the payne aldrich tariff 1

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Loyola University Chicago

Loyola eCommons

Master's eses

1-1-1946

e Payne-Aldrich TarifEdna Mary GrinLoyola University Chicago

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Copyright 1946 Edna Mary Grin

Recommended CitationGrin, Edna Mary, "e Payne-Aldrich Tari" (1946).Master's Teses. Paper 481.hp://ecommons.luc.edu/luc_theses/481
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7 t 1l' l

THE PAYNE-ALDRICH TARIFF

byEdna Mary Griffin

A Thesis Submitted in Part ia l F u ~ f i l l m e n t of the Requirements for the Degree of

Master of Artsin

Loyola UniversityJune1946


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VITA

Edna Mary Griffin was born in Chicago, I l l inois ,September 5, 1921.She was graduated from St. Xavier Academy, Chicago,I l l inois , June, 1939. She received a Bachelor of Educa-tion degree with a major in History, and a teacher'scer t i f icate from Chicago Teachers College, Chicago,

I l l inois , June, 1943.From 1943 to 1946 the writer has been engaged inteaching for the Board of Education, Chicago, I l l inois .During these years, she has devoted her time to graduatestudy in the field of History.


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TABLE OF CONTENTS

CHAPTER PAGEI. IN TRODUCT ION . . .. . .. . .. . . . .. . .. . .. . .. . .. . .. . .. . .. . . 1Tariffs of the United States--Special commission of 1868--Tariff reductions of 1872--Revisions of 1875 to 1880--Democraticplatform of 1880--Defense of Republicanprotection policy--Arguments against i t - Revision of 1882--Commission of 1882-Suggests lowering the tar iff--Effects of

the tar i f f of 1883--Morrison bi l l of 1884--Second bi l l rejected also--Cleveland'star i f f policies--Tariff bi l l of 1888--Not acceptable to Congress--Democratsdenounce protective policy--Republicanrevision in 1890--Harrison on the Tariff--McKinley bill--Objects of the bi l l - - I tis passed af ter delay--Effects of theta r i f f of 1890--Wilson b i l l of 1893-Senate amendments added by Gorman--Effectsof the Law--Fails to provide revenue-Both party policies on tar i f f given atrial--Dingley bi l l in committee--MoreSenate amendments--Duties of the bi l l - Effects of the law--McKinley speech onTariff--Tariff plank of 1904--Roosevelton the tariff--New policy of Roosevelt-Attacks the corporations and t rusts .

I I . THE NEED FOR A NEW TARIFF 33Dingley Tariff results--New conditione--Roosevelt desires ta r i f f revision--Thecountry desires lower duties--Taft ontariff--Conditions changed--Publicpressure--Increases in products--Section-a l sentiment--Discontent growing--Causesfor discontent--Businessmen pleaded forrevision--Need more acute in 1907-8--Thechanged ta r i f f conditione of foreigncountries--Sherman on the tariff--Republi-can version of the tariff--This was wel-comed as a solution--House Ofinione--Taft 's address of 1909--Taft s administrat ion--Taft convenes the special sessionof conp;ress.


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I I I . THE PAYNE ALDRICH BILL . . 49Sereno E. Payne--Ways and Means Com-mittee--Hearings before the Committee- -Bi l l reported to the House--Payne'sdefense of the bill--Maximum andminimum provision--McCall on the bi l l--Bi l l i t se l f - -Bi l l in the Senate--Nelson W. Aldrich--Bill in the Commit-tee or Finance--Bill reported to theSenate--Aldrich t r ies to railroad i t--Insurgent reaction felt--Generalrevision downward--Senate bi l l sched-ules--Taft and the bi l l - -Taf t andAldrich--Tabl.e of schedules comparingthe Dingley and Payne bills--Incometax desired--Corporation tax--Maximumand minimum provisions in the f inalbi l l - -Bi l l passes Congress--Measureenacted according to public sentiment.

IV. REACTIONS TO THE TARIFF . . 67No vi ta l change--Unsatisfactory to thecountry--Republican platform pledge-Disappointments over outcome or ta r i f f--Editor 's reaction--Taft signed bi l lfor the sake of the good features--Taft t r ies to make the people under-stand--Winona Speech--Taft's reasonsfor signing--People discontented withi t--Reactions in periodical l i terature--Corporation tax comments--Elmer More'sreactions--Resistance by Insurgents toLaw--Ida M. Tarbell on the tariff--Re-deeming features of the b i l l .

V. INSURGENT OPPOSITION . . 79Insurgent States--House insurgency--Senate insurgency--Progressive men andtheir opposition--Insurgents divide thebi l l among themselves for debate--Taftrequests Insurgent aid--Tariff reform afailure--Aldrich fights for bil l --Re-sul ts of t a r i f f ' s failure--SUmmary,Taft signed bill--Reasons for bill--Congress revises tar iff--Effects of bi l l - Protective t a r i f f .CRITICAL NOTES ON AUTHORITIES 91


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CHAPTER IINTRODUCTION

I t i s practically an axiom now that when the United Statesentered upon nationhood unity was far from complete. The bondholding the states together was the Constitution. But some in-terpreted this s tr ict ly , maintaining the doctrines of states 'rights even to the extent of nullif ication of federal laws andeven to the r ight to secede from the union. Others favored al iberal interpretation as to the federal powers granted by theconsti tution. The question of the interpretation of the constitution and definition of the rights of States was constantlydebated and many bi t ter debates were ultimately sett led by com-promise.

The mere introduction of any bi l l into the halls of Con-gress unt i l 1860 called for a debate upon i t s consti tutionali tyand thereupon b r o u g ~ t forth speeches for the federal authorityand against i t . The extension of slavery i s a well knownsource of debate. So too was the question of the tar i f f ,revenues, and taxation. The slavery and ta r i f f issues indi-cated the great division of the states into North and South.In the matter of ta r i f f the South, being chiefly agricultural,generally opposed protective measures and fought high ta r i f fs ,

1


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2while the North, having a variety of manufacturing and i n d u s t r ~a l pursuits , wished American industry protected against theproducts of cheap foreign labor. The Civil War settled thequestions of slavery and secession. I t settled also the question of the r ight of the federal government to establishtar i f fs . Nevertheless, unt i l 1868, the ta r i f f question hasplayed an important part in the national pol i t ica l scene.

The Republicans, in the campaign of 1868, committed them-selves to the reduction of taxation, a policy which was alreadyunder way. Just before the end of the Civil War, a specialcommission had been authorized by Congress to study how newrevenue might be obtained, but the war was over by the time theappointments were made. The commission, therefore, turned i t sattention to the problem of how the tax burden might be r e d u c e ~and so impressed the Secretary of the Treasury with i t s di l i -gence, that when the commission's term had expired, he kept oni t s able chief, David A. Wells, as 11 special commissioner of therevenue 111 Both the .commission and the special comm1 ssioneradvised the gradual reduction of ta r i f fs and excises, and onthe subject of excises, Congress responded readily. Many ofthe war taxes were s t i l l in force when Ulysses S. Grant becamePresident. In July, 1870, an act was passed which eliminated1John D. Hicks, The American Nation, Houghton-Mifflin, New

York, 1941, 46. Hereafter this work will be cited as Hicks,American Nation.


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3most of the nuisance taxes, restricted the internal revenuesto a small number of art ic les such as l iquor and tobacco. I talso reduced the income tax, which two years la ter , was abol-ished.

For a long time efforts to lower the t a r i f f met with successful opposition from those who profited from the high rates ,and during Johnson's term Congress was actually persuaded toraise the duties on raw wool, woolen goode, copper, and copperore. 2 Not unt i l 1872 were the f i rs t real reductions made. Atthat time many non-protective duties, such as those on tea,coffee, spices, and various raw materials, were lowered or abol-iehed, and a 10% cut was reluctantly conceded for a few carefully chosen duties on manufactured ar t icles .

Many changes were made in the ta r i f f laws from 1875 to1880. On February 8, 1875 the rates on some duties increased,and others were reduced.3 On March 3, 1875, the rates on sugarwere increased, the 10% reduction of the Act of 1872 was re-peaied, and the internal revenue taxes on tobacco and liquorwere repealed.4 Another attempt on the part of the Democratic2Ibid.3George B. Curtiss, The Industrial Development of Nations, Volume III , Curtiss, Binghamton, New York, 1912, 31. Hereafterthis work will be cited as Curtiss, Industrial Development.4Ibid. Also David s. Muzzey, The American Adventure, Volume II ,Harpers, New York, 1927, 71. Hereafter this work will becited as Muzzey, American Adventure.


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4

party to overthrow the policy of protection came in 1876. Thiswas a resolution introduced by William Morrison of I l l inois ,Chairman of the Democratic Ways and Means Committee, which provided for a horizontal reduction in duties.5 The attack on ourindustries was renewed in the session of 1878, by a bi l l introduced by Fernando Woods of New York City, who especially represented the importing in terests .6 The bi l l was an enteringwedge for the complete overthrow of protection then contemplated by the Democratic party. On December 1, 1877, Roger Q.11.Ulls of Texas offered a resolution 'tto so revise the ta r i f f asto make it purely and solely a ta r i f f for revenue,u and not forprotection.'7

The above facts are adverse to the statement made by JohnBassett who said: "There was no disposition to meddle with thet a r i f f during the four lean years that followed 18'(5. 118 Despite5curtiss, Industrial Development, 35. Also John s. Bassett, !Short History of the United States 1492-1920, Macmillan, NewYork, 1924, '714. Hereafter this work will be cited as Bassett,United States 1492-1920. Also Edward Stanwood, AmericanTariff Controversies in the Nineteenth Century, Volume I I ,Houghton-Mifflin, New York, 1904, 195. Hereafter this workwill be cited as Stanwood, American Tariff Controversies.

6curt1ss, Industrial Development, 35 Also Stanwood, AmericanTariff Controversies, 197.' !curtiss, Industrial Development, 35. Also Stanwood, AmericanTariff Controversies, 1978united states 1492-1920, 714.


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5what he said, it was said by Chester Wright that: "From 1875on, no change of importance was made."9 These statements arepart ia l ly true but i t s t iLl remained that there were attemptsto change the t a r i f f despite the depression of the seventies.lOThese resolutions did not pass.

The Democratic platform in 1880, written by Colonel Henry1 ullWatterson, called for a 11 t a r i f f for revenue on y. Mr. Gar-

f ield defended the policy of protection in numerous speeches,as did Mr. Blaine who was equally active in i t s defense. At notime since the Civil War has the Republican press of the coun-try exerted a more potent influence in awakening and molding

12public sentiment than it did in the campaign of 1880. Inevery ci ty and in nearly every vil lage throughout the northernstates there had been established, since the organization ofthe Republican party in 1856, newspapers owned and edited byable, learned, and patr iot ic men, who on every occasion whenthe vi ta l interests of the nation were assailed, in thei r dailyand weekly edi tor ia ls , supported and defended the great principles of the Republican party; exposed the errors and vicious9Economic History of the United States, McGraw-Hill, New York,1941, 690.

10curt iss , Industr ial Development, 35.l l Ibid. , Loc. c i t . Also Hicks, American Nation, 163.l2curt iss , Industr ia l Development, 42.


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6purposes or i t s adversaries, and preserved among the people anenlightened public sentiment and a clear conception of pol i t icaprinciple and issues. 13 In those days the people voted forprinciples rather than men. The triumph of the Republicanparty a t this time had so strengthened the sentiment of thepublic in favor of the protection policy that during the succeeding twelve years, capi tal i s ts with renewed vigor and confidence went about the work of developing and extending thebusiness and industr ia l enterprises of the country.

The chief arguments against the protective policy a t thistime were: 1) That under the exist ing t a r i f f laws a large surplus drawn from the people was being accumulated in the t reas-ury, which, by a reduction of duties, would be released and em-ployed in the promotion of business enterprises. 2) That thecountry was suffering from the overproductive capacity of theAmerican people which was so largely in excess of nationalpowers of consumption that a foreign market or outlet was necessary in order that labor might be more ful ly employed and thatthe industr ia l development of the United States could best bepromoted by an exchange of our domestic productions for themanufactures of foreign countries. 14 ! ~ r . Curtiss fe l t that "thevils of a large surplus and the benefits to be derived from an13 .Ibid. , loc. c i t .14 4Ibid. , 3


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7extensive foreign trade were made conspicuous topics in thediscussion of the t a r i f f question by the free traders, when infact their real purpose was not so much to secure an increaseof the exports of the United States as to increase the importat ion of foreign-made art ic les .nl5 That there was room for arevision of the t a r i f f a t this time on sound protection l inesfor the purpose of reducing revenues, correcting inequal i t ies ,and perfecting some of the protect ionist features of the exist ing laws was recognized by the Republican party.

John Kasson of, Iowa on January 9, 1882, introduced a b i l lto appoint a commission to investigate the t a r i f f and internalrevenue. After being referred to the Committee on Ways andMeans, i t did not come up for discussion unt i l March. OnApril 6, William McKinley of Ohio spoke in favor of the com-mission, declaring i t to be sound and good, but advised againstany general revision of the t a r i f f . A revision was thereforeundertaken but it was not to be accomplished unt i l the mostthorough investigation of existing conditions could be had. OnMay 15, 1882, Congress passed an act directing President Arthurto appoint nine commissioners from civ i l l i fe to

take into consideration and to thoroughlyinvestigate the various questions relat ing tothe agricul tural , commercial, mercantile, manu-facturing, mining, and industr ial interests ofthe United States, so fa r as the same may be


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necessary to the establishment of a judicioust a r i f f , or a revision of the existing t a r i f f ,upon a scale of just ice to a l l interests , andfor the purpose of ful ly explaining the matters which may come before i t . Said commis-sion, in the prosecution of i t s inquiries, i sempowered to vis i t such different portionsand s e c t i o ~ g of the country as i t may deemadvisable.

8

The commission spent the summer traveling through the country and taking testimony from over 600 witnesses, chiefly advocates of the protective system.17 In spite of the fact thati t s chairman, John L. Hayes of Massachusetts, was the secretaryof the National Association of Wool Manufacturers, and that thethree other members (George Oliver of Pennsylvania, Garland ofI l l ino is , and Kenner of Louisiana) were the avowed representat ives of the protected industr ies of i ron, wool, and sugar,thei r report was submitted to Congress in December, 1882. I tjust i f ied the assert ion of the commission that i t had divestedi t se l f of "pol i t ical bias, sectional prejudice, or considerat ions of personal interest .ul8 They surprised Congress and thepublic by recommending a "substantial reduction of the t a r i f fduties demanded not by the best conservative opinion of16 Ibid. , 49. Also Bassett, United States 1492-1920, 715.1 7 r ~ z z e y , American Adventure, 158. Also Curtiss, Industr ialDevelopment, 49.18Muzzey, American Adventure, 158-159.


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9the country." 19 The report suggested a bi l l lowering the tar -i f f by a t leas t 20%; and President Arthurt who urged an e n l a r ~ ment of' the free l i s t and reductions and simplifications in theduties on i ron, s tee l , cotton, wool, sugar, molasses, and s i lk ,would have gladly approved such a b i l l as the commission proposed.20 Bil l s carrying duties higher than those which thecommission proposed were prepared in both Houses; and when neither House would accept the other 's bi l l , a conference commit-tee reported a compromise b i l l which revealed clearly enoughthat neither party in Congress believed in t a r i f f reform.

Thomas B. Reed craf t i ly manipulated the conference committee so that it contained a majority of protect ionis ts . Thebi l l they presented was s t i l l higher than the others. SenatorsNelson Aldrich and William McKinley were also prominent in connection wlth this bi l l . Senator McKinley refused to vote fori t because the rates were too low. 21 Senator Aldrich, a etaprotect ionis t , took side with the able defenders of the doct r ine in the discussion of this tar i f t .22 He was an activemember of the conference committee. Senator Aldrich defendedl9Ibid. , 159.20Ibid.21Bassett, United States 1492-1920, 715.22Allan Johnson, ed. , Dictionarx of American ~ i o g r a p h y ,

Scribner 's , New York, 1928, 152.


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10the committee's report on the ground "that t h ~ result ing bi l la t leas t did not make any real increase in the t a r i f f and thatsuch changes as were accepted were due to convincing represen-tat ions made to the conference by interested industr ies ." 23The compromise bi l l Just squeezed through the Senate by a voteof 42 to 31, with the help of the protect ionist DemocratSenator McPherson of New Jersey, and the votes of 16 EasternDemocrats in the House. 24 To the Democratic party, the ta r i f fb i l l was unsatisfactory, as i t accomplished nothing for whichthe free traders were contending. The operation of the measureduring the seven years which followed demonstrated that manyduties had been reduced below the protective po1nt. 25 Themistakes made by the Congress in framing the act of March 3,1883, were to be remedied by the enactment of the ~ ! c K i n l e y b i l lof 1890.

The revenue act of 1883 l e f t the t a r i f f almost the same,although it reduced the surplus by removing a number of theinternal revenue taxes; namely, the taxes on bank deposits andcapital , and the stamp duties on bank checks, perfumery, cos-metics, patent medicines, playing cards, and matches.~ a t h a n i e l w. Stephenson, Nelson w. Aldrich, ! Leader inAmerican Poli t ics, Scribner 's , New York, 1930, 50.

24Muzzey, American Adventure, 159.25curt iss , industr ial Development, 52.


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11The Democratic House which assembled in December, 1883,

with the largest majority for ten years, made two fut i le a t-tempts to revise the t a r i f f . William R. Morrison of I l l inois ,Democratic Chairman of the Ways and Means Committee, reported ab i l l on March 11, 1884, which provided for a horizontal reduct ion of 20% on a l l existing duties. 26 I t further provided thatno duty should fa l l below the rate provided by the Morril Actof 1861. I t placed sa l t , lumber, and coal on the free l i s t ,and reduced other ar t ic les twenty percent.27 This would havelowered the surplus about thir ty million dollars . In spite ofthe Democratic majority in the House, the Morrison bi l l wasrejected on May 6, 1885, by a vote of 155 to 159; the DemocratSamuel J . Randall leading the attack against i t . 28 Mr. McKin-ley attacked the bi l l for the lack of care and ski l l in i t spreparation. Senator Nelson Aldrich was a prominent man in thet a r i f f debates that took place for he was a staunch protection-1st and high t a r i f f man. Six days la te r Abram S. Hewitt of NewYork proposed a somewhat more moderate bi l l with reductions,but i t was also rejected even before coming to a vote on i t . 2926Ibid. , 53. Also Muzzey, American Adventure, 159; Bassett,united States 1492-1920, 715.27Ibid. Also Curtiss, Industr ia l Development, 53.28Muzzey, American Adventure, 159.29Ibid. , 160.


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12

The net resul t of a l l the agi ta t ion of traveling commissionsand conference committees anu heated debates in Congress inPresident Arthur 's administration was an act reducing the ra tesabout twenty percent.

The Democratic platform of 1884 merely promised t a r i f frevision in the sp i r i t of fairness and without injury to American industry. The t a r i f f issue during the presidential cam-paign of 1884 was not clearly drawn, for the majority of theDemocrats appeared to favor a low t a r i f f while the great majori ty of the Republicans seemed to prefer a high t a r i f f . GroverCleveland was not elected as a t a r i f f reformer, and in his annual messages or 1885 and 1886, he had l i t t l e to say on th isquestion. In December, 1885, he suggested the adoption of atar i f f for revenue only, and a b i l l to that effect was introduced into the Congress but was rejected. In 1886 PresidentCleveland renewed h ~ s arguments for reduction but Congresspaid no heed. The country must be appealed to so the Presidentdevoted his entire message of 1887 to the t a r i f f question. TheDemocrats had a majority in the House but there was a Repub-l ican majority in the Senate. President Cleveland demanded "at a r i f f for revenue and pointed out most forcibly the dangers ofsurplus financiering."3 He disclaimed the advocacy of freetrade which h is opponents imputed to him, and said, in a phrase30Bassett, United States 1492-1920, '721.


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13that was often repeated: " I t i s a condition that confronts us,not a theory.u3l

Cleveland knew that he could not force the Republicans toaccept a low t a r i f f but he could, he did believe, force theDemocrats to favor a reduction in the ta r i f f . Mr. Roger Q.Mills of Texas, as chairman of the House Ways and Means Committee, promptly reported a bi l l call ing for reductions from anaverage level ot' about 47% to an average level of about 40%.32'I'he b i l l was presented on April 2, 1888, entirely preparedwithout hearings and investigation.33 I t t ransferred nearlya l l raw materials and many partly manufactured ar t ic les to thefree l i s t . The general debate continued in the House fromApril 17 to Hay 19, and the discussion by paragraph lasted fromMay 31 to July 19.34 I t was one of the longest and most notable debates on the t a r i r r which had held the attention of Con-gress since the formation of the government. President Cleve-land watched the bi l l closely as i t went through the House by amajority of 15 (162-147). He was believed to have secured i t s31Bassett , United States 1492-1920, '721.32Ibid. Also Curtiss, Industr ia l Development, 66.33Muzzey, American Adventure, 180. Also Hicks, AmericanNation, 209.34curtiss, Industr ia l Development, 66.


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14passage by threatening to veto bi l l s for public buildings.35In the Senate i t was referred to the Finance Committee where itremained unt i l October 3, when the Committee reported a substitute bi l l , in harmony with the Republican policy.36 I t waspassed by the Senate on January 22, 1889, by a vote of 32 to30. As anticipated, the House refused to accept the Senatebi l l , and the Senate would not accept the Mills Bil l . Althoughthe b i l l did not then become law, the work of the RepublicanSenators in i t s preparation was not wasted, for the i r thoroughinvestigation laid the foundation for perfecting the McKinleybi l l which was adopted the following year.37 The opposition inCongress was due partly to the policies proposed, partly tosectional economic rivalry, part ly to inevitable habits ofpartisanship, but chiefly to the sedulous cult ivation by theRepublicans of the suspicion that a Democratic administrationcould not prove equal to the country's needs or worthy of thecountry's t rust .38 Such i s the story of the frustrat ion ofPresident Cleveland's efforts to revise the t a r i f f .

The Democratic platform of 1888 gave allegiance to theAmerican system of protection and, with a squint a t the sur-3 5 ~ . r u z z e y , American Adventure, 180.36Ibid., 179. Also Curtiss, Industr ia l Development, 67.37Bassett, United States 1492-1220, 725.38MUzzey, American Adventure, 180.


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15plus, demanded l iberal appropriations for the Navy and pen-sions. They denounced the protective policy as imposing uponthe American people a system of unjust taxation and indorsedand recommended the early passage of the Mills Bil l .39 TheRepublicans unequivocally accepted the issue made by Mr. Cleve-land and declared "uncompromisingly in favor of the Americansystem of protection The protective system must be main-tained we denounce the Mills b i l l 40 The campaignwhich followed was one of the most notable controversies on thesubject of protection versus free trade in the history of thecountry. The President 's message had aroused to action everyprotect ionis t , Democrat or Republican. The Republican partywas returned to power, with i t s majority in the Senate in-creased as also in the House. Benjamin Harrison of Indiana waselected President but the Republicans had never hoped for muchfrom him since they desired legis lat ion, so they put the i rfai th in Congress.41

The Republican party, in entering upon the legis lat ion of1890, was prompted not only by a sp i r i t .o f patriotism, but con-t rol led by the same statesmanship which had guided the founderof the republic in establishing the American _system. The39curtise, Industr ia l Development, 98.40Ibid.41Hicks, American Nation, 214.


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16

policy for the protection and extension of the industries ofthe country advocated by the Republican party was embodied inthe McKinley Bil l . This was a step in advance. In keepingwith the will of the people, as expressed by the election of1888, and in harmony with the principles of the Republicanparty, the 51st Congress entered upon a revision of the t a r i f f .Mr. McKinley received the Senate's ta r i f f bi l l of 1889 and re-vised i t .

President Harrison recommended a revision of our t a r i f fboth in i t s administrative features and in the schedulee. 42He recognized that the adjustment of the t a r i f f was a "matterof great delicacy because of i t s direct effect upon the busi-ness of the country," but he believed that any temporary i l leffects would be reduced to the minimum by prompt action.43The protective principle, he contended, should be maintainedand "fair ly applied to the products of our farms as well as ofour shops."44 He declared that the effects of the duties werenot to be judged by fixing our eye on the public treasuryalone. President Harrison believed that "they have a directrelat ion to home production, to work, to wages, and to the com-mercial independence of our country; and the wise and patr iot ic~ r u z z e y , American Adventure, 201.

43Ibid.44rbid.


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17legislator should enlarge the field of his vision to includea l l of these. "45

In April, 1890, McKinley as chairman of the Ways and MeansCommittee, introduced a bi l l increasing the duties of the tari f f . I t passed the House and finally got through the Senate.The chief features were as follows: 46

1) The duties on agricultural products were sl ightlyraised to please the rural West, but raw sugar was put on thefree l i s t and a bounty of two cents a pound for four years wasoffered to domestic sugar producers. A duty was placed on re"!".fined sugar to protect the American ref iners.

2) The rates on bulky iron art icles were l i t t l e changed;in some cases they were actually lowered.

3) Less bulky art ic les , as woolens, cottons, and shoesproduced near the coast l ine were given higher rates.

4) Through James G. Blaine's efforts a system of reciproci ty was adopted, intended to secure trade from South AmericanStates. Hides, molasses, tea and coffee, as well as sugar,were to be free, but i f the president thought a state producingthese art icles charged unfair duties against us, he might im-pose duties on them a t specified rates.45Ibid.46Bassett, United States 1492-1920, 725. Also David S. Muzzey,

History of the American People, Ginn, New York, 1927, 467.Hereafter this work will be cited as Muzzey, American People.


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18I t was expected that the embarrassing surplus would be re

duced some $70 million by the aboli t ion of the duty on importedsugar in the United States. According to Mr. Curtiss, the b i l lhad two objects:47

1) To reduce revenue, but without destroying any protect ive features of our t a r i f f system. This was done to the extent of $42 million, and for the f i r s t time in the history ofthe United States, more than half of a l l our imports in valuewere admitted free of duty.

2) To develop and increase American industries and giveemployment to a greater number of American laborers. New industries were established on every hand; other industries wereimported from abroad; thousands of establishments were enlargeda l l of which gave employment to an increased number of laborersand in most cases at higher wages.

I t contained no concessions or compromises; i t took nobackward step, for i t was the outcome of a realization of thepart of the protectionists that the people themselves wouldhave to decide between protection and free trade. 48 The b i l lpassed the House on May 21, 1890, by a vote of 164 (a l l Repub-lican) to 142 (a l l Democrat), but in the Senate i t met with a47curtiss, Industr ial Development, 128-130.48 4Ibid. , 2 5


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19delay of nearly four months.49 The cause of the delay was notany hosti l i ty of the Republican majority of the Senate to the .principle of protection, or to the terms of the bi l l i t se l f ,but was connected with other legislation. I t was September,1890, before the McKinley Bil l was passed by this house, andthe le t of October before i t became law. Since John QuincyAdams' days, i t was the f i r s t high ta r i f f based upon the protective principle solely and not dictated by the needs of theTreasury. I t was also the f i rs t t a r i f f whose rates came homedirectly to every family in the country. Only the producersseemed to have been considered; the consumer was ignored.

Mr. Cleveland was reelected in 1892 mainly on the ta r i f fissue, and his concern for ta r i f f reform.was even greater inhis second administration than in his f i r s t . The effect of theMcKinley b i l l was the raising of rates to unprecedented levels.Abroad we were charged with raising a Chinese wall around ourtrade.SO Importations decreased, to the great loss of themerchants. President Cleveland proposed a moderate reductionand readJustment to meet the large revenue needs which the permanent expenditures of the Republicans fixed on the government.He had his way in the Democratic House where William L. Wilsonof West Virginia was chairman of the Ways and Means Committee.49Muzzey, American Adventure, 203.50sassett , United States 1492-1920, 728.


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20The bi l l , whlch he reported on December 2, 1893, was the resul tof much labor, and i t s chief features were:51

1) Free raw material, as lumber, coal, wool, iron ore, andsugar.

2) I t reduced appreciably the duties on most factory-madeart icles, as si lks, woolens, cottons, glass, and crockery.

3) To repair the deficiency in revenues which would thusensue, i t raised the internal tax on l iquors and laid a tax of2% on incomes over $4000.

This las t feature was declared unconstitutional by theSupreme Court in 1895 in a five to four decision. The Housepassed i t on a vote of 182 to 106. In the Senate many schedules were raised as they thought the b i l l inadequate to theneeds of the revenue. I t made no difference that the Senatewas Democratic. The ' 'coal Senators . of West Virginia, the"iron Senators" of Alabama, the "sugar Senatorstt of Louisiana,and the "lumber Senators" of Montana, fought for the protectionof their interests . Under the lead of the Democratic SenatorGorman of Maryland (sugar Senator), the Wilson bi l l was mutilated beyond recognition by over 600 amendments.52 Most of theMcKinley rates were restored. The opposition here to President51Ibid. Also Muzzey, American People, 486. Also Curtiss, IndUStrial Development, 269.52Ibid. , 271. Also Hicks, American Nation, 258.


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21Cleveland had grown into a habit . The House protested in vainagainst the amendments, and reluctantly accepted i t . Thisbi l l thoroughly disgusted the President who called i t a pieceof ttparty perfidy and dishonor."53 I t became law on August 28,1890, without his signature, because i f he had vetoed the bi l l ,the McKinley Act would remain in operation. The Gorman-WilsonAct, as i t i s called, was unsatisfactory to the greater m a j o r ! ~of the Democratic members of Congress who favored not merelyt a r i f f reform but absolute free trade.

The events of 1895 to 1897 are outstanding in Americanhistory. By President Cleveland's inaugural address, and bythe fact that for the execution of his t a r i f f leveling plan,he had back of him a majority both in the House and in theSenate, wise manufacturers and business men were sufficient lywarned of what was coming. Therefore, both wholesale and job-bing merchants immediately ceased buying of American manufac-turers and held themselves in readiness to make the i r purchasesfrom the cargoes of goods made by the poorly paid labor ofEurope.54 Thus said Mr. Curtiss:

the demand for American made goods fe l loff; and manufacturers, being unable to se l lthei r products readily, ei ther closed thei rmills , or ran them only when necessary to f i l limmediate and pressing orders; for i t was53Muzzey, American People, 487.54rndustr1al Development, 285.


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merely business suicide for them to go on paying American wages and pil ing up quantit ies ofgoods which, within a few months, they mustse l l in competition with similar art ic lesbrought in from abroad.55

22

According to Mr. Curtiss, the consequence of th is slackening of industry was "that our ci t i es were soon f i l led with unemployed labor; the spendable incomes of the people were ei therlargely diminished or entirely cut off; everybody economized infood and clothing. 1156 He wisely writes that in calculating theresul ts of the Gorman-Wilson Tariff : "We must consider the in-direct as well as the direct effects; for the anticipation ofthe law brought evils that should not be ignored in estimatingthe actual effect of the law i tself ."57 A f inancial panic andindustr ial depression began in 1893 Wage reductions were inevitable and lack of employment infl icted hardships on thepeople.

The Gorman-Wilson Tariff , although designed as a revenuemeasure, had failed to provide the government with the suff icient funds to pay i t s running expenses. The receipts of thegovernment had constantly diminished unt i l the deficiency hadreached about $74 bi l l ion. The closing of the mills, the enforced idleness of labor, and the bankruptcy and ruin of busi-55rbid.56Ibid.57rbid., 289-290.


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23ness men made the loss to the whole country incalculable. Inconclusion, i t may be said that the hard times which visi tedour country under th is Democratic revision of the t a r i f f re-sulted from a wage famine.58

The Republican party was called upon by the people toredeem the country from the disasters which an unwise economicpolicy had forced upon i t . Protectionism, discredited in theelection of 1892, was approved by the people in 1894 and 1896.Both t a r i f f policies of the opposing pol i t ical part ies had now,for the f i r s t time since 1860, been given a t r i a l . The wisdomof the policy of protection had been tested and proved by ac-tual experience. The great protect ionists of the country dur-ing a l l the years of the heated controversy from 1867 to 1892had defended i t by the presentation of indisputable facts show-ing the wonderful progress which the country had made under andby an actual t r i a l of the economic principles for which theycontended. The people for the f i r s t time since 1860 had nowturned the control of a l l branches of the government over tothe Democratic party and had given i t fu l l power to destroy theprotective policy and establish and put into practice the reve-nue policy for which i t had contended.59 The people now hadhad the actual experience of witnessing the operation of the58Ib id . , 307.59rbid., 322.


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24two opposing systems in practice.

The people were quick to real ize thei r error . The uprising against the Democratic free trade policy began as soon asGrover Cleveland, on March 4, 1893, made i t clear that thepurpose of the Democratic party was not a moderate revision ofthe t a r i f f , but the restorat ion of free trade and what seemedthe destruction of industries.6 The Republican platforms of1894 pledged them to the support of the protective policy.

The attempt on the part of the Democratic party to overthrow the protective policy had proved such an ut te r fai lurethat it dared not a t th is time make the ta r i f f an issue in theapproaching elect ion and attempted to just i fy the Gorman-Wilson Act. Mr. Cleveland, who had endeavored to make effectua l the ta r i f f policy of his party, ret i red from office ut ter lyrepudiated and intensely unpopular with i t s rank and f i le .During the closing months of his administration, the Ways andMeans Committee, under the leadership of Mr. Dingley, was preparing the new t a r i f f bi l l for presentation to the extra session of Congress, which it was known President McKinley wouldconvene soon af te r his inauguration on March 4, 1897.61 Between December 28, 1896 and January 11, 189'7 the Ways and MeanCommittee granted hearings to the various in teres ts of the60ibid. , 322-323.61Ibid. , 231.


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25country concerning the preparation of the many schedules of thnew b i l l . 62 The work of the preparation of the schedules wasbegun on January 13. Each schedule was taken up and carefullyanalyzed, and new rates , so far as i t had been demonstratedwere necessary to restore the adequate protection to Americanlabor and American manufacturers, were inserted. The b i l lwhen completed was substantial ly a redraf t of the McKinley Act,although the ra tes of duties on certain ar t ic les were lowerthan those contained in the former measure. Mr. Dingley said:ttThe b i l l has two purposes, namely, to raise addit ional revenue, and to encourage the industr ies of the United States. 1163

The b i l l was presented to the House on March 18 and thediscussion began on March 22, 1897.64 I t was reported to theSenate, af te r passing the House, by Mr. Aldrich of RhodeIsland, May 4, and was taken up for consideration May 25.65I t passed the Senate on July 7, and was reported back to theHouse with the Senate amendments, July 8. While in the Senatei t met the usual fate of a l l t a r i f f b i l l s . Before the sheep-raisers and fruit-growers of the West were as well sat isf ied athe manufacturers of the East and the new industr ial leaders o62Ibid.63Ibid. , 332.64Ibid. , 333.65Ibid.


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26the South, the b i l l had undergone 872 amendments.66 The amendments thus were more than those of the Gorman-Wilson Act of1894. But the Republican House was not seriously opposed tothe enhanced schedules as the Democratic House had been threeyears previously. The amended b i l l was passed in both housesby votes fai r ly representative of the Republican majorities(187 to 116, and 40 to 30), and was signed by President McKinley on July 24, 1897.67

I t imposed duties which in general were not as high asthose contained in the McKinley Law, but were the highest ratesin our history. I t was, in the words of Professor Frank W.Taussig, "the outcome of an aggressive spi r i t of protection."68The duties of the Dingley Act were as follows:69

1) On woolens, cottons, s i lks , l inens, glass and crockerythe rates varied l i t t l e from the t a r i f f of 1890, but were high-er.

2) On iron and s tee l products the lower rates of 1894 wereretained. Copper was l e f t on the free l i s t as in 1894. The66Muzzey, American Adventure, 334.67Ibid. Also Curtiss, Industr ial Development, 33368Frank w. Taussig, The Tariff History of the United States,Putnam's, New York, 1931, 358. Hereafter this work will becited as Taussig, Tariff History of the United States.69curtiss, Industr ial Development, 333 Also Bassett, United

States 1492-1920, 729-730. Also Stanwood, American TariffControversies, 381.


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27duty on raw sugar was doubled and the different ia l of protection for the ref iner was maintained.

3) The schedules imposing duties on agricul tural products,pottery, l iquors, and tobacco were higher.

4) The rates on lumber and manufacture of lumber, bags,cotton bagging and cotton t ies were restored.

The Dingley Tariff within two years brought ample revenueto the Treasury and raised the nation from the most dis t ress inconditions of unemployment and business depression to a stateof fu l l employment of labor and universal business prosperity.I t not only redeemed the country from the unwise economicpolicy adopted by the Democrats, but i t consummated the planof rounding out the industr ia l policy of the nation for whichthe Republican party had struggled for more than twenty years.

For twelve years af te r the passage of the Dingley Tariff ,reform was quiescent. According to Mr. Bassett: "The attackon the Cleveland Democracy showed that protection was verystrongly for t if ied in our economic system. Capital and laborboth fe l t themselves interested in perpetuating i t ."70 Theprogress of urban l i f e , so largely dependent on factory and in ternal commerce, widened the basis of the movement. In theeighties, the t a r i f f reform sentiment of the West centered inthe Old Northwest; in the nineties, this region was mostly for70united States 1492-1920, 730.


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28protection.71

The pol i t i ca l conditions under which the Act of 1897 waspassed, and the commercial and industr ia l conditions that haveprevailed during the years i t has been in operation, have beenas favorable to i t s success as those conditions which appliedto the two preceding acts (1890 and 1894) were favorable.Meanwhile 'prosperity had returned to the country. Mr. Stanwoodsaid that "Good crops, an ample market, and high prices reward-ed the efforts of the farmers, and enabled them to pay off avast amount of mortgage indebtedness which they had been tempt-ed to wipe off with a :free si lver sponge."72 Every avenue ofcommerce was crowded, every industry was ful l of act ivi ty ,every branch of trade fe l t the impulse of good times. Such arenot the conditions that drive men to seek changes in the tari:t'flaws. Indeed, they lead rather to a disposit ion to at t r ibutetoo much importance to the law which seems to them to have pro-duced results so sat isfactory. In 1897, the country was readyfor a season of great prosperity. The industr ia l depression asa check to act ivi ty was substantial ly completed. The uncer-tainty as to the monetary standard was dispelled. In short ,a ll things were made easy for the success of the t a r i f f .

President McKinley had recommended that the t a r i f f be so71Ibid.72stanwood, American Tariff Controversies, 390.


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revised as to raise revenue preserve the homemarkets to our own producers revive andincrease manufactures relieve and encourage agriculture to aid and develop min-ing and to render to labor in every f ie ldof useful occupation the l ibera l wages and adequate rewards to7which ski l l and industry arejus t ly ent i t led. ;)

29

The doctrine professed by the Republican leaders of ageneration ago, namely, of a t a r i f f for revenue only, with incidental protection, had already been repudiated in the Republ ican platform of 1888. I t was now defini tely abandoned. Tobe sure, the Dingley Law contained provisions for reciprocityagreements which would reduce the rates by about 25%, andwhich the Senate refused to ra t i fy . The Dingley Law has thedis t inct ion of having remained in force longer than any othertar i f f act in our history (1897 to 1909). The period was oneof almost uninterrupted prosperity.

The t a r i f f plank of the Republican platform of 1904 de-clared as follows:

.Protection which guards and develops ourindustries i s a cardinal principle of the Republican party. The measure of' protectionshould always a t least equal the differencein the cost of production a t home and abroad.We in s i s t upon the maintenance of theprinciple of protection, and therefore, ratesof duty should be adjusted only when condit ions have so changed that the public in teres tdemands thei r al terat ion; but th is work cannot

73curtiss , Industr ia l Development, 334.


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safely be committed to any other h ~ ~ d s thanthose of the RepubLican party fPresident Theodore Roosevelt had stated:

The general t a r i f f poLicy to which, without regard to changes in detai l , I believe thiscountry is irrevocably committed, is fundamentally based upon ample recognition of the differencebetween the cost of production--that is , the costof labor--here and abroad, and of the need to seeto i t that our laws shall in no event afford advantage in our market to foreign industr ies overAmerican industries, to foreign capi ta l overAmerican capital , to foreign labor over our ownlabor The t a r i f f i s essent ia l ly a businessproposition. We must preserve the policy ofprotection 5

30

The protective policy had been sustained in a l l of i t sintegri ty during the three years of Mr. Theodore Roosevelt 'soccupancy of the Presidential chair . I t was during this timethat he launched a new policy, that of attacks against the cor-porations and t rus ts . There was a widespread conviction in theminds of the American people that the great corporations werein cer ta in of thei r features and tendencies harmful to thegeneral welfare. They should not be prohibited, according toMr. Roosevelt, but supervised and within reasonable l imits controlled.76 The government, he averred, had the const i tu t ional74Ib id . , 345.75Ibid. , 346.'76M'uzzey, American Adventure, 381.


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r ight to regulate in ters ta te commerce.77 In order that i tmight do so with wisdom and justice, i t was necessary thatthose corporation engaged in interstate commerce should wil l ingly submit to a fu l l and free investigation. Mr. Muzzey.stated that: "President Roosevelt was not opposed to big busi-ness as such. He realized that concentration in industry was anatural and inevitable form of development of our great resources.u7S The great corporations, especial ly those whichpract ical ly monopolized such necessi t ies of l i fe as coal, oi l ,beef, and sugar, should be supervised and within reasonablel imits controlled. They had received privileges and protectionfrom the government, and they increased in return the obligat ion to the people of a s t r ic t ly legal and honest conduct ofthei r business. President Roosevelt believed that they shouldnot be allowed to reap fabulous prof i ts by charging exorbitantprices or by securing i l lega l privileges from the legis latures.79 In order that the government might regulate in ters ta tcommerce with wisdom and jus t ice, the Inters tate Commerce Actshould be made more clear and specific , and a new Department ofCommerce and Industry should be created to deal with those inte res ts of the government which concerned the corporation, labo77Ibid.78Muzzey, American People, 53379Ibid.


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and the merchant marine.80I t was President Roosevelt 's idea that the t rus t question

should be deal t with entirely apart from the t a r i f f question,and that the destruction of industries of the country by theoverthrow of the protective policy was not the method to beadopted in dealing with the so-called t rus ts and monopolies.Tariff revision had certainly never been one of the Rooseveltpolicies . He always found an excuse to avoid the issue whichwas fraught with so many pol i t ical per i l s . While there wasmuch agi ta t ion favoring a revision of the t a r i f f during thel a t t e r part of President Roosevelt 's f i r s t administration, i tdld not assume formidable proportions, nor was i t sufficient lypronounced to occasion any alarm in the minds of the great massof the people. He resisted a l l overtures for taking up and reopening the t a r i f f question during his f i r s t administration.80ibid.


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CHAPTER I ITHE NEED FOR A NEW TARIFF

The Dingley Tariff of' 1897 was enacted because of a defic i t in the operations of the Treasury of the United States, andPresident McKinley asked the Congress for legis lat ion dealingsolely with the import duties and revenue. This t a r i f f was theoutcome of an aggressive spi r i t of protection and it pushedthis protection in many directions over our domestic induet r i es . The country fe l t confident af ter i t was passed by Con-gress, and began to recover los t ground and to make up thedefici ts in various products. This also led to the renewal ofdomestic and foreign trade, and our revenues rapidly increased.

The closing years of the nineteenth century had found newconditions which became of greater consequence for our customspolicy. As the United States was a great manufacturing count ry, we did not depend upon the res t of the world for manyready-made products. But i t was thought that the industrieswere over-protected and the Republicans doubted whether thatpolicy had not been carried too far . The protective systemwas of less consequence as industry produces more abundantlyand cheaply.

Perhaps the most potent ia l reenforcement of the clamor33


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34for the t a r i f f revision came from the Presidential office ofMr. Theodore Roosevelt during his second administration. In1906 he sent forth the dictum that the t a r i f f should be revisedThus, nearly two years before the election of 1908, it was or-dained that the Republican party should discredi t i t s own tar-i f f legisla t ion, and hold up the hands of i t s assai lants bypledging i t s e l f to another revision of the t a r i f f . The Repub-l ican Convention of 1908 found i t se l f placed in an embarrassingpredicament. To refuse to declare for a t a r i f f revision meanta reflect ion upon and part ia l repudiation of a Republican ad-ministration. President Roosevelt, during the Republican Con-vention of 1908, expressed the party 's sentiments regarding thedominant issue of t a r i f f legisla t ion. He stated:

The Republican party declares unequivocal-ly for a revision of the t a r i f f by a specialsession of Congress immediately followiyg theinauguration of the next PresidentThis statement was popularly accepted as a promise to re-

vise the t a r i f f schedules downward, and a large proportion ofthe voters specifically voted for the Republican candidate withthis idea and expectation in mind. Gathering opposition to thehigh t a r i f f led both the Democratic and Republican part ies , inthis Presidential campaign to adopt a plank in their pol i t i ca lplatforms favoring a downward revision. The Republican being

lwilliam s. Myers, The Republican Party, Century, N. Y., 1931,380.


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35the more defini te won the election and t rust of the people.

Mr. William Howard Taft, upon accepting the Republicannomination, said that the ta r i f f excesses offered temptationsto those who wouid monopolize the production and sale of suchar t ic les in this country to prof i t by the excessive ra te . 2 Inthe same speech, he stated:

In 1897, the Dingley Tariff bi l l was passed,under which we have had, as already said, a. periodof enormous prosperity. The consequent materialdevelopment has greatly changed the conditionsunder which many ar t ic les described by the schedule of the t a r i f f are now produced. The Tariffin a number of schedules exceeds the cost of production of such ar t ic les abroad and a t home, including a reasonable prof i t to the American producer . 'The Tariff Act of 1897 proved to be the longest-lived be

cause the Republican party was in power continuously during thetwelve years i t was in effect , and naturally changes were lesel ikely . Problems of greater importance pressed for solution,and these concerned questions of industr ial combinations.These served to divert at tention from the t a r i f f because i t wasand is a great problem. I t was this very subject which in 1909compelled action on the ta r i f f . The ta r i f f was fe l t to needoverhauling because i t was believed to promote industr ial com-2cur t i ss , Industr ia l Development, 365.3Ibid. , 361. Also Hicks, American Nation, 422.Dewey, Financial History of the United States,

mans, Green, N. Y., 1 9 3 4 , ~ 8 3 . Also Davie R.12 Ed , Long-


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binations. The huge fortunes acquired in some protected in -dustr ies (the Carnegie fortune most conspicuously of al l )brought the feeling against the high duties. The t rusts andtar i t ' f are associated in the public mind, and host i l i ty to thecombinations had bred host i l i ty to e x ~ r e m e protection. Hence,the Republican party in i t s campaign platform of 1908 gave apromise of revising the t a r i f f .

The pressure from public sentiment was most acute !'rom1904 to 1906 for the people fe l t that the t a r i f f rates were toohigh and too favorable to big business. The United States, asa whole, prevailed upon the poli t icians to make a sane adjust-ment or the schedules to the new industr ial condition in thecountry; that of increased production. Many rates in theDingley Act were out of harmony with these existing industr ialconditions; and the conviction was growing, part icular ly inthe Middle West, that the t a r i f f fostered t rus ts which wereexercising larger powers in the commercial and f inancial de-velopment of the United States.

According to Mr. Muzzey, the bulle t ins of the Bureau ofLabor showed that the cost or necessary ar t ic les of consumptionhad risen some 40% under i t s operation, while wages had a d v a n ~less than 20%.4 There was a widespread conviction that the ef-fect or the high t a r i f f was to insure enormous profi ts ror the4Muzzey, American Adventure, 485.


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37manufacturer rather than to secure any benefit to the consumerand the laborer. Manufactured goods had increased 32% in priceand raw materials 50%, while wages in over 4,000 establishmentshad risen only 19.1%. At the same time the profi ts of thegreat combinations in the manufacture of wool, cotton, thread,shoes, sewing-machines, farm machinery, and scores of othercommodities indispensable to the millions of plain workingpeople in the country had grown to enormous proportions.5

Sectional sentiment shows the type of tar i f f desired bythe various portions of our country. The central northwesternsta tes were chiefly devoted to wheat, or corn, and were l i t t l einterested in manufacturing, and, therefore, developed opposition af ter 1900 to high duties on manufactured products. Thenortheast was the great center of manufacturing industr ies andsupported a protection policy, a.s did those industr ies in thenorth central and Atlantic coast areas. They were joined bythose in the same section who were interested in the protectionof certain raw materials such as lumber, wool, beet sugar,coal, and i ron. The Far West were vigorous defenders of protection as they were interested in lumber, certain minerals,cat t le , sheep, beet sugar, and f ru i t s . This section was heldthe strongest pol i t ical influence in the Senate as the ir popula t ion was sparse, and in alliance with the Northeast, the i r5rbid. , 485-486.


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38influence went fa r to shape t a r i f f legis la t ion. The South wasthe chief seat of the opposition to protection, but reconstruc-t ion here, af ter the Civil War, created a group of in teres tsinclined to favor protective duties , especially those in teres t -ed in the cotton mills , and the iron and s tee l industry in theSouth.

There arose, during the years the Dingley Law was in ef-1'ect, according to Mr. Wright: "Numerous signs of growing discontent with the high level of duties; f inal ly this attainedsuch proportions that even the party of protection admitted adownward revision of duties was a t leas t poli t ical ly expedient.116 An understanding of the conditione responsible forthis discontent i s desirable, not only as a help to explainthe immediate reaction but also because some of these condi-t ions s t i l l affect the att i tude of certain groups toward thepolicy of protection. At least five different causes can benamed that exercise considerable influence in this reactionfrom 1897 to 1908.7

1. We find a growing group of manufacturers who were beginning to feel that the t a r i f f was a handicap. Many manu-facturers of the more highly finished products found that the6chester w. Wright, Economic History of the United States,McGraw-Hill, New York, 1941, 696.7rbid. , 696-697


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39increased cost of thei r raw materials, caused by the Tariffduties, necessitated a higher price for the product and thusJ.imited the market. This was especially fe l t by those who wereexporting manufactured products. These exporters also fe l tthat the high t a r i f f duties of this country led other count r ies to impose hlgh duties on American products and thusl imited thei r market s t i l l further.

2. There was the group of farmers in the Central Northwest, chiefly in the wheat-growing region, as previous.ly men-t ioned, who fe l t that they were burdened rather than benefitedby the t a r i r f and, while seeking higher duties on thei r products, they frequently demanded lower duties on manufacturedgoode, especially on such as the farmers used.

3. The steady r ise in the general price level which occurred af te r 1896 was causing rather general discontent andoccasioned widespread complaint about the high cost of l iving.Though th is r ise was chiefly due to other causes, i t was possible to argue that a reduction of duties would a t leas t tendto lower the cost of many protected products.

4. The rapid spread of the t rus t movement immediatelyaf ter 1897 and the belief that the t a r i f f was an important facto r in fostering this movement caused rest lessness. Here againthe influence of the t a r i f f was exaggerated in the popular bel ief , though not without some foundation in fact; but the cry


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40that the t a r i f f was the mother of the t rus ts and so ought to beabolished on t rust controlled products met with popular response.

5. The growing sensitiveness on the part of the people tovarious forms of special privilege, aroused by the outbreak ofthe 11muck-raking 11 ar t ic les that became so numerous in the popula r magazines af ter about 1900, and the growth of large fortunes were other factors . The t a r i f f was attacked, also, asan iniquitous form of such privileges. The country also suddenly woke up to the fact that i t s natural resources were notunlimited, the movement for conservation appeared, and i t waspointed out that by removing duties on various raw materials,and importing them from other countries, we would help to conserve our own supply of natural resources.

Able and experienced businessmen pleaded for tar i f f stabi l i ty for in that alone could be round the conditions whichmake for steady employment, for regularly issued pay envelopes,and for good business. So powerful and so sensible an appealfor security against the i l l s and evi ls of t a r i f f agitat ion andtar i f f uncertainty, ought to have been effective in turningpublic opinion back into safe and sane channels, but i t was notso. Professional agitators , pol i t icians eager :ror notoriety,reformers, and theoris ts a l l joined in the clamor against theDingley Act, and demanded wholesale reductions in the rates of


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duty af ter 1907.The development of the need for a new t a r i f f during 1907

and 1908 was more acute than in the previous years. This de-cided demand for a revision gave to the ta r i f f question an im-portance previously denied to i t , and had rendered definiteaction imperative. The business public was the necessary force1n the demand for revision, as public opinion throughout thecountry could do l i t t le to secure legislation.8 The businessmen found themselves hampered in several ways by the terms ofthe Dingley Tariff . I t appeared that our trade with foreigncountries had been incapacitated by the indisposition of thesecountries to grant to us accession to their markets so long aswe insisted on excluding them from ours. In addition to feel-ing the results of our t a r i f f exclusiveness in the host i l i ty offoreign countries, American manufacturers had been obliged tosuffer from an increasing money expense in the production oftheir goods. Thus had come the demand from the business worldthat our revenue legisla t ion be remodeled in such wise as toallow the business men to resort economically to the bestsources of supply available anywhere within competitive reach.

Another source of pressure, that culminated in a recogni-tion for the need of a new t a r i f f , came from the changed t a r i f f8H. Parker Willis, Ed., "The Impending Tariff Struggle," Jour-nal of Poli t ica l Economy, University of Chicago, Chicago,1910, v. 17, January, 1909, 1.


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42methods of foreign countries, who were unduly discriminatingagainst the United States. Finally, our own officials recognized the confused state of the present practices under theDingley t a r i f f . When James Sherman was nominated for the VicePresidency, he stated:

The Dingley b i l l when enacted was welladapted to the then existing conditions. Thedevelopment of industr ia l prosperity in adecade, which in volume and degree have surpassed our most roseate expectations, have soaltered conditione that in certain detai ls ofschedules they no longer in ~ v e r y part icularmete out just ice to a l l The Republican platform carried a new version of the prin

ciple of protection. The doctrine was laid down as follows: In a l l protective legisla t ion the trueprinciple of protection i s beet maintainedby the imposition of such duties as will equalthe difference between the cost of productiona t home and abroad, together with r e a s o n a b l e prof i t to American industries

This was welcomed in many sections as the defini te solut ion of the question. I t had an engaging appearance of moderat ion, yet i t leads logical ly to the most extreme resul ts . Professor Taussig said that i t seems to say no favors--nothing but9The 6ls t Congress, The Tariff Act of 12.Q2, 232. Hereafterthis work will be cited as The 6let Congress. Also Curtiss ,Industr ial Development, 365.

lOTauesig, Tariff Historz of the United States, 363. Also,Dewey, c i t . , 483.


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43equalization of conditions. 11 He said that "The true principlemeans that duties should be high enough to cause anything andeverything to be made within the country, and for internationaltrade to cea.se."l2 But i t really i s that the more disadvantageous i t i s for a country to carry on an industry, the moredesperate should be the effort to cause the industry to beestablished. 13 The attention given to this,"true principle"was important of some compliance to those who believed thatprotection had been carried too far. Our duties were believedto have been more than sufficient to equalize trade, and tohave brought more than a reasonable profi t to American producers. A protective ta r i f f brings necessary revenues to thegovernment and, in addition, scatters i t s protection to everysection of the country and to the people in every occupationand call ing.

I t is a protection to opportunity. Representative C.Bascom Slemp of Virginia said that the policy of a protectivet a r i f f i s automatic in i t s action, uniform and imperative ini t s application, and impartial in i t s operation.14 AccordingllTaussig, Tariff History of the u. 365.12Ibid.13Ibid.l4congressional Record, March 27, 1909, Volume 44, Part I ,

Government Printing Office, Washington, D. C.i 439-440. Hereafter this work will be c i ~ e d as Congressiona Record. Also


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44to Representative George Sturgiss of West Virginia, this poliodevelops the resources and increases the wealth and prosperityof a nation, making i t independent commercially, financially,and pol i t ical ly . 15 The Republican party held the commission othe people of the United States to revise the t a r i f f upon thel ines of "true protection" and upon no other l ines, and theRepublican party would be recreant to the t rust of the Americapeople i f they did not follow implicit ly those l ines.

In Mr. Taft ' s inaugural address on March 4, 1909, he saidthat the t a r i f f bi l l would be introduced a t an extra session ofCongress on March 15. In this speech he stated:

This should secure an adequate revenueand adjust the duties in such a manner as toafford to labor and to a l l industries in thiscountry, whether of the farm, mine, or fac-tory, protection by t a r i f f equal to the difference between the cost of production abroadand the cost of production here, and have aprovision which shall put into force, uponexecutive determination of certain facts, ahigher or maximum t a r i f f against those count r ies whose trade requires such discrimination.l6

This may have meant anything or nothing a t a11, and Taftwas forced to declare whether he intended only to revise the15congressional Record, April 3, 1909, Volume 44, Part I , 1026.Also 6ls t Congress, 91.16congressional Record, March 4, 1909, Volume 44, Part I , 2-3.Also New York Daily Tribune, March 5, 1909. Also Marion M.Miller, ed., Revenue: The Tariff and Taxation, (volume XIIof Great Debates in American History}, Current Literature,New York, 1913, ;Db. Hereafter this work will be cited asMiller, Revenue.


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45t a r i f f , or to revise i t downward. He pledged his efforts tosecure a reduction of the Tariff of 1897 To say is one thing,to act and do i s quite another.

The reason why ex-President Roosevelt took no active partin th is question at th is time was that he sailed to Africa.He wished to give President Taft a free hand and not arouseany ill feeling in his f o l ~ o w e r s . ~ 7 A s l ight difference ofunderstanding between Mr. Roosevelt and Mr. Taft caused thetwo friends to dr i f t apart af te r the Republican Convention. I twas natural that President Taft desired independence in hisadministration to ascertain his own policies and to choose hisown cabinet men. Out of Roosevelt 's cabinet, Tart retainedonly two men, w h i ~ e six were chosen as personal appointeesra ther than as party leaders, and one t'or his service in McKin-ley 's and Roosevelt 's administrations. The new president wasnot hosti le to reform and approved of the major po.licies orTheodore Roosevelt. By temperament and t raining, he was del iberate and cautious; he walked sedately; he was an honest administrator; and was a champion of the protective policy. Hei s comparable to Mr. Roosevelt who charged ahead with confidence and dash.

President Taft a t once carried out his campaign pledge bycall ing the 6ls t Congress in special session to meet on17Hicks, American Nation, 422.


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46March 15, 1909. The b i l l to revise the t a r i f f already hadbeen drawn up by the Committee of Ways and Means in the Houseof Representatives of which Senero Payne of New York was thechairman. This committee had already held hearings at Washing-ton, that i s , of hearing, the representat ives of hundreds ofin teres ts , protected and unprotected, who pled for the continuance or the grant of the government's favor. The hearingsf i l led nearly 9,000 pages of the committee's report , and fewof these pages contained any elucidation of the "true principleof protection" as defined in the platform. They are the onesided arguments by interested agents, each intent on showingthat any reduction in the schedules in which he was interestedwould mean an assault on the very ci tadel of American industryand the independence of American labor. The frienas of protection were organized and a ler t . The "steel people," the"lumber pe:)ple," the "hosiery people" were vocal and even elo-

,

quent. The "ultimate consumer'' was unheard.The hearings were held in Washington, D. c., beginning

November 10, 1908, and continuing unt i l December 22, 1908.Briefs and statements were submitted unt i l as la te as March 9,1909. All of our manufacturers and indust r ia l i s ts , as well asthe agr icul tura l is ts and miners were heard. Many men who appeared before the committee were concerned not only with thevarious schedules but also with the t a r i f f revision, t a r i f f


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47c o ~ i s s i o n , and t a r i f f legislat ion. Professor Frank W, Taussigappeared before the committee on December 15, 1908, and statedthat:

in those industr ies where you have highduties, and an apparent need of high duties inorder to maintain protected industries, Ishould strongly feel against any increase of duty, and I think in a great manyinstances a reduction of the duties could bemade without serious disturances, and withadvantages to the consumer.On the subject of t a r i f f commissions, Mr. Henry R. Towne

of Stanford, Conn., appeared before this committee on Novem-ber 23, 1908, and declared:

In the belief that the present t a r i f f i snot well adjusted to present conditions, thati t embodies many inconsistencies and inequalit ies , and that i t s careful and intel l igent revision will affect favorably a l l of our indust r ies , and especially our foreign commerce, wefavor the creation of a permanent t a r i f f commission for the purp9se of collecting data a thome and abroad 9

Another representative, A ~ r . George s. Brown of Birmingham,Alabama, appeared before the committee on December 14, 1908 andstated that he firmly believed:

that the protective principle, a viciouserror, unscientif ic, ruinous, pronounced so bythe educated pol i t i ca l economists of a l l ages will again be so demonstrated in this ourl8sixth Congress, 2nd Session, 1908-1909, House Documents,Volume 145, Tariff Hearings, Volume 7, Government PrintingOffice, Washington, D. C., 1909, 7718.l9 Ibid. , 7587.


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age by the ignorance and selfishness of law-makers and manufacturers 2u

48

These are only a few of the great many testimonies givenbefore the Committee on Ways and Means of the House of Repre-sentat ives. They show that many were interested in the re-vision of the ta r i f f as evidenced by the committee's reports.20Ibid. , 7567


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CHAPTER IIITHE PAYNE ALDRICH BILL

Sereno E. Payne was an American lawyer and legislatorfrom Hamilton, New York, who was admitted to the bar in 1886.He became a member of a law firm in Auburn and soon took aninterest in Republican poli t ics . He was successively cityclerk, supervisor and dis t r ic t attorney of Cayuga County inthe 70's and from 1883 to 1 9 l ~ w a s a member of Congress, withthe exception of the 50th Congress. Mr. Payne was prominentin a l l ta r i f f legislation during his time in Congress.

The Ways and Means Committee contained Sereno E. Payne,chairman, John Dalzell, Samuel McCall, Ebenezer J . Hill , Henrys. Boutell, James C. Needham, William A. Calderhead, Joseph W.Fordney, Joseph H. Gaines, Nicholas Longsworth, Edgar D.Crumpacker, Francis w. Cushman, Champ Clark, Oscar w. UnderwoodJames M. Griggs, Edward W. Pou, Choice B. Randell, Robert F.Broussard, Francis B. Harrison, and William K. Payne, clerk.

The hearings or the House Ways and Means Committee fortwo years before the tar i f f b i l l was introduced, embraced thefollowing points . l

1. What particular rates of duty were higher than was1curt iss, Industrial Development, 374.

49


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50necessary to afford adequate protection, and to ascertain theextent to which they were unnecessary, in order that a reduc-tion might be made?

2. What particular existing duties were below the pro-tective point, and the extent to which they should be increasedin order to maintain the proper degree of protection?

An exhaustive investigation was made by this committee,for they examined manufacturers representing a ll the variousbranches of industry. The men on the Ways and Means Committeeheard evidence, and from these industrial magnates, on the costof domestic production, the rates of wages, the development andcondition of industries, and many other urgent and relevantphases of the subject. An inquiry was also made into the ex-port prices of commodities and rates of wages in foreign coun-t r ies as compared with the United State 's prices. In the his-tory of ta r i f f legislation, no one committee of Congress everdevoted more time and labor to the preparation of a customsact. The investigation was the most accurate, exhaustive, andinstructive ever conducted under the direction of Congress.

On March 17, 1909, Sereno E. Payne, chairman of the HouseWays and Means Committee, reported the bi l l to the House ofRepresentatives. He introduced i t as a bi l l to promote reve-nue, equalize duties, and encourage the industries of theUnited States. I t was intended to lighten the burden so far as


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51possible of the people of our land. The b i l l was scrutinizedaccording to the Republican acquiescence of the "true principlei idea. Mr. Payne denounced protective men who t r ied torevise the ta r i f f rates to meet the difference of cost abroad.

Some gentlemen think in order to be protect ionis ts that af te r they have found out the dif ference here and the cost abroad they ought toput on double that difference by way of a tari f f rate believed we should f ix theseduties as nearly as we can a t the difference2between the cost here and the cost abroad Mr. Payne debated the bi l l on that basis as the country

was overwhelmingly in favor of a protective t a r i f f because i twas an American policy, and i t was necessary to have an im-m e d ~ a t e revision of our revenue laws. The people of the coun-

\t ry from 1860 to 1909 had stood only for such duties as wouldproduce needed revenue and would give industries, which weretrying to prove their abil i ty to exist in the United States,protection through a l ~ m i t e d period.

A minimum and maximum ta r i f f was provided in the HouseCommittee's bi l l , and was a protective ta r i f f bui l t on thel ines of the Republicans' platform. I t was designed to protect United States industries in their dealings with foreigncountries, and free the businesses from any unfair competitionfrom foreign sources. I t provided the minimum ta r i f f for any2 c o n ~ r e s s i o n a l Record, Sixty-fi rs t Congress, Special Session,v. 4, 7


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52foreign country which did not discriminate against the UnitedStates, but i f foreign countries did not give this country anequal chance, they would receive the maximum t a r i f f rates ofduty. On March 24th, Representative Champ Clark of Missouri,opposed the b i l l on the grounds that i t raised the Dingleyrates.3 Oscar w. Underwood of Alabama, Morris Sheppard ofITexas, Ollie M. James of Kentucky, and William Sulzer of NewYork, opposed the b i l l on the grounds that i t was injurious todomestic and foreign trade.4 Those in favor of the Payne b i l ldeclared i t to be in accordance with the Republican party 'spledges and containing an excellent set of t a r i f f scheduleswhich were necessary for revenue and conditions in the UnitedStates.

Representative S a m u e ~ McCall of ~ ~ s s a c h u s e t t s supportedthe bi l l with this statement:

Whether you agree or disagree to the part icular provisions of the bi l l , there can beno question in the mind of any man who hasmade in any detai l a study of i t s provisionsthat i t revises the Tariff downward; that i tmakes some great and many important reduct ions from existing duties. .s

Despite active debate for and against the bi l l , no great3Miller, Revenue, 386.4Ibid. , 386-9.5congressional Record, Volume 44, Part I , 759. Also 6ls t

Congress, 75. Also Miller, Revenue, 391.


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53

changes were made in the House b i l l when i t was discussed.This thesis i s pot intended to go into ful l detai l of the tar -i f f b i l l i t se l f , and, for that reason, I have eliminated a l lreferences to the various rates of duties which were eitherraised or lowered by the Congress. Suffice i t to say that thePayne b i l l put wood pulp, hides, iron ore, and flax on the freel i s t , reduced the duties on steel and iron, lumber, and variousmanufactures by some 50%; made lesser cuts on the duties on refined sugar and chemicals; admitted the products of the Phil ippines free of duty, with l imitat ions on the amount of' sugar andtobacco; and laid a progressive tax on inheritances.6 On theother hand, there were a good many increases purely for thesake of protection, while some ar t ic les (tea and cacao, forexample) were taken from the free l i s t to swell revenue. Inspite of the hot debate regarding these duties, the Payne Bil l ,which was passed by the House of Representatives, was substant ial ly that which was prepared by the Ways and Means Com-mittee. Various sections of the country t r ied 11 log-roll ing 11 inorder to obtain their desired rates, and this brought protestfrom within the Republican party. The b i l l finally was votedupon in the House, and was passed April 9 by the votes of 215Republicans and 2 Democrats against 160 Democrats and 1 Repub-6 Muzzey, American Adventure, 487.


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54l ican.7 I t was an honest attempt to reduce the Dingley schedules along the l ines of the party 's understanding if' not definite promises. I t was sent to the Senate where i t was referredto the Committee on Finance.

In the Senate it was a different story, for history hadshown that i t is the Senate's influence on legis lat ion that hasthe greater ef!'ect and are in favor of higher ta r i f f duties.Because of i t s small and compact body, no State can be ignoredand "log-rolling" was rampant here. In order to give certainStates the i r desired concessions, others must be conciliated.The Senators from the agrarian States of the ~ . U d d . L e West stoodstaunchly for a general reduction in duties of the ta r i f f . Theloca.l in teres ts here were made more effective by the expertleadership of Senator Nelson Aldrich, a protect ionist , who hadthe Republicans well organized.

Nelson w. Aldrich was an American poli t ician from Foster,Rhode Island. Hie f i r s t politica.l service was as a member(1869-1875) and president (1871-1872) of the Providence commoncounci.l. He was a member of the lower house of the RhodeIsland legis lature in 1875-.1876, and speaker in the las t namedyear. By this time he had become very inr.Luential in Repub-7congreeaional Record, Volume 44, Part 2, 1301. Curtiss, Inaus t r ia l Development, 376. Also Miller, Revenue, 391. Edward Stanwood, AHistory of the Presidency from 1891 to 1916,Mifflin, New York, 1912, 219.


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55l ican state pol i t ics , and in 1878 and again in 1880 was electedto Congress. In 1881 he resigned to take a seat in the Senate,where he served continuously for th i r ty years. He was an ablechampion of protection and an authority on finance, and hisknowledge of these subjects was embodied in various tar i f f andcurrency enactments. From 1881 on unt i l he ret i red th i r tyyears la ter , he was the master of Rhode Island pol i t ics . 8 Inthe Senate he was promptly recognized as a coming man and soonproved himself to be a br i l l i ant statesman.9 In the 1897 and1909 t a r i f f debates, Senator Aldrich stood not so much forprotection in and of i t se l f as for the s tatus guo.10

Senator Aldrich kept the b i l l in the finance committee forforty-eight hours, while the corridors around his committeeroom were crowded with the representatives of the big protectedin teres ts . When the b i l l emerged, i t bore l i t t l e resemblanceto i t s original form. The Senator 's influence accounts for noless than 847 substantially important amendments, whose tendency was upward. Many greatly debated ar t ic les in the Housewere again subjected to a ra ise . I t is certain that the shi f t -ing of duties would embody "jokers"--new rates favoring par-8Allan Johnson, ed. , Dictionary of American Biography, Scribner 's , New York, 1928, 152.9Ibid.

10Ib id . , 154.


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56t icular industr ies . 11 As a resul t the bi l l was a complicatedaf fa i r which needed careful study in order to be understood.

Many months of hearings went into the work of the b i l l .I t was reported to the Senate on April 19, 1909, where i t wasdebated a t great length. Senator Aldrich led the active de-bate on the various points in the t a r i f f b i l l . With the helpof the other Senators, he was able to raise the ra tes; thisstimulated the discussion a l l the more. Senator Aldrich pro-posed to "railroad" it through the Senate by making i t thesole order of business unt i l i t was passed. Instead of layingbefore the members the customary written explanations for thechanges in the bi l l , with recommendations for a reasonabletime for discussion, he secured the order that the b i l l shouldbe taken up immediately, and discussed daily unt i l i t wasvoted upon favorably. The alleged reason for th is arbi traryprocedure was that the business interests of the country weresuffering from uncertainty as to the government's t a r i f fpolicy. 12 The real reason probably was that the t a r i f f reform-ers might not have time to make a careful study of the bi l l . l3

But the reformers were not daunted, as wil l be shownla te r . Heated arguments developed over the Republican party11Taussig, Tariff History of the United States, 365.~ 2 ~ ~ z z e y , American Adventure, 488.l3Ibid .


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57pledges between the various Senators and Mr. Aldrich. JosephW. Bailey of Texas stated that i f the t a r i f f were raised i twould not be keeping the promise to the American people to re-vise the t a r i f f in the in teres t of the consumer.l4 Aldrichfe l t bound to revise the t a r i f f from a protective standpoint,and to make the rates equal the difference in the cost of pro-duction here and abroad, plus a reasonable profi t . The Repub-l ican party held the commission of the American public to re-vise the Dingley Act upon these l ines . Mr. Aldrich, on thisfact , stated: "I believe that that policy i s the only correctpolicy for ~ h e people of the United States to adopt and tomaintain." 15 The bi l l , as a whole, contained large reductionsbelow the existing law and a few increases in present rates ,according to Senator Aldrich.

At th is point, Insurgent reaction was fe l t , ably led bySenator La Fol le t te , who interrupted Senator Aldrich's plans bya prolonged debate which revealed to the country exactly whatwas going on.. Well assisted, La Follet te studied the b i l l bynight and debated it by day. The Insurgents were, however, un-able to prevent i t s passage despite the ir active aggression tothe measure. They hopelessly fought i t every step of the way.They were denounced by the "Old Guard,". and there was a greatl4The 6 ls t Congress, 147.1 5rbid.


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58deal of ta lk about reading them out of the party. This reactiowill not be discussed here but in a l a te r chapter.

The Payne b i l l did reduce the schedules in a number of in stances and was an honest effor t to carry out the par ty ' s policies, b u ~ i t was not this way in the Senate. There was a genera l revision downward but not enough to sat isfy President Taftand his desires which were more than the Senate desired. Whilethe b i l l was being writ ten and rewrit ten in Congress, the President was carefully observing the maneuvers of the legis la torswith growing apprehension. Frequently he threatened to vetothe b i l l in order to daunt the reactionaries and obtain one incompliance with the platform. Taft approached the Insurgentsbecause he wanted them to f ight for a downward revision of thet a r i f f b i l l . With the ta r i