#23: Benjamin Harrison: The Great Tariff Debate

Today free trade is an almost universal value among our politicians, however; in the late 1800's it was not. Free trade has become such and aspiration and accepted goal that in this modern age, stuff seems to be made and imported to America while jobs seem to be exported.

I'm not writing this blog to take a view on free trade as a goal, but it's just interesting to look back at our own country's history when views that are now commonplace and largely bipartisan were still competing with alternate ideas.

Benjamin Harrison came down firmly on the side of protectionism. While "protectionist" might now be considered a slur to a political view, whether it be on the importing of goods or foreign policy, it was not considered an insult then.

Harrison's support of the McKinley Tariff Act of 1890 was one of the defining elements of his presidency. This act seems extreme by today's or even recent history's standards. Duties on imported goods, including raw materials were increased by up to 50%. The goal of this of course was to raise revenue for the government and decrease the amount of competition to America's developing manufacturing sector.

Historically, the northern part of the United States supported tariffs and the southern part deplored them since it was an economy based on agriculture that imported most of it's manufactured goods. The "Tariff of Abominations" in 1828 is considered one of the major events that led to the South looking to break away from the North (in addition to slavery obviously).

As anyone would expect, this tariff was loved by northern manufacturing interests but hated almost universally in the South as well by regular consumers in the North that relied on imported goods or raw materials. Most economists agree that it was a cause leading to the depression of the 1890's since it was essentially a 40-50% tax on any imported goods.

The unpopularity of this issue and Harrison's support of the Sherman Silver Act were what ultimately led to Grover Cleveland defeating him to serve his second, non consecutive term.

While it's interesting to think about the tariff and how views on free trade have changed over time, it's even more interesting to ponder the second debate the tariff led to. What to do with all that money in the surplus of the U.S. Treasury from the protective tariffs? Can you even imagine the country with huge cash reserves rather than a crushing debt in this day and age?

Maybe Harrison's policy of protectionism went way too far in trying to drastically reduce imports, but maybe our own policy of giving Americans incentives to buy imported goods and American corporations to export jobs goes too far in the other direction. If we weren't beholden to the World Trade Organization and slightly increased our tariffs, maybe we'd be having a debate not on which government programs to cut, but which ones to add with all that money in the U.S. government's coffers like they did in Ben Harrison's day.

No comments:

Post a Comment