tariffs

Fascinating Politics

The McKinley Tariff

Tariffs have been figuring strongly in recent politics thanks to President Trump’s repeated changes in course throughout the year on the imposition or removal of tariffs and certain decisions surrounding them that have been questionable at best. Trump’s policies on tariffs, although more erratic than Republicans of past, given his positive mention of William McKinley does make me think of the McKinley Tariff of 1890, which was at the time a crowning partisan achievement of the GOP and one that helped bring about swift political consequences.

The 1888 election was very close, but a great success for the Republican Party. For the first time since the Grant Administration, they had achieved unified government, and under the highly capable Speaker Thomas Brackett Reed of Maine, they sought to make the most of it. At the forefront of the agenda was the bread and butter of economic Republicanism of the time…protective tariffs. Leading this charge was the popular Representative William McKinley (R-Ohio), known as the “Napoleon of Protection” for his strong advocacy. The Republican Party was at the time strongly unified behind increasing tariffs while the Democratic Party was just as if not more strongly unified against.

A key concept introduced by this legislation was the reciprocal tariff or empowering the executive to raise tariffs on commodities after their addition to the free list to disincentivize other nations from raising their tariffs on these goods. Furthermore, Harrison persuaded the Senate to adopt a provision permitting the president to sign agreements opening foreign markets (U.S. House). These provisions would be upheld unanimously by the Supreme Court as a constitutionally permissible delegation of power in the 1892 decision Field v. Clark.

The initial version of the McKinley Tariff passed 164-142 on May 21st on a highly partisan vote as only three representatives defected: Republicans Hamilton Coleman of Louisiana and Oscar Gifford of South Dakota and Democrat Charles Gibson of Maryland. In the Senate, the bill was managed by Nelson Aldrich (R-R.I.), perhaps the foremost representative of industry in the Senate. On tariffs, in which 138 votes on the subject were held that covered numerous commodities from salt to sponges, the Senate passed the bill 40-29 on September 10th a completely partisan vote. However, there were differences between the House and Senate versions and thus the measure went to conference to resolve them. On September 27th, the House voted on the conference report, which was passed 151-81, with only Republicans Harrison Kelley of Kansas and again Coleman of Louisiana breaking with party. In the Senate, however, there was some more dissent among Republicans, with Senators Preston Plumb of Kansas, Algernon Paddock of Nebraska, and Richard Pettigrew of South Dakota voting against. In its’ final form, this law raised tariffs on average from 38% to 49.5%. Certain commodities were heavily focused on for protective tariffs like manufactured goods such as tin plates to appeal to factories in the East, while wool was jacked up to appeal to the sheep farmers of the rural West. Other tariffs, however, were removed, such as those on sugar, molasses, coffee, tea, and hides, but the president was authorized to raise them should other nations choose to impose on these goods for the United States.

Puck cartoon mocking McKinley.

Although quite the achievement for the Republican Congress, it went into effect on October 6th, less than a month before the 1890 election, and prices promptly rose in response to the tariffs. The Democratic newspaper skewered the bill, and since the benefits of the tariffs (increase in domestic worker wages and jobs) had little time to take effect while the negative side took effect promptly, this resulted in a surge of disapproval of the Republicans. Eleven days after the tariff took effect, The Cleveland Plain Dealer (1890) wrote, “The consumers are finding out that they are compelled to pay the tax, and that fact will grow daily more apparent. A gentleman walked into a hardware store a few days ago and asked to see some pocketknives. A number were placed upon the show case and prices were given. “Are these McKinley prices?” he inquired. “No,” said the clerk, “but we will be compelled to raise prices. We have been busy and have not made any change in our prices yet, but we shall soon do so.” This is only one of many occurrences of which one hears on the streets, and to offset it all there is nothing but prattle about imaginary tin plate factories and other McKinley air castles”. Such unpopularity contributed a great deal to the utter slaughter the Republicans faced in the 1890 midterms including McKinley himself losing his seat, although his loss was in good part due to unfavorable redistricting. Democrats won the popular vote by 8 points in the House, which produced a gain of 86 seats for them and Republicans sustained a 93 seat loss; they also lost seats to the newly formed Populist Party. The Indianapolis Journal (1890), contrary to The Cleveland Plain Dealer, wrote in defense of the tariffs after the election, attributing much of the unpopularity to “falsehoods” propounded about the McKinley Tariff by the “importers’ press”, for instance attributing a price increase in fruits and vegetables to tariffs without mentioning that there were crop failures that produced shortages. Although Republicans continued to be for higher tariffs, they sought to proceed more carefully in the future than they had in 1890, and McKinley would have an astounding comeback, being elected Ohio’s governor in 1891, be reelected in 1893, and then be elected president in 1896. Although a high tariff man, he would embrace the idea of reciprocal tariff reductions, and the Dingley Tariff Act of 1897, although it enacted the highest tariffs on average in American history, would contain a provision permitting the president to reduce duties by up to 20%. McKinley even came around to the idea of reciprocal trade treaties shortly before his assassination.

References

Gould, L.L. William McKinley: Domestic Affairs. UVA Miller Center.

Retrieved from

https://millercenter.org/president/mckinley/domestic-affairs

The McKinley Tariff of 1890. U.S. House of Representatives.

Retrieved from

https://history.house.gov/Historical-Highlights/1851-1900/The-McKinley-Tariff-of-1890/

The Victory of Misrepresentation. (1890, November 7). The Indianapolis Journal, 4.

Retrieved from

https://www.newspapers.com/image/321737007/

To Adopt the Report of Comm. on Conference on Bill H.R. 9416. Govtrack.

Retrieved from

https://www.govtrack.us/congress/votes/51-1/h414

To Agree to the Conference Report on H.R. 9416 (26 STAT. 567, 10/1/1890), a Bill Reducing the Revenue and Equalizing Duties on Imports. Govtrack.

Retrieved from

https://www.govtrack.us/congress/votes/51-1/s383

To Pass Bill H.R. 9416. Govtrack.

Retrieved from

https://www.govtrack.us/congress/votes/51-1/h184

To Pass H.R. 9416. Govtrack.

Retrieved from

https://www.govtrack.us/congress/votes/51-1/s364

Up Go the Prices. (1890, October 17). The Cleveland Plain Dealer, 8.

Retrieved from

https://www.newspapers.com/image/1075890829/

Fascinating Politics

Henry Carey: Lincoln’s Economist

For a long time there has been a debate about what side of an issue the late Abraham Lincoln would be on; in the 1930s numerous New Deal politicians expressed their belief that Lincoln would be on their side with some Republicans asserting that Lincoln would have done things differently than FDR. While we can never be totally what Lincoln’s social views would be in different times given that his changed over the course of his life, including on civil rights, there is a bit more certainty on economic issues, and on this question, there are two Henrys who can help us answer this question, both who greatly influenced Lincoln. The first is Henry Clay, the much-admired founder and three-time candidate of the Whig Party for president. The second is a considerably less known figure but one who shines light on Lincoln’s economic views in Henry Carey (1793-1879), a major advocate of the “American School” of economics who is largely forgotten today but was quite prominent in his day.

The American School of Economics

Carey did not start off as an economist, rather as a businessman in the publishing industry, but the Panic of 1837 inspired him, at the age of 44, to study economics. He was something of a gadfly in the world of economics in his day, as British economists were overwhelmingly on the side of pure lassiez-faire, and this is where Carey was initially. However, he was persuaded by economic crises in the 1830s and 1840s that this approach fell short. Carey would start arguing in 1848 that free trade served to benefit the British empire (indeed its most prominent advocates were from Britain) and that the United States should at that stage as a nation be developing its home markets and achieving economic independence (Cowan). Thus, he would argue for tariffs to help develop the nation and build up American industry so they could compete fairly with Great Britain, a more powerful nation than the US in his time. Carey would also argue that tariffs were a mutually beneficial policy as they helped both the profits of industry and the wages of labor (Cowan). He was also a critic of economists David Ricardo and Thomas Malthus, and wrote against their views in this three volume Principles of Social Science (1858-1860). On Malthus, he wrote that he “teaches that a monopoly of the land is in accordance with a law of nature. Admiring morality, he promotes profligacy by encouraging celibacy. … Desirous to uplift the people, he tells the landowner and the laborer that the loss of the one is the gain of the other. His book is the true manual of the demagogue, seeking power by means of agrarianism, war and plunder” (Levermore, 562-66). In the late 1850s, Carey blamed tariff reductions passed and signed into law by President Franklin Pierce for the Panic of 1857, and some historians have shared his judgment. Carey was also an opponent of unions as an instrument of collective bargaining, regarding the tariff as the proper mechanism for wage growth. However, Carey was supporting tariffs for the US based on its present conditions. He hoped for a future in which the nations of the world could trade without tariffs, writing, “Of the advantage of perfect free trade there can be no doubt. What is good between the states ought to be good the world over. But free trade can be successfully administered only after an apprenticeship of protection. Strictly speaking, taxation should all be direct. Tariff for revenue should not exist. Interference with trade is excusable only on ground of self-protection. A disturbing force of prodigious power pre- vents the loom and spindle from taking and keeping their proper places by the plow and harrow. When the protective regime has counteracted the elements of foreign opposition, obstacles to free trade will disappear and the tariff will pass out of existence. Wars will cease; for no chief magistrate will dare to recommend an increase of direct taxation” (Levermore, 570).

Carey was the lead editor on articles regarding political economy for Horace Greeley’s New-York Tribune from 1849 to 1857. At that time, another economist contributed from abroad who wrote under a pen name, this other economist being none other than Karl Marx. Marx considered Carey, a staunch opponent of socialism, to be the only notable American economist and also his ideological rival, considering himself to be engaging in “hidden warfare” against him through his work for the Tribune (Marx & Engels, 78-79). Indeed, Marx even thought that Carey’s philosophy was the central impediment to a communist revolution in the United States.

Carey was a supporter of Abraham Lincoln and upon his election to the presidency, he served as an economic advisor to both him and Secretary of the Treasury Salmon P. Chase. He helped draft Republican tariff bills, including the Morrill Tariff of 1861 and was influential in getting the National Bank Act of 1863 adopted. Carey was a consistent supporter of greenbacks, supporting both the Legal Tender Act of 1862 (which along with distribution of greenbacks unbacked by gold or silver and achieved the Whig goal of a unified national currency) and postwar currency inflation. The former got the support of the Republican establishment as an emergency measure for the war, but the latter was opposed as the Republican establishment was fundamentally conservative on issues of economics and finance. Whether Lincoln would have heeded Carey had he lived I think is an open question. On one hand, he was influenced by Carey in numerous facets of policy, but on the other hand, shortly before his death he had tapped Hugh McCulloch as Secretary of the Treasury, who pursued a policy of contraction of greenbacks. Would Lincoln have sought to rein in his own Secretary of the Treasury or heeded his advice?

Influence Today?

Although Henry Carey is a figure who is generally seen as a modern conservative’s go-to economist, Professor Adam Rowe, writing for Compact Magazine, argues that Henry Carey is an explaining figure for Trump’s tariffs. If Carey has any influence, this is a full circle back to the earliest days of the Republican Party.

References

Cowan, D.A. (2022, September 8). Henry C. Carey’s Practical Economics. The American Conservative.

Retrieved from

Henry C. Carey’s Practical Economics

Henry Charles Carey. New World Encyclopedia.

Retrieved from

https://www.newworldencyclopedia.org/entry/Henry_Charles_Carey#google_vignette

Levermore, C.H. (1890). Henry C. Carey and his Social System. Political Science Quarterly, 5(4), 553-582.

Marx, K. & Engels, F. (1975). “Notes”. In Ryazanskyaya, S.W. (ed.). Selected Correspondence. Translated by Lasker, I. (3rd edt.). Moscow, USSR: Progress Publishers.

Retrieved from

Click to access selected-correspondence.pdf

Rowe, A. (2025, March 4). The Thinker Who Explains Trump’s Tariffs. Compact Magazine.

Retrieved from

https://www.compactmag.com/article/the-thinker-who-explains-trumps-tariffs/