"Not less closely related to our people's prosperity and well-being is the removal of restrictions upon the importation of the raw materials necessary to our manufactures. The world should be open to our national ingenuity and enterprise. This cannot be while federal legislation, through the imposition of high tariffs, forbids to American manufactures as cheap materials as those used by their competitors."
In view of this message, it was manifest that the tariff would be the chief subject of legislation during the session. It was understood that a bill had been prepared by the committee of ways and means, which had been submitted to the President and Secretary of the Treasury and approved by them. It was reported to the House of Representatives, December 19, 1893. On the 8th of January, 1894, Mr. Wilson, chairman of the committee, made an elaborate speech in its support. The debate continued until the 1st of February, when, with some amendments, it passed the House. In the Senate, on the next day, it was referred to the committee on finance. On the 20th of March it was reported to the Senate, with amendments, by Mr. Voorhees. Mr. Morrill said:
"I desire to say that so far as the Republican members of the committee on finance are concerned they did not object to the reporting of the bill, while they are opposed not only to the proposed income tax, but to the many changes of specifics to ad valorems, and to the great bulk of the provisions of the bill."
On the 2nd of April Voorhees made a carefully prepared speech in support of the bill. The debate continued, occupying much the larger part of the time until the 3rd day of July, when the bill passed with radical amendments, which changed it in principle and details. Two conferences of the two Houses were held on amendments disagreed to, but failed to agree, and it appeared, after the long struggle, that he bill would be defeated, when, on the 13th of August, upon motion of Mr. Catchings, the House agreed to the Senate amendments in gross and thus the bill passed Congress. The President refused to approve it and it became a law after ten days without his approval.
This skeleton history of what is now known as the Wilson tariff partly discloses its imperfections. Framed in the House as a tariff for revenue only, and radically changed in the Senate to a tariff with protection to special industries, it was not satisfactory to either House, to the President or to the people. So far as it copied the schedules and the legislative provisions of the McKinley law, it met with approval. Its new features were incongruous, were decidedly sectional, and many of its provisions were inconsistent with each other.
The vital defect of this bill is that it does not provide sufficient revenue to carry on the government. This is the primary and almost the only cause of the financial difficulties of the present administration. The election of Mr. Cleveland in 1892, upon the platform framed by him, naturally created distrust as to the ability of the government to maintain the parity of the different forms of money in circulation. Added to this, the broad declaration of the purpose to reduce taxation led to the reduction of importations and the diminution of the revenue from the McKinley tariff. Importers and dealers naturally reduced their imports in view of the expectation that duties would be reduced. By the 1st of July, 1893, when the Wilson bill was in embryo, the revenues had been so diminished as to yield a surplus of only $2,341,074 during the previous year. It was apparent, when Congress met in August, that the administration, having a majority in each House of Congress, was determined to reduce duties, and yet it made no effort to reduce expenditures. Soon after there was a large deficiency in the revenue, and the Secretary of the Treasury was compelled either to refuse to pay appropriations made by law in excess of receipts or to borrow money to meet the deficiencies.
In my judgment the better way for him would have been not to pay appropriations not needed to meet specific contracts, for an appropriation of money by Congress is not mandatory, but is permissive, an authority but not a command to pay, nor does an appropriation in itself authorize the borrowing of money. When this authority is required Congress must grant it, and, upon its failure to do so, all the Secretary of the Treasury should do is to pay such appropriations as the revenues collected by the government will justify. It is for Congress to provide such sums, by taxation or loans, as are necessary to meet all appropriations made in excess of revenue. If it refuses or neglects to do this, the responsibility is on it, not on the secretary. All he can do is choose what appropriations he will pay. This is a dangerous and delicate power, but it has frequently been employed and has never been abused. His failure to exercise this discretion was a grave mistake.
As revenues diminished deficiencies increased. A doubt arose whether, under the then existing conditions, the government would be able to pay gold coin for United States notes and treasury notes. These were supported by a reserve of $100,000,000 in gold coin and bullion, but this reserve fund was not segregated from the general balance in the treasury, as it ought to have been, but was liable to be drawn upon for all appropriations made by Congress. There was not then, and there is not now, any specific authority invested in the Secretary of the Treasury to sell bonds or to borrow money to meet current deficiencies, and he felt called upon to pay these out of the general fund, embracing that created for the redemption of United States notes under the act of 1875. The result was to create an alarm that the government could not or would not pay such notes and thus maintain the gold standard. The timid, and those whose patriotism is in their purse, were making inroads on the gold reserve, which fell below $100,000,000.
By the resumption act of 1875 the Secretary of the Treasury was authorized, to enable him to pay United States notes on demand, to sell either of three classes of bonds bearing respectively five, four and a half and four per cent. interest, but the question arose, in 1894, whether he could sell these bonds to meet current expenditures. All of them were worth a premium in the market. Bonds bearing three per cent. running a short period could then have been sold at par. In common with many others I foresaw, in February, 1893, that the tariff policy of the then incoming administration would reduce our revenue below our expenditures, and sought to have Congress authorize the sale of bonds bearing three per cent. interest instead of those at a higher rate already authorized. I saw plainly that the incoming administration would enter on precisely the same course as that adopted by Buchanan, of providing insufficient revenue for the support of the government, resulting in the gradual increase of the public debt and the disturbance of our financial system. During each year of Buchanan's administration the public debt increased, as it has been steadily increasing during Cleveland's administration, and great embarrassment grows out of this fact. My friendly suggestion was defeated and the result has been the sale of four per cent. bonds at a sacrifice.
The President recommended the removal of restrictions upon the importation of the raw materials necessary to our manufactures. The tariff bill, as it passed, imposed duties on nearly all raw materials except wool. This important product of the farmer was made duty free. I made every effort to prevent this injustice. Free wool was the culminating atrocity of the tariff law. By it a revenue of over eight millions a year was surrendered for the benefit of woolen manufacturers. I appealed to the Senate to give some protection to this great industry of our country. It was generally classed as the fifth of the industries of the United States, including the manufacture of woolens, and I have no doubt it fully came up to that grade. Over a million farmers were engaged in the growth of wool. It involved an annual product estimated at $125,000,000 under the former prices, but probably under the prices after the passage of the Wilson bill it was reduced to about eighty or ninety million dollars. It was, therefore, a great industry. And yet it was left solitary and alone without the slightest protection given to it directly or indirectly. The manufacture of woolen goods was amply protected. Amendments were proposed and adopted without dissent, adding largely to the protection at first proposed on manufactures of wool.