Out of the economic and political circumstances which have just been described, there were emerging between 1865 and 1875 a wide variety of national problems. Such questions were those concerning the proper relation between the government and the railroads and industrial enterprises; the welfare of the agricultural and wage-earning classes; the assimilation of the hordes of immigrants; the conservation of the resources of the nation in lumber, minerals and oil; the tariff, the financial obligations of the government, the reform of the civil service, and a host of lesser matters. The animosities aroused by the war, however, and the insistent nature of the reconstruction question almost completely distracted attention from most of these problems. Only upon the tariff, finance and the civil service did the public interest focus long enough to effect results.
The tariff problem has periodically been settled and unsettled since the establishment of the federal government. Just previous to the war a low protective tariff had been adopted, but the outbreak of the conflict had necessitated a larger income; and the passage of an internal revenue act, together with a higher protective tariff, had been the chief means adopted to meet the demand. By 1864 the country had found itself in need of still greater revenues, and again the internal and tariff taxes had been increased. These acts were in force at the close of the war. The internal revenue act levied taxes upon products, trades, and professions, upon liquors and tobacco, upon manufactures, auctions, slaughtered cattle, railroads, advertisements and a large number of smaller sources of income.
The circumstances that had surrounded the framing and passage of the tariff act of 1864 had been somewhat peculiar. The need of the nation for revenue had been supreme and there had been no desire to stint the administration if funds could bring the struggle to a successful conclusion. Congress had been willing to levy almost any rates that anybody desired. The combination of a willingness among the legislators to raise rates to any height necessary for obtaining revenue, and a conviction on their part that high rates were for the good of the country brought about a situation eminently satisfactory to the protectionist element. There had been no time to spend in long discussions of the wisdom of the act and no desire to do so; and moreover the act had been looked upon as merely a temporary expedient. It is not possible to describe accurately the personal influences which surrounded the passage of the law. It is possible, however, to note that many industries had highly prospered under the war revenue legislation. Sugar refining had increased; whiskey distilling had fared well under the operation of the internal revenue laws; the demands of the army had given stimulus to the woolen mills, which had worked to capacity night and day; and the manufacture and use of sewing machines, agricultural implements and the like had been part of the industrial expansion of the times. Large fortunes had been made in the production of rifles, woolen clothing, cotton cloth and other commodities, especially when government contracts could be obtained. Naturally the tax-levying activities of Congress had tended to draw the business interests together to oppose or influence particular rates. The brewers, the cap and hat manufacturers, and others had objected to the taxes on their products; the National Association of Wool Manufacturers and the American Iron and Steel Association had been formed partly with the idea of influencing congressional tariff action.
After the close of the war, the tariff, among other things, seemed to many to require an overhauling. Justin S. Morrill, a member of the House Committee on Ways and Means, and one of the framers of the act of 1864, argued in favor of the protective system although he warned his colleagues:
At the same time it is a mistake of the friends of a sound tariff to insist upon the extreme rates imposed during the war, if less will raise the necessary revenue…. Whatever percentage of duties were imposed upon foreign goods to cover internal taxes upon home manufactures, should not now be claimed as the lawful prize of protection where such taxes have been repealed…. The small increase of the tariff for this reason on iron, salt, woolen, and cottons can not be maintained except on the principle of obtaining a proper amount of revenue.
Sentiment was strong against the tariff in the agricultural parts of the West and especially in those sections not committed to wool-growing. Great personal influence was exerted on the side of "tariff-reform" by David A. Wells, a painstaking and able student of economic conditions who was appointed special commissioner of the revenue in 1866. As a result of his investigations he became converted from a believer in protection to the leader of the opposition, and his reports had a considerable influence in the formation of opinion in favor of revision. The American Free Trade League was formed and included such influential figures as Carl Schurz, Jacob D. Cox, Horace White, Edward Atkinson, E.L. Godkin, editor of The Nation, and many others. William B. Allison and James A. Garfield, both prominent Republican members of the House, were in favor of downward revision.
In 1867 a bill providing for many reductions passed the Senate as an amendment to a House bill which proposed to raise rates. Far more than a majority in the House were ready to accept the Senate measure, but according to the rules it was necessary to obtain a two-thirds vote in order to get the amended bill before the House for action. This it was impossible to do. Nevertheless, the wool growers and manufacturers were able "through their large influence, persistent pressure and adroit management" to procure an act in the same session which increased the duties on wool and woolens far above the war rate. In 1869 the duties on copper were raised, as were those on steel rails, marble, flax and some other commodities in 1870.
The growth of the Liberal Republican movement in 1872, with its advocacy of downward revision, frightened somewhat the protectionist leaders of the Republican organization. It was believed that a slight concession might prevent a more radical action, and just before the campaign a ten per cent reduction was brought about. In 1873 the industrial depression so lowered the revenues as to present a plausible opportunity for restoring duties to their former level in 1875, where they remained for nearly a decade.
The lack of effective action on the part of the tariff reformers of both parties was due to a variety of causes. In the years immediately following the war, the Republicans in Congress were more interested in their quarrel with President Johnson than in tariff reform. Furthermore, the unpopular internal revenues were being quickly reduced between 1867 and 1872, and it was argued that a simultaneous reduction of import taxes would decrease the revenue too greatly. Moreover there was no solidarity among the Democrats, the South was discredited, and at first not fully represented. Wells was driven out of office in 1870, the Liberal Republican movement was a failure, the protected manufacturers knew precisely what they wanted, they knew how to achieve results and some of them were willing to employ methods that the reformers were above using. As time went on and the country was, in the main, rather prosperous, many people and especially the business men made up their minds that the war tariffs were a positive benefit to the country. For these reasons a war policy which had generally been considered a temporary expedient became a permanent political issue and a national problem.
The positions of the two political parties on the tariff were not sharply defined during the ten years immediately following the war. The Democrats seemed naturally destined for the role of revisionists because of their party traditions, their support in the South—ordinarily a strong, low-tariff section—and because they were out of power when high tariffs were enacted. Yet the party was far from united on the subject. Some prominent leaders were frankly protectionists, such as Samuel J. Randall of Pennsylvania, who was Speaker of the House for two terms and part of another. The party platform ordinarily was silent or non-committal. In 1868, for example, the Democratic tariff plank was wide and generous enough for a complete platform. The party stood for