1. PJM 10:265–66.
2. Martis (1988) points out that sectionalism has been a feature of congressional voting from the very beginning of the country.
3. For surveys of work by economists on the political economy of trade policy, see Rodrik 1995; Gwande and Krishna 2003; and McClaren 2016. The widely cited Grossman and Helpman (1994) model of “protection for sale” focuses on the determinants of tariff rates across industries, whereas this book focuses more on the average tariff rate, something captured by an exogenous parameter in their model: the weight that politicians put on social welfare.
4. Works on trade policy by political scientists include O’Halloran 1994; Hiscox 2002; Destler 2005; and others. For works by historians on trade policy, see Stanwood 1903; Ratner 1972; Dobson 1976; and Eckes 1995.
5. The Export-Import Bank was created in the 1930s to provide credit guarantees for exporters, but overall its financial support for exports has been small. For a history of the Export-Import Bank, see Becker and McClenahan 2003. Export subsidies were also used in the 1980s to deal with surplus agricultural production.
6. There are many other aspects of trade policy that we will not be able to consider, such as trade sanctions against particular countries and embargos on the export of particular products for national security purposes.
7. Import quotas can also be used to limit the quantity of particular foreign goods allowed to enter the market, but the United States did not start using them until the 1930s, and then mainly for agricultural goods.
8. Irwin 1998a.
9. These measures, calculated by dividing customs revenue by the value of total and dutiable imports, have several shortcomings, as discussed in Anderson and Neary 2005. They construct a trade-restrictiveness index that addresses many of the usual problems. Despite these shortcomings, the average tariff is still a useful measure. Irwin (2010) calculates a trade-restrictiveness index for US tariffs from 1867 to 1961 and shows that it is highly correlated with the standard average tariff measures. Furthermore, the United States has not used many non-tariff barriers, such as import licenses, foreign exchange restrictions, and discriminatory regulations, to restrict imports that would make the average tariff measure misleading.
10. The distinction between revenue and protective duties is not always sharp. Revenue duties do not discriminate in favor of domestic producers; they tend to be levied on products that are not produced at home or that are subject to domestic taxes equal to the import tariff. Protective duties discriminate in favor of domestic producers; Johnson (1960) defines protection as “any policy that raises the price received by domestic producers of an importable commodity above the world market price.”
11. See Corden 1974 for an introduction to the theory of commercial policy.
12. The Foraker quote is from Morgan 1965, 227, and the Reed quote is from Morgan 1969, 167.
13. By increasing the domestic price of imported goods, a tariff reduces the demand for imports and shifts demand toward domestically produced substitutes, leading domestic producers to increase their output. This is a description of the partial equilibrium “imperfect substitutes” trade framework developed by Baldwin (1976). See also Rousslang and Suomela 1988.
14. See Kim 1995 and Holmes and Stevens 2004. As Holmes and Stevens (2004, p. 2008) note, “For industries producing nontradable goods or services like retail, there is little [geographic] specialization, while for tradable goods like manufactures, mining output, and agricultural products, there is a substantial amount of specialization across regions.”
15. After the 1950s, Holmes and Stevens (2004, p. 2000) report that “US manufacturing moved out of this northern region and into other parts of the country” and that “certain areas of the South have become quite specialized in manufacturing, in effect fashioning a new manufacturing belt.”
16. See Lerner 1936. However, an across-the-board tariff on imports does not reduce all exported goods to the same degree.
17. See Bensel 1984 on sectionalism and American political development.
18. See Baldwin 1984a for this industry-based approach, as well as Grossman and Helpman 1994, both of which are implicitly based on the specific-factors model of Jones (1971) and Samuelson (1971).
19. The famous Stolper-Samuelson theorem focuses on the economic interests of the underlying factors of production that produce output rather than industries themselves. See Rogowski 1989 and Hiscox 2002 on this theme. See Deardorff and Stern 1994 for an overview of the Stolper-Samuelson theorem.
20. If trade-policy decisions were made via public referendum, Mayer (1984) shows how the preferences of the median voter would influence the outcome.
21. “The members of the Senate and House are the advocates and representatives of different local interests all of which naturally seek to influence the transactions of the government on their own behalf,” noted Senator Thomas Bayard (D-DE) (quoted in Rothman 1966, 81).
22. This point relates to Mancur Olson’s (1965) theory of collective action.
23. For example, if representatives from Pennsylvania want to impose higher tariffs on steel, and representatives from South Carolina want to enact higher tariffs on apparel, the legislators from each state could agree to support each other’s proposal. The benefits to Pennsylvania of higher steel tariffs would far exceed any loss it would incur from higher apparel tariffs, and a similar calculation holds for South Carolina. See Grossman and Helpman 2005 for a theoretical analysis of the protectionist bias in majoritarian politics.
24. See Fernandez and Rodrik 1991 on the certain losers and the uncertain winners, and Tullock 1975 on the transitional gains trap. The imposition of a tariff may generate short-run or transitional gains for the protected industry, but not permanent gains, because the initial benefits eventually get capitalized into asset values or eroded due to expanded production and the entry of new producers. At this point there is no apparent benefit of the tariff for incumbent firms, but its removal would force them to incur large capital losses—hence their strong opposition to any change.
25. Destler 1986, 3.
26. CQA 1988, 223.
27. Quoted in Binkley 1962, 222. There were some exceptions: President Woodrow Wilson was a strong party leader who actively helped shape the 1913 tariff.
28. On this switch, see Keech and Pak 1995.
29. McGillivray (1997), Brady, Goldstein, and Kessler (2002), and Weller (2009) show that political parties have an impact on trade-policy outcomes beyond constituent economic interests.
30. Of the 77 Congresses from 1867 to 2019, there have been 21 unified Democratic governments, 22 unified Republican governments, and 34 divided governments. Since the enactment of the Reciprocal Trade Agreements Act of 1934, divided government has been less of a problem for trade policy, since Congress no longer considered tariff legislation; see Karol 2000 and Sherman 2002.
31. Goldstein (1993) makes the case for the role of ideas in shaping US trade policy.
32. Remini 1997, 223.
1. Pereira and Flores de Frutos 1998.
2. See Lindert and Williamson 2016, as well as Gallman 2000 and McCusker 2000.
3. As Shammas (1982, 268) points out, “How can communities that spent a quarter of per capita income on goods imported from outside the colony be described as practicing local self-sufficiency?”
4. Shepherd and Walton 1972.
5. Ibid.
6. Shammas 1982.
7. The nominal GDP of colonial America in 1774 is estimated to have been between $142 million (McCusker 2000, table 2) and $164 million (Lindert and Williamson 2013, table 4). The nominal value of exports from England and Scotland to the thirteen colonies was £2.953 million in 1774, or $13.1 million after translating into dollars at the par exchange rate of $4.44 per pound (McCusker 1971).
8. Harper 1939, 35.
9. The estimates by Thomas (1965) spawned a large literature that probed the methods and figures used. See Walton 1971 and Sawers 1992 for references.
10. Ransom 1968.
11. PTJ 1:123.
12. Egnal and Ernst 1972, 30.
13. As Baack (2004) points out, land was another source of contention: the Proclamation of 1763 prevented the colonists from settling in or trading west of the Allegheny Mountains.
14. Mitchell 1988, 579.
15. See Thomas 1987 and Calloway 2006.
16. Breen 2004.
17. Thomas 1975, 151.
18. US Bureau of the Census 1975, Z-227–28.
19. Olson 1992.
20. Witkowski 1989.
21. Thomas 1987, 169–70.
22. Mitchell 1988, 494.
23. See Ragsdale 1996 and Holton 1999. Southern colonies accounted for 84 percent of the nearly £3 million in debt owed to British merchants in 1776 (Sheridan 1960, 167).
24. Thomas 1987, 246–54.
25. Labaree 1964.
26. From the Journal of the Continental Congress, available online at http://www.loc.gov/teachers/classroommaterials/presentationsandactivities/presentations/timeline/amrev/rebelln/rights.html (accessed July 11, 2016).
27. PJA 3:190.
28. Ibid., 4:57.
29. See Lint 1978 and Clarfield 1979.
30. Cheney 2006.
31. Article 2 of the treaty stated that the two countries “engage mutually not to grant any particular favour to other nations, in respect of commerce and navigation, which shall not immediately become common to the other Party, who shall enjoy the same favour, freely, if the concession was freely made, or on allowing the same compensation, if the concession was conditional.” See Malloy 1910, 1:468. Setser (1933) finds that the conditional MFN clause was due to the French negotiators.
32. Buel 1998, 178.
33. See Ritcheson 1969; Olson 1992; Crowley 1993.
34. Bjork 1964; see also Shepherd and Walton 1976.
35. Nettles 1962, 49.
36. McCusker 2001.
37. Massachusetts produced about 125 ships a year before the revolution, but just 4 ships in 1784. Nettles 1962, 52; Marks 1973, 64.
38. Nettles 1962, 49, 51.
39. PJM 8:314–16.
40. WJA 8:383.
41. Ibid., 313.
42. Ibid., 101
43. Ibid., 299.
44. PJA 17:390.
45. PAH 3:75–76.
46. Baack 2001; see also Ferguson 1961.
47. PJM 6:144–45.
48. Ibid., 9:294–95.
49. In a series of articles, Zornow (1954–56) investigated the tariff laws of seven states during the 1780s. For Rhode Island, Connecticut, Pennsylvania, and Maryland, see Shepherd (1993).
50. See McGillivray 2001 and Giesecke 1910.
51. Marks 1973, 82.
52. Ibid., 83, 68.
53. PTJ 9:399–400.
54. PJM 8:333.
55. Davis 1977, 91–92.
56. PTJ 8:215, 296.
57. Davis 1977, 92–93.
58. PJM 8: 407.
59. Davis 1977, 85.
60. PJM 8:344.
61. Ibid., 334–35.
62. Marks 1973, 68.
63. PJM 8:502.
64. Ibid., 9:96.
65. LJM 4:251.
66. PJM 10:29.
67. On voting patterns at the convention, see McGuire 2003, Heckelman and Dougherty 2007, and Pope and Treier 2015.
68. Farrand 1911, 3:126, 327.
69. Ibid., 2:441.
70. See Finkelman 1987; Goldstone 2005; and Baack, McGuire, and Van Cott 2009.
71. Farrand 1911, 2:374.
72. PJM 8:340.
73. Farrand 1911, 2:360, 306.
74. Ibid.
75. Ibid., 371.
76. Ibid., 374–75.
77. Ibid., 450, 453.
78. Ibid., 449–450.
79. Ibid., 449. Maryland’s Luther Martin, who opposed the constitution, also confirmed this vote trade, stating that “the eastern States, notwithstanding their aversion to slavery, were very willing to indulge the southern States, at least with a temporary liberty to prosecute the slave trade, provided the southern States would in their turn gratify them, by laying no restriction on navigation acts; and after a very little time the committee, by a very great majority, agreed on a report by which the general government was to be prohibited from preventing the importation of slaves for a limited time, and the restrictive clause relative to navigation acts was to be omitted.” Ibid., 3:210.
80. McClendon 1931.
81. PAH 4:340.
1. As McCoy (1980, 86–87) explains, “Many republicans eagerly embraced an eighteenth century ideology of free trade, whose leading spokesmen included Montesquieu, Hume, Adam Smith, and the French physiocrats. According to these writers, foreign as well as domestic commerce should be freed from all restraints so that it might flourish and, in the process, humanize men by refining their manners and morals. . . . Given their hostility to Britain and the mercantilist model, it is not surprising that many Americans in the early years of independence embraced this outlook and tied it directly to the spirit of their revolution.”
2. PBF 35:83.
3. PTJ 8:332; Jefferson 1955 [1785], 176.
4. PBF 39:344.
5. As Thomas Jefferson advised a correspondent in 1790, “In political economy, I think Smith’s Wealth of Nations is the best book extant” (PTJ 16:449). Cowin (1999) and Fleischhacker (2002) examine the influence of Adam Smith on the founding fathers.
6. PJM 12:71. Fisher Ames (1854, 1:49), one of the leading Federalists of the period, noted, “One of his [Madison’s] first speeches in regard to protecting commerce, was taken out of Smith’s ‘Wealth of Nations.’ The principles of the book are excellent, but the application of them to America requires caution. I am satisfied, and could state some reasons to evince, that commerce and manufactures merit legislative interference in this country much more than would be proper in England.”
7. PAH 3:76.
8. For more on Smith and trade policy, see Irwin 1996b.
9. PTJ 27:527.
10. Ibid., 8:633.
11. PJM 8:333–334.
12. WTJ 3:269.
13. “Were I to indulge my own theory, I should wish them [Americans] to practice neither commerce nor navigation, but to stand with respect to Europe precisely on the footing of China. We should thus avoid wars, and all our citizens would be husbandmen.” Jefferson recognized that “this is theory only, and a theory which the servants of America are not at liberty to follow” (PTJ 8:633).
14. PGW-CS 3:299–300.
15. PTJ 8:633.
16. Bordewich 2016.
17. PJM 12:64–65.
18. AC, 4/9/1798, 114.
19. PJM 12:69–70.
20. PJM 20:70–71.
21. Ibid., 71–72.
22. Ibid., 72–73.
23. See Edling and Kaplanoff 2004. Peskin (2003, 91) notes that the federal tariff rates were roughly double those of New York, but were generally lower than those imposed by Pennsylvania and Massachusetts.
24. Balinky 1958, 57.
25. Brown 1993, 238–39.
26. Edling and Kaplanoff 2004.
27. Riley 1978.
28. PAH 7:232.
29. Irwin 2003.
30. Richardson 1903, 1:65.
31. On the Report, see Cooke 1975; Nelson 1979; and Irwin 2004.
32. PAH 10:262–63.
33. Ibid., 266.
34. Ibid., 3:75.
35. Ibid., 10:266.
36. Ibid., 10:68.
37. Ibid., 299.
38. Ibid., 301.
39. PJM 14:195.
40. PAH 10:302–04.
41. PTJ 23:172–73.
42. Ibid., 24:187.
43. Ibid., 214, 353.
44. See Elkins and McKitrick 1993, 277.
45. See Clarfield (1975).
46. PAH 11:139.
47. AC, 1/27/1792, 349–51. This portion of the debate is clearly misplaced as it refers to events that occurred after January; it almost surely took place in late April.
48. Stanwood 1903, 1:102; Irwin 2004.
49. Elkins and McKitrick (1993, 261) argue that it would be “misleading to connect Hamilton too closely with the protective-tariff theorists of the early nineteenth century, much as they may have looked to him for inspiration. His ends were more complex than theirs, and went well beyond simple protection. (Indeed, a nineteenth-century Hamilton would in all likelihood have been a free trader: he did not think it well that any interest should become too settled and comfortable.)”
50. PAH 3:78–79.
51. Ibid., 4:477.
52. Ibid., 10:301.
53. See also Shankman (2003). This is not to say that protectionist pressures were strong, because the number of manufacturers was very small, and many of them had divided interests. For example, Peskin (2003, 109) points out that iron producers and iron users (nail and horseshoe producers) were deeply divided: the former wanted high duties, and the latter wanted low duties on imported iron.
54. PAH 11, 141.
55. AC, 5/4/1789, 238.
56. WTJ 8:405. See Peterson (1965) on Jefferson’s trade-policy views and McCoy (1974) and McCoy (1980) for an overview of the economic views of the Republicans.
57. AC, 5/4/1789, 256.
58. PGW PS 3:323–24.
59. PAH 5:488–89.
60. Ibid., 7:426.
61. Ibid., 424.
62. PTJ 20:236, 353–54.
63. Goldin and Lewis (1980) conclude that the favorable improvement in terms of trade translated into an increase in the growth rate of per capita income of about a quarter of a percentage point, from about 1.07 percent to 1.32 percent a year. By their calculations, American national income would have been about 3 percent lower had there been no American trade boom as a result of the European conflict.
64. Even though some ships and cargoes were confiscated, there were relatively few direct losses from the European war. As Nettles (1962, 324) points out, “The political and diplomatic quarrels of the time may give the impression that losses to American shippers all but ruined their business and drove their vessels from the sea. Actually, they prospered as never before. Ships that completed voyages greatly outnumbered those that fell prey to belligerents.”
65. AC, 5/6/1806, 557.
66. Adams 1980.
67. See PTJ 27:567–78.
68. Ibid., 574.
69. Ibid., 560.
70. Ibid., 561–63
71. Ibid., 562.
72. In 1792, Hamilton drafted a reply to Jefferson’s impending report, which began by noting, “The commercial system of Great Britain makes no discriminations to the prejudice of the UStates as compared with other foreign powers” and “There is therefore no ground for a complaint on the part of the UStates that the system of G Britain is particularly injurious or unfriendly to them” (PAH 13:412).
73. Ibid., 16:271–72.
74. AC, 1/13/1794, 196, 203, 202. According to Jefferson, “I am at no loss to ascribe Smith’s speech to its true father. Every tittle of it is Hamilton’s except the introduction. There is scarcely anything there which I have not heard from him in our various private tho’ official discussions. The very turn of arguments is the same . . . the style is Hamilton’s. The sophistry is too fine, too ingenious even to have been comprehended by Smith, much less devised by him” (PTJ 28:49).
75. PAH 16:275.
76. Mitchell 1988, 494.
77. PAH 16:274–76.
78. PTJ 27:560.
79. See Bemis 1923; Combs 1970; and Estes 2006.
80. WGW 35:233, 235.
81. Nettles 1962, 325.
82. Richardson 1903, 1:322.
83. Lambert 2005.
84. Davis and Engerman 2006.
85. Hickey 1987.
86. WTJ 5:64.
87. Latimer 2007, 20.
88. PJM SSS 16:322. On Jefferson’s commercial policy, see Peterson 1965; Spivak 1979; and Ben-Atar 1993.
89. WTJ 5:265.
90. Richardson 1903, 1:433.
91. On the embargo, see Jennings 1921; Sears 1927; Spivak 1979; Frankel 1982; and Irwin 2005b.
92. British figures for the calendar year show the “official value” of British exports to the United States fell from £7.9 million in 1807 to £4.0 million in 1808, a decline of 49 percent, while the official value of British imports from the United States fell from £2.8 million in 1807 to £0.8 million in 1808, a decline of 71 percent (Mitchell 1988, 499).
93. Irwin 2005b.
94. Bailey 1980, 126.
95. Wolford 1942.
96. Fry 2002, 34.
97. Sears 1921.
98. Irwin 2011a.
99. WTJ 5:271.
100. Gallatin 1879, 1:389.
101. Mannix 1979.
102. WTJ 9:202.
103. Ibid., 237.
104. Ibid., 239, 245; WTJ 12:56.
105. Frankel 1982.
106. ASP FR 1:256.
107. WTJ 9:237.
108. See Mannix 1979 and Stuart 1982.
109. Stagg 1983, 24; Spivak 1979, 153.
110. AC, 11/28/1808, 538, 541.
111. WTJ 9:244.
112. AC, 1/31/1809, 1249.
113. Ketcham 1971, 465.
114. PTJ RS 2:537.
115. Ibid., 533–34.
116. In 1825, Jefferson recalled that John Quincy Adams had told him about talk in New England about secession because of the embargo: “However reluctant I was to abandon the measure (a measure which persevered in a little longer, we had subsequent and satisfactory assurance would have effected its object completely), from that moment, and influenced by that information, I saw the necessity of abandoning it, and instead of effecting our purpose by this peaceable weapon, we must fight it out, or break the Union. I then recommended to yield to the necessity of a repeal of the Embargo, and to endeavor to supply its place by the best substitute, in which they could procure a general concurrence” (WTJ 7:424–26).
117. “In the course of those consultations, I learned the whole policy of Mr. Jefferson; and was surprised as well as grieved to find, that in the face of the clearest proofs of the failure of his plan, he continued to hope against facts. . . . The very eagerness with which the repeal was supported by a majority of the Republican party ought to have taught Mr. Jefferson that it was already considered by them as a miserable and mischievous failure” (Story 1851, 1:185).
118. PTJ RS 2:506; WTJ 9:521; 10:354. “Despite overwhelming evidence to the contrary,” Ben-Atar (1993, 171) argues, Jefferson “continued until the end of his public life, to hold on to an inflated assessment of the strength of the United States and its commerce.”
119. PAH 16:275.
120. PJM PS 2:322.
121. Latimer 2007.
122. Hickey 1981, 521.
123. Buel 2005.
124. Risjord 1961, 205.
125. Gilji 2013.
126. AC, 12/31/1811, 599–600.
127. AC, 12/9/1811, 424.
128. AC, 12/31/1811, 601.
129. PHC 1:842.
130. Latimer 2007, 31.
131. Perkins 1961, 326.
132. Ibid., 339.
133. As Perkins (1961, 339–40) writes, “The [British] depression of 1810, totally unconnected with events in America, secured for the United States what Jefferson’s Embargo had been unable to obtain.”
134. Hickey 1981, 523.
135. Dudley 2003.
136. Lebergott 1984, 124.
137. “From Thomas Jefferson to Marie-Joseph-Paul-Yves-Roch-Gilbert du Motier, marquis de Lafayette, 24 February 1809,” Founders Online, National Archives (http://founders.archives.gov/documents/Jefferson/99–01–02-9871 [last update: 2015–12–30]).
138. Richardson 1903, 1:476.
139. ASP-F 2:430–31.
140. PJM PS 3:52.
141. Irwin and Davis 2003.
142. PTJ RS 5:563.
143. WTJ 4:521–23.
1. North 1966, 242; Davis 2004.
2. Hansard’s Parliamentary Debates 33, 1099.
3. Brougham viewed this trade as a mistake rather than a deliberate attempt to sabotage American producers, but it is easy to understand why Brougham’s comments seemed to confirm a predatory intent on the part of British manufacturers. See Viner 1923, 42.
4. Richardson 1903, 1:553.
5. Ibid., 1:567.
6. ASP-F, 3:90.
7. Ibid.
8. PHC 2:179.
9. AC, 1/16/1816, 687.
10. AC, 4/4/1816, 1330.
11. On the South’s support for the bill, see Preyer 1959.
12. In 1832, Madison wrote that he still believed in free trade “as a theoretic rule, and subject to exceptions only not inconsistent with the principle of it,” but that “theories are the offspring of the closet; exceptions to them, the lessons of experience.” LJM 4:259.
13. US Bureau of the Census 1975, series K-554.
14. ASP-F, 2:426, 430. See also Ware 1926.
15. Jeremy 1981, 101. According to Zevin (1971, 141), “The principal motive for introducing the power loom was a desire to regain competitive viability by cutting costs. The stimulus which brought this desire to the fore was the traumatic pressure which material and product price movements put on the manufacturers’ gross margins. The result of adopting the power loom was to lower direct operating costs by a very substantial margin.”
16. Jeremy 1981, 101.
17. Ware 1931, 75.
18. Rosenbloom (2004) argues that it is premature to dismiss an important role for the tariff if there were external economies of scale at work in the industry.
19. Taussig (1931, 68) notes that “no strong popular movement for protection can be traced before the crisis of 1818–19.” On the panic, see Rothbard 1962 and Dupre 2006.
20. As Peart (2013, 97) notes, “Carey played a pivotal role in this expansion, offering advice and encouragement to allies all over the Union through an extraordinary volume of personal correspondence.”
21. In 1802, a special committee of the Pennsylvania Senate concluded that the underlying economic problem was “to be found chiefly in the abuses of the banking system” and their “universally bad administration. . . . The want of protection to domestic manufacturers, although it may apply in a great degree to the operations of manufacturing towns, yet it is not valid as relates to the great mass of people of the commonwealth, who can perceive in the banking institutions the immediate cause of their embarrassments” (see Eiselen 1932, 45).
22. As Rothbard (1962, 172) observed, “While the protectionists devoted a great deal of attention to the depression, the ‘free traders’ in opposition devoted little space to the depression, since they could not counter with a simple remedy of their own. Free traders generally concentrated on general political economic questions, such as the benefits of international trade and the division of labor, the danger of monopoly, the injustice of special privilege, and the morals of factory life.”
23. Richardson 1903, 2:45.
24. Ibid., 61.
25. On tariff politics surrounding the Baldwin bill, see Peart 2013.
26. AC, 4/26/1820, 2116, 2131.
27. Kennon and Rogers 1989, 86.
28. AC, 4/26/1820, 2036.
29. Vipperman 1989, 204.
30. Setser 1937.
31. Richardson 1903, 2:192.
32. PHC 3:685, 687.
33. Ibid., 692.
34. Ibid., 688.
35. Ibid., 694.
36. Ibid., 726.
37. Ibid., 701.
38. Ibid., 704.
39. Ibid., 723–24.
40. AC, 4/2/1824, 2028.
41. AC, 4/6/1824, 2206.
42. AC, 4/1/1824, 2010.
43. AC, 4/30/1824, 649, 623.
44. AC, 4/15/1824, 3359.
45. AC, 4/30/1824, 649.
46. As Jefferson noted to a correspondent, “Congress has done nothing remarkable except the passing of a tariff bill by squeezing majorities, very revolting to a great portion of the people of the States, among whom it is believed it would not have received a vote but of the manufacturers themselves” (WTJ 10:304).
47. Paskoff 1983, 76. See also Pincus 1977, 58–61.
48. Another attendee was Friedrich List, a German newspaper editor from Reading, Pennsylvania, who later achieved fame for writing The National System of Political Economy in 1841, a book that defended protectionist policies and was widely seen as the best rebuttal to the free-trade doctrines found in Adam Smith’s Wealth of Nations. See Henderson 1983.
49. The quotations are from Bartlett 1993, 145, and Dangerfield 1952, 409. See also Remini 1958 and Stanwood 1903, 1:243–90.
50. Remini 1981, 70.
51. “Whether the [Adams] Administration, which was already ruined, was worth such an elaborate stratagem was another question” that Dangerfield (1952, 406) asks.
52. Pincus 1977, 50.
53. Dangerfield 1952, 406.
54. RD, 3/4/1828, 1750.
55. Daniel Webster attributes this phrase to Smith in RD, 5/9/1828, 756.
56. PHC 7:95, 136.
57. Weekly Register, 9/20/1828, 52.
58. Remini 1958, 913.
59. “Adams’s signature meant only that he believed the bill to be Constitutional: like his predecessors, he did not consider himself justified in vetoing a piece of legislation merely because it was inexpedient” (Dangerfield 1952, 409).
60. RD, 5/9/1828, 746.
61. PJC 13:459–60.
62. CG, 5/30/1844, appendix, 747.
63. RD, 4/21/1828, 2472.
64. PJC 12:61.
65. PHC 10:125.
66. Richardson 1903, 2:414.
67. PJC 10:402–03.
68. Of course, a revenue tariff would have some protective effects on certain industries, but such protection was an incidental by-product of the duties, and the promotion of certain industries was not intentional. As Rep. John Letcher of Virginia admitted in 1857, “It is utterly impossible to arrange it [a revenue tariff] as to avoid incidental protection” (CG, 2/5/1857, appendix, 190). Of course, others wanted just the opposite. Sen. Simon Cameron of Pennsylvania stated, “I am in favor of protection as the object and revenue as the incidence” (CG, 6/15/1860, 3019).
69. Peskin 2003, 208–9. See also Prince and Taylor 1982.
70. Meyer 2003. On Pennsylvania’s role in trade politics during the nineteenth century, see Eiselen 1932.
71. See Tiegle 1942.
72. See Larson 2001 and Irwin 2008.
73. See Baxter 1995 and Ha 2015.
74. CG 5/27/1846, 936. As Sellers (1991, 290) put it, “The logrolling genius of Clay’s American System linked protectionism with internal improvements. Northwestern entrepreneurs backed high tariffs to provide revenue for roads and canals, while northeastern manufacturers supported transportation appropriations to sop up surplus revenues that might force tariff reductions.”
75. PHC, 6:654.
76. Larson 2001, 165–66.
77. Feller 1984, 136.
78. RD, 2/9/1832, 339–40.
79. PJC 10:456–57.
80. Ibid., 450.
81. Huston 1994, 532–33.
82. PJC 10:482.
83. PHC 10:328.
84. AC, 3/31/1824, 1994.
85. “That a Tariff for the encouragement of Manufactures may be abused by its excess, by its partiality, or by a noxious selection of its objects, is certain. But so may the exercise of every constitutional power,” Madison noted. “If mere inequality, in imposing taxes, or in other Legislative Acts, be synonymous with unconstitutionality, is there a State in the Union whose constitution would be safe? Complaints of abuse are heard in every Legislature, at every session” (PJM 9:287).
86. Ibid., 431–32.
87. Forsyth 1977, 82.
88. Lindert and Williamson 2013. See also Russel 1924.
89. Ratcliffe 2000, 17.
90. Freehling 1965, 118.
91. AC, 1/30/1824, 1308.
92. PJC 11:299.
93. Huston 2003, 27; Gundersen 1974, 922.
94. PJC 10:398.
95. RD, 3/5/1832, 501–2.
96. AC, 3/31/1824, 1979.
97. AC, 2/2/1832, 278.
98. LJM 4:261–62.
99. PJC 11:227.
100. Ibid., 10:402–3.
101. Ibid., 444–46.
102. PAJ 9:78.
103. Parton 1861, 3:295.
104. Feller 1984, 141.
105. Ratcliffe 2000, 11.
106. Richardson 1903, 2:525.
107. The statement is reprinted in Taussig 1892, 127–28. See Belko 2012 for details on the Philadelphia Free Trade Convention.
108. Richardson 1903, 2:556.
109. The minority on the committee dissented, arguing that “the protecting system is interwoven with the best interests of the country” (Stanwood 1903, 1:374–75).
110. MJQA 8:443, 446.
111. PHC 8:125. In March 1832, James Madison pleaded with Clay to work out a compromise (PHC 8:479).
112. MJQA 8:445.
113. RD, 2/2/1832, 266.
114. RD, 2/13/1832, 367.
115. Freehling 1965, 248.
116. PHC 8:551.
117. RD, 2/13/1832, 367. See also Miller 1975.
118. PJC 12:62 and PJC 11:603.
119. See Pease and Pease 1981; Ochenkowski 1983; and Ford 1988.
120. Benton 1854, 1:297.
121. Freehling 1965, 262.
122. Richardson 1903, 2:643, 645.
123. Ibid., 652.
124. Bassett 1926, 4:498, 504, 502.
125. See Bergeron 1973; Latner 1977; and Ellis 1987.
1. Richardson 1903, 2:598.
2. Ibid.
3. PHC 8:621–22.
4. Ibid., 617. Years later, when asked to explain why he endorsed the compromise, Clay said that he had two motives. First, he sought to “avert the calamity of civil war, the fire of which, having been lighted up in South Carolina, threatened to extend its flames over the whole Union.” Second, he sought to “preserve from utter destruction the system of protection” because “if the compromise act had not been adopted, the whole system of protection would have been swept by the board by the preponderating influence of the illustrious man then at the head of Government [President Jackson]” (PHC 9:660).
5. On the compromise, see Peterson 1982.
6. PHC 12:41.
7. Benton 1854, 1:311.
8. Kennon and Rogers 1989, 113.
9. RD, 2/25/1833, 729–42.
10. RD, 1/14/1833, 1040.
11. PHC 8:630 and 628.
12. RD, 2/26/1833, 1792.
13. RD, 2/12/1833, 468.
14. PHC 8:626–27.
15. CG, 3/12/1838, 638.
16. Timberlake 1993. Also see Rousseau 2002 and Wallis 2001 on the origins of the panic.
17. See Egnal 2001.
18. Richardson 1903, 4:43. On Tyler and the tariff, see Monroe 2003, chap. 5.
19. Richardson 1903, 4:82.
20. PJC 16:171.
21. CG, 6/15/1842, 635.
22. Johnson and Porter 1973, 9, 3.
23. Polk 1969, 7:264.
24. Richardson 1903, 4:378–79.
25. Polk 1910, 2:28.
26. Ibid., 44. Sellers 1966, 462; Shenton 1961, 74.
27. Richardson 1903, 4:405–6.
28. S. Doc. No. 2-29, at 8 (1845).
29. PHC 10:286.
30. S. Doc. No. 20-29, at 11 (1845).
31. James and Lake 1989.
32. Richardson 1903, 5:18.
33. CG, 7/21/1846, 1124.
34. See Taylor 1951, 451.
35. Lebergott 1966, table 1.
36. See Irwin 2010 for the 1859 calculation. In 1830, the import share was about 7 percent of GDP, and the average import duty was about 60 percent, yielding a deadweight loss of 1.3 percent of GDP. This calculation ignores the variance in tariff rates across goods, which usually increases the deadweight loss by a factor of two or more. Thus, a very crude guess at the deadweight loss would place it around 2.5 percent of GDP in 1830.
37. Irwin 2003c.
38. Gallman 1960, table A-1.
39. Meyer 2003.
40. As early as 1825, even Hezekiah Niles conceded that coarse American cotton fabrics did not need protection from imports. Taussig (1931, 136) and Ware (1931, 106) both conclude that domestic producers of coarse goods did not need protection by the early 1830s at the latest.
41. Irwin and Temin (2001) find only a weak relationship between domestic production and import prices even before 1830, consistent with domestic and foreign producers specializing in different products. Their empirical results suggest that the 1846 Walker tariff reduction would have reduced domestic production of cotton textiles by just 7 percent, and elimination of the tariff in 1820, when the tariff rate was much lower, would have reduced domestic production by about 9 percent.
42. Davis and Irwin 2008; Warren 1973, 11, 13.
43. Pincus 1977, 32.
44. See Engerman 1971 and Davis and Irwin 2008.
45. Richardson 1903, 4:285.
46. For example, the Senate rejected a reciprocity agreement with the German Zollverein in 1844. Similarly, Louisiana blocked a reciprocity agreement with Hawaii in 1855 out of fear of sugar imports. The Senate also stopped a trade agreement with Mexico in 1859. The one exception was the negotiation of a limited reciprocity agreement with Canada in 1855. Under this agreement, most bilateral trade in raw materials was given duty-free treatment in both countries. The United States and Canada also agreed to share the Atlantic fisheries off of Newfoundland, and the United States received permission to navigate the St. Lawrence River. The Senate approved this pact. Trade quickly tripled between the two countries, and Canada became the second-largest trading partner of the United States. The United States abrogated the treaty in 1866. See Officer and Smith 1968 and 1971.
47. Richardson 1903, 4:338.
48. Calomiris and Schweikert 1991.
49. Richardson 1903, 4:458.
50. Ibid., 521.
51. See Pitkin 1940 and Flaherty 2001, 108.
52. Luthin 1944, 626.
53. CG, 5/10/1860, 2053.
54. Magness 2009. See also Hofstadter 1938.
55. Flaherty 2001, 111.
56. Johnson and Porter 1973, 33.
57. WAL 3:487.
58. WAL 4:252. As James Blaine (1884, 198–99) explained, “The convention which nominated Mr. Lincoln met when the feeling against free-trade was growing, and in many States already deep-rooted. A majority of those who composed that convention had inherited their political creed from the Whig party, and were profound believers in the protective teachings of Mr. Clay. But a strong minority came from the radical school of Democrats, and, in joining the Republican party on the anti-slavery issue, had retained their ancient creed on financial and industrial questions. . . . The convention therefore avoided the use of the word ‘protection,’ and was contented with the moderate declaration” mentioned above.
59. Although the South had already decided to leave the Union, Morrill worried about the political ramifications of the tariff: “Our tariff bill is unfortunate in being launched at this time, as it will be made the scape-goat of all difficulties. In fact the southern Confederacy would have made a lower tariff had we left the old law in force and precisely the same troubles would have been presented” (Sherman 1895, 1:183).
60. Magness 2009, 325, 315.
61. Lee 1957, 299.
62. Luthin 1944, 625.
63. WAL 4:211.
64. See Huston 2003, 27; and Gunderson 1974.
65. This estimate is from Goldin and Lewis 1975. As Goldin (1973) points out, the cost of buying out slaves from their owners as an alternative to war would have been expensive as well. She estimates the cost of purchasing the freedom of slaves at about $2.7 billion, which would have required tripling federal expenditures, even if spread out over twenty-five years.
66. CG, 3/12/1862, 1196.
67. CG, 7/1/1862, 3053.
68. CG, 6/2/1864, 2672.
69. Lincoln is often thought to have made the statement that the United States gets a good but loses the money when it imports, but it gets the good and keeps the money with protection. Taussig (1920, 34–48) finds no evidence that Lincoln ever said that.
70. McGuire and Van Cott 2002, 429.
71. Bensel 1990, 175.
72. Carlander and Majewski 2003.
73. Burdekin and Langdana 1993, table 2.
74. Davis and Engerman 2006, 144. Although the price of cotton in Liverpool soared from 6 pence per pound in 1860 to 27 pence in 1864, the British government did not offer much support for the Confederate government.
75. Lebergott 1983, 69.
76. Lebergott 1983, 67; and Burdekin and Langdana (1993).
77. “Given Southern unwillingness to be taxed or pay taxes due, and given planter unwillingness to restrict their sale of cotton to support Confederate bond sales, the Confederacy was left with only one financial policy—confiscation” via inflation, Lebergott (1983, 70) notes.
78. Lebergott 1981, 883, and Hetherington and Kower 2009. In addition, by raising the cost of trade, the blockade affected the composition of Confederate imports in a way that was detrimental to the South’s war effort. Merchants were given an incentive to import high-valued luxuries (such as coffee and tea) rather than bulky but essential war material. See Lebergott 1981, 873 and Ekelund and Thornton 1992. On the northern blockade in general, see Surdam 2001 and Davis and Engerman 2006.
79. Easterlin 1961, 86; see also Sellers 1927.
1. US Bureau of the Census 1975, Y-493.
2. McGuire 1990.
3. CG, 6/29/1866, 3499.
4. CG 6/29/1866, 3499.
5. CG, 6/29/1866, 3500.
6. CG, 7/10/1866, 3719.
7. Joyner 1939, 44.
8. H.R. Exec. Doc. No. 12-39(December 1866).
9. Ferleger 1942, 178.
10. Wells’s change in outlook was probably triggered by the intense lobbying surrounding the earlier Morrill bill. Meardon (2007) considers some of the reasons for Wells’s intellectual conversion.
11. H. R. Rep. No. 72-41, at 33, 63, 65 (1869).
12. CG, 1/19/1869, 452.
13. Tarbell 1912, 67.
14. CG, 4/1/1870, 270–71.
15. Richardson 1903, 7:107.
16. CG, 3/28/1872, 2017–18.
17. Morgan 1969, 167.
18. Johnson and Porter 1973, 42.
19. Richardson 1903, 7:293.
20. Johnson and Porter 1973, 54, 50.
21. Morgan 1969, 167.
22. Ibid., 116.
23. Harper’s Weekly, 11/13/1880, 731.
24. Richardson 1903, 8:49.
25. Tariff Commission 1882, 1.
26. Taussig 1931, 249.
27. Richardson 1903, 8:134–36.
28. This is described in Stanwood (1903, 2:207–218). See also Hendrickson and Roberts 2016.
29. CR, 5/9/1890, 4431.
30. See Bensel 2000, 495.
31. Quoted in Tedesco 1985, 127.
32. Kennon and Rogers 1989, 187.
33. Thompson 1985.
34. Hoogenboom 1995, 493–5.
35. Richardson 1997, 105.
36. CR, 5/3/1882, 3577.
37. Wright 1910.
38. Because of their willingness to do so during this period, Smith (1954, 165) notes that “outside of the cotton South and apart from the period 1830–1860, American farmers have contributed virtually nothing to the cause of a liberal trade policy.”
39. Morgan 2003, 168. See also Calhoun 1996, 300–301, and Richardson 1997.
40. Leiter 1961.
41. Skocpol 1993; Holcombe 1999.
42. Bensel 1984, 70.
43. Thompson 1985, 187.
44. Morgan 1969, 170.
45. CR, 4/17/1888, 3058.
46. CR 5/9/1872, 3234.
47. CR, 5/17/1888, 4352. “The whole history of our national experience shows a constantly decreasing price as the effect of increased home competition,” one Republican report explained. “A reduction of duties which destroys our production and competition as inevitably results in putting up the price demanded by our foreign rivals.”
48. CR, 3/25/1870, Appendix, 209
49. Palen 2013, 217.
50. Oddly, Carey favored massive immigration into the United States, which he argued would raise wages by adding to the diversity of employment. See Morrison 1986 and Meardon 2011.
51. While applauding his policy conclusions, Justin Morrill gently conceded that Carey was unpopular because his argumentation was too “diffuse” (Huston 1983, 51).
52. Mill [1848] 1909, 922; JSM 17:1589.
53. Morrison 1986, 2.
54. On Wells, see Terrill 1969. Best known for his advocacy of a land tax, Henry George attacked trade restrictions in Protection or Free Trade (1886), while William Graham Sumner, a Yale professor and social Darwinist, wrote Protectionism: The-ism Which Teaches that Waste Makes Wealth (1885). Arthur L. Perry of Williams College was active with the American Free Trade League and even debated tariff policy with Horace Greeley.
55. CG, 4/1/1870, 268.
56. CR, 1/10/1877, 555.
57. CR, 2/1/1894, 1781.
58. See Corden 1971 and Anderson 1998. Hawke 1975 calculates effective rates of protection for various US industries in the nineteenth century.
59. Most studies of this period put the level of US prices higher than in Britain. In 1910, the nominal dollar-sterling exchange rate was £4.86, but Williamson (1995) calculates that the purchasing-power parity exchange rate was 30 percent higher, at £6.35, reflecting trade impediments and the higher prices of non-traded goods in the United States. Similarly, Ward and Devereux (2003, 832) report that the prices of services (housing, domestic service, and transportation) were roughly 25 percent higher in the United States than in Britain during the late nineteenth century, despite the similar income levels in the two countries.
60. See O’Rourke and Williamson 1999.
61. This “specific factors” model is due to Jones (1971) and Samuelson (1971), and the “neo-classical ambiguity” is analyzed in Ruffin and Jones 1977.
62. As Ward and Devereux (2003, 833) show, surveys of consumers in the 1870s and 1880s indicate expenditure shares of about 42 percent for food, 10 percent for tobacco and alcohol, 18 percent for housing, 20 percent for clothing, and 10 percent for other items.
63. Irwin 2010.
64. However, the collection costs in levying import duties were higher than the costs of internal taxes. The Treasury Department reported that the operating costs (as a percentage of revenue collected) were about 3 percent for both import tariffs and internal taxes in the 1880s, but the costs for internal taxes fell to about 1 percent by about 1900 (Lindert 2014, 487).
65. Irwin 2014.
66. With a perfectly elastic supply of imports, the domestic price of imports would be expected to fall 25 percent, calculated as (1 + τ1870)/(1 + τ1869)—1, or (1.20/1.60)—1 =–0.25, where τ is the tariff rate.
67. As Smith (1926, 119–120) puts it, “The consensus of opinion among economic historians is that the tariff was not the predominant influence in shaping the course of events in the wool growing industry during the years covered by this chapter.”
68. McGuire 1990.
69. James 1984, 193.
70. H.R. Rep. No. 792-48 (1884).
71. Porter and Johnson 1956, 65.
72. Ibid., 72–3.
73. In relating this story, Allan Nevins (1932, 280) adds, “Cleveland might well have expressed his comparative ignorance, but it is unlikely that he did it with this sentimental gesture.”
74. Cleveland vetoed hundreds of private pension bills that were pure patronage. Cleveland marveled at “the ingenuity developed in the constant and persistent attacks upon the public Treasury by those claiming pensions and the increase of those already granted is exhibited in bold relief by this attempt to include sore eyes among the results of diarrhea” (Bensel 1984, 65).
75. Richardson 1903, 8:341.
76. Ibid., 509–10.
77. Ibid., 581.
78. Ibid., 584.
79. Ibid., 588.
80. Ibid., 590.
81. Ibid., 590.
82. See H.R. Rep. 1496-50, at 15 (1888).
83. CR, 7/19/1888, 6519.
84. CR, 6/7/1888, 4401/4403, 4:3591, 5:4107.
85. Johnson and Porter 1973, 78.
86. Ibid., 80.
87. “There is no question that the tariff was the central issue of the election of 1888,” Reitano (1994, 108) argues. See also Calhoun 2008.
88. Baumgardner 1984.
89. To date, there has been no systematic analysis of voting patterns in the 1888 election, but see Reitano 1994, 127–28 and Kleppner 1979, 361–62.
90. Richardson 1903, 8:774–76.
91. McCarty, Poole, and Rosenthal (2002) discuss how territorial expansion helped to boost Republican support in Congress for tariff protection.
92. Richardson 1903, 9:39.
93. Morgan 2003, 109. See also Morgan 1960.
94. Quoted in Frieden 1997, 387.
95. CR, 5/7/1890, 4253.
96. CR 5/8/1890, 4318.
97. H.R. Rep. No. 1466-51, at 1–2 (1890).
98. Stanwood 1903, 2:268.
99. H.R. Rep. No. 1040-52, at 2 (1890).
100. Conybeare (1991) examines the economic basis for the political support given to the McKinley tariff.
101. Morgan 2003, 113.
102. Josephson 1938, 454.
103. Morgan 2003, 113–14.
104. Rogers 2007; Palen 2010; Palen 2016.
105. The infant industry argument usually relies on learning by doing, in which initial production costs fall rapidly with production experience. If production experience is an important determinant of a firm’s (or an industry’s) costs, temporary protection can enable it to reduce its costs in order to compete successfully against established foreign incumbents. Sutthiphisal (2006) finds little evidence of learning-by-doing in three industries—shoes, textiles, and electrical equipment—in the late nineteenth century.
106. As Irwin (1996b) points out, the infant industry doctrine has a long intellectual history and was endorsed by no less an authority than John Stuart Mill. Baldwin (1969) points out that import tariffs do not provide the right incentives to help infant industries mature.
107. Even James Swank, the stalwart protectionist of the American Iron and Steel Association, did not claim the industry was a newcomer that needed protection on infant industry grounds; see Tedesco 1985, 191.
108. See Berglund and Wright 1929, 195 and Hogan 1971, 357. Taussig (1915, 151) argued that “the same sort of growth [in iron and steel] would doubtless have taken place eventually, tariff or no tariff; but not so soon or on so great a scale.”
109. The assumption of no international technology transfer is hard to sustain in view of a 1901 report by a visiting party of British iron officials, which noted that “a considerable number of the heads of the American iron industry of today acquired their training, their knowledge, and their experience in British works” (Berthoff 1953, 67). See also Hyde 1991.
110. Irwin 2000b.
111. For example, using a basic formula for the effective rate of protection, if iron and steel account for two-thirds of the cost of producing tinplate, and the tariff on iron and steel was 40 percent, then a nominal tariff on tinplate of 25 percent implies an effective rate of protection of–56 percent!
112. See Berthhoff (1953, 69).
1. Statistical Abstract of the United States 1903, 549; League of Nations 1945, 13.
2. The commonly used figures by Maddison (1995), which have the United States overtaking Britain in per capita income around the turn of the century, are increasingly questioned. Ward and Devereux (2003, 2005) suggest that the United States always had a higher per capita income than Britain, which is consistent with the work of Lindert and Williamson (2016) on the late eighteenth and early nineteenth centuries. On 1910, see Woltjer 2015.
3. CR 5/7/1890, 4255.
4. “The effect of alternative commercial policies on the rate of growth may well be the quantitatively significant issue in the free trade versus protection debate,” Harry Johnson (1960, 339–40) once wrote. “If the cost of protection is a small proportion of the level of national income at any point of time, and if protectionists happen to be correct in their claim that protection increases an economy’s rate of growth, the increase does not have to be very great for its effect in raising national income to counterbalance the reduction due to the cost of protection within relatively few years.” See Bairoch 1993, 52–53, and O’Rourke 2000 for statements noting a positive relationship between tariffs and economic growth during this period. This section of the book draws on Irwin 2001.
5. Unfortunately, there is relatively little research that tries to explain the structure of late nineteenth-century tariffs across industries. Baack and Ray (1983) find that tariff rates by industry are not strongly related to skill intensity of labor in production or the capital-labor ratio.
6. Haines 2000, 153.
7. Hatton and Williamson (1998) find that immigration to the United States was highly cyclical and depended upon the wage gap between the two continents as well as business-cycle movements. These migration cycles are uncorrelated with movements in the tariff; for example, the reduction in protective duties in the Walker Tariff of 1846 was followed by a huge wave of migration to the United States.
8. See Davis and Gallman 1978 and Davis and Gallman 1994. James (1984) found indirect evidence that the government’s fiscal surpluses, devoted largely to reducing Civil War debt, promoted domestic investment by reducing interest rates (i.e., fiscal surpluses “crowded in” private investment).
9. Jaremski 2014.
10. De Long (1998, 369) notes that “the tariff made a wide range of investment goods—from British machine tools and steam engines to steel rails to precision instruments—more expensive.” The higher prices of foreign and domestic capital goods depressed the rate of capital accumulation. “The damaging effects of the tariff on investment were extremely important for nineteenth century growth,” De Long (1998, 370) concludes. “In the long run, a reduction in the real investment share of national product of 2 to 4 percent carries with it a reduction in the capital-output ratio of 10 to 20 percent—and a reduction in productivity and real wages of 5 percent or more.”
11. Kravis 1972, 403. The late nineteenth century saw the rise of big business enterprises, but they were not yet large multinational corporations capable of sizeable foreign investments. Wilkins (1989) examines the role of foreign investment in the US economy prior to World War I. See also Lipsey 2000.
12. See Lewis 1979, as well as Dennis and Iscan 2009 and Alvarez-Cuadrado and Poschke 2011.
13. Weiss 1993.
14. Cochran (1961) and others have shown that the Civil War did not provide a boost to manufacturing.
15. Data from the US Bureau of the Census (1975), series P-5, P-10, U-223–224.
16. “The impact of the international economy upon American economic growth during this period was clearly less significant than in earlier periods,” North (1960b, 199) notes. If the contribution of import-substitution to late nineteenth-century economic growth was negligible, that period was certainly not one of “export-led” growth either (Kravis 1972).
17. As Taussig (1915, 29) points out, “All the general indications from the economic history of the United States are that protective duties in the great majority of cases have not served to bolster up antiquated establishments or to retard improvements; though it may not be so clear that they have so often actually simulated improvement in the way and to the extent contemplated by the [infant] industries argument.”
18. Chandler (1959, 31) argues that “the major innovation in the American economy between the 1880s and the turn of the century was the creation of the great corporations in American industry.” This innovation “was a response to the growth of a national and increasingly urban market that was created by the building of a national railroad network—the dynamic force in the economy in the quarter century before 1880.”
19. Hirschman and Mogford 2009.
20. “Within a decade of the initial transfer of Bessemer steel technology to the USA, American Bessemer plants were decidedly superior to British plants, in terms of output levels and productivity,” Hyde (1991, 67) notes.
21. LTR 1:104. In Stanwood’s (1903, 2:294) view, “The result seemed to be, and in a certain real sense it was, an emphatic rejection of the protection system by the voters of the country.” The perception that high tariffs protected monopolistic big businesses and trusts also contributed to the unpopularity of the McKinley act. In Taussig’s (1931, 317) view, “The outcry against trusts and monopolies, though in fact it describes an exception rather than the normal working of protective duties, was probably the most effective argument in bringing about the public verdict against the McKinley act.”
22. In Cannon’s view, any revision of the tariff (up or down) harmed the economy because it generated uncertainty for business. For an analysis, see Clarke, Jenkins, and Lowande 2016.
23. Johnson and Porter 1973, 93.
24. Ibid., 87.
25. Richardson 1903, 9:392.
26. Friedman and Schwartz (1963) attribute the loss of gold reserves to the fear that silver interests would force the United States to abandon the gold standard. It was not until the Republican election victory in 1896 that such fears were set aside, gold returned to the United States, and the economy began to recover. On the economic depression during this period, see Steeples and Whitten 1998.
27. See Miron and Romer 1990 and Romer 1986.
28. Richardson 1903, 9:458–60.
29. As Kennon and Rogers (1989, 237) note, “The public hearings were merely pro forma—the real work occurred behind closed doors. The Wilson bill was as much of a ‘dark lantern’ measure as the Mills bill of 1888. After the formal hearings, the committee moved to the virtually inaccessible Census Committee room in the labyrinthine Capitol basement. The subcommittee met with Treasury Department officials and businessmen, some of whom came only on the condition that they could remain anonymous. The committee continued to draft the bill in its subterranean chamber.”
30. Cleveland had earlier resurrected the party’s call for free raw materials for manufacturers: “The world should be open to our national ingenuity and enterprise. This cannot be while Federal legislation through the imposition of high tariffs forbids to American manufacturers as cheap materials as those used by their competitors. It is quite obvious that the enhancement of the price of our manufactured products resulting from this policy not only confines the market for these products within our own borders, to the direct disadvantage of our manufacturers, but also increases their cost to our citizens” (Richardson 1903, 9:459).
31. Joseph 2004. See also Mehrotra 2004.
32. CR, 2/1/1894, 1781.
33. Ibid., 1792.
34. Ibid., App., 205.
35. Summers 1953, 186.
36. Stanwood 1903, 2:341.
37. Morgan 1969, 474.
38. CR 7/23/1894, 7082.
39. CR, 8/28/1894, App., 1535.
40. Ratner 1942, 184–92; Joseph 2004.
41. Johnson and Porter 1973, 98.
42. Ibid., 107.
43. Rove 2015.
44. Richardson 1903, 10:13.
45. Morgan 1965, 227.
46. Morgan 2003, 212.
47. Kennon and Rogers 1989, 242.
48. Palen 2013.
49. CR, 6/14/1898, 5903.
50. La Croix and Grandy 1997.
51. See Pérez 2003, 74.
52. In his book The Tragedy of American Diplomacy, William Appleman Williams argued that the United States was trying to create an informal empire based on economic expansion, sometimes called the “Open Door” thesis. Yet, as Herring (2008, 334) notes, “The original Open Door Notes, while important, amounted to much less than has been attributed to them. . . . The notes had little immediate impact for China or the United States” and seemed merely to reiterate the US interest in non-discrimination. See also Palen 2016.
53. Lipsey 2000; Lipsey 1963, 144.
54. US Bureau of the Census 1975, U 213–18; Lipsey 1963, 144.
55. Lewis 1957, 579; League of Nations 1945, 13; Eysenbach 1976, 6.
56. Lipsey (1963, 59) observed that the composition of manufactured exports had been “changing ceaselessly since 1879 in a fairly consistent direction—away from products of animal or vegetable origin and toward those of mineral origin.” Examining the factor content of US trade in manufactured goods from 1879–1940, Wright (1990) found that net exports were intensive in non-reproducible natural resources.
57. Warren 1973, 116.
58. On the international competitiveness of the steel industry, see Allen 1979; Allen 1981; and Irwin 2003a.
59. Wolman 1992, 82; Statistical Abstract of the United States 1904, 218, 522.
60. Findlay and Jones 2001.
61. Wolman 1992, xvii.
62. Kenkel 1983, 44.
63. Terrill 1973, 168.
64. Healey 2001, 165–66.
65. CR, 6/19/1890, 6256–59.
66. CR, 5/9/1890, 4397.
67. Johnson and Porter 1973, 87. In their election platform, Republicans defended the provision: “We point to the success of the Republican policy of reciprocity, under which our export trade has vastly increased and new and enlarged markets have been opened for the products of our farms and workshops. We remind the people of the bitter opposition of the Democratic party to this practical business measure, and claim that, executed by a Republican administration, our present laws will eventually give us control of the trade of the world” (ibid., 93).
68. FRUS 1899, 130.
69. Johnson and Porter 1973, 107.
70. Morgan 1965, 226.
71. On Kasson, see Younger 1955.
72. US Tariff Commission 1919.
73. Richardson 1903, 10:210.
74. Ibid., 240.
75. Younger 1955, 378–79.
76. Richardson 1903, 10:394–96.
77. For example, the domestic price of raw sugar dropped more than 20 percent on the day the duty was abolished by the McKinley tariff of 1890 and rose immediately when the sugar duty was increased in 1894 and 1897. See La Croix and Grandy 1997; Irwin 2015.
78. Tarbell 1912, 266, 261.
79. Stapleford 2009.
80. Wolman 1992, xvii; Lamoreaux 1985.
81. CR, 4/24/1888, 3305.
82. CR 12/2/1902, 8.
83. As Havemayer stated, “Economic advances incident to the consolidation of large interests in the same line of business are a great incentive to their formation [i.e., trusts], but these bear a very insignificant proportion to the advantages granted in a way of protection under the customs tariff” (Literary Digest, June 24, 1899, 720).
84. As Taussig (1931, 310) pointed out, one “needs no great acquaintance with economic history, and no great skill in general reasoning, to show that the tendency to combination has deeper causes than protective legislation, and presents problems more complicated, and in their social importance more weighty, than those involved in the tariff controversy.”
85. Bittlingmayer (1985) argues that antitrust enforcement was responsible for the merger wave. “Without the Sherman Act and these judicial interpretations [of the 1890s], the cartels of small family firms owning and operating single-function enterprises might well have continued into the twentieth century in the United States as they did in Europe,” Chandler (1977, 375) noted.
86. Chandler (1977) attributes the growth of firm size to changes in technology, as well as falling transportation and information costs due to the spread of the railroad and telegraph, which allowed firms to exploit economies of scale and transformed the United States into a national, integrated market served by large-scale businesses.
87. Gould 1978, 65.
88. Williamson 1995.
89. Irwin 2002.
90. For some evidence on this contention, see Liu and Meissner 2015.
91. Roosevelt apparently had been an enthusiastic advocate of free trade as a Harvard undergraduate, and he began his career sympathetic to the idea of free trade. In an address to the Free Trade Club of New York in 1883, Roosevelt stated that he favored “a gradual and progressive modification of the import duties in the direction of a tariff for revenue only.” He added that “there is certainly reaction in public sentiments against our doctrines, but this should not encourage cowardice in the ranks. It should rather make the advocates of free trade more persistent in their efforts to bring about the desired reform.” He even predicted that the complete success of free-trade doctrines was merely a matter of time (NYT, 5/29/1883, 5). Yet he soon repudiated these beliefs in order to advance in the Republican party; see Baker 1941. At the same time, Roosevelt (1924 16:338) wrote that the problem with the tariff was “that it puts a premium upon the sacrifice of the general welfare to the selfish interests of particular individuals and particular business or localities, and the most forceful plea advanced for a policy of low tariff is that it does away with this scramble of greedy and conflicting interests.”
92. LTR 1:408.
93. Ibid., 312–13. At another point, he wrote, “The question is simply whether the gain to be accomplished by a reduction of some of the duties is sufficient to offset the trouble that would be caused by a change in the tariff. Personally I do not believe that any important interest is being harmed in the least by the present tariff, nor, on the other hand, do I think that any special benefit or special harm will come so far as material things are concerned by a reduction” (ibid., 471–72).
94. LTR 4:1100.
95. Richardson 1903, 10:428.
96. Roosevelt timidly approached a reciprocity agreement with Cuba in which the State Department had offered concessions on its sugar and tobacco duties. After encountering opposition from Republicans backed by domestic sugar beet and cane producers and tobacco farmers, Roosevelt backed down: “I do not wish to split my own party wide open on the tariff question unless some good is to come” (Gould 1978, 35).
97. LTR 3:580.
98. LTR 4:1039–40.
99. Ibid., 1056.
100. Ibid., 1052–53.
101. Ibid., 1028.
102. Goodwin 2013, 309.
103. LTR 4:1062–63.
104. LTR 5:367. The brief financial panic of 1907 set back any prospects of reform. Roosevelt maintained that the “country is definitely committed to the protective system and any effort to uproot it could not but cause widespread industrial disaster. In other words, the principle of the present tariff law could not with wisdom be changed” (Richardson 1903, 14:7083).
105. Johnson and Porter 1973, 158.
106. Solvick 1963, 425–26.
107. Anderson 1981, 169–70.
108. Johnson and Porter 1973, 146.
109. CR, 3/4/1909, 3.
110. H.R. Rep. No. 1-61, at 2 (1909).
111. The bill also granted free trade to Philippines, although it limited the amount of sugar and tobacco it could export.
112. CR, 3/22/1909, 139.
113. H.R. Rep. No. 1-61, at 3 (1909).
114. Goodwin 2013, 592.
115. CR, 5/4/1909, 1716; CR, 5/5/1909, 1742.
116. Harrison 2004, 178.
117. Goodwin 2013, 593.
118. Sarasohn (1989, 64) notes, “However divided and uncertain the Democrats appeared in their attempts to lower the tariff, the insurgent Republicans seemed to be aiming at something else entirely. No insurgent would begin a tariff speech without first reaffirming his belief in the protective system.”
119. Ibid.
120. CR, 5/5/1909, 1744.
121. Goodwin 2013, 593.
122. Chauncey Depew (R-NY) called the income tax movement “the most direct possible attack upon the protective system” and said that such a tax would be unjustifiable except in times of war. “Perhaps you would like to reduce revenues for the purpose of imposing an income tax and thus taking the first steps for the destruction of the protective system,” Aldrich remarked to the proponents of tariff cuts (CR, 4/19/1909, 1379).
123. CR, 6/16/1909, 3344.
124. On Taft’s role, see Solvick 1963 and Barfield 1970.
125. Goodwin 2013, 593.
126. Anderson 1981, 174.
127. The Tariff Board was to be an executive advisory group, not an arm of Congress, and could also provide advice on other tariff matters. The chairman of the Tariff Board was Henry C. Emery, a professor of political economy from Yale University.
128. WHT 3:177. See also Lake 1988, 144.
129. CR, 4/4/1911, 7.
130. Anderson 1981, 178.
131. Kenkel 1983, 81.
132. See Percy, Norrie, and Johnston 1982, and Beaulieu and Emery 2001.
1. Johnson and Porter 1973, 184–85.
2. Ibid., 184–85, 168–69.
3. See Burdick 1968. Speaking before the commission, Wilson argued that high tariffs fostered monopolies, were detrimental to domestic welfare, and would harm relations with other countries. He was not impressed by the commission, calling it a “much ridiculed body of incompetencies” (PWW 2:140–43, 285–86).
4. Wilson 1909, 554.
5. “By 1909, that compelling sense of destiny which so infused the campaign days of 1896 had long since vanished, and the Democrats seemed dedicated to the lesser goals of scrambling for office, logrolling for favors, and searching for convenient issues with which to embarrass the Republicans,” notes Barfield (1970, 308–9).
6. Johnson and Porter 1973, 168.
7. Ibid., 180–81.
8. PWW 27:150.
9. Underwood (1928, 217) was a strong Southern advocate for lower tariffs who believed that “protective tariff bills are written to protect manufacturers’ profits rather than to sustain wages or labor’s standard of living.”
10. Link 1956, 37–38.
11. Historically, high duties on raw wool meant that woolen manufacturers demanded higher compensatory duties to offset the higher costs of the raw material. Essentially, the tariff on raw wool established a high floor that prevented any reductions in the woolens tariffs. To end this practice of tariff escalation, Wilson insisted on putting wool on the free list. Under pressure, the Ways and Means Committee agreed. Woolen manufacturers also supported this move, and thus Wilson succeeded in splitting the wool producers from the woolens manufacturers. As Willis (1914, 15) notes, “The testimony showed that the manufacturers were very desirous in most instances of securing free raw materials, and that they had hesitated to urge removal of duties only because they feared that they might thereby break up the ‘unholy alliance’ which had long existed between themselves and the shepherds, thus losing the support of the latter and sacrificing the votes of the senators from the sheep-growing states. When, however, it became evident that no amount of manipulation would probably suffice to ‘hold the party in line,’ so that a genuine revision of the wool and woolen schedule was assured, manufacturers hastened to seek the remission of duties which they had long desired.”
12. PWW 23:270–71.
13. H.R. Rep. No. 5-63, at ii–iii, xii (1913).
14. Ibid., at lv.
15. CR, 5/6/1913, 1247.
16. Link 1956, 187.
17. Burdick 1968. “The committee found little actual wrongdoing . . . and no evidence of lobbying by the great interests that had led the fight for high tariffs twenty years before,” notes Link (1956, 190). See Maintenance of a Lobby to Influence Legislation: Hearings Before the Senate Judiciary Committee, 63rd Congress (1913) 4 vols.
18. See Holt 1967. Despite having criticized the excesses of the Payne-Aldrich tariff, the insurgents now attacked the Democratic tariff reduction. Progressive Republicans insisted that they were more interested in “tariff equity” than “tariff reduction.” To them, tariff equity meant a rebalancing of duties so that those on industrial goods fell, while those on agricultural and raw materials rose. Progressive Republicans viewed the across-the-board Democratic approach to tariff cutting as reckless, and they particularly assailed the tariff reductions on farm goods, especially meat and grain.
19. Link 1956, 194.
20. Saunders 1999, 230.
21. Joseph 2004. On the political economy of the income tax, see Baack and Ray 1985, Anderson and Tollison 1993, Holcombe and Lacombe 1998, and Mehrotra 2004.
22. US Bureau of the Census 1975, Y-352–53.
23. Congress established the Federal Reserve System in December 1913 as the new central bank of the United States, but the country remained on the gold standard.
24. Miron and Romer 1990.
25. Brownlee 1982.
26. As McAdoo reported, “The Republican leaders are most anxious to make the tariff an issue in the coming campaign. In the Spring of 1915 they made consistent and persistent attacks upon the Democratic tariff act, alleging that the business depression existing at that time was due wholly to its enactment and Democratic incompetency, when, as a matter of fact, the chief cause of the depression was the European war. When prosperity began to return [in the fall of 1915], they changed their line of attack and said [prosperity] would disappear as soon as the war ended; that American manufacturers would then begin to feel the deadly effects of the Underwood tariff law because it would permit European nations to ‘dump’ such extraordinary quantities of their manufactured products upon the American market, at any sort of prices, that the home manufacturer would be seriously hurt, if not destroyed by this competition” (PWW 35:475).
27. Schnietz 1998.
28. PWW 35:477.
29. During the Senate consideration of the 1913 tariff, an amendment to create a bipartisan Tariff Commission failed by a vote of 32–37, with Republicans in favor and Democrats opposed.
30. Link 1956, 342.
31. See Taussig 1916. The memo is reprinted in Taussig 1920, 180–93.
32. Houston pitched the idea of a Tariff Commission to Wilson three times before the president relented. As Houston (1926, 196–97) recalled, “I stated that I was not foolish enough to think that the tariff or any other form of taxation could be taken out of politics,” but he thought it “could be of great service by gathering reliable data for the information of the President, of Congress, and, above all, of the public.”
33. PWW 35:312–16.
34. PWW 36:12–13.
35. PWW 35:510–52, 526–27. Schnietz (1998, 25) notes that the draft legislation that Wilson sent to the Ways and Means Committee was similar to the draft prepared by Taussig for Houston and McAdoo, except that the Wilson draft explicitly gave the Tariff Commission the power to investigate dumping.
36. Johnson and Porter 1973, 205, 195.
37. Fordham (2007) contends that the German threat to the wartime export boom may have influenced the decision to enter World War I.
38. League of Nations 1945, 13.
39. PWW 45:537.
40. As Wilson explained, “I, of course, meant to suggest no restriction upon the free determination of any nation of its own economic policy, but only that whatever tariff any nation might deem necessary for its own economic service, be that tariff high or low, it should apply equally to all foreign nations; in other words, that there should be no discriminations against some nations that did not apply to others (PWW 51:476).
41. Ibid.
42. Diamond 1943, 183. Indeed, the initial drafts of a League of Nations charter did not include any provision for equality of trade conditions, although the United States later began drafting proposals to limit new preferences and discriminations (including on colonial trade) in trade policy and to create an International Trade Commission under the auspices of the League. Despite these tentative steps, Temperley (1921, 5:68) finds that “there is no evidence that the suggestions of the American advisers were ever seriously urged or even seriously discussed” at the conference.
43. Temperley (1921, 5:69–71) explains the lack of action on trade policy as reflecting the greater focus on political issues after the war.
44. The Republican Congress cut funding for the Tariff Commission to prevent it from undertaking studies that might bring into question the principle of tariff protection. After Taussig resigned as chairman in 1919, the position remained vacant for two years until Republican president Warren Harding appointed a well-known protectionist, Thomas O. Marvin, the former president of the Home Market Club, to the post.
45. PWW 59:294.
46. PWW 64:108–9.
47. Another policy with trade implications was Prohibition, which went into effect in January 1920. The Eighteenth Amendment to the Constitution prohibited the manufacture, sale, and transport of alcohol, and gave rise to illicit trade. British distillers began shipping whiskey and other alcoholic beverages to the Bahamas, where it could be smuggled into the United States. Bahama’s imports of liquor jumped from 27,000 gallons in 1918 to 567,940 gallons in 1921, allowing the island to eliminate its public debt in two years, dredge Nassau harbor, and pay for other public works (Spinelli 1989, 3). When a US-UK treaty limited this illicit trade, Canada became the major headquarters for smuggling operations until Prohibition was repealed in 1933.
48. Johnson and Porter 1973, 216, 235.
49. Meltzer 2003, 91.
50. The severity of the post–World War I recession is disputed. The official Commerce Department series for real GNP falls 14 percent between 1919 and 1921, whereas Romer’s (1988) revised series declines just 3 percent between those two years. To judge by industrial production, the recession was intense but short, both on the downturn and the upswing. The business-cycle peak was January 1920, and the trough was in July 1921, according to the National Bureau of Economic Research.
51. H.R. Rep. No. 1139-66, (1920).
52. CR, 3/3/1921, 4498–99.
53. Kennon and Rogers 1989, 262.
54. CR, 3/4/1921, 7.
55. CR, 3/12/1921, 170.
56. “In practically no case did prices rise immediately after the passage of the act,” the US Tariff Commission (1922, 1–2) concluded. “In some cases a decrease of imports, as well as a continued decline in agricultural prices in this country, preceded the enactment of the emergency tariff law.”
57. Goldin 1994.
58. Kenkel 1983, 152.
59. H.R. Rep. No. 248-67 (1921).
60. Ibid., at 44, 49
61. CR, 9/21/1921, 13105; CR 9/13/1922, 12508.
62. CR, 7/14/1921, 3835, 3840.
63. Hoff 1971, 76.
64. CR, 12/6/1921, 37.
65. CR, 4/20/1922, 5673–74.
66. When Frank Kellogg (R-MN) complained that many rural Republicans might lose their seats over the tariff, Fordney snapped, “Well I would rather see the Senate lose you than American industry suffer” (Murray 1969, 277).
67. Senator Reed Smoot (R-UT) noted in his diary for February 28, 1922, “We disposed of some of the most difficult paragraphs in the tariff bill today. Among them pocket knives, scissors and shears, buttons and clasps and razors. We provided rates so high the President need not act to increase duties” (Smoot 1997, 495–96).
68. Dollar 1973.
69. The memo is reproduced in Culbertson 1937, 209. See also Gersting 1932.
70. On Culbertson, see Snyder 1968 and Snyder 1980.
71. CR, 12/6/1921, 37.
72. Because Smoot was an Old Guard Republican, the two were odd bedfellows. As Culbertson noted, “If anyone had told me six months ago that I would now be sympathetically working with Senator Smoot, . . . I would have rolled over and croaked” (Leffler 1979, 46–47).
73. McClure 1924, 50–51.
74. In 1928, the Supreme Court upheld the constitutionality of the flexible tariff provision in the case of J. W. Hampton, Jr. & Co. v. the United States. In this case, an importer contested the imposition of a duty of six cents per pound on barium dioxide, two cents more than in the 1922 statute, after a 1924 proclamation by President Calvin Coolidge. The Supreme Court ruled that the delegation of authority was constitutional because the president was carrying out of the will of Congress in changing the duty.
75. Many members of Congress would support higher tariffs regardless of what a “cost of production” investigation would reveal. As Senator Aldrich stated, “If it was necessary, to equalize the conditions and to give the American producer a fair chance for competition, other things being equal of course, I would vote for three hundred per cent as cheerfully as I would for fifty” (CR, 5/17/1909, 2182).
76. CR, 8/10/1922, 1192–93.
77. Kelley 1963, 18–19.
78. US Tariff Commission 1930, 24–25.
79. Greenbaum 1971.
80. From Costigan’s resignation letter, reprinted in the CR, 3/15/1928, 4735.
81. See Goodykoontz 1947 and Snyder 1968.
82. CR, 5/29/1928, 10546–52. The full report is S. Rep. No. 1325-70 (1926).
83. Kenkel 1983, 175. For Taussig’s reaction, see Taussig 1926.
84. CR, 9/12/1929, 3549.
85. H.R. Rep. No. 79-67, at 1–2 (1921).
86. Baldwin 1998, 301.
87. Viner 1924.
88. Wilson argued that the United States should be capable of protecting its commerce against discrimination in foreign countries and should work toward establishing equal treatment in world trade. Currently, the United States had “no weapon of retaliation in case other governments should enact legislation unequal in its bearing on our products as compared with the products of other countries,” Wilson noted. “Though we are as far as possible from desiring to enter upon any course of retaliation, we must frankly face the fact that hostile legislation by other nations is not beyond the range of possibility, and it may have to be met by counter legislation.” The Tariff Commission report “has shown very clearly that we lack and that we ought to have the instruments necessary for the assurance of equal and equitable treatment” (PWW 59:295–96).
89. CR, 4/24/1922, 5881.
90. Culbertson 1937, 245.
91. FRUS 1923, 1:122.
92. Ibid., 126–27.
93. Ibid., 128–29.
94. In August 1923, Hughes sent a confidential circular to American diplomatic officers notifying them that the president had “authorized the secretary of state to negotiate commercial treaties with other countries by which the contracting parties will accord to each other unconditional most-favored-nation treatment” (Ibid., 1:131).
95. “Because the United States conditional MFN policy resulted in relatively little discrimination,” Kelley (1963, 35) notes, “the adoption of an unconditional MFN policy in 1923 would not be of such major significance had the United States tariff continued to be virtually non-negotiable.”
96. CR, 12/6/1923, 97.
97. CR, 12/23/1924, 54.
98. CR, 12/7/1926, 29.
99. Johnson and Porter 1973, 245.
100. Benedict 1953, 168–72.
101. Alston 1983.
102. See Hansen 1991.
103. Tontz 1958.
104. “There was practically no direct attack upon the principle of a high tariff by the national farm organizations,” such as the American Farm Bureau Federation and the National Grange, Conner (1958, 37–38) notes. “Instead, the basic approach of these groups was an attempt to secure parity in tariff rates with industry. . . . The thinking of organizational leaders was developed within the framework of a high tariff structure, the emphasis being upon raising agricultural rates to obtain parity with industry, rather than upon lowering any or all rates.”
105. CR 7/14/1922, 3835, 3840.
106. See Kelley 1940 and Benedict 1953.
107. Benedict 1953, 216.
108. The Old Guard Republican establishment had always been rather dismissive of farmers. “Well, farmers never had made money,” Coolidge reportedly remarked about their plight. “I don’t believe we can do much about it” (Sundquist 1983, 187).
109. CR, 5/23/1928, 9524–27.
110. Malin 1930, 114–15.
111. NYT, 1/1/0/1928.
1. Johnson and Porter 1973, 272, 285.
2. Ibid., 272.
3. “For the first time in at least three generations, the platform contained no explicit attack upon the GOP theory of a high protective tariff as the best guarantee of high wages and prosperity,” notes Craig (1992, 158–59). “The Democratic party, which for over a century had upheld the principle of tariffs for revenue only as the chief distinguishing factor between it and the GOP, had now committed itself to the principle of a protective tariff.”
4. NYT, 11/4/1928, 132.
5. Johnson and Porter 1973, 282.
6. NYT, 11/4/1928, 132.
7. PPP 1929, 75.
8. CR, 4/15/1929, 25.
9. PPP 1929, 79.
10. H.R. Rep. No. 7-71, at 11 (1929).
11. CR, 5/9/1929, 1073–74.
12. H.R. Rep. No. 7-71, at 11 (1929).
13. CR, 5/28/1929, 2127.
14. Under the plan, an exporter of farm goods would receive a debenture (certificate) equal to half of the value of the import tariff on the good. For example, if the tariff on wheat was 42 cents per bushel, a farmer would receive a certificate for 21 cents for every bushel of wheat exported. Even if the tariff did not really protect wheat farmers from imports, because the United States exported much of its crop, the debenture would be valuable to the farmer. The certificate was like cash and could be sold at something close to face value to importers, who could use it to pay import duties.
15. CR, 5/25/1929, 1951.
16. CR, 5/13/1929, 1201.
17. CR, 6/14/1929, 10762.
18. NYT, 5/29/1929, 1.
19. Empirical studies of the House vote on the Hawley bill have sought to determine some of the underlying political and economic factors behind the legislation. See Eichengreen 1989 and Callahan, McDonald, and O’Brien 1994.
20. Merrill (1990, 288) writes that “there is no evidence that any apparent fact, any argument, any introspection even faintly disturbed the certainty of his knowledge and belief in the benefits of protectionism, or weakened his unalterable opposition to any reduction.” In Taussig’s (1930, 184) view, Smoot “was not only an out-and-out protectionist of the most intolerant stamp, but was strongly interested in his own region and its own product, beet sugar; not regarded as an impartial or disinterested person, and not entitled to be so regarded.”
21. CR, 9/19/1922, 12906.
22. CR, 9/26/1929, 3971.
23. CR, 9/12/1929, 3549.
24. Ibid., 3542.
25. CR, 11/6/1929, 5239.
26. NYT, 11/1/1929, 1. Historians have subsequently criticized Hoover for this indifference. “Had Hoover exercised his election mandate and exerted more legislative leadership during these early months of his presidency,” Ritchie (2007, 48) argues, the ensuing tariff mess could have been avoided. See also Koyama 2009.
27. A New York Times editorial explained why: “It is a mistake to suppose that the rebellious coalition wants to write a bill of its own. Its chief desire is to destroy the bill of the Senate Finance Committee. If the leaders of the coalition were locked up in a committee room and told not to come out until they had produced a measure satisfactory to all their supporters, they would never come out. If the door was burst open, they would doubtless be found lying about wounded after bloody rows with each other” (NYT, 11/11/1929, 20).
28. In a widely noted claim, Jude Wanniski (1978) argued that a small, critical Senate vote on a particular tariff produced the stock market crash of Black Thursday and Black Tuesday, October 24 and 29, 1929. On the other hand, Alfred Eckes (1998) suggests that it was the coalition’s effort to reduce industrial tariffs that may have led to the stock market crash because business supported higher duties. Kindleberger (1986, 125) dismissed as “farfetched” the idea that “the stock market crash of October 24, 1929, was a response to the action of a Senate subcommittee, reported on an interior page of the New York Times, in rejecting an attempt of some members to hold down a proposed increase in a tariff on carbide.” After careful study, White (1990, 173) found “no evidence to support the view that the Smoot-Hawley tariff significantly contributed to the crash.”
29. CR, 3/24/1930, 5976–77.
30. CR, 3/20/1930, 5669.
31. CR, 3/24/1930, 5977.
32. They concluded that the tariff would be fully effective on flax, olive oil, soybean oil, sugar, and wool; partially effective on buckwheat, butter, casein, milk and cream, sheep, lamb, and mutton, Swiss cheese, and high-protein wheat; and ineffective on barley, molasses, cheddar cheese, coconut oil, corn, cotton, jute, cottonseed oil, eggs, oats, rye, and other wheat (CR, 11/11/1930, 1439–47).
33. CR, 1/10/1930, 1368.
34. See Hayford and Pasurka 1992; Cupitt and Elliott 1994; and Irwin and Kroszner 1996.
35. NYT, 3/30/1930, 22.
36. As Hoover (1951–52, 295–96) recalled, “I learned on May 24 that the conferees had overridden Senator Smoot and Congressman Hawley and had watered the flexible provision down to about nothing. I wrote out the provision I wanted. I sent word that unless my formula was adopted, the bill would be vetoed. The result was a complete victory for the flexible tariff in the conference report.”
37. CR, 6/14/1930, 10760.
38. CR, 6/12/1930, 10546.
39. CR, 6/14/1930, 10762.
40. Ibid., 10764.
41. In 1929, the president of the American Federation of Labor reaffirmed that the organization had “never committed itself to the support of a protective tariff or free trade. We have avoided most scrupulously and carefully that controversial field” (Leiter 1961, 56).
42. Leuchtenburg 2009, 92.
43. Scroggs 1930.
44. Steel 1980, 288.
45. Burner 1979, 298.
46. Morison 1960, 312.
47. Snyder 1973.
48. CR, 5/5/1930, 8327–30. The statement was organized by Clair Wilcox of Swarthmore College and Paul H. Douglas of the University of Chicago (and later a senator from Illinois). For the origins of the statement, see Fetter (1942). Rep. David O’Connell (R-NY) said, “I have no patience with the economists that are consistently raising flimsy objections to this legislation” (CR, 5/5/1930, 8383). Senator Henry Hatfield (R-WV) stated, “Cloistered in colleges as they are, hidden behind a mass of statistics, these men have no opportunity to view the practical side of life in matters pertaining to our industrial welfare as a nation.” He scorned these “intellectual free traders, who seem to be more concerned with the prosperity of foreigners than they are with the well-being of our own American people” (CR, 5/28/1930, 9704).
49. PPP 1930, 232–33.
50. Ibid.
51. The Tariff Act of 1930 is sometimes popularly known as the Smoot-Hawley tariff, both because it sounds better than Hawley-Smoot and because Smoot was more closely associated with the legislation than Hawley. However, we follow the standard convention that the first name of a tariff act is the chairman of the House Ways and Means Committee and the second name is the chairman of the Senate Finance Committee.
52. Tariff Act of 1930, H.R. Doc. No. 476-71, at 43, 2 (1930).
53. NYT, 11/10/1929, 11.
54. These examples and many more are in Bidwell 1930.
55. Irwin 2011b, 95.
56. The average tariff on dutiable imports reached its highest rate of 61.7 percent in 1830, shortly after the enactment of the Tariff of Abominations in 1828. Of course, the average tariff on total imports was much lower in 1932 (at 19.6 percent) than in 1830 (at 57.3 percent) because many imports were duty-free in 1932.
57. US Bureau of the Census 1975, U-237.
58. Irwin 1998a.
59. NYT, 11/10/1929, 21.
60. Archibald et al. (2000) calculate that the Hawley-Smoot tariff actually reduced the effective rate of protection received by agricultural producers.
61. CR, 6/14/1930, 10762.
62. Conner 1958, 40.
63. Schattschneider 1935, 136.
64. US Bureau of the Census 1975, series U 225, 237.
65. This finding is supported by Hall’s (1933) contemporary estimates of the tariff’s impact on trade.
66. Quarterly GDP is available in Gordon 1986, appendix B.
67. These data are from the US Bureau of the Census 1975 and Statistical Abstract of the United States 1934, 283, 703. Quarterly real GDP is from Gordon 1986, appendix B.
68. See Fishback 2013 for a recent survey.
69. See Eichengreen 1992; Irwin 2012–13; and Sumner 2015.
70. Working with a Keynesian type model, Eichengreen (1989) suggests that the expenditure-switching effect from the Hawley-Smoot tariff could have increased domestic output by 5 percent in the absence of foreign retaliation. After incorporating limited foreign retaliation into his Keynesian model, Eichengreen (1989) finds a smaller but still positive net expansionary effect from Hawley-Smoot of about 2 percent of GDP.
71. If this decline in exports was due to foreign retaliation, then that could have more than offset any positive, expansionary influence coming from the tariffs themselves; see Dornbusch and Fischer 1986, 469.
72. See Irwin 2011b, 123.
73. Irwin (2010) estimates that the deadweight welfare losses associated with the tariff structure increased by 0.1 percent of GDP between 1929 and 1933.
74. Alston 1983.
75. Archibald and Feldman 1998.
76. Carey 1999.
77. CR, 6/9/1930, 10291–98.
78. CR, 9/12/1929, 3548.
79. McDonald, O’Brien, and Callahan 1997.
80. NYT, 9/17/1930, 26.
81. Irwin 2011b, 158.
82. League of Nations 1942.
83. Jones 1934, 53.
84. Gordon 1941, 54–55.
85. Eichengreen and Irwin 2010.
86. Jones 1934, 238.
87. MacDougall and Hutt 1954.
88. On the spread of protectionism across Europe, see Kindleberger (1989), Eichengreen and Irwin (2010), and Irwin (2012b).
89. “There is a widespread belief among the people of the United States that by reason of the high and exorbitant rates of the tariff act of 1930, we have incurred the hostility of many nations throughout the world. They believe that this hostility has resulted in the enactment of many retaliatory tariffs against us, the results of which are causing uneasiness and concern to all thoughtful minds” (H.R. Rep. No. 29-72, at 6 [1931]).
90. PPP 1932, 205–7.
1. See Ritchie 2007.
2. Johnson and Porter 1973, 343.
3. When accused by a Democratic official of supporting high tariffs, Raskob denied it, responding that the Hawley-Smoot tariff was “the most atrocious law every put on our statute books. . . . The impression seems to have gone abroad that I am in favor of high tariffs,” he said; “such is not the case at all.” Instead, he wanted to reassure the industrial East that the party would not “destroy industry” but rather be “in favor of the lowest tariffs that will adequately protect and restore prosperity to American industry.” See Craig 1992, 196.
4. Ibid., 199.
5. Johnson and Porter 1973, 331.
6. Rosen 1977, 344.
7. Ibid., 345.
8. PPP 1928–32, 1:702.
9. Leuchtenburg 2009, 141.
10. Moley 1939, 51.
11. Neither Smoot nor Hawley returned to Congress. Smoot was defeated for reelection in the 1932 campaign, while Hawley was an unsuccessful candidate for his party’s nomination that year.
12. PPP 1933, 2:14.
13. As Temin and Wigmore (1990, 485) put it, “The devaluation of the dollar was the single biggest signal that the deflationary policies implied by adherence to the gold standard had been abandoned; . . . the devaluation of April–July 1933 was the proximate cause of the [US economic] recovery.” See Taylor and Neumann 2016. A large body of research has demonstrated that worldwide economic recovery from the Depression began once countries left the gold standard and began pursuing more expansionary monetary policies; see Eichengreen 1992 in the international context and Sumner 2015 for the United States. Romer (1992) argues that monetary expansion was the driving force behind the US economic recovery after 1933.
14. Survey of Current Business, July 1951, 27.
15. Steward 1975, 14.
16. Even John Maynard Keynes strongly objected to the attempt to raise prices by reducing output. These policies impeded the recovery because reducing output was not a way to increase employment.
17. Others products covered by quotas included coconut oil and cordage from the Philippines, red cedar shingles, Douglas fir and western hemlocks from Canada, cattle, cream, and white seed potatoes. Some of these quotas were nonbinding (Whittlesey 1937).
18. Kelley 1963.
19. On Hull’s views on trade policy, see Butler 1998 and Allen 1953.
20. Butler 1998, 37.
21. NYT, 4/30/1933.
22. Assistant Secretary of State Francis Sayre (1957, 158), who worked closely with Hull in the 1930s, said, “He had a singular devotion to his ideals, and was firm as a rock in allegiance to his underlying principles. His long experience in Congress gave him strength on ‘the Hill’; in case of Congressional tangles he could always pick up the telephone and talk to his former associates in the intimacy of comradeship. Everywhere he was respected. He had high qualities of leadership and was recognized throughout the country as the strongest member of the Roosevelt Cabinet.”
23. Schatz 1972, 499.
24. Acheson (1969, 55) noted that Hull was so focused on trade to the exclusion of other issues that “whatever the occasion” and regardless of the issue of the day, any speech that Hull gave “was apt to turn into a dissertation on the benefits of unhampered international trade and the true road to it through agreements reducing tariffs.”
25. As Francis Sayre (1939, 41–42) put it, “Unilateral tariff reduction on our part would have left untouched the mounting trade barriers which had been erected all over the world as a result of aggressive economic nationalism, and which were effectively barring American surpluses from world markets. If we were to regain our vanishing export markets for American surpluses, obviously the only sound and effective method lay in lowering trade barriers simultaneously at home and abroad.”
26. FRUS 1933, 1:727–731.
27. Ibid., 924.
28. CR, 3/2/1934, 3580.
29. Hull (1948, 356) notes that the original State Department draft of the legislation was longer and more complicated. Ironically, his soon-to-be opponent within the administration, George Peek, suggested that the proposal would stand a better chance of passage if it were only two or three pages long, a suggestion with which Hull agreed. See Peek 1936, 197–99.
30. Schneitz 2000, 431 and CR, 6/14/1930, 10761.
31. Reciprocal Trade Agreements: Hearings Before the Committee on Ways and Means, 73rd Cong. 2, 5 (1934).
32. H.R. Rep. No. 1000-73 (1934).
33. See Berglund 1935 on the RTAA’s passage through Congress.
34. In a press conference in June 1933, Roosevelt remarked that “Congress would never give me complete authority to write tariff schedules,” to which a reporter replied, “Well, they have given you everything else” (Haggard 1988, 96). But Roosevelt was right about Congress’s reluctance to grant too much power over trade policy to the executive branch.
35. CR, 3/24/1934, 5356.
36. Trubowitz 1998, 163.
37. CR, 5/29/1934, 9803, 9805.
38. CR, 6/4/1934, 10383.
39. Ibid., 10378–79.
40. Although cotton and wheat farmers supported the bill, textile firms, toy makers, and many other small and medium-sized producers opposed it (Schnietz 2000, 428). Despite this lack of participation, interest groups were affected by the legislation. Schnietz (2003) finds that export-dependent firms experienced a positive and significant stock return of nearly 4 percent when Roosevelt requested the RTAA, and that highly protected firms experienced a significant stock return decline of nearly 5 percent when the RTAA was reported out of the Senate Finance Committee.
41. The text of the RTAA is in Tasca (1938, 306–8). Other contemporary studies of the trade agreements program include Larkin (1940) and Beckett (1941).
42. Studies about the political economy of the RTAA include Haggard 1988; Nelson 1989; Lohmann and O’Halloran 1994; Bailey, Goldstein, and Weingast 1997; Gilligan 1997; Irwin and Kroszner 1999; Hiscox 1999; Schneitz 2000, and Schneitz 2003. For a general study of Congress’s relation to the executive in foreign economic policy, see Pastor 1980.
43. NYT, 2/13/1936.
44. For a history of the Export-Import Bank, see Becker and McClenahan 2003.
45. Annex A of Irwin, Mavroidis, and Sykes 2008 reproduces the 1941 trade agreement template.
46. See Miller 2003.
47. Butler 1998, 25.
48. Similarly, Francis Sayre (1957, 159), to whom Hawkins reported, wrote that he “was a rare and splendid man whose whole heart and soul, like Secretary Hull’s, were in this work of reducing excessive trade barriers. I suspect that, apart from Secretary Hull, the success of the trade agreements program was due more to Harry Hawkins than to any other single man.” Likewise, Henry Grady (2009, 56) wrote that Hawkins was “one of the ablest men, and his resourcefulness, particularly in the working out of the basic principles of our agreements, was essential. To him as much as to any one person is due the success of this great but difficult government enterprise. For years he gave under Secretary Hull the most excellent direction to the [trade agreements] program.”
49. Varg 1976.
50. See O’Brien and McDonald 2009 for the change in Canada’s policy during this period.
51. Extension of the Reciprocal Trade Agreements Act, 1:38, H.R., Committee on Ways and Means, 76th Cong., (1937).
52. Schatz 1970, 100.
53. Rooth 1993, 303. On the Anglo-American trade agreement, see Kottman 1968, Schatz 1970, and Drummond and Hillmer 1989. US documents relating to the negotiations appear in FRUS 1938, 2:1–71.
54. Cantril 1951, 842.
55. See Durand 1937 for an early quantitative assessment of the RTAA’s impact on the pattern of US trade.
56. Hart 2002.
57. Tasca 1938, 188.
58. This calculation implies that the RTAA reduced the tariff by 12.8 percent, quite close to the Tariff Commission’s estimate of 13 percent. Thus, two-thirds of the overall tariff reduction during 1934–39 can be attributed to negotiated tariff reductions, and one-third to higher import prices (Irwin 1998a).
59. Survey of Current Business, July 1951, 27.
60. FRUS 1937, 1:842.
61. See also Grady 2009, 49, 51–52. Hawkins (1944) describes the implementation of the trade agreements program.
62. CR, 2/5/1937, 925.
63. Department of State Bulletin, January 13, 1940, 34–35. Hull complained about the misrepresentation of the agreements by critics: “Frequently, allegations of injury are made with respect to commodities on which existing duties have not been reduced, or with respect to commodities which were left on the free list even by the authors of the Hawley-Smoot tariff. In my entire experience, I do not recall a more flagrant and unscrupulous suppression and misuse of material facts on an issue which is of vital significance to every citizen, every home, every farm, and every factory.”
64. NYT, 1/21/1938, 12.
65. In Francis Sayre’s (1939, 95–96) view, “While we are in the very midst of these hair-trigger negotiations, seeking to win an agreement with real profit for both sides, high-powered lobbyists make their voices heard throughout the country, using every device to prevent the giving of concessions in the particular commodities in which they are interested or to defeat or upset the agreement. Pressure is brought against members of Congress; Washington is deluged with inspiring letters and telegrams. The country rings with the protests of special interests; unhappily few seem sufficiently concerned to speak for the interests of the consumer or of the Nation.”
66. As Brenner (1977, 151) notes, “The change in institutions had sharply reduced the effectiveness of these interests’ influence, . . . and they knew it.”
67. NYT, 1/14/1939.
68. Johnson and Porter 1973, 363.
69. Ibid., 368. Hull (1948, 486) was “dumbfounded” by the last section of the platform.
70. CR, 2/5/1937, 925.
71. “In talking it over with the President, I found he favored making the bill permanent, instead of limiting it to three years,” Hull (1948, 518) recalled. “I also preferred the permanent idea, but seriously doubted our ability to pass it. . . . The bill went up to the House as the president wanted it, but the House Ways and Means Committee inserted the three-year limitation.”
72. Extending Trade Agreements Act: Hearings Before the Senate Finance Committee, 75th Cong. 1:14 (1937).
73. H.R. Rep. No. 166-75, at 19 (1937).
74. CR, 2/23/1937, 1502.
75. Schatz 1972.
76. Schatz 1970, 86–87. A memorandum he sent to diplomatic officers in July 1937 provides an excellent summary of his philosophy; see FRUS 1937, 1:841–45.
77. Blum 1959, 1:524.
78. Quoted in Patrick 2009, 124. Schatz (1970, 102–3) offers a useful assessment.
79. Gallup 1972, 206.
80. Department of State Bulletin, 3/2/1940, 231.
81. NYT, 2/4/1940.
82. “Hull had persuaded about one dozen wavering representatives to support reciprocal trade, while [Assistant Secretary of State Breckinridge] Long had consulted privately with administration leaders in the House and had made certain that practically all Democrats were in Washington on the roll call date” (Porter 1980, 51).
83. Ibid., 53. Vice President John N. Garner, who did not support deep tariff reductions, was secretly working against the administration by recruiting votes for an amendment that would limit the president’s negotiating authority to just one year.
84. Ibid., 55. Of course, Republicans continued to attack the RTAA. Senator James Davis of Pennsylvania called it a “guerrilla attack on American trade protection,” while Arthur Vandenberg criticized the “despotic secrecy” with which the agreements were reached and called it “a grossly unconstitutional delegation of legislative power to the executive branch” (CR, 3/25/1940, 3341; CR, 3/26/1940, 3495).
85. Porter 1974.
86. The State Department lobbied hard to convince western Democrats to support the renewal, and apparently converted two of them just hours before the final roll call vote (Porter 1980, 57). “We were fighting a losing battle from the start,” Pittman wrote. “We had three votes in the majority the night before the vote. The power exerted was too strong for us to hold these votes. You can understand the power when you realize that Schwartz of Wyoming and Schwellenbach of Washington voted against us. The fight is not ended” (Israel 1963, 130).