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When Tariffs Were In Flower
In the past century the two major opponents on the question of free trade have changed sides completely
July/August 1998 | Volume 49, Issue 4
The thunder of distant drums is sounding again as protectionists and free traders respond to President Clinton’s efforts to get fast-track authority to negotiate multilateral trading agreements in advance of congressional approval. He lost his last bid, in the autumn of 1997, and I was much struck at the time by the almost universal acceptance of his arguments by the editorialists of major newspapers and major spokespersons for the business community. They all agreed broadly that the march toward unfettered global trade was irresistible and certain to benefit the American economy in the long run.
As a historian I am intrigued by the popularity of free trade doctrine in corporate-oriented “pro-growth” circles, simply because just a century ago the precise opposite was true. In the 189Os the idea that U.S. prosperity and high tariffs were tightly linked was big business—and especially Republican—gospel. The current U-turn is a reminder that nothing is permanent. And the change is evidence not only of seismic alterations in the nature of our economy but of a shifting philosophy of what the nation is all about.
When I was a graduate student, tariff history was a staple of our reading diet, and rightly so, for tariffs mattered in determining the social profile of the Republic. In 1790 Alexander Hamilton, then Secretary of the Treasury, proposed to the First Congress a set of duties high enough to discourage importation of foreign goods and so force America to create new industries to fill the gap. He believed that no nation dependent on outside sources for manufactures could earn either safety or stature in the world. This was diametrically opposed to the view of Thomas Jefferson that only a nation of self-sufficient farmers without an urban working class could be truly republican and free of devastating class conflict. Congress more or less compromised in Jefferson’s favor. A tariff was indeed enacted as a useful means of raising revenue, which it long remained. But the duties were not set high enough to discourage or effectively prohibit imports.
Fast-forward to the aftermath of the War of 1812. Some textile and other factories had been created during the war, especially in New England. When peacetime trade resumed, they were threatened with ruin by a competing flood of cheaper goods from Britain’s far superior workshops. A clamor arose for the protection of America’s “infant” industries until they could fight on equal terms. Of the many voices sounding this demand, I like none better than that of Kentucky’s Henry Clay. In 1824 he intoned on the Senate floor a plea to create a “home market” to absorb the products of American industry. “We must speedily adopt a genuine American policy,” he argued, “a genuine AMERICAN SYSTEM . We must naturalize the arts [i.e., of manufacturing] in our country ... by the only means which the wisdom of nations has yet discovered to be effectual... by adequate protection.” The argument was unpersuasive with Southern and Western farmers, who were perfectly willing to exchange I their cotton and foodstuffs for cheap British imports, but Clay argued that such narrow views should yield to that “saving spirit of mutual concession under which our blessed Constitution was formed.”
Clay promised something for everyone. The “mechanics” (industrial workers) would provide a home market for farm produce more reliable than Europe’s. Shippers would prosper as much by carrying U.S. exports as foreign imports. Moreover, the tariff would support a program of federal investment in roads and canals to enlarge the home market, thereby expanding the economy and yielding showers of tax revenue. Clay, in short, saw protectionism as a building block in a large design of growth encouraged by an activist federal government.
Unfortunately for him—and despite formidable skills as a popular and genial dealmaker—Clay could not overcome the antitariff resistance of agricultural and pro-States’ Rights forces in the South and West (or get himself elected President), and the average level of duties sank gradually to a nonprotective low between 1828 and 1857. But the coming of the Civil War, nine years after his death, vindicated Clay and turned him into one of the century’s influential Americans. The Republican party, born in 1854, took over his economic philosophy and linked it to antislavery and to overall moral and intellectual progress. Abraham Lincoln proudly proclaimed himself an heir of Clay. With the South out of Congress and the embattled North hungry for revenue, it was easy to pass the high Morrill Tariff of 1862. After that the tariff went up and up during the generally booming years of industrial growth that followed 1865. And why not? There were depressions, yes, there were classes and sections (like wheat and cotton farmers) that were in pain, but a majority apparently believed that an America on the way to becoming an industrial giant selling to the world (despite the tariff) was prosperous and healthy overall. In 1896 William McKinley won the Presidency on a Republican platform that was virtually poetic in its pro-tariff plank. “It upholds the American standard of wages for the American workingman; it puts the factory by the side of the farm ... it diffuses general thrift and founds the strength of each ... it is just, fair and impartial.”