Speech of Hon. J. D. Cameron, of Penna.
On the Reduction of Revenue as Affecting the Tariff. Delivered in the United States Senate January 16, 1882.
Mr. Cameron, of Pennsylvania. I move to take up the resolution submitted by me in relation to internal-revenue taxes.
The motion was agreed to; and the Senate proceeded to consider the following resolution submitted by Mr. Cameron, of Pennsylvania, December 6, 1881:
Resolved, That in the opinion of the Senate it is expedient to reduce the revenue of the Government by abolishing all existing internal revenue taxes except those imposed upon high wines and distilled spirits.
Mr. Cameron, of Pennsylvania. Mr. President, the surplus revenue of this Government applicable to the payment of the public debt for the year ending June 30, 1881, was $100,069,404.98.
The inference from these figures must be that if such surplus receipts are applied to the reduction of the debt it will be paid within ten or twelve years. The question then is: Should the people continue to be taxed as heavily as they now are to pay it off within so short a period? Is it wise or prudent?
No one will deny the wisdom of the legislators who inaugurated the system of reducing the debt, or the patriotism of the people who have endured a heavy load of taxation to pay the interest and reduce the principal of such indebtedness. Both have been causes of wonder to the world, and have shown the strength, honesty, and prudence attainable under a republican form of government in matters where it was thought to be weak. It is acknowledged that the course thus pursued by Congress, and supported by the people, has had several good results. The exercise of the power of the Government and the cheerful submission to the enacting nature of the laws by the people has had an undoubted tendency to elevate and strengthen the moral tone of the nation, giving the people more confidence in each other, and compelling the approval of the world. It has reduced the principal sum of our national indebtedness until it is entirely within the ready control of the financial ability of the people either to pay off or to pay the interest thereon. It has established the credit of the country, and brought it up from a position where the 6 per cent. gold bonds of the United States before the war would not command par to a present premium of 17 per cent, on a 4 per cent. bond, and to the ready exchange of called 6 per cent. bonds into new ones bearing 3½ per cent. interest. It has demonstrated the ability of the country not only to carry on a most expensive internal war, but to pay off its cost in a time unknown to any other people; and further, that the ability of the country to furnish men and material of war and to meet increased financial demands is cumulative. The burden carried by this country from 1861 to the present day has been much greater than it would be if laid upon this nation and people from 1881 to 1900.
The burden, therefore, of the present debt would fall but lightly on the country if the payment thereof should be for a time delayed, or the rate at which it has been paid be decreased. It thus becomes a question of prudence with the Government whether they will continue the burden upon the people, or relieve them of part of it.
The burdens of general taxation borne by the people are very onerous. They have not only the General Government to sustain, on which devolves the expenses of legislation, of the Federal judiciary, of the representatives of our country in all the principal governments and cities of the world, of the management of such of our internal affairs and conveniences as belong to Congress, the keeping up of our Army and Navy, the erection of public buildings, the improvement of the rivers and harbors, and many other items that require large annual expenditures. With the increase of population and the filling up of our unoccupied lands almost all these annual outlays and expenses will tend to increase in place of decreasing, and all such expenditures must be in some way met by the people of the country. They have also to sustain their State governments with the expenses and outlays incident to them, their legislatures, judiciaries, penitentiaries, places of reform, hospitals, and all means of aiding the afflicted, to sustain the common schools, to pay the cost of such improvements of rivers, of canals, of railways, or of roads as the States may undertake. They have also the heavy cost to meet of city governments, of county, town and borough governments; they must pay the inferior Legislatures, erect buildings, provide water, police, jails, poor-houses, and build roads and take care of them.
On the liberality of the people the country depends for the building of charitable institutions, universities, colleges, private schools of high grade, and every variety of relief to the poor and the afflicted. In addition to these burdens almost all the States, most of the large cities, and many of the counties and towns in the States still labor under the burdens of indebtedness incurred during the war to sustain the General Government, which indebtedness, incurred on the then value of paper currency, has now to be paid in gold. They have not had the means at command to pay off much of such indebtedness like the General Government, nor to refund it at a lower rate of interest. The superior credit of the General Government has been made partially at the expense of the local governments. I have stated these facts that Senators might keep in mind that the question should not be considered as merely one of our ability to reduce our indebtedness by paying off annually one hundred millions of dollars and by continuing our present laws for raising revenues, as if it were but a small matter for the people to do, but it should be considered in connection with the total burden of taxation imposed by the revenue laws of the General Government, as well as by those of the State and the subordinate governments within their bounds.
There is, therefore, a strong argument to be found in these facts of the other burdens of taxation borne by the people in favor of reducing the amount of revenue applicable to the payment of the public debt when it can be done without injury to the credit of the Government and without risking in the least the ability of the Government either to pay such indebtedness as it matures or to interfere with the ability of the Government to fully provide for the wants of the country as they may be developed. A complete statement of the percentage of taxation borne by each male citizen of the United States over twenty-one years of age in the various ways stated would astound the Senate and the country. There is probably no country in the world where the taxation direct and indirect is so heavy, and only a people situated and circumstanced as the American people are could prosper under such a burden. If no other reason could be advanced in favor of a reduction of the amount of moneys derived from our internal-revenue laws than this one of reducing the burdens of the people, it would be amply sufficient, in my judgment, to warrant the proposed reduction. Yet I will say frankly that I have another object in wishing to have the internal revenue reduced, and I hope before long that every vestige of that system will cease to exist. That object is to prevent any material change being made in the tariff upon imports as it now exists, for upon its existence depends the prosperity, the happiness, the improvement, the education of the laboring people of the country, although I do not object to a careful revision of it by a competent commission.
I want to say a word here about the arrears of pension act. This act never should be repealed, and in my judgment it never will or can be. It has lately been held up to contempt by that class of people who twenty years ago were engaged in exhorting these same pensioners to go to the front, and who now object to rewarding them; but their opinion is not shared by the people at large; in fact, no more essentially just law was ever placed upon the statute book. Its effect is simply and solely to prevent the Government from pleading the statute of limitation against its former defenders. It did not increase the rate of pensions in any way whatever, but merely said that a man entitled to a pension for physical injury received in Government service should not be debarred from receiving it because he was late in making his application. To the payment of these pensions every sentiment of honesty and gratitude should hold us firmly committed.
My friend the Senator from Kentucky [Mr. Beck] is very honest, is generally very astute, and has great capacity as a leader. My personal friendship makes me desire his success, and as an individual I want him to be the recipient of all the honors his party can bestow upon him, but I am very sure that he is now opposing a measure that is intended to promote the welfare of and is in accord with the wishes of the people of the country. He is leading his party astray, he is holding it back, he is tying it to the carcass of free trade.
Politically I am glad that he is; on his own account I regret it. He is opposing the principle of protection, and, in my judgment, no man can do that and retain the support of the people. No party can to-day proclaim the doctrine of “a tariff for revenue only” and survive. Opposition to an earnest prosecution of the war for the suppression of the rebellion failed to destroy the Democratic party because of the recruits it received from the South, but opposition to the doctrine of protection to American productions, hostility to the elevation of American labor, no party in this enlightened day can advocate and live. I am astonished that the Democratic party does not learn by experience. The “tariff-for-a-revenue-only” plank in the Cincinnati platform lost it Indiana, lost it New York, and in 1884 it will lose it one-half of the Southern States.
The President pro tempore. The morning hour has expired. Is it the pleasure of the Senate that unanimous consent be given to the Senator from Pennsylvania to proceed with his remarks?
Mr. Beck. I move that unanimous consent be granted.
The President pro tempore. The Chair hears no objection, and the morning hour will be continued until the Senator from Pennsylvania closes his remarks.
Mr. Cameron, of Pennsylvania. The great question of protection to American labor will be the question which will obliterate old dissensions and unite the States in one common brotherhood. The Democratic party has made its last great fight. It will struggle hard, and in its death throes will, with the aid of a few unsuccessful and disappointed Republicans, possibly have temporary local successes, but death has marked it for its victim, die it will, and on its tomb will be inscribed, “Died because of opposition to the education, the elevation, the advancement of the people.”
The historic policy of this country has been to raise its revenues mainly from duties on imports and from the sale of the public lands. There are many reasons in favor of this policy. It is more just and equal in its burdens on the States and on the people; it is less inquisitorial, less expensive, less liable to corruption; it is free from many vexed questions which our experience of twenty years in collecting internal revenue has developed. The internal revenue brings the General Government in contact with the people in almost every thing they eat, wear, or use. The collection of revenue by duties on imports is so indirect as to remove much of the harshness felt when the citizen comes in direct contact with the iron grip of the law compelling him to affix a stamp to what he makes or uses. No one will question the fact that the collection of internal duties unfavorably affected the general morals of the nation.
The internal revenue laws were adopted by the Government as a war measure, as an extraordinary and unusual means of raising money for an emergency, and it is proper and in accordance with public opinion that with the end of the emergency such policy should cease. I cannot but think that every Senator will agree with me that the end of the emergency has been reached. The emergency embraced not only the time of the expenditures, but their continuation until the debt incurred during the emergency was so reduced as to be readily managed, if not exclusively by the ordinary revenues of the Government, yet with a greatly reduced system of internal revenues and for a limited time. But in determining wherein such reduction shall be made, two great interests of the country are to be considered:
First, the system of duties on foreign goods, wares, &c.
Second, our national banking system.
It has been proposed to meet this question of reduction by lowering the rates of duty, and thus to continue in this country indefinitely the use of direct and indirect taxation, supposing that such reduction would require the prolonged continuation of internal taxation.
The first effect of this would be to increase the revenues, as lower duties would lead for awhile to increased importations; but ultimately these increased importations would destroy our manufactures and impoverish the people to the point of inability to buy largely abroad, and when that point would be reached, we should have no other source of revenue than internal taxes upon an impoverished people. At first we should have more revenue than we need, but in the end much less.
This statement of the effect of lower duties may at first seem anomalous and questionable, but that such would be the result is proven by the effect on the revenues of the country of the reduction in duties in the tariff of 1846 below that of 1842. This will be evident from the Treasury statistics of the years 1844, 1845, 1846, 1847, &c., which will show for the latter years a large increase of revenues. A reduction of duties which would affect the ability of our manufacturers to compete with foreign makers would cause a large importation of goods, with two objects: first, to find a market, the effect of which would be to keep the mills of England and other countries fully employed; and, second, a repetition of the custom of English manufacturers to put goods on our markets at low and losing prices for the purpose of crippling and breaking down our operators. And the increase of out national revenues would continue until our fires were stopped, our mills and mines closed, our laborers starved, and our capital and skill, the work of many years, lost. This time would be marked, by a renewal of our vassalage to England. Then the tables would be turned, our revenues would fall off with our inability to purchase, our taxation would continue and become very onerous, and in place of a strong, reliant, and self-supporting people, exercising a healthful influence over the nations of the world, we would be owned and be the servants of Europe, tilling the ground for the benefit of its people; our laborers would be brought down to a level with the pauper labor of Europe.
Our form of government will not permit the employment of ignorant pauper labor. It is a government of the people, and to have it continue to grow and prosper the people must be paid such wages as will enable them to be educated sufficiently to realize and appreciate the benefits of its free institutions; and knowing these benefits, they will maintain them. If, on the other hand, it is desirable that the revenues from duties should be decreased, and thereby retain both kinds of taxation, the direct and the indirect, the best possible way to do this would be to largely increase the duties on imported goods, which would for a time decrease the imports, thereby decreasing the amount of duties received. This tendency would last until, through this policy, the wealth and purchasing power of the country would so largely increase that the revenues would again increase, both by reason of decreased cost in foreign countries and because of the purchase by us of articles of special beauty, skill, and luxury. It may be said (and however paradoxical it may appear, the assertion is proven by the history of the tariff) that while the immediate tendency with free-trade duties is to increase imports and revenues, the ultimate result of such low duties is to decrease the imports and revenues, due to the decreasing ability of the country to purchase. The immediate tendency of protective tariffs is to decrease imports and revenues, but the final result is to increase the imports and duties, arising from the greater ability of the country to purchase. But my intention is not to discuss at this time the question of a tariff, but to show the effect of a change in the duties on imports upon the revenues of the country.
I clearly recognize that while the public mind is decidedly in favor of encouraging home manufacturers by levying what are called protective duties, yet the people are opposed to placing those duties so high that they become prohibitory and making thereby an exclusive market for our manufacturers at home. It seems very clear to my mind, in view of these statements as to the result of decreasing or increasing the duties on our imports, that no reduction of revenue is practicable by changes in our tariff.
The second great interest of the people, which will very shortly be directly affected by the large and increasing surplus revenues of the country, is the system of national banks, and this through the decrease of the public indebtedness by the application of the annual surplus to its payment. The large annual reduction of the public debt will very shortly begin to affect the confidence of the public in the continuation of the system. It will increase public anxieties and excite their fears as to a substitution of any other system for this that has proven so acceptable and so valuable to the country. If the national banking system is to be worked out of existence, it will inevitably cause serious financial trouble.
Financial difficulties among a people like those of this country, however ill-based or slight, are always attended by disastrous consequences, because in times of prosperity the energies and hopefulness of the people are stretched to the utmost limits, and the shock of financial trouble has the effect of an almost total paralysis on the business of the country. It is certainly the part of statesmanship to avoid such a calamity whenever it is possible.
I unhesitatingly declare and believe that the value of our system of national banks is so great in the benefits the country derives therefrom and the dangers and losses its continuance will avoid that it were better to continue in existence an indebtedness equal to the wants of the banks which the country may from time to time require until some equally conservative plan may be offered that will enable us to dispense with the system.
It is also important in this connection for Senators to bear in mind that the increasing business of the country will annually require increased banking facilities, and consequently increased bonds as the basis on which they can be organized; and it should not be overlooked that a possible determination by Congress to pay off by retiring or by funding the greenbacks will create a great hiatus in the circulating medium of the country, which can only be replaced by additional national-bank notes based upon an equivalent amount of public indebtedness.
In view of the statements I have made, I cannot but conclude that the wisest and most prudent course for Congress is to leave the question of changes in the tariff laws to be adjusted as they may from time to time require, and to make whatever reduction of the income of the Government that may be found desirable by reducing the changes in the internal-revenue laws.
The national revenue laws as they now are may be greatly and profitably changed. They are very burdensome to a heavily-taxed people, and such burdens should be relieved wherever it is possible. This can now be done with safety by providing that so much of the public debt may be paid off from time to time as may not be required to sustain the system of national banks.
I move that the resolution be referred to the Committee on Finance.
The motion was agreed to.