Tariffs

As a tax on imports, tariffs have been used in the United States to aid and develop the nation’s industrial and agricultural sectors since the nation’s founding. For this reason, though, politicians frequently have used the tariff to gain political advantage from certain sectors of American society. The central debate in struggles to adjust the tariff has been whether to protect manufacturing and agricultural interests by keeping the tariff rate high in order to minimize foreign competition or to aid consumers with a low tariff that would help keep the price of consumer goods low. Frequent tariff debates have contributed to longstanding struggle over the role of the federal government in the development of the nation’s economy. For President Abraham Lincoln and subsequent Republican administrations, high tariff duties became the principle strategy to aid and assist industrial development. According to President Benjamin Harrison, “the protective system. . . has been a mighty instrument for the development of the national wealth.” In contrast, the Democratic Party, as the advocate of states’ rights, frequently attacked the protective tariff and called instead for freer trade.

During the late 19th century, a protective tariff was put into place with the passage of the McKinley Tariff of 1890. But as the nation began to face growing concern over the increasing power held by the corporate elite, the tariff became a target of attack for many progressive reformers. Progressives considered protective tariffs a major factor in the consolidation of economic power that had contributed to the decline of competition in the American marketplace. Instead of protective tariffs, progressives argued for a revenue tariff that allowed the federal government to generate needed revenues but did not close the market to less-expensive imported goods. Despite advocating a progressive agenda during his presidential campaign, once in office, President William Howard Taft quickly annoyed many progressives when he signed the Payne-Aldrich Tariff Act in 1909. The chair of the Senate Finance Committee, Nelson W. Aldrich, guided through Congress a bill that drastically revised and enlarged the tariff on more than 800 items. The tariff caused an acrimonious debate to emerge, with midwestern Republicans charging that the legislation was a throwback to the days when the Republican Party served the interests of industry without question. By signing the bill, Taft quickly alienated the progressive wing of his party and caused it to split, with the formation of the Progressive Party by the next presidential election.

Shortly after entering the White House, Taft’s successor, Woodrow Wilson, aggressively attempted to address the problem of economic power that the nation had been debating for some 20 years. Topping his list of reforms was the need for tariff revision. Progressives had long advocated a reduction in tariff rates as a way to undercut the economic power of trusts, but they had not prevailed in this endeavor until Wilson took office. 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 more than 900 items, raised them on only 86, and left some 300 items untouched. 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.

With the return of Republicans to the White House in 1921, President Warren G. Harding’s administration set about restoring many traditional Republican policies, among them a tax cut and a protective tariff. Harding’s secretary of the treasury, Andrew W. Meffon, strongly advocated that both these policies be adopted shortly after the administration entered office. Worfd War I had allowed the chemical and metal industries to develop a number of innovative technologies; and they, along with Mellon, argued for protective tariffs to allow them further to develop. The Fordney-McCumber Tariff of 1922 increased tariff rates on chemical and metal products as a safeguard against the revival of German industries, which had dominated these sectors of the international economy prior to the outbreak of hostilities in Europe in 1914.

The global economy witnessed significant changes with the First World War. Accordingly, the imposition of a new protective tariff in the United States had far-reaching consequences that had not previously been imagined by the federal government. In particular, the change of the United States from a debtor to a creditor nation made the international economy increasingly dependent on American investment for economic development, As a result, the onset of economic crisis in 1929 was aggravated by the passage of yet another protective tariff in the United States in 1930. American economic policies had far-reaching ramifications. Given the large war debts and investment loans that European nations owed the United States, there was a vested interest in open movement of capital and goods throughout the international economy. The Tariff Act of 1930, also known as the Hawley-Smoot Tariff, accelerated economic decline both at home and abroad. The tariff was the result of domestic political pressures. Because the agricultural sector of the American economy experienced economic decline during the decade of the 1920s, farmers had become increasingly vocal in their demand for a protective high tariff that would reduce the amount of competition that farmers faced from foreign agricultural products.

With the collapse of the stock market in 1929, Congress responded by enacting the Hawley-Smoot Tariff in 1930, which increased the tariff on 75 foreign agricultural products and on some 925 manufactured goods. Many industrialists and farmers convinced the Republican-controlled Congress that protection was the remedy to the economic crisis that was unfolding as the United States entered the 1930s. Despite strong reservations from economists, President Herbert Hoover signed the legislation into law. With ad valorem duties from 32 to 40 percent, the highest tariff rate in American history, it effectively closed the domestic market to foreign goods. In response, the United States’ trading partners retaliated by imposing their own high tariffs to minimize competition from American products in their respective economies, and the economic crisis deepened.

Further reading: Edward S. Kaplan, Prelude to Trade Wars: American Tariff Policy, 1890-1922 (Westport, Conn.: Greenwood, 1994); Frank Taussig, The Tariff History of the United States, 7th ed. (New York: G. P. Putnam’s Sons, 1923).

—David R. Smith

Taylor, Frederick Winslow (1856-1915) management consultant

Born into an affluent family, Frederick W. Taylor grew up in comfort in Germantown, Pennsylvania. His father, Franklin, was an attorney. After spending three years in Europe, Frederick entered the Phillips Exeter Academy, a preparatory school. After he graduated, he was accepted by Harvard University, but his poor health and eyesight prevented him from enrolling. He then became an apprentice machinist and pattern maker, the beginning of a career that would lead him to fame as the father of scientific management. After finishing his apprenticeship in 1878, he took courses in mechanical engineering from Stevens Institute of Technology and earned his degree in 1883.

Taylor worked full time at Midvale Steel Company while he pursued his degree. His first position was tool clerk, the person responsible for keeping time records, and he quickly rose to become gang boss or superintendent. In this position, he became concerned over worker soldiering, or doing only the minimum amount of work required. He instilled a system of differential pay to get more out of his workmen, paying more to those who exceeded a predetermined goal. When they rebelled with minor sabotage, he made them pay for the repairs. Taylor improved efficiency by developing a command and control system based upon what he called functional foremen, or people assigned to oversee a particular task. He also began time and motion studies, using hidden stopwatches and specially designed forms, to determine the amount of work that could be accomplished during a prescribed time.

Taylor’s most famous human engineering experiment was with pig iron handlers at the Bethlehem Steel

Corporation. Working in teams, pig iron handlers lifted 92-pound pigs, or slabs of iron, from a pile and carried them onto railroad cars. When Taylor began his study, the handlers moved an average of 12.8 tons per man per day. After watching a gang work at maximum speed, Taylor determined the proper amount to be 47 tons of iron per person per day. Providing workers with precise instruction on how to perform the job as determined by time-motion studies, and motivating them with differential pay, he had workers exceed that goal. One, Henry Knolle, lifted and carried 68.3 tons of iron in one day and received in return $2.57.

Borrowing heavily from other business theorists, Taylor developed a complex method of cost accounting to complete his system of detailed analysis of every operation in a plant. Critics complained that his management system reduced workers to mere cogs in a machine. They also argued that it was simply a way of driving people beyond their endurance. Taylor’s admirers, however, noted that he called for high wages and wanted people to work smarter, not harder. The debate over Taylor’s management techniques tends to obscure his inventive nature. He held 45 patents ranging from high-speed steel cutting tools to golf clubs and tennis rackets. His influence, though, spread beyond the industry. Scientific management became the watchword for reform in city government, social agencies, and businesses, and changed the way work in general was organized.

Further reading: Daniel Nelson, Frederick W. Taylor and the Rise of Scientific Management (Madison: University of Wisconsin Press, 1980).

—Harold W. Aurand