The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction.
• Taxation and Work.
• Chapter I.: Occupations. Distribution of Products.
• Chapter II.: Taxation Measured By Work.
• Chapter III.: Taxation Measured In Money.
• Chapter IV.: Principal Sources of Revenue.
• Chapter V.: How the Tariff Should Be Reformed.
• Chapter VI.: Taxation Which the Government Does Not Receive.
• Chapter VII.: British Tariff Reform.
• Chapter VIII.: Beggarly Compensation of United States Officials.
• Chapter IX.: What Is Protection?
• Chapter X.: Occupations That Cannot Be Protected By Duties On Imports.
• Chapter XI.: Method of Tariff Reform.
• Chapter XII.: Protection By Exemption From Taxation.
• Chapter XIII.: Free Trade the Objective Point.
• Chapter XIV.: Attempted Definition of the Principle of Protection By Senators Sherman, Hoar, and Aldrich.
• Chapter XV.: Hamilton’s Policy.
• Chapter XVI.: Tariff Protection Does Not Raise Wages.
• Chapter XVII.: Protection Promotes War; Free Trade Promotes Peace.
• Chapter XVIII.: Does Tariff Protection Promote Liberty?
• Chapter XIX.: Progressive Reduction of Duties.
• Chapter XX.: Cost of a High Tariff.
• Chapter XXI.: Development By Free Commerce.
• Chapter XXII.: High Wages and Low Cost.
• Chapter XXIII.: The Use of Machinery By Nations.
• Chapter XXIV.: The Waste of Armies.
• Chapter XXV.: Senator Morrill’s Report On Canada Received. Food and Wages.
• Chapter XXVI.: In the Matter of Silver, Bi-metallism, and Free Coinage.
• Chapter XXVII.: Volume of Trade.
• Chapter XXVIII.: Taxation By Bad Money.
• Chapter XXIX.: How to Maintain Silver Equal to Gold.
• Chapter XXX.: The Issue Joined.
• Chapter XXXI.: Personal Observations—conclusion.

CHAPTER XXX.

The Issue Joined.

Since the last chapter upon Taxation and Work was written, the nominating convention of the Democratic party has been held. The division upon the silver question is not a party division. The advocates of the free coinage of silver without the concurrent action of foreign nations are only a small faction in each party, and their day of temporary influence has gone from them. The purchase of silver bullion under present acts will doubtless be stopped in the second session of the present Congress by the repeal or amendment of what is known as the Sherman bill. This purchase of bullion is not sustained by Senator Sherman himself or by many of his associates on the Republican side, nor will it be sustained by the Democrats.

The main issue in the ensuing election is the tariff question. The logic of events has compelled the nominating convention of each party to take a position upon this question which it is not probable that any large number of the members of either party would have taken had a free choice been left to them.

The enactment of the McKinley Tariff bill committed the Republican party to the policy of “Protection with incidental revenue” against the judgment of its best-informed members. This act was framed under the direction of its sponsor, Mr. Wm. McKinley, Jr., consistently with his theory of the purpose of a tariff, which is to secure “Protection with incidental revenue.” When the Republican party first subjected itself to the demands of the representatives of special branches of industry for the enactment of special schedules framed for the purpose of excluding foreign fabrics of the kinds made by themselves, by putting constantly increasing duties upon them without regard to revenue, the party placed itself under the necessity of continuing upon that line of policy to the end. It deprived itself of free choice, because to yield at any point would be to give up the fundamental idea upon which the McKinley act is based. The framers of the Republican platform had no choice in the matter, although this dogma of prohibition of imports for the benefit of certain classes is offensive to the largest and most intelligent portion of the members of the party. The declaration in the Republican platform is as follows: “We maintain that the prosperous condition of our country is largely due to the wise revenue legislation of the Republican Congress. We believe that all articles that cannot be produced in the United States, except luxuries, should be admitted free of duty, and that on all imports coming into competition with the products of American labor there should be levied duties equal to the difference between wages abroad and at home.”

It will be observed that the question of revenue is wholly ignored in this declaration. Articles which in the judgment of Congress cannot be produced to advantage in this country, except luxuries, are to be admitted free of duty. Articles which in the judgment of Congress can be produced to advantage in this country are to be subjected to such high rates of duty as to stop the import. Articles like sugar, which could be produced in this country, but which Congress has chosen to make free of duty, are to be made the subjects of a bounty at the cost of the tax-payers.

The enforcement of this policy would lead to the necessity of direct taxation or to the imposition of an income tax, in order to secure the necessary revenue which may not be derived from the excise taxes on liquors and tobacco.

I have shown that if the policy advocated in these terms were actually applied to the framing of a tariff measure, that measure would bring about a greater reduction in the rates of duties that are imposed now under the McKinley act than has yet been proposed by any Democrat, because, in point of fact, there is not a duty imposed under the McKinley act on any article of any considerable importance which is not very much greater than the difference between wages at home and abroad, even if the cost of labor corresponded to that difference in the rate of wages, which it does not. The very form of this resolution proves conclusively that the McKinley version of the protective policy is intellectually dead. No person of ordinary intelligence who possesses even a superficial knowledge of the facts governing the production of the goods which are imported in the crude or partly manufactured condition, or of the useful fabrics which constitute the larger part of the finished manufactures, would have ventured to frame a resolution which can be so completely turned against the intention of those who framed it. Nine-tenths or more of all the articles consumed in this country are made at less cost for labor than in any other country, whatever the rates of wages may be. A very large portion of the imports from other countries come from countries which possess advantages in other respects than the cost of labor; hence although their rates of wages may be lower and their labor cost may be more or may be less than it is with us, yet there is an advantage to them in selling their products to us, and there is an advantage to us in buying them.

Only persons who are wholly ignorant of the facts which govern commerce could have been imposed upon by the representatives of wool, pig-iron, and silver, who make use of the Republican party in order to secure special legislation at the cost of the masses for the benefit of the classes, in whose interest such resolutions and such acts as the McKinley tariff have been framed.

It is not, however, the purpose of the framers of this resolution to make any reduction in the tariff corresponding to its true construction, nor would they admit that this plank in the platform is subject to the construction that I have given it. We must look to the more intelligent and thinking portion of the Republican party to find out what its leaders really mean.

The party has committed itself through the law officers of the Republican administration to a specific declaration of its purposes. It has given a clear and definite meaning to the policy which it advocates under the name of “The Principle of Protection.”

At the risk of repetition we must again refer to the briefs which were submitted to the Supreme Court of the United States in support of the McKinley tariff and of the bounty to the sugar-planters incorporated in the terms of that act. The official construction of the act and the declaration of the real purpose of the party are given in terms that admit of no evasion, by able advocates fully conscious of the necessity of presenting their case in the clearest and plainest terms.

The following extracts from these briefs submitted by Hon. W. H. H. Miller, Attorney-General of the United States and by Hon. William H. Taft, Solicitor-General, should be substituted for the plank in the Republican platform in every discussion in the ensuing campaign. In fact, this entire brief in full should be reprinted for the information of the voters. The following extracts give the gist of the arguments:

Referring to the increase of duties on silks, woollens, and cottons, it is held in this brief that

After citing certain authorities, it is held as follows:

Reference being made to the other cases, the argument in this brief proceeds as follows:

Citing Chief-Justice Marshall’s decision in the case of McCullough vs. the State of Maryland, where the power of Congress to incorporate a bank was under discussion, the argument of the officers of the government proceeded as follows:

In this declaration of the law officers of the Republican Administration all the rubbish is swept away about putting our taxes upon others,—every assertion that the tariff is not a tax,—and every suggestion that its purpose is not to create a bounty for favored classes out of the proceeds of taxation paid by the masses. The power of Congress is declared to be supreme, and the power of the Supreme Court to reverse its decision in the matter is denied.

Such being the position in which the logic of the case has placed the Republican party, we may now consider the position of their opponents. The Committee on Resolutions of the Democratic party first framed such a definition of a tariff policy as it was thought judicious for the party to put into its platform, but the convention itself chose to put aside all consideration of mere policy and plant itself upon the principle upon which the Democratic party now stands. Perhaps a majority of the convention would not have committed themselves so absolutely, except under the excitement and enthusiasm of the moment, and they may have “builded better than they knew.” This declaration of a Democratic principle is stated in the following plain terms:

“We declare it to be a fundamental principle of the Democratic party that the Federal government has no constitutional power to enforce and collect tariff duties except for the purpose of revenue only, and demand that the collection of such taxes shall be limited to the necessities of the government, and honestly and economically administered.”

The issue is joined. The position of the Republican party, through its law officers, has made it evident that the so-called “principle of Protection” is a policy for taxing the many for the benefit of the few. The Democratic party denounces this assertion of power, and plants itself upon the principle that all taxes that the people pay the government shall receive, and that no moneys shall be expended except for the support of the government, economically administered.

The Republican party denies that the rule of law laid down before the Supreme Court by Justice Miller should control the National as well as the State legislatures. Justice Miller gave his ruling in the following terms: “To lay with one hand the power of the government on the property of the citizen, and with the other to bestow it upon favored individuals to aid enterprises and build up private fortunes, is none the less robbery because it is done under the forms of law and is called taxation. This is not legislation. It is a decree under legislative forms.”

The real point at issue is the question whether or not the Congress of the United States possesses a limited and delegated power, or whether it is so supreme that even the highest court of the land must submit to its decrees without regard to the merits of any question that may be brought before it. The Republican party declares that the plain rule as laid down by Justice Miller in Loan Association vs. Topeka has no binding force. The Democratic party declares that it is binding upon every legislature, including the Congress of the United States.

The Republican party, through its law officers, holds that Congress may grant bounties at the expense of its tax-payers to favored branches of industry, and that when the owners of capital have invested their money in that industry, they thereby secure a vested interest in the proceeds of taxation, and that the Congress of the United States is thereafter “under a moral obligation” to tax the people for the support of such private citizens or private corporations until the business that they have undertaken becomes self-sustaining.

The Supreme Court did not rule upon this question in the McKinley cases. It was not brought directly before the court, and the court passed it by. The case is now removed from the court to the adjudication of the people of the United States. History repeats itself. The position of the Republican party now corresponds to that of the Whig party in the ante-war period, a party which was endowed with good intentions, but was without convictions. As the Whig party destroyed itself by attempting to compromise with slavery, so may its prototype destroy itself by its readiness to compromise the monetary safety of the country and the interests of the mass of the people for the sake of continuance in power.

The Democratic party of to-day finds its prototype in the Republican party, as that party was when it was first organized, a party devoted to principles. The Democratic party has been forced by the logic of events to ignore the partisans who have tried to control it; it has become in a true sense the party of the people, the exponent of equal rights, and it has planted itself upon a principle which is impregnable.

Between the two have stood the Independents, whose prototypes may be found in the Free Soil party of the ante-war period, a party that never elected a candidate to any high office and which was represented in Congress by a few members only; but they were men whose courage and convictions gave them a dominant power in inverse proportion to their number, such as the Independent members of the present Congress have exercised.

The issue is joined. Taxation and Work are names for the same thing; each voter will soon be called upon to decide for what principle and for what party he will work and vote.

The manifest tendency of right-minded and reasonable men of both parties in the present Congress has been to take the question of the currency out from party politics. This power may soon be exerted so as to take the tariff question out from party politics, so that during the second session of the present Congress a reform of the tariff may be brought about in a way that will harm none, but which will do justice to all by establishing true protection to domestic industry through the exemption from unnecessary laxation of all the materials which are required in the processes of our own domestic industry, coupled with duties for revenue on finished products, so adjusted as not to exceed the difference in wages at home and abroad.

Unless this coalition and compromise are made in the present Congress at its second session, so as to prevent the tariff becoming the football of mere politicians, there will be great danger of radical and revolutionary changes in our policy which will provoke a reaction and endanger the steady progress of a true reform of our whole fiscal system.