Wilson Believed That High Tariffs

Wilson Believed That High Tariffs: Unpacking a Historical Misconception

The phrase "Wilson believed that high tariffs" immediately conjures an image of a protectionist American president, yet it stands in stark contrast to one of the most significant economic reforms of the early 20th century. This statement is, in fact, a profound historical misreading. Woodrow Wilson, the 28th President of the United States, was not a proponent of high tariffs; he was their most formidable and successful critic during his era. His belief was diametrically opposed: he viewed high protective tariffs as a corrupt, inefficient, and fundamentally unfair system that enriched a select few at the expense of the many. To understand Wilson is to understand his crusade for tariff reduction, a fight that defined his 1912 presidential campaign and culminated in the landmark Underwood Tariff Act of 1913. This article will dismantle the misconception, exploring Wilson's actual philosophy, the political and economic battle over tariffs, and why his victory reshaped American fiscal policy for a generation.

The Gilded Age Context: The Tariff as America's Political Godfather

To grasp Wilson's opposition, one must first understand the political and economic landscape he inherited. For decades following the Civil War, the protective tariff was the central, unchallenged pillar of Republican Party ideology and national policy. Its stated purpose was to shield burgeoning American industries from foreign competition, fostering "infant industries" and ensuring high wages for American workers. In practice, however, it had evolved into a complex web of duties that created vast monopolies (trusts), led to inflated consumer prices, and generated enormous federal revenues that funded a growing government without the need for a broad-based income tax.

The tariff was more than economic policy; it was the nation's primary political engine. It created powerful alliances between industrialists in the Northeast and Midwestern farmers (who believed high tariffs protected their markets), while simultaneously drawing the ire of the South and West, which saw it as a "tax on the poor." The system was riddled with perceived corruption, with specific duties seemingly crafted to benefit particular companies rather than any national principle. By the early 1900s, even some progressive Republicans, like Theodore Roosevelt, began to chafe at its excesses, but the party's core remained committed. It was within this entrenched system that Woodrow Wilson, a former academic and Governor of New Jersey, launched his assault.

Wilson's Intellectual Journey: From Academic to Crusader

Wilson's stance was not a sudden political calculation but the culmination of a long intellectual development. As a professor of political science and later president of Princeton University, he studied and wrote about American government. His seminal work, Congressional Government (1885), critiqued the concentration of power and the undue influence of special interests—a theme he would later apply directly to the tariff. He saw the tariff schedules not as a coherent economic plan but as a "most monstrous and illogical piece of legislation," a product of logrolling (trading votes for specific duties) and special pleading.

His perspective was deeply moral and democratic. He argued that high tariffs violated the principle of equal opportunity by legally privileging certain manufacturers and regions. They were, in his view, a form of "legalized robbery" from the general consumer to the favored producer. Furthermore, he believed they fostered anti-competitive trusts by sheltering domestic companies from the pressure of foreign competition, allowing them to raise prices without fear. For Wilson, tariff reform was the essential first step in dismantling the corrupt alliance between big business and big government that he termed "theinvisible empire." His 1912 campaign platform placed "tariff revision" at the very top, framing it as a fight for the "plain people" against the "interests."

The Step-by-Step Assault: From Campaign to the Underwood Tariff

Wilson's path to lowering tariffs was a masterclass in political strategy and legislative persuasion, unfolding in clear, decisive steps:

1. The Mandate: Wilson won the 1912 election in a landslide, in part due to a divided Republican Party. He interpreted his victory, and the concurrent election of a Democratic majority in the House and a more progressive Senate, as a clear public mandate for tariff reform. He made it the singular, non-negotiable focus of his first year in office.

2. The Blueprint: His administration, led by Secretary of the Treasury William Gibbs McAdoo and House Majority Leader Oscar Underwood, crafted a bill that was revolutionary in its simplicity and transparency. It moved away from the complex, protective schedules of the past. The centerpiece was a drastic across-the-board reduction in average tariff rates, from approximately 40% to around 25%.

3. The "Fighting" Chairmanship: Wilson took the unprecedented step of personally appearing before a joint session of Congress to lobby for the bill. More critically, he worked behind the scenes to ensure the House Ways and Means Committee, which writes tax bills, was chaired by a staunch reformer. He successfully pushed for the removal of the old-guard chairman and ensured the committee hearings were public, exposing the lobbyists and special pleas to the light of day.

4. The Compromise and The Victory: The bill faced fierce opposition from industrialists and their congressional allies. A protracted battle in the Senate, led by "stand-patter" Republicans and some Democrats, resulted in a slightly higher final rate than the House version, but the core reductions remained intact. The Underwood Tariff Act, signed in October 1913, was the most significant downward revision of tariff rates in over 50 years. Crucially, it also included a federal income tax (made possible by the recently ratified 16th Amendment) to offset lost revenue, fundamentally changing the relationship between the federal government and the citizenry.

Real-World Impact and Examples

The impact of the Underwood Tariff was immediate and multifaceted. The most direct effect was on consumer prices. For instance, the tariff on imported wool was slashed from 35% to 25%, leading to a noticeable decrease in the price of wool suits and blankets. Similarly, the reduction in the sugar tariff from 40% to 25% made this staple more affordable for American families. While the tariff did not eliminate all price differences, it significantly narrowed the gap between domestic and foreign goods, giving consumers more choices and putting downward pressure on domestic producers.

The tariff also had a profound impact on specific industries. The American wool industry, which had long relied on high tariffs for protection, faced increased competition from cheaper imported wool. This led to some short-term pain for domestic producers but also spurred innovation and efficiency in the long run. The steel industry, another major beneficiary of high tariffs, saw its profits squeezed as imported steel became more competitive. However, the industry adapted by focusing on quality and efficiency, ultimately becoming more globally competitive.

Beyond the economic impact, the Underwood Tariff had significant political and social implications. By reducing the power of special interests and exposing the lobbying process to public scrutiny, it helped to restore faith in the democratic process. It also laid the groundwork for future progressive reforms, demonstrating that the federal government could be a force for positive change in the lives of ordinary Americans.

The Underwood Tariff was not without its critics. Some argued that it did not go far enough in reducing tariffs, while others claimed it went too far and threatened American jobs. However, its overall impact was undeniably positive. It helped to lower prices, increase competition, and reduce the influence of special interests. It also set a precedent for future tariff reforms and demonstrated the power of progressive politics in the early 20th century.

In conclusion, the Underwood Tariff was a landmark achievement of the Progressive Era. It represented a bold attempt to reform a corrupt and outdated system, and its impact was felt across the American economy and society. While it was not a perfect solution, it was a crucial step towards a more open, competitive, and democratic economy. The legacy of the Underwood Tariff continues to resonate today, reminding us of the importance of fair trade, consumer protection, and the power of progressive politics to effect meaningful change.