The Tariff in Our Times

by Ida M. Tarbell

“I was an old Henry Clay-Tariff-Whig in old times, and made more speeches on that subject than any other. I have not since changed my views. I believe yet, if we could have a moderate, carefully-adjusted protective tariff, so far acquiesced in as not to be a perpetual subject of political strife, squabbles, changes and uncertainties, it would be better for us. Still it is my opinion that just now the revival of that question will not advance the cause itself or the man who revives it.... We, the old Whigs, have been entirely beaten out on the tariff question, and we shall not be able to reëstablish the policy until the absence of it shall have demonstrated the necessity for it in the minds of men heretofore opposed to it.”

In May, 1860, he was still of the same opinion on making the tariff an issue. “I now think,” he wrote the same correspondent, “that the tariff question ought not to be agitated in the Chicago Convention, but that all should be satisfied on that point with a presidential candidate whose antecedents give assurance that he would neither seek to force a tariff law by executive influence nor yet to arrest a reasonable one by a veto or otherwise.” After his nomination and election he steadily refused to say anything on the question. It was not, in fact, until February 15 (1861), when he reached Pittsburg on his way to his inauguration, that he uttered a word. In Pennsylvania, however, some expression was unavoidable. The tariff had played a greater part in that state in electing Mr. Lincoln than had slavery and unionism. Indeed, Mr. Blaine does not hesitate to say that if Governor Curtin had not spent most of his time in the campaign advocating protection, the state would have gone Democratic, and if Pennsylvania had gone Democratic, Mr. Lincoln would probably have been defeated. An expression of opinion then was unavoidable, and he gave it;—certainly it was moderate enough. After quoting the tariff plank of the party platform he said modestly: “I have by no means a thoroughly matured judgment upon this subject, especially as to details.... I have long thought it would be to our advantage to produce any necessary article at home which can be made of as good quality and with as little labor at home as abroad. At least by the difference of the carrying from abroad. In such cases the carrying is demonstrably a dead loss of labor....” After developing this argument, which was one of his strongest early ones and the only one of which full notes have been saved to us, he added: “The condition of the Treasury would seem to render an early revision of the tariff indispensable,” and he went on to advise “every gentleman who knows he is to be a member of the next Congress to take an enlarged view and post himself thoroughly so as to contribute his part to such an adjustment of the tariff as shall produce a sufficient revenue, and in its other bearings, so far as possible, be just and equal to all sections of the country and classes of the people.”

There is nothing to show that after he reached Washington Mr. Lincoln ever considered the tariff other than as one of the several methods by which money could be raised. If he saw, as he probably did, that there were many injustices in the measures passed, that some duties were too high for revenue and beneficial only to the special interests which had fought for them, that others were trades outright, he still knew that, all things considered, the bills were as good as could be expected. It is probable indeed that none of the important legislation of the war received less attention from the president than the tariff bills.

Congress was with the president in 1864 in his insistence on means for finishing the war, and in June a new tariff bill went to the Senate. It had been out of committee just eight days when it was adopted by the House and the debate on it lasted less than two days. The Senate was even more expeditious, for it was reported there on the 14th, taken up on the 16th, and passed on the 17th. That it was possible so to push the bill through was due to the wonderful generalship of the chairman of the Senate Committee on Finance, William Pitt Fessenden of Maine, a man whom Charles Sumner once declared to have been in the financial field what all our best generals were in arms. Fessenden was at this time about 58 years old, and he had been in the Senate for nearly ten years. Before the slavery question called him into public life, he had stood at the head of the Maine bar, a position his father had occupied for forty years before him. He was an untiring student, a clear thinker, and a forcible and convincing speaker. He had great dignity—“the dignity of a Cato,” one of his acquaintances has said, but he combined with it “the bitterness of a Junius.” Certain things were sure to arouse him—buncombe, misrepresentation, jobbery, and—Charles Sumner. His propensity to quarrel with Sumner was chronic. He seemed to take as a personal insult Sumner’s untiring fight in war times to keep a tariff off books, rags for paper making, magazines, philosophical apparatus for schools and works of art. Sumner never lost a chance to declare these tariffs “barbaric,” “taxes on knowledge.” “Why should not knowledge pay as well as everything else?” Fessenden would ask. This is war, and these tariffs are justified by the circumstances. Why should not rags pay? and he intimated that he knew well the gentleman in Boston who made paper and who had stirred Sumner up to make an attack on the rag duty. Besides, why should not American ragpickers be protected as well as American wool-growers? It was an industry to be cultivated.

But while Fessenden’s antagonism to Sumner coupled with his dyspepsia might make him often irascible, it never interfered with getting things done. The bill in question was put through with only two days’ debate, purely from his ability to whip the members into prompt action—to his quick wit, his fine tact in steering them away from unprofitable side issues and from subjects which precipitated heated and time-taking discussion. For instance, in the present bill the higher duty proposed on railroad iron caused great anxiety to railroad interests, especially in the West, where much building was going on. The duty on railroad iron in the bill of 1861 had been $12.00 per ton; it was proposed now to make it 70 cents per 100 pounds. The whole West rose in arms. Kansas and Minnesota were particularly disturbed, since they were laying track as rapidly as possible. It cost from two to three thousand dollars a mile for rails now, and nobody knew what it would cost if duties were raised. It looked very much as if railroad building would be stopped. “The development of the country was something even in war times,” urged the Senator from Minnesota. This tariff meant less revenue, Senator Pomeroy of Kansas declared, for importation would cease. It simply meant that the iron men who were demanding it would put up their prices. They were paying 50 per cent dividends now and watering their stock. The entire iron business was rapidly becoming a monopoly. We could better afford to import all our iron from England than let this happen. But the suggestion of importing anything from England at that moment was like fire to powder. An explosion always followed. Mr. Pomeroy’s suggestion brought Zach Chandler of Michigan roaring to his feet. “If I had my way,” he shouted, “I would raise a wall of fire between this nation and Great Britain. I would not only not allow her iron to come here, but I would not let a single pound of any article she manufactured come here during this war.... Let the railroad interest suffer and any other interest suffer. It is nothing to me, I am for the tax and the highest tax.” Mr. Fessenden well understood the danger in allowing an outbreak against England to start, and he quietly and firmly insisted that the discussion be confined to the duty on rails.

The new bill was signed on June 30, and went into effect at once. Under it duties rose from the 37 per cent of the bill of 1862 to over 47 per cent. The effect on prices was appalling. The cost of living, already enormous, increased, until it looked as if the “thousand-dollar breakfast” Secretary Chase had threatened was to come; even goods unembarrassed by taxes or tariffs, like butter and eggs, rose with the rest—sympathy and speculation the causes. In some cases the hoisting of prices almost caused riot. In New York and Brooklyn there was great excitement over the attempts of the gas companies and the street railroads to take their taxes out of the public, although it had been expressly stipulated that they were to pay them themselves. In August after the bill went into force, the Manhattan Gas Company notified customers that they must pay $3.25 per thousand instead of $2.50; the Brooklyn Gas Light Company and several others did the same. Higher fares on the street car lines were announced. There was a great uproar in the press and on the street, for it was well known that the companies were already making enormous profits. The Manhattan Gas stock at this time was quoted at $1.90 (50 being par) and New York Gas Light at $2.85¼ (50 par). Confiscation of franchises and the establishment of municipal plants were advocated generally. In Philadelphia there was an agitation at the same time in favor of coöperative coal companies, the price of coal, which it was estimated cost $6.00 per ton delivered, being put at $10.00. If the indignant cities had carried out their threats they would probably by this time have been free of their most arrogant task-masters.

Hard as the situation was made for common folks, they endured it patiently, grimly, convinced that there was no other way to end the war. There has never been seen, indeed, in the world’s history, a more splendid courage in bearing burdens than the people of the United States—North and South—showed in the Civil War. It is an inspiring thing to study. If it had had no reverse! But it is one of the curious and puzzling phenomena of human nature that the situation which inspires some to their highest endeavor arouses others to their lowest. That the same cause makes martyrs of some men, cormorants of others. If a war for a great cause brings out the nobler qualities of human nature, it brings out at the same time the vicious. If fine fellows march in the line and go bravely into battle, mean ones hang on their flanks and rob the battlefield. If the mass of people pay the cost by the sweat of their brow, a minority trades on their necessity. Never have we had this violent contrast more marked than in the Civil War. Take the attitude of the people towards the taxes and tariff. The mass bore the burdens imposed without a whimper, yet from the first there was a large number whose sole aim was to manipulate taxes and tariff to serve their interests. They ignored the principles the makers of the bills laid down clearly, that everything was to have a duty put on it which could be made to yield revenue. The consumers of raw materials fought fiercely for free wool, free cocoa, free everything, and they fought as hard for increased duties on their products; not satisfied that these duties compensate for internal taxes, they wanted them higher than the taxes. The government was the best patron of importers and manufacturers, and it was a customer not too careful that it got what it bargained for, such was the stress of its situation, and these manufacturers and importers cheated their great patron at every turn. They gave shoddy for wool, adulterated the food they sold, undercounted and underweighed. Frequently what they sold had been smuggled in, for smuggling flourished abundantly under the high duties. All that free traders had ever said of the inducement the protective system gave for cheating the government was more than proved true. An organized system of smuggling from Canada was in operation before the end of 1862, and it grew steadily throughout the war until it was an open secret that the markets of Boston particularly were full of smuggled goods. The closest watch had to be kept for this reason, on every attempt to put a duty on an article hitherto free. Thus in 1864 Mr. Fessenden stopped a proposed tariff on spices. He had discovered, he said, that the gentlemen who imported spices had already on hand in warehouses a great quantity held for the higher prices which the duty would cause, and that full preparations had been made to keep up this supply by smuggling from Canada—an easy thing to do, since anybody could fill his pockets with nutmegs and walk in unnoticed. The cost of guarding the border became enormous, three times the ordinary number of revenue cutters were on the Lakes, and a cordon of officers extended from Maine to the Pacific coast. Besides, the management of the custom houses throughout the war was notoriously bad, the service being sprinkled with the incompetent and dishonest. In New York alone it was estimated that the government lost from 12 to 25 millions annually through fraud—then as now false invoices being the favorite method of cheating.

But the adherents of free trade and direct taxation could not boast that their system gave no opportunity for like abuses. The men who fought for higher duties fought against excise. They made false returns of income and property in the same way that importers made false invoices. If importers brought in great quantities of unprotected goods and then organized a campaign for protection, manufacturers in anticipation of taxes piled up huge stocks; 40 millions of gallons of distilled spirits and nearly 80 millions of cigars were made and stored in anticipation of the tax of 1864. When it was seen that matches were to be taxed, stocks were so piled up that the first year the government collected only a small proportion of its estimate. After the stock was exhausted the return from the tax on matches increased 216 per cent in five months; then the manufacturers devised a new trick; they put 100 instead of 50 matches in a box. The law required only one stamp on a box—thus the tax was cut in two. Factories were transported across the Canadian border; and as the reciprocity treaty let matches in free, it began to look before the close of the war as if the match tax would be null.

On the whole, it is probable that the collection of the direct tax was accompanied by less fraud than the collection of the customs, but the service made up in inefficiency what it may have lacked in dishonesty. The taxed were on the alert to escape, and the collectors were too inexperienced to circumvent them.

There certainly never has been in this country so admirable an opportunity to compare these two systems of raising revenue as we had at this period. The amount each yielded, the expense and difficulty of collection, the effect on the loyalty of the people and the opportunity for greed and dishonesty—all can be placed in parallel columns for comparison. If anything is proven by the comparison it is that no system of organization and administration does away with human selfishness; that whatever the system, the men who have it in their hearts to cheat their fellows, are going to find a way. Regeneration lies deeper than system: it lies in the nature of the men who use the system.