During Grover Cleveland's third year as president, the federal government collected a surplus of taxes for more than $55 million. Cleveland felt the current taxation system was out of control. The current tariff laws did not match the scheme or principles established by the country to collect taxes. In principle, the federal government was to levy taxes on imports and internal taxes on consumption items like tobacco, whiskey and beer. But in practice the current tariff laws had become in Cleveland's words, a "vicious, inequitable, and illogical source of unnecessary taxation.
President Grover Cleveland did not take this lightly. In his 1887 annual address, he referred to it as a 'brood of evil consequences'. Grover Cleveland wrote,
"Then we consider that the theory of our institutions guarantees to every citizen the full enjoyment of all the fruits of his industry and enterprise, with only such deduction as may be his share toward the careful and economical maintenance of the Government which protects him, it is plain that the exaction of more than this is indefensible extortion and a culpable betrayal of American fairness and justice. This wrong inflicted upon those who bear the burden of national taxation, like other wrongs, multiplies a brood of evil consequences. The public Treasury, which should only exist as a conduit conveying the people's tribute to its legitimate objects of expenditure, becomes a hoarding place for money needlessly withdrawn from trade and the people's use, thus crippling our national energies, suspending our country's development, preventing investment in productive enterprise, threatening financial disturbance, and inviting schemes of public plunder."Grover Cleveland explained that "those who buy imports pay the duty charged thereon into the public Treasury, but the great majority of our citizens, who buy domestic articles of the same class, pay a sum at least approximately equal to this duty to the home manufacturer." So for example, if Great Britain tried to sell a shovel here $2 less than what an American manufacturer was selling it for, the government would tack on $2.50 of taxes. This meant the American manufacturer could make $2 extra. The idea was that the $2 additional profit would mean higher salaries and more jobs. When Americans bought the French shovel, the U.S. government pocketed the $2.
Cleveland wanted to reduce these tariffs, but, many Americans feared that if these tariffs were reduced, then salaries would plummet and jobs would be lost. In his annual address, Cleveland pointed out that these same tariffs that were protecting their wages, were also raising their cost of living. Cleveland continued,
"and yet with slight reflection they will not overlook the fact that they are consumers with the rest; that they too have their own wants and those of their families to supply from their earnings, and that the price of the necessaries of life, as well as the amount of their wages, will regulate the measure of their welfare and comfort."Today, it seems that many people believe that our government was run without taxing the people prior to 1913. Many believe that because our government was so small back then, they could rely on low taxes. But, tariffs brought in a lot of revenue and it was corrupting the government. Tariffs paid for wars and railroads and canals. Evidence of their success is that just 20 years after the civil war, Grover Cleveland and the Republican party were struggling with what to do about the growing federal surplus.
References
Presidency.ucsb.edu. (2018). Grover Cleveland: Third Annual Message (first term). [online] Available at: http://www.presidency.ucsb.edu/ws/index.php?pid=29528 [Accessed 14 Feb. 2018].
https://upload.wikimedia.org/wikipedia/commons/8/8a/Billion_dollar_Congress.jpg
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