Shortly after entering the White House, WoODROW WlL-SON attempted to address and remedy the problem of economic power that the nation had been debating off and on for some 20 years. The Democratic Party had not yet held the office of president in the 20th century and it was hungry for a variety of reforms. Topping its list of initiatives was tariff reform. President Wilson actually convened a special session of Congress to tackle immediately what he perceived was one of the nation’s most pressing needs, lowering the tariff. Progressives had long advocated a reduction in tariff rates as a way to undercut the economic power of trusts, but they had not succeeded in trimming tariff rates before Wilson took office in 1913. As one of his first policy efforts, Wilson pushed for a lowering of the tariff rates in the United States. From the prevailing average of 40 percent, the Underwood-Simmons Tariff Act of 1913 pared rates down to an average of 25 percent. The legislation reduced the import duty on over 900 items, raised them on only 86, and left some 300 items untouched. Beyond reducing the overall duty on imported products, the Underwood-Simmons Tariff Act also expanded the list of commodities that could now enter the United States duty free. More than 300 items were now put on this list, including sugar, wool, iron ore, steel rails, agricultural implements, cement, coal, wood and wood pulp, and many critical farm products. Because the new tariff legislation especially targeted trust-dominated industries, the Democrats strongly felt that this new tariff would spur competition and reduce prices for consumers by opening protected American markets for foreign products.
The other pressing issue that Wilson had to address as he sought lower TARIFFS was the fact that the federal government stood to lose a significant source of revenue. Accordingly, the Wilson administration supported a companion initiative to raise the federal government’s revenues through domestic programs. Accordingly, Wilson pushed for the adoption of the nation’s first federal income tax, which became law when the states ratified the Sixteenth Amendment in 1913. The income tax adopted in 1913 made good on the progressive pledge to reduce the power and privileges of wealthy Americans by requiring them to pay taxes on a greater percentage of their income than the poor. Shortly into his first administration, President Wilson had achieved two longtime goals of the Progressive movement: tariff reduction and a graduated income tax.
See also TRADE, FOREIGN.
Further reading: Edward S. Kaplan, Prelude to Trade Wars: American Tariff Policy, 1890-1922 (Westport, Conn.: Greenwood, 1994).
—David R. Smith
World History
