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taries; several auditors for the different executive departments; the treasurer, who has charge of the receipt and disbursement of money; a comptroller of the currency, who oversees the National banks; a comptroller of the treasury, who supervises all accounts in dispute; a director of the mint, which coins specie of gold, silver, nickel, and copper; a superintendent of the Bureau of Engraving and Printing, which prints paper money and postage stamps and protects people from counterfeiters; and a commissioner of internal revenue, who collects the excise taxes on distilled spirits, fermented liquors and tobacco. During the Civil War Congress issued $450,000,000 in Treasury notes known as greenbacks." They became worth so much less than gold that they drove coin out of circulation and remained below par until Congress redeemed them in gold on January 1, 1879. The Supreme Court having decided that Congress could issue paper money in times of peace as well as of war, the Treasury notes of 1890 paid out for silver bullion purchased under the Sherman Act of that year are legal tender. The Secretary of the Treasury was authorized to purchase 4,500,000 ounces of silver monthly, paying for it in legal tender paper. The law was repealed during the panic of 1893. Gold and silver certificates are being constantly issued in place of gold and silver coins, the paper being much more convenient to handle. A good part of our business
is done by means of paper money issued by banks chartered under National law. The currency law passed in March of 1900 transformed the whole monetary system of the country. The gold dollar was made the standard of value, and all forms of money issued or coined by the Government reached a parity with gold. The Treasury notes of 1890 were to be retired as soon as possible, their place in circulation being taken by new silver coins or new silver certificates. Greenbacks paid into the Treasury were not to be reissued save for gold, and for the redemption of greenbacks a gold reserve of $150,000,000 was to be maintained. New regulations regarding the denomination of the different kinds of paper money and bank notes to be issued were enacted, so that no gold certificates for less than $20 or silver certificates for more than $10 would be issued. The act included other salutary monetary reforms, reducing the monetary laws to some order.*
Perhaps the most important way in which the Government regulates our commerce and industry is through tariff legislation. The excessive war tariffs necessary for raising revenues to prosecute the war had educated the people to the cause of high protection. It was necessary indeed to continue to saddle the Nation with high
* See chapters XI. and XII., ante, on Banking. Currency, and Finance, and the index under these
taxation of both imports and domestic products to provide for a financial indebtedness of $2,800,000,000 as the aftermath of the titanic conflict. adjust a tariff to the exigencies of the situation was a serious task. Prices were 90 per cent higher than before the war, while wages were only 60 per cent higher. Though the duties on imports were supposed to balance internal taxation equitably, the greatest inequalities existed. The tariff in many cases fell below the taxes, while in others the taxes greatly exceeded the tariff. The manufacturers clamored for more protection, and Congress, following to the line of least resist ance, abolished those taxes that bore most heavily on the productive resources of the country. The most important acts for reducing the internal revenue of the country were those enacted in July of 1866, March of 1867, July of 1870, and June of 1872. The reduction of the war tariff was a different kind of proposition. Many industries had been established and others greatly extended under the influence of the war tariffs, and the projectors of these industries claimed they would be ruined by any change. Thus extreme protection, which was looked upon only as a temporary expedient during war times, came to be regarded as a permanent institution.
Mr. Wells' tariff bill of 1867, which proposed to reduce the duty on raw materials and which either maintained the duties on manufactured goods without charge or only slightly low
ered them so as to deprive them of their pernicious effect, was passed by the Senate but did not obtain the necessary two-thirds majority in the House. On the other hand, at the demand of the wool growers, Mr. Hayes in 1867 introduced a wool bill providing a duty that would prohibit imports, and, by dint of personal influence, secured a tariff of 50 cents a pound, and 35 per cent. ad valorem on wool.*
The success of the wool bill led the Lake Superior copper interests to demand protection for copper, and, by virtue of a strongly organized lobby they secured the passage of a bill in February of 1869 that put a duty of 25 cents a pound on copper ore. This, however, was vetoed by the President. The increased cost of copper put an end to the copper bottoming and repairing of wooden ships, just as the high tariff on iron and lumber was putting an end to iron shipbuilding. The act of 1870 reduced the duty on pig iron, brandy, sugar and spices, 33% per cent, and those on tea and coffee 40 per cent. The inspiration of the bill was the demand for "a free breakfast table." The Dawes bill of 1872 was another compromise between political and commercial pressure and allowed a reduction of 10 per cent. on articles made of cotton, wool, iron, paper, glass and leather, and a reduction on lumber, coal, salt, and several
*For the legislative history of these bills see previous pages of this History and the Index under "Tariff."
other articles. Materials to be used for shipbuilding in the United States were admitted free. A bill was passed also taking the duty off tea and coffee entirely. The tariff of 1883 was intended as a concession to a general desire for a real revision of the tariff, but in reality it made but few changes in the protective system. The panic of 1873 furnished an excuse for the tariff bill of 1890, known as the McKinley bill, in which rates on all industrial products needing protection were increased. In some cases these were practically prohibitory. On the other hand, the duty on refined sugar was reduced from 32 cents to 11⁄2 cent a pound, the duties on raw sugar were repealed, and a bounty of 2 cents a pound was allowed for 14 years on the production of sugar within the United States. The act also recognized commercial reciprocity, and commercial agreements relating to the reciprocal trade were made with Brazil; Spain, on behalf of her colonies of Cuba and Porto Rico; San Domingo; Guatemala; Salvador; Germany; Great Britain, on behalf of her West Indian colonies; Nicaragua; Honduras; and Austria-Hungary. On the whole, the McKinley bill proved unpopular, as prices and the cost of living increased with no compensating advance in wages
The losses sustained by the Republicans, due to a widespread belief in the political immorality of the McKinley tariff, were regarded by the Democrats as an endorsement of their tariff
principles. The Democrats won in the campaign of 1892, with the tariff as the dominant issue. In 1894 the Wilson bill was passed, which placed most raw materials on the free list, reduced somewhat the protective duties, and provided for an income tax on incomes exceeding $4,000 a year. The bill was merely a compromise between the warring factions - one party desiring the maintenance of protection and the other a tariff of revenue only. It reduced the average of the McKinley bill of 49.5 per cent. to an average of 39.94 per cent. President Cleveland, declaring that it was based on no distinctive principle, permitted it to become law without his signature. The Supreme Court declared the income-tax clause unconstitutional and thus made it a dead letter.
The Republicans once more came into power in 1896 and President McKinley, though really elected on the currency issue, regarded the victory as an endorsement of his protective policy. The Dingley tariff bill of 1897 gave protective duties to every business interest that could possibly be encouraged by them, the rates being higher than those fixed by any previous tariff. The average range of duties was 57 per cent.
During his administration, Mr. Roosevelt adroitly avoided meddling with the tariff, but in the campaign of 1908 the Republican party declared for a downward revision, and on this pledge elected its candidate, Mr. Taft.
The Payne-Aldrich bill of 1909, however, was an upward rather than a downward revision of the tariff. There was a slight reduction of duty on a few articles, it is true, but the intensive protection of favored industries was continued.
The Panama Canal.
The most epoch-making event of recent years was the determination of Congress to build the Panama Canal.* The piercing of the isthmus uniting the two Americas by a ship canal will probably revolutionize the commerce of the world. Distance of from 5,000 to 10,000 miles will be clipped off most oceanic voyages. The eastern sea
board of the United States will be brought 8,000 miles nearer the Pacific coast. The canal is over 40 miles in length, the middle section of 34 miles being 85 feet above sea level. Vessels are to be admitted to this section by means of gigantic double locks both on the Atlantic and Pacific ends of the canal. For the greater part of its length, the canal is a great lake formed by the colossal Gatun Dam, which causes the waters of the Chagres River to flood its valley over an area of 164 square miles. The minimum depth of the canal through out is 45 feet, and it will permit the passage of 100,000,000 tons of freight between the oceans per annum, without overtaxing its capacity.
*For the history of the canal see previous pages of this volume.
The Pan-American Union.
Among the indirect means by which the general government has stimulated American commerce and industry is the Pan-American Union. In 1823 President Monroe announced his famous doctrine that the welfare of the United States made it necessary that no country of the Old World should acquire another foot of territory in the New, and that attempts to do so would be regarded as acts of unwarranted aggression. This doctrine has become a principle in international law, and as a result the American republics have been drawn together by political and commercial interests. The building of the Panama Canal has intensified this feeling. The Pan-American Union was organized at the conference held in. Washington in 1890 and was presided over by James G. Blaine, Secretary of State. The attending delegates passed a resolution providing for a commercial Bureau of the American republics that would collect and distribute commercial information of all kinds, not only in order to increase the volume of trade between the respective countries, but also to redeem their peoples from the ignorance of each other which, unhappily, existed hitherto. Congress purchased land in Washington for the sum of $250,000 on which to build a palatial structure to house the Pan-American Union. The cost of the building was $1,000,000, of which Mr. Andrew Carnegie defrayed $750,000. It is the permanent home
of the American republics, containing assembly hall, banqueting rooms, committee rooms, a patio in the Moorish style, with its garden of tropical flowers.
One of the latest functions of Congress, acting through the Department of State, is the use of American dollars to stimulate the expansion of
trade and the rehabilitation of the weaker American republics and in advancing forms in China and elsewhere. The promotion of foreign trade is the raison d'être of this new department in international economics.
In the tariff negotiations of 1910, which were carried on with several foreign countries for the purpose of adjusting the requirements of the maximum and minimum provisions of the Payne-Aldrich law, the Department of State, in the interest of equality of commercial treatment in foreign markets for American products and of like products of competing countries, has effected such regulations as will greatly stimulate trade. For example, in the Brazilian budget for 1911 and 1912 a considerable number of American products have been granted a reduction of 20 per cent.
In 1907 the United States agreed to collect the customs revenues of San Domingo through a receiver-general. The foreign bondholders agreed to this arrangement because the interest was practically guaranteed by such interposition. Last year the revenues were $3,485,000.
Liberia has undergone a process of financial housecleaning that has rescued it from impending bankruptcy. French and German bankers have coöperated with an American ReceiverGeneral, and the progress of Liberia is assured. Similar arrangements are about to be made with Honduras and Nicaragua, by means of which the constantly recurring revolutions will be suppressed in favor of peace and prosperity.
In China American dollars are performing a function that is not only commercial, but moral as well. In the treaty of 1903 China abolished the liken, a most objectionable internal tax that crippled trade. Not only is American money earning interest in China, but is aiding to maintain her territorial integrity.
The waterways of the United States have an aggregate length of 60,000 miles, but only half of this mileage is used for navigation. From 1802 to 1890 Congress appropriated $214,039,886 for deepening and improving harbors and waterways. From 1890 to 1906 the amount was $301,447,046. Gigantic projects are being urged in the construction of new waterways. Among the plans under consideration is that of a canal from Boston to Jacksonville, Florida, and across Florida to the Gulf of Mexico, so that ships can avoid the dangers of the ocean. Another plan is to link Lake Michigan with the Gulf of Mexico by