THE McKINLEY BILL
There has not been a presidential election in our time when the tariff
positions of the two great parties were as perfectly defined as in 1888.
Each had a bill practically complete to offer the country. The
Republicans had elected a president and the majority of the House of
Representatives. It was natural that they should now demand that their
bill be at once adopted. Although the Allison Bill had been practically
finished before the election, it had not been sent to the House, because
it was claimed that the Democrats were malicious enough and Mr.
Cleveland clever enough to pass it in order to have a completed reform
to go to the country on. The Senate bill being what we have seen, and
Mr. Carlisle and Mr. Mills being the leaders of the House, such action
was of course unthinkable, but it was an excuse as good as another for
not sending in the bill, and no doubt was accepted by the devout.
As soon as Congress met in December the Allison Bill was taken up, again
compared with the Mills Bill, and finally on January 22 passed as an
amendment to the latter. In sending the bill over to the House the
Senate suggested that it be referred to a Conference Committee of the
two Houses. This was to avoid the objection the Democrats were sure to
raise, that the Allison Bill was a violation of the Constitutional
provision that all revenue measures must originate with the House. Mr.
Reed and Mr. McKinley both urged the Conference. To Mr. Reed it was an
absurdity that the rules in force could prevent prompt action. At least
if the Democrats did refuse to allow a conference on the bill, he wanted
to make sure that the country understood that it was not the Republicans
who were delaying action in the all-important matter of reducing the
revenue; it was the Democrats, the very gentlemen who had so long and so
loudly urged the necessity of action!
Mr. McKinley’s proposition sounded reasonable. “The House,” he said,
“has given to the country one bill framed upon one principle and based
upon the line of party policy with which the majority is in accord. The
Senate has given to the country another bill resting upon an entirely
different principle and following out an entirely different line of
public and party policy. The Senate has asked the House to consent to a
committee of conference to consider the disagreement so presented, that
they may see if in some manner this great difference between the two
Houses cannot be reconciled.
“Now, what do we want to do as practical men? What does the country
expect of us? We want to reduce the public revenues and we can reduce
them without my friend from Texas being called upon to surrender one jot
of his free-trade principles or this side surrendering one jot of its
protection principles. If the House of Representatives meets the Senate
in free and open conference and those provisions are adopted where the
two bills meet on common ground, we can reduce the revenues from
thirty-five to forty millions of dollars and still preserve for future
settlement the general policy of taxation respectively adhered to by the
two parties.
“All we have to do, Mr. Speaker, is to take up these two bills and look
at the duties and changes in rates which are common to both. First, the
abolition of the tax upon tobacco—$30,000,000; that is common to both
bills. Then you take the free list; that is common to both bills. Then
you take the administrative features of both bills. Both seek the same
purpose; both look to an honest collection of the revenue and an honest
administration of the customs laws.
“This administrative bill has nothing to do with politics; it has
nothing to do with free trade; it has nothing to do with protection; it
has nothing to do with party principles or policies. It is above
politics and should be divorced from party. But it has everything to do
with an honest administration of the customs laws, whether they are
based upon the principle of protection or upon the principle of free
trade.
“Now, why not, as practical men, seeking to relieve the Treasury of the
United States of its congestion, as described by the President of the
United States, meet this condition and relieve the Treasury of its
accumulating surplus and leave this vast sum of money with the people,
where it belongs? ‘It is not a theory; it is a condition.’ Shall we run
away from the condition which we can in part relieve, or waste our
valuable time now upon theory?”
The answers of Mr. Mills and his supporters to these arguments were as
indignant as to be expected. “Mr. Speaker,” said Mr. Mills, “we have
sent to the Senate a bill to reduce taxation. They had originated in
that Chamber, or were preparing before we sent this bill to them, in
defiance of the Constitution, a bill increasing taxation on the people
of this country, an act which they were prohibited by the great charter
of our fathers from doing. They have sent that bill so prepared here in
defiance of the rules of this House, and it is now proposed that we
accept their invitation to appoint a committee of conference and pass
this extraordinary measure, and that, too, at a time when the coffers of
this Government are loaded with the excess of revenue, at a time when
the people of this country are groaning with unnecessary taxation; a
bill to reduce the revenues by destroying the commerce of the country
and increasing the load of taxation upon the people for private
purposes.”
Mr. McMillan was equally severe: “The gentleman from Ohio (Mr. McKinley)
has not even pretended that this Senate bill is an ‘amendment’ to the
House bill. He could not. He is too intelligent to believe it and too
candid to assert it. It is, as he describes it, an entirely different
bill; a distinct proposition framed on a different ‘theory.’ As a matter
of fact, the Senate does not assume to amend the House bill. The Senate
struck out every section of our bill or threw it aside and framed one of
their own. In doing so they violated the Constitution, and they now ask
us to meet them in conference and concur in this demolition.
“What I want to know of the members of this House is, are you ready to
do this in the face of that declaration of the gentleman from Ohio that
this is a different and new bill? Have you so far degenerated from those
principles that your sires held of adherence to the Constitution as to
be willing at the request of the gentleman from Ohio to give up the
people’s right to frame a bill in accordance with the people’s
principles, and give it over to the Senate, not elected by the people
directly, but by the states? Others may do as they please, but for me, I
will never, never consent to such a cowardly and ignoble degradation of
the rights of the people and the privileges of the House.”
The Allison Bill went to the Ways and Means Committee and that was the
last of it under the name of the gentleman who had led in its making.
It was not until a year after its election that the new House got a
chance at the tariff. In his first message to Congress President
Harrison had recommended a revision of both the schedules and the
administrative features of the tariff. He feared, he said, that some
disturbance of business might result from the consideration of the
subject, but he was certain that this would be reduced to the minimum by
“the assurance which the country already enjoys that any necessary
changes will be so made as not to impair the just and reasonable
protection of our home industries.”
The new organization of the House and of the Ways and Means Committee
was admirably adapted to put through a bill satisfactory to the dominant
faction of the party—also a bill in which the manufacturer would get
what he asked. The chairman of the Committee was no longer William
Kelley. Mr. Kelley was in his last illness and the man who for nearly
six years had been his chief lieutenant had taken his place. This was
William McKinley of Ohio. In 1883, it will be remembered, Mr. Kelley
thought he had found his successor in William D. Haskell of Kansas. Mr.
Haskell had shown unusual ability both as a parliamentarian and a
debater, but the work of the session had been too much for him. He did
not recuperate from the strain through the summer, and twelve days after
Congress opened in December, he died in Washington. Kelley wept like a
child when he heard of Haskell’s death. “Why could not I have gone in
his place,” he said; “my work is nearly done, his was only begun.” But
Kelley was not alone. Close to Haskell throughout the winter of
1882–1883 had been another young protectionist, one in whom Kelley had
great and affectionate confidence. This was William McKinley. Indeed, it
had been uncertain at the beginning of the movement for tariff reform in
1880, whether Haskell or McKinley would become Kelley’s first
lieutenant. The former had won by his superior energy and superior
intellect and it is altogether probable that he would have kept his
place if he had lived. At his death McKinley naturally succeeded him. At
that time he was about forty-five years old. He had been in Congress
since 1876, and from the first the tariff had been his chief interest.
His amiability, his earnestness, his almost devout attitude towards the
dogma of protection, endeared him greatly to Kelley, and by the time the
debate on the Mills Bill came on he was firmly in place. His speeches in
that debate and the campaign which followed were among the most popular
made. McKinley had an advantage at that time which few of his colleagues
enjoyed,—that of believing with childlike faith that all he claimed for
protection was true. Moreover, he had no tariff reform record behind him
as the best of them had; no speech like Allison’s of March, 1870, could
be thrown up at him. Moreover, McKinley was one of those amiable persons
who likes to agree with everybody, and even when President, rarely sent
away a visitor without making him feel that they agreed more than they
differed. He was friendly with many of the Democrats, particularly
Colonel Mills, and often consulted him at vexing points. Believing, as
McKinley did, in the infallibility of protection, there could not be too
much of it; he could with clear conscience give all that the
manufacturer asked, and then add a little, confident that he was really
fostering prosperity.
But at this particular moment it needed something more than an ardent
and amiable chairman to put through the House of Representatives such a
bill as it was obvious would be reported. There was a majority of but
twenty-one, and with the rules as they were, almost endless obstruction
was possible. The probability was, too, that the Democrats would see
that all the obstruction possible was applied. The speaker the
Republicans had chosen could be counted to take care of this situation.
This was Thomas B. Reed of Maine. Mr. Reed was, like McKinley, a
protectionist, but he never regarded the dogma as inspired. His
well-developed humor, his cynicism, and his large practical sense all
helped him to view it for about what it was worth. But that made him no
less strenuous a supporter. Indeed, it made him a more adroit and
effective one. You could tell beforehand about what phraseology Kelley
or McKinley would offer in defence of a schedule. Reed could be counted
on for the unexpected. He had no patience with delaying the tariff bill.
He believed in doing what the majority wanted done,—when he agreed with
the majority,—and he laid down at the start in defiance of precedent a
set of orders which enabled him to force rapid action.
When Mr. McKinley called the Committee on Ways and Means, it had before
it two bills carefully prepared by members of his own party, providing
for what President Harrison had pointed out in his message should be
done. These were Mr. Allison’s Customs Administrative Bill, which after
passing the Senate had been referred to the Committee nearly two years
earlier (March, 1888), and the same Senator’s Tariff bill which in
January of 1889 had been referred to the House as an amendment to the
Mills Bill. Both of these measures were thoroughly familiar to Congress
and the country. McKinley seems to have had the idea at first of making
a tariff bill which would include administration as well as duties, but
Colonel Tichenor, who had been appointed Assistant Secretary of the
Treasury in charge of customs and internal revenue, urged so hard for
immediate action on the Administrative Bill that McKinley finally
introduced it separately and it was promptly passed and signed by the
President. This is practically the law under which our customs are still
administered. It is usually credited to Mr. McKinley, but with its
framing he had, as we have seen, very little to do.
Hearings on the tariff were at once begun. They perhaps were never less
justifiable. The Committee had as a guide a great mass of recent
testimony which further hearings could do little more than duplicate.
But Mr. McKinley took the whole matter too devoutly to omit any of the
ceremony. Hearings were a good Republican tradition, and hearings he
would have. His was to be no “Dark Lantern bill,” as the opposition
delighted in calling the Mills Bill.
The Allison Bill was accepted as a foundation by Mr. McKinley for the
new measure which was first reported on April 16. In reporting the bill
Mr. McKinley gave notice that general debate would be limited to four
days. “I have interpreted the victory to mean, and the majority in the
House and Senate to mean,” he said, “that a revision of the tariff was
not only demanded by the votes of the people but that such revision
should be on the line and in full recognition of the principle and
purposes of protection. The people have spoken and want their will
registered and their decrees embodied in public legislation.”
Mr. Mills and his colleagues were eloquent in their remonstrances
against the limit on the debate, but the program was in too firm hands
to be modified by arguments or tactics. The bill passed the House on May
21. The Senate Committee on Finance added hundreds of amendments to it,
and the Senate spent some seven weeks debating it. On the 10th of
September it passed the upper House and was referred to a Conference
Committee. Both Houses agreed to the report of this Committee, and the
President signed the bill and it became a law on October 1, 1890.
The matter of first moment in the new bill was of course the method
taken for reducing the surplus, which had been piling up in an alarming
fashion throughout the three years’ struggle. When Mr. Cleveland made
his demand in 1887 for general tariff reduction in order to bring this
overtaxation down to a normal figure, the Republicans had offered as a
counter proposition—“spend it.” Mr. Blaine started the cry in his letter
from Paris suggesting one of the most dubious schemes for handling
revenues ever proposed by an American public man of any weight. It was
to appropriate the whiskey tax (the internal revenue tax on distilled
spirits amounted in 1888 to over $69,000,000) to coast fortifications.
If there was something over after this was done and the National
government had no use for the money, he would divide it among the
Federal Union, with the specific object of lightening the tax on real
estate. Mr. Blaine evidently had forgotten for the moment that the
Constitution in defining the taxing powers of Congress does not include
that of “lightening the tax on real estate.”
There had been various other plans offered. Mr. Aldrich would apply the
surplus to the purchase of United States bonds, or as a prepayment of
interest on the National debt. One Congressman wanted it applied in
bounties to wheatgrowers, another wished it loaned, another would devote
it to building the Ead’s ship railway, several proposed using it in
elaborate educational schemes. The general consent that the best way to
get rid of it was to spend it, of course made Congress reckless in
appropriations, particularly of pensions. They jumped from $87,500,000
to about $107,000,000 in Harrison’s first year, and in his fourth year,
they had risen to $159,000,000. But spending it was not enough. The
taxes must come down some $60,000,000 a year and the Republican
suggestion had been, “cut down the internal revenue.” The Republican
platform declared, “We favor the entire repeal of internal taxes rather
than the surrender of any part of our protective system.” Mr. Allison
and his committee considered many suggestions for the repeal of all
internal revenue taxes but stopped after taking them off tobacco. Mr.
McKinley announced that he had not been compelled to abolish the
internal revenue though he was ready to do so if it was necessary to
save the protective system. He estimated that the taxes on tobacco and
alcohol used in the arts, which his bill did abolish, would amount to
$10,000,000. The other $50,000,000 of reductions he proposed to meet in
two ways. The first was by so increasing duties that importations would
fall off, _i.e._ Mr. McKinley accepted the principle of Mr. Kelley and
Mr. Aldrich that the way to reduce revenue from customs is to make
foreign goods which might compete with domestic products too dear to
buy. When the Democrats attacked his increase with the assertion that he
would increase taxation and so revenue, he answered: “That statement is
entirely misleading. It can only be accepted upon the assumption that
the importation of the present year under this bill, if it becomes a
law, will be equal to the importations of like articles under the
existing law; and there is not a member of the Committee of Ways and
Means, there is not a member of the minority of that Committee, there is
not a member of the House on either side, who does not know that the
very instant that you have increased the duties to a fair protective
point, putting them above the highest revenue point, that very instant
you diminish importations and to that extent diminish the revenue.”
The chief articles which he hoped to make too dear to import were
woollens and higher grade cottons, cotton knit goods, stockings, linens,
and all iron and steel and metal products, the articles, it will be
noted, which are essential to everybody. It was not necessary to raise
the rates on all these products to make them too dear to import. Not a
few rates then in force could be lowered and still be prohibitive. Thus
in the case of structural steel and steel rails, the McKinley bill
reduced the existing rate slightly without in the least disturbing the
situation.
Mr. McKinley’s pet duty in the metal schedule, and indeed in the bill,
was that on tin plate. There had been a duty of a cent a pound on tin
plate for some years and throughout much of this period there had been a
steady pressure to raise it to 2½ or 2½ cents. In the early ’70’s there
had been a little tin plate manufactured in the country. The price at
the time had been abnormally high on account of the Franco-Prussian War
and the premium on gold. When things dropped back to normal, the
industry lagged. But the would-be manufacturers—and many makers of iron
plates naturally wanted to turn them into tin plates—for ten years at
least had kept up an agitation. The tariff commission of ’82, through
Commissioner Oliver’s influence probably, had advised 2½ cents, but
Congress refused to raise the duty in the Bill of 1883. The Tin Plate
Association and the Iron and Steel Association continued their work. An
increased duty on tin plate became, in a way, in the ’80’s, a test of a
Republican’s soundness in the minds of the big interest which had put
themselves behind the party. If he hesitated, recalled that we had
developed no tin mines, that inevitably the price would be higher for a
long term, that such a duty would be a blow to an industry many times
greater than tin plate could ever be,—that of canning,—that the burden
would fall directly on the poor, they being the chief consumers of tin
buckets, and cups, of canned fish, meat, and vegetables—the answer was
the answer of “Pig Iron” Kelley!—“In God’s name do not let the gentleman
lead us to declare that the people of this country shall never
manufacture tin plate!”
With the Iron and Steel Association taking the important place it did in
the campaign of 1888, it was of course inevitable that the Allison Bill
should recognize its demand for an advance on tin plate. Mr. McKinley
found the duty then in the bill he inherited and Mr. Allison, who
believed sincerely that the tariff on tin plate had justified itself,
was sore to the day of his death because Mr. McKinley never credited it
to the Allison Bill. It is doubtful if an important duty was ever laid
on facts so distorted and in answer to pressure so questionable. The
chief advocate was the American Tin Plate Association. Their circulars
went out broadcast as appeals to patriotism. “If this little circular
should fall into the hands of a patriotic lady or gentleman,” wrote the
Secretary in a circular which was printed in 1888, “we ask that you
kindly give this matter some study; it is a patriotic feeling and
nothing else that instigates the members of this association.” The
patriotic lady or gentleman who had given the circular study would have
found it started with a statement so absurd that he would have only
continued because of the amusement he might get from it. According to
this circular we consumed about $35,000,000 worth of tin plate a year
(the figure was greatly exaggerated), and “if it were made in this
country several hundred thousand residents of the United States would
gain a livelihood thereby.” If the value of the tin plate consumed were
$35,000,000 and the sum was divided into one-third for materials and
two-thirds for wages and the “several hundred thousands” were reckoned
as 300,000, their annual wages would have been about $78.00 a year!
Mr. McKinley saw a wonderful future for the industry—23,000 men employed
directly in the business (in 1900 there were 4000; in 1905, 5000),
$30,000,000 of capital invested (in 1905 it was $10,000,000). He did not
seem to think there was any impropriety in a part of the capital ready
to go into tin plate making, being that of a member of the House long a
supporter of the duty, F. G. Niedringhaus, of Missouri. This gentleman
wrote on November 27 a letter read in Congress by Mr. McKinley, saying
one of his mills had been arranged for tin plate work and in case of a
“proper duty,” he could turn out tin plate on short order, and “if the
fact as I believe it to be can be generally established in the minds of
the people, _that the Republicans will continue to govern this country
in the future_, there will be plenty of money forthcoming to embark in
the manufacture of tin and terne plate.”
The violent attack upon this duty and the very plausible reasons for
believing that the industry could never be selfsupporting, led to the
adopting of an ingenious provision, limiting the time that manufacturers
might have to establish the business. Tin plate was to be admitted free
of duty after October 1, 1897, unless in some one of the years between
1891 (when the duty was to go into effect) and 1897, one-third as much
tin plate was produced here as was imported in any one of the other six
years. This clever device originated with Senator Spooner of Wisconsin.
The Tin Plate and Iron and Steel Associations practically wrote their
own schedules in the McKinley Bill. The wool growers and woollen
manufacturers did the same. A series of poor years in wool occurred in
the ’80’s. There were legitimate causes outside of the tariff for the
depression, but a large and influential part of the industry believed or
professed to believe the trouble to come solely from reductions in
duties made in 1883. These reductions had disturbed the “harmony” in
wool which they claimed the growers and manufacturers had established in
1867, and which they now loudly affirmed must be restored if the two
branches of the industry were again to be prosperous. There were long
petitions presented by manufacturers asking for free wool, arguing that
the industry could never hope to compete until it was on an equal
footing with other nations in the matter of raw materials; but this
point of view was not supported by the National Association of Wool
Manufacturers, which by this time had become one of the most powerful
political organizations in American industry. It held that the
manufacturer must support the duty on wool if he did not wish to set the
growers against the duty on woollens. It had been established in 1867
“almost as economic law,” Mr. Whitman, the president of the organization
claimed, that the wool-grower was to have his duty, and that the wool
manufacturer was to be given two kinds of duties, one which would
compensate him fully for the tariffs on his raw materials, not only wool
but dyestuffs, and that after that, he was to have the same measure of
protection that other industries received. Mr. Whitman claimed that the
lowering of the compensating duty in 1883 had particularly disturbed the
“economic law.” As we have seen, this duty had been dropped from 50 to
35 cents. In making this drop the Committee had decided that it was a
mistake to count 4 pounds of grease wool to one pound of cloth as had
been done in 1867, since 4 pounds were rarely used. It had said that 3½
pounds was a generous allowance—as it was. Mr. Whitman remonstrated
against this decreased compensation. He wanted the duty based on the 4
pounds and he wanted other upward revisions. The program proposed by the
Association was practically adopted. It contained one curious provision
new to the wool schedule and important in the later history of the
tariff; that was a duty on tops and all wools and hair advanced beyond a
washed condition. Tops are wool in one of the early stages on the way to
yarn. Mr. Whitman, asked how the cost of making tops compared with that
of making yarn, said it was about one-half. In the same examination Mr.
Whitman also said the principle which he wished applied in the fixing of
the duties was that there should be a higher duty on cloth than yarn, on
clothing than cloth, and he suggested that the relative per cent of the
three should be 40 per cent for yarn, 50 per cent for cloth, and 60 per
cent for clothing. As to tops, which could be made according to Mr.
Whitman at one-half the expense of yarn, he suggested for them a duty
_not_ lower, as one would expect from the “principle” he had himself
laid down, nor indeed did he fix a direct duty. Mr. Whitman suggested
that the rate on tops be that fixed for the basket or catch-all clause
of the schedule. Turning to that clause we find it to be not _less_ than
the rate on yarn, but considerably _more_. The suggestion was embodied
in the McKinley Bill apparently without anybody except Mr. Whitman
understanding its motive. Other suggestions of the manufacturers were
also adopted, resulting in increased protection on those classes of
goods where there was any amount of importation. Generally speaking, the
efforts of the manufacturers was to secure advances in both the wool and
cotton schedules where competition still persisted.
The wool growers were equally successful. The duties were raised on the
various classes of wool. Moreover, the duty on shoddy, mungo, and wool
wastes which had been low were raised so high that importation became
impossible. This change was made on the imperative demand of the Ohio
“Wool Trinity,” who declared these substances were taking the place of
pure wool and so injuring the wool-grower. The same argument was largely
responsible for an increased duty on carpet wool. We grow no carpet wool
in this country and probably can never afford to do so, our land and
labor being too valuable. The wool-growers contended, however, that the
manufacturer was using carpet wool in making cloth and that they must be
protected against this injustice. It is probable that considerable
carpet wool does find its way into some grades of cloth, but not enough
to have any effect on domestic wool production.
The largest lump of reduction provided for in the new bill came by
making raw sugar free and by reducing the duty on refined sugar to
one-half a cent a pound. The revenue from sugar was so great, about
$55,000,000 annually in this period, that the schedule had been a
favorite point of attack for years, when reduction was necessary. There
were two difficulties in the way of the Republican protectionist in
reducing the duty on raw sugar. The American sugar cane and American
sugar beet growers under the high duty which they had been enjoying had
come in 1890 to produce about one-seventh of the sugar we used. This
amounted to something like 220,000 tons. Of this amount only a little
over 3000 tons were made from beets and sorghum. Small as was the
amount, the beet and sorghum advocates were as insistent in their
demands for protection as the tin plate people. The Kansas (sorghum) and
California (beet sugar) Congressmen were certain that, properly
protected, these states would produce great quantities of sugar, and it
is pretty certain that they were ready to fight the tin plate, wool,
cotton, or any other duty if their demands were not granted. Take care
of them and they would soon grow all the sugar the United States could
eat, they said. Their product, small as it was, caused high
protectionists like Kelley, Haskell, and McKinley to rejoice. It was
proof of what they claimed—protection did diversify industry, and
Kelley, at least, always carried in his pocket a sample of beet sugar
raised in this country to show to the doubting. At the same time even
Kelley and McKinley found it hard to defend a tax of $55,000,000 a year,
to protect an industry which after a century’s experience had been able
to supply no more than one-seventh of our wants. The sugar bill was
really staggering when it came to be counted up for the century as one
advocate of free sugar did; he estimated we had paid $1,400,000,000 in
the period. To cut down this tax and at the same time to satisfy the
growers, Mr. McKinley proposed that raw sugar should be free and that
the sugar-growers should receive a bounty. The idea did not originate
with his committee. It had been a provision of the Allison Bill to which
Mr. Allison confessed he came slowly, but which he had consented to try
“as an experiment.” It had been a hobby of various members for years.
John Sherman had long believed in sugar bounties and had often advocated
them. In 1888 Joseph Cannon of Illinois had proposed a bill providing
for free sugar and bounties for growers. There were many Republicans who
baulked at the idea, declaring it unconstitutional. They might not
object to an indirect tax like a custom duty, being so applied as to
subsidize the man’s business, but when it came to appropriating
undisguisedly to this purpose funds raised by taxation they could not
consent. It was a case of a distinction without a difference, however,
and as they became familiar with the idea the scruples of many of them,
enough of them at least, to pass the bill, seem to have disappeared.
The bounty provision gave a fine opportunity to Mr. Mills. According to
his way of thinking it was a “bribe,” an “extortion,” a violation of the
Constitution, and where might it not lead? Why should not everybody have
it? Why should not the “people who are raising corn, cotton, wheat,
oats, hogs, and beeves, all slip up the counter and say ‘we will take
sugar in ours, too.’” It is difficult to believe that the sugar bounty
could have survived a test before the Supreme Court. The Constitution is
quite clear in the definition of the taxing powers it gives to Congress.
It is for the “general welfare.” If this means anything, it means that
the tax shall be for a public purpose; or, as Richard Olney has defined
it, “It is the power to raise money from the public for the public.” No
stretch of the Constitution could include in this definition the power
of raising money to help a few farmers raise sugar beets and sorghum,
any more than it could to pension an artist while he learned to paint.
The duty fixed on refined sugar in the McKinley Bill was intended as an
attack on the monopolistic powers of the so-called “Sugar Trust.” The
official name of the sugar trust in 1890 was the Sugar Refineries
Company. It had been formed in 1887, but the operations of the leading
concerns which organized it had long been a scandal. In those years, as
now, these beneficiaries of the nation’s tariff policy had worked in
every conceivable way to avoid paying the duty on their imported raw
sugar. False weighing, under-classification, over rebate duties for
drawbacks on exports, adulterations, were methods they practised boldly
and repeatedly in the ’70’s and ’80’s in their effort to cheat the
government. The sugar schedule had lent itself admirably to the
manipulation. The aim of the trust was, of course, to keep out all sugar
which was eatable, _i.e._ they aimed to supply the country. Now the line
between refined and unrefined sugar is difficult to draw strictly. There
are high grade clean raw sugars, and partially refined sugars which may
be used without further treatment. These sugars are of course cheap and
bought by the poor. The refiners aim to keep the duty on this class of
sugars, known in the schedule as Nos. 13 to 16, Dutch Standard (the
Dutch Standard is a color test) so high that it will not pay to put them
on the market. In the bill of 1883 they had succeeded in doing this. The
sugar refiners had not only manipulated the duty on this class of sugar
until it was too dear to eat, but they had practised some of their most
successful frauds in this region of the sugar schedule. A sample of
their operations had been presented to the Senate only a short time
before by Secretary Fairchild. It related to a cargo of sugar brought
into San Francisco by the American Sugar Refinery (the Spreckles
concern). In this case the enterprising importers caused the sugar to be
artificially colored in order to reduce the grade below No. 13, Dutch
Standard. They had also caused it to be invoiced at 88 degrees, but its
actual strength was found to be from 96 to 98 degrees. The attempted
fraud made a difference of $61,000 in the duty. The American Sugar
Refinery was caught in this instance, but there is no doubt that tricks
of this sort had been frequently successful. To take away the duty on
these grades then would not only serve the poor, but it would also go
far towards breaking up the monopoly. The independent refiners
themselves had in the recent hearings advised this. “The remedy for the
monopoly in sugar is in your hands absolutely,” one of the independents
told the Ways and Means Committee; “that is by putting just so much duty
and no more on refined sugar, that if we undertake to get more profit
than we ought, England, Germany, and France can send in their refined
sugars. The remedy is entirely with you and we expect you to apply it.”
The way in which Mr. McKinley proposed to reach the abuses was to make
all sugar below No. 16, Dutch Standard free. Here again the provision
was not original. It had been in the first drafts of both the Mills and
Allison Bills, but had been so strenuously fought by the sugar interests
that it had been dropped in both cases. When this provision of the
McKinley Bill reached the Senate it met the opposition of the same
gentleman who had been most influential in raising the rates in the
Allison Bill, Nelson W. Aldrich. Mr. Aldrich moved that Nos. 13 to 16 be
made dutiable. Senators Sherman and Allison both fought him, but Aldrich
carried the day. His power at that time, however, was not great enough
to rule the conference to which the bill was finally submitted, and the
original House arrangement was adopted and became the law.
There was no industrial development related to the tariff which gave the
Republicans deeper concern at this period than the trusts. Mr. Cleveland
in his message of 1887 had called attention to the aid a high duty gave
to combinations struggling for the entire control of a commodity, and
the country could not but see that he was right. There was a type of
protectionist who refused to admit the connection. According to Mr.
Kelley and Mr. Aldrich there could be no monopoly in a protected
article. Domestic competition would prevent it. Nevertheless the trusts
multiplied and the majority of them were in highly protected industries.
Moreover, it was obvious that if there was no duty, the industry would
have to sustain a competition which would make monopoly very difficult
if not impossible. It was not the Democrats alone who saw this. Senator
Sherman, who felt particular anxiety over the question, which he
realized might easily defeat the party if it were not settled, thought
and said frequently before 1889 that the trust could only be reached
through the revenue laws. He had been ready to take all duty from
refined sugar in order to destroy the sugar trust, but the majority of
his party did not agree with him. They hesitated at admitting a
connection between anything so unpopular as a trust and anything so
sacred and infallible as protection. An effort was made to dismiss the
troublesome phenomenon as of no consequence. Mr. Blaine tried this.
“Trusts,” he said, “were state issues.” “They have no place in a
national campaign.” In mentioning them he would put in the proviso,
“_If_ they are evils,” etc. But this was no more effective than the
similar attempt to make people believe that the surplus was a good
thing, a proof of prosperity. The unrest increased rather than
diminished, and numerous bills were introduced into Congress between
1887 and 1890, aimed at defining, regulating, or suppressing
combinations. Bills to tax, to take the tariff from, to investigate and
to forbid trusts, pepper the proceedings. Among these bills was a
measure of Senator Sherman’s making a combination in restraint of trade
a crime punishable by fine or imprisonment. This was first introduced in
1888. It was repeatedly discussed and amended, and now that the tariff
revision was on, it was felt that it should be passed. The Democrats did
not hesitate to declare that the Republicans’ sudden zeal for the bill
was due to their desire to have an answer for those who might criticise
their tariff bill as a trust-breeder. At all events, the measure was
passed ahead of the tariff bill. Thus an answer was ready for the
critics. As Senator Morgan said, “The bill was a good preface to an
argument upon the protective tariff.”
More difficult to meet than any other criticism on high protection had
always been the fact of the burden it put upon the farmer. Practically
everything he had to buy was made dearer by the import duties. His
domestic market was undoubtedly enlarged by the stimulus the tariff gave
to manufacturers. There were more buyers at home for his products, but
they paid the prices of the open-world market. There was no protection
for his corn or wheat or barley or potatoes, nor was it generally of an
advantage to him that there should be. He was the great exporter of the
United States. He produced more than we could consume, and sold abroad.
His prices were generally not made here but in the London market. In the
cases where we did import agricultural products, high duties had not
been levied for the good reason that they would make the necessities of
life dearer. It would be a tax on food, and there had always been a
reluctance to imposing that. If we did not raise potatoes enough for our
people and must import, should we penalize the consumer because the
farmer had failed to take advantage of the market at his door? Should we
penalize him for the crop failure which might occur at any time? But,
argued the protectionist of 1890, we are buying too much food abroad.
What are we building up the home market for unless that it may supply
all its needs from the home farmer, and it is not doing so. In 1889,
said Mr. McKinley, we bought $256,000,000 worth of agricultural products
abroad. This should be stopped. It was unjust to the farmer. When the
figures Mr. McKinley quoted are analyzed they are less impressive, for
upward of $200,000,000 of the importations were sugar, tea, coffee, and
articles which we did not produce or in very small quantities, _i.e._
they were articles which the American farmer as well as factory hand
must import if he uses them at all. This fact was slurred over in the
argument. We were buying $256,000,000 worth of agricultural products
abroad. The domestic market was not doing its duty by the farmer; that
duty was to supply all its needs at home. The only reason it was not
doing this was because there was too low a duty on the farmer’s
products. The factory hands must be forced to buy home-grown potatoes,
eggs, and meats. It was as logical, of course, to force the public at
large to eat only home-grown food as it was to force the farmer to buy
only home-made iron and steel. So in the interests of the farmer the
McKinley bill for the first time in our tariff history taxed food
generally and heavily. Eggs which had been free, 5 cents a dozen;
potatoes, 25 cents a bushel; bacon, 5 cents a pound; barley, 30 cents a
bushel. With this program the Republicans hoped to quiet the farmer’s
discontent.
It was a political manœuvre pure and simple. No tariffs can protect the
farmer’s products save locally and sporadically. His is the basic world
industry. The inhabitants of the earth, _all_ the earth, not a corner of
it, are his market. The most imperious cry of men, that for food, calls
him. Laws as all-powerful as gravitation govern him. Petty and temporary
interferences like tariffs may hinder his labors for a season, but the
word of the Almighty is his guarantee that the little schemes of men to
keep the fulness of the earth from its creatures are bound to end in
confusion. Already the farmers had striking proof that the radical
interference with the laws of supply and demand, which had been forced
upon the country by the Civil War and which had been kept alive since by
a combination of greed, superstition, politics, and loose thinking, were
telling on his industry. The entire agricultural production of 1890 was
worth only about ten per cent more than that of 1890, but the population
had increased some twenty-five per cent. That which had been repeatedly
prophesied had happened. The privileges granted to manufacturers had
enticed capital from the farms and men from the soil. It was natural
that this should be so. Effort will go where the way is made easiest and
the results are quickest. There was sound reason in the charge of the
free trader. You have ruined our commerce on the high seas, now you are
injuring our agriculture.
Moreover, nations will not buy freely of nations that close their doors.
The country was beginning to feel this fact. We were antagonizing the
foreign market. The member of the Harrison Administration who saw this
fact most clearly was James G. Blaine, Secretary of State. Mr. Blaine
had been guilty of some curious quakery in the campaign for tariff
reform, which Mr. Cleveland had forced. His treatment of the surplus and
the trust in their relation to the tariff had been superficial. But to
the question of our foreign trade he had given serious thought. He saw
clearly enough that increased duties would injure trade and that
limiting our trade would hurt the Republican party. There was no
mistaking the sentiment of the country on the need of extending foreign
markets. Mr. Blaine feared above all things to excite further suspicion
that the new bill would be to decrease rather than to increase them.
Before the measure had even been reported he made at least one strong
protest against a proposed duty on an article heretofore free. This was
the duty on hides. For over twenty-five years hides had been free and we
had been importing large quantities from South America. The demand for a
duty came from the cattle-growers of the West and Mr. McKinley proposed
to grant it. When Mr. Blaine heard of this he wrote a letter to Mr.
McKinley so sound that one can hardly believe it to be from the same man
who had proposed to perpetuate an exorbitant surplus and use it to
fortify American cities.
“DEAR MR. MCKINLEY:—It is a great mistake to take hides from the
free list, where they have been for so many years. It is a slap in
the face of the South Americans, with whom we are trying to enlarge
our trade. It will benefit the farmer by adding five to eight per
cent to the price of his children’s shoes.
“It will yield a profit to the butcher (Beef Trust) only, the last
man that needs it. The movement is injudicious from beginning to
end—in every form and phase.
“Please stop it before it sees light. Such movements as this for
protection will protect the Republican party only into speedy
retirement.
“Very hastily,
“JAMES G. BLAINE.”
This letter was dated April 10, six days before Mr. McKinley reported
his bill. It was effective. Hides were kept on the free list in 1890.
As the debate on the bill went on, Mr. Blaine appears to have become
more and more uneasy as to its effect on foreign trade, and to meet the
difficulty he proposed a system of what might be called forced
reciprocity with the countries of the American Hemisphere. So long as
they admitted free to their ports all the products of the United States
our market should be open and free to their products; but if they
applied their tariffs to our goods or put export duty on their own, they
should not enjoy the advantages of our free list. This proposition was
made in a report to President Harrison and by him sent to Congress. It
caused much discussion and Mr. Blaine was obliged to explain himself
repeatedly. On July 11, he wrote Senator Frye, saying:
“The charge against the protective policy which has injured it most
is that its benefits go wholly to the manufacturer and the
capitalist and not at all to the farmer. Here is an opportunity
where the farmer may be benefited—primarily, undeniably, richly
benefited. Here is an opportunity for a Republican Congress to open
the markets of forty millions of people to the products of American
farms. Shall we seize the opportunity, or shall we throw it away?
“I do not doubt that the tariff bill pending in the Senate is a just
measure, and that most of its provisions are in accordance with the
wise policy of protection. But there is not a section or a line in
the entire bill that will open the market for another bushel of
wheat or another barrel of pork.”
Mr. Blaine in another letter said:
“If, in the pending tariff, sugar is placed upon the free list, we
give to certain countries a free market for $95,000,000 of their
products, while they are not asked to open their markets to the free
admission of a single dollar of American products. We ought to have,
in exchange for free sugar from certain countries, a free market for
breadstuffs and provisions, besides various fabrics from all parts
of our country. In short, we ought to secure, in return for free
sugar, a market for $60,000,000 or $70,000,000 of our own products.
It will not require reciprocity treaties to secure this boon. The
tariff bill can contain all the necessary conditions. The
legislative power is able to secure the desired end. Within the last
twenty years we have given the countries south of us free admission
for nearly $60,000,000 worth of their products without receiving a
penny’s advantage in exchange. If sugar be now made unconditionally
free, we shall have given to the Latin-American countries free
admission for $150,000,000 of their products. It is time, I think,
to look out for some reciprocal advantages. We are a very rich
nation, but not rich enough to trade on this equal basis.”
Although Mr. Blaine’s idea was not adopted as he had presented it, a
reciprocity clause based on it was embodied in the Tariff Act of 1890.
This clause gave the President power to impose duties on sugar,
molasses, tea and coffee and hides, all free in the McKinley Bill, if he
found that a country which was exporting any of these articles into the
United States was levying duties on the products of the United States
which seemed to him unjust. There was of course a lively skirmish over
giving the President this power. The Democrats declared it
unconstitutional and in this view they were supported by Republican
Senators as able as Mr. Edmunds and Mr. Evarts; however, it became a
law.
As finally passed, the McKinley Bill was a complete victory for that
group of protectionists who had been struggling for twenty-five years to
force the Republican party to break the pledges repeatedly given during
and after the war to lower the customs as rapidly as the financial
condition of the country would permit, to repudiate its long accepted
moderate interpretation of the doctrine, and to substitute for it the
teaching, that the wealth of this country had been produced by
protection and that its stability depended upon protection being
accepted as a permanent national economic policy. It was equally a
victory for the theorist like Kelley to whom protection was sacred
because he saw in it a panacea for poverty, and for William Whitman and
Joseph Wharton who saw fortunes for themselves in wool, nickel, iron,
and steel if they could secure the duties they asked. For John Sherman
and Morrill and Allison it was a half-victory only. They had held
moderate protection as the only wise and safe policy, but they had been
overruled.
The most significant side to the victory was that it established firmly
the politico-industrial alliance which organizations like the Industrial
League, the Iron and Steel Association, and the National Association of
Wool Manufacturers had worked so indefatigably ever since the war to
build up. Moreover, in the making of this bill, that alliance had found
the Congressional leader it needed—a man who was willing to accept its
dictates as to classifications and rates, to fight for them with skill,
energy, and technical knowledge, and who took it as a matter of course
that he and his party should receive in exchange what financial and
organizing aid they required. This man was Nelson W. Aldrich. The part
he had played in the Senate in the making of the Allison and McKinley
Bills had proved him the first entirely able and what was quite as
important, entirely cynical leader, the high protectionists had
developed. Those whom he had served so well were not ungrateful.
Particularly jubilant was the National Association of Wool
Manufacturers. It publicly acknowledged its “great obligations to
Senator W. Aldrich of Rhode Island for the masterly manner in which he
advocated its cause in the Senate.” “Indeed,” the Bulletin went on to
say, “it is proper that we should bear testimony in this connection to
the remarkable familiarity with all branches of industry displayed by
Senator Aldrich in his management of the tariff bill. Every detail of
the most complicated of the schedules was present in his mind for
instant response to any criticism or inquiry. Day after day he stood at
his post, alert and watchful, rarely speaking except when a response was
required, but armed cap-à-pie for attack from any quarter. Rarely in the
history of tariff legislation in this country has the whole burden of so
protracted a debate fallen upon one man, and certainly no representative
in Congress ever acquitted himself more admirably of so great a
responsibility.”
The best reason for believing that the methods and principles embodied
in the bill would have more than a brief life, that the revolt already
begun against its excesses and makeshifts would not weaken it, lay in
the fact that the ideal leader for the measure had developed in the
Senator from Rhode Island.