Washington from the field to
sit in a courtmartial for some weeks, he spent all his leisure with
Secretary Chase studying the Treasury Department. In 1863 he was sent to
Congress, where he was put on the military committee, but two years
later, at his own request, he was transferred to the Committee of Ways
and Means. Here he attacked all problems with resolution and industry.
He pored over Tooke’s “History of Prices,” mastered thoroughly the
history of tariffs in England and the United States, and acquainted
himself with all the intricacies of the schedules. From the first he set
himself against the efforts of Stevens and Kelley to place protection
before revenue as an object of the tariff. Commerce and the consumers
were quite as important as manufacturers, he insisted. He took a middle
ground in argument, which he summed up in 1866 as follows:
“Duties should be so high that our manufacturers can fairly compete
with the foreign product, but not so high as to enable them to drive
out the foreign article, enjoy a monopoly of the trade, and regulate
the price as they please. To this extent I am a protectionist. If
our government pursues this line of policy steadily, we shall, year
by year, approach more nearly to the basis of free trade, because we
shall be more nearly able to compete with other nations on equal
terms. I am for a protection which leads to ultimate free trade. I
am for that free trade which can be achieved only through
protection.”
One excellent feature of Garfield’s tariff work was his willingness to
consider all the facts. When the attack began in Congress on David
Wells, one of the first manœuvres was an attempt to prevent the printing
of his reports. Mr. Garfield protested forcibly:
“I confess my great surprise,” he said, “at the opposition of the
gentleman from Pennsylvania to the printing of this report of the
Special Commissioner of the Revenue.... He admits, in the first
place, that the facts stated are generally correct—that the
statistics collected and arranged in tables are true and correctly
stated, but declares that the marshalling of the facts is
dangerous—that they are put together in such a way, and such
inferences are drawn from them, that the report is dangerous to
Congress, and to the enlightened people of the country. The
gentleman asks this House to make a humiliating confession in which
I, for one, am not ready to join. If any theories or opinions of
mine can be damaged by facts, so much the worse for my theories. An
officer who has served the country so ably and faithfully as the
Special Commissioner of the Revenue deserves well of the country. I
trust the motion to print will prevail.”
As we have seen, the tariff reformers of 1870–72 really numbered
Garfield as one of them and wanted him as the head of the Ways and Means
Committee—a position he would have had had it not been for Mr. Blaine’s
slipperiness. The events that followed—the panic of 1873, the outspoken
plank of the Democrats in 1876 in favor of tariff for revenue only, the
effort of his party to keep quiet on the tariff—did not change
Garfield’s views, though they did make him a shade more cautious in
expressing them.
When he came to face a campaign for the presidency in 1880, he must have
realized that whatever he thought about the tariff would count for
little if a struggle were precipitated. He had nineteen iron foundries
in blast in his Ohio district, and the watch their owners kept of him
creeps out more than once in his speeches. He must have known that in
case it should be needed these gentlemen were ready to make the biggest
fight they had ever made for high protection. Indeed, only a few months
before the nomination the ablest one among the organized metal workers,
Mr. Joseph Wharton, had openly served notice of their intention on the
coming administration. Mr. Wharton was speaking in Pittsburg on “The
American Ironmaster,” and said: “_It is meet that we should declare to
the country that we will support no party and no candidate who cannot be
depended upon by something better than election-day promises to protect
and defend home labor. It is fitting for us to call ‘hands off’ to those
who are itching to tear our tariff laws to shreds; to call upon the
President in advance to refrain from meddling with commercial
treaty-making and to veto, as he doubtless would, any measure injurious
to home industry which a hostile majority in Congress may pass_; to call
upon the representatives of all other American industries to stand by us
as we will stand by them in resisting all changes in the tariff laws and
all tariff-making by treaty until these laws can be carefully and
prudently revised by a Congress or a commission known to be devoted to
the interests of the nation.”
That Garfield knew of this speech is certain, for a copy of it bearing
his stamp was turned over to the Congressional Library when he left
Congress in the spring of 1880. Altogether it was enough to make a man
cautious, and it was certainly a mark of political sagacity on his part
that he said nothing in his letter of acceptance about the tariff issue.
But it was not to be downed. The Republicans, failing at the opening of
the campaign to excite anybody about the South, suddenly attacked the
Democratic phrase, “tariff for revenue only.” What did it mean? Why,
nothing if not the destruction of the “home market,” the consequent
shutting down of all American manufactories, the idleness of all
American laboring men, a reign of “pauper labor,” the end of
“prosperity.” Unfortunately for the Democrats, their candidate, General
W. S. Hancock, a splendid soldier and gentleman, apparently was not
certain that the phrase “tariff for revenue only” meant anything in
particular. He tried to parry lightly with his famous remark that the
tariff was only “a local affair.” The more he and his supporters talked,
the more of a tangle they made of it. It was quite apparent if the
tariff was to be a live issue they were too uncertain and too divided on
it to handle it. The Republicans, on the contrary, came out boldly for
protection to American industry, and on this they won. They won—but the
victory seemed only to make more insistent the demand for revision. “I
suppose,” said Mr. Morrill, regretfully, “that if the Bible has to be
revised from time to time the tariff may have to be.”
If there had been no other reason at this time, the piling up of the
surplus would in itself have forced a revision. The return of good times
which began to be perceptible in 1878–79 had of course stimulated
imports. In 1878–79 nearly $215,000,000 in duties had been collected; in
1879–80, $386,000,000. In these two years the national debt was reduced
by a hundred million dollars, and there was more money left in the
Treasury than they knew what to do with. Of course a stop had to be put
to this. But more imperative than the surplus was public opinion. It was
suspicious of high protection. The results of the census of 1880 had
begun to filter through the country, and accordingly people began to
compare the last decade—1870–80, which had been lived under a tariff of
about 42 per cent (on dutiable goods)—with the one from 1850–60, lived
under a tariff of about 20 per cent. In each had occurred a disastrous
panic. In each there had been, in spite of panics, a great growth in
agriculture, in population, in manufacturing. Taken on the whole, which
had been the more normal growth?
To start with, it was evident that one claim of the high protectionists
was a humbug—that is, given protection you had prosperity. Mr. Kelley,
as we have seen, had become a high protectionist in 1859, because low
tariff—he called it free trade—had not prevented a panic in 1857. But
neither had a high tariff prevented the panic of 1873. “Where,”
exclaimed the Parsee merchant, “was the Baal of protection all this
time? Why did he not come to the relief of this distress? Alas, he was
as lame, as impotent, and as false as the Baal in the Bible. The one was
unable to strike a lucifer match in the plains of Judea three thousand
years ago, and the other could not light a blast furnace in
Pennsylvania.”
The census showed, too, that the general growth between 1850 and 1860
was _greater_ than between 1870 and 1880. Capital had increased in the
first decade about 90 per cent, in the second but 32 per cent; hands
employed 37 per cent in the first, 33 per cent in the second; wages 60
per cent in the first, 22 per cent in the second; materials used 86 per
cent in the first, 36 per cent in the second; products of manufacture 85
per cent in the first, 27 per cent in the second. The increase of the
second decade over the first had been amazing in certain specific cases,
as in iron and steel. In 1860 the iron production had been but 821,223
tons; in 1880 it was 3,835,191. In 1860 it was 60 pounds per capita; in
1880, 171 pounds. It was protection that had done this, said the Iron
and Steel Association, but why had it not done as much for wool? As we
have seen, the wool interests had secured the passage of a special bill
in 1867 giving them the highest protection they had ever had, but in
spite of it the industry had lagged. Evidently protection was not
infallible. There were other elements in the problem of prosperity—what
were they? Again, what about the prosperity it claimed to produce—that
of iron and steel, for instance—was that prosperity equally divided? Was
a high tariff as good a distributor as it was a generator?
All of these questions had to be answered, but how was it to be done?
Not by a Congress in which “tariff for revenue only” Democrats and
“revenue-reform” Republicans were at large, decided the Industrial
League. Their notion of revision was to have it done by their own
representatives, and at once they began an active campaign for a
commission, such as was hinted at in the petitions of 1877 and in Mr.
Wharton’s Pittsburg speech in 1879, quoted above. In November, 1881, a
great tariff convention was called in New York by the manufacturers, and
this body committed itself to the idea of a Tariff Commission.
Naturally, all this agitation had stirred Congress. Early in 1880 the
Senate had passed a bill providing for a commission, but the House,
jealous of its rights in the matter of devising revenue bills, did not
agree. Now, however, the Secretary of the Treasury asked for a
commission, President Arthur in his first message asked for one, the
Industrial League kept up the pressure, and finally in the spring of
1882 the House consented. The idea of Senator Eaton of Connecticut, with
whom the bill for the commission originated, was that it should be
composed of nine members—six experts, one for each of the six great
industries of the country; two statisticians such as “David A. Wells of
Connecticut and R. M. T. Hunter of Virginia,” and as chairman “one of
the great governing heads of the country, not an expert in anything
except in all that makes men great.”
Mr. Wharton’s idea, as given at the Tariff Convention, was that “each of
the chief groups of industry should be represented by one man.... For
president, a man of high standing, preferably one known to his
fellow-citizens as having acceptably performed important public service,
and of really exalted character and intelligence, should be chosen. For
secretary, a man well versed in the working of our existing laws, in
Treasury rulings and judicial decisions, and in the ways of custom
houses and the tricks or evasions of unscrupulous importers, would be
most valuable.
“It might be necessary that what is loosely called the Free Trade
element should be represented on the commission; both political parties
should certainly be. Seeing that the appointments would be made by a
Republican President, and that the Republican party is firmly committed
to the principle of Protection to home industry, it would obviously be
right that a majority of the commission should be Republicans and that a
majority also should be distinctly Protectionists, but extremists of
every kind are to be avoided.”
President Arthur evidently had both of these views in mind in appointing
the commission, which he did as soon as the House gave its consent, but
his own notion was somewhat more liberal. He cut the representatives of
special industries down to four: wool manufacturers, wool growers,
sugar, and iron and steel. John L. Hayes, the efficient manager and
lobbyist of the Wool Manufacturers’ Association, was made chairman of
the body—a choice probably obligatory on Arthur, such was Hayes’s
influence among high protectionists in the country. The suspicion the
wool growers had of the wool manufacturers (the latter wanting free
wool) made it necessary to give them a special representative, and
Austin M. Garland of Illinois was appointed—a fair-minded man willing to
consider that there were other interests than wool in the country. Sugar
was looked after by Duncan F. Kenner of Louisiana. He had been a member
of the Ways and Means Committee of the Confederate Congress, and since
the close of the war had been active in the reconstruction of his state.
Kenner’s interest in a protective tariff centred around sugar entirely.
The one really broad-minded man among the representatives of industries
was Henry W. Oliver, Jr., of Pennsylvania, an iron manufacturer. Oliver
was a man of large experience and foresight, and a keen judge of men,
and from the start he threw his influence on the commission to the
consideration of the general interest as well as of iron and steel—which
he by no means neglected!
An excellent appointment, made at the suggestion of Mr. McKinley, was
Judge Jacob A. Ambler of Ohio. Judge Ambler was an old-fashioned country
lawyer, able, learned, and honest—a man jealous of the honor of any
office he held or trust he handled, full of contempt for greed,
extravagance, and grafting, shrewd in detecting them, and relentless in
punishing them. His influence on the commission was most healthy. It was
due to President Arthur’s knowledge of the Custom House administration
(Arthur was Collector of the Port of New York from 1871 to 1878, when he
was suspended by Hayes) that William H. McMahon, for twenty years an
officer of the New York Custom House, was put on the board. McMahon had
no interest in any phase of the question except administration, but that
he knew from top to bottom, and his knowledge was invaluable to the
commission. In order that there might be a statistician in the number,
Arthur appointed a young man from the Census Bureau, Robert P. Porter.
Porter was an Englishman and a free trader, who had found his way to
America at sixteen, and had become a journalist in Chicago. In 1877 he
had published an article in the _Princeton Review_ which attracted the
attention of President Hayes, and from which the latter quoted fully in
one of the speeches made on his Western journey in 1878. When Hayes
reached Chicago on this trip, Porter was presented to him, and the
President at once claimed him for the Census Bureau. Here he made many
friends, among them Judge Kelley, who lost no time in converting him to
protection and gladly backed him for the commission.
The remaining members were John W. H. Underwood of Georgia and Alexander
R. Boteler of West Virginia, two gentlemen who were appointed chiefly
that their respective sections might be represented.
The announcement of the commission awakened no great enthusiasm
anywhere. It was not sufficiently strong in business representation to
make the Industrial League feel secure, and the appointment of Mr. Hayes
as chairman naturally aroused the suspicion of moderate tariff men. Nor
did that portion of its work obvious to the public increase confidence.
Its first business, of course, was to get information about the actual
industrial condition of the country. It set out to do this chiefly by
means of public hearings in various cities. Starting out in July at Long
Branch for three months it junketed about from Long Branch to New York,
from New York to Boston, from Boston to Rochester, from Rochester to
Buffalo, then in turn to Cleveland, Detroit, Indianapolis, Cincinnati,
Louisville, Chicago, Milwaukee, St. Paul, Des Moines, St. Louis,
Nashville, Chattanooga, Atlanta, Wilmington, North Carolina, Richmond,
Baltimore, New York again, then Pittsburg, Wheeling, Philadelphia, and
finally back to Long Branch.
In this time 604 witnesses were listened to, and many of them questioned
at length. They were of all shades of opinion, from the uncompromising
free trader, like Professor W. G. Sumner, to the equally uncompromising
higher protectionist, like the Iron and Steel Association. They were of
all shades of selfishness, from the petty selfishness of a man who
refused to consider what effect the duty he wanted would have on a
related industry on the ground that he “had no interest in that
business,” to the enlightened selfishness of the big iron man who
advised lower tariff on iron and steel in order to placate public
opinion and so save the system. A great number of witnesses wanted
_more_ protection. The chemists pleaded for a restoration of the duty on
quinine. Mr. Joseph Wharton pointed proudly to his great nickel and
steel works as proofs of what protection could do for infant industries,
and urged that it be applied next to tin plate. Mr. John Roach of
Chester, Pennsylvania, farmer, iron manufacturer, ship-builder and
ship-owner, employer of 3000 workingmen with a weekly pay roll of
$33,000, gave his experience as a proof that upon protection depended
the prosperity and the future of the country. In Mr. Roach’s judgment
all business irregularities came from a failure to carry out the
doctrine to its logical results, which logical results were prohibitive
tariffs for all raw and manufactured products possible to our country,
and subsidies for all industries which could not be reached by duties,
such as ship-building.
While praises of the results of protection and pleas for more of it were
in the majority, there was considerable complaint of its damages and
demands for freer trade. It is true, said the German silver makers in
answer to Mr. Wharton, that _you_ are making money, but how about us? We
have to pay so much for nickel that we cannot sell in foreign markets,
and it was pointed out that the Meriden Britannia Company had been
obliged to establish a factory in Canada in order to keep a foreign
market for its goods—a factory it still operates. What of that? said Mr.
Wharton. “There is no market in the world that is comparable to this
country as a market of manufactured goods.” All very well, retorted the
people who used nickel, if you have a nickel monopoly and the market
wants more than you can supply!
There were others that complained in the same way that the higher cost
of materials cut them off from a foreign market. Colonel Albert A. Pope,
the great bicycle manufacturer of the day, said that he was shut out of
South America by English makers. He could offset the extra wage cost
here by his more efficient machinery and methods, but his materials were
so much dearer that he could not compete. A manufacturer of neckwear and
trimmings complained that he could not sell his goods in foreign markets
because his imported materials cost too much. The carriage-builders
claimed that previous to the Morrill tariff they had a market in Cuba
and South America, but they had been run out entirely by France, who
could put goods there at half the American price. The oil cloth
manufacturer pleaded for free trade. “If you give us free trade, we can
send goods to any part of the world and do an enormous business.”
Consumers of copper complained that they paid, in 1875, 23 cents in New
York for copper which cost 18 in London; in 1879, 17.5 for what cost
12.2 in London; in 1880, 20 for what cost 13.5 in London. Indeed,
importers and manufacturers had at times been able to buy American
copper in London so much cheaper than at home that it had paid them to
buy it there and send it here. (It came in duty-free if proved to be an
American product.)
Nor were the high protectionists even in steel and iron without
opposition from men who, like them, profited from the growth of iron and
steel industries. Mr. Abram S. Hewitt of New York, for instance,
declared that from his point of view the duties were altogether too
high, profits unfairly large. In speaking of steel profits he said: “I
have never known any such profits in connection with anything with which
I have had anything to do;” a statement which confirmed everything which
could be learned about the carefully concealed profits of that
industry—for instance, not long before this in a law-suit involving the
estate of J. Edgar Thompson, the fact had been brought out that he had
received as high as 77 per cent per annum as dividends on his steel
holdings.
A sinister phase of the testimony was the recurrence of the word
monopoly. The theory of Mr. Kelley and his kind had been, of course,
that when in consequence of high protection the manufacturing of an
article became profitable, capital rushed in to take advantage, and such
competition resulted that prices eventually fell lower than they were
abroad. But it was not working that way. In the steel and iron business,
for instance, as soon as prices began to go down from interior
competition a combination to keep them up resulted. It was even shown in
the hearings that in 1878 the Vulcan Works of St. Louis had been paid to
shut down.
It was October when the commission terminated its public hearings and
settled down to prepare its reports. The scrappiness of the testimony,
the evident absorption of the majority of the witnesses in their own
interests and not those of the country, the little attention given to
commerce and the consumer, the failure to get anything like exact
statistics, created the impression that nothing important would result.
A bad impression was made on the public, too, by the flock of
individuals which everywhere hovered around the commission apparently to
say to it privately what they did not care to say on the witness stand.
These persons beset the members as they dined, walked, rode across
country in their special train. They invited them to dinner and to the
theatres—a horde of hungry duty-hunters who did more to demonstrate to
the fair-minded members of the commission the peculiar evils inherent in
any protective system than reams of the ablest theoretical teaching
could have done.
The report was submitted to Congress in December, and its publication
was a surprise all around. It was far more intelligent, far-reaching,
and disinterested than a cynical public had expected. Poor Mr. Henry
Carey Baird, the quinine-makers, the whole band of duty-grabbers, were
in dismay. They had been betrayed, they said, and it was young Mr.
Porter who had done it. He was an Englishman. It was evident he was an
emissary of British free traders, sent over by them as a boy to be
educated for the task of undermining American prosperity.
No tariff reformer indeed could have asked a better platform than that
on which the Commissioners claimed they had worked. Early in their
deliberations, they said, they had come to the conclusion that a
substantial reduction was demanded—that it was necessary for general
industrial prosperity. “_No rates of defensive duties_,” declared the
commission, “_except for the establishment of new industries which more
than equalize the conditions of labor and capital with those of foreign
competitors, can be justified._ Excessive duties, or those above such
standard of equalization, are positively injurious to the interest which
they are supposed to benefit.” They encourage “rash and unskilled
speculation” to go into business, they “discredit our whole national
economic system,” they cause “uncertainty,” destroy the “sense of
stability required for extended undertakings.” No such “extraordinary
stimulus” as the war taxes gave was now necessary. The great
improvements in machinery and processes made in twenty years “would
permit our manufacturers to compete with their foreign rivals under a
substantial reduction of existing duties.” Twenty per cent was the
general reduction which they had decided manufacturing could support,
and they estimated that the changes they proposed would produce a
reduction of fully 25 per cent.
When one came to examine in detail the schedules proposed by the
commission, it was apparent that, however good their platform, they had
by no means lived up to it. The changes were marked by many
inconsistencies. The duty on chemicals was cut down with rigor, and
quinine was left on the free list, but the duty on crockery and glass
was raised without presenting any satisfactory proof that the conditions
of labor and capital required an advance. The duty on steel rails was
dropped from $28.00 to $18.00—which was still prohibitive—and raised on
steel blooms. The copper duty was reduced 20 per cent; nickel 16⅔ per
cent; pig iron _4 per cent_. The duty on iron rods, cotton-ties, and
many manufactures of iron were raised 50 and more per cent.
The singular inconsistencies apart, however, there was enough of what
was practical, sound, and helpful in the report to make it an admirable
basis to work on. The most serious question seemed to be whether those
who had created the commission would stand by its findings. Would the
Industrial League consent to a 25 per cent reduction? Would the horde of
individuals who had beset the commission during its labors keep their
hands off? Would Congress accept and act upon it in the same spirit and
with the same intelligence as had been bestowed on its preparation? That
it intended to act upon it was obvious. The report was immediately
referred to the proper committees in both House and Senate, with orders
to prepare bills. Haste was necessary. The last election had gone
against the Republicans, the House after March 4th would be Democratic.
If the tariff was to be revised by its friends, they must act quickly.