Two attempts were made to secure a national tariff before the adoption of the constitution in 1789, which gave Congress practically the exclusive power to levy such duties. These attempts were made near the end of the Revolution, when other sources of revenue were failing to supply the needed funds. In 1781 Congress hoped to secure the acquiescence of the states in the levy of a duty for the purpose of raising revenue. The proposal was a 5 per cent tax upon all imports except munitions and certain other specified articles. All the states reacted favorably except Rhode Island, and no amount of persuasion or remonstrance was able to break down the opposition. The principal objections were that such taxation would fall more heavily upon the commercial states, that it was introducing officials within her borders over whom she would have no control, and besides it was opening the way for an indefinite drain upon the resources of the state by the Federal government.
The second attempt, in 1783, was no more successful than the first. The amendment which was proposed provided for specific duties on certain classes of goods, as liquors, tea, coffee, and molasses, and an ad valorem rate on all other commodities. The action was to be limited to twenty-five years and, in an attempt to make it more attractive, the returns were not to be used to meet the current expenses of the government, but only for the payment of interest on the pub ic debt. In order to eliminate a previous objection of Rhode Island, the collection was to be put in the hands of the state officials.
The spirit of commercial freedom, which at this time had such a hold on European states, was making itself felt on this side of the Atlantic. The great need for revenues by the states also made some of them reluctant to allow the Federal government to enter this field. The consent of all the states was finally obtained except that of New York, whose opposition could not be broken.
From the attitude which had been displayed previous to the adoption of the Constitution, it is not surprising that much dissatisfaction was expressed when the states were practically prohibited from using customs duties. It was considered to be entirely too much of an encroachment on the rights of the states. It was not long after the adoption of the Constitution, however, until Congress began to make use of its prerogative to use the tariff. Revenue was sorely needed, internal tax levies were abhorrent, direct taxes could not be laid until a census had been taken, consequently the tariff presented the most logical field.
Tariff of 1789. - On July 4,1789, after a debate of nearly two months, the first tariff legislation of the new government was enacted. The time in the debate was consumed by attempting to fix the rates, and by attempting to agree upon the measure of protection which should be afforded. Much discussion has arisen over the question of whether this first tariff act was a protective measure. The rates were so low that little protective influence could be expected. Specific duties were placed upon some thirty kinds of goods, while ad valorem rates, which ranged from 7 1/2 to 15 per cent, were levied upon a few goods. A general ad valorem tax of 5 per cent was levied upon all commodities which were not covered by the other duties.
While these rates do not give evidence of a very strong protectionist feeling, yet the preamble to the bill would indicate that this was an important consideration. It states that, " Whereas, it is necessary . . . and for the encouragement and protection of manufacture, that duties be laid." It appears that thus, in the very beginning, the tariff legislation was not to be confined to merely fiscal purposes. The Act was to remain for seven years, yet many minor details along with some rates were changed as need arose.