Republicans were the tariff party first, from Lincoln to McKinley

Name the party of high tariffs in the nineteenth century. Go on, I'll wait. Most people, trained by the arguments of the last few decades, will guess the Democrats, and most people will lose the bar bet. The Republican Party was founded in the 1850s, came to power in 1861 and spent the next seventy years as the party of the protective tariff, standing for high duties to protect American factories and workers. The party of Jefferson and Jackson, the Democrats, spent that time as the party of low duties and "a tariff for revenue only."

This matters now for two reasons. If you are a Republican who thinks tariffs are un-Republican, you need to know that you are arguing against the party's founding generation. And if you are one who thinks that free trade was always a betrayal, you need to know that the free-trade chapter has deep roots of its own and many Republican fathers. The party has held both positions at different times, usually for the same reason: whichever it believed would put American workers and American industry on top. Let me tell the story in order.

Before the party: Hamilton, Clay and the American System

The very first tariff is older than the Republican Party by sixty-five years. The Tariff Act of 1789, signed on July 4 by President George Washington, was among the first major laws passed by the new Congress. The Constitution had given Congress the power to lay duties in Article I, Section 8, and the new government needed money. In those days there was no income tax, so tariffs funded the government.

Then came the argument over what tariffs were for. In December 1791 Treasury Secretary Alexander Hamilton sent Congress his Report on Manufactures, which made the case that duties could do more than raise money: they could nurture young industries until they could compete. After the War of 1812, which showed how dependent the country was on foreign supplies, Congress passed the Tariff of 1816, usually counted as the first openly protective tariff. Henry Clay of Kentucky then turned the idea into a program he called the American System, which combined a protective tariff, a national bank and federal spending on roads and canals.

Clay led the Whigs, and the young Abraham Lincoln was a Whig who admired him. It was an inheritance, and when the Whig Party fell apart in the 1850s over slavery, many of its members, Lincoln among them, moved to the new Republican Party. They brought their economic ideas with them.

The South, meanwhile, bought manufactured goods and sold cotton abroad, and it came to see tariffs as a tax on planters for the benefit of Northern mills. The Tariff of 1828, which opponents called the Tariff of Abominations, drove South Carolina to threaten nullification in 1832, and the crisis was defused by a compromise in 1833 that Clay helped write. Later Democratic Congresses cut rates, including the Walker Tariff of 1846 and the Tariff of 1857. The split was set: protection in the North, low duties in the South.

1860: a party and a plank

The Republican Party was organized in 1854, in protest against the spread of slavery, and ran its first presidential candidate, John C. Frémont, in 1856. By 1860 it needed to win states like Pennsylvania, where iron and coal interests wanted protection, and the platform was shaped accordingly. It included a plank saying that revenue from duties on imports should be adjusted to encourage the development of the industrial interests of the whole country. Lincoln won that November.

A word of caution about quotes. You will find lines on the internet attributed to Lincoln about the protective tariff, and some are not reliably sourced. I will not repeat any of them here. What can be documented is the Whig lineage, the party platform and the legislation that followed.

The Morrill Tariff and the war

Here is a detail that surprises people. The tariff that changed everything was signed not by Lincoln but by his predecessor, James Buchanan, a Democrat. The Morrill Tariff, named for Representative Justin Morrill of Vermont, was signed on March 2, 1861, two days before Lincoln took office. It passed the Senate only after Southern senators began leaving for the Confederacy, which removed the opposition. It raised duties on a long list of goods, and the Republican Congress raised them again during the war with measures in 1862 and 1864.

The war reshaped the system. To pay for the fight, Congress turned to new taxes as well, creating the first income tax in 1861 and the Bureau of Internal Revenue in 1862, along with excises on many goods. Most of those wartime taxes were later repealed, but the high tariffs stayed. For most of the rest of the century, customs duties plus excise taxes on liquor and tobacco funded the federal government. Think about what that means. For generations, Americans paid for Washington mostly through what they bought at the store, not through what they earned. The tariff was not an exotic tool. It was the tax system. For a sense of what that did to the government's habits, see How Washington learned to budget, from the 1921 act to the 1997 deal.

The Gilded Age: protection as the party creed

From the 1860s through the 1890s the tariff was the Republican answer to most economic questions. The argument went like this: American workers earned higher wages than European workers, so a wall of duties kept cheap foreign goods from undercutting them. Northern manufacturers backed it, many workers in protected industries backed it, and the party built its coalition around it.

The Democrats pressed the counter-argument, and one of their presidents made it the centerpiece of his administration. After the war the tariff was bringing in more money than the government needed, and in his December 1887 annual message Grover Cleveland devoted the whole address to calling for lower duties. The 1888 election turned on it. Cleveland won more popular votes but lost the Electoral College to Benjamin Harrison, who ran on protection. The result was the McKinley Tariff.

The best case against the old tariff creed

Fairness requires that I state the Democrats' argument at its strongest, because it was a good one. A farmer in the Midwest or the South sold his wheat or cotton at a price set in the world market, where he competed with growers in other countries. But he bought his plow, his cloth and his nails at prices lifted by the tariff. In effect, the argument went, he paid a hidden tax to the manufacturer and earned no protection of his own. Take a hypothetical farm family that buys $1,000 a year of protected goods, at prices a fifth higher than they would be without the duty. Without the duty the same goods would cost $1,000 divided by 1.2, which is about $833.33. The family pays about $166.67 more, every year, and the money does not go to the Treasury alone. A share of it goes to the price of the domestic product, which is the point of the duty and also the complaint.

Critics added that a high wall let big firms in protected industries band together and keep prices up, and that the surplus the tariff produced in the 1880s encouraged spending. The Republican answer was that the wall protected the wages of the men who bought the farmer's food, that a wealthy industrial city is a better customer than a poor one, and that the real alternative was dependence on British manufacturers. Both sides were making arguments about who bears the cost and who gets the benefit. That has not changed. What has changed is that the question now comes with a modern income tax and a complicated global supply chain attached.

1890: the McKinley Tariff

William McKinley of Ohio, chairman of the House Ways and Means Committee, gave his name to the tariff Congress passed in 1890, signed by President Harrison on October 1. It raised duties on many manufactured goods to some of the highest levels yet, and it added a reciprocity feature championed by Secretary of State James G. Blaine, which allowed the President to take action against countries that did not offer favorable terms to American exports. Blaine and McKinley were each, in their way, early practitioners of what we would call managed trade; see free trade, tariffs or managed trade, three theories side by side.

The voters were unimpressed. Republicans took a beating in the 1890 midterms, and McKinley himself lost his House seat. It is a useful lesson for any politician who thinks a tariff is a free source of popularity: when prices rose, so did the anger. Cleveland came back in 1892 and Congress passed the Wilson-Gorman Tariff of 1894, which cut rates somewhat, though not as much as reformers wanted.

1897: the Dingley Tariff and a changing McKinley

McKinley won the presidency in 1896, and in July 1897 he signed the Dingley Tariff, named for Representative Nelson Dingley of Maine, which raised duties again. By this time the Republican doctrine of protection looked unshakable.

But watch the man. On September 5, 1901, in a speech at the Pan-American Exposition in Buffalo, President McKinley said that the period of exclusiveness was past, and he urged reciprocity treaties that would trade market access abroad for market access at home. His reasoning was that American industry had grown strong enough to sell to the world, so the country should open its doors a little in exchange for others opening theirs. The next day he was shot. He died on September 14, and the speech became a kind of testament. The champion of high tariffs had ended his career asking for a trade strategy, not simply a wall. That is the managed-trade strand of our history in embryo.

The long fracture: Taft to Hoover

The party did not stay united. In 1909 the Payne-Aldrich Tariff, signed by William Howard Taft, fell short of the reductions that many Republicans in the Midwest had expected, and the argument split the party between its Old Guard and the insurgent progressives. In 1913, under Woodrow Wilson, Congress cut tariffs and in the same law imposed an income tax. That was possible because the Sixteenth Amendment, ratified in February 1913, had authorized it, and it ended the age when the tariff was the main support of the federal budget.

The Republicans raised duties again with the Fordney-McCumber Tariff in 1922 and went further in 1930 with the Smoot-Hawley Tariff, the subject of Smoot-Hawley, 1930, what the tariff did and what it did not do. After the Depression, the Democrats, under Franklin Roosevelt and Secretary of State Cordell Hull, took up the cause of trade agreements, passing the Reciprocal Trade Agreements Act of 1934. The parties had traded places on trade.

The free-trade turn

The postwar world pushed American leaders of both parties toward lower barriers. In 1947 the United States and twenty-two other countries signed the General Agreement on Tariffs and Trade, the GATT, which began a series of rounds of mutual tariff cuts. Republicans under Dwight Eisenhower accepted the trend, and in the following decades the party's mainstream embraced the case for open markets, an idea tied to anti-communism, to the principle of limited government and to the writings of conservative economists.

The high point of the free-trade chapter came with the North American Free Trade Agreement. The negotiation began under a Republican, George H. W. Bush, who signed the agreement with Canada and Mexico in December 1992. It was approved by Congress in 1993 under Democratic President Bill Clinton, with most House Republicans voting in favor, and took effect on January 1, 1994. The earlier Canada deal and the later USMCA are laid out in From the 1989 Canada deal to USMCA, a timeline of North American trade.

What this history proves and what it does not

Be careful with the lessons. Here is what the record supports.

1. Protection is an old Republican tradition, not a foreign import. From the 1860s to the 1930s it was the party's mainstream position, and the founders of the party believed it.
2. Free trade is also a Republican tradition, and a newer one. The GATT, the postwar order and NAFTA all had large Republican support.
3. The party's real consistency is in its aim, not its method. Each generation asked what would build American industry and raise American wages. They gave different answers in 1890, 1930 and 1993.
4. History cannot settle the policy question. That something was done in 1890 does not tell you whether it should be done now. The economy was different, the government's revenue needs were different, and so were America's trading partners. The practical questions, such as who pays and who benefits, are still answered in who really pays a tariff, following the dollar from dock to shelf and seven trade myths both parties repeat, tested against the record.

The bar-bet is a good one to win. The better use of it is to remind both camps in our party that the other one is not a heresy. Both are family.

The bottom line

• The Republican Party was founded in the 1850s on a Whig inheritance of protection, won in 1860 with a platform that backed it, and stayed the tariff party into the 1930s.
• Tariffs were once the main source of federal revenue. The income tax, made constitutional by the Sixteenth Amendment in 1913, ended that.
• McKinley raised tariffs in 1890 and 1897, then asked for reciprocity at Buffalo in 1901. Even the champion of protection wanted bargaining.
• After the Depression and the Second World War, Republicans moved toward free trade through the GATT and NAFTA. The party has held both views.
• When someone says a tariff is "un-Republican" or free trade is "not conservative," ask them which century they mean.