When the Civil War broke out the necessity for revenue outweighed all other considera tions. Heavy excise duties were placed upon domestic manufactures and to compensate these the import duties were raised correspondingly and in some cases a little more. This was done in 1862, the average rate being raised to 37 per cent. The same procedure was fol lowed again in 1864 except that a somewhat greater amount of protection was granted, the average rates being increased by this act to 47 per cent. After the war efforts to reduce the tariff to the ante-bellum basis met with resistance from the protected interests and prac tically nothing was done until 1870. In that year the duties on articles like tea, coffee, wine, sugar, molasses and spices, which did not affect domestic industries, were reduced. Again in 1872 a general revision was avoided by making a 10 per cent horizontal reduction of all duties and abolishing entirely those on tea and coffee and a few other articles. The loss of revenue resulting from the sacrifice of duties, amounting to about $20,000,000 from tea and coffee, and the shrinkage of other receipts as a result of the panic of 1873 resulted in a i deficit of about $50,000,000 and in 1875 the 10 per cent horizontal reduction was repealed. The period of depression came to an end about 1878 and with the return of prosperity a sur plus began to heap up in the treasury again. In 1882 a tariff commission was appointed to propose changes, but their recommendations for a reduction of the tariff were rejected by Con gress. Internal revenue duties were abolished or reduced, but the import duties were on the whole increased.
This action called forth strong protest from the Democrats, and in 1887 President Cleveland brought the issue to a head by a vehement message urging tariff reform and the necessity of reducing the surplus. Up to this time the surplus revenues had been applied to the payment of the debt, but all available bonds had now been paid. The Democratic House passed the Mills bill providing for a general reduction of the tariff, hut the Republican Senate replied by proposing further cuts in internal revenue duties. In the ensuing elec tions the Republicans were victorious and pro ceeded to solve the problem of the surplus by the double process of spending it and raising the import duties by the McKinley Act so as to discourage importations. Extravagant pen sion legislation was inaugurated and a bounty of two cents a pound given to domestic sugar producers; at the same time imported sugar was admitted free, thus sacrificing an annual revenue of $56,000,000. These actions effectually removed the surplus and indeed paved the way for a deficit, which occurred when the panic of 1893 broke upon the country. The Demo cratic tariff of 1894 reduced the duties on many protected commodities, added to the free list, restored the duty on sugar and provided for an income tax. The failure of the income tax
section, however, by being declared unconstitu tional, and the continuing depression led to embarrassing deficits, and when the Republi cans were returned to power in 1896 they promptly reversed this policy by the passage of the Dingley Tariff in 1897, raising the general average of duties to the highest point since the Civil War, namely, 57 per cent. This was an increase from 37 per cent in 1883 and 49.5 per cent in 1890.
The tariff now remained undisturbed for 12 years, but dissatisfaction with the existing duties grew strong, especially with the burdens on raw materials and the favors to monopolized Industries. Efforts were made within the Re publican party itself, especially by members representing the Middle West, to secure a re vision of those duties favorable to the trusts, though without success, but finally in 1908 a campaign pledge was made by this party to re vise the tariff. The Payne-Aldrich Tariff of 1909 was an attempt to redeem this pledge, hut the protected interests succeeded in prevent ing any serious reductions in schedules. This repudiation of party pledges led to an insur gent movement which found expression in the Progressive party and swept the Democrats into power at the next election. The Under wood Tariff of 1913 made important changes, especially in the iron and steel schedules; free wool was provided for, a gradual reduction of the sugar duty with ultimate free sugar, and in general free raw materials for manufactures. The outbreak of the European War the, follow ing year necessitated the suspension or the re duction of sugar duties, thus saving a revenue of some $45,000,000 a year. The enormous revenues needed to defray our expenditures since the entry of the United States into the war have been provided, as in the case of the Spanish War in 1898, by increasing the internal revenue taxes and by income, inheritance and excess profits taxes. An expert tariff commis sion was provided for by the War Revenue Act of 8 Sept. 1916, which it is expected will sup ply the machinery and the information for the scientific solution of the difficult problems of tariff adjustment after the war.
P., 'Modern Tariff History' (London 1904) ; Bolles, A. S., 'Fi nancial History of the United States' (3 vols., 4th ed., New York 1894-96); Dewey, D. it, 'Financial History of the United States' (5th ed., New York 1915); Dowell, S., 'History of Taxation and Taxes in England' (4 vols., 2d ed., London 1884-88) ; Stanwood, E., 'Ameri can Tariff Controversies of the 19th Century' (2 vols. New York 1903); Taussig, F. W., 'Tariff History of the United States' (6th ed., New York 1914); id., 'Some Aspects of the Tariff Question' (Cambrislse 1915).