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The true change may now be readily brought about, because the masters of the art of converting ore into iron have become aware that, owing to the scarcity of the fine ores suitable for the Bessemer metal, and of coal suitable for coking in Great Britain, the paramount control of the metal industry is passing to this country; it needs only the maintenance of the prices on the other side without a reduction of our own, to put us in a position of advantage for converting the crude metals into the higher forms in which ten or twenty men may be called for as compared to one in the production of pig-iron, copper, lead, and zinc. The prosperity which would ensue, as it did in Great Britain, after similar changes in the tariff were made, would tend to increase the consuming power of our own people in respect to the dutiable goods from which we should still derive a constantly increasing revenue. In this way we might gain a true protection to our domestic industry and the development of our home market; we might then take the paramount position in manufacturing arts as well as in agriculture to which we are entitled and yet enjoy the full benefit of low price and high wages.

I have endeavored to bring out this point very conspicuously, because many persons have looked upon those who are stigmatized as free-traders as if they advocated radical and injudicious changes in our revenue system, such as would launch us upon free trade without warning and without preparation. It is time to lay aside such prejudice with regard to those who advocate tariff reform in the direction of freer trade. I can not name a man among my associates in the study of these economic questions whose views are not substantially like my own and who is of any considerable influence or importance either as a student, economist, or legislator -not one who would not deprecate radical and revolutionary changes and who would not be guided by the most conservative ideas in the measures by which an ultimate but very profound change in our fiscal system would be brought about.

So far as one may judge by the course which has been taken in the House of Representatives and in the Senate, and by the position taken by ex-President Cleveland, the advocates of tariff reform and reduction first declared their adhesion to this proposed method by putting wool, hemp, flax, and many other articles which are most important products in the specific States from which they have been elected at once into the free list. May not men like the representatives from Texas, Kentucky, Tennessee, and Arkansas, who led off in the Committee of Ways and Means in taking off the taxes from wool, hemp, and flax, well be sustained in the brave stand which they have taken and on the lines on which they have carried their constituents with them? These men have also been willing, even eager, to grant rates of duty

on finished fabrics, such as might allay the fears of those who have been so long sustained by high duties that they dread any change. This is a reasonable method. The matter of importance is that we should be headed in the right direction. The time corered in the process of change may well correspond substantially with the life of the existing machinery which has been put at work at the high cost due to past and present conditions. All the machinery in our textile factories has cost at least fifty per cent if not seventy-five per cent more than that of our competitors in England, France, and Germany, on account of the tax upon materials of which that machinery is made. The life of machinery which is used in modern manufacturing ranges from ten to twenty years, averaging perhaps fifteen years. If the relief could at once be given by a removal of the duties upon crude and partly finished materials, with very moderate reduction on the finished goods, we should probably repeat the experience of Great Britain, and we should find, as Gladstone put it, that “the road to free trade is like the road to virtue; the first step the most painful, the last step the most profitable."

The manufacturers of England were formerly so afraid of pauper labor, so called, that when the proposition for the union of Ireland with England was pending, the purport of which was of course to bring Ireland under the same tariff system as that of England, they sent memorials to Parliament in opposition to the union, on the ground that they would be ruined by the cheap labor of Ireland. Of course, they were disappointed; they were not obliged to disturb or stop the factories of Lancashire and of Yorkshire, or to move them across the Channel. The manufacturers of England soon found out that the low-priced labor of people verging on pauperism is the dearest and not the cheapest labor that can be offered.

I will now close this over-long treatise upon the Method of Tariff Reform by submitting what may be called a practical budget. The figures are based upon the actual accounts of the Treasury of the United States, and upon what is hoped may be the maximum expenditure that will be warranted even by the present Congress.

First let me call attention to a few facts. Let us suppose that the civil war were ended-I mean the financial war, which will not be ended until the last dollar of debt shall have been paid and the last pension shall have fallen in. There are certain necessary annual appropriations which must be met year by year. How could we meet them with the least interference with the freely chosen pursuits of the people, and yet with due regard to the conditions in which we are? The ordinary expenses consist of, first, the cost of the civil service, legislative, judicial, consular, and the

like, and the cost of the collection of revenue; second, the support of the army and the construction of fortifications; third, the support of the navy, without expensive appropriations for construction ; fourth, the deficiency in the postal service; fifth, the interest on the public debt; sixth, the support of the Indians; and seventh, the miscellaneous expenses. The sum of these regular or normal expenditures, aside from war obligations, according to the estimates submitted by the Secretary of the Treasury for the next fiscal year, which estimates until now have been more apt to be cut down than increased by Congress, amount to less than $200,000,000. We may set off a tax against each branch of expenditure, and the conclusion which we reach is rather singular.

Omitting fractions, the internal revenue from whisky more than pays the cost of the civil government. The excess added to the tobacco tax more than suffices to pay the army expenses and fortifications. The navy floats on beer, with a part of the beer tax to spare and carry forward. The income from the Indian trust funds meets the cost of the Indian Department. The miscellaneous permanent receipts of various kinds more than cover the miscellaneous permanent expenses; while the sugar tax and the revenue derived from imported liquors and tobacco cover the postal deficiency and the interest on the public debt, with $10,000,000 to spare.

Were it not for pensions and sinking funds, our pleasant vices, with the tax on sugar added, would support the Government on a very adequate scale, not very economically administered, and with a margin for contingencies of more than $10,000,000 to spend on rivers and harbors.

This is only one way of putting the case. It shows how easily we could cover all the normal or peace expenditures of the Government by taxing nothing but spirits, beer, tobacco, and sugar. But we are subject to war expenses and we must continue some war taxes for a term of years. We may therefore make up two accounts: War Expenses :

No. 1. Current annual pensions, $65,000,000; arrears, $35,000,000............ $100,000,000 Interest on war debt. ......

31,500,000 Sinking fund ................................

48,500,000 Total war expense......

....... $180,000,000 War Taxes : Internal tax on whisky ......

......... $78,000,000 Internal tax on beer...

27,000,000 Internal tax on tobacco .......

33,000,000 Duties on sugar and molasses....

60,000,000 Elasticity in next fiscal year .......

2,000,000 Total war taxes

$200,000,000 Excess of war revenue carried forward .........

$20,000,000

No. 2.
Peace Expenditures :
Civil service ..........

$66,000,000 Army and fortifications .

37,000,000 Navy...

25,000,000 Indians..

6,000,000 Postal deficiency.......

7,000,000 Miscellaneous .....

21,000,000 Rivers and harbors..

10,000,000 Total..........

$173,000,000 Peace Revenue on Present Basis : Brought forward from the war taxes.....

$20,000,000 Miscellaneous permanent receipts, omitting so-called profit on silver coinage.........

30,000,000 Customs revenue on basis of calendar year ending December 31, 1889.........

$230,000,000 Less sugar assigned to war expenses........ ........ 60,000,000

170,000,000 Total......

................... $220,000,000 Surplus available for reduction of taxation

... 47,000,000

......

On reference to the table of the revenue derived from imports, sorted according to their kind, given in the first part of this treatise, it will be found that, Aside from sugar, necessary articles of food have been taxed annually between $10,000,000 and......

.... $12,000,000 Articles in a crude condition necessary in the processes of domestic industry.

$13,000,000 to 14,000,000 Articles partly manufactured which are necessary in the processes of domestic industry.....

$23,000,000 Less some duties which are imposed in order to adjust other duties to the internal taxes, etc....

3,000,000

20,000,000 Total...

.................

$46,000,000 All this revenue can be spared. All these taxes are a useless burden upon domestic industry. This relief can be given within the surplus proved to exist, if this Congress does not waste the substance of the people in order to prevent a reduction of taxation.*

Of course, one can not enter into details in a magazine article. Judgment would be required in abating the duties upon crude and partly manufactured materials. Under these headings there may be a very few articles which it may be necessary to move

* Since this treatise was first prepared for submission to a private club, the dependent pension bill has been passed, which may increase the current annual obligation to $100,000,000 a year. If common sense ruled in fiscal legislation, a duty on tea and coffee would bave been imposed to meet this increased obligation. But even this new burden will not prevent the application of this budget within two or three years by the next Congresssuch is the elasticity of our revenue, in spite of all the stupidities of partisan legislation.

into another class, or on which duties would have to be maintained because of their close relation to finished products of a very similar kind. So long as we maintain a duty upon spool cotton, for instance, it would not be safe or judicious to remove all duties upon fine cotton thread which could be imported in the skein and reeled here. But these are all small matters of detail. Suffice that the revenue which is now derived from spirits, tobacco, beer, and sugar, from silks, furs, and fancy goods, and from laces, embroideries, and the fine textile fabrics which are articles of luxury rather than of utility, is so large that it would suffice to meet all the ordinary and all the extraordinary expenditures of the Government.

But there is another element to be considered. When a reform of the English tariff was laid down on these lines under the direction of Sir Robert Peel, even he could not anticipate the prosperity which would ensue from the removal of the little petty obstructions to the commerce of the globe, which had yielded only a small part of the customs revenue. He expected a deficiency in the revenue from the duties on imports in consequence of the abatement of the duties on the articles made free; and to meet this expected deficiency he carried a temporary income tax for three years, beginning in 1842 to end in 1845. But such was the stimulus given to industry, trade, and commerce with all the world, that the revenue on dutiable imports soon rose to the same amount that had been yielded before the reform. By 1845 the previous deficiency in the revenue had been surmounted and the Treasury of Great Britain had a surplus to dispose of for the first time in many years.

But the lesson had been learned. Opposition to tariff reform almost ceased; in 1845 another list of articles of more importance was added to the free list. Still it could not be conceived that the revenue would not be diminished and the income tax was again imposed for the term of three years. But again the revenue from dutiable imports increased rapidly, again the consuming power of the people had increased with their prosperity. Then came the Irish famine. The corn laws went by the board by Orders in Council, afterward justified by act of Parliament. The prosperity of England went forward by leaps and bounds. And in 1853 Gladstone completed the work that Peel had begun.

We have yet to learn how to increase the public revenue by the abatement of obnoxious and obstructive taxation; even the simple system which is herein presented, under which even an excessive expenditure can be met by a very simple system of taxation, under which every necessary article in our domestic manufactures will be free could it be put in force, would be immensely disappointing, and in the same way in which Peel and his coadjutors

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