If there was any public question on which the minds of the people of the United States were made up fifty years ago, it was that of the tariff. They had not been made up in a day. On the contrary, it had taken nearly seventy years of experimenting to bring them where they were—seventy years in which all forms of taxation on imported goods had been tried, from the supposed 8? per cent of the first Congress to the 43 per cent of the “tariff of abominations” in 1828. Some of their experiments had been good and some bad, but out of them all they had struck a mean which was something like this: As a nation we intend to raise money to carry on our business by putting a duty on certain raw and manufactured goods brought from foreign countries. If we find we are getting too large a revenue we will cut down the duty, if too small we will raise it. In placing these duties we will do as Alexander Hamilton advised—that is, if there is a young industry in the country trying to produce something which is essential to war or on which our daily living depends, we will protect it from foreign competition until it is established—but no longer. 2For ten years the country had been working on this tariff platform, and so satisfied were they with it that when they found in 1857 they were taking in more money than they needed for expenses, they promptly passed a bill cutting the duties down to an average of 20 per cent—the lowest they had been since 1816. The duty on many articles they removed entirely—thus, cheap raw wool was allowed to come in free. Nobody, except the Pennsylvanians, and a few New Englanders, objected strongly to the bill; even the majority of manufacturers and old Henry Clay tariff men agreed. Henry Clay had told them that protective duties were never meant to be perpetual, and they looked upon this lowering of taxes as a natural step in the process of gradual extinction which they had been taught to expect.
Not only was the mind of the country satisfied with lower duties and an increasing list of free goods, but it had accepted the idea that a Christian nation should establish as rapidly as possible reciprocal trade relations with its neighbors. For three years a reciprocity treaty between ourselves and Canada had been working. It was not as good a treaty as might be, and the Canadians were getting greater advantages from it than we; but it could be improved, and there was much pride in the country over the advance it was felt this treaty showed in national broad-mindedness and generosity.
That was fifty years ago. To-day the average tax on dutiable goods imported into the United States is nearer 50 per cent than 20. Instead of reciprocity with Canada we have had for fifty years in many cases prohibitive protection. Why is this? What has become of the theories and practices of fifty years ago?
The answer lies in a curious story—a story of a panic and a war and the natural penalties which panics and wars 3impose. The panic came first—in 1857, just after Congress had lowered duties to prevent the collection of more money than we needed for actual expenses. It was a logical enough panic—panics always are logical. For several years the country had been making money. It had lost its head over its growing wealth—had speculated, had built railroads faster than they were needed, had spent lavishly. Its expenses finally outran its income and a crash naturally came.
The tariff had nothing whatever to do with the disturbance, but the effect of the panic on the national income was soon evident; straitened for money the country bought less abroad, buying less the revenue was less. In 1857 it had been $64,000,000, but the year after it was but 42 millions, and the year after that (1859) but 48 millions. Instead of too much money, Congress saw itself with too little. Its credit was sadly disturbed, not only or chiefly because of this falling revenue, but because of the agitation of the slavery question and the increasing contention between North and South.
It was natural enough, of course, that when the revenues from imports continued to be too little to pay the government’s bills, there should be a demand for higher duties. This demand was headed by a member of the House of Representatives from Vermont, Mr. Justin S. Morrill.
Mr. Morrill was an able and honest man, who had been sent to Congress by the “Conscience Whigs” of his district—not because he had sought the office, but purely because they believed from what they had seen of him as a merchant in their community, they could trust him to represent them on the slavery question. Now, Mr. Morrill was one of the Whigs who had not been satisfied to see duties lowered in 1857, and who strenuously objected to letting in raw products free of duty. He wanted all wool protected. He 4wanted his Vermont marble protected. He wanted maple sugar protected. He was one of the few New England representatives who had spoken, as well as voted, against the bill of 1857, and his speech at that time had been very able. Indeed it made him the acknowledged head of the active protectionist sentiment left in the country, for he made no bones about declaring his faith. “Such articles of primary necessity,” he said, “as there is any hope of successfully producing should be waked into life, nursed into perennial vigor by moderate and steady discrimination in their favor, so long as their condition makes it proper, so long as there is a probable chance of ultimate success.”
Mr. Morrill saw the opportunity for reviving protection in 1858 when the revenues were insufficient, and he determined to prepare a new bill which should represent his views. But the interest in the subject at that moment was so little that he could not get a hearing from the House. The next session, however, gave him a rare chance. In the fall of 1859 a Congress largely Republican took its seat. After a fierce fight this Congress elected a Republican speaker, and this speaker put a young man destined to play a large part in National finances at the head of the Ways and Means Committee—John Sherman of Ohio. Mr. Sherman was just 37 years old, and as shrewd, as active, and as experienced a politician as the Republicans had in the House. He had begun his political life when about 21 years old with but two political tenets—hatred of the Democratic party and belief in protection of American industries. Political conscience had been unstirred within him until the repeal of the Missouri Compromise. That turned him into a Crusader. Sherman had been fighting solely against slavery extension for six years, when his appointment to the head of the Ways and Means Committee suddenly made it his duty to consider finances. At once his 5old faith in protection asserted itself, and he gave full support to Mr. Morrill, who was instructed by the Committee of Ways and Means to prepare a new tariff bill.
Mr. Morrill worked out his bill with great care and patience, and when it came out of committee early in 1860 it represented very nearly what he believed. Mr. Sherman, who from this time on had much to do with tariff bills, says in his autobiography that the Morrill Bill at the start was nearer meeting the double requirement of revenue and protection than any bill he was ever familiar with.
But good as the bill may have been when it came from the committee, it was soon assaulted right and left by those who had something to protect or those who were affected by what it protected. Much of the pressure, Mr. Morrill found, was impossible to resist. What can you do when a Senator of the United States, one so famous as Charles Sumner, “calls your attention” to letting cocoa in free (though according to the principle on which you are working it should pay a slight duty) because his friend, the head of an “eminent house” (the friend was Henry L. Pierce and the “eminent house” was his chocolate factory), wants his cocoa free? What are you to do when Pennsylvania iron men and Rhode Island manufacturers, who according to your theory of protection are established and whose duties should gradually be lowered, come down on you for higher rates, and your party colleagues tell you that if you refuse their requests the election may be lost and the cause of human freedom be retarded? Amendment after amendment was tacked on the bill, many of them in direct contradiction of Mr. Morrill’s principles. They destroyed the justice and the consistency of the measure, and he became so disgusted that he was ready to abandon it. Inconsistency was less troublesome to Mr. Sherman, however. He was a “practical politician,” something Mr. 6Morrill never was. He believed more revenue to be necessary; he believed in protection; he believed in winning votes for the party wherever and however he could. This bill contributed to all these ends, and he himself undertook to engineer it through the House. Mr. Sherman’s task was made the easier because in May, when the Republicans had met in Chicago to nominate their candidate for president, they had put into their platform a plank which pledged the party to support protection, though they did not have the courage to use the word. This plank was plainly a bid for the vote of communities which could be held to the party only by protection, pre?minently the state of Pennsylvania. The great leaders of the party, Mr. Lincoln, Mr. Chase, and Mr. Seward, did not believe that the tariff should be taken up at all at this time. Indeed, only a few days before he was nominated as president Mr. Lincoln wrote to a correspondent that “the tariff question ought not to be agitated in the Chicago Convention.” Mr. Chase had always stood with the Democrats on the matter, and Seward had expressed his view in the Senate in 1857 when the tariff bill was up: “It is not wise, it is not just, to draw from the pockets of the people into the Treasury of the country an amount of money greater than the current expenses of the Treasury require.”
The Morrill Bill passed the House in May, 1860, but the Senate would have none of it. That body was still Democratic and the South still led. Not only was the South strongly free trade in its opinions, but at that moment no bill originating with the Republicans had a ghost of a chance, such was the bitterness of the feeling. The bill went over to the next session, and the next session brought a tragic change in the Senate. By the time Mr. Morrill’s bill had a hearing six states had withdrawn from the union, and their Senators had left Washington. The withdrawal of the Southern 7Senators left the control to the Republicans, and it soon became evident that the bill would probably pass. The result was a fierce onslaught by all sorts of interests. Almost everybody got what he wanted. Some of the items which went into the schedule were long subjects of mirth and scandal to the opposition. Such was the protection of 20 per cent accorded to wood-screws. At that time there was but one small factory for wood-screws in the country. It was situated in Providence, Rhode Island, and Senator Simmons, who secured its protection, and who was popularly supposed to be interested in the concern, was long known as “Wood-Screw” Simmons. The bill also carried a generous basket clause into which all raw materials and all manufactured articles “not otherwise provided for” were dumped.
It was little wonder that jobbery found an easy way into the bill. The country was in an uproar over secession and in a state of doubt and unrest about Mr. Lincoln—what would he do? Was he the man for a crisis? A poor time indeed to consider deliberately so serious a matter as new tariff schedules! There was an imperative need of money and it looked as if this bill would give it, so the Morrill Bill finally went through, and 48 hours before his term ended President Buchanan gave it his signature.
The immediate effect of the Morrill Bill was something quite unlooked for. The increased tariffs made Europe deeply indignant. England and France were particularly hard hit; for instance, the duties on cheap clothes, of which they sent us great quantities, were largely raised. Besides the growing free trade sentiment abroad, the sentiment of the liberal party everywhere was shocked that the new Republican party, which had arisen against human slavery, should take the narrower view of commerce. To make the matter worse for the Republicans, the seceders, in session at 8Montgomery, adopted a tariff for revenue only. Thus, before Sumter was fired on, Europe had turned to the Confederacy as the more liberal in commercial policy. It is probable that if the Morrill Bill had been simply a revenue measure the cause of the North would have met a very different reception in Europe from what it did.
The London Times clearly stated the foreign point of view:
“It will not be our fault if the inopportune legislation of the North combined with the reciprocity of wants between ourselves and the South should bring about considerable modification in our relations with America. No one after the recent debate on the slave trade can doubt that England is still in earnest on this point, and will never buy commercial advantage at the cost of her honor. We should infinitely prefer dealing with a single responsible government to maintaining two embassies and running the risk of misunderstandings with two highly sensitive democracies. But the tendencies of trade are inexorable, and our manufactures will infallibly find their way to the best market with the regularity of a mechanical law.... It may be the Southern population will become our best customers.... Granted that a permanent secession can be effected by a ‘peaceful appeal to the ballot-box,’ and that the moral and economical evils of slavery do not prove fatal to a society based on it, material prosperity will not fail to follow unrestricted intercourse, and the free States will long repent an act which brings needless discredit on the intrinsic merits of their cause.”
This “discredit” to the cause grew in Europe as the days went on. Not only did the bill hurt Northern trade and alienate European sympathy, it was the chief reason the Confederates had for thinking their new government would succeed. It was driving trade to their ports, thus giving them money. It was making Europe their friend, thus giving them position. And nothing could be done. On all sides the Morrill tariff 9was denounced as a stupidity, a blunder, an outrage. There were even many demands for an extra session to repeal it. Too late the Republicans saw that their first measure as a party had been a mistake. And then suddenly the whole situation of the unhappy bill was changed by the breaking out of war between the North and South.
The first and most imperative necessity in war is money, for money means everything else—men, guns, ammunition. Mr. Lincoln and his cabinet when they found in the spring of 1861 that they were in for a war of more than 90 days, at once called an extra session of Congress to provide the means for carrying it on. It fell to Mr. Chase, the new Secretary of the Treasury, to suggest what could be done. Practically our whole income came at that time from duties on imported goods. How could they be made to yield more? What other sources of revenue could be tapped? Mr. Chase had various suggestions to make, but it is with only one of them that we have to do here—the raising of the tariff on imported goods.
Under other circumstances it would not have been agreeable for Mr. Chase to suggest increased duties. All his life he had been what the Whigs called a free trader—that is, he had preached Democratic doctrines on the tariff. He was one of a large number of leaders in the Republican party who had originally been Democrats and who had joined the new organization solely because of its anti-slavery sentiments, and who had reluctantly swallowed the new party’s leanings towards protection, hoping always, no doubt, to uproot them finally. Mr. Chase had probably been the less inclined to make any show of objection to the protectionist program of the new organization because he had hoped to be its choice for president. But Mr. Chase had not been his party’s choice for president. On the contrary, he had been obliged to accept 10from his successful rival a portfolio for which he had no love and no training—that of Secretary of the Treasury. Disappointed as he was, badly used as he felt himself to be, he undertook manfully the hard task of raising money for the war. From the first his determination and confidence were the firmest. The money was in the country. It must come into the National Treasury, if not by one means, then by another. “The war must go on,” he told the bankers who hesitated to take his loans, in July, 1861, “until this rebellion is put down, if we have to put out paper until it takes a thousand dollars to buy a breakfast.” And when they gave him their terms with a “this-is-our-ultimatum,” he replied, “It is for me to make ultimatums; not you.” Higher tariffs then instead of lower Mr. Chase naturally advised, and he asked Congress to amend the Morrill Bill to this end. Many of its duties he raised, articles which it placed on the free list he took off. On many articles he arranged for a double duty, that is, duty on both value and quantity, and he tacked to the bill a direct tax of $20,000,000 to be divided among the states and a tax on all incomes of over $800. Mr. Chase expected from this measure as amended to get something like $80,000,000 of the $318,000,000 he calculated he would need in the next year (ending June 30, 1862).
There was no delay in the adoption of the bill. Its worst enemies were for it. Even the New York Evening Post, which had fought the Morrill Bill with teeth and claws, which had called it a “booby of a bill,” the “blunder of the age,” now said resignedly that in the situation the best thing to do was to “patch it up.” “The great object we have in view during the continuance of the war by financial regulations,” said the Post, “is to raise, in the easiest and least burdensome manner, the largest possible amount of revenue. To further this object, free traders can readily work with protectionists. 11War is an exceptional state and demands extraordinary measures. For this reason we are prepared to support a scale of duties at present which we should oppose if the nation were at peace.”
Thus, in less than five months after its passage the Morrill Bill, a protectionist measure, framed when there was but little protectionist sentiment in the country and made a law by the signature of a Democratic president elected on a platform of free trade throughout the world, a bill so changed from its first condition that its author had been inclined to abandon it, loaded with jobs, the cause of serious business disturbances in the North, of the alienation of European sympathy, of great gain and satisfaction to the South, had been accepted with resignation by its most intelligent enemies. Almost without knowing it the country had returned to a policy which nearly 20 years before it had abandoned. It is not too much to call the measure the foundation of a revolution in our commercial life. Henry C. Cary, the economist, did not greatly exaggerate its importance when he wrote Mr. Morrill: “You have connected your name with what is destined, I think, to prove the most important measure ever adopted”; nor did Mr. Blaine when he said, in his Recollections, that if the Morrill Bill had been passed under other circumstances, it would have been regarded as an “era in the history of the government.”
Mr. Chase had calculated that the receipts from the amended Morrill Bill would amount to about $80,000,000 a year, but they fell far short—only about 51 millions, of which the customs yielded 49 millions. The expenses of the war increased at a frightful rate, and it was soon evident that the struggle was to be longer than had been expected. Early in 1862 new schemes of taxation began to be considered. The result was that the Ways and Means Committee decided to 12ask Congress to pass an internal revenue bill, and still further to add to the duties provided for in the Morrill Bill. It was in June when the two new measures came from the committee. Taken together they were calculated to make the country gasp. The tax bill touched almost every article of daily life. It provided for licenses on a man’s business whatever it was—running a bowling alley, a hotel, or an attorney’s office; for taxes on his income and his inheritances, on his carriages, his gold watch, his silver plate; for revenue stamps on the documents he signed, the telegrams he sent, the matches he struck; nothing that he ate or drank or made escaped. The direct taxation on manufactured articles was so high that in many cases it would have acted as a bonus to foreigners to bring in their goods if the Ways and Means Committee had not foreseen this, and aimed to amend the tariff law so that increased duties would compensate for the internal taxes. As might have been expected from the hurried way in which the bill had been prepared, the duties intended as compensations were not always exact. Sometimes, as in the case of books and umbrellas, they were insufficient, and the foreigner could bring over his wares and undersell the overtaxed domestic producer. Again, the duties were in excess of the direct taxes and served only to protect the home manufacturer in extortionate prices. Thaddeus Stevens, the chairman of the Committee, and Mr. Morrill both explained to the House with great care that the whole scheme of the changes was to make the additional duty cover as nearly as possible the internal taxes. “If we bleed manufacturers we must see that the proper tonic is administered at the same time,” said Mr. Morrill. Any duty not compensatory was placed purely for revenue reasons. In no case, they said, were the new duties for protective purposes—the whole change must be regarded as “temporary”—a war measure, and nothing else.
13It was a foregone conclusion that the bills whatever their provisions would pass, for the people were actually demanding taxation, that the war might be properly waged. Nevertheless, there was much bitter remonstrance at the duplication of taxes, which in certain cases was excessive and unjust. Take the newspaper business, for instance. Almost everything a printing house used was taxed—paper paid 3 per cent; a duty was put also on rags imported for paper making, which still further raised the price; the advertising income was taxed. Revenue stamps were required on every telegram a member of the staff sent, on every check made out, on every official paper signed. When the bill was under consideration, the New York Herald computed that it would add from thirty to forty thousand dollars a year to its expenses. The Herald got great joy out of the situation. It could afford the expense, but in its judgment no other New York newspaper could, and in a long and interesting editorial (July 1, 1862) it said, jubilantly: “Many papers will be killed, but the Tribune and the Evening Post will die first. They have no advertising patronage and but very little circulation, and so by a just retribution of Providence they will be the first victims of the taxation which they have brought upon us by causing our Civil War.” The comforting assurance of the destruction of his two hated contemporaries, combined with the disgust and anger of England over the increased duties, gave Mr. Bennett such satisfaction at this time that he became almost benevolent towards the Lincoln administration.
Mr. Greeley did not share Mr. Bennett’s conviction that the Tribune would be destroyed by the new taxes, for he wrote Mr. Morrill:
“If newspapers are to be taxed at all, their advertising can bear it best, as it is a source of profit which circulation is not. We 14can stand 2 mills per pound on paper—though that will be a pretty productive tax. I think that item alone will cost the Tribune establishment $7000 per annum, all to come out of profits that can’t be made in these times. Still taxes must be put on—only do give us some substantial retrenchment—especially of mileage—to go to the people on.”
The House passed the new bill promptly. Even if it had felt more seriously than it did the objections to it there would have been little chance of delay, for the chairman of the Ways and Means Committee, Thaddeus Stevens of Pennsylvania, was a dictator who tolerated little interference with any measure he approved. Mr. Stevens at this time was a man of 70, sombre and gaunt, with rugged features, deep-set eyes, and a splendid brow. He was lame, a club foot, and his health was permanently broken. But never had his wit been keener, his sarcasm more biting, his eloquence greater, his will more indomitable. He understood Congressional tactics as few men ever have, and he was a filibuster of first order. He was frequently unscrupulous in getting what he wanted. If he wanted it, it must be right and the means were a secondary consideration. Stevens always stood by his own, right or wrong, not that he entertained illusions about his Republican colleagues. “Which one is our d——d rascal?” he asked one day when called upon to vote in a contested election case, and “our d——d rascal” got his vote. The last thing Stevens would allow was delay over revenue bills. If a member took to questions he considered immaterial in the debate he hauled him back sharply to his muttons, and it was a rash man indeed who offended a second time. Only one thing would send him off on a tangent, and that was an effort to secure some advantage over a man of another race or color. In the debate on the present bill, for instance, he broke out in a fiery denunciation 15of California because the representatives were trying to secure a high duty on cleaned rice, which the Chinese used almost exclusively. The Californians frankly avowed that the duty was intended as a discrimination against the Chinaman. Stevens was at them in an instant, the engineering of the bill quite forgotten, in a hot speech against the injustice of their attitude.
That there was discrimination possible against your white fellow-man in applying a protective tariff, Stevens seems never to have understood. Duties were never too high for him, particularly on iron, for he was an iron manufacturer as well as a lawyer, and it was often said in Pennsylvania that the duties he advocated in no way represented the large iron interests of the state, but were hoisted to cover the needs of his own small and badly managed works. He was as unsound on all financial matters as he was on protection. He wanted to pay the war debt in greenbacks, had a horror of gold going out of the country, and once proposed a law forbidding it to be bought and sold. But taken all in all, Thaddeus Stevens was probably what the House needed in the crisis, a prejudiced, violent dictator, with a holy passion for the union cause. Such men get things done if the after-cost of their work is heavy. Stevens soon sent the tax and tariff bills to the Senate, where, if not greatly improved, they were passed with promptness. Considerable suspicion was popularly attached to many of the Senate changes in the excise bill, particularly because of the close connection with it of Senator Simmons of Rhode Island. The Senator’s connection with the Morrill Bill which had won him the sobriquet of “Wood-Screw” Simmons has been referred to above. It was fresh in public mind then. He still further distinguished himself at the time he was engineering the tax bill by a gun contract so unsavory that it had to be investigated. It was 16shown beyond quibble that he had been promised $50,000 for getting a contract for one of his constituents and that he had already received some thousands of the money. The Senator did not pretend to deny the fact, but he declared his transaction to be “strictly legal.” The committee was severe on him. He had no more right to sell his influence, they said, than his vote, both were “the property of the country”; but they intimated that as he was really no worse than many of his colleagues, it was better to let him off, and let off he was, though he soon resigned. The affair did not raise the tax bill in the estimation of the public, nor increase public confidence in the merits of the compensating tariffs which accompanied it.
The passing of the bill went almost unnoticed by the press, so engrossed were the people in war. (It was the summer of McClellan’s Virginia campaign.) A few newspapers of free-trade principles tried to make an issue of it, but without success. Mr. Greeley came out in the Tribune declaring that he would not be drawn into a discussion on protection as long as the war lasted. Indeed there was room for little on the wonderful editorial page of the Tribune, where Horace Greeley stripped bare his agonized heart, but the war and the emancipation of the slave. Greeley, too, was satisfied enough to let protection re?stablish itself through a revenue bill, for if there was anything which he held almost as sacred as human liberty, it was the doctrine of protection to American industries. Greeley saw protection as an actual wealthproducer, and when the Morrill Bill was up in 1860, he declared: “We have as undoubting faith that this bill if passed would add at least $100,000,000 per annum to the earnings and wages of labor throughout the country as we have that the sun will rise to-morrow.” He was one of a very few men in public life whose belief was something more than an inheritance 17from Henry Clay. In one of his Institute talks he once told how he became a protectionist:
“From early boyhood I had sat at the feet of Hezekiah Niles, Henry Clay and Walter Forward and Rollin C. Mallary, and other champions of this doctrine, and I had attained from a perusal of theirs and kindred writings and speeches a most undoubting conviction that the policy they commended was eminently calculated to impel our country swiftly and surely onward through activity and prosperity to greatness and well-assured well-being. I had studied the question dispassionately, for the journals accessible to my boyhood were mainly those of Boston, then almost if not quite unanimously hostile to protection; but the arguments they combated seemed to me far stronger than those they advanced, and I early became an earnest and ardent disciple of the schools of Niles and Carey, and could not doubt that the policy they commended was that best calculated to lead a country of vast and undeveloped resources like ours up from rude poverty and dependence to skilled efficiency, wealth, and power.”
It is undoubtedly true that the mantle of the early protectionist advocates Niles and Carey fell on Horace Greeley, and that what the one did in the “Register” and the other in his pamphlets, Greeley continued in the Tribune.
There was much calculating on all sides of the amount the new tax bills would yield. Harper’s Weekly at the start estimated that it would be $185,000,000, and in November (1862) it said the amount would be nearer $275,000,000, but it was far too sanguine. At the end of the year (June, 1863) it was found that the customs had yielded less than $64,000,000 and the excise only about $41,000,000, and the country had been spending in the last two years an average of over one and one-half millions a day. The funds raised by taxation were a bagatelle beside the enormous loans which had to be made, the legal tender which had to be issued. By 18the beginning of 1864 it became evident to Mr. Lincoln and his cabinet that more money must be raised by taxation. It was not a popular thing to do, for the slow progress of the war, the awful cost in life and money, had raised a strong party against Lincoln. It looked as if he might not be re?lected. The opportunists around him advised against any measures which would increase dissatisfaction, but Mr. Lincoln wanted no misunderstanding about his intentions in regard to the war. It had got to be finished at all cost, and he wanted the people to understand what his re?lection meant. He asked them for more men and more money, another draft, higher taxes, higher tariffs. The raising of the tariff was as a method much less disturbing to Lincoln than imposing direct taxes. He had the old Whig’s horror of the tax-collector, and indeed had pictured effectively in his early campaigning “assessors and collectors going forth like swarms of Egyptian locusts, devouring every blade of grass and other green thing.” In 1859, when there was a general curiosity as to what he believed, a correspondent asked him as to his tariff views, and he replied:
“I was an old Henry Clay-Tariff-Whig in old times, and made more speeches on that subject than any other. I have not since changed my views. I believe yet, if we could have a moderate, carefully-adjusted protective tariff, so far acquiesced in as not to be a perpetual subject of political strife, squabbles, changes and uncertainties, it would be better for us. Still it is my opinion that just now the revival of that question will not advance the cause itself or the man who revives it.... We, the old Whigs, have been entirely beaten out on the tariff question, and we shall not be able to re?stablish the policy until the absence of it shall have demonstrated the necessity for it in the minds of men heretofore opposed to it.”
In May, 1860, he was still of the same opinion on making the tariff an issue. “I now think,” he wrote the same correspondent, 19“that the tariff question ought not to be agitated in the Chicago Convention, but that all should be satisfied on that point with a presidential candidate whose antecedents give assurance that he would neither seek to force a tariff law by executive influence nor yet to arrest a reasonable one by a veto or otherwise.” After his nomination and election he steadily refused to say anything on the question. It was not, in fact, until February 15 (1861), when he reached Pittsburg on his way to his inauguration, that he uttered a word. In Pennsylvania, however, some expression was unavoidable. The tariff had played a greater part in that state in electing Mr. Lincoln than had slavery and unionism. Indeed, Mr. Blaine does not hesitate to say that if Governor Curtin had not spent most of his time in the campaign advocating protection, the state would have gone Democratic, and if Pennsylvania had gone Democratic, Mr. Lincoln would probably have been defeated. An expression of opinion then was unavoidable, and he gave it;—certainly it was moderate enough. After quoting the tariff plank of the party platform he said modestly: “I have by no means a thoroughly matured judgment upon this subject, especially as to details.... I have long thought it would be to our advantage to produce any necessary article at home which can be made of as good quality and with as little labor at home as abroad. At least by the difference of the carrying from abroad. In such cases the carrying is demonstrably a dead loss of labor....” After developing this argument, which was one of his strongest early ones and the only one of which full notes have been saved to us, he added: “The condition of the Treasury would seem to render an early revision of the tariff indispensable,” and he went on to advise “every gentleman who knows he is to be a member of the next Congress to take an enlarged view and post himself thoroughly so as to contribute his part to such an 20adjustment of the tariff as shall produce a sufficient revenue, and in its other bearings, so far as possible, be just and equal to all sections of the country and classes of the people.”
There is nothing to show that after he reached Washington Mr. Lincoln ever considered the tariff other than as one of the several methods by which money could be raised. If he saw, as he probably did, that there were many injustices in the measures passed, that some duties were too high for revenue and beneficial only to the special interests which had fought for them, that others were trades outright, he still knew that, all things considered, the bills were as good as could be expected. It is probable indeed that none of the important legislation of the war received less attention from the president than the tariff bills.
Congress was with the president in 1864 in his insistence on means for finishing the war, and in June a new tariff bill went to the Senate. It had been out of committee just eight days when it was adopted by the House and the debate on it lasted less than two days. The Senate was even more expeditious, for it was reported there on the 14th, taken up on the 16th, and passed on the 17th. That it was possible so to push the bill through was due to the wonderful generalship of the chairman of the Senate Committee on Finance, William Pitt Fessenden of Maine, a man whom Charles Sumner once declared to have been in the financial field what all our best generals were in arms. Fessenden was at this time about 58 years old, and he had been in the Senate for nearly ten years. Before the slavery question called him into public life, he had stood at the head of the Maine bar, a position his father had occupied for forty years before him. He was an untiring student, a clear thinker, and a forcible and convincing speaker. He had great dignity—“the dignity of a Cato,” one of his acquaintances has said, but he combined with it “the bitterness of a Junius.” 21Certain things were sure to arouse him—buncombe, misrepresentation, jobbery, and—Charles Sumner. His propensity to quarrel with Sumner was chronic. He seemed to take as a personal insult Sumner’s untiring fight in war times to keep a tariff off books, rags for paper making, magazines, philosophical apparatus for schools and works of art. Sumner never lost a chance to declare these tariffs “barbaric,” “taxes on knowledge.” “Why should not knowledge pay as well as everything else?” Fessenden would ask. This is war, and these tariffs are justified by the circumstances. Why should not rags pay? and he intimated that he knew well the gentleman in Boston who made paper and who had stirred Sumner up to make an attack on the rag duty. Besides, why should not American ragpickers be protected as well as American wool-growers? It was an industry to be cultivated.
But while Fessenden’s antagonism to Sumner coupled with his dyspepsia might make him often irascible, it never interfered with getting things done. The bill in question was put through with only two days’ debate, purely from his ability to whip the members into prompt action—to his quick wit, his fine tact in steering them away from unprofitable side issues and from subjects which precipitated heated and time-taking discussion. For instance, in the present bill the higher duty proposed on railroad iron caused great anxiety to railroad interests, especially in the West, where much building was going on. The duty on railroad iron in the bill of 1861 had been $12.00 per ton; it was proposed now to make it 70 cents per 100 pounds. The whole West rose in arms. Kansas and Minnesota were particularly disturbed, since they were laying track as rapidly as possible. It cost from two to three thousand dollars a mile for rails now, and nobody knew what it would cost if duties were raised. It looked very much as if railroad building would be stopped. “The development 22of the country was something even in war times,” urged the Senator from Minnesota. This tariff meant less revenue, Senator Pomeroy of Kansas declared, for importation would cease. It simply meant that the iron men who were demanding it would put up their prices. They were paying 50 per cent dividends now and watering their stock. The entire iron business was rapidly becoming a monopoly. We could better afford to import all our iron from England than let this happen. But the suggestion of importing anything from England at that moment was like fire to powder. An explosion always followed. Mr. Pomeroy’s suggestion brought Zach Chandler of Michigan roaring to his feet. “If I had my way,” he shouted, “I would raise a wall of fire between this nation and Great Britain. I would not only not allow her iron to come here, but I would not let a single pound of any article she manufactured come here during this war.... Let the railroad interest suffer and any other interest suffer. It is nothing to me, I am for the tax and the highest tax.” Mr. Fessenden well understood the danger in allowing an outbreak against England to start, and he quietly and firmly insisted that the discussion be confined to the duty on rails.
The new bill was signed on June 30, and went into effect at once. Under it duties rose from the 37 per cent of the bill of 1862 to over 47 per cent. The effect on prices was appalling. The cost of living, already enormous, increased, until it looked as if the “thousand-dollar breakfast” Secretary Chase had threatened was to come; even goods unembarrassed by taxes or tariffs, like butter and eggs, rose with the rest—sympathy and speculation the causes. In some cases the hoisting of prices almost caused riot. In New York and Brooklyn there was great excitement over the attempts of the gas companies and the street railroads to take their taxes out of the public, although it had been expressly stipulated 23that they were to pay them themselves. In August after the bill went into force, the Manhattan Gas Company notified customers that they must pay $3.25 per thousand instead of $2.50; the Brooklyn Gas Light Company and several others did the same. Higher fares on the street car lines were announced. There was a great uproar in the press and on the street, for it was well known that the companies were already making enormous profits. The Manhattan Gas stock at this time was quoted at $1.90 (50 being par) and New York Gas Light at $2.85? (50 par). Confiscation of franchises and the establishment of municipal plants were advocated generally. In Philadelphia there was an agitation at the same time in favor of co?perative coal companies, the price of coal, which it was estimated cost $6.00 per ton delivered, being put at $10.00. If the indignant cities had carried out their threats they would probably by this time have been free of their most arrogant task-masters.
Hard as the situation was made for common folks, they endured it patiently, grimly, convinced that there was no other way to end the war. There has never been seen, indeed, in the world’s history, a more splendid courage in bearing burdens than the people of the United States—North and South—showed in the Civil War. It is an inspiring thing to study. If it had had no reverse! But it is one of the curious and puzzling phenomena of human nature that the situation which inspires some to their highest endeavor arouses others to their lowest. That the same cause makes martyrs of some men, cormorants of others. If a war for a great cause brings out the nobler qualities of human nature, it brings out at the same time the vicious. If fine fellows march in the line and go bravely into battle, mean ones hang on their flanks and rob the battlefield. If the mass of people pay the cost by the sweat of their brow, a minority trades 24on their necessity. Never have we had this violent contrast more marked than in the Civil War. Take the attitude of the people towards the taxes and tariff. The mass bore the burdens imposed without a whimper, yet from the first there was a large number whose sole aim was to manipulate taxes and tariff to serve their interests. They ignored the principles the makers of the bills laid down clearly, that everything was to have a duty put on it which could be made to yield revenue. The consumers of raw materials fought fiercely for free wool, free cocoa, free everything, and they fought as hard for increased duties on their products; not satisfied that these duties compensate for internal taxes, they wanted them higher than the taxes. The government was the best patron of importers and manufacturers, and it was a customer not too careful that it got what it bargained for, such was the stress of its situation, and these manufacturers and importers cheated their great patron at every turn. They gave shoddy for wool, adulterated the food they sold, undercounted and underweighed. Frequently what they sold had been smuggled in, for smuggling flourished abundantly under the high duties. All that free traders had ever said of the inducement the protective system gave for cheating the government was more than proved true. An organized system of smuggling from Canada was in operation before the end of 1862, and it grew steadily throughout the war until it was an open secret that the markets of Boston particularly were full of smuggled goods. The closest watch had to be kept for this reason, on every attempt to put a duty on an article hitherto free. Thus in 1864 Mr. Fessenden stopped a proposed tariff on spices. He had discovered, he said, that the gentlemen who imported spices had already on hand in warehouses a great quantity held for the higher prices which the duty would cause, and that full preparations 25had been made to keep up this supply by smuggling from Canada—an easy thing to do, since anybody could fill his pockets with nutmegs and walk in unnoticed. The cost of guarding the border became enormous, three times the ordinary number of revenue cutters were on the Lakes, and a cordon of officers extended from Maine to the Pacific coast. Besides, the management of the custom houses throughout the war was notoriously bad, the service being sprinkled with the incompetent and dishonest. In New York alone it was estimated that the government lost from 12 to 25 millions annually through fraud—then as now false invoices being the favorite method of cheating.
But the adherents of free trade and direct taxation could not boast that their system gave no opportunity for like abuses. The men who fought for higher duties fought against excise. They made false returns of income and property in the same way that importers made false invoices. If importers brought in great quantities of unprotected goods and then organized a campaign for protection, manufacturers in anticipation of taxes piled up huge stocks; 40 millions of gallons of distilled spirits and nearly 80 millions of cigars were made and stored in anticipation of the tax of 1864. When it was seen that matches were to be taxed, stocks were so piled up that the first year the government collected only a small proportion of its estimate. After the stock was exhausted the return from the tax on matches increased 216 per cent in five months; then the manufacturers devised a new trick; they put 100 instead of 50 matches in a box. The law required only one stamp on a box—thus the tax was cut in two. Factories were transported across the Canadian border; and as the reciprocity treaty let matches in free, it began to look before the close of the war as if the match tax would be null.
On the whole, it is probable that the collection of the 26direct tax was accompanied by less fraud than the collection of the customs, but the service made up in inefficiency what it may have lacked in dishonesty. The taxed were on the alert to escape, and the collectors were too inexperienced to circumvent them.
There certainly never has been in this country so admirable an opportunity to compare these two systems of raising revenue as we had at this period. The amount each yielded, the expense and difficulty of collection, the effect on the loyalty of the people and the opportunity for greed and dishonesty—all can be placed in parallel columns for comparison. If anything is proven by the comparison it is that no system of organization and administration does away with human selfishness; that whatever the system, the men who have it in their hearts to cheat their fellows, are going to find a way. Regeneration lies deeper than system: it lies in the nature of the men who use the system.
On March 31, 1865, the last tariff bill of the Civil War was passed, an amendment raising many duties, among others that on railroad iron. Nine days after it was passed Lee surrendered, and almost as soon as the news reached Washington orders went forth to stop many of the extraordinary measures which war had made imperative. It had been declared from the first that the high tariff and the direct taxes were simply and only measures for war revenue. In framing the tariff bill of 1862 the committee entitled it a bill to increase duties “temporarily.” Mr. Morrill, Mr. Stevens, and Mr. Fessenden all explained again and again that the increased duties were to compensate for excise taxes. There are repeated passages from their speeches of the same tenor as this from Mr. Fessenden in 1864: “The tariff is adjusted and was adjusted upon the simple principle with reference to the internal tax.” Sumner reiterated the idea whenever 27he had the chance. “I regard all our present legislation as temporary or provisional in its character,” he said in 1864, when an irate fellow Senator pointed out the growing hardihood of manufacturers in demanding protection and the danger of fastening high duties irrevocably on the country. “It is to meet the exigency of the hour.”
Nothing is clearer indeed than that in the minds of the men who devised them—in the minds of the people who paid them, the tariffs with which the country found itself in 1865 were temporary, just as the army was temporary, the internal taxes temporary, that with the end of the war they would come off. But a war does not “end” with the laying down of the musket. That is but the turning point in the fever. The consequences are left to take care of—tens of thousands of men to detach from army life and reassimilate into civilian life; thousands of maimed and weakened soldiers to find occupation and homes for; thousands of widows and orphans to care for. It is over forty years since Lee surrendered to Grant, but the army of the Civil War is still with us.
Nor does the laying down of the musket put an end to the cost. War means debt. It is fought on a nation’s credit—not wholly on its income—not on its surplus, and the debt remains. When the government at Washington came to consider its financial condition in 1865 after the so-called “end of the war,” it found itself with the colossal debt of over twenty-eight hundred million dollars ($2,808,549,437.55 to be exact). Interest on this must be paid. The principal must be paid. Tariffs and taxes might be “temporary,” but it was evident that they must be adjusted to take care of the war debt. How was it to be done? It was evident that between redeeming its pledge to make the taxes temporary and meeting its obligations the government of the United States had a very pretty financial problem on its hands.