CHAPTER VIII REFORM WIDESPREAD prosperity followed the resumption of specie payments in 1879. Railroads and factories provided constant demand for labor, while the former opened up great areas of public domain for purposes of farming. The fall in prices, that had seemed a menace to the existence of the farmer in the days of the depression, ceased to worry him in the good years that followed. The parties of protest, born of hard times, dwindled between 1878 and 1882, and lost most of their supporters except the incorrigible idealists, who were unwilling to put up with the compromises of the larger parties and persisted in hoping that a third party might be the vehicle of real reform. Congressional elections, 1882 In the Congressional elections of 1882, the Democratic Party rushed to the attack with party capital derived from the misfortunes of the Republicans, and here and there, where factional controversy existed in Republican communities, there was unearned political profit for Democratic and Greenback candidates. President Arthur was performing his duties in partial isolation, with his former Stalwart friends chilled by his desertion, and independents not satisfied of his complete repentance. The star-route frauds were at the height of their notoriety, and were used to show a demoralized condition in Republican administration. The varied attempts of the Administration to save its party were turned to its disadvantage. The Secretary of the Treasury, Charles A. Folger, was nominated for governor of New York and was supported vigorously by the Administration, with the result that he was treated as a machine candidate and was beaten by a relatively unknown man, Grover Cleveland, who stood as the champion of reform. The Republican Congressional campaign was managed by the same J. A. Hubbell, of Michigan, to whom Garfield had written his unwise letter in 1880. In a series of circulars which Democratic papers copied widely, he called upon the federal office-holders for assessments to the party funds, and declared that these were voluntary, when taxed with violation of the anti-assessment law of 1876. The appeal for reform attracted much attention. Hubbell himself lost his seat in Congress, and a Democratic House of Representatives, chosen to take office Tariff in 1883, became an admonition to the Republi- revision cans in the short session of 1882-83 to pass what laws they could before they lost control. A revision of the tariff was the most pressing of their necessities, for there were signs that the Democratic Party was demanding a reform in the revenue system, and that good Republicans were unwilling to defend it. "There are stupendous interests in America which have grown into monopolies through the artificial nurture of the tariff," said the Stalwart New York Herald. The Secretary of the Treasury saw it from a different angle, and wrote in his annual report of 1882, "What now perplexes the Secretary is not wherefrom he may get revenue and enough for the pressing needs of the Government, but whereby he shall turn back into the flow of business the more than enough for those needs that has been withdrawn from the people." The tariff situation in 1882 had come about as much by accident as by design, and in its immediate operation was the heritage of financial reconstruction. The Morrill tariff of 1861, passed by a Republican Congress in the last days of the administration of James Buchanan, was a moderately protective measure, and provided the background for all tariff legislation of the next two decades. The details and rates of this tariff were greatly changed through the necessities of the Civil War, and it was discovered that the internal revenue taxes and the tariff rates must be adjusted in harmony with each other. The situation produced by the Morrill tariff was changed for many American manufacturers when they were compelled to pay the heavy internal taxes levied upon incomes, trades, and manufactured goods before 1865. Their European competitors, who could not be required to bear similar burdens, received an advantage in the competitive market. Congress yielded to the pressure of manufacturers to restore the equilibrium of trade by increasing tariff rates in order to balance the burden placed upon domestic manufacturers by the internal revenues. Every time the internal taxes were increased during the war, Congress was called upon to increase the tariff rates as well, and in 1865 both sources were yielding revenues beyond anything hitherto known in American experience. The tariff in that year brought in $84,000,000; the internal revenue, $209,000,000. The program of financial reconstruction called for the reëstablishment of public credit and the redemption of the greenbacks, as well as the lowering of revenues to a peace basis. In reducing the revenues the difficulties were uneven. The internal taxes had no friends, and public opinion generally approved the reduction and elimination of the income and stamp taxes, and the other forms of excise that had been borne as a patriotic duty. Tariff revision was attended with great difficulty. At each suggestion of this, manufacturers hurried to Washington to protest against the injury to their business that would occur if the rates were lowered, and Congressmen made common cause with each other to protect their constituents from these losses. By 1873 most of the internal revenue taxes had been withdrawn, leaving industry protected not only by the original rates of the Morrill tariff, but by the additional compensatory rates that had been added to offset the internal war taxes. In most cases there was now no justification for these extra rates, which had come to give an unintended and accidental protection, but as a matter of practical politics, it was difficult to get rid of them because they were intimately tied up with the personal profit of influential citizens. A flat reduction of ten per cent in tariff rates was voted by Congress in 1872. This was less than the amount of the accidental protection, but seemed to be more than the country could bear when a few months later the panic of 1873 made hard times universal, reducing American purchases abroad, and lowering the national revenue until it was insufficient for the needs of the Government. By 1879, when prosperity came back, most persons had forgotten that the tariff rates had not existed forever. The tariff question was entirely out of politics, and manufacturers enjoyed almost unchallenged the extra profits conferred on them by the accident of financial reconstruction. Their There had been some theoretical opposition to the tariff and protection even through the period of depression, and the principles of free trade were advanced by a group of economists among whom David A. Wells, Edward Atkinson, and William Graham Sumner were the leaders. teachings aroused indignant rejoinders from practical business men. "In nothing is it easier to show stupidity than in the framing of a tariff law," wrote Joseph Wharton, one of the most important of the Pennsylvania ironmasters, who founded a school of finance and economy in the University of Pennsylvania in 1881 to teach what he regarded as sound views of finance. There was a conference of free-traders held in Saratoga, in 1877, that attributed the prevailing depression to the interference with freedom of trade caused by the tariff. In Congress in 1878 Fernando Wood, of New York, brought in a Democratic measure to lower the rates. Among the junior Republican Congressmen on his committee was William McKinley, of Ohio, whose appointment to the Committee on Ways and Means Garfield had secured, and who had been advised by President Hayes to study the tariff and grow up with it. The new national prosperity was early shown in an increase of national revenue. There was a Treasury surplus of $100,000,000 in 1881 and of $145,000,000 in National 1882. Thereafter through the decade the sur- prosperity plus continued in varying amounts, averaging in the $104,000,000 per year. President Garfield died before he had a chance to make to Congress any recommen eighties dation upon the reduction of the revenue in order to lessen surplus or to remove the abuses that were charged against it. In the closing days of his campaign the revenue system and the protection which was a part of it showed signs of coming back into politics. The barren political debate of 1880 was more significant after the Democratic candidate, Hancock, expressed himself upon the tariff. Speaking at Paterson, New Jersey, on October 7, in reply to an inquiry for his opinion on the tariff he said: "The tariff is a local question. The same question was brought up once in my native place in Pennsylvania. It is a matter that the General Government seldom cares to interfere with, and nothing is likely ever to be done that will interfere with the industries of the country." In the few days of the canvass that remained the tariff was much discussed, but without extensive preparation on either side. Much sensitiveness was shown in manufacturing communities. "General Hancock posts himself for a political greenhorn," said the New York Tribune. "Was there ever such twaddle shown? ... [Is] a man who considers the tariff question as merely local . . . fit to become the first citizen of the United States?" Democratic pressure upon this theme increased as Republican irritability was revealed. Upon recommendation of Arthur, Congress created a tariff commission in 1882 to recommend action, and the defeat incurred by the Republican Party in the commission, following autumn made it desirable to act at once. John L. Hayes, the chairman of the commission, was identified with the woolen industry and most of his associates were connected with other fields of manufacture. There were few experts available for appointment who knew anything about the details of tariff who were not identified with interests affected by it. The New York Herald described the commission as "the product of the manufacturers' machine, and it is almost certain that from first to last it will dance to the music of the party that 'protects' American labor." The report of the commission, presented to Congress in September, 1882, recommended a Tariff 1882 |