Mr. SHERMAN addressed the Senate. [His speech will be published in the Appendix. The Tariff. SPEECH OF HON. JOHN SHERMAN, of ohro, January 23, 1867. The Senate having under consideration the bill to provide increasedrevenue from imports Mr. SHERMAN said: Mr. PresIDENT: Before the vote is taken on the amendment of the Senfrom RhdIsland I think it right that I should state the general views which have controlled my action as a member of the ComFinance, and which will control my vote on this and the yarious propositions, of amendment that will be submitted to the Senate. I listened yesterday with great pleasure to the speech.? my honorable friendfrom NewJersey, [Mr. CATTELL, and was generally leased with its tenor and scope. It sounded ike a good old fashioned Whig protective speech—the school in which I was educated, the faith in which I was taught, and in which I yet have confidence. But, sir, it seamed to me that the Senfrom NewJersey, in his zeal for protection, forgot that we were now legislating under peculiar circumstances, and are compelled to look at a state of facts far different from those that existed before the recent war. In considering so complicated a subject as a tariff nothing can be more deceptive than the application of such general phrases as a “pro tective tariff, ” a “revenue tariff, ” a “free trade tariff.” Every law imposing a duty on imported goods is necessarily a restraint on trade. It imposes a burden upon the purchase and sale of imported goods and tends to prevent their importation. The expression a free trade tariff” involves an absurdity. Free trade implies a trade without restriction, while any tariff is a restriction on trade. A duty of ten% is a limitation on trade as well as a , of 100%, and they differ only in degree. So the phrase a “protective tariff” may be applied to every bill imposing duties on. "goods. The 1st tariffact, passed soon after the formation of the Constitution, was called a “pro tective tariff;” one of its leading objects, as declared by Washington, was to foster and protect American manufactures, and yet the general rate of duties was but ten%, advalorem. On the other hand, the tariff of 1846 is commonly known as? “free trade tariff, ” and yet the rate of duty levied by it averaged 24 and a half%. Every duty on imported merchandise gives to the domestic manufacturer an advantage equal to the duty, and to that extent every is a protective tariff. When the duty is so high as to prevent importation it ceases to be a “tariff” and becomes a “commercial regulation.” So the general term a “revenue tariff’” as descriptive of a tariff is deceptive and is simply tautology. Every tariff bill is a “revenue tariff.” The word “tariff” implies revenue, and means a rate of taxation on imported goods. It is simply a mode of taxation adopted by all commercial nations as the most certain, convenient, and least expensive form of taxation. The common meaning attached to the phrase a “revenue tariff” is a general advalorem tax on imported goods, without regard to the domestic manufacture. such a tariff has never existed in any commercial country, least in all in GreatBritain, where the duties are carefully levied to encourage their own manufactures. They do not now levy duties on manufactures for the same reason that we do not care to levy a duty on anthracite coal. By a vast accumulation of capital, and by severe commercial restrictions maintained for 100 years, they have a substantial monopoly of important branches of industry. They do not levy duties on such goods because none are imported into GreatBritain, and the tariff on them would produce as little revenue as your. duty on anthracite coal. These general phrases, if not always decep tive, are totally inapplicable to any tariff law that anyone opropose for the U.S. now. Free trade, if it means a mutual exchange of commodities with foreign nations without restrictions, is impossible. . necessities compel us to tax every form of property or production. Every hour of domestic labor contributes some portion of its product to the wants of the nation. Under these circumstances it is the plainest principle of political economy that we should so frame our tariff laws as to produce the largest possible income from imported goods. Revenue is the 1st, highest, and most pressing want, and it must be so levied as to do the least harm to our own industry. It is in the application of this ob vious principle that all the difficulty in framing a tariff law exists. This cannot be done b a Poio any general rate or rule to all articles. We must discriminate between articles of luxury and articles of necessity; between articles that may be produced in our country and articles mainly produced abroad; between raw materials necessary to the domestic manufacture and completed products of industry. The rate of duty must be modified by a mul titude of circumstances as varied as human knowledge, and with details far more difficult than any subject of legislation. Nor can we now consider the question as we should before the war. Then we had an opportunity to choose between imported articles; we might throw off the duty upon necessities, such as coffee and tea and various articles, because such duties were not necessary for revenue nor useful for protection; but now we are compelled to levy high duties upon every. thing, not only upon articles of absolute neces: sity the duty upon which will undoubtedly add to the cost of the articles, but also upon all articles of American production, and even upon raw materials that are indispensably necessary as the basis of our manufactures. We cannot now regard the subject in the same light or from the same stand point that we did in olden times when the tariff was the great controversy between parties in this country. We have now to consider it in the light of facts created by the war. The 1st and obvious inquiry of every Senator in discussing the question is, how much is it necessary to raise by a tariff on imported goods? and here I may say that all the revenue that is required to be raised in gold must be raised by duties on imported goods. While we have a depreciated currency it would be idle to require domestic taxes to be paid in gold. It would be to legalize a paper currency and then to repudiate it. In regard to imported goods the case is differ ent. All imported goods are bought, with gold; all transactions in imported goods are based upon gold. Imported goods being the product of foreign countries can be purchased only by the money known in the commerce of the world. Therefore, in imposing duties upon imported goods, it is no hardship to levy them in gold, so that the whole cost of an article of that description when it enters into consumption represents so much in gold. But if an attempt was made to levy in gold our domestic taxes it would be very difficult; it would im ose on our people a burden they could not ear. It is manifest that we have to raise all the gold we require for Government purposes by means of duties on imported goods. By the financial policy adopted during the war—it is not necessary for me now to discuss the propriety or expediency of that policy—we are required to raise a very large sum of money in o The annual interest upon the out standing gold bonds of the U.S., according to a statement furnished me from the Treasury Dept brought down to the 1st of January, 1867, is $82,048, 531. By the terms of all the outstanding notes bearing interest in currency, except the compound interest notes, they are convertible into gold bonds bearing 6%. interest. That conversion must be made within a year or a little more. When those notes are converted the amount of annual interest that will be required of the Treasury of the U.S. will be $131, 353, 977 40. To this must be added the amount required to maintain our foreign intercourse.other gold liabilities, partly growing out of treaties, which it is estimated will amount to $6,000,000 per annum. The expenditures for foreign intercourse, which are disbursed in foreign countries principally, must necessarily be paid in 'o. gold, the currency of the world. enough for this item, it is evident that the aggregate amount of gold required to carry on the operations of the Government for the present fiscal year will be not less than $140,000,000 in gold. In addition to this there are maturing bonds which by the policy of the Government are paid in gold, and which mature before the end of the next fiscal year. Bonds amounting to nearly 16 million dollars mature during that time, namely: on the 31st of December, 1867, $7, 613,000, and on the 1st of July, 1868, $8, 169,000. These must be paid in gold; but probably they can be provided for out of the arge amount of gold on hand, and need not enter into the elements of our calculation. But at any rate it will be necessary to raise $140,000,000 in gold. For us now, therefore, to talk about a free trade tariff is simply an absurdity; and for us to talk about a protective tariff is unnecessary, because the with of man could not possibly frame a tariff that would produce $140,000,000 in gold without amply protecting our domestic industry. To the extent that the duties are levied upon articles that may be produced in this country the tariff operates as a protection. It is very clear that upon an ordinary year's importation the rate of duty that will have to be levied upon importations in order to produce $140,000,000 will not be much less than 50%. advalorem, even if we could prevent all undervaluation or smuggling. I assume, then, Mr. President, that the main, leading, and necessary object of this bill is to produce $140,000,000 in gold, and that we may very properly leave the question of protection to be settled as a matter of detail, with the certainty that any tariff which will yield the necessary revenue will sufficiently protect American industry. The degree of protection on different articles can only be adjusted by a careful inquiry into a multitude of details, while the paramount object—to raise revenue to the amount of $140,000,000 in gold —must always be kept in view. It is sometimes said that, as this is the great object, it is not necessary to change the present tariff, which will produce that amount, and has in fact during the last fiscal year yielded $179,046, 630. The answer is, that during the last fiscal year our importations were swollen beyond any former experience of this country, and cannot be relied on as a basis for the future. Under the very same law the year before the amount of gold revenue was only $84, 928, 260. It is manifest, therefore, that we cannot depend for the next fiscal year upon the present tariff to produce anything like the amount that it did in the last fiscal year, and even during the current fiscal year the esti. mated receipts from customs are far less than they were a year ago. That no estimate of future receipts can be based on the amount of the receipts during the last fiscal year is shown by the peculiar circumstances by which we were then surrounded. When the war closed the southern States were entirely bare of domestic or foreign fabrics. They were without clothing; they were without all those articles necessary for human life, both of domestic and foreign manufacture. The stock on hand, as it is commonly called, in the northen States was very much reduced, so that the very moment the war was over large importations necessarily flowed in, and large demands were made for our domestic manufactures. But that cause has now ceased; the vacuum has been supplied. Not only so, but by the sudden fall of gold, which fell much more rapidly than the prices of labor or of other commodities, goods manufactured abroad became cheaper in proportion than American goods. The American manufacturer could not adapt his prices to the fall of gold because of the high prices of labor and commodities, and these.not be reduced owing to the high rate of taxation and the increased cost of food and all the elements which enter into production. If the American manufacturer could have reduced the cost of his production in the same ratio that gold was reduced he would not have been disturbed by the fall of gold. The valuable statistics presented to us by Mr. Wells show that while gold at times went down to 30 and even to 25%. premium, during all that time the ordinary addition to the cost of food was from 90 to 140%., and the addition to the usual cost of manufacturing was from 70 to 80 or 90%.; so that the fall in the price of foreign goods, which were paid for in gold, was far greater than the fall in the prices of domestic commodities. The domestic manufacturer was suddenly called upon to compete with the foreign market when the advantage was some 30 or 40%. in favor of the foreigner. It was manifest under these circumstances that domestic fabrics must fall off, and that large amounts of foreign goods would flow in to take their place. This led to enormous importations, and thus produced a very large gold revenue during the last year; but that cannot exist longer without utter destruction to our producing interests. It is also clear that if the present relative condition of the price of labor and the price of commodities and the price of food is maintained nearly all our domestic manufactures must cease to exist. It is impossible under the present rates that domestic manufactures can be maintained unless one of 2 things occur: either a fall in the price of labor, or a rise in the price of gold. Among the numerous gentlemen who their observations to the Committee on 'inance, it was admitted on all hands that if they could reduce the price of labor they could also reduce the price of their fabrics and without additional duties come in competition with the foreign manufacturers; but they all said that was impossible; the laborer now was getting barely enough to maintain life; there were indeed strikes all over the country; some peculiar branches of industry were able to pay very large prices for labor, but in many cases, especially with the woolen and some other in: terests, the price of labor had not advanced in proportion to the price of food, so that the aborer was really receiving less now than he did before the war, although nominally getting twice the wages he did before. The reason is that the price of food, clothing, and of all commodities which enter into his consumthetion have not declined sufficiently to enable him to live upon a less sum of nominal money. If the present tariff law be continued in force we cannot expect it to yield more than 125 to 130 million dollars. It is clearly necessary, then, looking at this subject simply in a revenue point of view, to increase the duties on imported goods and to receive a larger amount of duties in gold. It is not necessary for me to othe disastrous consequences that would result to this country if we failed to pay our interest in gold — failed to meet our obligations. The absolute necessity that weighs upon us is scrupulously to observe the public faith. During the war we were jo.make contracts that may appear to our people to be onerous; and yet any man of ordinary patriotism feels that we must observe those contracts to the fullest extent. It is evident, therefore, that an absolute necessity rests upon us to raise by some mode of taxation an amount of money sufficient to enable us to meet our public engagements. The weight of these engagements has never yet rested on the people of this country. The reason has been that the interest on half the public debt was payable and paid in paper; but by the very terms of our obligations the whole of that interest will soon be payable in gold, and then we must meet the burden that will come upon us of paying it in gold. If your tariff should yield you but $120,000,000 in gold when you have to pay $140,000,000 in gold, the SecyTreasury will be compelled to go into {{. open market and buy $20,000,000 of gold to meet the deficiency. What would then be our financial condition? If, instead of selling gold now day by day, he was compelled to borrow or buy gold in the open market to meet the interest on the public debt, what would be the consequence? The price of gold would rise. The public engagements could only be met by a sale of our securities in a foreign market. Indeed it would be the saddest spectacle that could possibly be presented. It is manifest, therefore, that we must levy such an amount of duties upon imported goods as will place us beyond all danger from this cause. Then, Mr. President, when you come to apply the duties upon the various articles of importation it becomes a simple matter of detail. I shall not waste much time in going into the various details now, because the questions will come up from time to time as they are presented; but there are certain matters upon which the committee have acted that it would be well enough to state in general terms. The most obvious sources of revenue in a tariff bill are items usually classed as luxuries. In levying duties upon these articles there is but one rule laid down, not merely by the English and French writers, but by every nation that attempts to raise a revenue from imports, and that is to levy as high a rate as possible from them without reducing censumption. They are mostly contained in 3 items: spirits, wines, and tobacco. These are undoubtedly the 1st objects of taxation; and in most countries, especially in England and France, they yield a very large portion of the revenue. We, however, are unhappily placed in regard to these articles because we produce them ourselves. We make our own whisky and produce our own tobacco, and therefore we do not and cannot look to these items as so great a source of revenue as they do in other countries, especially in England and France, where they produce no tobacco, but import all they use, and where it consequently can be levied upon at the customhouse. The rates of duty prescribed by the Senate amendment on these articles are substantially the rates of duty prescribed by the House bill, in one important particular—in the article of wine. It was found on examination, and is shown very clearly by Mr. Wells's report, that wine of a cheap quality, really inferior to our ordinary cider, is imported in enormous quantities at the valuation of less than 20 cents a gallon, and pays a duty of some 20 or 30 cents, and is sold to our in many cases at 4 dollars a dozen ottles, or about one dollar a gallon. This is really not the wine of France, or the wine of the country from which it purports to come, but an adulterated article prepared for the American market, having no market value in the country of its production and sent here at a merely of price. It is found that by the operation of the present tariff the Government gained comparatively litttle revenue from it. Last year the revenue from wines amounted to about 4 millions. The committee have proposed to substitute a uniform tax of 50 cents a gallon which, in my opinion, is rather too small, but which will yield a much larger sum than the present advalorem duty. ". inclined to think that while a larger rate of duty would probably prevent the importation of a considerable portion of the wine, the amount of revenue received would be greater even on a smaller quantity. The committee thought proper to adopt a spe cific duty of 50 cents a gallon, and I am willing to try the experiment. In regard to to bacco the law is left substantially as it is o in regard to the single item of cigars, which is somewhat reduced because it was found that the present rate tended to prevent importation and to promote smuggling. he next items which are always regarded in framing a tariff bill are such articles of common use as are called comforts, or perhaps luxuries—in this country they are the comforts of all classes of the people—sugar, tea and coffee. The HoRep, f think without carefully examining the subject —certainly it was done without the sanction of the ComWays&Means—threw off 1/2 the duty on tea and coffee on the ground that as of tea and coffee were used by all our people we ought not to tax them so nilgril. T. truth is that the advalorem tax on both coffee and tea is far below the general average of our tariff laws, 6 cents a pound on coffee and 25 cents a pound on tea, amounting to about from 30 to 50%. advalorem. If we had no occasion for revenue, if we were in a position to throw off taxes, if we had no system of internal taxation, if we. had no taxes more oppressive and more bur densome than those, on tea and coffee, they would be the 1st we should throw off; but it is manifestly improper now to dispense with a revenue equal to 8 or ten million dollars merely to relieve our people from paying a tax that does not weigh heavily upon them. By doing so we would compel the imposition of $12,000,000 in paper money upon our domestic productions. The ComFinance, therefore, thought it wise to restore the old rate of taxation, and that yields on the articles I have already named—wines, tobacco, spirits, sugar, tea and coffee—from 55 to 60 million dollars, or about 2/5ths of all the revenue that is necessary to be produced from imported goods. These articles are more stable in their yield, more uniform in their consumption than any other articles on the list. Although used to some extent by all the people the great body of them is used by those who are able to pay for them. Besides, the duties on these articles are more easily and more surely collected. The duties are specific and there can be under this bill no undervaluation. Besides, the articles are heavy; they cannot be smuggled in; they are easily ascertained by weight or measure. They are articles that in all countries are looked upon as the main sources of revenue. We cannot afford to throw off now a certain revenue of $10,000,000. At a time when we are compelled to levy internal taxes upon every branch of our industry, when the widow and the orphan, when the farmer and the manufacturer, when the laboring man and all classes of our citizens are compelled to pay largely increased prices for their food and clothing by our system of internal taxation, we certainly ought not to throw off this, the easiest and best form of taxation. The duties in these cases are left by the Senate amendment where they were before. So in regard to spices: I bneoltiheivneg there have been some little changes, but material.