… is from page 126 of C. Donald Johnson’s 2018 book, The Wealth of a Nation: A History of Trade Politics in America:
Whatever the cause [of the Panic of 1893], a significant new Treasury deficit arose from the profligate spending by the “Billion Dollar Congress” and the loss in revenues resulting from the McKinley Tariff’s prohibitive rates.
DBx: Among those who should most urgently take note of this reality are President-elect Trump and his fellow protectionists who express their admiration for William McKinley and the McKinley Tariff of 1890 – a tariff bill, by the way, that was enacted when McKinley was in the House of Representatives, six years before he became U.S. president. That Republican-controlled Congress – the 51st – earned its nickname, according to Johnson, by being the first to have “appropriated over a billion dollars in public spending in support of business interests.” (Remember that, back then, the GOP was proudly the party of protection.)
Protective tariffs – which are the only kind that provide significant protection for domestic producers against foreign rivals – work their black magic only insofar as they keep imports out of the country. And imports kept out of the country are imports on which no tariff revenues are collected. Too many people today endorse tariffs as a means both of protecting American producers from foreign competition and of raising revenue. These people talk and write economic nonsense, as verified by the experience with the McKinley tariff.
Oh, and the political results weren’t favorable to the protectionist Republicans. In the election of 1892 the Republicans lost their majority in the House, with even Rep. McKinley losing his seat, while the free-trader Democrat Grover Cleveland returned to the White House, ousting Republican Benjamin Harrison, who signed the McKinley Tariff bill. And the GOP lost seats in the U.S. Senate. With the 1894 election, the Democrats gained control of both chambers of Congress.
Pictured above is McKinley.
