No one can study the drift of public opinion in each of the great agitations of the tariff question in the last fifty years without realizing that at least nine-tenths of the people have stood only for such duties as would produce needed revenue and would give industries which were trying to prove their ability to exist in the United States, protection through a limited period. But when it came to the point the people have never had such duties. To those familiar with the methods of tariff-making which have prevailed over this half-century, it was obvious that the bill of 1909 would result as had the bills of 1883, of 1890, of 1894, and of 1897. There were optimists who said that this could not be. This time the “voice of the people” was too clear, this time the game was too apparent. But the game was no more clear and “the voice of the people” no louder than in other years. The preparatory work for the bill was preceded as always by long months of “Hearings.” The absurdity of this method of seeking facts on which to frame a bill would be obvious enough if the country had not grown so accustomed to it. The reports published of the hearings before the Ways and Means Committee for the last bill cover something over 8725 pages. It is unbelievable that any serious body of men would consent to sit day after day to listen to such a conglomeration of narrow and selfish notions of what the witnesses’ personal enterprises need to help them along—much less consent to print them at public expense. White-haired men came to 298repeat the pleas that we heard in war times—sons repeated the jargon they had learned from their fathers. And never has the “infant industry” argument been more alive. All sorts of little trades sought help; for instance, from New York State came a cry for duty on basket willows; the suppliant (a woman) complained that she was obliged to compete with foreign-grown willows sent into the country by the shipload and sold far below what willows can be grown for in this country. From Virginia came a cry that mountain ivy root for making pipes be protected from the competition of brier wood. There were many more industries like these which in the nature of the case could affect but a small number of people that asked that the whole country be taxed that they be taken care of. There has never been a completer demonstration of how general the notion has become that no matter how few are benefited by a duty, it is fair to ask the whole mass to subscribe to the fund. Hundreds of pages of testimony are given to requests not to disturb the present schedules unless it be to increase the duty, and when sifted down the reason of the requests is not protection, but prohibition. How ridiculously lacking the testimony was in anything like satisfactory proof of the cost of production here and abroad, one has only to read to see. It was evident that almost none of the manufacturers knew the facts the committee needed. All that the great majority could offer were the phrases they had learned in their youth or had been taught by their predecessors in business. They were men influenced by a superstition, and it is probable few, if any of them, will escape from its influence until, like Mr. Carnegie, they retire from business. Then we may expect some of them to come, as Mr. Carnegie has done, with ridicule and derision for the whole system,—to say, as he did, of the duty seekers: They are incapable of judging. No judge should be permitted 299to sit in a cause in which he is interested; you make the greatest mistake in your life if you attach importance to an interested witness.
But it was not the character of the information presented which was the most sinister phase of the “Hearings”; it was the pressure which one felt the informer could exercise on Congress when the time came. These hundreds of witnesses, organized or unorganized, all possessed more or less political importance. They had it in their power to upset local machines, displace local bosses, defeat Congressmen, hold back campaign contributions, make endless mischief. They had been trained for years to expect reward for political support in the shape of duties. They were not going to give it up in a day. They had behind them bodies of favored workmen trained to believe that high wages depended on protection, and these favored workmen were not going to give up their creed in a night. Congressmen knew this well enough. They knew in 1909, when they began work on the Payne-Aldrich Bill, that they were in the position they had been for forty years and more—forced to make a bill with a divided mind—to fix duties with an eye to what effect it was going to have on the fall elections in their districts—on campaign funds for the next presidential election.
The absurdity, even criminality, of these methods, which have persisted so long, was completely demonstrated in the course of the Payne-Aldrich Bill in the making of the schedule which for twenty years has been the most important in our tariff, from a doctrinal and a political point of view, and that is K, the wool schedule. When the late revision was undertaken duties were in operation which had been forced from a reluctant Congress in 1897, solely by the political power of the combined Wool-Growers Association and the National Association of Wool Manufacturers. In the decade following the 300adoption of the Dingley Bill the power of the former organization waned. The members of the “wool trinity” who had held so strong a whip over Congress were dead. Ohio, which had been their headquarters, no longer felt the life-and-death interest it once had in prohibitive wool duties. But the second association was as alive and ready for action as ever, and in the fall of 1908, when Mr. Taft’s promises of tariff revision became reasonably convincing, the head of the Association, Mr. William Whitman of Boston, called together those in the business whose interests were identical with his, and they sought counsel with the growers of wool in the far West. In October of 1908 the two interests met in Chicago. Mr. Whitman says that this conference was called at the suggestion of the wool-growers. For people who had taken an initiative the wool-growers were very modest. They said frankly they were not prepared to talk extensively on tariff questions, that they had come to listen. Mr. Whitman did the talking, and to such good effect that the conference decided: “it is the sense of this meeting that in the coming revision of the tariff the present duties on wool and woollen goods be maintained without reduction.”
Some two months later Mr. Whitman appeared before the Ways and Means Committee with an elaborate argument for preserving the wool duties. He made a particular point of defending the duty on raw wool. “Fair Play for All Interests” is the subhead under which Mr. Whitman asked that the tax on his raw material be continued. The Bulletin of the Wool Association puts the principle this way: “The traditions of the association all condense themselves into the Golden Rule”—“Do unto others as you would have others do to you; between grower and manufacturer and as between one manufacturer and another, that has always been the guiding principle.”
301Before Mr. Whitman was excused from cross-examination, however, a serious questioning of his interpretation of the Golden Rule was introduced into the testimony. It came from a maker of carded woollens as distinguished from worsteds, Mr. Edward Moir, of Marcellus, New York. The carded woollen manufacturers, like many other innocent Americans, took the results of the presidential election of 1908 as evidence that the tariff was to be thoroughly revised. “At last,” said they, “we shall get relief.” Accordingly, soon after the election, Mr. Moir, learning that there was to be a meeting of the National Association of Wool Manufacturers, and supposing that the revision of the wool schedule was to be discussed, presented himself at the gathering. To his surprise he found that some weeks before the election, about the time, indeed, that Mr. Taft’s promises of downward revision were most definite and vigorous, representatives of this association had met representatives of the wool-growers of the far West, and the two had made what they called a “solemn compact” to resist all changes in the wool schedule! The inequalities were to stand. The carded woollen mills were to be fed carpet wool and cotton if they could get them, the man on small income was to continue to wear cotton worsteds and sleep under cotton blankets, the well-to-do were to continue to pay $1.50 for cloth they could buy in England for seventy-five cents. When Mr. Moir protested, he found he stood alone; i.e. he found that the National Association of Wool Manufacturers apparently represented the worsted industry. A little later, when the Ways and Means Committee began its hearings, Mr. Moir found that this same association was giving information on what the wool schedule needed, and that it did not include help for him. Outraged, he went to work to organize the carded woollen men. Over one hundred were soon in line, and this body carried its grievance to 302the Ways and Means Committee. The reports of the tariff hearings contain some very interesting explanations from Mr. Whitman of the points of which the carded woollen men complained. Take the matter discussed in the last chapter, of collecting 11 cents on every pound of grease wool imported into the country, regardless of quality or value, or whether it shrinks 15 or 80 per cent. How did Mr. Whitman defend this duty, which is, as one can see, the very foundation of his advantage over his competitors? He defended it almost hysterically by the claim that it is only a specific duty, which will prevent undervaluation at the customs. Mr. Whitman buys his wool according to its value. He does not insist upon paying a fixed price through fear of misrepresentation. Wool is a standard like wheat and corn. Centuries of experience have made men expert in judging its value. Undoubtedly there would be efforts at undervaluation if the duty were according to value. But a specific duty does not prevent fraud—witness the Sugar Trust. Everybody knows that such cheating is dangerous work. Even the Sugar Trust, with all its cunning, has not escaped entirely. There would be little chance for the regular importer to do much cheating, and if there was a percentage of fraud, what could it amount to compared with a duty which is always unfair, which is actually a legalized fraud?
Mr. Whitman’s defence of the amount of compensation allowed manufacturers for the duty on grease wool was interesting also. It will be remembered that this duty on wool worth over 40 cents a pound is 44 cents; that is, it is reckoned as if four pounds of grease wool were used in making a pound of cloth. Mr. Whitman defends this ratio, so rarely correct, by using the same argument with which Mr. Aldrich met the attack upon it in 1890 when the McKinley Bill was making.
303“It is true that certain wools do not shrink so much, but whether they do or not is not the point. The American manufacturer must be reimbursed on the basis of the shrinkage of wools used by his foreign competitors or available for the latter’s use.”
This is as hard to follow as the long-standing consolation offered to the complaining consumer that “the foreigner pays the tax.” However, it is hardly more away from the point than Mr. Whitman’s second defence of the 4 to 1 ratio, which, in essence, is that it must be right because it was so fixed in 1867! Curiously enough, while Mr. Whitman defends the 4 to 1 ratio because it was decided on by the compact of ’67, he insists that 55 per cent ad valorem on cloth is none too much, although in 1867 the manufacturer considered 25 per cent sufficient!
But the carded wool men were not the only branch of the industry which disputed the soundness of Mr. Whitman’s “fair play for all” schedule. A few weeks after his hearing, it came out that one great branch of the woollen industry, the carpet manufacturers, had left the National Association in a body. They had wakened up to the fact that for some twenty years or so they had been serving largely as cat’spaws for the worsted makers’ chestnuts. They had refused to contribute further to the organization, and frankly bolted Schedule K, asking for a common-sense adjustment of the duty on carpet wools.
The most sensational and serious attack on Mr. Whitman’s testimony was made, on the very day he appeared, in a pamphlet distributed to the committee. It bore an ugly title, “How an exorbitant duty on wool tops was concealed in the Dingley law by the cunning manipulation of S. N. D. North and William Whitman.” The name attached to the pamphlet as author was that of a man well known in wool circles, the editor of the American Cotton and Wool Reporter, Frank 304P. Bennett. In proof of the charges he made, Mr. Bennett offered documentary proof of the first order. Nothing less than extracts from letters which had passed between Mr. North and Mr. Whitman at the time of the “cunning manipulation.”
To those familiar with the personal relations of the three gentlemen the substance of the charges was not new. They had been first made by Mr. Bennett the year after the passage of the Dingley Bill (1898) and in very precise form. What they amounted to then was that Mr. North, although the paid secretary of the National Association of Wool Manufacturers, had worked on Mr. Aldrich’s Finance Committee while it was busy with the Dingley Bill, as “the paid lobbyist of William Whitman and one other manufacturer,”—that he had secured benefits for them “regardless of other interests,” and that “these gentlemen now (1898) aimed at the control of the United States Census, which they proposed to secure by having Mr. North (their agent) made director of the Census!” It was an ugly looking accusation, and naturally the association appointed a committee to look into the matter. Both Mr. North and Mr. Whitman made statements. They amounted to a complete denial of all the charges, and particularly of any tampering with the top duty. Mr. Whitman showed by the documents he presented that the duty on tops as it finally appeared in the Dingley Bill was the same as that fixed by the McKinley Bill. He also showed it had been retained at the request of the wool-growers. He said that when he discovered this duty was in the Dingley wool schedule he wrote a letter of protest to Mr. Dingley, in which he said:
“As tops now stand in the proposed tariff bill, the duty is absolutely prohibitory.... This places me in a very awkward position before the community. Nearly everybody in this part of the 305country is aware of the fact that the Arlington Mills, of which I am the treasurer, has just completed an enormous plant for the manufacture of tops, and everybody will say that, through my influence, there has been secured upon tops prohibitory duties. Yarn spinners and weavers will complain, although they may not be directly affected; but everybody who is at all jealous or envious will charge that this duty has been imposed at my solicitation.... The objections, then, that I have to the top rates as now incorporated in the bill are:
“1st. That they are unnecessarily high and will do nobody any good.
“2d. They are so high on the article our mills manufacture as to create unfavorable criticism.”
This letter and the strong and definite denials of Mr. North and Mr. Whitman were considered satisfactory by the investigating committee, which announced that in its judgment the statements of Mr. Bennett were “malicious and unwarranted,” and that he had forfeited his right to membership in the association.
The matter probably would have ended there if four years later, 1902, Mr. Bennett had not sued a Lynn, Massachusetts, newspaper for libel. When the case was tried the newspaper summoned various witnesses to prove that Mr. Bennett’s newspaper, the United States Investor, made a practice of blackmailing concerns which did not advertise in it. Among those witnesses was Mr. Whitman. In the course of his testimony, Mr. Bennett’s lawyer, Moorfield Storey, saw an opportunity to demand Mr. Whitman’s correspondence over the years of the making of the Dingley Bill. The court upheld him, and all of Mr. Whitman’s political letters of that period—“My entire private correspondence, embracing correspondence with every member I have relations with, private and public,” Mr. Whitman said of the letters—were turned over 306to Mr. Bennett, who at once took copies of those which interested him. It was nearly seven years before Mr. Bennett found a sufficiently dramatic moment in which to use the letters he took from Mr. Whitman’s file. It came finally—the day when Mr. Whitman was explaining to the Ways and Means Committee why a wool schedule made in 1867 should be preserved in 1909.
As related above, Mr. Whitman had cleared himself in 1898 from Mr. Bennett’s charge of manipulating the top duty in the Dingley Bill by publishing a letter he had written to Mr. Dingley protesting against the duty. He had also related that Mr. Dingley had accepted his suggestion and had put it into the bill, and that the reason it had not appeared finally was that the wool-growers had objected so strenuously that the committee had given in to them. This looked all right, but there was a chapter of which Mr. Whitman and Mr. North said nothing, and of which Mr. Bennett had no proof until he got hold of the correspondence, and this chapter was published in the little pamphlet distributed by Mr. Bennett to the Ways and Means Committee on December 2, 1908.
It seems that when the top duty suggested by Mr. Whitman came to the Senate Committee in 1897 it struck a snag at once. It was prohibitive—just as the higher one for which it had been substituted—the figures were different, but not their effect. Mr. North was summoned to explain—the Finance Committee having apparently accepted him as its wool expert. Mr. North consulted Mr. Whitman and an agitated correspondence followed. The letters to Mr. North show that Mr. Whitman was in great alarm lest the duty he had suggested be lowered: “No possible legislation in connection with the woollen schedule would be so dangerous to the woollen industry as legislation which would favor the importation of tops.” “You know how important it is, not only to me, but 307to the whole wool industry of the United States, that such rates of duty should be imposed upon tops as will enable them to be made here and not to be imported from foreign countries.” “The prosperity of the woollen industry in this country depends wholly upon the ability of the domestic manufacturers to manufacture the tops here.” “It is of the greatest importance that the Arlington Mills products (tops and yarns) have the full measure of protection accorded to associated industries.” These extracts and the context show conclusively that though Mr. Whitman may not have wanted a rate so high that it would be suspicious, he was after a duty which would be prohibitive, and that he was depending upon the confidential relations of the paid secretary of the wool association with members of the United States Senate in charge of the tariff bill to secure what he wanted.
Mr. Whitman’s second defence—that it was the wool-growers, not he, that kept the high duty on tops in the Dingley Bill—loses its weight also when one looks into the origin of that duty. It first appeared in the McKinley Bill of 1890, and so far as the writer has been able to discover from an extended examination of the debates and hearings, the top duty was devised for the McKinley Bill by Mr. Whitman. Nobody else ever seems to have had anything to do with it. He advocated it in 1889 before the Senate Finance Committee. He presented it in January, 1890, to the Ways and Means Committee, explaining and defending it. Mr. Whitman was the father of the obnoxious top duty. He found it was suspicious. He revised it so that it would “look better,” but do the same work!
In spite of ample proof of gross unfairness and trickery in the Dingley wool schedule, Mr. Payne reported it practically unchanged. As it passed the House it still gave to Mr. Whitman a prohibitive duty on his tops. The Finance Committee 308was equally complaisant, for, as Mr. Aldrich, its chairman, said later, the schedule as he reported it to the Senate “followed precisely the act of 1897 in every word.” But when the wool schedule reached the Senate for debate, its smooth passage was over, for there on May 5, 1909, it was treated to one of the most searching analyses of duties which has ever been made in Congress. The significant fact was that it came from a Republican who had been for twenty years in Congress, and who had served on the Dingley Ways and Means Committee,—Senator Dolliver of Iowa, one of a group who, when they had discovered by the character of the bill reported from the House and by the attitude of the majority of the party in the Senate towards it that there was no intention of treating seriously the campaign promises of revising the tariff downward, had revolted: insurgents, they were called. These men all believed in the doctrine of protection, and most of them had been all their political lives under the spell of the notion that it had created American prosperity. But they were honest men, and slowly they had awakened to a consciousness that the sacred dogma had been stretched and twisted in the last fifty years until it had been made literally to cover a multitude of sins. They saw how its meaning had been manipulated to justify unscrupulous duties whose only contribution to prosperity was turning the profits of labor and natural wealth into some private pocket. They all seem to have taken without reserve the latest strain put upon the protective formula in order that it might cover whatever a manufacturer wanted, the form in which it had appeared in the Republican platform of 1908, insuring the person lucky enough to have a business which could be protected that he should have a duty which would not only cover the difference in the cost of his production, but insure him a profit. The insurgents did not object to this interpretation, but they saw 309at once that Mr. Aldrich in reporting his bill had no intention, in cases where duties had been advanced, of giving the Senate evidence that the difference in the cost of production here and abroad made an advance necessary, that the facts he had he refused to make public. I asked Senator Bristow of Kansas, whom I knew to be a strong and convinced protectionist, what started his revolt against the bill? “Red paint,” he replied promptly. “I was interested in that. We paint our barns with it in Kansas. I saw them putting up duties which I believed would affect its cost. I wanted to know why. I could find no reason—no proof that it was necessary. I insisted, and I soon made up my mind that they had no intention of considering the difference in the cost of production, that they sneered at the idea, that they were simply intent on giving their political supporters what they wanted. Moreover, they intended to force us to be a party to the business. It was the most dishonest and corrupt work I have ever seen, and I revolted.”
The insurgents determined to demonstrate to the country the utter unscrupulousness of the leaders of their own party, and to do this effectively they divided among themselves the schedules which they knew to be most important politically and therefore to be most open to suspicion, the intention being thoroughly to master their intricacies. Schedule K fell to Senator Dolliver. Now Senator Dolliver had always been what one may call a McKinley protectionist or prohibitionist. He had followed that leader with the unquestioning fidelity which the man had the ability to inspire in many who knew him. His speeches in the ’90’s are brilliant and witty defences of the new interpretation of protection which the party for political reasons was trying to force on the country. They are thoroughly orthodox and thoroughly unsound. In 1897 Mr. Dolliver was a member of the Dingley Ways and 310Means Committee, which seriously tried to lower the rates in all the schedules, and particularly in wool. He had seen the effort frustrated by the very group whom he knew now to be behind the wool bill which Mr. Aldrich reported. He determined to master the history and the operation of the schedule in so thorough a fashion that he could go on to the floor of the Senate or on to any platform and make clear to a popular audience its tricks and its injustices. He believed that such an exposure must in the long run kill it. Now the wool schedule is one of the most difficult in our tariff laws to understand and to explain. It is really the accumulation of fifty years of active superstition and greed. An ocular demonstration of the change in its character and its intelligibility may be had by comparing the wool schedule of fifty years ago and that of to-day as printed in the official collection of United States tariff bills. Fifty years ago wool was disposed of in perhaps fifty words, which anybody could understand; to-day it takes some three thousand, and as for intelligibility, nobody but an expert versed in the different grades of wools, of yarns, and of woollen articles could tell what the duty really is. It is a mistake to suppose that because a man has been twenty years in Congress and has served for a portion of that time on the Ways and Means Committee, he therefore understands the tariff schedules. As a rule, it is safe to say that a Congressman understands rarely the real meaning of the rates he votes for. What he understands is that the Committee has made the bill for what it considers sound party reasons, and that if he does not accept the rate, he or some colleague is in danger of defeat, and he accepts it without too much scrutiny. It is a case where it is just as well not to know too much. Moreover, it takes an amount of hard time-taking study to master a schedule, which only an occasional man has the will to give. Senator Dolliver knew that neither he nor 311any other insurgent understood enough of wool-growing and wool manufacturing to cope with the schedule. Later in the course of the debate he illustrated the difficulties he encountered in spite of his twenty years in Congress. He was told that a certain paragraph was worded to conceal a trick.
“I had to read it four or five times before I could see the point where the proposition emerged,” Senator Dolliver said. “I handed it to intelligent men and asked them if they saw any distinction in that language between clothing wools and combing wools, and, one after another, bright men said, ‘I cannot see any distinction.’ If you will get the paragraph and read it yourself, you will notice with what delicacy of phrase, worthy of poets and artists, this distinction has been wrought into the very foundation of the wool tariff.” Now it was this aggregation of tricks, evasions, and discriminations that Senator Dolliver determined to master, and master it he did, by months of the severest night-work. He poured over statistics and technical treatises. He visited mills and importing houses and retail shops. He sought the aid of experts, and in the end he knew his subject so well that he went on to the floor of the Senate without a manuscript and literally played with Schedule K, and incidentally also with Senator Aldrich and several other stand-patters whose long experience in juggling with untruths had destroyed their agility in handling truths.
When he had finished his clean, competent dissection, Schedule K lay before the Senate a law without principles or morals; and yet, just as it was, the Senate of the United States passed it, and the President of the United States signed it, and it went on the statute books, even to Mr. Whitman’s prohibitive duty on tops.
What made Mr. Whitman so powerful? Probably we shall not go far astray if we assert that the real reason is that 312for many years he and his worsted friends have been one of the main financial reserves of the high protective wing of the Republican party in New England, and that in return they have got what they asked for. That is political ethics—or etiquette. Ever since 1888 it has been a settled and openly expressed principle in political circles that your protection shall be in proportion to your campaign contribution. In that year it was laid down officially that as the manufacturers of the United States got “practically the sole benefit of the tariff” and in prosperous years “made millions” out of it, therefore it was entirely justifiable that those who granted the tariff should, when their time of need came, put these manufacturers “over the fire” and “fry the fat out of them.”
Mr. Whitman’s individual support is not to be despised, but with it has always gone the support of his association. It means the support of the great “wool trust” with William M. Wood at its head, and it means also, as we have seen, the support of the wool-growers of the far West—not, be it noted, of all the wool-growers of the country, but of those who, like the worsted manufacturers, are getting more out of the present duties than their competitors, and are therefore most anxious to keep them. These are the men who produce a wool which on an average will yield only about 44 pounds of clean wool in every 100 pounds sheared from the sheep. Yet their protection on this 100 pounds is the same as that of the farmer of the South whose wool yields 60 pounds to every 100, or the Eastern and Middle state farmers whose wool yields 52 out of every 100 pounds. The protests of these Eastern, Southern, and Middle West farmers that they are not fairly treated were no more heeded by the makers of the Payne-Aldrich Bill than the protests of the carded woollen and carpet manufacturers. The reason is obvious enough. The Western wool-growers are as loyal and generous in their support 313of their Senators as are Mr. Whitman and Mr. Wood of theirs. Each group—the wool-growers of the far West and the worsted manufacturers of the East—controls a good-sized block of votes. By uniting these blocks they control probably the largest and most dependable vote of any tariff-protected interest in the country. It is a vote which for over forty years has never bolted. It is a vote which always gets what it asks, for the simple reason that it is powerful enough to defeat any duty in a tariff bill if the backer of that duty is hostile, and nobody doubts it will exercise the power if tried. It is the size and solidarity of the vote which explains why when, through the boldness of the insurgents, the most odious features in the wool business had been laid before the Senate and a motion was made to send Schedule K back to the committee for revision, it was lost by 8 yeas and 59 nays. It is Mr. Taft’s reason—given frankly enough after he found the odium of allowing the schedule to stand was not going to pass. “The interests of the wool-growers in the far West,” said Mr. Taft, “and the interests of the wool manufacturers in the Eastern states, and in other states, reflected through their Representatives in Congress, were sufficiently strong to defeat any attempt to change the wool tariff, and had it been attempted it would have beaten the bill reported from either committee.” Apparently the same combine was strong enough to prevent the presidential veto the country had a right to expect from Mr. Taft.
Not less significant than the experience of wool in the Payne-Aldrich Bill was that of cotton.
When Mr. Aldrich reported the bill of 1909 to the Senate on April 12, there was lively curiosity in many quarters about what the cotton schedule would contain. Rumors were general............