History of Tariff Legislation (1)
Among the earliest questions coming before the First Congress in 1789 was that pertaining to the raising of revenue for the Government. The public finances were in a deplorable condition. Madison brought forward the matter two days after the votes for President and Vice-President had been counted, and later duties were imposed upon tonnage and a tariff upon foreign imports. The duties were favorable to the interests of American shipping. These measures convinced the British legislators of the necessity of reciprocity in trade between the two countries. A committee of Parliament proposed to ask the United States to consent to the arrangement which Mr. Adams had suggested six years before, and which England had with scorn rejected. The chief feature of this had been reported to Parliament in 1783 by the younger Pitt, and embraced the free entry into the British West India ports of vessels laden with the products of American industry, with a like concession to the West Indies of free trade with the United States. But this was rejected, and the Privy Council issued orders prohibiting the importation to the West Indies of the products of the United States, even in British bottoms. The United States gave the subject a respectful hearing, but it was not until after the War of 1812 that reciprocity treaties were signed between the two countries.
During the War of 1812 the commercial interests of the United States had greatly suffered, and at its close, the questions which relate to the industrial and financial condition of the country assumed supreme importance. The foreign supply of iron, cotton, and woollen manufactures had been cut off, and in consequence infant industries had been attempted in these articles, to take the place of the articles formerly imported. With the return of peace, these home manufactures were threatened with annihilation. Then the South, desiring the creation of a home market for her staple product, cotton, demanded protection as the national policy. President Madison, during his first term, had recommended the passage of a protective tariff, and under the leadership of Calhoun and Lowndes, of South Carolina, Congress passed the first distinctively protective tariff known in this country. This was in 1816. The law had for its avowed purpose the fostering and protection of those infant industries of the country which had been inaugurated by her citizens under stress of the exigency arising from the war.
The Eighteenth Congress passed a tariff in 1824 extending the scope and strengthening the force of the one passed eight years before. In the mean while, the relation of the two sections of the country to the question of protection had materially changed. The cotton-growing States had gained not only the home market for their staple product, but were able to export vast amounts of it to other countries. Her industries were largely agricultural, while the northern and eastern States had developed great manufacturing interests. There was a contest over the question of the tariff in the Twentieth Congress, led by Webster, of Massachusetts, in favor of high duties on the one side, and Calhoun, of South Carolina, in favor of a low tariff on the other. In 1824 the policy of protection was carried to its highest extreme. General Andrew Jackson was re-elected president in 1829, and in 1832 a new tariff was passed. There was a convention held in the State of South Carolina which "nullified" this obnoxious tariff act and prohibited the collection of duties within the State. The convention announced that any attempt to enforce such collection by the general government would be deemed a dissolution of the Union. Previous to this act there had been a prevalent feeling in the South that a home market for their cotton was a matter of indifference, and that the protection of cotton, iron, woollen, and hempen goods in the North was much to their disadvantage. South Carolina and Georgia had, in their capacity as sovereign States, protested against a tariff for protection as unconstitutional.
When the "act of nullification" was passed, President Jackson issued his famous proclamation, declaring his intention to enforce obedience to the law, even, if necessary, at the point of the bayonet. Calhoun had resigned the office of Vice-President and taken his seat in the United States Senate as Senator from South Carolina. Daniel Webster, in a masterly speech on the Constitution, sustained the President, and South Carolina submitted under protest. Amid all the excitement of threatened secession, a presidential election was held. General Jackson was sustained by the country at large and re-elected. Henry Clay, of Kentucky, appeared as the champion of compromise and successfully carried his measure, the tariff of 1833. By this law the duties of 1828 were to be reduced for a period of ten years by a sliding scale until they reached a uniform rate of 20 per cent. This concession calmed the excited minds of the people of South Carolina, and the act of nullification was repealed. The revenues from the tariff and the sale of public lands, from 1828 to 1832, had been far in excess of the needful expenditures of government, and what to do with the accumulating surplus was the agitating question before the people from 1833 to 1836. In the last-mentioned year the sum of $28,000,000 from this surplus was distributed to the several States according to the population of each. The fearful financial crisis of 1837 followed and was attributed to a variety of causes, some claiming that it was due to the reduction in the tariff, some that it was occasioned by the rigorous policy of President Jackson in opposition to the United States Bank, while his adherents claimed that it was the natural result of that spirit of speculation induced by the operations of the bank.
The financial condition became the absorbing question in the campaign of 1840, and upon that issue Gen. W. H. Harrison was elected President and John Tyler, Vice-President. The former died when he had been in office but one month, and Mr. Tyler succeeded to the office. A bill to revive the Charter of the United States Bank was passed by Congress, but Mr. Tyler returned it with his veto and it therefore failed to become a law. A tariff was, however, enacted in 1842, increasing the duties and affording protection to home manufactures. But the Whigs were defeated in the next presidential election, and James K. Polk became President. The protective tariff of 1842 was repealed in 1846, and one with greatly reduced rates of duty was enacted in its stead. The question of tariff gave way to the more absorbing questions connected with the annexation of Texas, the spread of slavery, and the war with Mexico. The tariff of 1846 remained in force until, on the last day of President Pierce's term of office, March 3d, 1857, a tariff, which still further reduced the rates of the law of 1846, received the signature of the President. Then came the financial crash of 1857, from which the country more quickly recovered than in 1837 and 1839. The intense excitement aroused by the discussion of the question of slavery, that at last culminated in a gigantic civil war, overshadowed all other questions.
In the exigency of war a tariff was enacted which greatly advanced the duties beyond those of 1857. Excise laws and direct taxation of the people had to be resorted to to meet the heavy drains on the National Treasury occasioned by the war. The tariff of 1862 imposed duties upon imports averaging fifty per cent ad valorem. After the close of the war, between the years 1869 and 1883, several tariff bills were passed reducing the rates as the interests of the country seemed to warrant. The direct tax was taken off and the excise duties were also removed from almost all articles of necessary use. The war debt was greatly diminished by the liquidation of matured bonds, and a sinking fund to meet other bonds as fast as they matured was established. Still the tariff and other revenues created a growing surplus in the National Treasury. This surplus, June 30th, 1888, amounted to $103,000,000. The presidential campaign of 1888 was waged on the issues connected with tariff reform and tariff protection. All shades of opinions were entertained, from the extreme of free trade on one side, to that of high protection upon the other. In the midst of the political discussion of the question by the country at large, the House of Representatives of the Fiftieth Congress passed a tariff knows as the "Mills' bill," which was amended in the Senate by the substitution of a new bill known as the "Senate bill," but it did not become a law. Benjamin Harrison, of Illinois, was nominated upon a platform which affirmed, "We are uncompromisingly in favor of the American system of protection; we protest against its destruction by the President and his party. . . . The protective system must be maintained. Its abandonment has always been followed by general disaster to all interests except those of the usurer and the sheriff." The utterances of the party then controlling the executive administration and one House of Congress on the subject of the tariff was as follows: "The Democratic party of the United States . . . indorses the views expressed by President Cleveland in his last message to Congress as the correct interpretation of that platform (of 1884) upon the question of tariff reform, and also indorses the efforts of our Democratic representatives in Congress to secure a reduction of excessive taxation . . . . The Republican party controlling the Senate and resisting in both Houses of Congress a reformation of the unjust and unequal tax laws which have outlasted the necessities of war and are now undermining the abundance of a long peace, deny to the people equality before the law and the fairness and justice which are their right."
These principles upon the tariff, as enunciated by the two great parties in their appeal to the people of the United States, became the issues of the campaign of 1888, which resulted in the election of Mr. Harrison as President. The Fifty-first Congress at an early date took up the absorbing question, and a tariff bill, known as the "McKinley bill," was passed by the House of Representatives, May 21st, 1890. After certain modifications it passed the Senate September 30th, was signed by the President and took effect October 6th, 1890.