Volume 9 — TAX ON COTTON.

Speeches in the Senate, May 27 and June 4, 1862.

In the consideration of the Internal Tax Bill Mr. Sumner took an active part, as the Congressional Globe attests.

When this bill came from the House of Representatives, it contained a tax of one cent a pound on cotton. The Finance Committee of the Senate reported against this tax. Mr. Sumner, though never disposed to spare Slavery, was unwilling to bear hard on an interest so important as cotton to the whole country, especially to the South when redeemed, as well as to the manufactures of the North, and therefore exerted himself against the tax. May 27th, he spoke as follows.

MR. PRESIDENT,—I am in favor of the proposition of the Committee, which seems to me sound in principle and policy.

There are reasons against taxing cotton,—first, from the character of the product itself, and, secondly, from the effect of the tax on manufactures.

If we look at the character of the product, we find, in the first place, that it is agricultural,—peculiar, indeed, to one section of the country, but as much an agricultural product as grain, hemp, and flax, which are left untouched by this bill. There should be reason for adopting the tax in one case and not in the other. No such reason exists.

But cotton is not only an agricultural product, it is also a leading export. Now I raise no constitutional question on the power to tax exports, although it may not be entirely easy to reconcile such tax with the language of the Constitution: “No tax or duty shall be laid on articles exported from any State.” The object of this clause was to prevent discrimination among States through the taxing power. But not questioning the power in the present case, it seems to me that its exercise is of doubtful policy, according to principles of political economy. I do not think that it is the policy of civilized nations to tax exports, which play an important part, first, in quickening commerce, and, secondly, in furnishing the equivalent of imports.

Then there is difficulty arising from the condition of the country. Until the Cotton States are restored to the Union, little or no revenue can be expected from any such tax. But if their representatives were once more here, can anybody suppose it possible to tax this great staple of the South, while the great staples of the West—grain, provisions, and wool—are free? It seems to me unadvisable to attempt, in the absence of these representatives, what we would not attempt, if they were present,—in other words, to do what is of doubtful equity, simply because we have the votes. Our tax, at best, can be little more than prospective. Is it not better to wait till it may be a reality?

Even if at another time the tax on cotton seemed politic, I doubt if it can be so regarded for some time to come. Considering the peculiar condition of things, there is small doubt that the country for the next five years will have greater interest in encouraging the production of cotton than in taxing it.

Sometimes it is said, that, if cotton is not taxed, the Cotton States will escape taxation, which would be a practical injustice to other parts of the country. But I am not satisfied that we cannot tax their slaves. Besides, the $200,000,000 of cotton exported assures the importation of $200,000,000 of foreign products, which, with twenty-five per cent duty, gives a revenue of $50,000,000 annually.

But if cotton must be taxed, it should not be by a specific tax, but by a tax ad valorem, and for obvious reason. Cotton is sold in the market under seven different grades, varying materially in value. These grades are classified as follows, beginning with the lowest or least valuable, and ending with the highest or most valuable: (1.) ordinary, (2.) good ordinary, (3.) low middling, (4.) middling, (5.) good middling, (6.) middling fair, (7.) Sea Island. For ten years, from 1850 to 1860, the average price of ordinary cotton was six and five eighths cents a pound, while middling fair, the highest grade except Sea Island, averaged twelve cents a pound. A tax of one cent a pound on ordinary cotton would be over fifteen per cent on its value, while one cent a pound on middling fair cotton would be eight and one third per cent, and the same tax on Sea Island cotton, commanding the highest price of all, would be less than five per cent.

The tax on cotton, if any is imposed, ought not to exceed five per cent ad valorem. In the natural course of events, without interruption of war, the cotton exported would have amounted in value for a year to $200,000,000. If to this we add the value of cotton used in the United States, $35,000,000, we shall have the sum-total of $235,000,000. A tax of five per cent ad valorem on this would be $11,750,000.

The proposed tax of one cent a pound is much larger. During the year ending the 30th of June, 1860, the value of the cotton exported was $191,806,555, and the number of pounds exported was 1,767,686,338. A tax of one cent a pound would be $17,676,863,—a very large sum, which I should be glad to pour into our Treasury. But, assuming the value of this cotton at ten and eight tenths cents a pound, the tax of one cent a pound will be above nine and one fourth per cent,—nearly double what the tax ought to be.

Consider now, if you please, the effect of this tax on cotton manufactures. It appears that we manufacture annually about seven hundred thousand bales of cotton, one half of which is of the three lower grades, and is worked into what is called by manufacturers coarse goods. Of these one pound of cotton will make about two and a half yards, worth twenty cents. Now a tax of three per cent on this cloth would be six mills. Add the tax of one cent a pound on cotton, and you have a total of sixteen mills, making a tax of eight per cent on the value of the cloth,—a higher tax than is imposed by the Tax Bill on anything except dogs, whiskey, and tobacco.

The rest of the cotton manufactured in our country is worked into what are called fine goods, of which one pound will make from four to eight yards, valued at thirty to forty cents, or, on an average, thirty-five cents. The tax of three per cent on these goods at thirty-five cents would be ten and a half mills. Add the tax of one cent on the cotton, which is ten mills, and you have the total of twenty and a half mills, making a tax on this article of more than five and eight tenths per cent.

Of the finest goods, a pound of cotton would make cloth worth seventy-five cents. The tax upon this class would be four and one third per cent.

Thus the cheap goods used by the poorer people will be taxed much higher than the finer goods used by the rich. Are you ready to set up this discrimination?

There is an important export trade of cotton manufactures, which must not be forgotten. But these are entirely of the class known as coarse goods. For instance, during the year ending June 30, 1860, cotton goods exported amounted to $10,934,796. This commerce is conducted under difficulties. Necessarily it encounters strong competition in the foreign markets, and must have failed, but for the anomalous opportunities it enjoyed in China and the East Indies, where these goods were often sent as remittances instead of bills of exchange, it being cheaper to pay for them in Boston even more than they will bring at their destination than to pay the premium of exchange. But this business, having such anomalous support, cannot bear additional burden. It will be annihilated,—at least I am so assured by those who ought to know.

The proposed tax upon coarse goods used in our country is found, on calculation, equal to seven per cent on the capital invested in their manufacture, and on exported goods it is equal to five per cent. If cotton must be taxed, it ought not to be higher than five per cent, and I have already shown that it ought to be ad valorem. On goods exported there should be a drawback in favor of the manufacturer, not only of the three per cent on the goods, but also of the five per cent on the cotton. If the three per cent tax on all goods used in this country were reduced to one and one half per cent ad valorem, this, with the five per cent tax on the cotton, would be equal to three and one sixth per cent ad valorem on coarse goods, and to three and one third per cent on fine goods. But I prefer the proposition of the Committee, leaving the bill otherwise as it is.

In conclusion, I have to say that the cotton cloths manufactured in our country are nearly as much a necessary as breadstuffs, entering into the daily life of all, whether rich or poor, like daily bread.

In the debate which ensued, Mr. Davis, of Kentucky, alluded to Mr. Sumner.

“I have been very strongly arrested by the debate to-day, and I very much approve of its spirit and its tenor. I am glad to see gentlemen quitting visionary subjects”—

Mr. Clark. Do not lug them in.

—“and coming to questions of legitimate political economy; and especially I am glad that the Senators from Massachusetts have shown a disposition to come to such legitimate ground of legislation.”

In the same speech the Kentucky Senator indulged in prophecy.

“And if the slaves were liberated, if the theory of the gentlemen from Massachusetts and other Senators were carried into operation, I believe, as certainly as I believe that I am now addressing the Senate of the United States, that there would not be one fifth as much cotton raised in any year in the next five years as has been raised, according to the estimate of the Senator from Rhode Island, for the past year. I do not believe that the man lives, that the child lives, who will ever see, after the universal emancipation of the slaves, under any state of labor, or of care, or of application of labor, either the labor of men or of machinery, that the production of cotton in the United States will reach one half of five millions of bags.”[61]

The amendment striking out the tax was adopted,—Yeas 20, Nays 16.

June 3d, at the next stage of the bill, the question was presented again, when Mr. Sumner renewed his opposition to the tax. In the course of his remarks the following passages occurred.

Mr. Sumner. Then, Sir, as I had the honor of saying in the former debate, suppose the vacant seats on the other side of the Chamber were filled, suppose Senators here from the Cotton States, would you think of imposing a tax on cotton without in the same bill imposing a tax on the agricultural products of the North? You would not, I am sure; and, Sir, in their absence, I will not do what I would not do, if I could, were they here.

Mr. Grimes. Would you not abolish Slavery in the District of Columbia?

Mr. Sumner. I would do that, were they here, and propose it to their faces, and be too happy in the opportunity.

June 4th, the debate was continued, when Mr. Sumner spoke as follows.

I am admonished by my friend, the Senator from Maine [Mr. Fessenden], not to say anything. I shall say very little. I am in favor of reducing the tax from one cent to half a cent, and I am also in favor of striking out the whole tax. If there must be a tax, I wish the smallest; and if I can have the attention of the Senator from Wisconsin [Mr. Howe], whose remarks were so candid, I should like to put him a question. You heard him say that he would not impose any tax which he knew would really be burdensome on the manufacturers. Other Senators have repeated the same thing.

Now, Sir, on whom will he rely, in determining whether the tax will be burdensome? I take it that the manufacturers are competent witnesses, if not the best witnesses; and Senators from manufacturing States, when they express themselves on the question, are to be heard. But it is the clear opinion of the manufacturers that the proposed tax will be burdensome, that it will almost annihilate a certain branch of trade with China and the East Indies, and that it will be most oppressive on the coarser fabrics at home. The tax on the latter will swell to as much as seven per cent, which is a very large tax, larger than is imposed on anything else in the bill, unless it be whiskey and dogs.

I put it to the Senator from Wisconsin, who so candidly said that he would not impose a tax that he knew to be burdensome, whose testimony will he accept? On what will he rely? Is it his own knowledge, his own impressions, his own imagination, if you please? In answer to all these I present the positive testimony of those really familiar with the subject.

Here, then, is the question in a nutshell. In imposing this tax, you have on one side the certainty of undue burden on a special interest; and what have you on the other side? An uncertainty. Who here can say that the proposed tax will be productive? Sir, we have not the cotton in our hands. Through the machinations of wicked men, it has ceased to be within our possession. I remember in my childhood being much amused with a little poem entitled “Oxen in the Skies,” which pleasantly described a contest between two senseless persons as to who should own certain imagined oxen in the skies,—that is, a contest about something not within reach. The cotton you propose to tax is not within reach. I trust that it may soon be. Should we not act on existing facts, rather than on hopes?

There is a larger view of the question. While you begin to tax the agricultural products of the country, you open the door to that great experiment. If the Senate is ready to march in that direction, I will not say whether I am not ready to march also; but the Senate should not commence the experiment without considering where it leads. In this whole bill you do not tax a single agricultural product. Why, therefore, make an exception of cotton? If you begin with cotton, where will you stop? Must you not also tax hemp, flax, and corn? Why not? Not that I am in favor of such taxation; but where in principle are you to stop? Sir, I put these questions as a warning to Senators.

The original proposition from the House of Representatives was amended by substituting “one half cent” a pound, instead of “one cent,”—Yeas 30, Nays 10.