Thaddeus Stevens , chair of the House Ways and Means Committee , delegated the fiscal resurrection of the Union to two subcommittees : Elbridge G . Spaulding ( R-NY ) chaired the Subcommittee on Banking and Currency and Morrill chaired the Subcommittee on Taxation . John Sherman ( R-OH ), future Secretary of the Treasury , believed Morrill was “ eminently fitted ” for this position because of his “ practical experience ” in commerce . Morrill accepted his charge and worked “ night and day ” on the different revenue bills .
Few studies of Civil War financing look at the tariff and internal revenue laws as integrated , but that is how Morrill saw them . “ The weight must be distributed equally not upon each man an equal amount , but a tax proportionate to his ability to pay ,” was how he described his effort to distribute the tax burden during the war . Morrill wrote two comprehensive internal revenue laws : HR 312 ( 1862 ) and HR 405 ( 1864 ). The text of HR 312 filled 17 pages in the Statutes at Large , at that time , the longest bill passed by Congress . The majority of the revenue produced by these two bills came from three sources : a three , then five , percent tax on manufactured goods ; an income tax on salaries above $ 600 ; and sumptuary excise taxes on alcohol and tobacco . The combined revenue measures were designed to spare agricultural production . Morrill described agriculture , not manufacturing , as “ the most important field where we are to meet the world as rivals .” He noted in 1865 that , “ We have in all cases endeavored to avoid taxation upon the products of the farm . It is only upon manufacturers that we have endeavored to levy a tax .”
To meet the war expenses , tariffs were modified 11 times between 1861 and 1867 . Two comprehensive tariff bills were passed , in 1862 and 1864 , in conjunction with the internal revenue measures . The Tariff Act of July 14 , 1862 enacted “ compensating duties ” levied on all imported commodities competing with home manufacturers who were paying a 3 % ad valorem tax on all goods they produced . “ It will be indispensable for us to revise the tariff on foreign imports so far as it may be seriously disturbed by any internal duties … If we bleed manufacturers , we must see to it that the proper tonic is administered at the same time .” The Tariff of 1864 embedded this principle : “ This need for compensation , for the demands
Early Civil War Treasury note authorized by the Morrill Tariff Act of 1861 .
of government for more revenue ... offered protectionists who controlled Congress unexampled opportunity .”
Like his internal revenue bills , the tariff legislation Morrill drafted was extraordinarily detailed . “ Seeking to avoid all extremes the committee have thought best to propose duties upon a large number of objects , rather than confine them to a narrow field .” The Morrill Tariff had approximately 310 dutiable items listed ; by 1872 , the number of dutiable items rose to over 930 . As each tariff revision was enacted , members of Congress sought to apply protective duties to specific items produced in their congressional districts .
“ This need for compensation , for the demands of government for more revenue ... offered protectionists who controlled Congress unexampled opportunity ,” notes tariff historian F . W . Taussig . After the war , “ Whatever a politician ’ s ideological stance , it was essential to defend producers in one ’ s home district ,” writes Nicholas Barreyre . Both Republicans and Democrats acquiesced to the protection embedded in the war tariffs . The tariff rates increased dramatically during the war , reaching a high of 48.6 % in 1868 . These high rates remained in place , with only “ minor changes ” until 1883 .
When Morrill ’ s fiscal legacy is considered by historians , he is labeled a “ protectionist ,” a pejorative used to paint the individual as corrupt and in the thrall of “ greedy manufacturers .” Although a consistent and steadfast opponent of free trade , Morrill believed in what he called “ fair trade : an exchange of products costing an equal amount of labor ,” as well as “ incidental protection ,” meaning targeted protection for select commodities . For Morrill , this meant raw wool produced in Vermont . The protectionist label has stigmatized Morrill , although over the course of a decade , from 1861 to speeches he delivered later in the Senate in 1874 , he groused that , “ I believe that the duties on most articles are put too high … the duty on iron is too high . I would have been glad if all the interests of the country could have been harmonized , to have fixed it [ the overall tariff rate ] somewhat less .” James Garfield remarked once to Morrill , “ I thought you were an extreme protectionist , but I find that in the hearings before the committee , you are fighting against too much protection continually .”
Morrill ’ s goals in both tax and tariff legislation were to promote domestically produced agricultural products and raw materials and avoid “ the social miseries of England — vast numbers of poor , overwhelming monopolies , a disgraceful distribution of wealth and an oppressed working class .” Morrill consistently stated that the tax program he created would benefit the agriculture sector more than manufacturing , and provide a better standard of living for workers . In an 1870 speech delivered in the Senate , Morrill stated with satisfaction that , “ Our country is the one toward which the eyes of the world are turned . It is the magnet which attracts emigration from all Europe and part of Asia … men and women believe that they can here earn much more than … they now receive [ in Europe ]. They know … our country is the one before all others where the poor can get rich .”
When Morrill moved to the Senate , he became a “ calm onlooker ” regarding tariffs
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26 FINANCIAL HISTORY | Fall 2024 | www . MoAF . org