American politics (non-partisan) from the beginning to date

by Thomas V. Cooper; Hector T. Fenton

A revenue tariff is such a one as will produce the largest revenue from the lowest duty. The lowest rate of duty will encourage importations, diminish home production, and inevitably increase the revenue. It will, of necessity, check competition at home, and send our merchants abroad to buy; it affords no protection, not even incidental, for the very instant that you discover that such duty favors the home producer, that instant you discover that importations and revenue are checked, and that our own producers are able to control the home market or a part of it. Then at once the advocate of a revenue tariff reduces the duty, brings it down to the true revenue standard, for it must not be overlooked, according to the free trade maxim, “where protection begins, revenue ends,” and the question of revenue is always controlling. A revenue tariff is inconsistent with protection; it is intended for a wholly different purpose. It loses its force and character as a genuine revenue tariff when it becomes to any extent protective. It has but one object. It can have but one effect—that of opening up our markets to the foreign producer—impoverishing the home producer and enriching his foreign rival.

England is more nearly a free trade country than any other, and her system of taxation furnishes an unmistakable example of the practice and principle of a revenue tariff. Her import duties are imposed almost exclusively upon articles which cannot be produced by her own people upon her own soil. Tobacco, snuff, cigars, chicory, cocoa, currants, figs, raisins, rum, brandy, wine, tea, and coffee—these are the articles from which her customs revenue is derived—articles, in the main, not produced in England, but which must be supplied from abroad; while, practically, all competing products of foreign make and production are admitted through her custom-house free of duty.

A brief statement of the dutiable imports of Great Britain will not be without interest.

It will be observed that her duties are more largely imposed upon the peculiar American products than upon any others. The duty upon tobacco is, according to moisture, from 84 to 92 cents per pound for the raw or unmanufactured article; and, if manufactured, it pays a duty of from $1.04 to $1.16 per pound. The manufactured article is made dutiable at 20 cents a pound greater than the raw product, which, with all of England’s boasted free trade, is intended as a protection to those engaged in the manipulation of tobacco. It is almost prohibitive to Americans who would export manufactured tobacco. The ad valorem equivalent of the duty on tobacco is nearly 2000 per cent. Cigars pay a duty of $1.32 per pound, and from tobacco and snuff over $43,000,000 of duties are collected annually. The duty on tea is 12 cents a pound. How would the Americans enjoy paying such a duty upon this article of everyday use? The duty collected from this source is over $18,000,000 annually. Coffee pays a duty of 3 cents a pound; but, if ground, prepared, or in any way manufactured, it must pay a duty of 4 cents a pound—another example of where England protects those engaged in manufacture. Cocoa pays a duty of 2 cents a pound, but if it is in any form subjected to manufacture it pays 4 cents a pound, the duty on the manufactured article being double that on the raw material.

Besides the articles named, there are about ninety or a hundred others, chiefly of American production, patented and other medicines, which are dutiable at $3.36 per gallon. More than $96,000,000, or nearly one-fourth of the British revenues, are raided from customs duties.

You will note the character of taxation to which the revenue reformer invites the people of the United States. Both the breakfast table and the sick room are made to bear a large part of the burden under the British system of taxation. It is not without significance that the nearer we approach this system the more generous the bestowal of British commendation. Every step we take in that direction, every enlargement of the free list of competing foreign products, every reduction of duty upon such products is hailed as a vindication of Cobden and a beneficence to British interests. It is in vain for the British statesman to assure us that their system is best for us. We are not accustomed to look to our commercial rivals for disinterested favors. “It is folly,” said Washington in his farewell address, “for one nation to look for disinterested favors from another; that it must pay, with a portion of its independence, for whatever it may accept under that character. There can be no greater error than to expect or calculate upon real favors from nation to nation. It is an illusion which experience must cure, and which a just pride ought to discard.” We are not insensible to the good opinion of mankind and of the English-speaking race, but when it is to be had only at the expense of our industrial independence, at the sacrifice of the dignity and independence of labor and the destruction of national prosperity, we must regard it with supreme suspicion, and turn from it as the eulogy of selfish interest and the commendation of interested greed.

The other theory of taxation, and the one which I believe to be essential to American development and national prosperity, is based upon an exactly opposite principle. It permits all articles of foreign production, whether of the field, the factory, or the mine, except luxuries only, which we cannot produce in the United States, to enter our ports free and unburdened by custom-house exactions. The duty is to be imposed upon the foreign competing product; that is, the product which, if brought into this country, would contend with the products of our own soil, our own labor, and our own factories, in our own markets. Under this system, if the foreign producer would enter our market with a competing product, he must contribute something for the privilege which he is to enjoy, and this something, in the form of duties, goes into the Treasury, furnishing revenue to the Government; and these duties operate to protect the joint product of labor and capital against a like foreign product.

This mode of levying duties answers a double purpose. It produces revenue to the Government, and at the same time fosters and encourages the occupations of our own people, promotes industrial development, opens up new mines, builds new factories, and sustains those already established, which in turn furnish employment to labor at fair and remunerative wages. A revenue tariff accomplishes but a single purpose—that of raising revenue; it has no other mission; while a protective tariff accomplishes this and more—it brings revenue to the American treasury and discriminates in favor of the American citizen. A revenue tariff invites the product of foreign labor and foreign capital to occupy our markets free and unrestrained in competition with the product of our own labor and capital. A protective tariff invites the product of foreign labor and foreign capital which are necessary to the wants of our people (which we cannot produce in the United States) to occupy our markets and go untaxed to the people, but insists that every foreign product which is produced at home, or can be, successfully, in quantities capable of supplying the domestic consumption, shall, whenever necessary to maintain suitable rewards to our labor, bear a duty which shall not be so high as to prohibit importations, but at such a rate as will produce the necessary revenues and, at the same time, not destroy but encourage American production. It says to the world of producers: “If you want to share with the citizens of the United States their home market, you must pay for the privilege of doing it. Your product shall not enter into free and unrestrained competition with the product of our own people, but shall be discriminated against to such an extent as to fully protect and defend our own.”

It is alleged as a serious objection to protective duties that the tax, whatever it may be, increases the cost of the foreign as well as the domestic product to the extent of such tax or duty, and that it is wholly paid by the consumer. This objection would be worthy of serious consideration if it were true; but, as has been demonstrated over and over again, it is without foundation in fact. Wherever the foreign product has successful competition at home, the duty is rarely paid by the consumer. It is paid from the profits of the manufacturer, or divided between him and the merchant or the importer, and diminishes their profit to that extent. Duty or no duty, without home competition the consumer would fare worse than he fares now. There is not in the long line of staple products consumed by the people a single one which has not been cheapened by competition at home, made possible by protective duties. There is not an article that enters into the everyday uses of the family, which is produced in the United States, that has not been made cheaper and more accessible as the result of home production and development, which was to be secured only by the sturdy maintenance of the protective system. While this is true of protective tariffs, exactly the opposite is true of revenue tariffs. They are always paid by the consumer. When a duty is put on a foreign product the like of which is not produced at home, and which enters our markets free from home competition, the cost to the American consumer is exactly the foreign cost with the duty added, whatever that may be, much or little. Supposing, for example, there was a tax upon tea and coffee. There being no production of these articles in the United States, and therefore no competition here, the cost to the American public would be the cost abroad and the duty added. We imported last year 526,489,000 pounds of coffee. A duty of 10 cents a pound would have produced to the Government over $52,000,000, which would have been paid by the 12,000,000 families of this country, consumers of this article; 87,584,000 pounds of tea were imported last year; at 10 cents a pound, $8,000,000 and upward would have gone into the Treasury, every dollar of which would have been paid by our own people. Take sugar as another example. We produced last year in this country about eight per cent. of what our people consumed. The duty collected from imported sugar amounted to $58,000,000. The domestic production was so inconsiderable as compared with the domestic consumption as to have had little, if any, appreciable effect upon the price to the consumer, and therefore this sum was almost wholly paid by our own citizens, and the cost of sugar to the American consumer, because of the inadequate home supply, is practically the foreign price, duty added, the domestic production being so small contrasted with the domestic demand that it in no wise controlled or influenced the price.

The revenue tariff periods of our history have been periods of greatest financial revulsions and industrial decadence, want, and poverty among the people, private enterprises checked and public works retarded. From 1833 to 1842, under the low tariff legislation then prevailing, business was at a standstill, and our merchants and traders were bankrupted; our industries were paralyzed, our labor remained idle, and our capital was unemployed. Foreign products crowded our markets, destroyed domestic competition, and, as invariably follows, the prices of commodities to consumers were appreciably raised. It is an instructive fact that every panic this country has ever experienced has been preceded by enormous importations. From 1846 to 1861 a similar situation was presented under the low tariff of that period.