The Civil War brought profound industrial changes, and gave a new direction to tariff policy. Hitherto, customs duties had been practically the sole source of government revenue, and tariff legislation had therefore been dictated to no small extent by the condition of the Treasury. The war, with its insatiable demands for revenue, called into existence an elaborate system of internal revenue taxes, of which the imposts on liquor and tobacco re mained as a permanent and highly important part of the revenue system, thus affording legislators somewhat more leeway to deal with customs duties without primary consideration of their effects on the revenue. The internal-revenue acts of 1862 and 1864 laid heavy taxes on the production of commodities of all sorts, taxes which were naturally accompanied by corresponding increases of duties on imports. As those who framed the laws were protec tionists, they were eager to see that no domestic producer Was injured; accordingly, almost any duty asked for was granted. A tariff structure, "in many ways crude and ill-considered," estab lishing "protective duties more extreme than had been ventured on in any previous tariff act," to quote the leading authority, was thus suddenly built up. Like the other hasty financial legislation of the period, it was originally designed to meet the war emer gency. At the end of the war, however, the structure thus erected, instead of being rebuilt, was preserved practically intact, and with relatively minor modifications continued to serve as one of the two pillars of Federal finance down to 1913.
After the war, the internal-revenue taxes, except those on liquor and tobacco, were promptly swept away, but the pro tected interests successfully resisted the reduction of protective duties, thus retaining what had been granted during the war both as compensation for internal taxes and as protection. The demand for tax reduction and tariff reform was met in 187o by a lowering of rates on revenue articles like tea, coffee, sugar and spices, but an actual raising of certain protective duties, including those on steel rails and nickel. Two years later it became necessary to do something more to reduce revenue. Fearing worse things, the pro tectionists consented to a horizontal io% reduction of all duties, on condition of the entire repeal of the non-protective duties on tea and coffee. When more revenue was needed in 1875, the io% was easily and quietly restored. On the other hand, the high war rates on wool and woollens had been in 1867 raised yet higher, at the instance of certain woollen manufacturers and sheep breeders represented in the Syracuse convention ; and the elaborate scheme of classified duties on wool, together with compound specific and ad valorem compensating and protective duties on woollens, in troduced in the Morrill act, had been further developed. Similarly, the Lake Superior copper producers succeeded in 1869 in getting Congress to raise the duties on copper ore and ingot copper. By
this means a combination of copper producers for a decade ob tained extra prices equal to a good part of the duty. In 187o the 45% duty on steel rails was changed to a slightly higher specific duty of $28 a ton. Rail costs fell rapidly, and by 1877 this amounted to almost i00%. The small number of American companies owning the Bessemer patent made enormous profits and expanded their business rapidly. At the request of interested producers, though with less striking results, there was a similar raising of duties on marble and nickel.
No general revision of duties occurred until 1883, when a re dundant revenue compelled a reconsideration of the entire situa tion. A tariff commission was appointed, made up of protection ists. Its recommendations looked, on the whole, towards reduc tion, but little attention was paid to them. The protectionist forces in control of Congress managed, by skilful parliamentary management, to get rates raised on goods which continued to be imported despite the existing protective duties—articles such as fine woollen cloths and dress goods, cotton hosiery, laces and em broideries, iron ore and various special manufactures of steel— while duties were lowered chiefly in cases where the new rates were no less prohibitory than the old, such as cheap cottons, steel rails and copper. The act made no fundamental change in the protective system. Tariff discussion continued, and President Cleveland's annual message to Congress in Dec. 1887, urging gen eral tariff reduction, particularly on raw materials, made protec tion the outstanding issue of the presidential campaign of 1888. The Republicans were successful, and they proceeded accordingly to revise the tariff in order to make it more highly protective. By the McKinley act (1890) the duties on wool and woollens were raised, as were also those on such cottons as continued to be im ported, particularly knit goods. Linens went up sharply, and vel vets and plushes of all sorts, of which imports were heavy, were charged high rates in the effort to establish a new industry. With the same purpose, tin-plate, with which the United States had been supplied almost entirely by importation, was charged cents a pound, but with the proviso that it should be admitted duty free after 1896 unless domestic production should equal of imports in some one year between 1890 and 1896. The exist ing duty of two cents a pound on sugar, which was practically a revenue duty, since only a tenth of the supply was produced at home, was repealed, and the domestic producer was given a two cent bounty instead, the two measures together taking something like 6o millions a year out of the Treasury. The whole act was a bold attempt to extend the protective system distinctly farther.