by Paul R. Spitzzeri
As the issue of punitive tariffs proposed against Canada, China and México continues to dominate the news, including the announcement today of a 30-day delay in those that were set to be imposed on imports from Canada and México, we look back to 1892 and a debate between Republican and Democratic commentators on the efficacy of tariffs in The Californian Illustrated Magazine.
The first part of the post summarized the position of San Francisco banker Richard H. McDonald, Jr. from the perspective of the G.O.P. and this second part looks at the response of Democrat Stephen M. White, a major figure in Los Angeles as well as in the Golden State and nationally for the last quarter of the 19th century.
White was born in January 1853 on a farm in Santa Cruz County owned by his father, William, a native of Ireland, as was White’s mother Ellen Russell. Though his mother, there were ties to the well-known Irish poet Gerald Griffin, as well as to White’s namesake, Stephen Mallory, best known to history as the Secretary of the Navy of the Confederate States of America during the Civil War.
William and Ellen White, who were married in 1848 in Savannah, Georgia, were among the hordes of Gold Rush ’49ers to California, though she was a rare woman among the Argonauts and Stephen was their second child. After attending a private school at Santa Cruz, he attended St. Ignatius College in San Francisco and then earned his bachelor’s degree at Santa Clara College, now the University of Santa Clara, which several members of the Temple family attended, including William W. Temple, who was there when White was.
White read (studied) law with firms in Santa Cruz and Watsonville before being admitted to the bar by the state Supreme Court in April 1874 at just age 21. Almost immediately, he migrated south to Los Angeles for reasons that have not been unearthed. He quickly garnered attention for his legal acumen as well as his considerate oratorical abilities and among this first law partnerships was with the prominent Edward J.C. Kewen, a fire-breathing public speaker and avid defender of the Confederacy.
Political ambition also came early. White ran for district attorney in the 1875 campaign, though as an independent, which raised the hackles of opponents who insisted that he was a Democrat, though his recent arrival in town and youthfulness might have led him to the pragmatic conclusion that running as an independent was the right course. F.P.F. Temple was the only candidate of the slate to emerge victorious, winning the county treasurer’s race, and White narrowly lost, but he bided his time.
In fall 1882, he won the district attorney office and served a two-year term. After another stint practicing law, he succeeded in winning a seat in the state Senate in 1886 and then was appointed lieutenant governor when that role became vacant. Though he swore to steer clear of political office after that, he became a candidate for the United States Senate for the November 1892 election and it seems more than obvious that the invitation to weigh in on the tariff question was tied to his running for that office.
Known for his civility and courtesy in political discourse, White acknowledged McDonald’s “very interesting article” and remarked that the pro-tariff writer “says much which cannot be successfully disputed,” though he quickly added that the general thrust “points to a conclusion differing radically from that which he has reached.” White then informed the reader, “I will endeavor to follow Mr. McDonald’s argument, and ascertain whether he is justified in sounding the praises of the McKinley bill, and other kindred Republican fiscal legislation.”
That 1890 tariff bill was sponsored by member of the House of Representatives and future President William McKinley (now being touted by the current administration as is the Gilded Age of the 1890s for its high tariffs and absence of an income tax, among other reasons) and McDonald welcomed it as a necessary return to policies that he stated were standard from the beginning of the republic through 1846 when the election of Democrat James K. Polk brought a change in tariff policy.
White, however, asserted that,
Much has been written during this [1892 election] campaign with reference to the policy alleged to have been advocated by Washington and other Presidents. Every student knows, or ought to know, that no such tariff as the present [McKinley act] was thought of in our earlier history. No one then dreamed that in hours of tranquility the power of the Federal Government would be deliberately used to make rich men richer and poor men poorer.
Moreover, the writer analyzed the history of the tariff and scored “the bogus infantile creations of protective Republicanism” distinguishing between the use of imposts for revenue opposed to protectionism. Alexander Hamilton, usually cited as the progenitor of the protective tariff because of his well-known report on manufactures, White went on, “did not believe in never-ending protection.”
As for the tariff reforms of 1846, the author questioned McDonald’s conclusions that they reversed economic growth, noting, with use of statistics and data, “in the ten years which elapsed between 1850 and 1860, our national wealth doubled,” while capital used for manufacturing doubled and wages increased, while it took three decades of Republican control to achieve a similar result. As to exports, White wrote that they leapt 135% in the Fifties, but only jumped 167% from 1860 to 1890, while tonnage of American ships dropped from 5.35 million to 4.42 during that period, while foreign ship totals went from almost 2.4 million to 928,000.
The conclusion was that “this certainly is an appalling condition of affairs from a business standpoint,” and White continued,
Our Republican friends blame the war for these consequences. But the war is over. It was concluded many years ago. Prominent business men of the present day were born after the scene at Appomattox [the end of the Civil War in April 1865]. There ever was a country better situated to recuperate from the effects of a conflict than the United States . . . We are promised that the McKinley bill will cure all this, but the evil exists, and it exists not only in spite of Republican legislation, but because of it.
The G.O.P. controlled the federal government for all of those years, except the 1885-1889 term of Democrat Grover Cleveland, so the writer queried, “why has it not done something for commerce for Lo! these many years?” Strikingly, White observed “there is nothing backward or bashful about the ordinary McKinleyite. He is prepared to claim everything,” yet, “the United States has progressed in defiance of Republican legislation” and attributed this to the fact that “there is no inaptitude upon the part of our people.” If other countries succeeded in unfavorable trade balances through their higher exports of goods to America, it was “simply because of pernicious legislation.”
While White also acknowledged McDonald’s touting of America’s “immense productive capacity” and agreed that “we have immense natural advantages,” he commented that “it is novel to claim that our prolific crops are the result of the McKinley bill,” which was tantamount to suggesting that good weather and healthy crops was due to the Republicans, while droughts and weak agricultural production was to be pegged to Democrats. It was also important to deny that the latter were not proponents of English-style free trade, but “a tariff for revenue only, and that means a very large collection, is the insistence of Grover Cleveland in his 1892 campaign to return to office.
While Great Britain secured 25% of all its revenue from custom imposts, “the United States, on the other hand, throws the burden of taxation upon imports” and more statistics were cited to show this, as well as a lengthy discourse on English tariff policy, including the fact that, after an 1842 act that removed tariffs on 750 items, the national revenue climbed by leaps and bounds through 1890. Again, while White noted that the natural advantages of the U.S. were significant, “we ought to make an unequaled financial showing” as well, but inequality was rising dramatically, so that up to 30,000 Americans “own half the wealth of the republic.” Moreover, “if we are to believe the Census return for 1890, pauperism has increased.”
As to McDonald’s claim that wage increases were due to protective tariffs, White countered that “labor is not protected” and “the man who is running the so-called protected industry takes the benefits of legislation.” Wage growth was higher in England, though the writer was sure to add that “ours is the greatest of nations, notwithstanding Congressional blunders” and that acknowledging facts meant that “it is aggravating for a patriotic American to see his Government adopting a policy which must retard the country’s growth” and that it was “exasperating” that England “can make such a favorable showing.” White continued,
when we look about us and comprehend all that nature has done for us, and see how little we are doing for ourselves in economic matters; when we remember that with all our freedom and all our intelligence, we are diverting vast wealth from the pockets of the masses into the coffers of selected millionaires, our sense of duty—our common sense [note the use of this term now]—must bid us pause. That we are happier and better off than any other people is poof of our great endurance and our limitless resources.
Repeating that the McKinley tariff “is admirably adapted to interfere with the growth of our commerce,” the writer provided more facts concerning the duties on steel rails were countered by the reality that labor costs per ton were higher in America than in the U.K., so that the result was that this “mere sample of the insincerity of the tariff lords” yielded an “inaccuracy of those who advocate their interests.” With wool clothing, second only to liquor in terms of revenue, “we have not sufficient raw material in this country to supply our wants” and “must buy foreign-made articles” or buy them who pushed for the McKinley tariff, “so we cannot get what we need without paying extravagant duties.”
Importantly, White commented that industrial growth had really been the by-product of the fact that “the law has increased the market price of [any given] product by taxing the consumer” and that, while “this may be beneficial to the handful engaged in the enterprise,” the problem was that “it is onerous to the people at large who are involuntarily supporting a class of persons who have no more claim upon the nation than those who raise wheat or corn or potatoes.” It was added that 25% tariffs led to much higher costs and merchants of any given article “does not sell them at a loss” so that “his patrons contribute this enormous sum” introduced by the impost “for the benefit of a few gentlemen.”
For farmers, “Republican protectionists assume to be very friendly,” but the author remarked that “the farmer pays tariff on everything he uses, but he makes no profit by the legislation” as “there is nothing in it for him.” White asserted that “the farmers through the country have been sold so often by the Republican party that they are protesting vigorously” and he continued.
Let us assume that California’s wheat crop is worth $23,000,000 in Liverpool [and its commodities market], and that its owners instead of getting gold for it make a wise bargain with their English customers and take and bring home in exchange English goods worth $25,000,000. Here, evidently, the balance of trade appearing against us is $2,000,000, and yet that sum represents gain resulting from barter in excess of the gold value of the article sold.
As for reciprocity, in which countries adjust tariff policy on imports in favor of the removal of export restrictions, White noted that it “merely gives us a taste of the benefits of freer trade,” but added that Democrats “oppose the reciprocity features of the McKinley bill . . . because it is there sought to vest in the President dangerous powers, and because the retaliatory spirit of the enactment is unworthy of the age.” Cited in this regard was George Washington in his farewell address, in which he remarked, “harmony and a liberal intercourse with all nations are recommended by policy, humanity and interest . . . our commercial policy should hold an equal and impartial hand . . . diffusing and diversifying by gentle means the streams of commerce, but forcing nothing.”
White continued that “one of the most iniquitous results of the Republican protective policy is found in the circumstance that our manufacturers sell many of the articles made by them in this country to foreigners far cheaper than they do to the tax-ridden American.” An agricultural implement maker, Arthur B. Farquhar, stated that he believed in modifying the tariff “as the free importation of raw materials would enable him to compete with British manufacturers anywhere,” whereas he was currently selling his farm tools in Central and Southern America at a quarter less than to customers in this country. White reproduced a table showing that a Michigan firm in the same industry sold its products to Americans at up to double what Spanish customers paid.
As he concluded, the writer remarked that Republicans in the California legislative session of 1891 passed a joint resolution seeking removal of tariffs (called a tax in the document) on several items, but this was rejected by Congress, while Democrats in the national legislature sought a similar abolishment on an item, to no avail. White then quoted President Andrew Jackson, who protested,
The corporations and wealthy individuals who are engaged in large manufacturing establishments, desire a high tariff to increase their gains. Designing politicians will support it to conciliate their favor, and to obtain the means of a profuse expenditure for the purpose of purchasing influence in other quarters . . . Do not allow yourselves, my fellow citizens, to be misled on this subject. The Federal Government cannot collect a surplus for such purposes without violating the principles of the Constitution, and assuming powers which have not been granted. It is, moreover, a system of injustice, and if persisted in, will, inevitably, lead to corruption, and must end in ruin.
With that, White simply summarized: “Republican protection is a fraud.” While much has changed in the last 130 or so years in terms of the economic environment in the United States and England is not the target of tariff threats as Canada, China and México are, with the European Union also in consideration by the current administration, there is much in these essays well worth pondering now for historical perspective.
As for the author, he won his seat in the U.S. Senate and the 11 November 1892 edition of the Los Angeles Express included an interview with him in which he observed that “I think the tariff will be reduced to as near a revenue basis as is practicable” and that “I think very clearly the vote of the nation,” which also returned Cleveland to a second, non-contiguous term, the only such until the current president, “is a protest against high tariff and the McKinley bill.” Commenting that he expected “a period of unparalleled prosperity,” though a major depression was just around the corner, White concluded, “I do not think the tariff was the sole cause of the victory, but it was the largest structure.”
The senator’s work to select San Pedro and Wilmington, not the Southern Pacific’s Santa Monica property, as the focus on massive federal expenditures for what is now the Port of Los Angeles, made him best known during his era and afterwards. After his death, at just age 48, in 1901 from a gastric ulcer, a statue was erected in front of the County Courthouse and then moved to San Pedro, where it stands now, though White’s anti-Chinese sentiments are also a part of his legacy, as noted by the Los Angeles Explorers Guild.
We are going to return soon with another tariff-related post regarding the 1928 presidential election between Democrat Al Smith, the governor of New York, and the victor, Republican Herbert Hoover, the incumbent Secretary of Commerce, so keep an eye out for it!