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Wall Street History
https://www.gofundme.com/s3h2w8
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03/26/2004
The Trade Policy of William McKinley
Back in August 2001, I did a piece on the assassination of
President William McKinley and its impact on the financial
markets, but in doing some reading the other day, I realized I
haven’t done anything on McKinley’s importance in the realm of
trade.
McKinley was a transitional figure in American history, as well
as being perhaps the most underrated president in the opinion of
your editor. He was the last Civil War veteran to reach the
White House, the first to ride in an automobile, and he literally
straddled the turn of the century, having been first elected in
1896 and then reelected in 1900, serving only a few months of
his second term before meeting his demise.
Henry Adams wrote of the change in America, from rural to
metropolitan, 1870-1920, in “The Education of Henry Adams.”
“For a hundred years the American people had hesitated,
vacillated, swayed forward and back, between two forces, one
simply industrial (productive), the other capitalistic, centralizing
and mechanical the majority at last declared itself, once and for
all, in favor of the capitalistic system with all its necessary
machinery. All one’s friends, all one’s beset citizens, reformers,
churches, colleges, educated classes, had joined the banks to
force submission to capitalism.”
As a powerful Republican congressman in 1890, William
McKinley was responsible for the tariff act that bore his name,
raising duties on manufacturing goods to an average of 50%, the
highest to that time. His feeling was that barriers to cheap
foreign goods would help keep up the wages of the American
worker as well as the profits of key new businesses and that until
the U.S. could compete on a global basis, the high tariffs were
necessary to protect all the classes. [Back then, generally
speaking, Republicans were protectionist, Democrats free
traders.]
The McKinley Tariff also placed sugar on the free list, however,
because the commodity was such an important part of both the
economy and diet. But in allowing imports of sugar to flow
freely into the country in order to keep the price down, the tariff
paid a ‘bounty’ to Louisiana and Kansas sugar growers; in other
words, the first sugar subsidy.
Just as importantly, the McKinley Tariff had a third provision.
There was a ‘reciprocity’ clause, whereby the president could
unilaterally lower some duties on other nations’ goods if they in
turn lowered duties on American products. This was the first
real attempt to bring the U.S. into the world trading system.
But Democratic voters ended up soundly defeating the idea of
tariffs in the election of 1890, with Congressman McKinley
being one of the losers at the voting booth, but McKinley
rebounded (thanks in no small measure to the Karl Rove of the
time, Mark Hanna), and McKinley won the nomination and then
the election over William Jennings Bryan.
While a new tariff was enacted following his inauguration (the
Dingley Tariff) which was the highest yet, President McKinley
had been refining his views on trade. In 1895 he said, “We want
our own markets for our manufactures and agricultural products.
We want a foreign market for our surplus products We want a
reciprocity which will give us foreign markets for our surplus
products, and in turn that will open our markets to foreigners for
those products which they produce and which we do not.”
Then in 1897 he told a Cincinnati gathering, “(Free trade) should
be our settled purpose to open trade wherever we can, making
our ships and our commerce messengers of peace and amity.”
A year later America shed its isolationist past, basically for good,
with the advent of the Spanish-American War (1898-99) and
McKinley was steering the country in a new direction. He won
the election of 1900 handily, again over William Jennings Bryan,
and then in the fall of 1901 he appeared before the Pan-American
Exposition in Buffalo.
This world’s fair was the biggest of its kind to date on the
continent and it highlighted the transition from the rural past into
the future. There was the Electric Tower, for example, which
illuminated the fairgrounds each night, awing the thousands of
spectators from around the world who attended daily. From
spring to fall of that year, over 11 million made their way to
Buffalo and on September 5, 1901, an estimated 60,000 heard
President McKinley give his views on the new world. As you
read this, transport yourself back to this amazing time, and also
recognize the parallels to today and some of the issues in our
current presidential campaign.
---
Expositions are the timekeepers of progress. They record the
world’s advancement. They stimulate the energy, enterprise, and
intellect of the people; and quicken human genius. They go into
the home. They broaden and brighten the daily life of the
people. They open mighty storehouses of information to the
student. Every exposition, great or small, has led to some
onward step. Comparison of ideas is always educational; and as
such instructs the brain and hand of man
The Pan-American Exposition has done its work thoroughly,
presenting in its exhibits evidences of the highest skill and
illustrating the progress of the human family in the Western
Hemisphere. This portion of the earth has no cause for
humiliation for the part it has performed in the march of
civilization. It has not accomplished everything; far from it. It
has simply done its best, and without vanity or boastfulness, and
recognizing the manifold achievements of others, it invites the
friendly rivalry of all the powers in the peaceful pursuits of trade
and commerce, and will co-operate with all in advancing the
highest and best interests of humanity.
The world’s products are exchanged as never before, and with
increasing transportation facilities come increasing knowledge
and larger trade.
Prices are fixed with mathematical precision by supply and
demand. The world’s selling prices are regulated by market and
crop reports. We travel greater distances in a shorter space of
time and with more ease than was ever dreamed of by our
fathers. Isolation is no longer possible or desirable. The same
important news is read, though in different languages, the same
day in all Christendom. The telegraph keeps us advised of what
is occurring everywhere, and the press foreshadows, with more
or less accuracy, the plans and purposes of the nations
At the beginning of the nineteenth century there was not a mile
of steam railroad on the globe. Now there are enough miles to
make its circuit many times. Then, there was not a line of
electric telegraph; now we have a vast mileage traversing all
lands and all seas. God and man have linked the nations
together. No nation can longer be indifferent to any other. And
as we are brought more and more in touch with each other, the
less occasion is there for misunderstandings, and the stronger the
disposition, when we have differences, to adjust them in court of
arbitration, which is the noblest form for the settlement of
international disputes.
Trade statistics indicate that this country is in a state of
unexampled prosperity. The figures are almost appalling. They
show that we are utilizing our fields and forests and mines and
that we are furnishing profitable employment to the millions of
working men throughout the United States, bringing comfort and
happiness to their homes and making it possible to lay by savings
for old age and disability. That all the people are participating in
this great prosperity is seen in every American community and
shown by the enormous and unprecedented deposits in our
savings banks
We have a vast and intricate business, built up through years of
toil and struggle, in which every part of the country has its stake,
which will not permit of wither neglect, or of undue selfishness.
No narrow, sordid policy will subserve (sic) it. The greatest skill
and wisdom on the part of manufacturers and producers will be
required to hold and increase it
Reciprocity is the natural outgrowth of our wonderful industrial
development under the domestic policy now firmly established.
What we produce beyond our domestic consumption must have a
vent abroad. The excess must be relieved through a foreign
outlet, and we should sell anywhere we can and buy wherever
the buying will enlarge our sales and productions and thereby
make a greater demand for home-labor. The period of
exclusiveness is past. The expansion of our trade and commerce
is the pressing problem. Commercial wars are unprofitable. A
policy of good will and friendly trade relations will prevent
reprisals. Reciprocity treaties are in harmony with the spirit of
the times; measures of retaliation are not
Let us ever remember that our interest is in concord, not conflict;
and that our real eminence rests in the victories of peace, not
those of war. We hope that all who are represented here may be
moved to a higher, a nobler effort for their own and the world’s
good, and that out of this city may come not only greater
commerce and trade for us all, but more essential than these,
relations of mutual respect, confidence and friendship which will
deepen and endure.
Our prayer is that God will graciously vouchsafe prosperity,
happiness, and peace to all our neighbors, and like blessings to
all the peoples and powers of the earth.
[PBS.org]
---
Alas, the next day, September 6, McKinley was back at the
exposition, greeting well-wishers at a reception, when a fanatical
anarchist by the name of Leon Czolgosz, with gun wrapped in a
bandage, fired at the president from pointblank range and hit him
twice in the abdomen. McKinley said “I am not badly hurt, I
assure you,” and for a few days it appeared he would recover.
But the doctors had never located the second bullet and merely
bandaged him up. [Seriously, the lighting where he was being
treated was awful and they missed a lot.] Gangrene set in and
McKinley died on September 14, with his last words being
“Never, My God to Thee, Never to Thee.” Teddy Roosevelt
became the new president.
Sources:
“American Heritage: The Presidents,” edited by Michael
Beschloss
“The Presidents,” edited by Henry F. Graff
“America: A Narrative History,” George Brown Tindall and
David E. Shi
“McKinley,” Kevin Phillips
PBS.org
Wall Street History will return April 2.
Brian Trumbore
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