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Speech of Hon. William R. Morrison.
Introduction
The House being in Committee of the Whole House on the state of the Union, and having under consideration the bill (H. R. 5893) to reduce import duties and war-tariff taxes —
Mr. MORRISON said:
Mr. CHAIRMAN: Information comes to us from the executive branch of the Government that the people are burdened with unnecessary taxes and contribute annually large sums to the public Treasury not necessary for public uses. The majority of the House is justly held responsible both for its legislation and its neglect to legislate. The fact that our customs or tariff revenue is not limited to the necessities of the Government is, so far as I know, not questioned by any member of the majority here where bills to reduce as well as to raise revenue must originate. While taxation is admitted by all to be excessive, the extent to which its burdens are imposed directly and indirectly in excess of the requirements of the Government is the subject of much diversity of opinion. The amount of annual surplus is dependent upon the speed with which we pay the public debt.
The Treasury estimate of expenditure, including such annual payment on the public debt as is enjoined by the law under which the debt was made, is for the current year $40,000,000, and for next year $60,000,000 less than the estimated revenues on the basis of existing laws. The Treasury estimate of annual surplus may, therefore, be fairly stated at $50,000,000. Of this needless taxation and surplus with their attendant aggravated evils we can not fail to relieve the people without flagrant disregard of public duty.
Reduction of Taxes Only Reform Practicable.
It is not claimed that the bill reported by the committee will afford all the relief demanded of the people's representatives. It is but an advance toward and a promise of more complete revenue reform, to attain which a general revision of the tariff and a more equitable adjustment of rates on its long list of dutiable articles is essential. Such a revision and adjustment was believed to be unattainable at the present session of Congress. A bill was therefore reported having for its chief purpose the reduction of taxes. It will create no surprise that in the opinion of the minority members of the committee the bill is not sufficiently harmonious in its relations to be approved by them or by protectionists generally. They find in it no merit because, as they allege, it proposes to reduce duties "alike," and without regard to particular industries. To protectionists any measure is without harmony and without merit which deprives their favorites of any bounty, though such measure but responds to the statement of the fiscal officer of the Government
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that, "The question still presses, what legislation is necessary to relieve the people of unnecessary taxes?"It would be only just to correct the inequalities in the present law by an increased tax or duty on wool, tin-plates, cotton-ties and wire-rods, say our opponents who had neither harmony nor merit in a tax bill which only reduces taxes.
Horizontal Reduction.
A reduction "alike" or horizontal is not the most logical or best, but none other was practicable. Protectionists oppose it not because it is to them illogical in its method of reduction, but because it is a reduction at all. The late revision, after leaving the hands of the manufacturers and their Tariff Commission, was completed in conference, of which three leading members were Messrs. MORRILL, KELLEY, and SHERMAN, who have made all the tariffs of the last 25 years. They are the chief architects of the present system, and it will not be lightly said by the friends of the system that the revision as it came from such hands was not consistent and harmonious. They laid some duties as low as 10, others as high as 100 per cent. and higher. These are to be reduced 20 per cent., or to 8 and 80. Relatively they remain the same. To the people they will be a little lighter.
This horizontal or equal method is not new. In 1872 it was adopted to reduce and in 1875 again to increase the tariff — this too by those who now find in it no merit.
Once deprive the system of its enormous bounties and the right adjustment of rates will be a matter of easy accomplishment.
Taxes Will Be More Reduced Than Revenue.
Gentlemen are disturbed lest revenues will increase under the bill. Professedly they are alarmed at the possibility of taking less of the people's earnings while putting more money in the people's Treasury. The enactment of a law that would accomplish this should not be classed among national calamities.
The bill will decrease the revenue and lessen the burden of taxation in largely increased proportion.
There are now but few duties which do not much exceed revenue rates. Except as to these the reduced duties will leave our own products above the level of fair competition, and our own people will in the future, as always in the past, supply their own wants by their own matchless skill. The year 1860 was a time of plenty. With a tariff too low for revenue — lower by one-half than that we now offer to modify — we had in fourteen years less than two of adversity, more than twelve of wonderful progress. The laborer for wages was at least as well and the grower of grain better paid than they are in this year 1884, and in that year, 1860, of bounteous plenty our importations of foreign goods were less to the person, or in proportion to population, than in the years 1880-1882. (I.)
Free Salt, Coal, and Lumber.
To the list of articles now imported free of duty, amounting to nearly one-third of all our importations, it is proposed to add salt, coal, wood, and lumber. Salt is already freed from tax for fishermen, also for the exporter of meats, to lessen the cost of food to the people of other countries, not for our own; coal is untaxed for use on vessels having by law the exclusive right to the coasting trade, or engaged in the foreign carrying trade — a privilege denied to persons engaged in other pursuits. Such privileges and exemptions should not be confined to the few, but
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extended to all. It is now more than twelve years since the protectionists themselves, the late President Garfield among them, passed a bill in the House placing coal and salt on the tree list. Since then they have done nothing which so much commended them to the people.The revenue from wood and lumber imported and hereafter to be admitted free of duty has in the ten years last past not much exceeded $10,000,000, or $1,000,000 per annum. The census returns show the domestic wooden products to exceed $500,000,000 per annum. If the average duty of 20 per cent. on the imported wood adds but 10 per cent. to the price of that produced here, its increased cost to the people has been $50,000,000 per annum, or $500,000,000 in the ten years. In these ten years, under pretense of taxing this article to secure $10,000,000 of revenue, we have compelled the people to pay $500,000,000 in bounty to encourage the destruction of forests and the felling of trees; and in the same time we have given more than 18,000,000 acres of land under the timber-culture act as bounty to encourage the planting of other trees and other forests.
Hidden and Concealed Enormities of Present Law.
In the estimates made by Mr. Evans, a clerk of experience in the Bureau of Statistics, which actual payments on importations show to be but estimates though based on official data, it appears the bill would leave in the cottons but two articles — of cotton yarns, not the finest — dutiable above 40 per cent.; in woolens but one coarse carpet wool, which we do not produce, above 60 per cent., and in iron and steel but few above 50 per cent. These rates have been fixed as the limit above which on these articles no duty shall be collected. The present rate on the finest cotton is 40 per cent., and yet it is an unquestioned fact, as shown by invoices and payments made, that duties exceeding 100 per cent. (exceeding the first cost) are exacted and paid on cotton goods the duty upon which is, in the estimates referred to, stated to be less than 20 per cent. The same is true of iron and steel in different degrees. In the woolen schedule these abuses are moat glaring. In all they result from enormities hidden and concealed both in classification of articles and rates of duty. The limit of 40, 50, and 60 per cent. on the cotton, metal, and woolen schedules is intended to expose and remedy these hidden enormities.
There are those who assume the virtue of a willingness to abate something from custom-house taxes, and aspire to be counted revenue reformers, but do not find in this measure the relief demanded by them. Those really desirous of affording some relief from existing abuses will, not fail to find their opportunity in removing taxes yeilding $8,000,000 on sugar, as much on cotton and woolen goods, and $14,000,000 on other articles used in every home.
Morrill Tariff and War Increase.
In March, 1861, the tariff of previous years, sometimes named in contradictory terms a "free-trade tariff," gave place to the Morrill tariff, which the House had passed early in 1860, and which its author at the time said "would place our people on a level of fair competition with the rest of the world." Goods which were imported under this tariff act of March, 1861, for $100 must pay to-day $155; an increase resulting from war rates and additions under various pretexts still remains averaging 55 per cent. of the former duty and on many articles double as much. The reductions proposed are so limited as never to place our people below but to leave them far above the level of fair competition
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on which the Morrill tariff placed them. This is proposed in the hope that there might be no division among the people's representatives on the "question" which "still presses what legislation is necessary to relieve the people from unnecessary taxes."Duties sufficient for protection in 1861 ought to be more than sufficient after twenty-five years. It is a cardinal faith of the protectionist, so far as he has any faith not measured in dollars and cents, that protection cheapens production, strengthens productive power, and fits its favorites for less dependence upon the bounty of the Government. Why, then, may we not expect to have their co-operation in a reduction of taxes so moderate? And shall we not have the co-operation of their incidental allies? Or must they make up in works what they lack in faith, and still give and give to the miserable system dying of its own excesses?
Late Revision Only Reduction in Name.
In executive communications, and in the report which I had the honor to make on behalf of the committee, it has been already shown that the executive branch of the Government, its fiscal officer or department, the Tariff Commission, and the people were during the last Congress in entire accord as to the necessity of a substantial reduction of tariff taxes, and that all the agencies charged with that duty have failed to do more than make a reduction in name, not in fact. In other words, all the agencies chosen to revise and reduce the tariff, including the two Houses of Congress, have been deceived themselves, and for a time deceived the people, into the belief that they had been relieved from the payment of unnecessary taxes they are yet compelled to pay.
The official statement appended (II) shows that the average cost of importing goods valued at $100 was only $1.74 less under the new than under the old law, and that the average cost or duty under the new law is 41 (40.91) per cent.
It is also shown that the late revision and alleged reduction of duties has not been followed by increased but by reduced importations resulting in less revenue; that the largely increased protective rates made in some branches of all leading industries have not been followed by increased compensation to the workers in these industries, but the reduction of wages begun before the revision has been continued and often followed by further reductions; and that our manufacturing capacity exceeds the wants of our own people, resulting in lower wages, loss of employment, enforced idleness, suffering, and misfortune.
This is the protective scheme we are asked to let alone, because we are told the country wants relief from Congressional agitation.
Agitation.
The insufficient not to say deceptive character of the late revision, the manner of making it, and the circumstances attending its adoption alike forbid that it should be permanent. When it was being forced upon the country with assumptions and assurances which have not been verified, I warned its authors it would give no contentment to the public mind and no rest from agitation, because it did not afford the relief admitted to be a measure of justice by the commission packed to perpetuate existing abuses. I said then that its authors in and out of Congress but deceived themselves if they expected from this measure so much as a temporary settlement.
In a speech made in January last at Columbus, Ohio, Hon. Columbus Delano, a protectionist, long a member of Congress and member of President
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Grant's Cabinet, said substantially, that of his own personal knowledge the Tariff Commission was secured by the manufacturers whose salaried agent they caused to be made its president and as their agent here, after his and his employers' commission had made its report (his own report) he secured many changes in it greatly to the advantage of manufacturers. I hardly need to say that a revision procured through such agencies and methods is entitled to no respect whatever.It is correctly said that a tariff too low necessitates change to obtain needed revenue. It is equally true when too high, as ours now is, change is necessary to avoid a surplus from imports on which the duty is not prohibitory. The only security from agitation and change, therefore, is to confine the taxing power to its rightful purpose of obtaining revenue limited to the necessities of the Government. When no more revenue is needed by the Government of the people, it has attained the limit of its power to tax the people.
Property Should Pay the Taxes.
It is now nearly 8 years since I first said here:
Burdens of Government should be borne in proportion to ability to bear them. Property should pay the taxes. He who has much should pay much; he who has little should pay little; and he who has none, none.
And later —
Legislation which helps an unjust distribution of property, or an unfair division of the proceeds of labor, is a, great public wrong.
And it is just because of this great public wrong that burdens are unequal which are laid upon the necessities and comforts of human existence. The First Congress, pressed by the needs of a nation grievously in debt, with an empty treasury, departed from this most just rule of equal taxation and resorted to the indirect method of obtaining revenue. This was justified at the time upon the assumption that an impost on trade was a tax in proportion to ability to pay it, because it was claimed that consumption was generally proportioned to the circumstances of individuals. This assumption has not been verified in our experience. It was in fact never true. With the then conditions and habits of our people it may be the evil effects of the plan were not apparent. Subsequent history not only shows its monstrous injustice but its baneful results. Some of these are to be found in the fact that this method of obtaining revenue so increasing the cost of living consumes all the earnings of a great majority of the people in the struggle for existence.
Unequal Burdens of Tariff Taxes.
Estimates based on the census statistics show that as many as 18,000,000 of our people do some work or are occupied in some business; that the average earnings of at least 16,000,000 of these do not much exceed $300 and are wholly consumed in means of daily subsistence. These, too, are the millions who in shop and field strike the blows of all production. All the accumulations of and boasted additions to our national and individual wealth go to one-tenth of those who earn it; and of these but few indeed appropriate the great miss of the savings of the people and are enriched by the profits of the labor of other men.
Like estimates will show that the few who profit most from the labor of all contribute little under this system of unequal taxation, not more than 2 per cent. of their savings, while the great mass of workers, including the dependent poor, pay the bulk of taxes, all of which is subtracted from the too scanty means of comfortable living.
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This indirect method of obtaining revenue came early into use among those who had not only pledged but expended their fortunes for the right to establish commerce. Once established, they taxed it, for the best of reasons — they had nothing else to tax. They were impartial, too, in their exactions. Manufactures, as well as tea, coffee, and spices, articles produced and those not produced here, were made to contribute. Then as now the country's commerce was largely with England, whose king had caused the substance of the people to be eaten out. Tax-paying was not a favorite employment at that time, though the taxes on manufactures were but one-fifth of what we now pay. Light as they were, it may be they were yet lighter when it was declared, as it was, that their food and clothing, including tea, coffee, and spices, not grown here, were taxed for the encouragement and protection of manufactures, for had not our commerce been cut off by England, against whom manufactures were to be encouraged and protected?
Revenue Tariff — Free Trade.
To get away from impost taxes is to us practically impossible. Certainly I do not expect the people to abolish a revenue system to which they have been so long accustomed. I do expect to confine it to its rightful purpose and correct its abuses. Need I repeat that when the Government has taken from the people all that it needs for the cost of frugal administration, then the hand of the tax-gatherer must be staid. In such a limit to the right to lay taxes the protectionist, finding himself no longer pensioned on the industries of the country more or less prosperous than his own, will discover free trade. Ours is a very free country of very free men, both very freely taxed. In the same sense that we are free men in a free country freely taxed, we may be correctly named free-traders when we insist that the trade and commerce of the country and the necessities of comfortable living shall be freed from all taxes not essential to the Government for public uses.
Internal-Revenue.
The amount required from customs is dependent upon what may be received from internal revenue. The abolition of internal revenue means free and cheaper liquors but heavier taxed and higher priced sugar and other articles essential in every household. I am not called upon to defend the system, which has many abuses. Of the two systems it is the cheaper in administration, immensely cheaper in its results. The spies and informers complained of are common to both. So offensive is the impost that gentlewomen are required for its execution in part. The repeal of internal revenue means more than additional cost of living and greater privation to the poor; it means a permanent public debt which few own and many pay and which corrupts administration. The earlier statesmen described it as a moral canker and dangerous to good government.
While we cannot doubt the existence of great wrongs in the execution of internal-revenue laws, especially in the South Atlantic States, many of these may be cured. Neither is it because of these abuses of administration that the abolition of the liquor and tobacco taxes is demanded in the States far north and substantially free from these flagrant abuses of administration.
Mr. Jefferson has been summoned here as often as four times in a single day and made to bear testimony to the "infernal" character of a tax on whisky.
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It was Mr. Jefferson who said:
Public debt is a moral canker from which we ought to emancipate posterity.
It was Mr. Jefferson who said:
Agriculture, manufactures, commerce, and navigation are the most thriving when left most free to individual enterprise. Protection from casual embarrassments, however, may sometimes be reasonably interposed.
It was Mr. Jefferson who said:
Foreign spirits, wines, teas, coffee, cigars, salt are articles of as innocent consumption as broadcloth and silks, and ought, like them, to pay but the average ad valorem duty of other imported comforts. All of them are ingredients in our happiness, and the government which steps out of the ranks of the ordinary articles of consumption to select and lay under disproportionate burdens a particular one, because it is a comfort, pleasing to the taste, or necessary to health, and will therefore be bought, is in that particular a tyranny.
It was Mr. Jefferson who said:
Taxes on consumption, like those on capital or income, to be just must be uniform.
It was Mr. Jefferson who said:
I do not mean to say that it may not be for the general interest to foster for a while certain infant manufactures until they are strong enough to stand against foreign rivals; but when evident that they will never do so, it is against right to make the other branches of industry support them.
It was Mr. Jefferson who said:
When it is found that France could not make sugar under 6 francs (h) a pound, was it not tyranny to restrain her citizens from. importing at 1 franc (h), or would it not have been so to have laid a duty of 5 francs (h) on the imported? The permitting an exchange of industries with other nations is a direct encouragement of your own, which without that would bring you nothing for your comfort, and would of course cease to be produced.
It is a little singular that Mr. Jefferson should be so often summoned here by the friends of the bounty system to tell us so little when he knew so much. He was not made to bear witness to the moral canker and corrupting influence of a public debt, or that all industries are most thriving when left most free to individual enterprise, that taxes on consumption to be just must be uniform; that protection is only justifiable "to foster for awhile certain infant manufactures until they are strong enough to stand against foreign rivals, but when evident that they will never be so, it is against right to make the other branches of industry support them." Why was he not permitted to tell the whole truth?
Macaulay says:
There is a certain class of men who, while they profess to hold in reverence the great names and great actions of former times, never look at them for any other purpose than in order to find in them some excuse for existing abuses. In every venerable precedent they pass by what is essential and take only what is accidental; they keep out of sight what is beneficial and hold up to public imitation all that is defective.
Abuses, to Continue Which Internal-Revenue is to Be Repealed.
What are some of the existing abuses for which some excuse is to be found in professed, reverence for the great name and great actions of Jefferson? In the first six months under the new tariff 36,000,000 yards of woolen goods for women's and children's clothing were imported, and upon every $100 worth (at first cost) $68.32 was paid in duty. Under the old law the duty would have been $68.74—42 cents more.
While this abuse continues to exist the grower of grain, who is compelled to find a foreign market and exchanges his product for woolen goods, must on his return give to the Government out of every hundred
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yards of cloth 68 1/3 yards for the privilege of selling the other 31 2/3 yards. This helps those most clamorous for internal-revenue repeal, who, or their friends, make woolen goods to sell 31 2/3 yards as nearly as possible at the first cost of the 100 yards imported. At the last session, while promising to reduce tariff taxes, these new disciples of Jefferson so increased them on manufactures of iron and other metals, including cotton and other machinery, that the planter who exchanges 100 bales of cotton for any of these manufactures must on his return surrender to the Government the foreign proceeds of 45 for the privilege of selling or using that received in exchange for the other 55 bales. All makers of iron products, with their especial representatives, profess reverence for the great name of Jefferson in continuance of this abuse.Yet these are but examples of the innumerable existing abuses which it is proposed to perpetuate by the repeal of the internal revenue; for when we shall have abandoned this profitable source of revenue the lightest of our many burdens carried only by the willing, then will the protectionist claim to find reason not only to continue but even to augment the enormous bounties and exactions of the present tariff.
It is said this is a war tax and must be repealed now that the war has ended. The obligations of the war have not ended with the war itself. In the last twenty-two years we have paid nearly $800,000,000, and in the next twenty-two years we will pay not less than $1,000,000,000 for pensions. The bonded debt was never quite $2,400,000,000. It is yet more than $1,200,000,000. The cost of the war is not half paid. Internal taxes which yielded more than eight-tenths of the revenue obtained from that source have been repealed. Liquors and tobacco, which yielded less than two-tenths alone, are now made to contribute. And whatever else may be said of the system, what it takes from the people it puts in their Treasury. What under the urgencies of war was added to the weight of customs, especially that which yields bounties indirectly, remains to plague us, cut off our commerce, and prevent an exchange of our products abroad for which there is no market at home.
These additions or war-tariff rates should be repealed, because without yielding revenue they increase the taxes and burdens of the people. Until these are removed internal revenues ought not to be further reduced. Even the repeal of the tobacco tax would be unwise finance and only justifiable as a help, if need be, to the removal of tariff abuses.
Unsatisfactory Condition of All Industries.
The office of all others I am least ambitious to fill is that of alarmist or foreboder of evil to my country and its people. And certainly the report of the committee does not overstate the fact in saying "the condition of manufacturing industries is not satisfactory." Those of us who refuse to shut our eyes to facts must admit this to be true of most if not all industries.
In that referred to in the committee's report, iron and steel, it is shown, that its most important division was idle one-third of the time in the year 1882 and yet produced all the iron the people could use. In the year 1883 less iron was made than in the previous year, and therefore more mills were idle. The same is true of all leading industries; they have outrun in their capacity to make goods the ability of the people, to use and pay for them. Our mills, furnaces, forges, cards, and spindles more than equal the wants of our population. Shall we wait for our people to grow up with the mills, cards, and spindles? That will never be while Congress offers bounties for the products of new mills.
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In the same journal of daily news you may read of manufacturers before Congress protesting against a reduction of taxes which yield them bounties, of the opening of new mills or shops, of old ones shutting down and running on part time, of a 20 per cent. horizontal cut or reduction in wages, and of manufacturers before Congress protesting against a reduction of taxes which yield them bounties, hypocritically assuming that they are protesting that wages may be maintained.
While the mills stand still and their owners divide among themselves profits eight months of the twelve, what is the laborer to do? To take, with or without the forms of law, part of the earnings of those who work the whole twelve months to pay twelve months' wages to those who are permitted to work but eight, would be dishonest. To maintain by taxation an industrial system which enforces idleness with its attendant suffering upon men willing to work is a crime. Both are impossible of long continuance consistent with the welfare of the State, for when all who are willing to work find employment their earnings but little exceed their daily subsistence. Want of employment for great masses of industrious men from any cause can not fail sooner or later to bring suffering, misfortune, and hunger, and hungry men are dangerous.
We Want a Market Abroad for What We Can Not Sell at Home.
When industrial and financial misfortune came upon us in 1873 it was credited by protectionists to a depreciated currency and other relics of the war, excepting always tariff taxes. Abundant harvests here, and short crops abroad, brought us good prices for our grain in foreign markets and out of trouble in 1879. Evidently the stoppage of mills and shops, the cutting of wages, and want of employment for men willing to work, are danger signals to all industrial interests. It is not new industrial establishments we need, for we have more than are employed. It is not men to work, for many are idle; besides we have free trade in labor and a half million a year come from abroad. What we want is a market; somebody to buy abroad what we can not sell at home. Agricultural products cannot relieve us, as in the financial troubles of 1873 to 1879, because the customers who then bought of us have other sources of supply in India and elsewhere in the East. These are being so developed that they can supply food in ever-increasing abundance.
If this were not so the division of labor and its growing productive power compels us to find other markets than our own for manufactures which have so outgrown the wants of our own people. Whatever else the tariff has or has not done it has taxed us out of all other markets than our own; and such was the purpose of its authors. On this subject Mr. MORRILL said while a member of the House:
When one nation admits cotton or any raw material free of duty other nations are forced to follow tile example or cease to manufacture beyond their own consumption, unless they give equal compensatory advantage upon exports.
When Mr. MORRILL, and his associates, who made and who continue the present tariff, refused to admit ores, coal, wood, wool, and other raw materials free of duty, they were not ignorant of the effect of such refusal and must have intended our people should "cease to manufacture beyond their own wants."
Untaxed Materials.
That we may manufacture beyond our own wants the policy of Mr. MORRILL and his associates must be so changed that in materials constituting so large an element of the cost of production our people must
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be placed on a level of fair competition with all others. It was for this purpose that in the bill as first presented by me ores, coal, and some of the cruder materials for use in manufactures were placed on the free-list. Ultimately and speedily, too, all classes would be benefited by such legislation — the manufacturers first, laborers most. Yet the proposition met no favorable response from the manufacturers themselves, or, so far as I am advised, from any member here claiming to be the especial representative of the industrial interests. Untaxed ores lie at the bottom of all real reform in the metal schedule. The tax on iron ore with interest and profits on investment goes into and increases the cost of the pig, then into the bar and the more finished product, adding the cost at every stage of production. The same is true of all the cruder materials which are used in the processes of production. Revenue must be derived from products ready for consumption if ours is to be a manufacturing nation at all commensurate with its unlimited resources or beyond the wants of its own people.Low Tariff Develops Country Most.
When this is done manufacturing industries may add something to the wealth of the nation by reason of the tribute which other nations must pay to its endless resources and the unrivaled skill and intelligence of its people.
The grand aggregate of national wealth, counted in the census at $43,300,000,000 in 1880, was but $26,460,000,000 in 1870. "Behold," exclaims the protectionist, "the results of our system which so multiplies and nearly doubles the wealth and national savings in a single decade. Further investigation will show that in the ten years from 1850 to 1860 with very low tariff taxes wealth was more than doubled, and that was the only decade in our history which doubled wealth. Protection has prevented this industry from bringing anything to the wealth of the country from abroad. Had manufacturing industry produced more that could be sold profitably abroad it might have better claim to the credit of the country's growth and development, when for its own prosperity it has been dependent upon other domestic industries.
Duties Must Be Reduced on Both Materials and Manufacturers.
To the extent that materials are relieved from tax the articles into which they enter derive advantage over competing articles of foreign make, and the duty on such competing articles should be correspondingly reduced. Without this manufactures would be more highly protected than they now are and more rates would be prohibitory.
It may be asserted that competition would regulate all this in the public interest, but the assertion is not justified by the practices of protected interests. The fact is quite notorious that distinctive branches of manufacturing industry highly protected against foreign competition combine to maintain prices to the injury of the general public. In the larger industries such combination is more difficult, but it pervades the whole system, and for twenty-five years Congress has been a party to it. Some of the larger industries have tariff committees to advise Congress how to make laws that they may make money. Opportunities for such combinations have grown into monopoly.
The use made by the manufacturers of their advantages bestowed by Congress does not justify Congress in adding to them. To compensate them for income and other domestic war taxes estimated by the advocates of more protection at the time to be $128,000,000, they were given
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largely increased protective rates. They secured the removal of the $128,000,000 fifteen years ago, but adhere to the increased compensatory duties with the tenacity of men in pursuit of some honest purpose.Tariff Taxes Do Not All Go to the Treasury.
In estimating the causes of present or possible financial and industrial embarrassment the great burden of taxation must not be forgotten. Since 1885 national, State, and local taxes have exceeded $1,200,000,000, and the contributions of the people do not all reach the Treasury. This is especially true of tariff taxes imposed for protection.
It is sometimes claimed that certain taxes are more popular or less unpopular than others. An inquiry on that subject would probably disclose the fact that as a rule the tax will be most popular with each tax-payer of which he pays least and others pay most. The sum necessary for good government must be paid. When one pays less another must pay more than his fair proportion. And there is probably nothing for which a thoroughly honest man will so readily excuse himself for being dishonest about as the payment of taxes. Still they must be paid and by our own people.
The doctrine that the importer pays them for us is apparently exploded. If the foreign maker were permitted to and did sell in our market 100 tons of iron at $1,400, or $14 per ton, duty free, the maker of iron here must sell at the same price. If a duty of $6 were imposed on the foreigner he must add it to the price and sell it for $20 if he returns with the same amount for his iron. Suppose he does not add the duty to the price, but pays it himself, sells his iron at the same price as if it paid no duty, $14, and returns with $8 per ton; how would the maker of iron here be benefited or protected? It is only because the duty goes into the cost and price of the foreign article that the domestic producer is protected.
To afford protection a duty must be a tax. To what extent customs revenue and the tax on articles of foreign make add indirectly to the annual burdens of the people through the increased cost and price of the home-made competing article is yet a matter of much speculation. Sometimes the price of the domestic article is increased to the amount of the whole duty on the foreign; sometimes to no part of it. But the duty on foreign articles whenever they are imported adds something to the price of what are made here. Two years ago I made an estimate, based on official statements taken from the census and Bureau of Statistics, which showed that in the census year the whole increase in cost of sugar to the consumer resulting from the tariff, which on sugar and molasses is largely a revenue tariff, was $48,820,418, which was so divided that the Treasury received $7.51 of revenue, while the planter received $1 of bounty.
The duty on hoop-iron was $31.66 per ton. The price of the domestic article was $14.61 more than the price of the foreign article, including cost of importation, which was an increase equal to half the duty. The Treasury received $500,986, and the manufacturer $1,414,876, or $2 82 for $1 to the Treasury. On bar-iron the average duty was $22.66 per ton; the value and price of the home product was $7.40 in excess of the cost of the imported article, including cost of importation, an increase equal to but one-third of the duty, and the manufacturer received $4,907,761 bounty; the Government, $1,641,453 in duty — $3 to manufacturer, $1 to the Government. Iron rails pay $16.68 duty. The increased cost over the foreign article was $11.33, or two-thirds of
14
the duty. The cost of iron rails was increased, by the tariff $6,114,916, of which $5,290,119 went to the manufacturer, and $824,747 to the Treasury; $6.41 for bounty to $1 for revenue. (III.)From this statement it will appear that those who use these articles of home production pay for them at prices increased, some of them, to the extent of the whole duty; on others less than half the tax on the same goods when imported, and that under this system the annual tax-paying burdens of the people do not end with the contributions to the Treasury for public uses.
Since this statement or estimate was made the prices of the articles selected for illustration may have changed and the duty on some of them have been modified; this requires some modification of the statements, but they illustrate the principle or lack of principle by which this system confers especial advantages on its favorites.
Estimates of the cost of this system to the people resulting from the increase of prices and the cost of living have been made by many who have given great consideration to the subject, among them Professor Perry and Robert J. Walker, both of whom estimated it at much more than goes to the Treasury. Mr. Tilden, with more caution, writing of our enormous taxation, said:
It was aggravated by most unscientific and ill-adjusted methods of taxation that increased the sacrifices of the people far beyond the receipts of the Treasury.
Prices and Cost of Living Increased by Tariff
A comparison of present prices with those of twenty or fifty years ago can not be made with entire accuracy. The make, style, and structure of fabrics are continually changing. Old things new made are given new names. In the report of the Iron and Steel Association made in May of last year, already referred to, the price of anthracite pig-iron per ton is given for 1860 at $24 per ton, for 1880 at $28; rolled bar-iron, 1860, at $60; for 1880 at $60, and iron rails, 1860, at $48, for 1880 at $49. These prices indicate that in iron there has been no decline of prices in the last twenty-five years.
Accurate comparison can not be made in textile fabrics of cotton, wool, flax, and silk; but in these goods, of some descriptions at least, prices are lower than they were twenty-five years ago, but not nearly so low as they would be but for the expense added to the cost of making them by the high rate of protective taxation.
In the statements made before the committee by the representatives of the Iron and Steel Association, protesting against the bill, they said, "If the duties are reduced the selling price of our products must be reduced;" and such were the statements made before the committee generally, thus admitting that prices are kept up by the tariff. Except when a reduction is proposed the contrary doctrine is insisted upon, and before this debate is ended it will be insisted again and again that whatever reduction of prices has occurred in recent years results from the tariff, when the fact is they result from the ever-growing genius and aptitude of men That goods are made at less cost year by year by reason of oar bettered processes we learn in the every-day affairs of life.
Then why should restrictive legislation distribute the advantages of all human progress as applied to popular well-being among the favorites of Congressional legislation? If the same effort is required now as long ago to obtain the same comfort and good fortune, of what use to humanity is all we have learned? Only a few years ago the cost of railroad service was two or three times its present cost; their owners
15
made great reductions voluntarily and still had great profits. By reason of the intelligent use of what has been learned in building and operating railroads further reductions were only just. Every State in the Union asserted the prerogative of the people and required railroads to carry at reasonable rates. No man's wages was reduced, neither was that subject inquired of. By reason of the same causes which enable railroads to carry cheaper, the makers of all things material for use in our mills, fields, and homes are made cheaper; and yet the Congress of the United States interposes to keep up prices and the cost of human comfort, that the people may have no benefit of what has been learned in all these years.Export of Agricultural Products Double that Manufacturers Use.
In the lower cost of transportation on land and sea is to be found one chief agency of the wondrous development which bounty-fed manufacturers credit to protection. The system, by adding to the cost of the materials for railroad construction, has increased the cost of railroad transportation at least 25 per cent. In the lower cost of carrying agricultural products they have found their only sources of profit. On more than one occasion here I have exposed the fallacy of obtaining a home market for agricultural products through protection maintained by taxing agriculture. In 1880 the agricultural product was counted in the census at $2,212,540,927. Assuming that these products were used by the people equally without regard to their occupations, those engaged and employed in manufacturing, including all mechanics, also miners, consumed of the products classed as agricultural $335,000,000 worth, while for more than double as much, or $685,961,091 worth, the producers were compelled to seek a foreign market.
Wages of Labor Not Helped by Taxing It
During more than half of the last ten years wages have been as low or lower than before the adoption of the taxing policy as a pretended means of making wages higher. They are lower still when compared with the use which those who earn wages are compelled to make of them, for they must use them to obtain the means of comfortable living. Counted by what our laborers are able to accomplish and produce in quantities, and especially in values, wages here are but little more in many industries than the wages paid by our chief commercial rivals. There is but one horizontal reduction for which our opponents are willing to legislate — the reduction of wages — and this their favorites, with or without regard to legislation, are now executing day by day with cruel regularity.
Of all the false pretenses with which protection mocks its victims the assumption that labor is helped or protected by taxing its earnings is the flimsiest. Protectionists, in common with our people, invite the surplus labor of all the world to come, untaxed, unrestricted, free, and join us on equal terms and share in the profits of the wonderful heritage this newer world affords. The captains and masters of industry, if not masters of Congress as well, take to themselves protection of a very different kind — they tax the people at home that they may have no competition from abroad.
Republican Protectionists Cure the Ills of Overtaxation by More Taxes — Democratic Protectionists by More Platform.
In the opinion of the minority members of the committee, representing as they do the friends of the prevailing policy, the cure for whatever of national ills exist, so far as they result from taxation, is to be found
16
in higher-priced clothing and other articles useful in fields, mines, and homes, for that is what is meant by higher-taxed wool, fence-rods, cotton-bands, and tin-plates. Some of our friends here would cure the ills of overtaxation with a declaration of purpose, the execution of which they would carefully avoid. And here is the declaration. It is called the Ohio platform:We favor a tariff for revenue limited to the necessities of Government economically administered, and so adjusted in its application as to prevent unequal burdens, encourage productive industries at home, afford just compensation to labor, but not to create or foster monopolies.
A tariff for revenue limited to the necessities of the Government is demanded by this plan of relief. Is the tariff now so limited? If not, then why refuse to limit it? Who among the Representatives of the goodly people of that State who made this declaration believes it is so limited? Who among them believes the pending bill will reduce the revenue below the necessities of the Government? These are questions to which the plain people of the country want an answer. They will demand to know why tariff taxes are not removed in part if they are beyond the revenue limit. Do gentleman expect to escape responsibility because rates are not rightly adjusted? The adjustment will be the same when reduction is made, but whatever of monopoly belongs to it will be fostered by 20 per cent. less than it now is. If this platform has an honest meaning it is that the tariff shall be lowered to a revenue basis. And gentlemen but deceive themselves who expect the people will be deceived by a refusal to legislate in accordance with this declared purpose. If the protective policy is to be the continuing policy of the Government, it will be, and ought to be, intrusted to its friends, the Republican party.
Arguments for Protection Based on Assumed Danger of Revenue Tariff.
Every argument in support of the protective policy is based on the assumption that any considerable tariff modification, especially a modification to the revenue basis, will destroy manufacturing industries, compel the abandonment of shops and mills, and force those now engaged in them into other employments. This is the old, old story. It was told of manufacturing industries in their infancy; it will be told when protection brings them to decay. Eight years ago I introduced the first bill for free quinine and providing for untaxed alcohol for use in making it. At once it was insisted that quinine-making would become a lost art among us if such a bill should pass into a law, and it did not then pass. Later on, when the story of free quinine got among the people, another placed the bill before the House, omitting the free-alcohol provision, and the bill became a law, protectionists themselves feeling obliged to vote for it. The great Philadelphia house did not go into decline, but continued its business of quinine-making successfully as the second largest quinine establishment in the world. So every legitimate industry would go on with a revenue tariff.
It is insisted that wages are so much higher here than in countries seeking our markets that revenue duties will not equalize the difference in the cost of production. Conceding the truth of what is not true, that the foreign rival must pay for the privilege of selling in our markets a sum equal to the difference in wages to enable the home producer to sell with reasonable profit, let us see if revenue rates will compensate for that difference. The census value of manufactures for 1880 war $5,369,579,191. The wages paid in making them were $947,953,795.
17
The difference in cost of goods is said to be the difference in the cost of wages. But suppose the difference between the cost here and the cost abroad amounts to all the wages paid here, then these manufactures would cost abroad $4,421,625,396. Suppose the average rate of duty which the bill before the House leaves at 33 per cent. was reduced to 22 per cent., and at that rate this $4,421,625,396 in value of goods was imported. It would cost the importer at that rate, of 22 per cent., $972,757,587, which not only makes up for the difference in wages but exceeds all the wages paid for making all the goods.If those who claim especial friendship for manufacturing industries will insist on their going into decay and then dying, some other apology must be found for their taking off than the removal of unnecessary taxes.
Appendix.
I.
| 1860. | 1880. | 1883. | |
| Population | 31,443,321 | 50,155,783 | 54,163,000 |
| Total importations | $353,616,119 00 | $667,954,746 00 | $724,639,574 00 |
| Importations to the person | 11 24 | 13 31 | 13 72 |
| Dutiable | 279,874,640 00 | 459,652,883 00 | 514,060,567 00 |
| Dutiable to the person | 8 90 | 9 16 | 9 73 |
| Free merchandise | 73,741,479 00 | 208,301,863 00 | 210,579,007 00 |
| Free to the person | 2 34 | 4 15 | 3 98 |
II.
March 11, 1884, Mr. MORRISON, from the Committee on Ways and Means, submitted the following report:
The Committee on Ways and Means, to which was referred so much of the President's message and accompanying documents as relates to the revenue, respectfully reports that in said message and accompanying documents the President has deemed it his duty to give to the Congress Information as follows:
"To make a start in the proposed reduction of revenue from imports, the Tariff Commission had been created. In good faith it undertook the work. In its report to Congress it said: Early in its deliberations the Commission became convinced that a substantial reduction of tariff duties is demanded, not by a mere indiscriminate popular clamor, but by the best conservative opinion of the country. * * * Such a reduction of the existing tariff the Commission regards not only as a due recognition of public sentiment and a measure of justice to consumers, but one conducive to the general industrial prosperity, and which, though it may be temporarily inconvenient, will be ultimately beneficial to the special interests affected by such reduction. Entertaining these views, the Commission has sought to present a scheme of tariff duties in which substantial reduction should be the distinguishing feature. The average reduction in rates, including that from the enlargement of the free list and the abolition of the duties on charges and commissions, at which the Commission has aimed, is not less on the average than 20 per cent., and it is the opinion of the Commission that the reduction will reach 25 per cent."
* * * * * * *
"The chairman of the Senate Committee on Finance, in explanation of the bill before the Senate last year, which, after various amendments became a law, estimated at $45,000,000 the reduction of the revenue which would follow the changes in the tariff proposed thereby.
"These intentions and calculations have not been verified.
* * * * *
"So the question still presses, what legislation is necessary to relieve the people of unnecessary taxes?"
18
Your committee find that in the first six months ending December 31, 1883, under act of March 3, 1883 (the new law), dutiable merchandise was imported into the United States valued at $235,898,109, on which duties were paid amounting to $96,514,136, being 40.91 per cent. on the value thereof. In the corresponding six months of the year 1882, under the old law, the value of dutiable imports amounted to $260,856,273, and the duty paid was $111,266,507, or 42.65 per cent. on the value. It thus appears that the average cost of importing goods valued at $100 was only $1.74 less under the new than under the old law.
This exhibit of reduction in rates made by act of March 3, 1883, amounting to 1.74 per cent. of the duty, is subject to an unimportant modification resulting from changes in value and other conditions, some of which increase and others reduce comparative ad valorem rates.
The nominal reduction made by the proposed bill is 20 per cent., or one-fifth of the present rates. With the Morrill tariff limitations in the bill, and the liquor and silk schedules omitted, as they are, the actual reduction on the basis of last year's imports will not exceed 15.74 per cent. on the whole importation of dutiable goods. Together the average reduction made in the Tariff Commission bill (act of March 3, 1883) and that to be made by the proposed bill do not equal the reduction at which the commission aimed."
Wood, sawed lumber, coal, and salt are of such universal use among and so necessary to all the people that in view of the present abundant Treasury receipts it is not deemed advisable longer to obtain revenue from a tax on these articles.
The decrease in revenue as shown by the receipts under the new law other than that resulting from the nominal reduction of 1.74 per cent. results from the falling off to the value of nearly $25,000,000 of imports in the first half year, under the new law, as compared with first half of the previous year under the old law. The reduction of revenue receipts under the bill reported is estimated at $31,000,000 on the basis of last year's imports. To the extent of that $31,000,000 the bill will "relieve the people of unnecessary taxes." To that extent taxes will be reduced directly "as a measure of justice to consumers," and indirectly in largely increased proportion.
From a statement made by the Bureau of Statistics, a copy of which is appended to this report, it appears that duties or tariff taxes were decreased on some and increased on other articles of imported goods under act of March last (the new law). While this is true, there has been no increase of the rates of wages in any, but a reduction of wages in most industries, as well in those whose competing products received more as in those that obtained less protection under the act of March last.
The condition of manufacturing industries is not satisfactory. In common with other industries they only recovered late in 1879 from reverses or partial paralysis of five years' duration. In less than three years' after this recovery such new evidences of industrial adversity appeared that in one of the largest, best-paying, and best-paid industries, iron and steel, the calamity of four months' stoppages and idleness fell upon the workers dependent upon it, not upon the capital invested in it.
In the annual report of the American Iron and Steel Association for the year 1882, made May 1, 1883, by James M. Swank, esq., secretary of the association, he says:
"At the beginning of June nearly all the mills referred to (rolling-mills of Pittsburgh and the West) were closed by a general strike, which continued until the last of September; when work was resumed upon the scale of wages which had previously prevailed. During the strike of four months the prices of rolled iron did not advance, notwithstanding the stoppage of so many mills, a fact which clearly demonstrated that the capacity to produce this form of iron had again, as in the panic years, exceeded the demand. * * * At the same time it must be frankly admitted that our rolling-mill capacity has for some time been in advance of the consumptive wants of the country, and that the check to the overproduction of rolled iron which was afforded by the strike of 1882 was in no sense a calamity to the manufacturers."
It is believed by your committee that the condition of the iron and steel industries and of the workers in them has not much improved since 1882; that the condition of other industries is not unlike and diners only in degree from iron and steel; that the calamity of frequent-recurring Industrial embarrassment and enforced idleness is inseparable from the enormities of our protective system; and that the calamities of such a system always fall upon the laboring poor.
Your committee therefore report the bill with the title above, and with the recommendation that it be passed "as a measure of partial relief to the people from unnecessary taxes, as a measure of justice to consumers," and "conducive to the general industrial prosperity."
19
| Articles. | Six months under the old law — 1882. | Six months under the new law — 1883. | Increase + Decrease - | |||||
| Value. | Duty collected. | Ad valorem rate of duty collected Per cent. | Value. | Duty collected. | Ad valorem rate of duty collected. Per cent. | Value. | Ad valorem. Per cent. | |
| All dutiable merchandise | $260,856,237 | $111,266,507 | 42.65 | $235,898,109 | $96,514,136 | 40.91 | -$24,958,128 | -1.74 |
| Sugar and melada | 44,432,311 | 23,180,590 | 52.17 | 46,800,671 | 23,121,601 | 49.40 | +2,368,360 | -2.77 |
| Iron and ateel and manufactures thereof | 32,499,426 | 12,713,996 | 39.12 | 23,698,937 | 7,924,225 | 33.44 | -8,800,489 | -5.68 |
| Wool: Clothing | 1,210,689 | 671,415 | 55.46 | 2,399,515 | 1,073,311 | 44.73 | +1,188,826 | -10.73 |
| Wool: Combing | 135,123 | 67,839 | 50.19 | 615,677 | 267,704 | 43.48 | +480,554 | -6.71 |
| Wool: Carpet | 3,505,980 | 974,202 | 27.79 | 4,345,385 | 1,087,094 | 25.02 | +839,405 | -2.77 |
| Manufacturers of wool | 22,400,387 | 14,943,626 | 66.71 | 22,064,512 | 15,202,183 | 68.90 | -335,875 | +2.19 |
| Manufacturers of cotton | 14,967,850 | 5,629,658 | 37.61 | 12,067,631 | 4,835,714 | 40.07 | -2,900,219 | +2.46 |
| Manufacturers of silk | 19,999,119 | 11,738,469 | 58.69 | 21,286,252 | 10,617,057 | 49.83 | +1,287,133 | -8.86 |
| Earthen and chinaware | 4,423,146 | 1,896,705 | 42.88 | 3,824,951 | 1,830,363, | 47.85 | -598,195 | +4.97 |
| Glass and glassware | 4,271,305 | 2,327,660 | 54.49 | 3,943,197 | 2,187,362 | 55.47 | -328,108 | +.98 |
| Spirits and wines | 5,203,625 | 3,706,142 | 71.22 | 2,945,001 | 2,659,312 | 90.30 | -2,258,624 | +19.08 |
| Malt liquors | 511,772 | 227,370 | 44.43 | 490,315 | 235,823 | 48.10 | -21.457 | +3.67 |
JOSEPH NIMMO, JR., Chief of Bureau.
TREASURY DEPARTMENT, BUREAU OF STATISTICS, March 10, 1884.
20
III.
| Hoop (band and scroll) iron. | Bar-Iron. | Iron rails. | ||||
| Domestic production. | Foreign imports | Domestic production. | Foreign Imports. | Domestic production. | Foreign imports. | |
| Tons | 96,843 | 15,823.76 | 663,211 | 71,800.12 | 466,917 | 52,598.69 |
| Value | $6,094,484 00 | $720,903 82 | $35,302,431 00 | $3,111,218 43 | $20,978,637 00 | $1,635,980 00 |
| Value per ton | 62 67 | 45 56 | 53 33 | 43 33 | 44 93 | 31 10 |
| Rate of duty per ton | 15 68 | |||||
| Amount of duty received | 590,986 01 | 1,641,453 82 | 824,747 49 | |||
| Freight on foreign (estimated) per ton | 2 50 | 2 50 | 2 50 | |||
| Cost per ton with freight added | 48 06 | 45 83 | 33 60 | |||
| Bounty paid by consumer per ton | 14 61 | 7 40 | 11 33 | |||
| Bounty paid by consumers on domestic production | 1,414,876 22 | 4,907,761 40 | 290,169 61 | |||
| Bounty paid by consumer on domestic production is to duty received by the Treasury as | $2 82 to $1 | $2 99 to $1 | $6 41 to $1 | |||
21
| Articles. | Foreign. | Domestic. | ||||||
| Quantities. | Values. | Rate of duty. | Amount of duty received. | Quantities. | Rate of bounty. | Amount of bounty paid (estimated). | ||
| Sugar | Pounds. 1,625,971,302 | $68,052,639 55 | Per pound. av., 2.44c. | Per pound. $39,739,306 46 | Pounds. 198,962,278 | $13,191,200 02 | Per pound. av.,2.44c. | $4,854,679 59 |
| Molasses | Gallons. 39,443,745 | 8,978,008 50 | Per gallon. av.,6źc. | 2,464,609 00 | Gallons. 12,189,196 | 3,528,770 51 | Per gallon. av.,6źc. | 761,834 38 |
| Total | 77,030,648 05 | 42,203,915 49 | 16,719,970 53 | 5,616,503 96 | ||||