[chodeasyday]

More fun with tariff history



(How the World Works reader ****** Gresser sent me an enlightening letter full of interesting details about the political history of tariffs in the United States. Enjoy

The 19th-century tariff argument really began at the end of the Napoleonic Wars in 1816, and continued until 1933, when Roosevelt created the modern concept of "trade policy" based upon negotiations and trade agreements with foreign countries. It was always highly partisan, pitting Whig and early Republican advocates of high tariffs against Democratic supporters of low tariffs.

In one sense this was a debate over trade and competitiveness, often with rhetoric and ideas very similar to those of today. The big difference is that until Wilson's creation of the income and estate taxes in 1913-1916, tariffs were the main source of tax money. They brought in 80 percent or so of tax revenue before the Civil War, and about half of revenue between the Civil War and the Woodrow Wilson administration. So until WWI, the tariff debate was not only a trade policy debate, but also a more basic question of taxation and the powers of the national government.

Whigs and the Republicans generally favored high tariffs. On trade grounds they argued that high-wage Americans could not compete with low-wage Europeans in manufacturing. By the 1890s they were making the same argument about competition with China and Japan. (Daniel Webster argues in 1832 that competition with the "pauper labor" of Europe will drag down U.S. wages; Herbert Hoover says in 1928 that American manufacturers "cannot successfully compete against foreign producers because of lower foreign wages and a lower cost of production.") Republicans held on to this basically until Eisenhower. More palatably from a modern liberal point of view, they also wanted high tariffs to raise money for public-works projects.

Early Democrats argued that the tariff was regressive because (just as the tariff systems of the U.S. and most other countries do today) it raised most money by taxing life necessities, and also that it was regionally unjust because it protected northern industry while raising the prices of machinery for southern agriculture. They also had a center of gravity in the south, which exported much of its agricultural produce, and worried about retaliation from foreign countries. On the larger question of revenue and national power, southern Democrats also believed high tariffs meant high national-government revenue, big public-works projects, spending and encroachment upon the rights of states and therefore threats to slavery and segregation.



http://www.salon.com/technology/how_...tariff_history