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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the other hand, the duty on refined sugar was reduced from 312 cents to 1/2 cent a pound, the duties on raw sugar were repealed, and a bounty of 2 cents a pound was allowed for 14 years on the production of sugar within the United States.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. 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.

The

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.

Dollar Diplomacy.

One of the latest functions of Con

gress, 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.

Waterways.

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

a deep canal and a deepening of the Mississippi River. Some States are doing great work in building new waterways. New York State is build

ing a new barge canal running along the old Erie Canal from Albany to Buffalo, with a branch from Syracuse to Oswego.

CHAPTER VI.

1865-1912.

STATE AND LOCAL GOVERNMENT ACTIVITY IN REGULATING COMMERCE AND INDUSTRY. Promotion of commerce and industry by the Government after the Civil War - First attempt to regulate interstate commerce State anti-trust legislation - The Missouri law - The Illinois actsions The Granger movement Recent regulation of interstate commerce mission.

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After the close of the Civil War the policy of direct government aid in stimulating industry was generally confined to the United States as a whole. In fact, this reversal of State policy began even before the war. The untoward experiences of many States and municipalities in aiding turnpike, canal and railroad construction had much to do with this change in public sentiment, and the urgency of the great political questions that beset the country for over a decade prior to 1861, kept men's minds in uncertainty and their thoughts on other matters than the future industrial development. Nationalism, as distinguished from the old-time Federalism, was the prime outcome of the war, and that greatly encouraged the tendency of relegating all questions of trade, commerce and industry to the central government. State rights had gone into the background, and though this mostly affected the South, all the States felt the change. Accordingly

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Railroad commisThe Public Service Com

the history of this period shows an almost complete absence of State or municipal concern for the advancement of private business interests. Abundant National aid in a protective tariff, in land grants to railroads, in expenditures for harbor and river improvements, and in other ways, was forthcoming. An era of great business and industrial prosperity followed; business became stronger than the political State. It controlled legislation in many commonwealths and its interests were advanced in many ways by special privileges, franchises and so on, which took the place of the oldtime bounties, subsidies, and State, county and municipal bond issues. But this policy finally fell very much into disfavor by the shift of public sentiment regarding corporate wealth after 1880.

It was not, however, until well toward the close of the century, when the problems arising from the concentration of capital in large corpor

ate enterprises began to loom large in the public eye, that there was any very serious attempt anywhere in the United States at legislation at all intended in restraint of methods of trade. Congress made the first move in February of 1887, by passing the first act for the regulation of interstate commerce.

Soon after, individ

ual States began to take action.

In a little more than a decade 29 of the States and Territories had legislated on trusts, passing statutes defining monopoly more definitely and imposing penalties of an ultra-severe character, in order to meet existing business conditions and to prevent the enhancing of prices, the crushing of competition, and other interferences with the natural freedom of trade. To Maine belongs the distinction of enacting the first anti-trust law put upon the statute books of any State. It was passed in 1889 and was of a sweeping and drastic character. So far, however, little has been done under it. Closely following Maine, Kansas, Michigan, Missouri, Nebraska, North Carolina, Tennessee, and Texas, and the three Territories of Idaho, Montana and North Dakota also passed anti-trust laws. In 1890 Iowa, Kentucky, Louisiana and South Dakota passed similar laws and Missouri added to that already on her statute book. In the three following In the three following years, Alabama, Minnesota, New Mexico, New York, Wisconsin and California also fell into line with legislation, and later came Georgia, Indiana,

Mississippi, Ohio, Utah, Arkansas, Illinois, Oklahoma and South Carolina. The States of Washington and Wyoming put provisions against trusts into their constitutions in 1889, and Kentucky and Missouri in 1891. Ultimately Colorado, Idaho, Michigan, North Dakota, South Dakota, Texas, Connecticut, Mississippi, North Carolina, South Carolina, Tennessee and Utah legislated to the same end.

Naturally there was wide variance in the details of this legislation. In most of the States the law made it a crime for two or more persons to enter into an agreement which should prevent free competition and sale, whether such agreement be reasonable or unreasonable. Several States made it a criminal conspiracy for two or more persons to agree to regulate the quantity or price of any article to be manufactured, mined, produced or sold, whether prices be raised or lowered. In other States the attempt to monopolize any commodity by two or more persons in association was made a criminal offence. Mississippi declared in its statute that it was a criminal conspiracy for two or more persons, not simply to regulate prices, but also to settle the price of an article between themselves or between themselves and others.

As various as the definitions of what constituted the crime and the methods of judicial procedure against offenders were the penalties. These took the form of imprisonment and fining of individuals, fining of firms

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