Evening star., 1935-10-15

quently increases the value OF his IN
come and property"
During the first years Of the new
government the tariff was so low that
it was hardly an issue. The general
European wars of the Napoleonic Pc
riod, however, disrupted world trade
and led to a desire for self-sufticiency.
Beginning in 1916 a series Of higher
tariffs sought to insure the home mar
ket to American producers by restrict
ing imports from abroad.
Ten years Of this policy had its ef-
feet upon agriculture. Thomas Jeffer-
son testified to it in letter written
a few months before his death, in
which he cited the causes of his own
farm bankruptcy. He explained his
inability to retire his debts by the sale
of farm produce as follows:
Had crops and prices for several
years been such as to maintain steady
competition of substantial bidders at
market, all would have been safe. But
the long succession of years Of stunted
crops, of reduced prices, the general
prostration of the farming business,
under levies for the support of manu-
facturers, etc, with the calamitous
fluctuations of value in our paper me-
dunn, have kept agriculture in state
| OF abject depression, which has peo-
pied the Western States by silently
breaking up those on the Atlantic and
glutted the land market, while it drew
off its bidders. In such state of
things, property has lost its character
of being resource for debts"
Two years after this letter was writ
ten, tariff rates were raised again by
what farmers called "the tariff of
abomination 1t was increasingly
clear that the balance between agri-
culture and industry which the found
ing fathers had established as a test
Of the propriety of tariff legislation
had been destroyed. The South Caro-
lima ordinance of notification of 1882
expressed the extreme view of the
farmers when 1t declared that this
tariff was so far beyond the powers of
Congress as to jeopardize the basis of
the Federal Union.
Compromise Came in 1888.
A retreat was in order. The COM
promise tariff act of 1888 provided
step-by-step reduction of tariff rates
which. while allowing time for read
justment, exerted continuous level
ing influence for the next 10 years.
There are many striking parallels
between the period following the Ma
poleonic Wars and the period follow
ing the World War, but there are also
some reasons why the solution of 1888
could not be the solution of 1888. In
1888 high tariffs were matter of less
than IS years standing and applied to
relatively few commodities. Moreover,
the high tariff interests were not very
firmly entrenched, and the social read
justments required by fiat rate reduc-
tions of the tariff were not so serious.
The situation in 1888 was different.
In 1888, tariffs had been ingrained
into the social and economic system
of the United States for rs years. To
correct the unbalance between agricul-
ture and industry by towering indus
trial prices to agriculture's world price
level was not even seriously suggested
in 1888. The alternative was to move
farm prices in the direction of parity
with industrial prices.
This. historical background, to my
mind. lends particular support to the
analogy between processing taxes and
the tariff. In framing the A. A. A. we
were quite definitely attempting to do
for agricultural prices what a mod
crate tariff, If effective, would have
done.
The analogy holds even though the
processing tax contains a ceiling for
the protection of the consumer, which
the tariff lacks. The analogy holds
even though the processing tax has
been effective, as many agricultural
schedules Of the Hawley-Smoot act
have not.
The processing tax affects nine
commodities. The tariff now in opera
ton taxes over 5000 commodities. Yet
I doubt if the tariff on these 5000
items benefits many more persons
than the processing tax on only nine