1890: The McKinley Tariff
For many years the primary function of the US tariff system was to provide the Federal Government with a regular income adequate to finance its operations. Tariffs or customs duties are fundamentally nothing more than taxes levied on imported goods. The duties, collected at customs houses, are turned over to the US. Treasury. The importance of the revenue-raising aspect of tariffs only declined after 1913. Until that time customs duties had accounted for between 50 and 90 percent of the total Federal income. The ratification of the 16th amendment to the Constitution in that year permitted the imposition of direct income taxes.
High tariffs were designed to "protect" U.S. industries and producers from foreign competition and to preserve domestic employment levels. The passage and maintenance of protective tariff rates grew in conjunction with the Nation's industrial revolution. A protectionist tariff philosophy prevailed in the post-Civil War period and on through the first third of the 20th century.
President Cleveland opposed the protective tariff on foreign goods, which had come to be accepted as permanent national policy under the Republican presidents who dominated the politics of the era. Cleveland, a conservative Democrat, regarded tariff protection as an unwarranted subsidy to big business, giving the trusts pricing power to the disadvantage of ordinary Americans. Reflecting the interests of their Southern base, the Democrats had reverted to their pre-Civil War opposition to protection and advocacy of a “tariff for revenue only.”
Cleveland, narrowly elected in 1884, was unsuccessful in achieving tariff reform during his first term. He made the issue the keynote of his campaign for reelection, but Republican candidate Benjamin Harrison, a defender of protectionism, won in a close race. In 1890, the Harrison administration, fulfilling its campaign promises, achieved passage of the McKinley tariff, which increased the already high rates.
The Republicans successfully sponsored a new tariff act in 1890, fulfilling the campaign promises of their successful candidate for the Presidency in 1888, Benjamin Harrison. Ohio Representative William Mc.Kinley wrote the most comprehensive statement of protectionist principles yet drafted, raising the rates on a number of items, but also restructuring the system on a more rational basis and eliminating some of the imperfections that the earlier, haphazard system had produced. The average ad valorem equivalent of the rates of the McKinley Act was a high 49 percent.
At the urgings of Secretary of State James G. Blaine, past Republican Presidential candidate, the McKinley Tariff also contained a limited reciprocity clause. Under this provision bilateral reciprocity agreements were negotiated with a number of Latin American governments, laying the foundation for a mutual reduction of tariffs. This experiment with reciprocity was short-lived, however, because the Democrats refused to extend it when they altered the entire tariff structure a few years later.
On October 01, 1890, the McKinley Tariff of 1890 became law—boosting protective tariff rates of nearly 50 percent on average for many American products. Ways and Means Committee Chairman William McKinley of Ohio led the effort in the House. The new legislation increased rates for many manufactured goods, while it placed items such as sugar and coffee on the free list. When Richard W. Townshend of Illinois, a stalwart Democratic opponent, delivered his customary protest against the measure on the House Floor, Republicans jeered him.
Speaker Thomas Brackett Reed of Maine dryly explained, “It is not the speech we complain of so much as the monotony of the thing; we want a change.” The House passed the bill 164 to 142 and it slowly worked its way through the Senate. President Benjamin Harrison convinced Senate allies to insert a provision permitting the President to raise duties to match foreign rate hikes and to sign agreements to open foreign markets without congressional approval. McKinley unsuccessfully opposed the reciprocity provision on the grounds that it yielded closely-held congressional powers.
Many voters, perceiving the McKinley Tariff as a boon to wealthy industrialists, registered their displeasure at the polls that fall. House Republicans lost 93 seats and Democrats swung comfortably into a commanding majority. Blamed for high retail prices, the McKinley duties triggered widespread dissatisfaction, led to Republican losses in the 1890 elections, and paved the way for Cleveland’s return to the presidency in the 1892 election.
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