Chapter V. The Tariff Act of 1890

AFTER THE PASSAGE of the tariff act of 1883 few persons would have expected, for a long series of years, a further extension of the protective system. Nevertheless, a marked increase of duties was made, within a few years, in the act of 1890, familiarly known as the McKinley tariff act: a measure which marks a new phase in our tariff history and in the protective controversy.

In the years immediately succeeding the passage of the act of 1883, several unsuccessful attempts were made to amend it.¹ In 1884, Mr. Morrison, of Illinois, introduced a bill by which a general reduction of twenty per cent., and the entire remission of duties on iron ore, coal, lumber, and other articles, were proposed. Mr. Morrison may have been moved to advocate the plan of a “horizontal” reduction by the example which had been set in 1872; and doubtless he was also influenced by the circumstance that the protectionists themselves had arranged the details of the act of 1883, and could not complain of disproportionate reductions, or of a disturbance of relative rates, under a plan which affected all articles equally. Nevertheless, the proposal met with vehement opposition not only from the Republicans, but from a strong minority in Mr. Morrison’s own party. It was disposed of on May 6, 1884, by a vote (156 to 151) striking out its enacting clause. Two years later, in the Forty-ninth Congress, a similar disposition was made of another bill introduced by Morrison. The proposal of 1886, however, was different from that of 1884, in that it made detailed changes in the duties. Lumber, salt, wool, hemp, flax, and other articles were put on the free list; the duty on woollens was made thirty-five per cent., the specific duties on woollens being removed with the duties on wool; and reductions were proposed on cottons and on sugar. The bill never was discussed in Congress, for Mr. Morrison’s motion to proceed to its consideration was defeated by a vote of 157 to 140, and during the rest of the session no further attempt was made to take it up. Early in the next session, in December, 1886, a motion was again made to proceed to the consideration of revenue bills, and again was defeated.²

With the session of 1887–88, however, the tariff controversy entered on a new phase. President Cleveland’s annual message to Congress, in December, 1887, was devoted entirely to the tariff, and urged vigorously a general reduction of duties, and more especially the removal of duties on raw materials. Mr. Cleveland’s decided and outspoken attitude had the effect of committing his party unreservedly to a policy of opposition to the existing protective system, and so of making this question more distinctly a party matter than it had been at any time since the Civil War. It is true that in the campaign of 1884 the Republicans had put forward the tariff question as the main issue on which they wished to stand before the country; but in that year the personal qualifications of Mr. Blaine for the Presidency played an important part in the election, which therefore could not be said to turn simply on the tariff issue. Moreover, within the Democratic party there was then an active minority opposed to the policy of tariff reduction favored by most of the Democrats. This minority had been strong enough to defeat Mr. Morrison’s tariff bill of 1884. On the measure of that year, while 151 Democrats voted in the affirmative, 41 voted in the negative, and, with the aid of a compact Republican vote in the negative, put an end to the bill. The strength of this element in the Democratic party had declined somewhat in later years; but in December, 1886, at the opening of the short session 1886–87, 26 Democrats out of 169 voting were still recorded in opposition to the tariff reform measure then under consideration.³ In the new Congress, whose first session opened with Mr. Cleveland’s message on the tariff, the situation was changed. The Mills bill, so-called, prepared during that session, was passed by the Democrats in the House distinctly as a party measure; out of 169 Democrats voting all but four voted for it. The Republicans were as unanimous in voting against it, and, by way of counter manifesto, prepared in the Senate, where they had a majority, a bill for changing the tariff system in the direction of further protection. The position of both parties was in this way sharply defined, and in the campaign of 1888 the tariff question was the issue squarely presented.

Neither the Senate bill prepared by the Republicans, nor the Mills bill prepared in the House by the Democrats, was expected to reach the stage of enactment. Both served simply to give concrete expression to the principles of the two parties. The Mills bill reduced the duty on pig-iron to $6.00 a ton, fixed the duties on cottons at 35 or 40 per cent. (all specific duties on cottons being abolished), and made reductions of a similar sort, not often great in themselves, but significant in principle, on other manufactures. The incisive changes were on raw materials. Hemp, flax, lumber were to be admitted free. Most important of all, wool was put on the free list; a change naturally accompanied by the proposal to abolish the specific or compensating duties on woollen goods. The Senate bill, on the other hand, proposed distinctly a further extension of the protective system. A considerable number of duties were raised, especially on manufactures of which imports continued in large volume, like finer cottons and woollens. On a few articles concessions were made, as in the free admission of jute, and a small reduction of the duty on steel rails. In the crucial case of wool, the Senate bill provided for a slight increase above the rates of 1883, both on clothing and carpet wools, and for a corresponding advance in the specific duties on woollens; these changes being accompanied in some cases by an increase in the ad-valorem duties on these goods.

The victory of the Republicans in 1888, and the election of President Harrison, were the results of the issue thus placed before the voters. The election was won by a narrow margin, and was affected by certain factors which stood apart from the main issue. The independent voters had been disappointed with some phases of President Cleveland’s administration of the civil service, and many who had voted for him in 1884, did not do so in 1888. In New York, whose vote was practically decisive, political intrigues helped to turn the scale. On the whole, however, the Republicans held their own, and even made gains, throughout the country, on the tariff issue; and they might fairly consider the result a popular verdict in favor of the system of protection. But their opposition to the policy of lower duties, emphasized by President Cleveland, had led them not only to champion the existing system, but to advocate its further extension, by an increase of duties in various directions. This they had proposed in the Senate bill of 1888, and had pledged themselves to effect in the debates of the campaign. Accordingly when the Congress then elected met for the session of 1889–90, the Republican majority in the House proceeded to pass a measure which finally became the tariff act of 1890. This measure may fairly be said to be the direct result of Mr. Cleveland’s tariff message of 1887. The Republicans, in resisting the doctrine of that message, were led by logical necessity to the opposite doctrine of higher duties, and felt compelled, for the sake of party consistency and political prestige, to pass a tariff measure of some sort. Notwithstanding grave misgivings on the part of some of their leaders, especially those from the northwest, the act known popularly as the McKinley bill was pushed through after long and wearisome debates, and finally became law in October, 1890. To some of the details of this important measure we may now turn.⁴

The wool and woollens schedule had become the most important and most sharply debated part of the tariff system, and the changes made in it by the act of 1890 deserve careful attention. On wool, the division into three classes, clothing, combing, and carpet wool, was retained, and the changes in duty were in the main significant from their direction rather than from their amount. The duties on clothing and combing wool, it will be remembered had been slightly lowered in 1883; they were slightly raised in 1890. That on clothing wool went up from ten to eleven cents per pound; on combing wool from ten to twelve cents. The change was meant to put the wool duties where they had been before 1883, and to placate certain malcontents who ascribed a fall in the price of wool to the reduction of duty of that year. The decline in price was undoubtedly due to other causes, and indeed was much greater than could have been accounted for by the slight reduction of 1883; while the change in duty in 1890 was too small to have any serious effect beyond emphasizing the determination of the Republicans to yield nothing on this part of the protective system. So far as the difference in rate between clothing and combing wool goes (eleven cents on the one, twelve on the other), it is difficult to see what was gained. The distinction between the two classes is largely nominal, many kinds of wool being available either for carding or for combing, and the difference in the duties was in any case too slight to have any appreciable effect. Apparently, it served simply to cause needless complication in administering the collection of duties.

On carpet wools, a more radical change was adopted, more radical at least in form. As has been observed elsewhere, the conditions in regard to carpet wool are peculiar. Practically no wool of this grade is grown in the United States. It is of a coarse quality grown mainly in countries like Asia Minor, India, Russia, and the Argentine Republic, from which it is imported into the United States in large quantities. The reason why it is not grown in advanced communities like the United States, Australia, England, France, Germany, is very simple. With the same labor and attention required for carpet wool, the grower in civilized communities, by care and intelligence in the breeding and management of sheep, can secure a better quality of wool, commanding a higher price; accordingly he confines himself to the more profitable sorts. The demand for an increase in the duty on carpet wool was based on a suspicion that wool, properly belonging to the clothing or combing class, had been entered as carpet wool, and so had escaped the higher duty. Probably some part of the imported carpet wool is in fact used in making cloths; but the fraction is small, and can have no appreciable effect on the price of domestic clothing wool. The endeavor to increase the duty naturally was opposed by the carpet manufacturers, and led to an acrimonious discussion in the committee-rooms between them and the advocates of the supposed interests of the farmers. The result in the McKinley act was a compromise. The carpet-wool duty was made ad valorem instead of specific, varying from thirty-two per cent. to fifty per cent.; the change to the ad-valorem method being intended to make the duty adjust itself automatically to the quality and value of the wool.⁵ Obviously the change in one respect was objectionable: it brought with it the temptations to fraud and undervaluation which are inevitable under ad-valorem duties. With it there went some other provisions which made the new duties more rigorous than they seem to be on their face. Thus, if any carpet wool should be improved at all by an admixture of merino or English blood, it became dutiable as clothing or combing wool. If any bale stated by the importer to be dutiable under one class, contained any wool of another class, the whole bale was dutiable at the highest rate. If any wool had been sorted or increased in value by the rejection of any part of the original fleece, it was subject to double duty. Some of these provisions were framed in ambiguous language, giving occasion for troublesome litigation and uncertainty as to the real effect of the legislation. But all were objectionable to those who imported and used carpet wool, and emphasized the policy of keeping that article within the protective system. Yet if there is any article as to which that system does not attain its object, it is carpet wool. None is grown in the country, and none is likely to be; it is a raw material for an important manufacture; its free admission would harm no vested interest.

Turning now to the duties on manufactures of wool, we find a further development in the direction taken in 1883; namely, a development toward greater complications in the already complicated scheme of duties built up in the act of 1867. It will be remembered that in 1883 the duty on woollen cloths proper, the central point in the wool and woollens schedule, had been changed from the uniform rate fixed in 1867 to rates varying with the value of the goods. In the act of 1890 the policy of varying rates was advanced still further. The mode in which these duties developed cannot be better exhibited than in tabular form, thus:

Duties On Woollen Cloths
In 1867	In 1883	In 1890
50 cents per lb., plus 35 per cent	(1) If worth 80 cents or less per lb., 35 cents per lb., plus 35 per cent. (2) If worth more than 80 cents per lb., 35 cents per lb., plus 40 per cent.	(1) If worth 30 cents or less per pound, 33 cents per lb. Plus 40 per cent. (2) If worth between 30 and 40 cents per lb., 38½ cents per lb., plus 40 per cent. (3) If worth more than 40 cents per lb., 44 cents per lb., plus 50 per cent.

It will be seen that the act of 1890 reduced slightly the specific duty on the cheapest woollens, those costing 30 cents or less per pound. This is another tacit admission, similar to that made in the act of 1883, that on cheap goods the old compensating duty had been excessive. The ad-valorem rate on these goods was raised to forty per cent. No pretence was now made of limiting the net protection supposed to be given by the ad-valorem duty, to that moderate rate of twenty-five per cent. which had been the nominal object of the original compound scheme of 1867. On the second class of goods, costing between 30 and 40 cents a pound, there was an increase over the rates of 1883 both in the specific and in the ad valorem duties. Finally, on the third class under the new act, woollens costing over 40 cents, the increase in duties was marked: the specific duty was 44 cents a pound, and the ad-valorem duty went up to fifty per cent. On readymade clothing the duties were higher still, being fixed at 49½ cents a pound, plus sixty per cent.

There are two features in this rearrangement of the duties on woollens which call for comment. In the first place, the compensating duty on the cheaper goods was on the face of it made excessive. Thus, on goods valued at between 30 and 40 cents a pound the compensating duty was fixed at 38½ cents. The compensation was simply for the rise in the price of wool used by the American manufacturers, due to our duty on imported wool. This extra expense to the domestic manufacturer, in the higher price of wool, was assumed, by the terms of the act, to be as great as the total cost of making the same woollen goods for the foreign manufacturer,—wool, wages, and everything else. But the foreign goods were valued at between 30 and 40 cents a pound, which means that they cost about so much; while the duty which compensated the American producer was 38½ cents a pound. As will be presently explained, this extraordinary compensating duty was more nominal than real, since no classes of goods to which it would apply are likely to be imported. But it was nonetheless an anomaly.

The second feature to be noted is connected with the first. It is the new dividing point in the valuation and classification of woollen cloths: the maximum duty being no longer on goods worth over 80 cents per pound, but on goods worth over 40 cents. The change obviously served to increase the duties more than would appear at first sight; since goods worth between 40 and 80 cents now paid not the lowest, but the highest duty. The effect of the new classification in fact was that all cloths imported must pay the highest rate. The imports of woollens are chiefly of the finer qualities. When the act of 1883 was passed, it was probably expected that few woollens of the lower class then provided for (namely, those worth less than 80 cents per pound) would be imported. In the first years after 1883, this was the case. But as time went on, a growing proportion of woollens came in at the lower value and the correspondingly lower duty; until in 1889 a good part of the cloths imported were classified at the lower rate. This unexpected development was due partly to a decline in the price of wool after 1883; partly to improvements in manufacturing which made it possible to produce goods more cheaply; and partly, no doubt, to the temptation to make goods, and perhaps also undervalue them at the custom-house, in such manner as to bring them in at the lower rate of duty. At all events, the act of 1890 was so arranged as to put an end to this importation of woollens at the lower end of the schedule. To all intents and purposes it has made all woollen goods likely to be imported at all, subject to the maximum rate of duty.⁶

Next we may consider the duties on women’s and children’s dress goods. The duties on these had already been raised in 1883 above the rates of 1867; in 1890 they were further raised. As in the case of cloths for men’s wear, the increase took place partly by direct advance in the rates, partly by a shifting of the classification. The compensating duty on these goods, it will be remembered, had been from the first arranged by the yard, and not by the pound. The changes in duty can again be best presented in tabular form.

Duties On Dress Goods
In 1883	In 1890
(1) Worth 20 cents a yard or less: duty, 5 cents a yard, plus 35 per cent. (2) Worth over 20 cents a yard: duty, 7 cents a yard, plus 40 per cent. (3) Made wholly of wool: duty, 9 cents a yard, plus 40 per cent.	(1) Cotton warp, worth 15 cents a yard or less: duty, 7 cents a yard, plus 40 per cent. (2) Cotton warp, worth over 15 cents a yard: duty, 8 cents a yard, plus 50 per cent. (3) If the warp contains any wool: duty, 12 cents a yard, plus 50 per cent.

The specific duty on the lowest class went from 5 cents to 7; the ad-valorem duty from 35 to 40 per cent. In the middle class the rates advanced from 7 to 8 cents, and from 40 to 50 per cent. The line of division by value went down from 20 to 15 cents, so that a larger proportion of the goods come in under the middle duty of 8 cents plus 50 per cent. On the third class, the rates went up in similar proportions,—from 9 to 12 cents, and from 40 to 50 per cent. One other effective change was made, indicated in the tabular statement, but deserving more detailed description. In 1883 the third class, in which the duties were highest, included goods made wholly of wool, and these only. In 1890, certain goods of mixed materials were transferred to it. The first two classes included, in 1890, fabrics “of which the warp consists wholly of cotton or other vegetable material.” Consequently the third class included such as have a warp containing any fraction of wool; and these mixed goods, as well as goods made entirely of wool, become subject to the new maximum duty of 12 cents per yard, plus 50 per cent.

The changes on dress goods were undoubtedly those of greatest practical effect in the wool and woollens schedule. The importation of these goods into the United States was enormous: having ranged between fifteen and twenty millions of dollars’ worth annually in the years since the act of 1883. It was natural that those who held to the principle of protection should endeavor to check them. There had been a tendency, similar to that noted in the case of woollen cloths, though not so marked, for a growing importation of the cheaper goods (valued at less than 20 cents a yard under the act of 1883); and this contributed to the change in valuation and description in the new act. By the act of 1890, these fabrics were subjected in almost all cases to the maximum duty, equivalent to over one hundred per cent. on their foreign value.⁷ It was surprising that imports continued in the face of a duty so very high; yet continue they did, indicating that not only the imported fabrics, but the domestic fabrics of the same sorts, were raised in price for the consumer by the full extent of the duty. The explanation of the steady inflow of these goods, and the inability of the American manufacturers to supplant them, is probably to be found largely in the peculiarities of their manufacture, and the difficulty of adapting it to American conditions. Of course, with duties high enough, anything can be made in the United States; and the higher duties of 1890, increased still further as they were in 1897, served to stimulate effectively the manufacture of fine woollens and dress goods.

In other parts of the wool and woollens schedule there were similar changes. Some of the higher duties were merely nominal. Thus the duty on ingrain carpets, which had been 12 cents a yard plus 30 per cent. in 1883, went up to 19 cents plus 40 per cent.; that on Brussels carpets, from 30 cents plus 30 per cent. to 44 cents plus 40 per cent. The duty on these had been prohibitory before; the changes served simply to make them more prohibitory, and were of no practical effect whatsoever. Other changes were, like the higher duties on dress goods, of real importance, such as the increase in the duties on knit goods and underwear. Of these the imports also were considerable, and a change in duties consequently had a material effect on industry and prices. The patience of the reader would be needlessly taxed by a further consideration of these details. Enough has been said to indicate the character of the wool and woollens schedule of the act of 1890; we may pass to other parts of the measure.

Among textiles cotton goods come next in importance to woollens in our tariff system. On the cheaper grades of cotton cloths, the duties, which had already been reduced in 1883, were still further lowered. Thus, on the cheapest grade of unbleached cottons, the duty decreased from 2½ to 2 cents a yard. These, however, are goods which are manufactured in the United States as cheaply as in foreign countries, and which we are more likely to export than import. The duties were and are nominal, and the change went no further than a revision of certain unimportant figures in the statutes. On goods whose importation had continued under the act of 1883, and on which the duties had been of real importance, the changes were in the other direction. On the highest grade of cotton prints, the duty went up from 6 to 6 ¾ cents a yard; with the further proviso that goods valued at over 15 cents a yard, on which the duty had before been 40 per cent., now became subject to one of 45 per cent. In the drag-net clause, fixing the duty on cotton manufactures not elsewhere provided for, the old rate of 35 per cent. was replaced with one of 50 per cent. Some duties were changed from ad-valorem to specific with the effect of raising them materially. Thus, on cotton cords and braids, the former rate of 35 per cent. became one of 35 cents per pound, equivalent to about 60 per cent. The most striking change, however, was in the case of knit goods and stockings. On cotton stockings, the act of 1883 had collected a uniform rate of 40 per cent. This was replaced in 1890 by a complicated system of graded duties, partly specific and partly ad-valorem, and varying with the assessed value of the goods. The new rates can again be best described by a statement in tabular form:

If the value is 60c. or less a dozen, the duty is 20c. a dozen, plus 20 per ct.

If the value is betw. 60c. & $2.00 a dozen, the duty is 50c. a dozen, plus 30 per ct.

If the value is betw. $2.00 & $4.00 a dozen, the duty is 75c. a dozen, plus 40 per ct.

If the value is over $4.00 a dozen, the duty is $1.00 a dozen, plus 40 per ct.

Knit goods of cotton, and more particularly cotton stockings, are imported in large amounts, the annual value of the imports having been hitherto between six and eight millions. Most of these were of the second class in the schedule just given, dutiable at 50cents a dozen plus 30 per cent.,—equivalent, on the average, to about 70 per cent. on the value. The raw material here is cheaper in the United States than abroad, and it is surprising that so heavy a duty should have been considered necessary to encourage the domestic manufacture. The explanation of the continued large imports is apparently to be found in part in a great advance in foreign methods of production, due to the newly invented or newly improved machinery, the use of which has not yet been introduced into this country. In part the explanation lies doubtless in the fact that the finer cotton stockings are made on knitting frames with a large use of hand labor. At all events, the changes just noted present as extreme a case of the application of protection as is to be found in our legislation.

On linen goods, of which only the coarsest qualities have been made in the country, the finer being all obtained by importation, the duty wnt up from 35 to 50 per cent. Linen laces and embroideries were advanced from 30 to 60 per cent. On silks the general duty remained as before, at 50 per cent.; on silk laces and embroideries it went up to 60 per cent. Plush goods of all sorts, whether made of silk, cotton, or wool, were subjected to very high rates. A complicated scheme of duties was adopted, partly specific and partly ad-valorem, and varying with the value of the goods; the system being similar in its construction to that already described as to cotton hose, and bringing about duties of 60 and 70 per cent. on the value. The imports of velvets, plushes, and similar goods, were heavy, and the domestic production was inconsiderable; the rates stood for another determined effort to establish a new manufacture under the shelter of very high duties.⁸

One general characteristic of the McKinley act may here be discussed. It was the great development of the method of minimum valuations and minimum duties substantially similar to that adopted in the tariff act of 1828. This mode of grading the duties was adopted not only in the cases described in the preceding pages—woollen cloths, dress goods, cotton stockings, velvets and plushes—but in other cases also, such as blankets and flannels, boiler and plate iron, penknives and table-knives, shotguns, and pistols.⁹ On some of these articles the minimum system had already been adopted in earlier acts; on others it was newly adopted in 1890. The object apparently was to avoid an ad-valorem duty, and yet to secure an adaptation of the rate of duty to the value of the article. But, in doing this, the fundamental difficulty of ad-valorem duties—the temptation to undervaluation—is met, as was pointed out in the discussion of the act of 1828, in aggravated form.¹⁰ The foreign manufacturer is tempted to make goods so as to bring their value near the minimum points, and the importer is tempted to undervalue them. No doubt another object sought in the minimum system, in 1890 as in 1828, was to conceal the real extent and weight of the duties imposed: a result the more likely to be attained where the duties are not only graded by valuation, but are also mixed specific and ad-valorem duties.

The duties on iron and steel would have been thought, in 1870, and even in 1880, the most important parts of the protective system. But in recent years the enormous development of the iron industry in the heart of the country has materially changed the situation. The bulk of the iron in the country is now made of ore mined on the shore of Lake Superior, smelted with bituminous coal mined west of the Appalachian chain. Pennsylvania also contributes its ore, and there has been a striking development of iron-making in the South. Iron smelted with anthracite coal, which played so important a part in our industrial history in the period from 1850 to 1870, has wellnigh disappeared.¹¹ Most of the production now takes place far from the sea-board, and the greater part of the producers of pig-iron can disregard foreign competition. A lowering of the duty on pig-iron to $6.00, the rate which was proposed in the Mills bill of 1888, would have had no appreciable effect in any quarter. The effect of a complete abolition of the duty would be confined mainly to the sea-board districts. These are for all practical purposes nearer to England than they are to the central States, which are now the seat of the greatest domestic production of iron. In the McKinley act, no change in the duty on pig-iron was proposed, and it remained at the old rate, $6.72 a ton.

The situation is much the same in regard to iron ore. The duty on ore is significant only in regard to those grades which contain little phosphorus, and are therefore available for the making of steel by the Bessemer process. The great rich beds of Bessemer ore on the shore of Lake Superior, having easy water communication with the heart of the country, can supply the larger part of the smelters more cheaply than foreign ore could. This ore has made its way far to the eastward, and has been used by establishments very near the sea-board, which, but for the duty, would be likely to use more or less of foreign ore. The eastern establishments which make steel must get their Bessemer ore either by long railway haul from the West, or by importing it subject to duty. Large works have already been established on the Atlantic coast, using ore from rich deposits in Cuba, and therefore desirous of getting ore free.¹² Notwithstanding a strong endeavor from these producers to secure a remission of the duty, it remained in the McKinley act at the old rate, seventy-five cents a ton.

On steel rails the duty was reduced to six-tenths of a cent a pound, or $13.44 a gross ton. This reduction was of the same sort as that made in 1883: it left the duty still at a prohibitory rate. The steady advance in the iron and steel manufacture in the United States, the growth of the West, the discovery of rich sources of iron and coal, above all, the enormous decline in the cost of bringing these materials together, due to the cheapening of railway rates, reduced the price of steel rails as well as of other manufactures of iron. As the figures given in the Appendix show, the price still remained higher in the United States than in England. But cost of transportation from the sea-board to the interior is such that even in the absence of the duty, steel rails would be imported only to supply railways near tide-water. In the main, the steel-rail duty has done its work, for good or ill: it is no longer of great economic importance. The same remark may be made of the duty on copper, which went down in the act of 1890 to 1¼ cents a pound. Copper would not be imported in any event; its price at ordinary times is not higher in this country than it is abroad; a duty serves only to make it possible for the combination of copper producers, in occasional times of exceptional demand, to keep up the price above the foreign price.

A different aspect of the tariff of 1890 appeared in the rise in the duty on tin-plates. This article had never been produced in this country, and had never been subjected to duties comparable to those on other manufactures of iron. In 1862 a duty of twenty-five per cent. had been imposed, and had been retained until 1872, when, at the time of the general reduction of that year, it was lowered to fifteen per cent.¹³ In 1875, when the general reduction of 1872 was repealed, the rate was changed to a specific duty of 1 cents a pound, equivalent to about twenty per cent. at the prices then ruling. But this change did not have any effect in stimulating domestic production, and in 1883 the duty was reduced to one cent a pound, equivalent, at the prices of 1883, to an ad-valorem rate of about thirty per cent. At that rate the importations had been very large, twenty millions of dollars and more a year, and the domestic production had been nil. The question presented itself squarely whether a further and great extension of the protective system should be made. Those who believed that system to be wise, naturally maintained that this article had been unfairly singled out for a specially low rate of duty; and in the act of 1890 a duty of 2 cents a pound, equivalent to about seventy per cent., was imposed. The continuance of this duty, however, was made subject to a curious condition, unprecedented in our tariff legislation: that after the year 1896, tinplates should be admitted free of duty, unless the domestic production for some one year before that date should have equalled one third of the importations during any one of the years between 1890 and 1896. In other words, the permanent maintenance of the duty was made conditional on a substantial increase of the domestic production. Obviously, so long as there was no domestic production, the duty had been merely a revenue duty,—an indirect tax of the simplest type, not of the best sort doubtless, but substantially similar in its effects to duties on tea or coffee. The alternative now presented was that it should either become a protective duty, with the peculiar effects flowing from such, or that it should cease to be a tax at all.¹⁴

As to agricultural products, there were some innocuous changes, and some of real importance. The duty on wheat went up from twenty to twenty-five cents a bushel, and that on Indian corn from ten to fifteen cents; changes which obviously could be of no consequence whatever. Equally insignificant in their general effects were the higher duties on potatoes and eggs, which might possibly have some slight effect in checking the border trade between Canada and the Northern States, but in the main must be of petty character. Among changes of greater importance was an increase of the duty on barley from ten to thirty cents a bushel; a change meant to protect the farmers of some Northern States against Canadian barley. Oddly enough, the duty on rice, which, like barley, is imported in considerable quantities, was slightly reduced. On another set of agricultural products there were some changes in the direction of higher duties; namely, on textile materials like hemp and flax. On flax the duty was increased from $20 to $22.40 a ton; on dressed flax, from $40 to $67.20 a ton. On undressed hemp the duty remained unchanged; on dressed hemp it went up from $25 to $50 a ton.¹⁵ Notwithstanding some attempts to get encouragement for the production of jute in the Southern States, that tropical commodity, which we import largely, was relieved from the former duty and admitted free.

We may now turn to another phase of the act of 1890, the remission of the duty on sugar, which was important in its effects on the financial situation, and in its connection with the reciprocity provisions of the act. The duty on sugar had been in the main a revenue duty; for nine tenths of the consumption was still supplied by importation. Only one tenth of the sugar was made at home, almost exclusively in the sugar-cane district of Louisiana; on this alone could the distinctive effects of a protective duty be felt. Substantially, therefore, the sugar duty presented the same questions as were presented by the tea and coffee duties in 1872.¹⁶ At the same time, the receipts from sugar were very large. They formed the most important single item in the revenue from customs, and in the period immediately preceding 1890 were on the average about fifty-five millions a year. In that period the United States were embarrassed by a large surplus in the revenue, the situation in this respect being again similar to that in 1870–72. At the same time the duty on sugar, averaging about two cents a pound on the grades chiefly imported, was high, considered simply as a tax and without regard to its connection with the general financial and economic situation. The Mills bill of 1888 had proposed a reduction of about fifteen per cent.; the Senate bill of the same year proposed to cut the rate to about one half that then in force. There was general agreement that some reduction should be made.

The McKinley act went further: it admitted all raw sugar free. On refined sugar a duty of one half cent per pound was retained, by way of protecting the domestic sugar refiners. This duty was open to the objection of playing into the hands of the Sugar Trust, which had just reached the stage of controlling practically the entire sugar refining of the country. Undoubtedly it did; but the previous tariff system, by making the duty on refined sugar higher than that on raw sugar, had done the same; and the act of 1890 left the situation as it was, simply maintaining for good or ill a policy as to the sugar refiners which had been followed for a generation or more. With the free admission of raw sugar came a bounty to the domestic sugar producers at the rate of the former duty, two cents a pound. There would have been an obvious inconsistency in leaving the sugar producers to their fate, at a time when other domestic producers were receiving increased protection. Moreover, there was a disposition to assist and stimulate the production of sugar in other ways, especially from beets. The bounty was accordingly given, at the rate of two cents a pound, on all domestic sugar, for the period from July 1, 1891, to July 1, 1905. Such a change in one sense is immaterial to the domestic sugar producer. He must sell his sugar at a lower price, but gets a bounty which makes up the loss. But so far as ease of collection goes, the bounty clearly is less advantageous than the duty was. The benefit of the duty came to him without trouble, in the shape of a higher price. The benefit of the bounty he can secure only by a process, somewhat troublesome and not unattended with expense, of filing descriptions and statements at government offices, securing licenses, and submitting to the regulations which the government must of necessity prescribe to prevent fraudulent use of the bounty provisions.

So far as the financial object in view was concerned, the sections on sugar accomplished their object. Indeed, perhaps they more than accomplished it. The remission of the duty cut off fifty or sixty millions of revenue; the bounty called for an extra expenditure of six or eight millions. The act also reduced the internal tax on tobacco from eight cents to six cents a pound; and the same Congress that passed it increased the appropriations in several directions, especially for more liberal pension payments. It would certainly have been wiser financial policy to be content with a reduction of the sugar duty such as was proposed in the Senate bill of 1888–89. Those who opposed the protective system on principle naturally objected to the financial effects of the sugar remission on still another ground—it left the hands of Congress less free to deal with the more distinctly protective duties. Such duties as those on wool and woollens, lumber, iron ore, and similar materials, are more burdensome in character than was the sugar duty; but the remission of these taxes is much more difficult in the face of a deficit than of a surplus.

The complete remission of the duty on sugar was undoubtedly determined on as a means of gaining popularity for the new tariff act in the West, where the higher duties on manufactured articles might be difficult to present in an attractive light. The same object was had in view in another set of provisions, closely connected with the new sugar schedule,—the reciprocity provisions. The trend of public opinion on the tariff bill, while it was under discussion in the House, made some of the Republican leaders uneasy as to its effects on the party prospects in the West; and this feeling was strong with Mr. Blaine, not the least shrewd of the Republican leaders. The bill had passed the House of Representatives without the reciprocity provisions; they were inserted at the last moment in the Senate, almost under pressure from Mr. Blaine and those who shared his views. The effect of these provisions was to give the President power to impose by proclamation certain duties on sugar, molasses, tea, coffee, and hides, if he considered that any country exporting these commodities to the United States “imposes duties or other exactions on the agricultural or other products of the United States, which, in view of the free introduction of sugar, molasses, tea, coffee, and hides into the United States, he may deem to be reciprocally unjust or unreasonable.”¹⁷

This particular mode of reciprocal engagement has a distinct economic advantage over the ordinary form of reciprocity. The ordinary form consists in the simple remission of duties to a favored country, duties remaining on goods coming from countries not favored. Such a remission is likely not to redound to the advantage of the domestic consumer. Unless the favored country can easily supply the whole market, or other countries are quickly admitted to the lower duties, prices are not affected, and the foreign producer reaps the whole benefit of the remission. The United States has had one conspicuous illustration of the workings of reciprocity of this sort, in the treaty of 1876 with the Hawaiian Islands. Under that treaty, sugar was admitted free from the islands; but they were far from being able to supply all the sugar consumed; other sugar was imported, paying duty; the price remained as high as before, and the Hawaiian planters reaped the benefit of the remission.¹⁸ But the reimposition of duties on articles coming from a particular country, if it leaves enough of other countries in the field, not paying duty, to supply the domestic consumption, brings a pressure to bear on the enemy without injuring the consumers at home. It is true that if one of the countries on whose goods duties were re-imposed, should supply a very large part of our consumption, the result would not be so innocuous. If, for example, the duty of three cents a pound were imposed on coffee from Brazil, all coffee would go up in price, not only that from Brazil, but that from other countries; and the producers from other countries would gain three cents a pound on their coffee, which the consumers in the United States would pay. But it was not probable that the power given by the reciprocity provisions would ever be exercised in a case of this sort. The simple threat of re-imposing duties would usually be relied on as a means of securing concessions from other countries.

Concessions so obtained may or may not be advantageous to the countries making them; and they may or may not be of real importance and advantage to the United States. The countries from which concessions were asked were chiefly the South American countries. So far as agricultural commodities imported into them from the United States were concerned, a lowering of duties meant lower prices to the South American consumers, and very probably an enlarged demand for such commodities sent from the United States. Grain, flour, provisions, are sent to these countries by the United States alone, and a remission of duties on them operates as a remission of the duty on English tin-plate would operate in the United States: it is practically a complete remission. Such changes bring about a real reduction of the burdens of taxation, and a real enlargement of the international division of labor.

But if the South American countries lower their duties on manufactured goods from the United States, the result may be different. Many of these goods are not made as cheaply in the United States as in European countries; as to others, the United States might not be able to supply the whole consumption of the country which gave it favors. Under such conditions, the lower duties would not mean lower prices to the South American consumer. The United States would then be in much the same relation to them, as the Hawaiian Islands were to the United States under the reciprocity treaty of 1876. Concessions of this sort, however, which do not redound to the ultimate advantage of the communities giving them, are not likely long to remain preferential. Sooner or later, they are likely to be granted to all comers. The experience of European countries under commercial treaties, especially under the net-work of treaties which spread over Europe after the conclusion of the treaty of 1860 between England and France, shows that a remission of duty in favor of one country soon is extended to others, and becomes practically equivalent to a general lowering of the customs scale. This was likely to be the outcome of any concessions secured to the United States from South American countries under the reciprocity provisions; a result no doubt advantageous to all concerned, but less peculiarly advantageous to the United States than more limited concessions would have been.¹⁹

As a whole, the tariff act of 1890 presented to the American people without disguise the question whether they wished a large extension of the protective system beyond the point to which it had developed by the legislation of the war period. The act of 1883, as we have seen, did indeed raise not a few of the protective duties; but other duties it lowered, and the advances were neither so great nor so conspicuously put forward as in the act of 1890. A retention of the existing state of things, such as on the whole the act of 1883 amounted to, might be urged on the ground that vested interests should not be disturbed, and that the inevitable disadvantages of any far-reaching change would outweigh any ultimate gain. The act of 1890 boldly proposed something more: a radical extension of the protective system. The question of principle never was so squarely presented.

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¹ An account of these attempts is given by Mr. O.H. Perry in the Quarterly Journal of Economics for October, 1887, vol. ii., pp. 69–79.

² Some other measures of less significance were also introduced in these years, such as a bill of 1884, to restore the duties of 1867 on wool, which was defeated by a close vote of 126 to 119, and bills introduced by Messrs. Randall and Hiscock in 1886. Mr. Randall’s bill proposed the removal of internal taxes on tobacco, fruit brandies, and spirits used in the arts, entire remission of duties on lumber, jute butts, and a few minor articles, and a slight reduction of some other duties. Mr. Hiscock’s bill proposed similar changes in the internal taxes and a large reduction of the duty on sugar, with a bounty to American sugar-makers. Both of these bills, which indicated the manner in which the protectionists tried to grapple with the problem of reducing the revenue, were referred to the committee of Ways and Means, and, not being reported from that body, never came to a vote in the House.

³ Tables on the votes, by States, on the bills considered between 1883 and 1887 will be found in Mr. Perry’s article in the Quarterly Journal of Economics, just referred to.

⁴ An excellent account of the legislative history of the act of 1890, and also of the acts of 1894 and 1897, is given in Stanwood’s American Thrift Controversy, vol. ii., chapters 16, 17, 18.

⁵ The change in duty is most easily explained by putting together the rates under the acts of 1883 and 1890. In 1883 carpet wool, if worth 12 cents or less per pound, paid 2½ cents. If worth more than 12 cents, paid 5 cents. In 1890 carpet wool, if worth 13 cents or less per pound, paid 32 per cent. ad valorem. If worth more than 13 cents, paid 50 per cent. ad valorem. Most carpet wool is worth ten cents a pound or more; consequently the new ad-valorem rates meant, in almost all cases, an increase in the duty.

⁶ The imports of woollen cloths during the period in which the act of 1883 was in force were as follows (the figures denote thousands of dollars):

	Worth 80 cents or less	Worth over 80 cents
Fiscal Year 1884,	$243,000	$12,974,000
Fiscal Year 1885,	$213,000	$9,867,000
Fiscal Year 1886,	$314,000	$9,151,000
Fiscal Year 1887,	$713,000	$9,309,000
Fiscal Year 1888,	$1,073,000	$9,778,000
Fiscal Year 1889,	$1,125,000	$8,133,000

During that part of the fiscal year 1890–91, when the duties of the act of 1890 were in force, the imports of woollen cloths were,

	(1) valued at 30 cents or less per pound	$1,248
	(2) valued at between 30 and 40 cents	$49,925
	(3) valued at over 40 cents	$6,303,500

Practically all were valued at over 40 cents, and so paid the maximum rate of 44 cents per pound, plus 50 per cent. Reduced to an ad-valorem equivalent, this was a duty of about 92 per cent. On the few goods of the second class imported (worth between 30 and 40 cents) the duty was 143 per cent.

⁷ In that part of the fiscal year 1890–91 in which the new duties were in force, the imports of the three classes of dress goods were:

	(1) valued at 15 cents or less (duty 7 cents plus 40 per cent.)	$768,000
	(2) valued more than 15 cents (duty 8 cents plus 50 per cent.)	$845,000
	(3) if the warp contains any wool (duty 12 cents plus 50 per cent.)	$5,281,000

On goods of the third class, the duties collected were $5,423,000, making 103 per cent. of their value.

It should be noted that dress goods exceeding a certain weight (four ounces a square yard) are treated like men’s woolens and are subjected to the maximum duty on these,—44 cents a pound plus 50 per cent.

For a statement of the grounds from the protectionist point of view, for these very high duties, see an article by Mr. William Whitman, in the Bulletin of the Wool Manufacturers, vol. xx., pp. 283–304.

⁸ The provisions as to velvets and similar fabrics are in sections 350 and 411 of the act.

⁹ See sections 138, 165, 167, 170, 393.

¹⁰ See pp. 83, 90–91, above.

¹¹ Compare what is said below, at pp. 255–58, and the references there given, as to the recent history of the iron manufacture.

¹² In later years, not only Bessemer ores, but others also, have become important among the Cuban deposits.

¹³ See pages 182–185 above. The language of the acts of 1862 and 1875 was not entirely clear, and in 1878 an attempt was made to have tin-plates classified under another head in the tariff schedules, and so subjected to a higher duty. But Secretary Sherman maintained the interpretation of the statutes which had been followed since 1862, and the duties were collected as stated in the text. See a letter of Secretary Sherman’s in the “Tariff Commission Report” of 1882, p. 208.

¹⁴ The duty remained in force; the increase in domestic production did take place. But this was due chiefly to the greater cheapness of the steel sheets which, when coated with tin, are known as tin-plates. On the causes of this change, see the article in the Quarterly Journal of Economics referred to below (p. 302), at p. 502 of vol. xiv.

¹⁵ The duties on hemp and flax, reduced in 1894, and raised again in 1897 and 1909, have been of no great industrial effect. For some discussions of them, see the Quarterly Journal of Economics, vol. iii., p. 260. Sisal grass from Yucatan has displaced coarse hemp as a fiber for making twine, and fine hemp has never been produced in the United States.

¹⁶ See above, pp. 161–65.

¹⁷ The duties authorized under these conditions were: on coffee, three cents a pound; on tea, ten cents a pound; on hides, one and a half cents a pound; on the grades of raw sugar chiefly imported, a trifle over one cent per pound,—about one half the duty which was in force before 1890.

¹⁸ Compare what is said below, at p. 398, and the references there given, on the Hawaiian treaty and the general sugar situation.

¹⁹ In the course of 1892, treaties were concluded with the following countries: Great Britain, for Jamaica, Trinidad, Barbadoes, and British Guiana; Spain, for Cuba and Porto Rico; Salvador; the Dominican Republic; Nicaragua; Honduras; Guatemala; and Brazil. The remissions or reductions of duty secured by these treaties were chiefly on agricultural articles and others produced abundantly and cheaply in the United States. Duties were imposed under the authority conferred by the reciprocity section, on sugar, tea, coffee, hides, coming from Venezuela, Colombia, and Hayti. The only country of considerable importance among these was Venezuela, which usually sends to this country about one tenth of the coffee imported.

With Germany, an arrangement was made by which the United States got the benefit of the slightly lower rates of duty conceded by Germany to Austria and Hungary by the treaties of 1892 with these countries. With France, a similar arrangement was made, by which American commodities were admitted at the minimum tariff of the French legislation of 1892.

All these arrangements came to an end with the tariff of 1894. The act of that year, it is true, contained a saving clause by which the reciprocity treaties were to remain in force “except where inconsistent with the provisions of this act.” But as the act admitted tea and coffee free unconditionally, and imposed a duty of forty per cent. on all sugar, its provisions were necessarily inconsistent. The duty reimposed on sugar deprived the United States of the chief quid pro quo which had been available under the act of 1890,—the maintenance of the free admission of sugar. An account of the whole episode is given in Laughlin and Willis’s “Reciprocity,” chs. VI., VII., VIII.; and an analysis of the working of the treaty with Brazil, the largest of the South American countries, in an article by L. Hutchinson, Political Science Quarterly, vol. XVIII., June, 1903.