Trade Policy Case Study
H.R. 379
"to provide revenue for the Government and to encourage the industries of the United States"
Compelling Policy Question: What should be the goal of American Trade Policies?
"H.R. 379 to provide revenue for the Government and to encourage the industries of the United States"
A tariff is a tax on goods coming into or leaving a country. These taxes can either be a percent of the product (ex: a 25% tariff), or a flat rate (a specific amount of money per item). Tariffs are also called “duties”
One example from H.R. 379 is is the tariff on Iron ore. Under H.R. 379 each ton of Iron Ore shipped into the United States will be charged a tax of forty cents per ton.
This could possible cause foreign imports to be more expensive than products made in America, which in theory would lead to more people buying American products. A risk of one country passing tariffs is that other countries will pass their own tariffs to retaliate, making it harder for American companies to sell their goods in those countries. If a country does not have tariffs it is called “Free Trade”.
Trade Case Study: H. R. 379. "An Act TO PROVIDE REVENUE FOR THE GOVERNMENT AND TO ENCOURAGE THE INDUSTRIES OF THE UNITED STATES."
Also known as the "Dingley Tariff"
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That on and after the passage of this Act, unless otherwise specially provided for in this Act, there shall be levied, collected, and paid upon all articles imported from foreign countries, and mentioned in the schedules herein contained, the rates of duty which are, by the schedules and paragraphs,
respectively prescribed, namely :
- (link to the full bill - in here you would find the specific % and $ amount of the tariff. )
Historical Context: History of Tariffs in the United States
Trade policies have been debated throughout our history as a country. The first tariffs were passed by the administration of George Washington in 1789. President George Washington and Treasury Secretary Alexander Hamilton supported tariffs as a way to protect the new American “infant industries”. Over the decades tariffs have been raised and reduced by new administrations. The one constant has been change, and the political debates have been very tense. In the 1830's the use of tariffs almost led to a civil war. The South Carolina State Government tried to say the Federal Government’s tariffs were “Null and Void” in South Carolina (meaning they did apply to South Carolina). President Andrew Jackson responded by Proclaiming if the South Carolina State Government went against the Federal Government they would be committing treason. In 1833 Congress passed an Act giving the President the power to use the U.S. Army to collect tariffs, but also reduced the tariff rate. The South Carolina government backed down. This was known as the Nullification Crisis.
In 1890 Representative William McKinley (R)Ohio, led the push for higher tariffs. This leads to the highest protective tariffs in American history, with an average of 48 percent. Six years later William McKinley is elected President of the United States, and in 1897 he calls a special session of Congress to deliver a message to them asking for the creation of new tariffs (speech below). In response, U.S. Representative Nelson Dingley, Jr. (R)Maine introduces "H.R. 379 to provide revenue for the Government and to encourage the industries of the United States".
Section One - Guiding Question, Why do some people believe the government should use "protective" trade policy?
In 1897, President William McKinley sent a message to a special session of Congress, which said...
(excerpts/link to original)
McKinley's biography. Before being elected President he was most known for helping create the Tariff of 1890, known as the "McKinley Tariff".
“Regretting the necessity which has required me to call you together, I feel that your assembling in extraordinary session is indispensable because of the condition in which we find the revenues of the Government... With unlimited means at our command, we are presenting the remarkable spectacle of increasing our public debt by borrowing money...
Congress should promptly correct the existing condition. Ample revenues must be supplied not only for the ordinary expenses of the Government, but for the prompt payment of liberal pensions and the liquidation of the principal and interest of the public debt.
In raising revenue, duties should be so levied upon foreign products as to preserve the home market, so far as possible, to our own producers; to revive and increase manufactures; to relieve and encourage agriculture; to increase our domestic and foreign commerce; to aid and develop mining and building; and to render to labor in every field of useful occupation the liberal wages and adequate rewards to which skill and industry are justly entitled...
The imperative demand of the hour is the prompt enactment of such a measure, and to this object I earnestly recommend that Congress shall make every endeavor…”
“This bill is very simple in its objects. They are fully and accurately, stated in the title. They are, first, to provide revenue for the Government, and second, to encourage the industries of the United States…
I am in favor of increased revenue, but I still more insist upon protection. Revenue is essential, but protection is paramount. Revenue will help the Government proper, but protection will relieve the whole people…
No man can fail to experience the sincerest distress who goes through any of our cities, to see the idle men and the suffering women and children... our industries must be stimulated and encouraged…
{The Bill] will put into forceful activity that doctrine of the Republican party which demands that there shall be encouragement given to the industries of the people of the United States. Our people are without work. Enforced idleness is the greatest calamity that can come to an industrious population...
We impose the tariff duty on the foreign article in order to give our home people a chance to make what we need… When a product of foreign growth or manufacture attempts to find a market in the United States, it is required to pay a price for the privilege...
This is what we call protecting and stimulating American industries, and what our Democratic friends call taxing them to death…”
As a plain business man and struggling manufacturer, I can speak from personal experience of the difficulties we have faced for the past four years. It has taken our best efforts to keep from going bankrupt. But when we look back over these last few years of hard times, there is one thing shining and breaking up the dark clouds over us. That is, the good times of 1892, when our mills all running full blast, and our workingmen were all employed at good wages.
Those dark clouds of difficulty grew darker as the years of the Democratic Administration dragged along. But last fall our champion of protection and prosperity, Hon. William McKinley, was elected President. Then I, and every other businessman in our country, felt the change in the heart of the people, when confidence was again restored.
Our great chairman of the Ways and Means Committee has given us a tariff measure. It will, in my humble opinion, give us the needed relief.
In 1888, the Republican Political Party created a Platform Poster titled "Principles of the Republican Party protective tariff platform”.
In 1987, cartoonist J.S. Pughe, created a cartoon titled "He has one medicine for all ills" for Puck magazine.
Library of Congress Summary: Print shows President McKinley as a physician dispensing strong "Tariff" medicine in the men's ward of a sanatorium where beds line the walls and are occupied by a "Business Man", a "Populist", a "Jingoist", a "Spoils Man", an "Anarchist", a "Filibuster", a "Monopolist", and a man sitting on a bed with a sign that states "Hallucinations About Home Markets and Infant Industries". In the background is a door that leads to the "Woman's Ward".
Section Two - Guiding Question, Why do some people believe the government should not use "protective" trade policy?
“The American people will not approve of high protective-tariff schedules, made especially to favor manufacturers, trusts, and combinations at the expense of the producers...
In the debate on this bill we have heard that oft-repeated and false statement that Democrats are free traders. I challenge anyone to prove by Democratic legislation or platforms of the party that the Democratic party has ever advocated free trade. It is true that some Democrats believe in free trade. It is also true that some Republicans believe in free trade. I am not a free trader, but I am opposed to tariff schedules that will foster trusts, and that I thoroughly believe a high protective tariff will do…
Some of the advocates of this pending bill have talked much about doing something to benefit the farmers. To one who knows something of the farmers' interests, what they have to sell and what they have to buy, it is plain that these would-be friends of the farmers either do not know what they are talking about or do not mean what they say. How can you benefit the farmer by making him pay more for everything he has to buy and not increasing the price of the products he has for sale? This bill will increase the price of articles he must buy…
Why do not the advocates of this bill be honest and frank in stating the purposes of the measure? Why do they not say it is to enable the trusts and great corporations to get back the millions they contributed to the last Presidential campaign? This is the view the people take of this bill.”
"A high protective tariff is the proposed remedy for the many existing ills; the people must be subjected to a higher tax—for tariff is a tax—to overcome the depression in business and general distress. ... [I]nstead of putting money into the Treasury (Tariffs have) the effect of keeping out foreign producers; of taking money out of the pockets of the people and putting it into the pockets of the protected industries....
Many of the rates fixed in the bill were those suggested by the manufacturers of the East representing certain protected industries. Is it right that (these)... should shape legislation...?
The farmer, the man who comes in daily contact with the soil, and who delves from morning till night, was not consulted as to what protection he wanted… His corn is burned in the West for fuel and his straw rots in the field for want of a market; and should he seek a foreign market, he will incur the risk of retaliation...
The truth is [the bill] will increase prices of goods and will not raise wages. It will force the consumer to pay the tariff, not into the Treasury, but to the manufacturer. At last the burden falls on the consumer…
Mr. Chairman, this inequality in taxation, this robbing of the poor under the form of law to build up industries... is wrong, and will in time be resented by a patient and long-suffering people. It was never intended by the founders of this Government that industries should be protected, or that one class should “ride, booted and spurred,” over the rest of the people. All men are equal before the law, and all should equally bear the burdens of taxation…
The poor man will be the sufferer under this bill..."
In 1897, the cartoonist Louis Dalrymple illustrated a cartoon titled "Better than Klondike" in Puck Magazine.
Library of Congress Summary: Print shows a bloated man labeled "Trusts" holding a gold mining pan with large gold nuggets, sitting by a stream labeled "Dingley Tariff" that flows from the U.S. Capitol building.
The cartoonist Frederick Opper made a cartoon titled, "All aboard for the millennium!" for Puck Magazine in 1896
Library on Congress Summary: Print shows "Captain Bill McKinley" standing at the bow of a steamboat labeled "High Protection" and "Monopoly & Co. builders" that has been patched in several places, listing to the stern, and is overloaded with passengers; Mark A. Hanna is standing at the helm in the pilothouse. McKinley is inviting more people to board while the boat is still at dock; there is a large sign on the wharf that states "Grand Excursion to Washington in the Elegant Steamer 'High Protection', Bill McKinley, Captain. A Fortune Guaranteed for every Passenger!!! No More Debts!! No More Mortgages!! No More Poverty!! No More Work!!!!"
Puck Magazine published a cartoon by Louis Dalrymple titled "A fourth of July celebration under difficulties" in 1897
Library of Congress Summary: Print shows President McKinley, as a young boy, attempting to light the fuse to a fireworks-rocket labeled "Prosperity" using "McKinley Administration Matches" during a rain storm beneath dark clouds labeled "Tariff for Trusts".
In 1897, cartoonist Udo J. Keppler drew "The keepers at the gate" for Puck magazine.
Library of Congress Summary: Print shows a farmer on "Prosperity Road" stopped at a gate labeled "Dingley Tariff", standing in his wagon, handing a heavy bag labeled "Toll" to a well-dressed bloated man labeled "Monopoly" sitting on a large pile of moneybags labeled "Trust Profits"; a few bags labeled "Cereals" remain in the farmer's wagon. Further up the road behind the farmer is another farmer's wagon piled high with bags, the implication is that the majority of the bags represent "Trust Profits". President William McKinley is sitting in a chair on a porch at the gate, he is the gatekeeper.
Louis Dalrymple, A senate for revenue only, Puck, 1894
Caption: Chorus What are we here for, if not for our private interests?
Library of Congress Summary: Print shows Uncle Sam sitting on the Speaker's desk in the "U.S. Senate", bound by tape labeled "McKinley's High Protection Monopoly Tariff", facing a group of senators labeled "Coal Senator, R. Road Senator, Collar and Cuff Senator, Sugar Senator, Steel Rail Senator, Lumber Senator, Copper, [and] Iron Senator", and David B. Hill holding a large knife labeled "Peanut Dave"; seated among them is George F. Hoar.
In 1893, Puck Magazine published a cartoon made by C.J. Taylor titled "An old imposition" in 1893.
Library of Congress Summary: Print shows President Cleveland as a railroad conductor collecting fares from William McKinley, who is holding a ticket labeled "War Tariff Pass" and an elderly man, dressed as an infant labeled "Infant Industries" on his lap. The infant holds a pacifier connected to a bottle labeled "Protection Pap".
Louis Dalrymple, Wrapped up in his pet idea, Puck, 1897
Caption: Citizen Mr. McKinley, I have called to offer a few suggestions about some needed reforms of our financial system.
McKinley My dear sir, you must excuse me; - I've turned all that over to Senator Wolcott.
Library of Congress Summary: Print shows President McKinley wearing a long cape labeled "Protection Monomania", sitting at a desk working on his "Tariff Plans", while ignoring a businessman who offers "Suggestions for Financial Reform"; in baskets beneath the desk are papers that state "Don't forget the issues of the last campaign. [signed] A Banker" and "Please give a little attention to the money question. [signed] Businessman".
Frederick Burr Opper, Home Comforts for the Laborer and his Family, Puck, 1888
Caption: -If Harrison and Protected Monopoly are victorious-
What was the result of the debate?
In 1897 Congress passed H.R. 379, known as the “Dingley Act of 1897” named after U.S. Representative Nelson Dingley, Jr. (R)Maine who introduced it.
The Dingley Tariff set the United States tariff laws for twelve years. It was the longest tariff in U.S. history. The Dingley Tariff was also the highest tariff in U.S. history, it averaged around 47% for the twelve years.
The Dingley Act was replaced by the the Payne-Aldrich Tariff Act of 1909. The Payne-Aldrich Tariff tried to lower the average level of duties, but not much reform was achieved.