American History: What is the purpose of the McKinley Tariff Act of 1890? What are the four advantages?

Preface: In 1888, the Republican Elector Benjamin Harrison won the presidential election, which allowed the Republican Party to regain full control of the US government. In 1889 and 1890, the Republican Party of the United States successively agreed to join the six western states of Washington, Idaho, Montana, Wyoming, North Dakota, and South Dakota to join the United States to further consolidate their power. As they did during the Civil War, the Republican Party only accepts regions that support its party to join the Union, and refuses to absorb regions that have a larger population but agree with the Democratic Party, such as Arizona and New Mexico. The addition of 12 Republican senators to the U.S. Senate further weakened the Democratic Party’s power in Congress, but did not have a significant impact on the balance of power in the House of Representatives.

Schematic diagram of the United States federal

After the United States joined the "gold standard" system in 1873, the United States experienced inflation and urgently needed a new tariff bill to save the US economy

However, allowing these states to join the Union also created some trouble for the Republican Party of the United States. Their joining has moved the geographic distribution of political power westward and has exacerbated the already existing tensions within the party between producers of raw materials in the west and manufacturers of manufactured goods in the east. In addition, the tariff policy is intertwined with the monetary policy that causes tension between different groups, and it has even suppressed the limelight.

Since the United States joined the "gold standard" (monetary system with gold as the main currency) in 1873, the United States has been in inflation for many years. The interest groups of farmers in the Midwest and the mining interest groups in the west are eager to mint silver coins. Agricultural populists believe that the federal purchase of silver and minting silver coins will increase the prices of agricultural products, and then end deflation, which increases the cost of farmers to repay farm mortgages and other debts.

Therefore, farmers in the Midwest of the United States want to push up prices and reduce their debts, while states with concentrated mining industries want their mineral prices to rise. The use of silver coins to meet these two goals at the same time, uniting agricultural and mining areas, but will separate them from the Eastern Republicans, who oppose the adoption of a multiple currency system and prefer to strictly adhere to the gold standard.

President Benjamin Harrison of the United States

President Benjamin Harrison after winning the general election called on the new U.S. Republican Congress to amend tariffs and tariffs to ensure that "the domestic industry receives fair and reasonable trade protection." In December 1889, he stated in his State of the Union address to Congress:

"The work of preparing the new customs tariff is extremely delicate, because it directly affects our business, and because people have different opinions on the goals that the tariff law should advocate, so this job Faced with numerous difficulties...The problem of unfair law needs to be resolved, but we should adhere to the principle of trade protection and apply it fairly to the products provided by our farms and stores." The State of the Union address of

opened the controversial address. Fifty-first Congress. Its leader is Thomas Reid, the Speaker of the US House of Representatives and a Republican from Maine. This Congress has extensively discussed a variety of controversial issues, from tariffs and trusts to veterans' pensions and the purchase of silver.

However, if the Republicans want to advance their policy agenda in the Senate, they need to work hand in hand with the West, which means that the Silver Bill must be included in a package of legislation. Nevada Senator William Stewart said frankly: "Unless the silver purchase bill is passed, it is impossible to introduce a tariff bill during this session." They must reach a compromise with the silver interest groups in the west. In 1890, John Sherman of Ohio passed a series of meticulous operations to make the Silver Purchase Act and the Antitrust Act passed through Congress. He is the main legislator in the Republican Party working hard to promote the smooth passage of the new tariff bill. In essence, the Eastern Republicans voted in favor of the silver purchase bill in exchange for the Western Republicans’ approval of the tariff bill. The "Sherman Purchase of Silver Act" passed in 1890 required the government to buy 4.5 million ounces of silver with paper money every month, so that the price of silver was on par with the price of gold.

At the same time, the Republican Party of the United States is rapidly advancing the drafting process of the new tariff bill. The Republicans once accused the Democrats of secretly drafting the Mills Act"So it decided to hold a public hearing on the issue of tariff amendments after taking over the fundraising committee. Dozens of industry representatives attended the hearing and provided 1,400 pages of testimony. Of course, this hearing is mainly a public relations exercise. Stakeholders will speak on this issue, and those who give testimony almost overwhelmingly support the increase in tariffs, but as in the past, the real bill drafting is done in secret by the Republican majority meeting.

Schematic diagram of William McKinley

In April 1890, what was the purpose of the "McKinley Tariff Act" proposed by William McKinley?

In April 1890, William McKinley, Chairman of the Fundraising Committee, submitted a bill aimed at substantially increasing the tariffs on protected products. McKinley emphasized: "The United States has made no secret of the goals of this bill. This bill aims to promote production in our country, increase the diversification of production enterprises, expand production areas and increase the demand for American workers. What kind of Will the Americans oppose these reasonable and patriotic goals?" Michigan Republican Congressman Julius Barros proudly said that this bill "from the provisions of the bill to the last paragraph, it is all about how to promote trade protection. ".

The bill proposes to increase the average tariff rate of taxable imported products from about 41% to 52%, and raise the tariff rates for most raw materials (such as wool) and manufactured products (such as metals), with the only exception being imported sugar. The bill is not only intended to reduce tariff revenue, but also "to expand the scale of domestic manufacturing plants and curb the foreign supply of products that can be manufactured domestically and with good profits... We have never been so worried about the price of consumer goods because we could have encouraged The domestic manufacturing system has developed and expanded, enabling domestic manufacturers to obtain fair remuneration and enabling American workers to receive reasonable wages."

Sketch of the portrait of William McKinley

What are the four advantages of the McKinley Tariff Act?

The McKinley Tariff Act demonstrates four novel advantages:

① formulated comprehensive tariffs for agricultural products; ② added sugar to the tax-exempt list, supplemented by subsidies for domestic sugar manufacturers; ③ imposed a levy on imported tinplate The new tariffs hope to create a brand-new tinplate industry in the country; ④ The bill has added provisions on reciprocal agreements.

First of all, despite the negligible imports of wheat, cotton, and barley, the Republican Party of the United States still began to impose taxes on agricultural products, striving to draw the Midwest agricultural states into the camp of trade protectionism. The United States is the main net exporter of these products, so imposing import taxes on them is more a symbolic gesture, making agriculture and industry seem to enjoy tariff equality on the surface, and making people think that this can balance the east and the west. Interests. These tariffs have a slight inhibitory effect on imports of barley, eggs, meat, potatoes and butter from Canada, benefiting some farmers, mainly farmers near the US-Canada border such as Minnesota and North Dakota, but most of the producers of these crops Affected by tariffs.

Schematic diagram of the statue of William McKinley

Secondly, the "McKinley Tariff Act" included sugar in the tax-exempt list to significantly reduce the fiscal surplus. The sugar tax alone accounts for nearly a quarter of all U.S. tariff revenue. The move to exempt sugar from tariffs has harmed the interests of sugar cane growers in Louisiana, which are within the sphere of influence of the Democratic Party, but has benefited the sugar industry in the Northeast. In order to further reduce the fiscal surplus and offset the losses suffered by sugar beet growers in the west, the government provided incentives to domestic growers at a standard of two cents per pound of beet. The subsidy was basically the same as the previous sugar tariff rate.

Sugar tax created US$55 million in government revenue, and sugar industry subsidies require an additional US$7 million in government expenditure. Therefore, after adjusting the sugar industry tariff policy, the government budget has changed more than US$60 million. McKinley declared: "This is how we enable people to enjoy tax-free cheap sugar, and at the same time, when our producers invest capital, we will enable them to enjoy absolute and comprehensive protection and help them resist the cheap sugar belt produced by cheap labor in other countries. The impact."

Once again, the McKinley Tariff Act raised the tariffs on imported tinplate, which is a kind of iron or steel sheet coated with tin and used to make cans for storing food, storing and transporting oil. Oil drums, roofing materials and variousKind of household appliances. At that time, the United States could not produce tinplate domestically, and was completely dependent on British imports. McKinley represents the interests of a region in Eastern Ohio. This area has the potential to cultivate tinplate production capacity. McKinley wrote into the bill the terms of raising tinplate tariffs, making foreign imports of tinplate too expensive, so as to cultivate the domestic tinplate manufacturing industry.

Schematic diagram of American tinplate

In October 1890, the "McKinley Tariff Act" came into effect

However, domestic tinplate consumers such as Standard Oil Corporation, food canning companies and roofing materials industry are widely using tinplate. They are well organized and resolutely oppose the increase in this tariff. Even the Republican Party has difficulty finding enough political power to support the increase in the import tax on tinplate. The House of Representatives passed a bill to raise the import tax on tinplate by one vote. The Democratic Party has a rather pessimistic view of this move, saying that it "reduces the lucrative existing industry into the prey of wishful thinking, speculative and risky behavior, and subverts federal taxation rights in a new and unique way."

In May 1890, McKinley strongly expressed support for trade protection in the House of Representatives, sparking a big debate. The Republican majority and the Speaker of the House of Representatives Reid stipulated that the debate in the meeting room was limited to the content of the bill and did not add any amendments, hoping to ensure that the outcome of the debate would not be unexpected. The House of Representatives quickly passed the bill by a partisan vote of 164 to 142. The Republicans supported the bill by 163 votes to 2, and the Democrats opposed the bill by 140 votes to 1. The figure below shows the voting in the House of Representatives. As before the Civil War, although the areas north of the Midwest are firmly in the Republican camp, the opposition between the North and the South is very clear.

On May 21, 1890, the U.S. House of Representatives voted on the McKinley Tariff Act.

Then the bill was submitted to the Senate, and Nelson Aldridge, chairman of the U.S. Treasury Committee and Republican of Rhode Island, convened a meeting to initiate the review process. In mid-June, the Finance Committee submitted the bill to the Senate, but the bill was shelved because the Republicans and Democrats of the West requested the realization of silver coinage. It was also at this time that John Sherman reached a compromise with the western silver interest groups and met their requirements, namely the introduction of the "Sherman Silver Purchase Act", and the review of the tariff bill continued.

In July and September 1890, the U.S. Senate held a roll-call vote on many specific products, adding 496 amendments to the bill submitted by the House of Representatives. Increasing the tax rate of tinplate is one of the most controversial clauses. Industries that widely use tinplate, such as Standard Oil Company, which buys large amounts of tinplate oil barrels, and food processors that buy large amounts of tinplate cans, believe that this will increase their own costs, so Resolutely resist the new tax rate.

Wisconsin region map in the United States

In order to avoid them worrying that tariffs will not only put a heavy burden on tinplate consumers, but also fail to promote domestic production, Wisconsin Republican Congressman William Spooner introduced an unusual clause, according to which If the domestic tinplate production does not reach 1/3 of the total import volume within 6 years, the tariffs on tinplate will be terminated. This is the only time Congress has implemented tariff protection measures conditioned on the performance of domestic industries.

Schematic diagram of tariff reduction

The McKinley Tariff Act increased the tariffs on imported products by 4%

The McKinley Tariff Act was the first major bill to comprehensively amend tariffs after the American Civil War. Of course, the purpose of amending the tariff bill is not to reduce tariffs. In fact, it increased the average tariff on taxable imports4%. It exempts sugar tariffs and greatly reduces the federal budget surplus. This is one of the strategies adopted by the Republican Party to avoid drastic cuts in protective tariffs.

The Republican Party of the United States has also adopted other methods to reduce budget surpluses, such as the introduction of the "Pension for the Disabled and Families Act" to expand the scope of pension benefits to include non-combatants and their children. The civil war had ended 25 years when this bill was introduced. It doubled the U.S. government's military pension expenditures from 1889 to 1893.

Therefore, the 51st Congress became known as the "Billion Dollar Congress" because of its generous use of government funds for veterans relief, purchase of silver and sugar incentives. If in the 1880s, the government’s fiscal surplus caused hidden dangers, then the Republican Party has solved this problem. The severe economic downturn swept across the United States in 1893, dragging the federal budget into a large deficit, and the fiscal surplus quickly disappeared without a trace.

Tariff diagram

The Republican Party of the United States has made its own choice. Once the public opinion is like the 1888 presidential election, the people who support tariff cuts and tariff hikes are equal, then increase tariffs. If the Electoral College had been anxious about Cleveland’s proposed tariff reduction plan in 1888, then it would not necessarily agree to a substantial increase in the tax rate. Some Republicans worry that the public will not respond well to their claims. Maine Republican Congressman James Bryan warned that a substantial increase in tariffs "is not always a wise move, and such trade protectionist moves will only doom the Republican Party to rapid decline."

Even McKinley seems to be keeping a distance from the bill named after him. When people asked why he agreed with the House of Representatives bill to set such a high tax rate, he replied: "This is for the most sufficient reason in the world-to pass my bill through Congress. My idea is to let Congress pass this. I understand that some tariffs are too high, but if I don’t do so, my bill will not pass Congress. There has never been a tariff bill that does not make a lot of compromises in the design process."

The US tariff diagram

Concluding remarks

The McKinley Tariff Act also had an impact on the international community and made the British Empire nervous. The bill excludes Canadian agricultural products and restricts the import of British wool products. As a result, the demand for Australian wool is hit. At that time, the United States had become the world's largest economy. Its every move affects the world.

The McKinley Tariff Act has led to the rise of trade protectionism in the United Kingdom and its dominions. Therefore, people call for the establishment of a trade group within the territory of the British Empire that mutually adopts preferential tariffs. Although some Americans believe that imposing high tariffs on Canadian products will "put it in a dead end and be annexed by the United States" and force Canada to join the United States, in fact, this has actually pushed Canada to strengthen its ties with the United Kingdom. Members of Congress do not understand that the United States has become a global economic power, and the impact of its trade policy on other countries is increasing day by day.