Financial History Issue 129 (Spring 2019) | Page 24

1894 print shows a St. Bernard rescue dog with a blanket labeled “Tariff Reform” strapped to its back and a small barrel labeled “The Wilson Tariff Bill” under its chin, next to a man labeled “Labor” caught in snow drifts labeled “McKinley Tariff”; nearby, Grover Cleveland, as a monk with a hand to his ear, responds to the dog’s bark. At the top of a hill, in the background, is the US Capitol. were impeding those efforts. In order to enable more international trade, he sug- gested in a speech in September 1901 the need for a series of joint agreements among nations to reduce tariffs and eliminate unnecessary trade barriers. But he never got the chance to take concrete steps to pursue that idea since he was assassinated the very next day. For most of the next seven years, the very activist President The- odore Roosevelt gave lip service to the idea of at least semi-free trade and supported selected reciprocity agreements. However, he did very little to address the tariff ques- tion in any fundamental manner. Immediately upon taking office in March 1909, Roosevelt’s chosen successor, William Howard Taft, called Congress into special session to address what he believed was another necessary effort at tariff revi- sion. Taft held the traditional Republi- can view that high tariffs were necessary to protect the interests of the nation’s manufacturers. But he also acknowledged that the need for high rates was steadily declining as those manufacturers con- tinued to improve their own efficien- cies of production and distribution. The President was content to let congressional leaders develop the details of the much- needed tariff revision. However, his spo- radic comments during the five months it took those men to develop a bill only served to confuse the supporters of both protectionism and free trade. In August, President Taft signed the Payne-Aldrich Tariff Act, a compromise bill that lowered 650 tariff rates, raised 220 others and left 1,150 unchanged. It proved unsatisfac- tory to a large number of reform-minded Republicans and was a major reason why many of them deserted the party in the election of 1910. That intra-party split enabled Democrats to gain control of the House and make inroads into the Repub- lican majority in the Senate. Two years later, Democrats again benefitted from the split between Republican conserva- tives and progressives. Democrat Wood- row Wilson entered the White House in March 1913 with majorities in both houses of Congress. In October, he signed the Underwood-Simmons Act that lowered the general tariff level again—this time to one not seen in more than 75 years. As noted earlier, the income tax that 22    FINANCIAL HISTORY  |  Spring 2019  | www.MoAF.org had been levied during the Civil War years expired in 1872. During the next decade, congressmen representing the Greenback movement and Labor Reform party made more than a dozen attempts to revive that tax. They were repeatedly rebuffed by repre- sentatives from the industrial Northeast. Throughout the 1880s, a growing num- ber of labor leaders, agrarian associations and social reformers became increasingly aware of the role that high tariffs and high excise taxes were playing in exacerbat- ing the unequal distribution of wealth in America. By the dawn of the new decade, they began to realize that a progressive income tax represented the most effec- tive way to dissolve the apparent link between high tariffs and the monopoly powers enjoyed by the country’s business elite. Imposing an income tax during a time of peace and prosperity still posed a challenge. But the changing times helped accelerate the desire for such a tax. The Panic of 1893 saw an unprec- edented number of bank closings and corporate failures, as well as record increases in unemployment and personal