George Oberkirsh Seilhamer.

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of the Committee on Ways and Means. With this object in view
this important committee was in a measure reconstituted. William
L. Wilson, of West Virginia, was made its chairman instead of Will-
iam M. Springer, of Illinois, who held the place in the 52d
Congress. The appointment of Mr. Wilson was congenial to the
President, and it was even said it was made at his instance. Mr.
Wilson was a scholarly man, and thoroughly grounded in the prin-
ciples of Free Trade, as taught by the political economists. In the
application of the doctrines taught in books to the political needs
of a revenue-supported government, he was to prove himself far from
equal to the task intrusted to him. His ideal of a revenue tariff
was the Tariff of 1846, a tariff that served its purpose in its day, but
was based on conditions entirely different from those of 1894. With
Mr. Wilson on the Committee were not fewer than five Southern
Representatives imbued with economic principles akin to his own:



514 HISTORY OF THE REPUBLICAN PARTY.

McMillin of Tennessee, Turner of Georgia, Montgomery of Ken-
tucky, Breckinridge of Arkansas, and Tarsney of Missouri. This gave
the South a majority of the Committee. The other Democrats were:
Whiting of Michigan, Cockran of New York, Stevens of Massachu-
setts, Bryan of Nebraska, and Bynum of Indiana. This Democratic
majority at once went to work upon the new Tariff bill, its prepara-
tion extending over the special session of Congress and through the
vacation period, so as to have the measure ready for the first regular
session in December.

In the preparation of this bill the Democratic majority of the Com-
mittee permitted no interference with its work. Complaint was
made that the business interests of the country were denied a hear-
ing, such as had been accorded when the McKinley bill of 1890 was
in preparation, or, if granted a hearing, that their facts and arguments
were ignored. But hearings were not deemed necessary, as the
theory of the bill was to eliminate the protective principle as far as
possible, and to establish a system of purely revenue duties, with as
near an approach as circumstances would admit to the principles of
free trade. When the bill was reported in the House its opponents
quickly pointed out incongruities due to a desire to placate certain
sections and favor certain industries. In this respect it was at odds
with the Platform adopted by the Democratic National Convention of
1892. A leading feature of the bill was the almost universal de-
parture from the principles of specific duties, and the adoption of ad
valorem rates. In this respect it copied the old Walker Tariff Act,
which went out of existence with the adoption of the Morrill Tariff of
1861. In general terms the bill made sweeping reductions in duties
as fixed in the McKinley Act, turned the lumber schedule practically
into a free list, placed wool, coal, animals, and iron ore on the free list,
and brought all manufactures of wool below the protective rate. The
further enlargement of the free list w r as effected by modifications in
all the schedules, and especially in those which embraced products of
the farm. It struck a direct and exterminating blow at the principle
of reciprocity, which had been incorporated into the McKinley Act,
and brought about the speedy abrogation of the numerous treaties
which had been negotiated under that Act, looking to an enlarge-
ment of reciprocal trade relations with other countries, and which
had already brought about great increase in commerce.

The most conspicuous and at the same time the most unexpected
feature of the bill was a tax of two per cent, on all incomes over
14,000. In this country direct taxes had always been so unpopular
as to be considered intolerable. An income tax had never been
levied before, except during the Civil War, when the vast expendi-



PRESIDENT CLEVELAND'S SECOND ADMINISTRATION. 515

tures of the Government rendered it necessary, but as soon as pos-
sible after the return of peace it was repealed. While it was in op-
eration it met with the bitterest hostility from the Democrats. Even
its necessity as a war measure could not justify it in Democratic eyes.
It had never been demanded in a Democratic platform, and a proposi-
tion to include it in the declaration of the Convention that nominated
Cleveland in 1892, would have been repudiated as peremptorily as by
the Convention that nominated Buchanan in 1856. The only previ-
ous demand for " a graduated income tax " was in the Populist Plat-
form, adopted at Omaha in 1892. But President Cleveland com-
mended the principle in his annual message in December, 1893, even
before the Committee on Ways and Means had offered the new Tariff
bill to the House. " The Committee," he said, " after full considera-
tion, and to provide against a temporary deficiency which may exist
before the business of the country adjusts itself to the new tariff
schedules, have wisely embraced in their plan a few additional in-
ternal-revenue taxes, including a small tax upon incomes derived
from certain corporate investments. These new assessments are not
only absolutely just and easily borne, but they have the further merit
of being such as can be remitted without unfavorable business dis-
turbance whenever the necessity of their imposition no longer exists."
In the subsequent discussions of the bill, especially in the Senate, the
Populists boldly assumed the paternity of this income tax feature,
and their claim to it was not denied. It was due to the blending of
Populistic and Democratic theories, almost universal in the South,
and the complaint of the West that the rich were not bearing their
full share of taxation. When Mr. Wilson brought forward the bill to
which his name was given he sustained it in a vigorous speech that
was intended to sound the keynote of the argument in its behalf and
carry it forward to a happy and a speedy passage. But it soon be-
came apparent that the measure in all its features was to be the sub-
ject of a prolonged parliamentary struggle. It pleased nobody, its
halting friends scarcely more than its open enemies. It was not
such a bill as the out and out free traders had expected. Conserva-
tive Democrats were alarmed because it threatened their home in-
terests and industries. The Republicans denounced it for its glaring
inconsistencies and confessed weaknesses. The income tax feature
was assailed as a confession in advance that as a revenue measure the
bill would fail to produce the necessary revenue, as intended to give
to an unequal and unproductive revenue scheme a sectional and re-
vengeful direction, and as at odds with all ideas of justice.

But Republican opposition from the very outset took the form of
resistance in acts rather than in words. The Democratic trick of not



516 HISTORY OF THE REPUBLICAN PARTY.

voting so flagrantly exhibited in the 51st Congress was resorted
to so persistently and continuously that headway in the progress of
the bill became slow and painful. At last, as the only way out of the
dilemma, a change of the rules was made to allow a quorum to be
counted a method that had been bitterly denounced w T hen it was
practiced by " Czar " Reed. With a majority of 64 on the final pas-
sage of the bill, the measure would have gone by default at any of its
stages if many of those who voted for it could have had their way. The
dominating power that compelled their acquiescence was the idea
that the bill was a party necessity. From hour to hour and day to
day and week to week, the need of holding the party together, of
keeping a quorum for votes that might prove fatal, of making head-
way in the face of an interest that flagged as the debate progressed,
and as amendment was piled upon amendment, like Pelion upon
Ossa, was the dominant force of the struggle. The bill came from the
Committee on Ways and Means, December 19, 1893; it passed the
House, February 1, 1894. The vote was 204 ayes to 140 nays, seven-
teen of the negative votes being cast by Democrats.

In the Senate the bill was stripped of all semblance to the original
before it was finally reported from the Finance Committee. In the
Committee it was referred to a sub-committee of three Senators from
contiguous Southwestern States without important commercial or in-
dustrial interests Mills of Texas, Vest of Missouri, and Jones of
Arkansas. This sub-committee went to work as if it was framing a

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Democratic platform for the South; as if it had been instructed to
report a tariff bill for the agricultural States, in which the demands
of the manufacturing States were to be ignored. It refused hearings
to interests that claimed a right to be heard, and attempted to quiet
the clamor of which this course was the occasion by sending out
circulars inviting opinions as to the effect of changes in tariff rates.
It was claimed that hearings would result in waste of time and cause
indefinite postponement of conclusions. In spite of the method
adopted the Finance Committee did not report until March 8, and
even then its report was only tentative. Under Republican fire the
consideration of the bill was delayed, the Committee giving it out
that it had a more complete and satisfactory measure in reserve.
When this was reported it was no longer the Wilson bill, for the
measure that had passed the House was loaded down with more than
four hundred amendments. As thus transformed its consideration
did not begin until May 8. The bill, with its amendments, was de-
bated in the Senate for months and subjected to gradual modifica-
tions, generally in the direction of increased duties and additional
inconsistencies.



PRESIDENT CLEVELAND'S SECOND ADMINISTRATION. 517

The debate was one of unusual ability and acrimony, especially on
the Income tax feature, which was bitterly opposed by Democratic
as well as ^Republican Senators. Senator Hill, of New York, took
the ground that it was unwise to incorporate an income tax into a
reform bill, or to attach it to any measure of tariff revision. It was a
war tax in time of peace. Democracy had never favored such a tax.
It was a Populistic measure. It fulfilled no Democratic doctrine
or promise. He ridiculed the idea that the United States should
copy this form of taxation from England, whose form of government,
natural surroundings, and obligations were essentially different. But
even in England it was rather tolerated than approved. He repudi-
ated the " Spurious Democracy of these modern apostles and proph-
ets, who are part Mugwump, part Populist, and the least part
Democratic, who seek to lead us astray after false gods, false theories,
and false methods."

The arguments against the Income tax feature were: (1) That it
had no legitimate place in a tariff reform bill; (2) it was neither
Democratic nor Republican in principle, had never been approved by
the people, was a doctrine of Populism; (3) it was unnecessary, as a
revenue measure; (4) it was a direct tax and therefore unconstitu-
tional; (5) it was unequal, unjust, and sectional in its operations; (6)
it revived an odious war tax; (7) its exemptions stamped it as an of-
fensive piece of class legislation, all incomes should be taxed or none:
(8) it was retroactive; (9) it usurped a field of taxation lawfully be-
longing to the States; (10) it was inquisitorial and offensive; (11) it
would lead to conflict between State and Federal authorities; and
(12) it selects a class for Federal taxation. The Southern and Pop-
ulist Senators were persistent and aggressive in support of the
clause. They averred that the tax was favored by a majority of the
people; that the laboring classes thought the rich were not bearing
their share of taxation; that the officials who had to do with public
moneys were corrupt, and the rich could secure from them lower as-
sessments; and that millionaires were too numerous, seventy of them
averaging estates of $37,000,000 each. Thus supported, and backed
by all the power of the Administration as a party measure, it passed
the Senate as it had before passed the House. In the Senate, as in
the House, its friends were dissatisfied with it, yet willing to vote
for it for the sake of party.

The Brice-Gorman bill, as the measure was called after its trans-
formation in the Senate Finance Committee, was still further dis-
credited by a scandal connecting distinguished Democratic Senators
with the Sugar Trust. The charge was made that the sugar schedule
had been made a matter of bargain and sale; that members of the



518 HISTORY OF THE REPUBLICAN PARTY.

Trust had secretly visited members of the Senate Finance Committee,
and had secured a modification of the sugar schedule by means of
which it would reap great profits. These profits were to be realized
by placing a duty on sugar, but postponing its collection till January
1, 1895, thus giving the Trust a chance to stock up without duty, but
at the same time to advance the price of refined sugar to the extent
of the duty. The charge was further made that the Secretary of the
Treasury had personally written or dictated a change in the sugar
schedule in accordance with the wishes of the Trust. Still another
charge was made that the Trust demanded and obtained this valuable
concession in pursuance of a pre-existing agreement with the leaders
of the Democratic party that its interests should be protected for the
consideration of a gift of a sum of money, estimated at $500,000, for
campaign purposes in 1892. And again, it was charged that informa-
tion respecting the work of the Finance Committee had been sent out
secretly to New York brokers, and that Senators had taken advantage
of this leakage to speculate in sugar stocks. The publication of
these charges dragged the high character of the Senate in the mire,
and cast a taint on tariff legislation. An investigation w r as ordered.
The newspaper men who had made the exposure refused to give the
names of their informants, and were turned over to the criminal
courts to be tried for contumacy. The sugar magnates who were
called to testify admitted the giving of money in unremembered
amounts to State, but not National campaigns, on the score of busi-
ness, and for which they expected corresponding benefits. Other
witnesses testified in a modified way, and some with very proper
and natural excuses, to the truth of w r hat had been charged, while
even Senators w T hen called did not in every instance place them-
selves beyond the suspicion that they had taken advantage of the sit-
uation to turn a penny in sugar stock speculation. The revelations
were a terrible blow to the national pride, and to every sense of
honor and honesty, but they did not serve to loosen the grip which the
Trust had on the Senate. On the contrary, they served rather to ex-
plain what had before been a rumor, that the position of the Trust
was so strong that the fate of the entire Tariff bill depended on its
getting the protection it wanted. They also served to explain the in-
difference of the Trust to the sugar schedule when the bill was in the
House, at which time it was given out that the Trust depended on
the Senate for the protection it desired. That there should have been
such favoritism shown to a gigantic trust, at a time when the exalted
principle of tariff reform was seeking for recognition in our indus-
trial and commercial economy, w r as made all the more inexplicable
by the clause in the Democratic Platform of 1892, which read: " We



PRESIDENT CLEVELAND'S SECOND ADMINISTRATION. 519

recognize in the trusts and combinations which are designed to en-
able capital to secure more than its just share of the joint product
of capital and labor a natural consequence of the prohibitive
taxes which prevent the competition which is the life of honest trade,
but believe their worst evils can be abated by law, and we demand
the rigid enforcement of the laws made to prevent and control them,
together with such further legislation in restraint of these abuses
as experience may show to be necessary."

Why and how the Senate amendments came to be made amend-
ments sufficient in number to constitute a new r bill after the revela-
tions concerning the sugar schedule, was a subject for doubts and sus-
picions as midsummer approached with the bill still pending. Dem-
ocratic inability to legislate on the Tariff became so clear as to be un-
deniable, but tariff legislation of some kind was a party necessity.
At last the end w r as reached in the Senate, and the transformed bill
was passed, July 3, 1894, and sent to the House. It received a ma-
jority of five, 39 yeas to 34 nays, the Populists, Allen of Nebraska, and
Kyle of South Dakota, voting with the Democrats. Mr. Stewart of
Nevada, and Mr. Peffer of Kansas, voted with the Republicans. Mr.
Hill, of New York, was the only Democrat opposed to the bill who
had the courage to vote against it.

In the House there was an understanding that the bill should be re-
ferred to a Conference Committee without debate, and after a speech
by Mr. Wilson, this was done. In his speech Mr. W r ilson sad that
the bill had come back to the House with six hundred and thirty-four
amendments to it, and that it no longer represented the principle
that revenue taxes under a tariff should be levied on finished products
and not on raw materials. Only wool and lumber came back undis-
turbed by the Senate. The bill had been rendered further unsatis-
factory by numerous changes from ad valorem to specific or com-
pound rates of duty. In the contention in conference over the de-
parture from ad valorem rates the Senate proved the stronger. The
principle of specific rates was too deeply grounded in the practice of
civilized governments to be overcome. The Committee found grounds
for agreement in many of the schedules, but in regard to the sugar
schedule and the items of coal and iron ore, all of which were free in
the House bill, the differences seemed irreconcilable, and a disagree-
ment was reported on July 19. In reporting the disagreement Mr.
Wilson said the committee on the part of the House could not accede
to the Senate's demands without further instruction. He pointed
out the difference between the rates of duty as originally fixed in the
House bill and as found in the Senate bill. In the course of his
speech he said : " If it be true, as stated by the gentleman from Ohio



520 HISTORY OF THE REPUBLICAN PARTY.

(Mr. Johnson), of which I have seen myself some confirmation in the
press, if it be true that the great American Sugar Trust has grown
so strong and powerful that it says that no tariff bill can pass the
American Congress in which its interests are not adequately guarded;
if, I say, that be true, I hope this House will not consent to an adjourn-
ment until it has passed a single bill putting refined sugar on the
free list." In conclusion Mr. Wilson eulogized President Cleveland,
and then, to the astonishment of the House, read a letter from him
dated July 2, 1894, and before the passage of the bill in the Senate.
The letter was addressed to Mr. Wilson, and had been in his private
keeping ever since its receipt. Mr. Wilson now made it public with
President Cleveland's consent. It was such a remarkable letter, and
led to such serious consequences, that it came to be regarded as one
of the most momentous chapters in the history of the Wilson Tariff
bill, if not one of the boldest of executive attempts to influence legisla-
tion.

" Every true Democrat," the President said in his letter, " and every
sincere tariff reformer knows that this bill in its present form and as
it will be submitted to the Conference Committee falls short of the
consummation for which we have long labored, for which we have
suffered defeat without discouragement; which in its anticipation
gave us a rallying cry in our- day of triumph, and which, in its promise
of accomplishment, is so interwoven with Democratic pledges and
Democratic success, that our abandonment of the cause or of the
principles upon which it rests means party perfidy and party dis-
honor. One topic will be submitted to the conference which em-
bodies Democratic principle so directly that it can not be com-
promised. We have in our Platforms and in every way possible de-
clared in favor of the free importation of raw materials. We have
again and again promised that this should be accorded to our people
and our manufacturers as soon as the Democratic party was invested
with power to determine the tariff policy of the country. The party
now has the power. We are as certain to-day as we ever have been of
the great benefit that would accrue to the country from the inaugu-
ration of this policy, and nothing has occurred to release us from our
obligation to secure this advantage to our people. It must be ad-
mitted that no tariff measure can accord with Democratic principles
and promises, or bear a genuine Democratic badge, that does not
provide for free raw material. In these circumstances it may well
excite our wonder that Democrats are willing to depart from this, the
most democratic of all tariff principles, and that the most inconsis
tent absurdity of such a proposed departure should be emphasized
by the suggestion that the wool of the farmer be put on the free list,



PRESIDENT CLEVELAND'S SECOND ADMINISTRATION. 521

and the protection of tariff taxation be placed around the iron ore
and coal for corporations and capitalists. How can we face the peo-
ple after indulging in such outrageous discrimination and violation
of principles? It is quite apparent that the question of free raw mate-
rials does not admit of adjustment on middle ground, since their
subjection to any rate of tariff taxation, great or small, is alike viola-
tive of Democratic principle and Democratic good faith. . . .
Under our party platform and in accordance with our declared party
purposes, sugar is a legitimate and logical article for revenue tax-
ation. Unfortunately, however, incidents have accompanied certain
stages of the legislation which will be submitted to the conference,
that have aroused in connection with this subject a national Demo-
cratic animosity to the methods and manipulations of trusts and
combinations. I confess to sharing in this feeling, and yet, it seems
to me, we ought, if possible, to sufficiently free ourselves from preju-
dice to enable us coolly to weigh the consideration which, in formu-
lating tariff legislation, ought to guide our treatment of sugar as a
taxable article. While no tenderness should be entertained for
trusts, and while I am decidedly opposed to granting them, under the
guise of taxation, any opportunity to further their particular meth-
ods, I suggest that we ought not to be driven away from the
Democratic principle and policy which lead to the taxation of
sugar by the fear, quite likely exaggerated, that in carrying
out this principle and policy we may indirectly and inordi-
nately encourage a combination of sugar-refining interests. I
know that in present conditions this is a delicate subject, and
I appreciate the depth and strength of the feeling which its
treatment has aroused. I do not believe we should do evil that
good may come; but it seems to me that we should not forget
that our aim is the completion of a tariff bill, and that in taxing-
sugar for proper purposes and within reasonable bounds, whatever
else may be said of our action, we are in no danger of running counter
to Democratic principles. With all there is at stake, there must be in
the treatment of this article some ground upon which we are all will-
ing to stand, where toleration and conciliation mav be allowed to solve

o

the problem without demanding the entire surrender of fixed and
conscientious convictions. ... I expect very few of us can say,
when our measure is perfected, that all its features are entirely as we
would prefer. You know how much I deprecated the incorporation
into the proposed bill of the income feature. In matters of this kind,
however, which do not violate a fixed and recognized Democratic
doctrine, we are willing to defer to the judgment of a majority of our
Democratic brethren."



522 HISTORY OF THE REPUBLICAN PARTY.

When the bill got back to the Senate after the disagreement there
was a long and acrimonious debate, in which Mr. Cleveland's letter
was the principal cause of the bitterness. The Republicans saw in
the letter a concession of the President to trusts of all kinds to the
Sugar Trust, in his plea for a duty on sugar; to the Nova Scotia Coal
Syndicate, in his plea for free coal; to the Cuban Iron Syndicate, in



Online LibraryGeorge Oberkirsh SeilhamerHistory of the Republican party (Volume 1) → online text (page 56 of 61)