When the administration of Washington was organized in 1789, the government which he represented did not command a single dollar of revenue. They inherited a mountain of debt from the Revolutionary struggle, they had no credit, and the only representative of value which they controlled was the vast body of public land in the North- west Territory. But this was unavailable as a resource for present needs, and called for expenditure in the extensive surveys which were a prerequisite to sale and settlement. In addition therefore to every other form of poverty, the new government was burdened in the manner so expressively described as land poor, which implies the ownership of a large extent of real estate constantly calling for heavy outlay, and yielding no revenue. The Federal Government had one crying need, one imperative demand,—money!
An immediate system of taxation was therefore required, and the newly organized Congress lost no time in proceeding to the consideration of ways and means. As soon as a quorum of each branch of Congress was found to be present, the House gave its attention to the pressing demand for money. They did not even wait for the inauguration of President Washington, but began nearly a month before that important event to prepare a revenue bill which might, at the earliest moment, be ready for the Executive approval. Duties on imports obviously afforded the readiest resource, and Congress devoted itself with assiduous industry to the consideration of that form of revenue. With the exception of an essential law directing the form of oath to be taken by the Federal officers, the tariff Act was the first passed by the new government. It was enacted indeed two months in advance of the law creating a Treasury Department, and providing for a Secretary thereof. The need of money was indeed so urgent that provision was made for raising it by duties on imports before the appointment of a single officer of the Cabinet was authorized. Even a Secretary of State, whose first duty it was to announce the organization of the government to foreign nations, was not nominated for a full month after the Act imposing duties had been passed.
THE TARIFF ENACTED BY FIRST CONGRESS.
All the issues involved in the new Act were elaborately and intelligently debated. The first Congress contained a large proportion of the men who had just before been engaged in framing the Federal Constitution, and who were therefore fresh from the councils which had carefully considered and accurately measured the force of every provision of that great charter of government. It is therefore a fact of lasting importance that the first tariff law enacted under the Federal Government set forth its object in the most succinct and explicit language. It opened, after the excellent fashion of that day, with a stately preamble beginning with the emphatic "whereas," and declaring that "it is necessary for the support of government, for the discharge of the debts of the United States, and for the encouragement and protection of manufactures, that duties be laid on imported goods, wares, and merchandise." Among the men who agreed to that declaration were some of the most eminent in our history. James Madison, then young enough to add junior to his name, was the most conspicuous; and associated with him were Richard Henry Lee, Theodorick Bland, Charles Carroll of Carrollton, Rufus King, George Clymer, Oliver Ellsworth, Elias Boudinot, Fisher Ames, Elbridge Gerry, Roger Sherman, Jonathan Trumbull, Lambert Cadwalader, Thomas Fitzsimons, the two Muhlenbergs, Thomas Tudor Tucker, Hugh Williamson, Abraham Baldwin, Jeremiah Van Rensselaer, and many other leading men, both from the North and the South.
It is a circumstance of curious interest that nearly, if not quite, all the arguments used by the supporters and opponents of a protective system were presented at that time and with a directness and ability which have not been surpassed in any subsequent discussion. The "ad valorem" system of levying duties was maintained against "specific" rates in almost the same language employed in the discussions of recent years. The "infant manufactures," the need of the "fostering care of the government" for the protection of "home industry," the advantages derived from "diversified pursuits," the competition of "cheap labor in Europe," were all rehearsed with a familiarity and ease which implied their previous and constant use in the legislative halls of the different States before the power to levy imposts was remitted to the jurisdiction of Congress. A picture of the industrial condition of the country at that day can be inferred from the tariff bill first passed; and the manufactures that were deemed worthy of encouragement are clearly outlined in the debate. Mr. Clymer of Pennsylvania asked for a protective duty on steel, stating that a furnace in Philadelphia "had produced three hundred tons in two years, and with a little encouragement would supply enough for the consumption of the whole Union." The Pennsylvania members at the same time strenuously opposed a duty on coal which they wished to import as cheaply as possible to aid in the development of their iron ores. The manufacture of glass had been started in Maryland, and the members from that State secured a duty on the foreign article after considerable discussion, and with the significant reservation, in deference to popular habits, that "black quart-bottles" should be admitted free.
Mr. Madison opposed a tax on cordage, and "questioned the propriety of raising the price of any article that entered materially into the structure of vessels," making in effect the same argument on that subject which has been repeated without improvement so frequently in later years. Indigo and tobacco, two special products of the South, were protected by prohibitory duties, while the raising of cotton was encouraged by a duty of three cents per pound on the imported article. Mr. Burke of South Carolina said the culture of cotton was contemplated on a large scale in the South, "if good seed could be procured." The manufacture of iron, wool, leather, paper, already in some degree developed, was stimulated by the bill. The fisheries were aided by a bounty on every barrel caught; and the navigation interest received a remarkable encouragement by providing that "a discount of ten per cent on all duties imposed by this Act shall be allowed on such goods, wares, and merchandise as shall be imported in vessels built in the United States, and wholly the property of a citizen or citizens thereof." The bill throughout was an American measure, designed to promote American interests; and as a first step in a wide field of legislation, it was characterized in an eminent degree by wisdom, by moderation, and by a keen insight into the immediate and the distant future of the country. The ability which framed the Constitution was not greater than that displayed by the first generation of American statesmen who were called to legislate under its generous provisions and its wise restrictions.
These great statesmen proceeded in the light of facts which taught them that, though politically separated from the mother country, we were still in many ways dependent upon her, in as large a degree as when we were Colonies, subject to her will and governed for her advantage. The younger Pitt boasted that he had conquered the Colonies as commercial dependencies, contributing more absolutely and in larger degree to England's prosperity than before the political connection was severed. He treated the States, after the close of the peace of 1783, with a haughty assumption of superiority, if not indeed with contempt—not even condescending to accredit a diplomatic representative to the country, though John Adams was in London as Minister Plenipotentiary and Envoy Extraordinary from the United States. English laws of protection under the Pitt administration were steadily framed against the development of manufactures and navigation in America, and the tendency when the Federal Constitution was adopted had been, in the planting States especially, towards a species of commercial dependence which was enabling England to absorb our trade.
TARIFF ACT APPROVED BY WASHINGTON.
The first tariff Act was therefore in a certain sense a second Declaration of Independence; and by a coincidence which could not have been more striking or more significant, it was approved by President Washington on the fourth day of July, 1789. Slow as were the modes of communicating intelligence in those days, this Act of Congress did, in a suggestive way, arouse the attention of both continents. The words of the preamble were ominous. The duties levied were exceedingly moderate, scarcely any of them above fifteen per cent, the majority not higher than ten. But the beginning was made; and the English manufacturers and carriers saw that the power to levy ten per cent. could at any time levy a hundred per cent. if the interest of the new government should demand it. The separate States had indeed possessed the power to levy imposts, but they had never exercised it in any comprehensive manner, and had usually adapted the rate of duty to English trade rather than to the protection of manufacturing interests at home. The action of the Federal Government was a new departure, of portentous magnitude, and was so recognized at home and abroad.
It was not the percentage which aroused and disturbed England. It was the power to levy the duty at all. In his famous speech on American taxation in the House of Commons fifteen years before, Mr. Burke asserted that it was "not the weight of the duty, but the weight of the preamble, which the Americans were unable and unwilling to bear." The tax actually imposed was not oppressive, but the preamble implied the power to levy upon the Colonies whatever tax the British Government might deem expedient, and this led to resistance and to revolution. The force of the preamble was now turned against Great Britain. She saw that the extent to which the principle of protective duties might be carried was entirely a matter of discretion with the young Republic whose people had lately been her subjects and might now become her rivals. The principle of protecting the manufactures and encouraging the navigation of America had been distinctly proclaimed in the first law enacted by the new government, and was thus made in a suggestive and emphatic sense the very corner-stone of the republican edifice which the patriots of the Revolution were aiming to construct.