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Information About the Underwood-Simmons Tariff Act of 1913

Samarpita Choudhury Feb 26, 2020
On October 3, 1913, America added another milestone to her long list of achievements in her eventful history, and a new Act was passed in the house, which became known as the Underwood-Simmons Tariff Act of 1913. Historyplex takes you a century behind, and shares some important information about this Act.

What's on the List?

Apart from the Underwood-Simmons Tariff Act, President Woodrow Wilson also initiated other important reforms:
  • Federal Reserve Act
  • Clayton Antitrust Act
  • Federal Trade Commission Act
Post Civil War, America didn't have any major tariff reforms. Soon after the election of President Wilson, there was a sea change, and thus came into effect the Underwood-Simmons Tariff Act. Wilson was determined to eliminate the existing flaws that had plagued the American economy.
As such, he resolved to improvise the then prevailing plight of industry of America, and also keep monopoly from dominating the economy. This vision of his prompted him to think that Americans were in for a better lifestyle, and a neutralized expenditure, with no loss to the government either.

Underwood-Simmons Tariff Act Information

# The Underwood-Simmons Tariff Act was passed in the year 1913 under the support of President Woodrow Wilson, with the vision of improving the industrial sector in America.

# The Act would limit and curtail the tariffs associated with the finished products and also raw materials.
# It was passed after the ratification of the 16th Amendment.

# President Wilson assumed, and was convinced with his assumption that, the Act would make ample room for the import of foreign goods.
# Rates were lowered from an initial 40% to 25%.

# It was passed during the time of the Progressive Movement. This was the time of maximum reforms in the history of the US. President Wilson was an ardent advocate of the ideals of this era.
# The Act was sponsored by American politician Oscar Wilder Underwood, and also F.M. Simmons, who was the senator from North Carolina.
# The main aim of the Act was to alter the source of revenue collection. This was aptly done by the government when they decided to reduce tariffs, and instead hike income tax.

# The Act is also known as the United States Revenue Act of 1913. The other name is Revenue Act of 1913. It also introduced the system of graduated tax.
# Graduated tax is a system of tax payment which assigns specific brackets, where the payers with the highest income pay the highest amount of taxes.
# The significance of the Underwood-Simmons Tariff Act of 1913 lies in the fact that it was introduced as an antithesis of protective tariffs.

# Protective tariffs were introduced in order to increase the prices of imported goods, so that consumers would prefer domestic products instead of imported products.
# With the election of Wilson as President, he gained control of Congress, and in no time passed the Simmons Tariff, granting the reduction of taxes on imported goods.
# However, with time, it appeared that this Act was impairing the business of America, though the initial purpose of the Act was to improvise the industrial sector of the nation.

# This Act restarted the system of federal income tax payment. This is the system, wherein, the rate at which the tax is to be made, is decided.
# Hence, the losses that were incurred due to the application of the Underwood-Simmons Tariff Act would be compensated by the system of collecting income tax from the citizens of America.

# It goes without mention that this Act allowed the American government to get ample revenue and monitory gains. It was the source of financial gains for the government.
# According to this Act, taxes were to be determined according to the value of an item. The precise term for this system is known as 'ad valorem'. This also rendered some agricultural products, as those which had zero percent rate.
# Some products like wool, sugar, iron, and steel were almost classified as those with negligible taxes.

# The passing of this Act in the house marked the turning point in the career of the newly appointed Wilson as President.
# The session for the discussion of the Act, and the much-needed tariff reform, was vital, said the president in his speech in the session. The session gained much media coverage.

# The Act helped in boosting the quality of manufactured products, as there was competition among manufacturers, and also it lent consumers with a wider diaspora to choose their products from.
# The Act was doing good until the outbreak of the First World War. The war ceased the import of goods, and hence, this Act stood far from application.
For leader for whom the aim was to heighten the chances of economic gains, and also to ensure a good scenario for even small-time entrepreneurs, economic reforms always remained the dominant point in his agenda. So, let us recall some words from the legendary leader, which are still afresh even after a hundred years.
"Our duty," Wilson said, "is to correct the evil without hurting the good. I call all honest men, all patriotic, all forward-looking men to my side."