The Payne-Aldrich Tariff Act of 1909 (ch. 6, 36 Stat. 11), named for Representative Sereno E. Payne (R-NY) and Senator Nelson W. Aldrich (R-RI), began in the United States House of Representatives as a bill lowering certain tariffs on goods entering the United States. It was the first change in tariff laws since the Dingley Act of 1897. President William Howard Taft called Congress into a special session in 1909 shortly after his inauguration to discuss the issue. Thus, the House of Representatives immediately passed a tariff bill sponsored by Payne, calling for reduced tariffs. However, the United States Senate speedily substituted a bill written by Aldrich, calling for fewer reductions and more increases in tariffs.
An additional provision of the bill provided for the creation of a tariff board to study the problem of tariff modification in full and to collect information on the subject for the use of Congress and the President in future tariff considerations. Another provision allowed for free trade with the Philippines, then under American control. Congress passed the bill officially on April 9, 1909.
Taft promptly appointed members to serve on the tariff board.
Impact of the bill
The Payne–Aldrich Tariff Act, in its essence a compromise bill, had the immediate effect of frustrating both proponents and opponents of reducing tariffs. In particular, the bill greatly angered Progressives, who were beginning to stop supporting President Taft. Because it increased the duty on print paper used by publishers, the publishing industry viciously criticized Taft, further tarnishing his image. Although Taft consulted Congress during its deliberations on the bill to a certain extent, critics charged that he ought to have imposed more of his own recommendations (that is, more lowered schedules) on the bill. However, unlike Roosevelt, Taft felt that the president should not dictate lawmaking and should leave Congress free to act as it saw fit.
Taft signed the bill in an attempt to preserve party unity; however, it had the opposite effect. The debate over the tariff split the Republican Party into Progressives and Old Guards and led the split party to lose the 1910 congressional election. In the 1912 presidential elections, because of the split votes amongst Republicans in most states, Democratic candidate Woodrow Wilson was elected as president.
The bill enacted an income tax on the privilege of conducting business as a corporation, which was affirmed in the Supreme Court decision Flint v. Stone Tracy Co. (also known as the Corporation Tax case).
By 1915, tobacco exports from the Philippines to America had annually increased as a result of the bill passing.
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