Financial History Issue 112 (Winter 2015) | Page 31
By Alan Lavine
The Civil War was history. But by
1869, a new war had emerged as the United
States set on a path to become the leading
industrialized nation of the world. The
nation, ravaged with debt from the war,
needed to make money fast. Tariffs were
seen by many as the most effective solution.
In the last four years of the 1860s, tariffs
on all imports averaged 45%.
“Those interested in an expanded role
for the federal government, whether building national roads…or paying for postCivil War pensions, tended to approve
higher tariffs,” said University of California at Berkeley economist J. Bradford
Delong, in his study on US trade policy.
Delong, who also served as a Deputy
Assistant Treasury Secretary under former President Bill Clinton, reported that
those seeking higher tariffs joined political forces with a coalition of Northeastern
and Midwestern manufacturers seeking
protection against the British.
However, much like in today’s Congressional battles concerning the overreaching
role of government, not everyone supported the idea of raising government
tariffs.
Free trade advocates believed that the
rising tariffs on imports would become
permanent. They blamed high tariffs on
imported copper ore for the demise of
Baltimore and Boston copper smelters.
The tariffs resulted in rising copper prices,
which led to falling demand.
American businesses that imported
goods from overseas and US agricultural
exporters, concerned over foreign taxes
on their produce, pressed Congress for
tariff reform.
Both sides of the issue of foreign tariffs were showcased in landmark public
debates between two New Hampshireborn Republicans. They were Horace
Greeley, a founder of the Republican Party
and editor of the New York Tribune, and
Arthur Latham Perry, an author and economics professor at Williams College in
Williamstown, MA.
Political campaign print for Horace Greeley,
editor of the New York Tribune, who was
involved in a public debate on free trade.
The two squared off in four heated
debates during the summer of 1869 that
spanned St. Louis, Detroit, Boston and
New York.
How the Debates Got Started
The seeds of the post-Civil War US free
trade movement sprouted in March 1865,
when Treasury Secretary Hugh McCulloch appointed David A. Wells chairman
of the country’s revenue commission.
His annual salary was $4,000 plus travel
expenses. Wells, an economist, initially
was a firm believer that tariffs on imports
were required to protect American workers. His commission wrote revenue bills
that reduced domestic sales taxes, but
increased tariffs on foreign goods. Congress adopted them.
However, Wells abruptly changed his
tune and ultimately was dismissed from
his post following the failure of his last
proposed bill to cut tariffs. Historians
report that Wells, disgusted at all the
influence peddling in Washington — especially by Pennsylvanians — changed his
views following a fact-finding mission. He
used his taxpayer-funded travel expenses
to visit free-trade England. There, Wells
studied the controversial British “Corn
Laws,” which, especially in the 18th and
19th centuries, regulated grain prices
before their repeal in 1846. Though initially enacted to protect England’s farmers
and the country’s food supply, the British
regulations came under fire when they
triggered higher costs that hurt British
textile manufacturers.
In 1867, Wells, with Perry and William
Cullen Bryant, editor of the New York Evening Post, helped launch the American Free
Trade League, New York. The organization,
of which Wells ultimately became president, committed to campaigning politically
against tariffs on imports — except when
truly needed for revenue.
The American Free Trade League sponsored lectures and published news articles
and pamphlets supporting lower foreign
tariffs. By 1869, they had built a war chest
of more than $30,000, which would be
worth more than $2 million today.
Horace Greeley, then 59, was an extremist favoring the tariff on imports. A friend
of President Abraham Lincoln, he has been
credited with founding the first national
newspaper, the New York Tribune, and
building its circulation to 300,000 readers. Greeley, often described as impolite
and a poor dresser, was known as “Old
Honesty” for his bluntness. He considered
himself a champion of the working man,
abolition and vegetarianism.
“If I had my way — if I were king of this
country — I would put a duty of $100 a
ton on pig iron and a proportionate duty
on everything else that can be produced
in America,” Greeley once told the late
President James A. Garfield.
Arthur Latham Perry