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The
Trade Policy of William McKinley
Brian
Trumbore
President/Editor, StocksandNews.com
Back in August 2001, I did a piece
on the assassination of President William McKinley
and its impact on the financial markets, but in doing
some reading the other day, I realized I haven't done
anything on McKinley's importance in the realm of
trade.
McKinley
was a transitional figure in American history, as
well as being perhaps the most underrated president
in the opinion of your editor. He was the last Civil
War veteran to reach the White House, the first to
ride in an automobile, and he literally straddled
the turn of the century, having been first elected
in 1896 and then reelected in 1900, serving only a
few months of his second term before meeting his demise.
Henry
Adams wrote of the change in America, from rural to
metropolitan, 1870-1920, in "The Education of Henry
Adams."
"For
a hundred years?the American people had hesitated,
vacillated, swayed forward and back, between two forces,
one simply industrial (productive), the other capitalistic,
centralizing and mechanical?the majority at last declared
itself, once and for all, in favor of the capitalistic
system with all its necessary machinery. All one's
friends, all one's beset citizens, reformers, churches,
colleges, educated classes, had joined the banks to
force submission to capitalism."
As
a powerful Republican congressman in 1890, William
McKinley was responsible for the tariff act that bore
his name, raising duties on manufacturing goods to
an average of 50%, the highest to that time. His feeling
was that barriers to cheap foreign goods would help
keep up the wages of the American worker as well as
the profits of key new businesses and that until the
U.S. could compete on a global basis, the high tariffs
were necessary to protect all the classes. [Back then,
generally speaking, Republicans were protectionist,
Democrats free traders.]
The
McKinley Tariff also placed sugar on the free list,
however, because the commodity was such an important
part of both the economy and diet. But in allowing
imports of sugar to flow freely into the country in
order to keep the price down, the tariff paid a 'bounty'
to Louisiana and Kansas sugar growers; in other words,
the first sugar subsidy.
Just
as importantly, the McKinley Tariff had a third provision.
There was a 'reciprocity' clause, whereby the president
could unilaterally lower some duties on other nations'
goods if they in turn lowered duties on American products.
This was the first real attempt to bring the U.S.
into the world trading system.
But
Democratic voters ended up soundly defeating the idea
of tariffs in the election of 1890, with Congressman
McKinley being one of the losers at the voting booth,
but McKinley rebounded (thanks in no small measure
to the Karl Rove of the time, Mark Hanna), and McKinley
won the nomination and then the election over William
Jennings Bryan.
While
a new tariff was enacted following his inauguration
(the Dingley Tariff) which was the highest yet, President
McKinley had been refining his views on trade. In
1895 he said, "We want our own markets for our manufactures
and agricultural products. We want a foreign market
for our surplus products?We want a reciprocity which
will give us foreign markets for our surplus products,
and in turn that will open our markets to foreigners
for those products which they produce and which we
do not."
Then
in 1897 he told a Cincinnati gathering, "(Free trade)
should be our settled purpose to open trade wherever
we can, making our ships and our commerce messengers
of peace and amity."
A
year later America shed its isolationist past, basically
for good, with the advent of the Spanish-American
War (1898-99) and McKinley was steering the country
in a new direction. He won the election of 1900 handily,
again over William Jennings Bryan, and then in the
fall of 1901 he appeared before the Pan-American Exposition
in Buffalo.
This
world's fair was the biggest of its kind to date on
the continent and it highlighted the transition from
the rural past into the future. There was the Electric
Tower, for example, which illuminated the fairgrounds
each night, awing the thousands of spectators from
around the world who attended daily. From spring to
fall of that year, over 11 million made their way
to Buffalo and on September 5, 1901, an estimated
60,000 heard President McKinley give his views on
the new world. As you read this, transport yourself
back to this amazing time, and also recognize the
parallels to today and some of the issues in our current
presidential campaign.
---
Expositions
are the timekeepers of progress. They record the world's
advancement. They stimulate the energy, enterprise,
and intellect of the people; and quicken human genius.
They go into the home. They broaden and brighten the
daily life of the people. They open mighty storehouses
of information to the student. Every exposition, great
or small, has led to some onward step. Comparison
of ideas is always educational; and as such instructs
the brain and hand of man?
The
Pan-American Exposition has done its work thoroughly,
presenting in its exhibits evidences of the highest
skill and illustrating the progress of the human family
in the Western Hemisphere. This portion of the earth
has no cause for humiliation for the part it has performed
in the march of civilization. It has not accomplished
everything; far from it. It has simply done its best,
and without vanity or boastfulness, and recognizing
the manifold achievements of others, it invites the
friendly rivalry of all the powers in the peaceful
pursuits of trade and commerce, and will co-operate
with all in advancing the highest and best interests
of humanity.
The
world's products are exchanged as never before, and
with increasing transportation facilities come increasing
knowledge and larger trade.
Prices
are fixed with mathematical precision by supply and
demand. The world's selling prices are regulated by
market and crop reports. We travel greater distances
in a shorter space of time and with more ease than
was ever dreamed of by our fathers. Isolation is no
longer possible or desirable. The same important news
is read, though in different languages, the same day
in all Christendom. The telegraph keeps us advised
of what is occurring everywhere, and the press foreshadows,
with more or less accuracy, the plans and purposes
of the nations?
At
the beginning of the nineteenth century there was
not a mile of steam railroad on the globe. Now there
are enough miles to make its circuit many times. Then,
there was not a line of electric telegraph; now we
have a vast mileage traversing all lands and all seas.
God and man have linked the nations together. No nation
can longer be indifferent to any other. And as we
are brought more and more in touch with each other,
the less occasion is there for misunderstandings,
and the stronger the disposition, when we have differences,
to adjust them in court of arbitration, which is the
noblest form for the settlement of international disputes.
Trade
statistics indicate that this country is in a state
of unexampled prosperity. The figures are almost appalling.
They show that we are utilizing our fields and forests
and mines and that we are furnishing profitable employment
to the millions of working men throughout the United
States, bringing comfort and happiness to their homes
and making it possible to lay by savings for old age
and disability. That all the people are participating
in this great prosperity is seen in every American
community and shown by the enormous and unprecedented
deposits in our savings banks?
We
have a vast and intricate business, built up through
years of toil and struggle, in which every part of
the country has its stake, which will not permit of
wither neglect, or of undue selfishness. No narrow,
sordid policy will subserve (sic) it. The greatest
skill and wisdom on the part of manufacturers and
producers will be required to hold and increase it?
Reciprocity
is the natural outgrowth of our wonderful industrial
development under the domestic policy now firmly established.
What we produce beyond our domestic consumption must
have a vent abroad. The excess must be relieved through
a foreign outlet, and we should sell anywhere we can
and buy wherever the buying will enlarge our sales
and productions and thereby make a greater demand
for home-labor. The period of exclusiveness is past.
The expansion of our trade and commerce is the pressing
problem. Commercial wars are unprofitable. A policy
of good will and friendly trade relations will prevent
reprisals. Reciprocity treaties are in harmony with
the spirit of the times; measures of retaliation are
not?
Let
us ever remember that our interest is in concord,
not conflict; and that our real eminence rests in
the victories of peace, not those of war. We hope
that all who are represented here may be moved to
a higher, a nobler effort for their own and the world's
good, and that out of this city may come not only
greater commerce and trade for us all, but more essential
than these, relations of mutual respect, confidence
and friendship which will deepen and endure.
Our
prayer is that God will graciously vouchsafe prosperity,
happiness, and peace to all our neighbors, and like
blessings to all the peoples and powers of the earth.
[PBS.org]
---
Alas,
the next day, September 6, McKinley was back at the
exposition, greeting well-wishers at a reception,
when a fanatical anarchist by the name of Leon Czolgosz,
with gun wrapped in a bandage, fired at the president
from pointblank range and hit him twice in the abdomen.
McKinley said "I am not badly hurt, I assure you,"
and for a few days it appeared he would recover. But
the doctors had never located the second bullet and
merely bandaged him up. [Seriously, the lighting where
he was being treated was awful and they missed a lot.]
Gangrene set in and McKinley died on September 14,
with his last words being "Never, My God to Thee,
Never to Thee." Teddy Roosevelt became the new president.
Sources:
"American
Heritage: The Presidents," edited by Michael Beschloss
"The Presidents," edited by Henry F. Graff
"America: A Narrative History," George Brown Tindall
and David E. Shi
"McKinley," Kevin Phillips
PBS.org
Brian
Trumbore
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