Page images
PDF
EPUB

*

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 Encourage the Industries of the United States, and for Other Purposes."

higher duties were imposed or the old 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

Elihu Root and other constitutional lawyers took the view that Congress would not be required by this amendment to levy on such bonds, and would not be likely to do so; moreover, that the courts, following long precedent, would in all probability forbid such taxation.

The affirmative vote of 36 States is necessary for adoption, and, up to December of 1912, 34 States had voted in the affirmative, 4 had refused to ratify and the others had taken no action or only partial action.

But interest in the tariff as well as in other public measures was for a time diverted by a deplorable controversy that arose over conservation policies. This grew out of an attack made upon Secretary Ballinger regarding his relations to certain alleged fraudulent claims for mineral properties in Alaska. After the gold discoveries, this terra incognita was populated by thousands of fortune hunters, towns of considerable importance sprung up, and a more efficient system of administration was organized. The occupancy of the gold fields directed attention toward other mineral products, in search of which Alaska had been thoroughly explored, with the resultant discovery that it was as rich in other natural resources as in the more precious metals. Copper, coal, iron and other mineral deposits were found in abundance, and the interests" quietly began to absorb enormous tracts through the operations of the land-grant laws. As

each applicant under the homestead law could obtain only 160 acres, and, under the law supervising mineral lands, could purchase only a certain maximum amount, it was the policy of unscrupulous men to obtain vastly more land than the law allowed by dummy entries and fraudulent claims.

The most active of these exploiters were alleged to be the Guggenheims who already had virtual control of the copper industry of Colorado. The charges against Secretary Ballinger were made public by a special agent of the Federal government, Lewis R. Glavis, who asserted that certain socalled "" Cunningham claims" were fraudulent, and were in reality a part of an organized effort of the Guggenheims to obtain control of the most valuable mineral deposits of Alaska. Mr. Glavis alleged that not only was the Secretary of the Interior aware of the nature of these claims through knowledge gained by him when commissioner of the land office, but that he had been instrumental in furthering them. Glavis submitted his charges to Attorney-General Wickersham and, as a result, was deposed from his position by order of the President, who made a statement to the effect that he had full knowledge of Mr. Ballinger's acts and had utmost confidence in his integrity. This action was soon followed by a summary dismissal of Gifford Pinchot, Chief Forester, who, in a letter to Senator Dolliver, had rather broadly intimated that the President was somewhat mistaken as

to his facts. As a result of the charges of Mr. Glavis, a joint committee was appointed by Congress to look into the affair. After a protracted investigation lasting more than a year, a report was rendered by this joint committee through its chairman, Senator Nelson, fully exonerating Secretary Ballinger, thus settling the " Ballinger-Pinchot controversy "' and establishing the principle that public lands are not to be subjected to private exploitation. Another excellent result of the acrimonious dispute was to establish upon a firmer basis than ever a wise and equitable policy of "conservation." The opponents of Mr. Ballinger, it should be remarked, were evidently actuated by over-zealous anxiety for the public welfare rather than by the extreme and harsh methods that President Taft denounced as the weapons of the "unscrupulous conspiracy."

On March 7 Mr. Ballinger resigned his office as Secretary of the Interior, with health impaired but no longer "under fire," and Walter L. Fisher of Illinois, was appointed his successor. Later in the year the new Secretary ordered the Cunningham claims cancelled, thus releasing the Alaska mineral lands which these claims had sought to control.

Aside from the corporation tax levy, which, however, was not primarily an anti-trust measure, though it was destined to have an important bearing on trust questions because of its publicity features, the first important

movement of the Administration in opposition to the trusts was the prosecution of the American Sugar Refining Company. There were two distinct lines of government procedure. One was to recover damages in a suit brought by the Pennsylvania Sugar Refining Company for the closing of its plant by the larger concern. Settlement was made out of court, but the government used this settlement as a basis of an indictment for fraud in violation of the criminal clause of the Sherman Law. The statute of limitations was invoked by the defendants and upheld by the United States Circuit Court, an appeal from which was immediately carried by the Government to the Supreme Court. Another class of cases against the "Sugar Trust" grew out of frauds in the weighing of imported sugar and also in paying duties on lower grades of sugar than those that were actually imported. In September, large sums were paid to the Government by two companies in the Trust as preliminary installments or settlement in full of all back shortages of duties on sugar.

Other policies became prominent. A special message of President Taft on January 7, 1910, made further regulation of railroads and certain modifications of existing anti-trust laws the leading order of business for the first regular session of the SixtyFirst Congress a message that has been pronounced worthy of the highest place in his achievements as lawyer and statesman.”

[ocr errors]

66

« PreviousContinue »