McKinley Tariff

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The McKinley Tariff of 1890 was what set the average ad valorem tariff rate for imports to the United States at 48.4%, and protected manufacturing. Its chief proponent was Congressman and future President William McKinley. In return for its passage, the Sherman Silver Purchase Act was given Republican support. It raised the prices in the United States under Benjamin Harrison, which may have cost him his presidency in the next elections.

The tariff was detrimental to the American people, since it acted to raise the price of goods purchased; anything being bought from overseas which now became more expensive than a local product rose in price to that of the local product, and anything bought from overseas which even with its price increase was still cheaper than a local product had to be bought at the new, higher price. This made the mass of people significantly less wealthy in real terms since everything cost more. This tended to cause an increase in wages, as people required more pay to maintain proper renumeration for their skills, which in turn increased the cost of producing local goods, since the cost of labour rose. This in turn acted to make people poorer.

The tariff was in fact detrimental to the American farmers. Not only did the tariff drive up the prices of farm equipment (since wages and imported components were more expensive), it also failed to halt sliding agricultural prices, possibly since there wasn't much competition with imported goods since American agricultural produce was already cheaper than imports.

Adam Smith had already written in The Wealth of Nations in 1776 a full explanation of this behaviour and his work was very well known at this point. McKinley's behaviour was unscientific and doomed to failure.

The following agrarian resentment would give rise to the Free Silver movement and the Populist Party.

Concise Statement: The McKinley Tariff Act raised tariffs and brought new trouble to farmers, who were forced to buy high-priced, protected products from American manufacturers but sell their own products into highly competitive, unprotected world markets. This upset many rural voters, who voted many Republicans out of office in the next congressional elections (1890). [The American Pageant, 12th edition].

References

• Ayala, César J. (1999). American Sugar Kingdom: The Plantation Economy of the Spanish Caribbean, 1898-1934. The University of North Carolina Press. ISBN 0807847887. .