Page images

well-matured, just, disinterested, constructive policy, that appealed to intelligent men regardless of party.

On March 6 President Taft issued a call for a special session of Congress to convene on March 15, on which day it assembled and reëlected Speaker Cannon, somewhat dampening the choice, however, with slight modifications of the House rules as a precursor of greater changes to follow in succeeding sessions. The next day Sereno E. Payne, chairman of the Ways and Means Committee, introduced a tariff bill embodying the results of several months of anticipatory investigation, in which hearings and documentary evidence covering over 4,000 articles had been under advisement; and the battle-royal over the tariff measure of 1909 was on.

After a long debate the House passed the Payne bill on April 9, and sent it to the Senate which, on April 12, reported a substitute measure known as the Aldrich bill. The Payne bill placed iron ore, and petroleum and its products, on the free list; made reductions on iron and steel and their manufactures, and on chemicals, coal, hides and lumber; and increased the duties on many textiles, and on gloves and hosiery-the two latter items to a startling extent. The Aldrich bill made even fewer concessions— the rate on lumber, for instance, being 50 per cent. higher than in the House bill. So extreme was the character of this bill that the powerful

[ocr errors][merged small][merged small][merged small][ocr errors][merged small]

*The seven Senators who, though Republicans, finally voted against the bill in its completed form were: Beveridge of Indiana; Bristow, of Kansas; Clapp and Nelson, of Minnesota, Cummins and Dolliver, of Iowa; and La Folette, of Wisconsin. While all thus protested against the "upward revision" which they believed characterized the bill, Senator Beveridge recorded, by his vote, a special protest against the emasculation of the tariff commission feature, by which it was intended that the rulings of the commission should be restricted to the "maximum and minimum" clause.



gle product getting its just recompense of reward' in a perfectly equitable tariff, was admitted to have broken down. At last the forgotten consumer had been given a thought." This tendency toward greater consideration for public opinion was not as marked as could be desired and showed itself, among other ways, in the somewhat belated efforts of President Taft to secure concessions from members of the conference committee looking toward the lowering of some of the schedules. Such efforts on the President's part were made, and, to some extent, effectively, for he obtained lower rates on iron ore, hides, coal, oil and lumber. With this the struggle ended; the conference report was adopted on August 5, and the PayneAldrich bill became the law of the land.*

The tariff schedules in which the greatest changes occurred were: metals and their manufactures; cotton manufactures; silk and silk manufactures; chemicals, oils and paint; lumber; paper pulp and paper; hides and leather. In the metal schedules generally lower duties prevailed, as was true of lumber and leather, with petroleum, hides, iron ore and ground wood pulp on the free list; while on silks and many of the chemicals and all of the better grades of cotton

This act is officially designated as "An Act to Provide Revenue, Equalize Duties and Encour age the Industries of the United States, and for Other Purposes."


higher duties were imposed or the old

Dingley rates Dingley rates were retained. The "maximum and minimum "clause is a novel device for attempting to secure commercial concessions from other countries. The minimum rates are those of the current bill; the maximum rates add 25 per cent. to every duty in the dutiable list, and are applicable to the products of all foreign countries with which there are no commercial agreements. A tariff board was created to assist the President in administering the "maximum and minimum" provisions, but with no authority to constitute itself a commission for collating general data, as the President had requested and Senator Beveridge had battled for.* And lastly, in order to meet present and expected deficits (on June 30 the deficit was $89,000,000) and to provide additional revenues, a corporation tax clause was enacted, providing that all corporations should pay a tax of one per cent. on all incomes in excess of $5,000.

When the President signed the bill he accompanied it with an apologetic statement to the effect that the bill was "not a complete compliance with the promises made, strictly interpreted," but he claimed it to be the result of a sincere effort on the part of the Republican party to make a

In September the President appointed as the members constituting the tariff board Prof. Henry C. Emery, of Yale University, James B. Reynolds, Assistant Secretary of the Treasury, and Alvin H. Sanders, of Chicago.

"downward revision." The country, grateful to have at least a temporary quietus put upon the vexatious tariff agitation, seemed at first inclined to exercise a little auto-suggestion and good naturedly to acquiesce in the President's opinion as to the actual downwardness of the revision. A veto had not been demanded even by the Insurgents, as it would have created needless confusion, and the apology was evidently accepted in lieu of a veto. But an entirely new note of irritation and dissatisfaction was sounded, at first against conditions and gradually against the President himself, on reading his "Winona speech" of September 17, in which he characterized the Payne-Aldrich bill as "the best tariff bill the Republicans had ever made." This "bestever" speech caused, to put it mildly, a gasp of surprise, and, while it cannot be said that a revulsion of feeling was at once aroused, the country began thoughtfully to ask itself whether a measure which not even its makers had been enabled entirely to justify and which contained so many palpable inequalities was indeed the country's last, best word in tariff construction.

It was during the height of the discussion on the tariff that decisive action was taken on the income tax. The United States had once proposed, and twice passed, income-tax bills. The first of the two enacted was a war measure, and was in effect from 1861 to 1872. The second was supplementary to the Wilson Tariff Act of 1894,

as a precaution against the expected deficit caused by the reduction of import duties. But the deficit did not materialize, and as the apportionment among the States was not made according to population and representation, the Supreme Court of the United States, on May 20, 1895, declared this clause of the act unconstitutional. The law had proposed to levy a uniform tax of 2 per cent. on all incomes over $4,000.

But the friends of the income tax idea, believing the Supreme Court decision was not aimed at the principle itself but only the method of its application, finally succeeded in having the following resolution passed by Congress on July 12, 1909, calling for an amendment to the Constitution as Article XVI:

"The Congress shall have power to lay and collect taxes on incomes from whatever source derived, without apportionment, among the several States, and without regard to any census or enumeration."

It will be seen that the last two clauses are intended to meet the objections of the Supreme Court to the acts of 1894, but the clause" from whatever source derived " became the fruitful source of much controversy. It was held that this feature would bestow upon Congress the power to lay a tax on the income from State and municipal bonds, Governor Hughes taking the lead in opposition to the principle, although in favor of the amendment in general, fearing that it would endanger the borrowing power of the States. But Senator

« PreviousContinue »