Economics Volume II: Modern Economic ProblemsFetter, Frank A. (Frank Albert)
General
Economics Volume II: Modern Economic Problems
Fetter, Frank A. (Frank Albert)
Economics
The most important tariff acts of the war were those of 1862 and 1864
by which large increases were made on many articles. These tariff
acts were passed in connection with far-reaching and burdensome
applications of internal revenue taxes on many kinds of manufactures.
The tariff rates were primarily intended to offset these taxes, "to
impose an additional duty on imports equal to the tax which had been
put on the domestic articles," as was said by the sponsors of the
bill. These rates were similar in purpose to compensatory rates, and
in many cases they were more than sufficient to offset the internal
taxes. Under the last of these acts the duties collected in the six
years from 1865 to 1870 averaged nearly 48 per cent on dutiable and
nearly 44 per cent on free and dutiable.
The remarkable fact was that soon after the war the internal revenue
taxes began to be repealed one after another, and by 1872 nearly
all those bearing upon general manufactures (apart from cigars and
alcoholic beverages) were gone. The tariff, however, remained almost
unaltered. This repeal of internal revenue taxation had the same
"protective" effect as raising the tariff rates by so much. As if
this were not enough for the protected interests, in 1867 the duty on
woolens was further raised and in 1870 numerous other increases were
made in the duties having a protective character. Some reductions were
made, but these were almost all on articles of a distinctly "revenue"
character such as tea, coffee, sugar, molasses, spices, wines.
Revenues were superabundant for current expenses of government, and
altho there was a large national debt, hardly any of it was redeemable
at the time. There was therefore need to reduce taxation, but the
attention of the consuming and tax-paying public was distracted by the
somewhat passionate political issues of the day. Besides, the public
had not the technical knowledge or the unified opinion on this subject
to protect itself against the greedy lobby in this process of tax
revision. And so, selfish commercial interests could get nearly what
they asked for in Congress, and the politicians at Washington, who had
come to have a well-nigh superstitious faith in the efficacy of very
high protective duties, could quietly use the opportunity to raise the
people's taxes for the people's good.
These virtual increases in the protective power of the rates in force
are not evident in the statistics of average _ad valorem_ rates,
because the higher rates in many cases were sufficient to exclude
relatively more of the foreign products to which they applied.[5] The
imports came, by a process of selection, to consist more largely of
goods subject to lower rates. So the year 1868 showed the highest
average rate on dutiable goods (48.6 per cent) of any year after the
act of 1828 until that of 1890, and the rate fell somewhat each year
until in the fiscal year 1872 it was 41.3 per cent.
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