opposition to any change. Other interests, however, demanded reduction, and the force of their claims was strengthened by the annually increasing revenue. In 1870, in answer to the continued demands of the agricultural sections, an act was passed, but its effect was merely superficial, since the reductions it authorized affected commodities with which American industry had little concern, while a reduction in the rates on pig iron (long demanded) was offset by an increase of those upon steel rails. When the advocates of a downward revision refused to be satisfied with this measure, another attempt to satisfy them was made in 1872. On this occasion two bills were introduced simultaneously, one in the House and the other in the Senate. Of these the former, although recognizing the principle of protection, was decidedly the more radical, and at length the Senate measure proposing simply a 10 per cent. horizontal reduction was accepted by way of compromise. This measure was too carelessly constructed to meet the needs of the country. By doing away with the duties on tea and coffee alone it cost the Government about $20,000,000 in revenue, and after the panic of 1873 customs receipts generally fell off alarmingly, iron and steel suffering particularly. Three years after its passage the 10 per cent. horizontal reduction was abolished, after which Congress left the tariff untouched until the general revision of 1883.

It was during the depression follow

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ing the crisis of 1873 that the question of silver coinage first came prominently before the people. In that year full coinage of silver was suspended by Congress. Prior to that time silver had been comparatively unimportant in the circulation of the country and therefore the measure by which this was accomplished did not cause much discussion at the time of its passage. As soon as the matter began to excite general attention, however, the claim was made that this act had come from a conspiracy on the part of the Eastern bankers to demonetize this medium without giving the general public any knowledge of the proceeding. It is sufficient to note that careful historians of the country's financial history agree that this charge of deceit or fraud was utterly unfounded.

Still the subject continued to be one of increasing importance. The demonetization of silver as a standard and consequent adoption of a single gold standard by Germany in 1871, the limitation of silver coinage in the Latin Union which went into effect in 1873, and the opening up of new sources of silver in the United States at the same time, united to bring about a decline in the bullion value of that metal. Meanwhile the panic made new supplies of money imperative, and when President Grant, through his veto of the inflation measure, put an end to the possible increase in treasury notes popular agitation against demonetization became so strong that a bill restoring a free and unlimited.

coinage of silver at the old ratio passed the House of Representatives without much trouble. In the Senate, however, this bill was so amended as to limit the coinage while still retaining the full legal tender quality of the silver dollar. This act was vetoed by President Hayes, but so strong was the pro-silver sentiment at this time that it was subsequently passed in spite of the veto. This measure, known as the Bland-Allison Act, remained operative until 1890, during which period 378,000,000 silver dollars were coined under its provisions. provisions. These, however, afforded a seigniorage of $70,000,000, since their aggregate purchase value was only $308,000,000. At first this form of legal tender did not gain general favor with a country long accustomed to paper currency. To obviate this condition, Congress finally (in 1886) provided for the issue of silver certificates of $1, $2, and $5 value. A large reduction in bank note circulation between 1886 and 1890, which was actually the result of the silver inflation, afforded an outlet for these certificates and at the same time afforded the excuse that without silver the monetary medium of the country was deficient. The opposition to silver continued strong in many quarters, on the ground that it made it difficult to maintain a gold standard, and two successive Secretaries of the Treasury did all in their power to secure a repeal of the Bland-Allison Act. Such attempts were frustrated by those who

How the country recovered from the panic of 1873 is told elsewhere. From the year 1880 revenues collected in the treasury far exceeded in volume the current needs of the country. This state of the finances, coupled with the operation of the refunding act of 1870, which prevented the Government from redeeming bonds save at a premium, naturally led to another revision of the tax system. In the natural course of events internal revenue taxes — always regarded as a war time expedient ent were first attacked, all of them being abolished, save the imposts on spirits, fermented liquors, and tobacco, the rates on the last being cut in half. The constant gain in the revenue accruing from the first two named articles decreased the expected falling off in the general aggregate. In 1890 a one-quarter cut was made in the rates affecting snuff, chewing and smoking tobaccos, while the special license taxes on the sale of tobacco were done away with altogether.

The changed conditions of trade demanded also a revision of the tariff. Congress accordingly appointed a commission of experts - made up of representatives of manufacturing, agricultural, and commercial interests -to submit suggestions. The creation of this commission was a distinct departure from former custom and marked an important development in

tariff history in that it furnished the first instance where expert advice was sought in the framing of schedules. Yet, when the commission made its report recommending an average reduction of from 20 to 25 per cent., Congress ignored its suggestions almost entirely and enacted, instead, a patch-work tariff of a decidedly protectionist character. When the Democratic party was in power, from 1885 to 1889 (under President Cleveland's first Administration) repeated efforts were made to change this condition, but by that time the protectionist faction in both parties had grown so strong that all such attempts proved futile.

The next important step in tariff legislation came in 1890, after the Republicans had returned to power. In that year what is known as the McKinley tariff was enacted, develop ing the policy of protection to a point never before reached. The rates were increased on wool, woolen goods (particularly the more expensive grades), dress goods, the better grades of cotton, lawn, laces, embroideries, linens, silk laces, plush goods, cutlery, tinplate, barley, hemp, and flax. In some cases the duties imposed were positively prohibitive. The minimum principle was extended even beyond the bounds of the experiment of 1828. The two important innovations embodied in the McKinley tariff were the creation of a bounty on domestic production of sugar and the provision for commercial reciprocity under executive proclamation.

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A few weeks before the passage of the McKinley tariff, an act of no less. importance, known as the Sherman silver purchase act, was passed. The silver faction had grown so strong, recruiting advocates from both political parties, that some sort of concession was imperative in order to stave off unlimited coinage. By the provisions of the Sherman measure, authority was given for the purchase of 4,000,000 ounces of silver bullion each month, thus largely increasing the possible monthly purchases of silver while averting the danger of unlimited coinage. Provision was made also for the issuance of Treasury notes of full legal tender, in place of silver certificates. Either gold or silver coin, according to the judgment of the Secretary of the Treasury, could be used for the redemption of Treasury notes. This measure, wise as it appeared at the time of enactment, was of short duration.

After the recovery from the crisis of 1873, there was a serious interruption of prosperity in 1884 which lasted about two years. The year 1893 witnessed the beginning of another money panic. The Democrats were by this time again in the political ascendency, Grover Cleveland once more occupying the Presidential chair. In June of that year the mints of India discontinued the coinage of silver. silver. No sooner had this information gone abroad than the price of silver bullion dropped heavily. Simultaneously the fear that the Treasury would be un

able to meet its obligations in gold gained strength, and the panic quickly communicated itself to all parts of the country. In July of 1893 President Cleveland called Congress together in special session and demanded the repeal of the Sherman silver purchase act. In the discussion which followed party lines were for the time disregarded and statesmen allied themselves either for or against silver. The House of Representatives speedily acceded to Cleveland's demand, but the Senate was more stubborn, and it was not until October 30 that the desired repeal was finally effected. In the meantime the Treasury had suffered greatly. On December 1, 1893, the net balance actually in the Treasury above the gold reserve, pledged funds, and agency accounts was only $11,038,448.

Nearly 500 banks failed during the year, deposits fell off alarmingly, while clearing-house certificates were generally issued. Railroad systems representing about one-half the entire railroad capitalization of the country went into the hands of receivers; the production of coal and pig iron fell off greatly, commercial failures followed one another in overwhelming volume; and in the midst of all the chaos and fright the corn crop of 1894 failed. Thousands were thrown out of work and in many cases starvation caused rioting. The combination of all these forces brought about a great decline in the revenue and it became necessary to draw upon the gold reserve. The

banks were appealed to and they gave the Government over $30,000,000 in gold between February and April of 1893; but since the Treasury was all the while called upon to redeem other notes to meet the demand for gold to settle trade balances abroad, this measure availed little. Eventually the Administration fell back upon the sale of bonds for gold as a last resort to avoid a suspension of specie payments. Those who deplored having the Government thus incur debt in times of peace, strengthened by the free silver faction, did all in their power to prevent such action. Congress refused to authorize the issue of any new low-rate bonds, and the Treasury was therefore compelled to revert to the authority of the resumption act of 1875, under which $50,000,000 of 5 per cent. ten-year bonds were sold, yielding more than $58,500,000. At the same time the coinage of the silver seigniorage was prevented only by the President's veto.

Even the new bonds, however, were insufficient to check the constant withdrawals of gold from the Treasury which the redemption of legal tender notes constantly demanded. The Government sought the aid of a syndicate of bankers in an effort to recoup its gold supply, but there were bitter charges made against such a course and so many obstacles thrown in its way that at length new issues of bonds had to be resorted to. All the while panic-stricken people were hoarding their gold and thus keeping large

sums out of circulation, so that in July of 1896 the reserve amounted to only $90,000,000. In this extremity the fear spread among bankers and dealers in foreign exchange that a new bond issue would give dangerous strength to the silver faction. Thereupon they came to the aid of the Treasury by exchanging gold for notes, thereby placing the reserve out of danger. Following the election of 1896 large amounts of gold which had been hoarded during the panic returned to circulation and, with both business and revenue improving, the Treasury again felt secure.

While the Democratic party was in power, a new tariff was enacted in answer to the popular clamor which denounced the McKinley act for its effect in advancing prices. The Wilson tariff of 1894 was, as originally proposed, a movement in the direction of freer trade, but the Senate, under the lead of Senator Gorman, amended the measure so that the existing policy was changed but little. The two most important and novel features were the abandonment of the principle of reciprocity and the establishment of an income tax by which all incomes in excess of $1,000 were taxed 2 per cent. That no incomes under $4,000 were taxed at all was due chiefly to the efforts of the Populist party, then at its strongest. The income tax was promptly assailed on the ground of unconstitutionality. The Supreme Court rendered a decision on April 8, 1895, that a tax on

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income derived from land was a direct tax and hence unconstitutional unless apportioned. A few months later another decision of the same court brought incomes derived from other sources under the same interpretation.

The Presidential campaign of 1896 was contested on the gold standard issue. The Democratic platform demanded the free and unlimited coinage of both gold and silver at the ratio of 16 to 1, without waiting for the aid or consent of any other nation. The Republicans, on the other hand, opposed the free coinage of silver except by international agreement. Never did political acridity reach a higher degree of intensity than in this campaign, and in many instances party lines were deranged. Broadly speaking, the indications were that the agricultural West favored free silver, with the East practically a unit in opposition. The country at large finally declared in favor of a gold standard by the election of William McKinley. After that election the question of currency reform was left untouched until 1900.

The condition of the Treasury continuing unsatisfactory, another tariff was undertaken. The Dingley tariff became law on July 24, 1897. Under its provisions the duties of 1890 were restored on some commodities, while on some others compromises were effected between the rates of 1890 and 1894. Only in a few instances were the lower rates of the Wilson tariff allowed to stand. On the whole, the