American Tariff History 1

with higher rates distinctly protective, passed by the Whig party, and which remained in force four years.

§ 7. The tariff, 1846-1860.

The Democratic party, com ing into power, passed the act of 1846, called the Walker tariff after the Secretary of the Treasury. As he was a believer in free trade, this act is often mistakenly described as a free-trade measure. It was, in truth, far from that. Most of the rates were, indeed, lower than those that had been in force between 1816 and 1846 (with the exception of those between 1840 and 1842), but still some of the rates were high (a few as high as 100 per cent) and many of them were strongly protective in nature. The fact that tea and coffee were on the free list is marked evidence that con siderations of revenue did not dominate. The rate on cot ton goods was 25 per cent and the rates on many of the most important other protected articles (iron, woolen goods, manufactures of iron, leather, paper, glass, and wood) were 30 per cent. The average rates under the act for its last eight years (to 1857) were on dutiable 26 per cent, on free and dutiable 23 per cent. The country prospered for eleven years under this tariff. In 1857 rates were again reduced, the more important protective rates from 30 per cent. to a level of 24 per cent. This time partizan considerations played no part in the discussion. The revenues of the gov ernment had been excessive and the need of a reduction was admitted by nearly every one. The average ad valorem rates under the nearly four years of the act of 1857 were about 20 per cent on dutiable and 16 per cent on free and dutiable (the lowest in the century between 1812 and 1913).

§ 8. The tariff, 1861-1871.

The reduction of rates in 1857 was made just at the time when the country was at the height of a wave of prosperity and of speculation which cul minated in the financial crisis of that year.* As always at 4 The political argument that the small tariff reduction of 1857 caused the crisis of 1857 will not bear serious examination. See ch. 16, 113.

such time, the government's revenues fell greatly. The first purpose in the revision of the tariff in 1861 was simply to restore the rates in the act of 1846. But the Morrill act, which became a law just before Fort Sumter was fired upon, contained many higher rates and its purpose was avowedly protective. This necessarily involved a sacrifice of possible revenues for the Then from the beginning of the Civil War till its close some rates were raised almost every month with little scrutiny or debate. The average ad

valorem rate jumped from 19 per cent on dutiable in 1861 (under the law of 1857) to an average of 35 per cent in the three years, 1862-1865.

The most important tariff acts of the war were those of 1862 and 1864, by which large increases were made on many articles. These tariff acts were passed in connection with far-reaching and burdensome applications of internal revenue taxes on many kinds of manufactures. The tariff rates were primarily intended to offset these taxes, "to impose an addi tional duty on imports equal to the tax which had been put on the domestic articles," as was said by the sponsors of the bill. These rates were similar in purpose to compensatory rates, and in many cases they were more than sufficient to offset the internal taxes. Under the last of these acts the duties collected in the six years from 1865 to 1870 averaged nearly 48 per cent on dutiable and nearly 44 per cent on free and dutiable.

The remarkable fact was that soon after the war the in ternal revenue taxes began to be repealed one after another, and by 1872 nearly all those bearing upon general manufac tures (apart from cigars and alcoholic beverages) were gone. The tariff, however, remained almost unaltered. This re peal of internal revenue taxation had the same "protective" effect as raising the tariff rates by so much. As if this were not enough for the protected interests, in 1867 the duty on woolens was further raised, and in 1870 numerous other in 5 See ch. 18, 2.

creases were made in the duties having a protective character. Some reductions were made, but these were almost all on articles of a distinctly "revenue" character such as tea, coffee, sugar, molasses, spices, wines! Revenues were super abundant for current expenses of government, and although there was a large national debt, hardly any of it was re deemable at the time. There was therefore need to reduce taxation, but the attention of the consuming and tax-paying public was distracted by the somewhat passionate issues of the day. Besides, the public had not the technical knowl edge or the unified opinion on this subject to protect itself against the greedy lobby in this process of tax revision. And so, selfish commercial interests could get nearly what they asked for in Congress, and politicians at Washington, who had come to have a well-nigh superstitious faith in the efficacy of very high protective duties, could quietly use the opportunity to raise the people's taxes for the people's good.