Fledgling president Woodrow Wilson summoned a special session of Congress in April 1913. His immediate objective was to confront the perennial tariff question and he brought special attention to the matter by deciding to appear in person before Congress to make his appeal. He was the first president since John Adams to do so.
The joint session was a spectacular event. A huge crowd gathered and every seat in the House chamber was taken. Newspaper coverage was intense. Wilson spoke only briefly, but made it clear that tariff reform was needed and that he would not be a party to a repeat of the embarrassment of the thwarted reform of 1894. The burden was clearly on Democratic shoulders because they controlled both houses of Congress for the first time in 18 years.
Oscar W. Underwood of Alabama guided a reform measure through the House, but his counterpart in the Senate, F.M. Simmons of North Carolina, reverted to form and allowed numerous increases in rates to be added. Wilson, unlike many of his predecessors, took the offensive. He went to the Capitol and twisted the arms of backsliding Democrats; he also warned the public of the invasion of Washington then underway by scores of lobbyists. The president was successful with generating a public reaction. Angry constituents wrote their congressmen and demanded tariff reform.
Success came in October 1913 with the first meaningful tariff revision since the Civil War. The Underwood-Simmons measure vastly increased the free list, adding woolens, iron, steel, farm machinery and many raw materials and foodstuffs. The average rate was approximately 26 percent.
The new tariff act also provided for the reinstitution of a federal income tax as a means to compensate for anticipated lost revenue because of the reduction of tariff duties. The most recent effort to tax incomes (Wilson-Gorman Tariff of 1894) had been declared unconstitutional by the Supreme Court. That obstacle, however, was removed by ratification of the Sixteenth Amendment on February 3, 1913. The incomes of couples exceeding $4,000, as well as those of single persons earning $3,000 or more, were subject to a one percent federal tax. Further, the measure provided a progressive tax structure, meaning that high income earners were required to pay at higher rates.
It would require only a few years for the federal income tax to become the chief source of income for the government, far outdistancing tariff revenues.
It is impossible to offer a meaningful judgment on the impact of the Underwood-Simmons Tariff because the entire international economic picture was soon upset by the outbreak of World War I. American products were in great demand throughout the world, making the question of protectionism moot. The next reordering of national tariff policy would not occur until after the war ended in the Fordney-McCumber Tariff of 1922.