The Tariff in Our Times

by Ida M. Tarbell

The bounty provision gave a fine opportunity to Mr. Mills. According to his way of thinking it was a “bribe,” an “extortion,” a violation of the Constitution, and where might it not lead? Why should not everybody have it? Why should not the “people who are raising corn, cotton, wheat, oats, hogs, and beeves, all slip up the counter and say ‘we will take sugar in ours, too.’” It is difficult to believe that the sugar bounty could have survived a test before the Supreme Court. The Constitution is quite clear in the definition of the taxing powers it gives to Congress. It is for the “general welfare.” If this means anything, it means that the tax shall be for a public purpose; or, as Richard Olney has defined it, “It is the power to raise money from the public for the public.” No stretch of the Constitution could include in this definition the power of raising money to help a few farmers raise sugar beets and sorghum, any more than it could to pension an artist while he learned to paint.

The duty fixed on refined sugar in the McKinley Bill was intended as an attack on the monopolistic powers of the so-called “Sugar Trust.” The official name of the sugar trust in 1890 was the Sugar Refineries Company. It had been formed in 1887, but the operations of the leading concerns which organized it had long been a scandal. In those years, as now, these beneficiaries of the nation’s tariff policy had worked in every conceivable way to avoid paying the duty on their imported raw sugar. False weighing, under-classification, over rebate duties for drawbacks on exports, adulterations, were methods they practised boldly and repeatedly in the ’70’s and ’80’s in their effort to cheat the government. The sugar schedule had lent itself admirably to the manipulation. The aim of the trust was, of course, to keep out all sugar which was eatable, i.e. they aimed to supply the country. Now the line between refined and unrefined sugar is difficult to draw strictly. There are high grade clean raw sugars, and partially refined sugars which may be used without further treatment. These sugars are of course cheap and bought by the poor. The refiners aim to keep the duty on this class of sugars, known in the schedule as Nos. 13 to 16, Dutch Standard (the Dutch Standard is a color test) so high that it will not pay to put them on the market. In the bill of 1883 they had succeeded in doing this. The sugar refiners had not only manipulated the duty on this class of sugar until it was too dear to eat, but they had practised some of their most successful frauds in this region of the sugar schedule. A sample of their operations had been presented to the Senate only a short time before by Secretary Fairchild. It related to a cargo of sugar brought into San Francisco by the American Sugar Refinery (the Spreckles concern). In this case the enterprising importers caused the sugar to be artificially colored in order to reduce the grade below No. 13, Dutch Standard. They had also caused it to be invoiced at 88 degrees, but its actual strength was found to be from 96 to 98 degrees. The attempted fraud made a difference of $61,000 in the duty. The American Sugar Refinery was caught in this instance, but there is no doubt that tricks of this sort had been frequently successful. To take away the duty on these grades then would not only serve the poor, but it would also go far towards breaking up the monopoly. The independent refiners themselves had in the recent hearings advised this. “The remedy for the monopoly in sugar is in your hands absolutely,” one of the independents told the Ways and Means Committee; “that is by putting just so much duty and no more on refined sugar, that if we undertake to get more profit than we ought, England, Germany, and France can send in their refined sugars. The remedy is entirely with you and we expect you to apply it.”

The way in which Mr. McKinley proposed to reach the abuses was to make all sugar below No. 16, Dutch Standard free. Here again the provision was not original. It had been in the first drafts of both the Mills and Allison Bills, but had been so strenuously fought by the sugar interests that it had been dropped in both cases. When this provision of the McKinley Bill reached the Senate it met the opposition of the same gentleman who had been most influential in raising the rates in the Allison Bill, Nelson W. Aldrich. Mr. Aldrich moved that Nos. 13 to 16 be made dutiable. Senators Sherman and Allison both fought him, but Aldrich carried the day. His power at that time, however, was not great enough to rule the conference to which the bill was finally submitted, and the original House arrangement was adopted and became the law.

There was no industrial development related to the tariff which gave the Republicans deeper concern at this period than the trusts. Mr. Cleveland in his message of 1887 had called attention to the aid a high duty gave to combinations struggling for the entire control of a commodity, and the country could not but see that he was right. There was a type of protectionist who refused to admit the connection. According to Mr. Kelley and Mr. Aldrich there could be no monopoly in a protected article. Domestic competition would prevent it. Nevertheless the trusts multiplied and the majority of them were in highly protected industries. Moreover, it was obvious that if there was no duty, the industry would have to sustain a competition which would make monopoly very difficult if not impossible. It was not the Democrats alone who saw this. Senator Sherman, who felt particular anxiety over the question, which he realized might easily defeat the party if it were not settled, thought and said frequently before 1889 that the trust could only be reached through the revenue laws. He had been ready to take all duty from refined sugar in order to destroy the sugar trust, but the majority of his party did not agree with him. They hesitated at admitting a connection between anything so unpopular as a trust and anything so sacred and infallible as protection. An effort was made to dismiss the troublesome phenomenon as of no consequence. Mr. Blaine tried this. “Trusts,” he said, “were state issues.” “They have no place in a national campaign.” In mentioning them he would put in the proviso, “If they are evils,” etc. But this was no more effective than the similar attempt to make people believe that the surplus was a good thing, a proof of prosperity. The unrest increased rather than diminished, and numerous bills were introduced into Congress between 1887 and 1890, aimed at defining, regulating, or suppressing combinations. Bills to tax, to take the tariff from, to investigate and to forbid trusts, pepper the proceedings. Among these bills was a measure of Senator Sherman’s making a combination in restraint of trade a crime punishable by fine or imprisonment. This was first introduced in 1888. It was repeatedly discussed and amended, and now that the tariff revision was on, it was felt that it should be passed. The Democrats did not hesitate to declare that the Republicans’ sudden zeal for the bill was due to their desire to have an answer for those who might criticise their tariff bill as a trust-breeder. At all events, the measure was passed ahead of the tariff bill. Thus an answer was ready for the critics. As Senator Morgan said, “The bill was a good preface to an argument upon the protective tariff.”

More difficult to meet than any other criticism on high protection had always been the fact of the burden it put upon the farmer. Practically everything he had to buy was made dearer by the import duties. His domestic market was undoubtedly enlarged by the stimulus the tariff gave to manufacturers. There were more buyers at home for his products, but they paid the prices of the open-world market. There was no protection for his corn or wheat or barley or potatoes, nor was it generally of an advantage to him that there should be. He was the great exporter of the United States. He produced more than we could consume, and sold abroad. His prices were generally not made here but in the London market. In the cases where we did import agricultural products, high duties had not been levied for the good reason that they would make the necessities of life dearer. It would be a tax on food, and there had always been a reluctance to imposing that. If we did not raise potatoes enough for our people and must import, should we penalize the consumer because the farmer had failed to take advantage of the market at his door? Should we penalize him for the crop failure which might occur at any time? But, argued the protectionist of 1890, we are buying too much food abroad. What are we building up the home market for unless that it may supply all its needs from the home farmer, and it is not doing so. In 1889, said Mr. McKinley, we bought $256,000,000 worth of agricultural products abroad. This should be stopped. It was unjust to the farmer. When the figures Mr. McKinley quoted are analyzed they are less impressive, for upward of $200,000,000 of the importations were sugar, tea, coffee, and articles which we did not produce or in very small quantities, i.e. they were articles which the American farmer as well as factory hand must import if he uses them at all. This fact was slurred over in the argument. We were buying $256,000,000 worth of agricultural products abroad. The domestic market was not doing its duty by the farmer; that duty was to supply all its needs at home. The only reason it was not doing this was because there was too low a duty on the farmer’s products. The factory hands must be forced to buy home-grown potatoes, eggs, and meats. It was as logical, of course, to force the public at large to eat only home-grown food as it was to force the farmer to buy only home-made iron and steel. So in the interests of the farmer the McKinley bill for the first time in our tariff history taxed food generally and heavily. Eggs which had been free, 5 cents a dozen; potatoes, 25 cents a bushel; bacon, 5 cents a pound; barley, 30 cents a bushel. With this program the Republicans hoped to quiet the farmer’s discontent.

It was a political manœuvre pure and simple. No tariffs can protect the farmer’s products save locally and sporadically. His is the basic world industry. The inhabitants of the earth, all the earth, not a corner of it, are his market. The most imperious cry of men, that for food, calls him. Laws as all-powerful as gravitation govern him. Petty and temporary interferences like tariffs may hinder his labors for a season, but the word of the Almighty is his guarantee that the little schemes of men to keep the fulness of the earth from its creatures are bound to end in confusion. Already the farmers had striking proof that the radical interference with the laws of supply and demand, which had been forced upon the country by the Civil War and which had been kept alive since by a combination of greed, superstition, politics, and loose thinking, were telling on his industry. The entire agricultural production of 1890 was worth only about ten per cent more than that of 1890, but the population had increased some twenty-five per cent. That which had been repeatedly prophesied had happened. The privileges granted to manufacturers had enticed capital from the farms and men from the soil. It was natural that this should be so. Effort will go where the way is made easiest and the results are quickest. There was sound reason in the charge of the free trader. You have ruined our commerce on the high seas, now you are injuring our agriculture.

Moreover, nations will not buy freely of nations that close their doors. The country was beginning to feel this fact. We were antagonizing the foreign market. The member of the Harrison Administration who saw this fact most clearly was James G. Blaine, Secretary of State. Mr. Blaine had been guilty of some curious quakery in the campaign for tariff reform, which Mr. Cleveland had forced. His treatment of the surplus and the trust in their relation to the tariff had been superficial. But to the question of our foreign trade he had given serious thought. He saw clearly enough that increased duties would injure trade and that limiting our trade would hurt the Republican party. There was no mistaking the sentiment of the country on the need of extending foreign markets. Mr. Blaine feared above all things to excite further suspicion that the new bill would be to decrease rather than to increase them. Before the measure had even been reported he made at least one strong protest against a proposed duty on an article heretofore free. This was the duty on hides. For over twenty-five years hides had been free and we had been importing large quantities from South America. The demand for a duty came from the cattle-growers of the West and Mr. McKinley proposed to grant it. When Mr. Blaine heard of this he wrote a letter to Mr. McKinley so sound that one can hardly believe it to be from the same man who had proposed to perpetuate an exorbitant surplus and use it to fortify American cities.

“Dear Mr. McKinley:—It is a great mistake to take hides from the free list, where they have been for so many years. It is a slap in the face of the South Americans, with whom we are trying to enlarge our trade. It will benefit the farmer by adding five to eight per cent to the price of his children’s shoes.

“It will yield a profit to the butcher (Beef Trust) only, the last man that needs it. The movement is injudicious from beginning to end—in every form and phase.

“Please stop it before it sees light. Such movements as this for protection will protect the Republican party only into speedy retirement.