Presidents and the Economy: Benjamin Harrison and the McKinley Tariffs
In the last part of the 19th century, one of the issues which divided Democrats and Republicans was the issue of tariffs on imported goods. Tariffs had been successful in funding governments and had resulted in large budget surpluses, which would be a nice problem to have today. Democrats were in favor of reducing tariffs, while Republicans wanted to keep or increase tariffs and to use the budget surpluses for internal improvements and to reduce other internal taxes. During the administration of President Benjamin Harrison, the issue came to a head as the 51st Congress became known as the "Billion Dollar Congress" because it was the first time that government spending had exceeded a billion dollars.
With their success in the election of 1888, the Republicans enacted most of their platform during their first session. Laws passed included one that provided American Civil War veterans with generous pensions and expanded the list of eligible recipients to include noncombatants and the children of veterans. Grover Cleveland had vetoed a similar bill in 1887. Now Democrats criticized the Republican "Billion Dollar Congress" for such lavish spending.
Other important legislation passed into law by the Congress included the McKinley tariff, a bill sponsored by Representative and future President William McKinley. The Tariff Act of 1890, commonly called the McKinley Tariff, became law on October 1, 1890. It raised the average duty on imports to almost fifty percent, with the intention of protecting domestic industries from foreign competition. This type of protectionism was fiercely opposed by Democrats.
Tariffs, which are taxes on foreign goods entering a country, had two purposes for the United States in the late 19th century. One was to raise revenue for the federal government, and the other was to protect domestic manufacturers from foreign competition. In December 1887, President Grover Cleveland, devoted his entire State of the Union Address to the issue of the tariff. He called for the reduction of duties and the abolition of duties on raw materials. In the 1888 election, the Republicans were victorious with the election of President Harrison, and majorities in both the Senate and the House.
William McKinley, then a Representative from Ohio, was chairman of the House Ways and Means Committee and was responsible for framing a new tariff bill. He believed that a protectionist tariff had been mandated by the people through the election, and that it was necessary for the nation’s wealth and prosperity.
Democrats were concerned about the high revenue accruing from tariffs. After the Civil War, tariffs remained elevated to raise revenue and cover the high costs of war. But in the early 1880s, the federal government was running a large surplus. Both parties agreed that the surplus was too high, but they disagreed about whether to raise or lower tariffs. The Democrats believed that tariff revenue could be reduced by reducing the tariff rate, while Republicans believed that by increasing the tariff, imports would decrease, and total tariff revenue would drop.
After 450 amendments, the Tariff Act of 1890 was passed. It increased average duties on all imports from 38% to 49.5%. McKinley became known as the “Napoleon of Protection” and viewed the high tariff as protective of American manufacturing.
Tin-plates
The Act removed tariffs on sugar, molasses, tea, coffee and hides, but authorized the President to reinstate such tariffs on these items when exported from countries which treated U.S. exports in a "reciprocally unequal and unreasonable" fashion. The President did not use the delegated power to re-impose tariffs on the five types of imported goods, but used the threat of doing so to successfully negotiate ten treaties in which other countries reduced their tariffs on U.S. goods.
The tariff was not well received by Americans who suffered a steep increase in the cost of products. In the 1890 election, Republicans lost the House going from 166 seats to only 88. In the 1892 presidential election, Harrison was soundly defeated by Grover Cleveland, and the Senate, House, and Presidency were all under Democratic control. Lawmakers immediately started drafting new tariff legislation, and in 1894 the Wilson-Gorman Tariff was passed which lowered US tariffs.
With their success in the election of 1888, the Republicans enacted most of their platform during their first session. Laws passed included one that provided American Civil War veterans with generous pensions and expanded the list of eligible recipients to include noncombatants and the children of veterans. Grover Cleveland had vetoed a similar bill in 1887. Now Democrats criticized the Republican "Billion Dollar Congress" for such lavish spending.
Other important legislation passed into law by the Congress included the McKinley tariff, a bill sponsored by Representative and future President William McKinley. The Tariff Act of 1890, commonly called the McKinley Tariff, became law on October 1, 1890. It raised the average duty on imports to almost fifty percent, with the intention of protecting domestic industries from foreign competition. This type of protectionism was fiercely opposed by Democrats.
Tariffs, which are taxes on foreign goods entering a country, had two purposes for the United States in the late 19th century. One was to raise revenue for the federal government, and the other was to protect domestic manufacturers from foreign competition. In December 1887, President Grover Cleveland, devoted his entire State of the Union Address to the issue of the tariff. He called for the reduction of duties and the abolition of duties on raw materials. In the 1888 election, the Republicans were victorious with the election of President Harrison, and majorities in both the Senate and the House.
William McKinley, then a Representative from Ohio, was chairman of the House Ways and Means Committee and was responsible for framing a new tariff bill. He believed that a protectionist tariff had been mandated by the people through the election, and that it was necessary for the nation’s wealth and prosperity.
Democrats were concerned about the high revenue accruing from tariffs. After the Civil War, tariffs remained elevated to raise revenue and cover the high costs of war. But in the early 1880s, the federal government was running a large surplus. Both parties agreed that the surplus was too high, but they disagreed about whether to raise or lower tariffs. The Democrats believed that tariff revenue could be reduced by reducing the tariff rate, while Republicans believed that by increasing the tariff, imports would decrease, and total tariff revenue would drop.
After 450 amendments, the Tariff Act of 1890 was passed. It increased average duties on all imports from 38% to 49.5%. McKinley became known as the “Napoleon of Protection” and viewed the high tariff as protective of American manufacturing.
Tin-plates
The Act removed tariffs on sugar, molasses, tea, coffee and hides, but authorized the President to reinstate such tariffs on these items when exported from countries which treated U.S. exports in a "reciprocally unequal and unreasonable" fashion. The President did not use the delegated power to re-impose tariffs on the five types of imported goods, but used the threat of doing so to successfully negotiate ten treaties in which other countries reduced their tariffs on U.S. goods.
The tariff was not well received by Americans who suffered a steep increase in the cost of products. In the 1890 election, Republicans lost the House going from 166 seats to only 88. In the 1892 presidential election, Harrison was soundly defeated by Grover Cleveland, and the Senate, House, and Presidency were all under Democratic control. Lawmakers immediately started drafting new tariff legislation, and in 1894 the Wilson-Gorman Tariff was passed which lowered US tariffs.