Free Riding on Free Trade, 1887–1897
During the decade between 1887 and 1897, the United States transformed its tariff from a passive instrument of pure protection into a more active tool which could protect the home market and aid in the expansion of American exports. The two national political parties were bitterly divided on the tariff during this period.1 The Democrats called for duty-free raw materials, while the Republicans campaigned on protectionism and, after 1890, trade expansion through bilateral reciprocity agreements. Despite their differences in rhetoric, however, the two parties pursued common goals and trade strategies in the early 1890s. Both sought to maintain the “American system” of moderately high protection. Both also sought to expand American exports, particularly to Latin America, by lowering tariffs within the United States on a selected and limited number of raw materials. The question that confronted Americans at this time was not free trade versus protection but how best to expand American exports while incurring the smallest disruption to the American system. Despite their intense rivalry, Republicans and Democrats offered surprisingly similar answers.
The opportunity to pursue both protection and export expansion was created by the position of the United States as an opportunist within an international economic structure of British hegemony. America’s increasing relative productivity generated both the ability and the incentive to expand exports, and Britain’s openness and leadership within the international economy left the United States free to adopt protection at home. As an opportunist within a structure of British hegemony, the United States had the ability to free ride. It could, in other words, obtain its preferred outcome of protection at home and free trade abroad (P/FT) with little or no direct cost to itself. The United States consciously accepted this opportunity.
The International Economic Structure, 1887–1897
During the period from 1887 to 1897, the United Kingdom was the largest nation within the international economy, controlling twice the trade of its nearest rivals. It was also the most productive country, although its lead over the United States was gradually declining (see Table 1.1). Despite the recent growth of protectionism in Europe and elsewhere, Great Britain remained committed to free trade and a liberal international economic regime.2 Correspondingly, tariffs were low, as they had been since 1846, and Britain continued to support open-door or nondiscriminatory policies at home, abroad, and in its colonies.3 Not until 1896, at the close of this first phase, would a significant movement for tariff protection emerge in the United Kingdom.4
Despite its advocacy of liberalism abroad, the United Kingdom appears to have made little if any real effort to reverse the slide toward protection begun in Europe during the Great Depression of 1873–97 and in the United States after the Civil War.5 Rather than seeking to encourage more liberal trade policies in its principal competitors, Britain increasingly turned toward the developing markets of Asia, Latin America, and Africa, where its political and economic superiority was more secure.6
That the continued openness of the British market left the country vulnerable to the policies of its competitors was recognized by Lord Salisbury in a speech at Hastings on May 22, 1892: “We live in an age of a war of tariffs. Every nation is trying … [to] get the greatest possible protection for its own industries, and at the same time the greatest possible access to the markets of its neighbors. ... In this great battle Great Britain has deliberately stripped herself of the armor and the weapons by which the battle has to be fought. ... by saying that we will levy no duties on anybody.” In concluding, Lord Salisbury sounded a theme that was to become prevalent in forthcoming decades: free trade “may be noble, but it is not business.”7 In the early 1890s, however, business had not yet usurped nobility in Britain’s commercial relations.
For the United States, the international economic structure of British hegemony created an era of nearly unparalleled opportunity. As a result of Britain’s commitment to free trade, the United States was able to pursue and obtain its preferred trade strategy (P/FT), or first choice in the preference orderings identified in Chapter 1.8 By absorbing approximately half of all American exports at this time, the openness of the British market satisfied, in large part, the desire of the United States for free trade abroad.9 The United Kingdom’s passivity, as Salisbury recognized, also enabled the United States to exploit British policy. The United States was able to build a tariff wall around its domestic market to protect its increasing returns industries from competitive imports without fear of British retaliation. Somewhat paradoxically, even though the United States was only a middle-sized power within the international economy, Britain’s unilateral commitment to nonretaliation also enabled America to exploit whatever market power it possessed through an optimal tariff. Finally, and for similar reasons, the United States was also free to target British markets in the developing regions, and particularly in the independent nation-states of Latin America. As an opportunist, in short, the United States was able to free ride on British free trade.
Possessing an extensive and dynamic domestic market as well as a full complement of natural resources, the United States was one of the few countries in the late nineteenth century which could have chosen to pursue an autarkic trade strategy. Indeed, foreign trade averaged only 14 percent of America’s Gross National Product during this phase, as compared to 45 percent for the United Kingdom, 50 percent for France, and 30 percent for Germany.10 Conversely, the United States also had the second most productive economy and was potentially competitive in a relatively broad array of agricultural and manufactured goods.11 It might also have been able to withstand the rigors of international competition associated with policies of free trade. Yet, despite this extensive range of viable policies, the trade strategies actually under discussion in the United States were considerably narrower and strongly influenced by the position of the country within the international economic structure.
In the absence of a strong national desire for export expansion, the moderate protectionists—those who argued that exports were important only at the margin and that first priority had to be given to the security of the home market—dominated American trade strategy making after the Civil War.12 Although proposals for export expansion had circulated in Washington and the country at large—and indeed, great progress had been made in port, canal, and railroad development13—the tariff remained a passive instrument of pure protection. As America’s relative labor productivity and international competitiveness increased, however, the opportunity costs of not pursuing export expansion rose, eventually leading to a shift in the center of political debate. By the late 1880s, the foreign policy executive—with little pressure from society—recognized the potential benefits of export expansion and sought to reorient the tariff accordingly. The United States could have continued to pursue a rigidly protectionist trade strategy, the option generally favored in the country. Yet to do so would have foregone the benefits of export expansion. Likewise, a strategy of free trade, which would have led the market gradually to increase American exports, was also possible. Had such a course been adopted, however, the United States would have forsaken the benefits of protecting its increasing returns industries and exploiting its optimal tariff. Fortunately for the United States, greater free trade was not necessary as long as Britain remained committed to economic openness and a nonretaliatory trade strategy.
Like Britain, the United States singled out Latin America as an area of fruitful export expansion, at least in part because of the region’s relatively high level of economic development and well-established patterns of trade. Also important for the United States was the region’s geographic proximity, which provided an economic advantage as well as fitting into a larger political strategy of American regional dominance.14
Most American products entered Latin American markets on relatively equal terms with those of Britain and other European producers. In several cases, particularly in railroad equipment and construction and shipbuilding, equality of opportunity was insufficient to displace the special trading relationships between British producers and their Latin American consumers. The United States sought more favorable or preferential access to these markets. In other instances, particularly agriculture, Europeans had not developed the market or established trade because they lacked a comparative advantage. In these areas, the United States had to cultivate its own export markets without European assistance. The road toward United States export expansion in Latin America, in short, had already been paved, mostly by Great Britain. The United States merely needed to extend and reshape it to fit its own requirements.
During the early 1890s, the important markets the United States already possessed in Europe were taken for granted and no new policies were perceived as necessary to maintain the nation’s existing access. Indeed, perhaps because of Britain’s commitment to openness, the United States believed that it could safely ignore threats of tariff retaliation directed against its own protectionist policies by the continental European powers. In 1894, the Wilson-Gorman Act reimposed a duty on raw sugar, thereby abrogating the reciprocity treaties negotiated under the McKinley Act of 1890, and provided for countervailing duties against countries that subsidized their sugar exports. Both of these provisions had serious implications for German sugar exports to the United States, which depended on the preferential access gained through reciprocity and the extensive export bounties granted by the German government. On July 16, 1894, after the final form of the new tariff bill had begun to emerge in Congress, Germany issued a strongly worded warning to the United States: “The Imperial Government is … at present unable to say whether it will be possible for it, in view of the increasing agitation on account of the proposed measure, to restrain the interested parties from demanding retaliatory action, which the Imperial Government, owing to the friendliness and fairness that characterize its intercourse with the United States, desires to avoid.”15 Despite the importance of Germany as a market for American exports, the government was unmoved by this protest. American decision makers in both Congress and the executive appeared to believe that either the threat of retaliation was not serious, although the Germans later carried it out, or that if Germany did retaliate, the effect upon American trade would be relatively mild. Later in the decade, as the United States faced a new round of protectionism in Europe—much of which was directly or indirectly aimed at American exports (see Chapter 4)—this American arrogance would change dramatically. Only in an international economy dominated by British openness could the United States afford to ignore threats of retaliation.
Thus, as a result of the international economic structure of British hegemony and the trade strategies of other countries, the United States had few incentives to reduce its own tariffs. Britain would not retaliate. Continental Europe, it was believed, could be safely ignored. And export expansion to Latin America required only selective concessions on items of interest to the countries of that region, primarily raw materials. The tension between simultaneous export expansion and import protection could be easily overcome through a differentiated tariff which maintained the existing structure of protection while encouraging exports through selective reductions in duties.
The incentive to free ride on Britain’s hegemonic leadership was clearly recognized by contemporary American scholars and policy makers. William Graham Summer, Yale University’s leading political economist, wrote: “The best thing which could happen, from our point of view, is that England should ‘grab’ all the land on the globe which is not owned by some first-class power. She would govern it all well, on the most enlightened and liberal principles, and we could all go to it for pleasure or gain as our interests might dictate. She would then have all the trouble, care and responsibility, and we should all share the advantages.”16 Likewise, Richard Olney, apparently frustrated by the problems it caused for America’s relations with Europe during his tenure as secretary of state (1895–97) under President Grover Cleveland, was acutely aware that the United States was free riding on Great Britain:
Do we want the same rights and facilities of trade … accorded to the people of any other country? We loudly hark Great Britain on to the task of achieving that result, but come to the rescue ourselves without a gun, nor a man, nor a ship with nothing but our “moral support.” ... So far as our foreign relations are concerned, the result is that we impress [other countries], however unjustly, as a nation of sympathizers and swaggerers—without purpose or power to turn our words into deeds and not above the sharp practice of accepting advantages for which we refuse to pay our share of the price.17
As an opportunist within an international economic structure of British hegemony, the United States faced an era of nearly unprecedented opportunity. The international economic structure created strong incentives for the United States to pursue both protection and export expansion. The resulting political task that confronted foreign policy leaders in this phase was not compromising protection in favor of export expansion, but merely “internationalizing” the tariff, or transforming it into an active instrument of both protection and expansion.
Despite their sharply divided rhetoric, both the Republican and Democratic parties, led by individuals from within the foreign policy executive, concurred on the objectives of American trade strategy between 1887 and 1897. Exports were to be expanded abroad and the protectionist system maintained at home. These goals were to be accomplished by reducing the tariff on a selected number of raw materials. The Democrats called for duty-free raw materials but removed only the tariff on raw wool. This policy would, the party argued, expand American exports—primarily agricultural products, steel, and railroad materials—to the wool-producing regions of the world, although de facto it was limited to Latin America’s southern cone. The Republicans advocated bilateral reciprocity treaties between the United States and the several Latin American countries, in which the former would admit sugar, coffee, tea, and raw hides free of duty while the latter would grant in return preferential duties on a specified list of American agricultural and manufactured items. By focusing on Latin America, trade expansionists sought to redirect the trade of that region—previously dominated by Great Britain—away from Europe and toward the United States. Foreign policy leaders, in other words, attempted to preserve America’s protectionist system but to change the policies and actions of the Latin American countries. This combination of international activism and domestic protection is the distinguishing characteristic of American trade strategy in this first phase.
Although many proposals for tariff reform had circulated before 1887, none had the impact of Democratic President Grover C. Cleveland’s call for duty-free raw materials. Cleveland devoted his 1887 Annual Message to Congress entirely to the tariff question to emphasize the importance of his proposed reforms. Recognizing that the protectionist system could and should be maintained, Cleveland asked for only a moderate reform of the raw materials schedules to cheapen the costs of manufacture, lower prices, and—most important for the argument advanced here—increase exports. Duty-free raw materials, Cleveland concluded, “would appear to give [domestic manufacturers] a better chance in foreign markets with the manufacturers of other countries, who cheapen their wares by free material. Thus our people might have the opportunity of extending their sales beyond the limits of home consumption.”18
Cleveland’s proposal was soon introduced in Congress by Roger Q. Mills, chairman of the House Ways and Means Committee. The Mills bill, as it was known, was passed by the Democratic House but defeated in the Republican-dominated Senate. In the upper house, the Republicans submitted a traditionally protectionist bill, which eventually formed the basis for the McKinley Tariff of 1890.19
Cleveland’s proposal stimulated the “Great Debate” in the presidential election of 1888.20 Despite the importance of the issue and the clearly defined positions of both parties on the tariff, the election failed to yield a mandate for either platform: Cleveland received a plurality of one hundred thousand popular votes, and Benjamin Harrison, his Republican challenger, obtained a majority of votes in the electoral college.
The defeat of Cleveland’s first reelection bid and of the Mills bill might be interpreted as demonstrating the importance of party and electoral politics. It is more significant, however, that the Republicans adopted a similar program for export expansion in 1890, only three years after Cleveland’s original proposal.
The McKinley Tariff
In the Great Debate of 1888, the Republicans emphasized their continued commitment to protectionism. To fulfill pledges made during the campaign, the Republicans submitted a tariff bill to Congress in 1890 designed “to be a measure of protection from its enacting clause to its closing paragraph.” The explicitly protectionist nature of the bill was praised by William McKinley (R.-Ohio), chairman of the House Ways and Means Committee: “We do not conceal the purpose of this bill—we want our own countrymen and all mankind to know it. It is to increase production here, diversify our productive enterprises, enlarge the field, and increase the demand for American workmen.”21
In drafting the McKinley Act—like all tariff bills, named after its principal author—the Ways and Means Committee sought to impose duties on any article that could be produced in the United States and to admit free of duty those goods which Americans could not produce at all or in sufficient quantities to meet domestic demand.22 As a result, tariff levels were actually increased from those of the last tariff act passed in 1883 (see Table 3.1). The McKinley Act raised the tariff on dutiable imports from an average of 45.1 to 48.4 percent. Items on the free list (goods that entered without paying any duty at all) were expanded from 33.6 to 50.8 percent, thereby lowering the rate of duty on all imports from 29.9 to 23.7 percent.
The Republicans attempted to defuse the issue of duty-free raw materials championed by the Democrats by reforming the “draw-back” provision. Previously, 90 percent of all customs paid on any good consumed in the manufacture of an item for export were reimbursed to the manufacturer upon the completion of a complex set of administrative requirements. The McKinley Act raised this draw-back from 90 to 99 percent of the duty. The Republicans argued that the draw-back provision was more effective than the Democratic proposal for duty-free raw materials because it applied to all materials consumed in the production of the final exported product and not just a limited number of officially defined raw materials. In practice, however, the administrative requirements were so cumbersome that few manufacturers took advantage of the provision.23
The McKinley Act is perhaps best known for its reciprocity provision. Reciprocity, as embodied in the 1890 tariff, was not a replacement for protection. “What I [desire],” Secretary of State James G. Blaine and reciprocity’s foremost advocate explicitly stated, “is a system of reciprocity not in conflict with a protective tariff, but supplementary thereto.” Or, as Blaine’s senatorial ally Eugene Hale (R.-Me.) defined it, reciprocity “is an extended protection, an external protection for American labor.”24
As finally enacted, the reciprocity provision kept sugar, molasses, coffee, tea, and raw hides on the free list unless the president found that the exporting country, in view of the free introduction of these goods, imposed duties on American products that were reciprocally unjust and unreasonable. With the exception of tea, all of these products were imported from Latin America.25 The bill also specified rates of duty to be imposed on the several commodities if the president determined that a nation failed to make appropriate concessions. In the most generous grant of tariff-making authority given by Congress to the executive until 1934, no congressional approval was required for any of the presidential actions called for in this provision.
The first reciprocity agreement was signed with Brazil on January 31, 1891. Agreements were also reached with Spain for Cuba and Puerto Rico; with the United Kingdom for Barbados, Jamaica, Leeward Islands, Trinidad, Windward Islands, and British Guiana; and with Salvador, Nicaragua, Honduras, and Guatemala. Each agreement contained tariff concessions by the foreign country on live animals; grains, particularly oats, barley, rye, and corn; meat products; bridge-building materials; cottonseed and related products; railway cars, wagons, and other materials; and timber and iron for shipbuilding. As in the Democratic plan articulated in the duty-free raw materials platform, the Republicans exchanged lower duties on raw materials for expanded exports of agricultural and infrastructural materials.26
The essential objective in these agreements was to gain an advantage in the Latin American markets at the expense of European producers and to admit free into the United States sugar, molasses, coffee, tea, and raw hides—goods that were not produced at all or in sufficient quantitles within the United States. As J. Laurence Laughlin and H. Parker Willis wrote in 1903, reciprocity in the McKinley Act was a form of coercion, “since we offered not a differential advantage to the countries concerned, but … only a differential disadvantage.”27 Of all the countries examined by President Harrison and Blaine and determined to discriminate unjustly against the United States, only Colombia, Haiti, and Venezuela refused to grant the United States tariff concessions in their markets. As a result, these nation-states were subjected to the retaliatory duties specified in the act.
The United States also negotiated reciprocity agreements with the German Empire and Austria-Hungary, allowing beet sugar produced in these countries to enter duty-free in exchange for tariff concessions the two nation-states had recently accorded each other. The United States did not gain any new trading advantages in these agreements but merely maintained the market access it had formerly enjoyed. Although foreshadowing the trade strategy adopted in 1897 (discussed in Chapter 4), these two European reciprocity agreements were merely by-products of the McKinley Act: extending reciprocity to European beet and sugar producers was not considered in the legislative debates. Indeed, Senator George G. Vest (D.-Mo.) noted during the debate on reciprocity that Europe was specifically excluded because the manufactures of that region would come into direct competition with American manufacturers.28
The Wilson-Gorman Tariff
In 1892, Cleveland turned the tables on Harrison, beating the incumbent in the presidential election and returning to office for a second term. Strongly advocating the duty-free raw materials platform during the campaign, Cleveland and his supporters soon introduced the proposal in Congress for the second time.
As originally submitted to the House, the Wilson-Gorman Act of 1894 added several important raw materials to the duty-free list, including wool, coal, iron ore, and lumber. Hides and raw sugar, placed on the free list in 1890, remained untaxed in the House version of the bill. Easily passing the House, the bill encountered greater opposition in the traditionally more protectionist Senate, where the Democrats possessed only a slim majority. When the bill finally emerged from the upper chamber, after the addition of 634 amendments, only wool and lumber remained on the duty-free list.29
Of these various raw materials, wool was the most important. Dutyfree coal and iron ore would have benefited only a handful of manufacturers in New England and the Pacific Northwest, where proximity and the comparative ease of ocean transport offered foreign producers a small cost advantage. Likewise, free lumber was of concern to only a limited number of mills concentrated along the Canadian border. Sugar and hides were quite important, but the political battle over these products had already been fought under the Republicans, although oddly enough the verdict on free sugar was reversed under the Democrats in the Senate.
The woolen schedule, on the other hand, was critical;30 given its importance to the American textile industry and its pivotal position in the protectionist coalition, had the Democrats failed to obtain this important proposal their efforts would have been judged a complete failure even if the others had passed. As William L. Wilson, chairman of the House Ways and Means Committee and principal author of the bill, stated in his opening speech, “I myself believe that if every other item in this bill were stricken out, if in the wisdom of this committee every other proposed change were abandoned, yet if we could carry through a bill putting wool on the free list, and reducing the duties on woolen goods, we should make a great, beneficent, revolutionary step in the work of tariff reform that would justify all the efforts we have put forth.”31
The United States was a high-cost producer of raw wool. Even under high protection, American wool growers could not meet the domestic demand, and a significant quantity of raw wool continued to be imported. By raising domestic wool prices, however, the tariff made it economical for many small farmers in the Midwest and Northeast to keep sheep to supplement their cash incomes, although it increased costs for the manufacturer. The duty on raw wool was the only item in the tariff which yielded a real benefit to the agricultural sector and helped mitigate farm opposition to the tariff as a whole. The acquiescence, indeed support, of the woolen manufacturers for the duty on raw wool was obtained through the “mixed” tariff system. The manufacturer received both a specific duty, nominally equivalent to the tariff on raw wool but normally including an extra measure of protection, and an ad valorem duty to protect the manufacturing process. The Tariff Act of 1890, for instance, provided for a specific duty of 33 cents per pound (roughly equivalent to the tariff on raw wool) and an ad valorem duty of 40 percent on wool cloth not worth more than 30 cents per pound. Under this system of mixed duties, both the wool grower and the manufacturer could be benefited without apparent cost to the other.32 The Wilson-Gorman Act removed both the duty on raw wool and the compensating specific duty.
The duty-free status of raw wool was expected to have strong positive effects upon America’s export trade. As William C. R. Breckinridge (D.-Ky.) declared about the raw materials platform as a whole, “When we give to these men untaxed raw material, we are giving them what is necessary to conquer the world.” Not only would exports of manufactured woolen goods increase because of lower prices, but because the party believed that international markets possessed an inherent tendency to balance trade bilaterally between countries, Democrats anticipated that other exports to those countries from which the United States purchased raw wool would also increase. This assumption of bilateral balancing flowed throughout the Democratic party platform on tariff reform but can be seen most clearly in an exchange between Senator William B. Allison (R.-Iowa) and Roger Q. Mills, author of the 1888 tariff bill, a Cleveland intimate, and now senator from Texas:
Mr. Allison. But I understood the Senator to say that if we bought bronchos from Mexico we would send them flour in payment?
Mr. Mills. Yes.
Mr. Allison. I supposed that trade was conducted in a little different way; that we exported a certain amount to a certain country, and if we did not import an equivalent amount they sent to us coin or its equivalent.
Mr. Mills. They send to us the value, it may be coin, which is simply the instrument of exchange, but at some time either during that year or the next year—or perhaps they may have paid for it in the preceding year—they will pay [in tangible goods] something just in proportion to the amount we send to them. There can be no getting away from that.33
This assumption of bilateral balancing is critical to understanding the Democratic program of export expansion. Without such an assumption, the duty-free raw materials program could be interpreted as a modestly liberal trade strategy. By increasing American imports, exports as a whole would have been stimulated through the market mechanism. In a liberal trade strategy, it is immaterial which commodity imports are increased; it is the aggregate change that is important. Under the assumption of bilateral balancing, however, the duty-free raw materials program becomes more mercantilist. It was adopted not as a tool to expand exports indiscriminately but to expand exports to particular regions and countries. Under the Democrats’ assumption of bilateral balancing, the goods selected for inclusion in the program—in this case, raw wool—are of central importance. The United States primarily imported raw wool from the United Kingdom, Australia, New Zealand, Russia, South America, China, and Turkey. Nearly all of the wool imported by the United States from the United Kingdom, however, originated in one of Britain’s major suppliers: Australia, New Zealand, East Indies, South Africa, Russia, Turkey, South America, and France.34 The benefits of free wool were expected to be derived largely from increased trade with South America, the United States’s “natural” market to the south. America’s capacity for expanding exports to the other wool-producing regions was limited by high transportation costs and the colonial ties of others. Even more important, there was a natural complementarity in trade between North and South America which was not believed to exist elsewhere.35 The southern cone, the most prosperous area of Latin America,36 did not produce sufficient quantities of grains or infrastructural materials (railroad and shipbuilding equipment and materials) to meet the domestic demand, and these were the areas in which policy makers hoped to expand exports most dramatically.
Under the Wilson-Gorman Act, imports of raw wool from Latin America increased more rapidly than from any other region. Imports rose by 18 percent from Australia and New Zealand, 21 percent from China, and 13 percent from Turkey, but fell by 59 percent from Russia. Raw wool imports from Uruguay and Argentina increased by 60 and 90 percent respectively. As the Democrats expected, American exports to South America also increased dramatically. Under the Wilson-Gorman Act exports as a whole fell by approximately 15 percent, largely because of the third slump of the Great Depression between 1893 and 1897.37 Exports to Europe fell by 21 percent and those to Latin America as a whole declined by 4 percent, but exports to South America actually increased by 9 percent. Thus, despite what would now be recognized as the erroneous assumption of bilateral balancing, the Democratic policy of duty-free raw materials succeeded in its goal of expanding exports to Latin America.
Despite the free-trade rhetoric often associated with the duty-free raw materials platform, it must be emphasized that the Wilson-Gorman Act was not an assault on protection. The limited intent of the legislation, even before the Senate substantially raised the level of protection in the bill, was clearly set forth by Wilson in the Ways and Means Committee Report:
The bill on which the committee has expended much patient and anxious labor is not offered as a complete response to the mandate of the American people [for free trade]. It no more professes to be purged of all protection than to be free of error in its complex and manifold details. However we may deny the existence of any legislative pledge or the right of any Congress to make such a pledge for the continuance of duties that carry with them more or less acknowledged protection, we are forced to consider that great interests do exist whose existence and prosperity it is no part of our reform either to imperil or to curtail.38
Moreover, the average rate of tariff on dutiable imports was reduced from 48.4 percent in the McKinley Act of 1890 to 41.2 percent. Likewise, the average rate of duty on all imports was reduced from 23.7 to 20.5 percent. The magnitude of the free list remained essentially the same (see Table 3.1). Rather than being a liberal internationalist tariff or an attack on protectionism, the Democratic program of duty-free raw materials was designed to maintain the essential structure of American tariff protection.
Although nearly identical in intent and strategy, the Democratic and Republican trade expansion programs differed in one important respect: the duty-free raw materials program relied more upon international market forces (or rather, a particular view of these forces referred to as bilateral balancing), whereas reciprocity allowed the state to intervene directly in the process of exchange. Nonetheless, both sought to limit the actual increases of imports into the United States through continued protection. Both approaches also sought to expand the exports of the United States within a relatively narrow range of commodities by removing the duties on specific raw materials. Finally, Latin America, which had previously been a British trading preserve, was singled out by Republicans and Democrats as the principal outlet for the products of America’s increasingly productive economy.
This strategy was at least partly successful. During the 1880s, United States exports to Latin America averaged $67.96 million. From 1890 to 1897, these exports expanded to an average of $89.38 million per year, for an increase of 31.5 percent. During the same period, exports to Europe—still the United States’s most important market—increased only 15.8 percent and total American exports increased by 19.0 percent. Through this export drive, the United States slowly chipped away at Britain’s commercial preeminence in the region.39 Britain remained the most important trading partner for many countries in Latin America, but the United States was rapidly gaining.
This relatively successful American trade strategy was made possible by the international economic structure of British hegemony. The United Kingdom’s commitment to free trade and its self-abnegating strategy of nonretaliation created the opportunity for the United States to protect its domestic economy, exert its albeit limited market power, and expand its exports to Latin America—all at Britain’s expense. The United States carefully exploited this opportunity.
In spite of their partisan differences and continued protectionist pressure in Congress, foreign policy leaders in both parties concurred that the tariff had to be “internationalized,” or reconceptualized as an instrument of both protection and export expansion. They rapidly accomplished this task. Within three years, between Cleveland’s initial proposal and the passage of the McKinley Act, the transformation was nearly complete; the tariff would never again be simply a means of protection. That both parties adopted the same trade strategy despite their partisan differences is strong support for a systemic explanation of trade strategy.
Both reciprocity and duty-free raw materials were put forth and championed by individuals in positions of authority within the foreign policy executive. The politically mobilized groups within society as manifested in Congress were highly protectionist. There were almost no countervailing societal pressures on trade restrictions. As noted in Chapter 2, the largest and most internationally oriented industries became involved in tariff politics only when their immediate interests were directly threatened. The smaller internationally oriented industries, which benefited from a specialized market niche, generally turned to the government for assistance in export promotion, becoming an important constituency in favor of reciprocity and, to a lesser extent, duty-free raw materials.40 Yet these desires for export expansion were not manifested in Congress, in which protectionist logrolling was not only tolerated but advocated as a just principle. Not a single brick could be removed from the tariff wall, protectionist congressmen argued, for fear of bringing the entire interdependent structure down. Nor did the smaller internationally oriented producers exert significant pressure upon the government for reciprocity and duty-free raw materials; in both cases, action by the foreign policy leaders preceded popular pressure. As will be seen, in at least 1890 foreign policy leaders actually created the popular pressure necessary to bend a recalcitrant Congress to their will.
Blaine, Reciprocity, and the McKinley Tariff
James G. Blaine, a moderate protectionist, had long been interested in expanding trade to Latin America. As secretary of state in the administration of President James A. Garfield, Blaine issued invitations for an International American Conference to discuss trade and hemispheric affairs.41 These invitations were later withdrawn when, after the death of Garfield, President Chester A. Arthur replaced Blaine with Frederick T. Frelinghuysen. In his unsuccessful 1884 campaign for president against Cleveland, Blaine emphasized relations with Latin America, writing in his letter accepting the nomination that “we seek the conquests of peace; we desire to extend our own commerce, and in an especial degree with our friends and neighbors on this continent.”42 In 1889, after defeating Cleveland for the presidency, Harrison asked Blaine to preside over the State Department again not only because of his position as an “elder statesman” within the Republican party but also because of their similar views on foreign affairs, particularly regarding commerce with Latin America.43 Indeed, during the 1888 campaign, Harrison echoed Blaine’s well-known ideas on expansion, declaring that “we do not mean to be content with our market. We should seek to promote closer and more friendly commercial relations with the Central and South American States.”44
Despite Arthur’s withdrawal of the invitations to the International American Conference, support for the plan did not disappear. Cleveland reissued the invitations before the 1888 election, perhaps to demonstrate further his commitment to export expansion. After Harrison’s election, the task of organizing the conference once again fell to Blaine. In the conference, Blaine had two principal objectives: the adoption of a hemispheric arbitration treaty, which was accepted, although only seven states signed the document, and the erection of an inter-American customs union, which was rejected by the Conference in favor of bilateral reciprocity treaties between interested countries of the region. Failing in his grander proposal, Blaine then focused his attention on the concept of reciprocity.45 With the support of the conference for reciprocity, Blaine increased the costs of congressional rejection of his export expansion plans. If the legislature now failed to adopt reciprocity, it would dampen the widely applauded feelings of inter-American solidarity spawned by the meeting.
While the International American Conference was in session, the House of Representatives began debate on a protectionist and internationally passive draft of the McKinley bill. Congress proposed to take the duty off raw sugar and coffee, “necessities” of life which the United States did not produce in sufficient quantities to meet the home demand, impose duties on raw hides for the first time in twenty-five years, and raise the tariff on raw wool. The latter two actions, Blaine feared, would needlessly antagonize the Latin American nations, with whom he was then actively negotiating, and the former would take away his only bargaining chip because over 87 percent of the products of Latin America already entered the United States duty-free.46 Blaine succeeded in maintaining hides on the free list and in moderating the increased duty on raw wool, but he failed to convince Congress of the importance of using sugar, coffee, and other products as instruments of reciprocity. The House passed the McKinley bill on May 21 without provision for reciprocity. Blaine then turned his attention to the Senate, presenting an emotional plea for reciprocity before the Finance Committee. According to the newspaper correspondent W. F. Curtis, who covered the hearing,
Mr. Blaine, in the impetuous manner that is characteristic of him, declared that if sugar were placed on the free list the greatest results sought for and expected from the International Conference would be sacrificed. He declared that it would be the most inexcusable piece of folly the Republican Party was ever guilty of… [and that] he would give two years of his life for two hours on the floor of the Senate when the sugar schedule was under consideration… . [As a closing shot, Blaine threatened] Pass this bill, and in 1892 there will not be a man in all the party so beggared as to accept your nomination for the Presidency.47
An apocryphal but often repeated story follows in which Blaine, to emphasize his point during the hearing, smashed his silk top hat with his fist. Despite his efforts, and the possible loss of his hat, the Senate Finance Committee reported the bill to the full Senate with free sugar and without provision for reciprocity.
The congressional leadership resisted reciprocity for three reasons. First, Blaine could not guarantee that under his plan sugar would enter free of duty. Raw sugar was the single largest revenue item in the tariff, providing 23 percent of all tariff revenue and 13 percent of all federal government revenue in 1888. The growing federal budget surplus was the Achilles heel of protectionists; tariff reformers, including Cleveland, had used the issue to good effect. By placing sugar on the free list, protectionists hoped to reduce the surplus and remove an important issue from partisan debate.48 Fearful of leaving domestic sugar growers unprotected, however, Congress also provided a direct subsidy of approximately $7 million per year to these producers, both to solidify their political support and to reduce the budget surplus.
The congressional leadership also failed to see the importance of foreign markets. McKinley stated this position most directly. “We do not depreciate the value of our foreign trade; we are proud of it,” he argued. “It is of great value and must be sacredly guarded, but what peculiar sanctity hangs about it which does not attach to our domestic trade? … If our trade and commerce are increasing and profitable within our own borders, what advantage can come from passing it by, confessedly the best market, that we may reach the poorest by distant seas?”49
Finally, the congressional leadership appears to have believed that even if exports required stimulation, the tariff was not the proper instrument. As McKinley stated in his opening speech on the bill, “I am not going to discuss reciprocity ... I leave that to the illustrious man who presides over the State Department under this Administration and to my distinguished friend, the Chairman of the Committee on Foreign Affairs of this House [Mr. Hitt]. This is a domestic bill; it is not a foreign bill.”50
On June 4, Blaine sent the final report of the International American Conference containing the recommendation on reciprocity to Harrison, along with a letter in which he detailed the hindrances to trade with South America and demonstrated that European trade in the region was increasing but the trade of the United States was decreasing. The United States, he argued, would be the greatest gainer from reciprocity. President Harrison submitted the report and Blaine’s letter to Congress on June 19, under a cover letter in which he threw his full support behind reciprocity:
If sugar is placed upon the free list, practically every important article exported from [the Latin American] States will be given untaxed access to our markets, except wool. The real difficulty in the way of negotiating profitable reciprocity treaties is that we have given freely so much that would have had value in the mutual concessions which such treaties imply. I can not doubt, however, that the present advantages which the products of these near and friendly States enjoy in our markets, though they are not by law exclusive, will, with other considerations, favorably dispose them to adopt such measures, by treaty or otherwise, as will tend to equalize and greatly enlarge our mutual exchanges.51
Upon receiving the president’s message, Senator Hale introduced a sweeping reciprocity amendment “hastily” drafted by the secretary of state. The amendment authorized the president to admit free of duty all and any goods from any country in the hemisphere as long as that country admitted free of duty a specified list of American agricultural and manufactured items. The Hale amendment was intended only as an opening gambit and a basis for debate, although it appears to have reflected Blaine’s maximum desires.52 Taken literally, the amendment would have seriously altered the system of American protection, granting the president nearly unrestricted authority to set tariff rates, placing wool—the foundation of the protectionist coalition—on the free list, and opening the possibility of reciprocity with Canada, the only country in the region which could seriously compete with the United States in agriculture and certain manufacturing industries.
Blaine then stepped up his efforts to publicize reciprocity, taking his case directly to the public through letters and public speeches. In a widely reprinted letter written to Senator William P. Frye (R.-Me.), Blaine stated, “I do not doubt that in many respects the tariff bill pending in the Senate is a just measure and that most of its provisions are in accordance with the wise policy of protection; but there is not a section or a line in the entire bill that will open a market for another bushel of wheat or another barrel of pork.”53 Blaine’s efforts now began to meet with considerable success. At least one member of the House Ways and Means Committee from a western state and a bitter opponent of reciprocity complained that “Blaine’s plan has run like a prairie fire all over my district.”54
Meanwhile, President Harrison, through quiet, behind-the-scenes diplomacy, searched for compromise language that would allow for both free sugar and reciprocity. On July 25, Senator Nelson Aldrich (R.-R.I.), on behalf of the Senate Finance Committee, introduced an amendment, apparently drafted within the White House, which fulfilled this task.55 It was adopted with few revisions on September 10. The House continued to resist the concept of reciprocity, however, and acceded to the Senate amendment only after several conference committee meetings and seven days of Republican caucuses.56
Although Blaine did not receive everything he wanted, the final legislation did meet his most importance objectives. Sugar, coffee, tea, and even hides were made available for use in the negotiation of reciprocity treaties with no congressional limitations on the executive. Blaine succeeded, in part, because of his determination and willingness to risk alienating important members of the congressional leadership.57 Also important were the transnational coalition created in the International American Conference and Blaine’s attempt to circumvent the usual protectionist lobbies in Congress by appealing directly to the public and particularly to farmers for support. Finally, and perhaps most important, reciprocity was eventually successful because the concept, once the correct legislative language was found, was not in conflict with protection, as Blaine himself noted. Blaine could thus readily compromise on the breadth of products covered by reciprocity (that is, the difference between the Hale and final committee amendments) to secure reciprocity for sugar and coffee. Under reciprocity, both protectionists and trade expansionists could be easily satisfied.
Cleveland and the Wilson-Gorman Tariff
Cleveland had not clearly spelled out a plan for tariff reform in the 1884 election campaign, and no strong actions were taken during the first years of his administration, but he nonetheless staffed his first cabinet with committed tariff reformers.58 Cleveland was often criticized for delaying the 1887 tariff message. Yet “if he had announced this policy earlier,” Cleveland believed, “the country would not have been prepared for it.”59 Despite the years of preparation and many clues to the direction he eventually intended to take, Cleveland’s call for dutyfree raw materials startled Congress and the nation. Developed by a small group of Cleveland’s closest advisers at the president’s summer retreat, Oak View, the tariff message was recognized as a bold stroke of presidential leadership by supporters and detractors alike.60
Cleveland was also committed to expanding exports to Latin America. It was Cleveland who issued the second invitations for the International American Conference at which Blaine presided. During his second administration, Cleveland first appointed Walter Q. Gresham (1893–95) and later Richard C. Olney (1895–97) as secretary of state. Both men were committed expansionists, who—with the president’s backing—led the nation into an extremely active political role in Latin America, intervening in the Brazilian Revolution of 1894, the dispute over the Mosquito Coast in Nicaragua, and the Venezuelan Boundary Crisis of 1895–96 in efforts to limit and reduce British influence in the hemisphere and expand American commercial and political ties in the region.61
The Democratic duty-free raw materials platform shared the same objectives but was less successful legislatively than was the Republican policy of reciprocity. The 1894 tariff was drafted by William L. Wilson, then chairman of the House Ways and Means Committee and a Cleveland intimate who had participated in the 1887 Oak View conference. As passed by the House, the Wilson bill contained the full list of dutyfree raw materials requested by the president. The bill encountered considerable resistance in the Senate, which historically was more inclined toward higher duties than the lower house.62 More important for the fate of the Wilson bill, the Democrats possessed only a slim majority in the Senate, which had already been weakened by the bitter conflict over the repeal of the Sherman Silver Purchase Act in 1893. The Wilson bill, as passed by the House, removed the subsidy to domestic sugar producers but left raw sugar on the free list to avoid abrogating the reciprocity agreements signed under the McKinley Act. This proposal was strongly resisted by the two senators from Louisiana, whose votes were necessary for the passage of the bill. Their opposition, as well as that of others who desired similar treatment for the industries in their states, initiated the usual logrolling politics.63 Under the leadership of Arthur Gorman, who Wilson believed was beholden to the trusts either through bribery or financial interest,64 the Senate passed a considerably narrowed duty-free raw materials measure by a 39 to 34 margin.
The House-Senate conference committee then deadlocked on the measure. The House held to its broader duty-free raw materials bill, and the Senate—hemmed in by continued fears of defections from its slim majority—insisted upon its more circumscribed version. Cleveland, hoping to break this impasse in favor of the House bill, took the unprecedented step of intervening in the proceedings of the conference committee. On July 2, Cleveland sent a letter to Wilson which was read into the Congressional Record. In the passage most offensive to Senate Democrats, Cleveland stated:
Every true Democrat and every sincere tariff reformer knows that this bill in its present form … falls far short of the consummation for which we have long labored, for which we have suffered defeat without discouragement, which, in its anticipation, gave us a rallying cry in our day of triumph, and which, in its promise of accomplishment, is so interwoven with Democratic pledges and Democratic success, that our abandonment of the cause or the principles upon which it rests means party perfidy and party dishonor.65
By equating the House version of the bill with the “true” Democratic position on the tariff, Cleveland alienated the Senate. Had Cleveland made another bold appeal to public support, as he had done in 1887 and as Blaine successfully did in 1890, or had the president openly criticized the various lobbies seeking to influence Congress, which would have been consistent with his “clean” government stance and was so successfully used by Woodrow Wilson in 1913 (see Chapter 5), Cleveland might have succeeded in expanding support for the House bill. But by publicly criticizing the Senate, Cleveland merely strengthened the resolve of the upper house and made any compromise appear as humiliation. To pass any bill at all, the House was eventually forced to acquiesce to all of the 634 Senate amendments.66 Torn between wanting to veto the bill and desiring to keep free wool and other reforms, Cleveland eventually allowed the bill to become law without his signature.
The failure to obtain the complete duty-free raw materials program has often been attributed to the political ineptitude of the president. Specifically, Cleveland is often cited with three tactical mistakes: not calling for a special session of Congress immediately after his inauguration in 1893 to revise the tariff and, rather, expending his limited political capital on the repeal of the Sherman Silver Purchase Act; not taking a forceful leadership role early in the 1894 tariff debates; and mishandling the bill during its final weeks in Congress.67 All of these factors played a role. Just as important, however, was the nature of the duty-free raw materials platform.
Unlike reciprocity, under which both protectionists and export expansionists could be easily satisfied, duty-free raw materials were perceived as challenging the dominant mode of tariff making: the logrolling coalition of mutual noninterference in which the wool producers and wool manufacturers were key players. To institute the duty-free raw materials program, choices had to be made. Most groups could continue to receive protection, but a few industries had to be denied and placed outside the logrolling coalition.
In spite of its legislative difficulties, the Wilson-Gorman Act was not a failure as its detractors often imply.68 Frustrated by the lack of total legislative success, tariff reformers have often failed to recognize that the bill met its most important objective—free wool—and articulated and implemented a positive program of export expansion. The bill should be judged for these successes. And it is here that the Wilson-Gorman Act most closely mirrors its Republican counterpart.
The internationalization of the tariff was initiated and most forcefully urged by individuals within the foreign policy executive. Although the national trade interest and desires of the dominant social groups were not difficult to reconcile, the existing protectionist coalition nonetheless resisted the redefinition of the tariff. The success of foreign policy leaders in transforming the national trade interest into trade strategy derived from the executive’s redefinition of the tariff as a foreign policy issue, thereby legitimating the president’s involvement in tariff making; the creation of a transnational coalition in the International American Conference, which raised the stakes of a congressional rejection of reciprocity; and the mobilization of previously neutral groups, particularly the farmers, into the process of tariff making, circumventing the usual protectionist coalition.
Despite their political antagonisms and the specific differences between their respective tariff bills, both Republican and Democratic foreign policy leaders pursued the same trade strategy during the period 1887–97. Both Republicans and Democrats sought to maintain protection for the home market. And both parties sought to expand exports by removing duties on selected raw materials primarily imported from Latin America. Previously a passive instrument of protection, the tariff was internationalized or reconceptualized as a more active tool of both protection and export expansion.
This protectionist but more active trade strategy was grounded in the incentives created by the United States’s position as an opportunist within an international economic structure of British hegemony. The United States was able to fulfill its desires for protection at home and export expansion abroad only because the United Kingdom continued to pursue a liberal and passive trade strategy. As long as Britain remained committed to free trade and abstained from protection, the United States could protect its increasing returns industries, exploit its market power through an optimal tariff, and expand its trade with traditional English markets in Latin America while continuing to ship nearly half of its exports to the United Kingdom. As Britain’s interests evolved in later phases, American trade strategy would shift in response. But in the period between 1887 and 1897, the United States faced an era of opportunity in which its preferred policies could be easily obtained. The United States responded to this opportunity by free riding on free trade.
The interpretation of American trade strategy and political process developed in this chapter raises questions for more traditional, domestically oriented explanations. Many studies have focused on competition between the political parties as a source of tariff policy.69 In this view, the Republicans were the party of protection and the Democrats the party of free trade. Variations in tariff policy, then, are explained by changes in party power. The argument presented here, however, highlights the commonalities in trade strategy, which cannot, in turn, be explained by party competition.
Other studies have emphasized the importance of interest-group politics.70 Yet, as Table 2.1 demonstrates, few industries in the United States were dependent upon exports in 1889. More important, in both the reconceptualization of the tariff from a tool of pure protection into an instrument of protection and export expansion and in the specific policies designed to meet the declared and similar goals of the two admin-istrations, foreign policy leaders originated and most forcefully advocated the new policies. In the case of reciprocity in 1890, foreign policy leaders prevailed only by actively building public support and pressuring a reluctant Congress. In 1894, important beneficiaries of the dutyfree raw materials program—particularly the woolen manufacturers—actively opposed it. Thus trade strategy in the early 1890s cannot be seen merely as a reflection of competition between social interests, whether class or group based. Although interest-group pressures and party competition no doubt played a role, the internationalization of the tariff after 1887 can be better understood as a response by foreign policy leaders to the opportunities of the international economic structure.
1Tom E. Terrill, The Tariff, Politics, and American Foreign Policy, 1874–1901 (Westport, Conn.: Greenwood, 1973), examines the intense rivalry between the Democratic and Republican parties and their stands on the tariff during this period. Terrill argues that the tariff was so contentious because it was the only issue on which the two major parties could disagree without alienating their important ethnic and religious constituencies.
2For an overview of British trade policy in this era, see F. W. Hirst, From Adam Smith to Philip Snowden: A History of Free Trade in Europe (New York: Adelphi, 1925); S. B. Saul, Studies in British Overseas Trade, 1870–1914 (Liverpool: Liverpool University Press, 1960); Albert H. Imlah, Economic Elements in the Pax Britannica: Studies in British Foreign Trade in the Nineteenth Century (Cambridge: Harvard University Press, 1958); and Peter A. Gourevitch, “International Trade, Domestic Coalitions, and Liberty: Comparative Responses to the Crisis of 1873–1896,” Journal of Interdisciplinary History 8 (Autumn 1977): 281–313.
3Tariff levels varied over the British colonies. At this time, however, all possessed “open-door” or nondiscriminatory tariff structures. Thus Britain received no special tariff favors from her colonies.
4This tariff reform movement was led by Colonial Secretary Joseph Chamberlain, who proposed and championed an imperial preference scheme (see Chapters 4 and 5).
5Britain settled instead for its second choice of free trade at home and protection abroad (FT/P in the southwest cell of Figure 1.2). For Britain, the costs of inducing or coercing the United States and other European powers into pursuing greater free trade appears to have exceeded the benefits likely to be obtained from such action. For the limited efforts taken by Britain, see Timothy J. McKeown, “Hegemonic Stability Theory and 19th Century Tariff Levels in Europe,” International Organization 37 (Winter 1983): 73–91; and Arthur A. Stein, “The Hegemon’s Dilemma: Great Britain, the United States and the International Economic Order,” International Organization 38 (Winter 1984): 355–86.
6See E. J. Hobsbawm, Industry and Empire: The Making of Modern English Society, Vol. 2, 1750 to the Present (New York: Pantheon, 1968), pp. 110–26.
7Reprinted in James P. Boyd, Men and Issues of ’92 (n.p.: Publishers Union, 1892), pp. 191–92.
8France and Germany enjoyed similar opportunities. As spoilers, both countries had strong preferences for protection at home and free trade abroad (first choice = P/FT). Although according to the theory developed above, free trade would have been compromised to obtain protection at home, Britain’s free-trade policies alleviated any such necessity. As long as England and her colonies remained open, France and Germany could freely export those products in which they specialized. Likewise, under Britain’s passive trade strategy, France and Germany could erect high tariff barriers at home without fear of retaliation. For a good description of German and French trade policies in the late nineteenth century, see Percy Ashley, Modem Tariff History: Germany—United States—France (New York: Dutton, 1920).
9Between 1887 and 1890, the United Kingdom accepted on average 51.7 percent of all American exports. This average fell only slightly to 48.1 percent between 1891 and 1897 (U.S. Bureau of the Census, Historical Statistics of the United States: Colonial Times to 1970, Part II [Washington, D.C.: U.S. Government Printing Office, 1972], pp. 903–6).
10These data are from Simon Kuznets as presented in Kenneth Waltz, Theory of International Politics (Reading, Mass.: Addison-Wesley, 1979), p. 212. Years of comparison vary slightly by country.
11For a general discussion of America’s export strength, see Matthew Simon and David E. Novack, “Some Dimensions of the American Commercial Invasion of Europe, 1871–1914: An Introductory Essay,” Journal of Economic History 24 (December 1964): 591—605; and Novack and Simon, “Commercial Responses to the American Export Invasion, 1871–1914: An Essay in Attitudinal History,” Explorations in Entreprenurial History, 2d ser. 3 (Winter 1966): 121–47.
12The two best histories of American tariff policy are Frank W. Taussig, The Tariff History of the United States, 8th ed. (New York: Putnam, 1931); and Edward Stanwood, American Tariff Controversies in the Nineteenth Century (Boston: Houghton Mifflin, 1903). Both Terrill, Tariff, and Walter LaFeber, The New Empire: An Interpretation of American Expansion, 1860–1898 (Ithaca: Cornell University Press, 1963), do an excellent job of placing the tariff debates into the larger context of American foreign policy.
13Terrill, Tariff, p. 18; and William Appleman Williams, The Roots of the Modem American Empire: A Study of the Growth and Shaping of Social Consciousness in a Marketplace Society (New York: Random House, 1969), p. 106.
14See Terrill, Tariff; LaFeber, New Empire; and Williams, Roots of the Modem American Empire.
15U.S. Congress, Committee on Ways and Means, Reciprocity and Commercial Treaties, 54th Cong., 1st sess., Report 2263 (Washington, D.C.: U.S. Government Printing Office, 1896), p. 22. There was some doubt during the legistlative debate that such a threat had indeed been made. A letter published in the Congressional Record on June 29, 1894 (p. 6997), from Walter Q. Gresham, then secretary of state, stated that he was aware of no representation by Germany. Several attached newspaper articles from Germany, however, asserted or at least did not deny that a threat had been issued. Despite the confusion, the threat was clearly made as the letter quoted attests.
16Quoted in Lloyd Gardner, ed., A Different Frontier: Selected Readings in the Foundation of American Economic Expansion (Chicago: Quadrangle, 1966), p. 81.
17Ibid., pp. 93–94; Olney was discussing the case of China in particular, but his remarks are relevant for American policy in general.
18“Third Annual Message,” in James D. Richardson, comp., A Compilation of the Messages and Papers of the Presidents, 10 vols. (New York: Bureau of National Literature, 1911), 7: 5174.
19Taussig, Tariff History, provides an excellent concise review of the legislative history of the ill-fated Mills bill, pp. 252–56.
20The 1888 presidential election and its relationship to the tariff is discussed in Terrill, Tariff, pp. 132–40.
21First quote from Speech by Burrows, Congressional Record, 51st Cong., 1st sess., 1890, p. 4318; McKinley quote in ibid., p. 4253.
22U.S. Senate, Committee on Finance, Customs Tariffs: Senate and House Reports, 1888, 1890, 1894, and 1897, 60th Cong., 2d sess., 1909, Sen. Doc. 547 (Washington, D.C.: U.S. Government Printing Office, 1909), p. 244.
23See McKinley’s defense of the draw-back provision, Congressional Record, 51st Cong., 1st sess., 1890, p. 4247.
24Blaine quoted in J. Laurence Laughlin and H. Parker Willis, Reciprocity (New York: Baker and Taylor, 1903), p. 186; Hale quote in Congressional Record, 51st Cong., 1st sess., 1890, p. 9511.
25Approximately 15 percent of raw hides imported into the United States came from England. But like wool, Britain exported little of its domestic hide production. Most of the hides exported from Britain originated in the colonies, Russia, Holland (probably reexports), Germany, and the United States. As written, the reciprocity provision might also have applied to Great Britain because of its role in the hide trade. But because Britain had few tariffs and treated all nations equally, the reciprocity provision was not expected and did not apply to trade relations between the two countries.
26Laughlin and Willis, Reciprocity, p. 211.
27Ibid., p. 112.
28Congressional Record, 51st Cong., 1st sess., 1890, p. 7803.
29See Taussig, Tariff History, pp. 284–319; and Stanwood, American Tariff Controversies, pp. 296–358.
30For a history of the wool tariff, see Mark A. Smith, The Tariff on Wool (New York: Macmillan, 1926), pp. 97–169.
31Congressional Record, 53d Cong., 2d sess., 1894, Appendix, p. 194.
32Manufacturers presented considerable resistance to the repeal of the duty on raw wool. In spite of the confusion in the highly intricate wool schedule, the manufacturers felt they understood the old system (Taussig, Tariff History, p. 295; and Stan wood, American Tariff Controversies, p. 337).
33Breckinridge quote in Congressional Record, 53d Cong., 2d sess., 1894, p. 712; Allison-Mills debate in ibid., p. 5861. See also statements by Mills, p. 4025, and Palmer, p. 4068. Richard C. Edwards, “Economic Sophistication in Nineteenth Century Congressional Tariff Debates,” Journal of Economic History 30 (December 1970): 802–38, provides an insightful discussion of the economic theories underlying the Democratic and Republican platforms.
34In 1891, for instance, Britain exported 400.9 million pounds of raw wool. Of this amount, only 16.7 million pounds was produced domestically, the rest consisting of reexports (B. R. Mitchell with Phyllis Deane, Abstract of British Historical Statistics [Cambridge: Cambridge University Press, 1962], p. 194).
35The hindrances to American exports created by the lack of a merchant marine—which often necessitated shipping American goods through London—and colonial ties, as well as the complementarity of the North and South American markets were themes that ran subtly through the tariff debates of this era. These beliefs were not limited to Democrats but were fully shared by their Republican brethren. Because of this consensus, however, these important propositions were seldom discussed. They are inferred here from the congressional debates. For others who share this view that the trade expansionists focused primarily on Latin America, see Terrill, Tariff, LaFeber, New Empire, and Williams, Roots of the Modern American Empire.
36In 1895, Argentine per capita income was approximately equal to those of Germany, Holland, and Belgium, and higher than those of Austria, Italy, Switzerland, and Sweden (Carlos F. Diaz Alejandro, Essays on the Economic History of the Argentine Republic [New Haven: Yale University Press, 1970], pp. 1–66).
37See Charles Hoffman, The Depression of the Nineties: An Economic History (Westport, Conn.: Greenwood, 1970), esp. chap. 5.
38U. S. Senate, Committee on Finance, Customs Tariffs, p. 282.
39The trade data for this period are unfortunately incomplete. Data are available for selected South American nations, where Britain appears to have been most firmly entrenched. Between 1883 and 1897 the ratio of American to British exports increased from .14 to .23 in Argentina, .21 to .48 in Brazil,. 12 to .25 in Peru, and decreased from .20 to. 18 in Chile. Data for 1883 from Boyd, Men and Issues of ’92, p. 298. Recalculated by author for ratios. Data from 1897 from U.S. Congress, House of Representatives, Commercial Relations of the United States with Foreign Countries during the Years 1896 and 1897, Vols. 1 and 2, 55th Cong., 2d sess., House Doc. 483 (Washington, D.C.: U.S. Government Printing Office, 1898).
40The interests of American business groups are discussed in William H. Becker, The Dynamics of Business-Government Relations: Industry and Exports, 1893–1921 (Chicago: University of Chicago Press, 1982), pp. 1–47.
41discussed in detail by LaFeber, New Empire, p. 47, and Terrill, Tariff, pp. 45–48.
42Reprinted in James G. Blaine, Political Discussions: Legislative, Diplomatic, and Popular (Norwich, Conn.: Henry Bull, 1887), pp. 428–29.
43Most telling in this regard is a letter from Harrison to Blaine dated January 17, 1889, reprinted in Albert T. Volwiler, The Correspondence between Benjamin Harrison and James G. Blaine, 1882–1893 (Philadelphia: American Philosophical Society, 1940), pp. 44–45.
44Quoted in Terrill, Tariff, p. 134.
45For a discussion of the International American Conference and its results, see Alice Felt Tyler, The Foreign Policy of James G. Blaine (Minneapolis: University of Minnesota Press, 1927), pp. 165–90.
46See Terrill, Tariff, pp. 162–63, Tyler, Foreign Policy of Blaine, pp. 184–87, and David Saville Muzzey, Janies G. Blaine: A Political Idol of Other Days (New York: Dodd, Mead, 1935), pp. 437–51.
47Quoted in Muzzey, Blaine, pp. 444–45.
48Ibid., p. 442.
49Congressional Record, 51st Cong., 1st sess., 1890, pp. 4253–54.
40Ibid., p. 4250.
51Reprinted in Richardson, comp., Messages and Papers, 7:5509.
52On Blaine and the Hale Amendment, see Muzzey, Blaine, pp. 448–49.
53Congressional Record, 51st Cong., 1st sess., 1890, pp. 4253–54.
54Quoted in Muzzey, Blaine, p. 447, and Gail Hamilton, Biography of James G. Blaine (Norwich, Conn.: Henry Bull, 1895), p. 687. This quote has been widely reprinted. The original source, the speaker, and the context are unknown.
55On Harrison’s role in drafting the reciprocity amendment, see Harrison to Blaine, July 23, 1890, in Volwiler, Correspondence between Harrison and Blaine, pp. 111–12.
56For a more detailed examination of the passage of the reciprocity amendment, see Terrill, Tariff, pp. 159–83.
57Charles Edward Russell, Blaine of Maine: His Life and Times (New York: Cosmopolitan, 1931), p. 420.
58Terrill, Tariff, pp. 109–11.
59George F. Parker, Recollections of Grover Cleveland (New York: Century, 1909), p. 104.
60See Terrill, Tariff, pp. 109–40. Cleveland’s presidential papers contain many congratulatory letters from a wide cross-section of the American public in the weeks following his December 1887 message. He apparently saved few notes of criticism.
61These three episodes in American expansion are described by LaFeber, New Empire, pp. 210–29 and 242–83.
62The Senate is typically more protectionist than the House, even though economic interests tend to be more concentrated in the latter. Three explanations are generally given for this trend: the Senate is a more individualistic institution with weaker committee chairs, debate is unlimited, and an unlimited number of amendments are permitted on the Senate floor. See Robert E. Baldwin, The Political Economy of U.S. Import Policy (Cambridge: MIT Press, 1985), pp. 15–17; and Robert A. Pastor, Congress and the Politics of U.S. Foreign Economic Policy, 1929–1976 (Berkeley: University of California Press, 1980), pp. 162–63.
63“The truth is,” Senator Shelby M. Cullom (R.-Ill.) later declared, “we were all—Democrats as well as Republicans—trying to get in amendments in the interest of protecting the industries of our respective states.” See Robert McElroy, Grover Cleveland: The Man and the Statesman, 2 vols. (New York: Harper and Brothers, 1923), 2:111.
64 Wilson wrote that “my services on the Conference Committee on the Tariff Bill  gave me enough glimpses of [Gorman’s] conduct in that contest to assure me that he was the bribed attorney of the Sugar Trust and of other trusts or jobbers, who wished their interests taken care of in the tariff revision” (Festus P. Summers, ed., The Cabinet Diary of William L. Wilson, 1896–1897 [Chapel Hill: University of North Carolina Press, 1957], p. 60).
65Allan Nevins, ed., Letters of Grover Cleveland, 1850–1908 (Boston: Houghton Mifflin, 1933), p. 355.
66In nearly every tariff bill in American history, the conference committee has, in a very real sense, written the final version. Often, what emerged from the conference room bore little resemblance to the two bills that went in. By accepting all of the Senate amendments, the House circumvented this normal process of consensus building. It also resulted in numerous “jokers” becoming law even though they were not intended to. Senator John Sherman (R.-Ohio) remarked that “there are many cases in the bill where enactment was not intended by the Senate. For instance, innumerable amendments were put on by the Senators on both sides of the chamber ... to give the Committee of Conference a chance to think of the matter, and they are all adopted, whatever may be their language or the incongruity with other parts of the bill” (quoted in Henry Jones Ford, The Cleveland Era: A Chronicle of the New Order in Politics [New Haven: Yale University Press, 1919], p. 199).
67For example, see Terrill, Tariff, pp. 191–94; and Horace Samuel Merrill, Bourbon Leader: Grover Cleveland and the Democratic Party (Boston: Little, Brown, 1957), pp. 187–89.
68Merrill declares that the Wilson-Gorman Act was a “distinct victory for the high protectionists” (Bourbon Leader, p. 189). See also Harold U. Faulkner, Politics, Reform and Expansion, 1890–1900 (New York: Harper & Row, 1959), p. 161.
69For example, see Terrill, Tariff; Taussig, Tariff History, and Stanwood, American Tariff Controversies.
70See Becker, Dynamics of Business-Government Relations; E. E. Schattschneider, Politics, Pressures and the Tariff (New York: Prentice-Hall, 1935); and Theodore Lowi, “American Business, Public Policy, Case-Studies, and Political Theory,’’ World Politics 16 (December 1964): 677–715.