Tariff Speech of Major Wm. McKinley, Jr.,
Member of Congress from Ohio.
In the great tariff campaign of 1888 the two most distinguished Republican speakers were Mr. Blaine and Major McKinley. The latter was invited by the Chautauqua Society of Georgia to explain the doctrine of Protection, and did so in the following comprehensive speech:
Fellow-citizens: I make my acknowledgments to the Piedmont Society for the courtesy and cordiality of its invitation, which has given me the opportunity to meet, for the first time, an assemblage of the citizens of Georgia.
I have come, upon the suggestion of the committee, to address you upon a public question of great national import, which concerns not only the prosperity of one section, but of all sections of our common country, and which is of commanding interest to our sixty millions of people. It is no new subject which I propose to consider. It is as old as government by men. Taxation, with few exceptions, has been the chief and absorbing issue for more than a century of the republic.
A revenue tariff is such a one as will produce the largest revenue from the lowest duty. The lowest rate of duty will encourage importations, diminish home production, and inevitably increase the revenue. It will, of necessity, check competition at home, and send our merchants abroad to buy; it affords no protection, not even incidental, for the very instant that you discover that such duty favors the home producer, that instant you discover that importations and revenue are checked, and that our own producers are able to control the home market or a part of it. Then at once the advocate of a revenue tariff reduces the duty, brings it down to the true revenue standard, for it must not be overlooked, according to the free trade maxim, “where protection begins, revenue ends,” and the question of revenue is always controlling. A revenue tariff is inconsistent with protection; it is intended for a wholly different purpose. It loses its force and character as a genuine revenue tariff when it becomes to any extent protective. It has but one object. It can have but one effect—that of opening up our markets to the foreign producer—impoverishing the home producer and enriching his foreign rival.
England is more nearly a free trade country than any other, and her system of taxation furnishes an unmistakable example of the practice and principle of a revenue tariff. Her import duties are imposed almost exclusively upon articles which cannot be produced by her own people upon her own soil. Tobacco, snuff, cigars, chicory, cocoa, currants, figs, raisins, rum, brandy, wine, tea, and coffee—these are the articles from which her customs revenue is derived—articles, in the main, not produced in England, but which must be supplied from abroad; while, practically, all competing products of foreign make and production are admitted through her custom-house free of duty.
A brief statement of the dutiable imports of Great Britain will not be without interest.
It will be observed that her duties are more largely imposed upon the peculiar American products than upon any others. The duty upon tobacco is, according to moisture, from 84 to 92 cents per pound for the raw or unmanufactured article; and, if manufactured, it pays a duty of from $1.04 to $1.16 per pound. The manufactured article is made dutiable at 20 cents a pound greater than the raw product, which, with all of England’s boasted free trade, is intended as a protection to those engaged in the manipulation of tobacco. It is almost prohibitive to Americans who would export manufactured tobacco. The ad valorem equivalent of the duty on tobacco is nearly 2000 per cent. Cigars pay a duty of $1.32 per pound, and from tobacco and snuff over $43,000,000 of duties are collected annually. The duty on tea is 12 cents a pound. How would the Americans enjoy paying such a duty upon this article of everyday use? The duty collected from this source is over $18,000,000 annually. Coffee pays a duty of 3 cents a pound; but, if ground, prepared, or in any way manufactured, it must pay a duty of 4 cents a pound—another example of where England protects those engaged in manufacture. Cocoa pays a duty of 2 cents a pound, but if it is in any form subjected to manufacture it pays 4 cents a pound, the duty on the manufactured article being double that on the raw material.
Besides the articles named, there are about ninety or a hundred others, chiefly of American production, patented and other medicines, which are dutiable at $3.36 per gallon. More than $96,000,000, or nearly one-fourth of the British revenues, are raided from customs duties.
You will note the character of taxation to which the revenue reformer invites the people of the United States. Both the breakfast table and the sick room are made to bear a large part of the burden under the British system of taxation. It is not without significance that the nearer we approach this system the more generous the bestowal of British commendation. Every step we take in that direction, every enlargement of the free list of competing foreign products, every reduction of duty upon such products is hailed as a vindication of Cobden and a beneficence to British interests. It is in vain for the British statesman to assure us that their system is best for us. We are not accustomed to look to our commercial rivals for disinterested favors. “It is folly,” said Washington in his farewell address, “for one nation to look for disinterested favors from another; that it must pay, with a portion of its independence, for whatever it may accept under that character. There can be no greater error than to expect or calculate upon real favors from nation to nation. It is an illusion which experience must cure, and which a just pride ought to discard.” We are not insensible to the good opinion of mankind and of the English-speaking race, but when it is to be had only at the expense of our industrial independence, at the sacrifice of the dignity and independence of labor and the destruction of national prosperity, we must regard it with supreme suspicion, and turn from it as the eulogy of selfish interest and the commendation of interested greed.
The other theory of taxation, and the one which I believe to be essential to American development and national prosperity, is based upon an exactly opposite principle. It permits all articles of foreign production, whether of the field, the factory, or the mine, except luxuries only, which we cannot produce in the United States, to enter our ports free and unburdened by custom-house exactions. The duty is to be imposed upon the foreign competing product; that is, the product which, if brought into this country, would contend with the products of our own soil, our own labor, and our own factories, in our own markets. Under this system, if the foreign producer would enter our market with a competing product, he must contribute something for the privilege which he is to enjoy, and this something, in the form of duties, goes into the Treasury, furnishing revenue to the Government; and these duties operate to protect the joint product of labor and capital against a like foreign product.
This mode of levying duties answers a double purpose. It produces revenue to the Government, and at the same time fosters and encourages the occupations of our own people, promotes industrial development, opens up new mines, builds new factories, and sustains those already established, which in turn furnish employment to labor at fair and remunerative wages. A revenue tariff accomplishes but a single purpose—that of raising revenue; it has no other mission; while a protective tariff accomplishes this and more—it brings revenue to the American treasury and discriminates in favor of the American citizen. A revenue tariff invites the product of foreign labor and foreign capital to occupy our markets free and unrestrained in competition with the product of our own labor and capital. A protective tariff invites the product of foreign labor and foreign capital which are necessary to the wants of our people (which we cannot produce in the United States) to occupy our markets and go untaxed to the people, but insists that every foreign product which is produced at home, or can be, successfully, in quantities capable of supplying the domestic consumption, shall, whenever necessary to maintain suitable rewards to our labor, bear a duty which shall not be so high as to prohibit importations, but at such a rate as will produce the necessary revenues and, at the same time, not destroy but encourage American production. It says to the world of producers: “If you want to share with the citizens of the United States their home market, you must pay for the privilege of doing it. Your product shall not enter into free and unrestrained competition with the product of our own people, but shall be discriminated against to such an extent as to fully protect and defend our own.”
It is alleged as a serious objection to protective duties that the tax, whatever it may be, increases the cost of the foreign as well as the domestic product to the extent of such tax or duty, and that it is wholly paid by the consumer. This objection would be worthy of serious consideration if it were true; but, as has been demonstrated over and over again, it is without foundation in fact. Wherever the foreign product has successful competition at home, the duty is rarely paid by the consumer. It is paid from the profits of the manufacturer, or divided between him and the merchant or the importer, and diminishes their profit to that extent. Duty or no duty, without home competition the consumer would fare worse than he fares now. There is not in the long line of staple products consumed by the people a single one which has not been cheapened by competition at home, made possible by protective duties. There is not an article that enters into the everyday uses of the family, which is produced in the United States, that has not been made cheaper and more accessible as the result of home production and development, which was to be secured only by the sturdy maintenance of the protective system. While this is true of protective tariffs, exactly the opposite is true of revenue tariffs. They are always paid by the consumer. When a duty is put on a foreign product the like of which is not produced at home, and which enters our markets free from home competition, the cost to the American consumer is exactly the foreign cost with the duty added, whatever that may be, much or little. Supposing, for example, there was a tax upon tea and coffee. There being no production of these articles in the United States, and therefore no competition here, the cost to the American public would be the cost abroad and the duty added. We imported last year 526,489,000 pounds of coffee. A duty of 10 cents a pound would have produced to the Government over $52,000,000, which would have been paid by the 12,000,000 families of this country, consumers of this article; 87,584,000 pounds of tea were imported last year; at 10 cents a pound, $8,000,000 and upward would have gone into the Treasury, every dollar of which would have been paid by our own people. Take sugar as another example. We produced last year in this country about eight per cent. of what our people consumed. The duty collected from imported sugar amounted to $58,000,000. The domestic production was so inconsiderable as compared with the domestic consumption as to have had little, if any, appreciable effect upon the price to the consumer, and therefore this sum was almost wholly paid by our own citizens, and the cost of sugar to the American consumer, because of the inadequate home supply, is practically the foreign price, duty added, the domestic production being so small contrasted with the domestic demand that it in no wise controlled or influenced the price.
The revenue tariff periods of our history have been periods of greatest financial revulsions and industrial decadence, want, and poverty among the people, private enterprises checked and public works retarded. From 1833 to 1842, under the low tariff legislation then prevailing, business was at a standstill, and our merchants and traders were bankrupted; our industries were paralyzed, our labor remained idle, and our capital was unemployed. Foreign products crowded our markets, destroyed domestic competition, and, as invariably follows, the prices of commodities to consumers were appreciably raised. It is an instructive fact that every panic this country has ever experienced has been preceded by enormous importations. From 1846 to 1861 a similar situation was presented under the low tariff of that period.
Contrast this period with the period from 1860 to 1880, the former under a revenue tariff, the latter under a protective tariff. In 1860 we had 163,000,000 acres of improved land, while in 1880 we had 287,000,000, an increase of 75 per cent. In 1860 our farms were valued at $3,200,000,000; in 1880 the value had leaped to $10,197,000,000, an increase of over 300 per cent. In 1860 we raised 173,000,000 bushels of wheat; in 1880, 498,000,000. In 1860 we raised 838,000,000 bushels of corn; in 1880, 1,717,000,000 bushels. In 1860 we produced 5,000,000 bales of cotton; in 1880, 7,600,000 bales, an increase of 40 per cent. In 1860 we manufactured cotton goods to the value of $115,681,774; in 1880 the value reached $211,000,000, an increase of upward of 80 per cent. In 1860 we manufactured of woollen goods $61,000,000; in 1880, $267,000,000, an increase of 333 per cent. In 1860 we produced 60,000,000 pounds of wool; in 1880, 240,000,000 pounds, an increase of nearly 300 per cent. In 1860 we mined 15,000,000 tons of coal; in 1880, 79,000,000 tons, an increase of over 400 per cent. In 1860 we made 987,000 tons of pig iron; in 1880, 3,835,000 tons. In 1860 we manufactured 235,000 tons of railroad iron, and in 1880, 1,208,000 tons. In 1860 our aggregate of national wealth was $16,159,000,000; in 1880 it was $43,000,000,000.
From 1848 to 1860, during the low tariff period, there was but a single year in which we exported in excess of what we imported. The balance of trade during twelve of the thirteen years was against us. Our people were drained of their money to pay for foreign purchases. We sent abroad, over and above our sales, $396,216,161. This vast sum was drawn from the United States, from its business, from the channels of trade, which would have been better employed in productive enterprises, and thus supplied our wants for which we were compelled to go abroad. During the last thirteen years, under a protective tariff, there was but one year that the balance of trade was against us. For twelve years we sold to our foreign customers in excess of what we bought from them $1,612,659,755.
This contrast makes an interesting exhibit of the work under the two systems. You need not be told that the government and the people are most prosperous whose balance of trade is in their favor. The government is like the citizen; indeed, it is but an aggregation of citizens; and when the citizen buys more than he sells, he is soon conscious that his year’s business has not been a success.
Our wealth increases $875,000,000 every year, while the increase of France is $375,000,000, Great Britain $325,000,000, and Germany $200,000,000. The total carrying capacity of all the vessels entered and cleared from American ports during the year 1886–7 in the foreign trade was 28,000,000 tons. The amount of freight transported by the railroads of the United States was alone 482,000,000 tons during the same period.
The sum of our industries exceeds that of any other people, or tribe, or nationality. Mulhall, the English statistician, places the industries of the United States at $11,405,000,000 annually, which is $2,205,000,000 greater than those of the United Kingdom of Great Britain, nearly twice those of France or Germany, nearly three times those of Russia, and almost equal to the aggregated industries of Austria, Italy, Spain, Belgium, Holland, Australia, Canada, and Sweden and Norway.
This advancement is the world’s wonder. The nations of the earth cannot furnish such a splendid exhibition of progress in any age or period. We defy a revenue tariff policy to present such an exhibition of material prosperity and industrial development. Art, science, and literature have held their own in this wonderful march. We are prosperous to-day beyond any other people. The masses are better cared for, better provided for, more self-respecting, and more independent than ever before in our history, which cannot be said of the masses of other countries.
One of the striking differences between a revenue tariff and a protective tariff is that the former sends the money of its people abroad for foreign supplies and seeks out a foreign market. The latter keeps the money at home among our own people, circulating through the arteries of trade, and creates a market at home, which is always the best, because the most reliable.
Surely a new era of industrial development has come to the South. Nothing should be permitted to check or retard it. To her nature has been most prodigal with her gifts. Her hills and valleys have been made the storehouses of richest treasure. Coal and iron mines wait impatiently the touch of labor and capital, and tempt both with the promise of lavish profit.
Raw materials are found at every turn to invite the skilled artisan to transform them into the finished product for the highest uses of man. She possesses the fibres in rich abundance; her skilled labor should weave the fabric.
It is said that there is nothing grown in any of the States, except Florida, that Georgia cannot profitably produce. She has coal, iron deposits, marble and building stone, cotton and the cereals. Nothing but her own folly, nothing but blindness to her highest and best interests can keep her from the front rank of the industrial States of the Union.
Whether we discuss this question from principle, from statistics, or experience, we must reach the same conclusion; all lead to the same conviction.
One of the chief complaints against the protective system is its alleged hindrance to foreign trade and a foreign market for our own products. It is argued that if we could import raw material from other countries free, and manufacture such raw material into products for use, we could export them at great profit, and thus secure a standing in the markets of the world. This theory is wholly, as I believe, illusory. It is without substance. We have an example of free raw material in a certain line of manufactures—that of leather for boots, shoes, etc. In 1872 hides and skins were made free, so that our manufacturers could import them without custom-house burdens. They have had “free trade” in their raw material now for sixteen years. This industry has been an exceptionally successful one, and yet you cannot avoid being surprised when I say to you that in these sixteen years we have been able to export but two per cent. of the leather production of this country.
But if free raw material be necessary to secure an export trade and the foreign markets, then I answer that our manufacturers to-day have substantial free trade in foreign raw materials which they make into the finished product in the United States, provided they export it. Sections 3019, 3020, 3021, and 3022 of the United States Statutes provide for the remission of duties on all foreign materials used in manufacturing for the export trade. The law is positive that all articles manufactured for export from imported materials upon which duties have been paid, shall, when exported, be entitled to a drawback of 90 per cent. of the duties paid on such raw materials. Some use has been made of these laws. The remission of duties in 1884 paid upon imported material manufactured for foreign markets amounted to $2,256,638. On some articles the drawback is equal to the duty paid, but in no instance where articles are imported to be manufactured here and sent abroad is the duty to exceed 10 per cent.
And yet we are gravely told by the tariff reformers that we cannot reach foreign markets on account of the high tariff on the raw material, when, in fact, for foreign trade foreign raw materials are practically free. This principle was recognized as early as the administration of George Washington, and has been enlarged and made applicable to all imported materials, the drawbacks varying from 60 to 100 per cent. What becomes, then, of the cry for free raw materials in the presence of this fact? The truth is, we are not so much concerned about the foreign market as we are about the home market. The latter is the best, and we have not yet been able to control it, and, until we do, that should be our chief concern. But if any of our people are sighing for a foreign market, and value it more highly than our own, they can import foreign raw material practically free of duty, and after advancing it into the higher forms of manufacture, can go out and possess the world’s markets. Taxed raw materials do not stand in their way, and it is hypocrisy to claim otherwise.
“The markets of the world,” in our present condition, are a snare and a delusion. We will reach them whenever we can undersell competing nations, and not sooner. Tariffs do not keep us out, and free trade will not make it easier to enter them.
Upon what terms can we adopt a revenue tariff system in this country? In one way only; by accepting European conditions, and submitting to all the discomforts and disadvantages of our commercial rivals. The chief obstruction in the way of a revenue tariff are the wages paid American workingmen, and any return to that policy involves a reduction of the cost of labor. We cannot afford to have cheap labor in the United States. Cheap labor means cheap men and dear money. I would rather elevate and improve the condition of my fellow-citizens than increase the value of money and the power of “money-bags.” This is a republic of free and equal citizenship. The government is in the hands of the masses, and not of the few. This is our boast, and it is a proud one. The condition of the masses, their well-being, their intelligence, their preparation for the civil duties which rest upon them, depend largely upon the scale of industrial wages. It is essential, therefore, that the best possible wages attainable shall be secured and maintained. This is vital and fundamental. We cannot, without grave danger and serious disturbance—we ought not under any circumstances—adopt a policy which would scale down the wages and diminish the comforts of the American workingmen. Their welfare and independence, their progress and elevation are closely related to the welfare and independence and progress of the republic. We have got no pampered class in this country, and we want none. We want the field kept open. No narrowing of the avenues, no lowering of our standard. We want no barriers raised against a higher and better civilization. The gateway of opportunity must be open to all, to the end that they may be first who deserve to be first, whether born in poverty or reared in luxury. We do not want the masses excluded from competing for the first rank among their countrymen and for the nation’s greatest honors, and we do not mean they shall be.
Free trade, or a revenue tariff, will, of necessity, shut them out. It has no respect for labor. It holds it as the mere machinery of capital. It would have cheap men that it might have cheap merchandise. With all of its boasted love for the struggling millions, it is infinitely more interested in cutting down the wages of labor than in saving twenty-five cents on a blanket; more intent in reducing the purchasing power of a man’s labor than the cost of his coat. Things are not always dearest when their price is nominally the highest. The price is not the only measure, but the wherewith to buy it is an essential factor. Few men before me but have found in the course of their lives more than once that that which was cheapest when measured by mere price was the dearest when they were without money and employment, or when their products could find no market, and, finding it, commanded no price at all commensurate with the labor required to produce them. Primarily, it is labor which is interested most in this question of protection. The man with money can seek other avenues of profit and investment, or can wait for his dividends, but the laborer cannot wait for his dinner, and the United States do not want citizens who make presidents, and senates, and the house of representatives, to be in a condition of dependence and destitution. That is not the sort of citizenship we want.
We are different from any other nation, and it is that difference which makes us the best. Our political system rests upon a principle different from that of any other. It is founded upon the consent of the people. If we had wanted it otherwise we would not have left home, but would have remained the obedient child of an imperious parent. We would not have turned away from the mother country. We would have remained one of her dependencies. We would not have fought our way through blood and sacrifice to independence. We separated to set up for ourselves a free and independent political society, and that policy is the best for us which best subserves the purposes of our organization, our citizenship and civilization. It is ours to work out our own destiny, and, in doing so, furnish an example of a free and progressive people, whose industrial policy has made it possible to satisfy the best and highest aspirations of men, and which closes no field to human endeavor. We would wish for all mankind the beneficence of our system and the opportunities which it presents. We bid them level their condition up to ours; we will not level ours down to theirs. We will remove all restrictions from international trade, as we have removed all restrictions from inter-State trade, whenever they will raise their labor and their conditions to our standard.
Men of Georgia, upon this great industrial question there should be no North nor South. To us of every section have been entrusted the interests of our country—our whole country. To others have been confided the care of other nations and other people. We will not interfere with them; we bid them not interfere with us. My fellow-citizens, in this conflict, influenced by patriotism, national interest, and national pride, let us be Americans.