The Tariff in Our Times

by Ida M. Tarbell

“We have now spent twenty days in the discussion of the Mills Bill,” said Mr. Reed, when he made his leading speech. “Have you noticed what has been the most utterly insignificant thing in the discussion? The most utterly insignificant thing in the discussion has been the Mills Bill.” It was true, and Mr. Reed’s party was responsible. It was engaged in a shrewd struggle to divert attention from damaging evidence and to establish a superstitious reverence for the doctrine of protection which would put it out of the reach of attack by facts and logic.

Seven months after Mr. Cleveland’s message, July 21, the House passed the Mills Bill—passed it by a very decent majority—162 to 114. Mr. Randall’s followers, who in May, 1884, had been 41 strong against Mr. Morrison’s original bill, and in June, 1886, 35 strong against his second bill, had dwindled to three or four. They had not given up without a fight. Randall had prepared a second bill to introduce, but even the most devoted of his followers realized the hopelessness at that moment of any bill which advocated reduction as his did by free tobacco and free whiskey and prohibitory tariffs. Randall, too, was away from the House much of the spring of 1888, suffering from the disease which two years later was to end his life; and his group, left without the stimulus of his magnetic presence, subject to the pressure of the majority and to the rising popular approval of Mr. Cleveland, dwindled away one by one. They left him with heavy hearts. Indeed, for more than one of them the most painful experience of his political life was “going back on Sam Randall,”—not, let it be noted, on the doctrine of protection.

Four days after the House bill was passed it was turned over to a sub-committee of the Senate Finance Committee, appointed two months before to prepare for its reception. The chairman of this sub-committee was Senator William B. Allison of Iowa. It could not have been a better man. Allison was at the time nearly sixty years old and he had been in Congress constantly for over twenty-five years. Most of the time he had served on the House or Senate Committees in charge of the tariff. He had begun his career as a very moderate protectionist of the Garfield type. In all of the early years of the Republican struggle to keep the war-time promises as to high duties, i.e. to reduce them as the internal taxes came off, Allison had been a leader. In March of 1870, when the Schenck Bill was under consideration, he made one of the ablest tariff reform speeches of the period; a speech which dogged his later life. But Allison was a strong party man. As the tariff became gradually a matter of politics rather than of principle he adapted his views to the needs of the campaigns, striving diligently for duties which would win the most supporters and do the least harm to consumers. By temperament he was admirably adapted to compromise. They used to say in Iowa that he could walk on eggs from Des Moines to Washington and not break one. Senator Dolliver admirably characterized Senator Allison’s gift of getting on with men in his eulogy delivered in the Senate in 1905: “He avoided dogmatism even in its most attractive forms and made room in the expression of his opinion for those differences which he knew would be encountered sooner or later, giving leeway for composing those disagreements which he knew must be composed before anything could be actually done.” Senator Allison was peculiarly ready for making a tariff bill at this time, for he had been the head of a sub-committee which only a few months before had finished an important new measure for reforming the Administration of the Customs. This had already passed the Senate and at the time Allison and his colleagues took up revision, was before the Committee of Ways and Means.

By way of emphasizing its sympathy with the protected as well as to show its disapproval of Mr. Mills’s attitude, the Senate Committee began hearings in May of 1888 which were continued at intervals until the first of the next year. They make four big volumes and altogether are an illuminating compilation for the student. Much more important than the hearings was a piece of work going on quietly at the same time at Senator Allison’s request: this was the actual preparation by an expert of a bill which was to serve as a guide and model to the Committee. The expert chosen was Colonel George C. Tichenor, a man who knew more about the administration of our customs and had more authoritative notions of what duties should be to meet a moderate protectionist program than anybody then living. Colonel Tichenor had first come into touch with the tariff in 1877 when he had been appointed by John Sherman, then Secretary of the Treasury, a special agent of the Department. Here he was so impressed with the importance of the question and possibly also with the rarity of men who really knew anything about it, that he determined to master all its intricacies. In 1881 he was sent abroad by the Secretary to study undervaluations and the cost of production. Colonel Tichenor spent some four years in different parts of Europe seriously examining various sides of the tariff question. His studies had led him to one conclusion which was of particular influence at the moment, and that was that specific duties should replace ad valorem wherever possible, the exact opposite to Mr. Mills’s conclusion. Colonel Tichenor believed the ad valorem duty more equitable, but that human ingenuity and dishonesty would always find ways of evading it, and that as a result both the honest importers and the government would suffer. It was to be expected that the administration should feel strongly about undervaluations and be ready to accept almost any system which promised to make them more difficult. The scandals arising from them had been flagrant for years. These undervaluations were by no means due alone to dishonest importers, they were due quite as much to dishonest and incompetent customs-house officials, to bungling and tricky schedules, and to a general belief in Europe that our tariffs ought to be evaded.

Many of Tichenor’s recommendations had a value which time has emphasized, such was his warning that specific duties could not be placed arbitrarily without grave injustice; it would require time and preparation to arrange them; such was his protest against “ambiguous phrases, vague description, loose and uncertain definitions, contradictory terms” in a tariff law, and his appeal for “plain, simple, and definite terms.”

Colonel Tichenor had been continued in the Treasury Department after Mr. Sherman left it by President Cleveland. He had been used indeed almost as much by the Democrats as by the Republicans. The Randall Bill referred to above was done largely by Tichenor and into it he had introduced many of his favorite ideas. While he was working on the Randall Bill, Mr. Allison had sought his help on the Customs Administration bill; indeed, the latter was much more Colonel Tichenor’s bill than any one else’s.

It will be seen then that the man to whom Senator Allison turned in the spring of 1888 was thoroughly equipped to make a bill—that he did not even have to begin at the bottom. He had one in hand, the Randall Bill introduced in March but which had never been heard from since its reference to the Ways and Means Committee. By readjusting the rates of this bill to meet more perfectly Senator Allison’s ideas, Colonel Tichenor soon turned over the document on which the sub-committee went to work. It became apparent almost at once to those who knew what was doing in the Committee that the rates in Colonel Tichenor’s bill were being decidedly increased—a fact which seems to have caused Allison some concern, for we find him writing to Tichenor in August, “You have seen that the constant tendency here is to increase rates. How would this suit our people in the West?”

In October (the 3d) Mr. Allison reported his bill to the Senate as a substitute for the Mills Bill. The latter was so bad, he said, that it could not be amended. There was nothing to do but prepare an entirely new measure. What this measure was, not Mr. Allison, but Nelson W. Aldrich of Rhode Island, explained. This report is the first important evidence we have of the powerful influence Mr. Aldrich had already come to exercise in the Senate on tariff matters. It is also a complete statement of the interpretation of protection which he had adopted and to which he has been ever since faithful. Mr. Aldrich had been in the Senate since 1881. In the making of the bill of 1883 his work for his wool, cotton, and sugar constituents had been marked by those who studied the debates and votes. From that time on business men interested in tariffs had come to count on him more and more. By 1888 he had indeed become more influential than either Sherman or Allison. The report he now made shows that he had none of their leanings towards moderation, none of their anxieties over the evils in protection which both had at one time or another admitted, none of their dislike of complicated schedules and classifications. Mr. Aldrich rejected every principle on which Mr. Mills had worked. He was particularly hard on the attempt to substitute ad valorem for specific duties. The most important work Congress had in hand after taking care of the surplus was stopping undervaluations, he declared; nothing but specific duties would accomplish this. No expert knowledge was required for the enforcement of specific duties by customs officials, “as the articles upon which they are levied have only to be counted, weighed, or measured”; an extraordinary statement when one remembers the scandals in those years over specific duties on sugar; extraordinary also when one finds that many of the schedules in the new bill, as in the law then in force, were subdivided according to the value of the articles, and that in addition to the specific duties on these classes were ad valorem duties. Thus Mr. Aldrich, after denouncing ad valorem duties, presented a bill filled with ad valorems laid on ad valorems! Sharp issue was of course taken with Mr. Mills’s free list. Mr. Aldrich declared it destructive. The Republicans had indeed pretty generally given up the idea of admitting free any raw materials which were produced in this country. The notion that if you gave to one you must to all had been steadily making converts since the early ’70’s, and it was laid down emphatically now by Mr. Aldrich as one of the tariff principles of the party. No free raw materials where there is competition, but a long free list. Mr. Aldrich called attention to the growth of the free list as a proof of the party’s generosity. In 1847, he said, 88 per cent of the articles imported were dutiable. This had been cut down in 1887 to 66 per cent. This was a deceptive statement, for in that period the variety of things imported had enormously increased, and besides the free list was made up largely of articles so rare and unimportant that the ordinary person had to consult the dictionary to know for what many of them were used. In the nature of the case, it could matter little to consumers whether they carried a duty or not. But increasing the free list had become a favorite pastime with enthusiasts like Mr. Kelley. It was presented as a proof of the interest that the protectionist had in the consumer!

The general reduction by the Mills Bill of rates on the articles where the tariff affects the multitude, that is, on iron and steel and woollen and cotton goods, was resented bitterly by Mr. Aldrich. He represented the class of Republicans that had come to feel that protection had created these industries and professed to believe that duties low enough to admit foreign goods in free competition with them would be ruinous. The Senate bill raised many of the rates considerably above what they were in the bill of ’83, and in other cases lowered them, but still kept them at a prohibitive point. Structural steel is a case in point. It had begun to show the future which was before it as a building material replacing wood, particularly in larger buildings and in bridges. Under the bill of ’83 the duty had been 102¾ per cent. The Mills Bill made it 49.32. The Allison Bill now put it up to something over 91 per cent. There was no possible justification for so high a duty. Steel beams of foreign manufacture could be put down in the United States at that date at about $27.00 a ton exclusive of the tariff. But steel beams were selling in the United States at $66.00 a ton. The argument which raged over this particular article was typical of the way the two parties were handling the question. Senator Vest, in declaring the rate in the Senate bill excessive, quoted an agreement between Mr. Carnegie and the Knights of Labor as his authority for saying that the cost of turning a ton of pig-iron into steel rails was $4.09, and that steel beams cost 30 per cent more, or $5.32 a ton. In reply to this showing, Senator Aldrich said that $4.09 was not a fair estimate of the cost of steel rails, that it represented only the cost of turning pig-iron into steel rails. That on fixing the duty on rails one should go back to the mines and take the cost of the iron as it comes from the earth and the cost of changing it into pig-iron. To which argument Senator Vest replied: “It seems to me, with the greatest respect to the Senators from Iowa and Rhode Island that the proposition is entirely absurd and without the shadow of logical foundation. The pig-iron comes to the manufacture of steel rails a finished product. The cost of the pig-iron had paid all the antecedent cost of manufacture, and it would be just as forcible an argument to say that if the tailor who makes my coat is to be protected, we are not to take as a basis of calculation the cost of the cloth as it came to the tailor’s shop, but we are to go back to the wool of the sheep, to the cost of shearing, to the cost of washing, to the cost of carting, and all this is to be added to the cost of the cloth, although the tailor has already paid it.”

The opponents of the rates on steel products were loud in their trust alarm. They certainly had an effective example to hold up. Mr. Carnegie had begun to come into his own, as an illustration of what combined transportation and tariff privileges can do for an able manufacturer. He and his profits and his castle at Skibo figure in every debate on iron and steel products at this period. Even Senator Aldrich had grudgingly to admit a trust in steel beams, but he hopefully declared that if the prohibitive duty was retained, domestic competition would destroy the monopoly. Senator Sherman was not quite so hopeful as Senator Aldrich. He was at last beginning to feel some doubt about the infallibility of domestic competition.