The Difference Between William McKinley’s American System School of Protective Tariffs and Today (Third Instalment)Part III of Make Whose America Great Again? Series
You can read the First Instalment here (which focuses on Mathew Carey and Henry Clay as the founders of the American System of protectionism and their opposition to the British system of free trade), the Second Instalment here (which focuses on Lincoln and his advisor Henry C. Carey, son of Mathew Carey, and their role in the revival of the American System). This Third Instalment will focus on McKinley’s role in this American System of protectionism and how it differs from today’s application of protectionism by the Trump Administration.
William McKinley was the last of the Civil War veterans to be elected President. As already discussed in this series, Abraham Lincoln, along with his economic advisor Henry C. Carey (son of Mathew Carey, one of the founders of the American System of protectionism) had revived the American System after a slew of pro-free trader, pro-Wall Street Anglophile presidencies over two decades which had allowed for the rise of traitorous factions within the United States including such names as the Boston Brahmins, the Essex Junto, and the Anglophile families of the Lowells, Cabots, Higginsons and Coolidges. All of these groupings would actively work to break apart the United States and were in favor of the British System school of economy. These traitorous acts reached a climax in 1861 and the US Civil War was launched.
In fact, contrary to what we have been told, the US Civil War was at its core an economic war, between the America System and the British system, to which the latter’s natural outcome was cheap labor and slavery. Thus, slavery was the direct outcome of an economic policy, British free trade, which forced the world to remain as raw material exporters to the empire and suppliers of cheap labor. Hence, the slave-based cotton plantations of the South in service to the cotton textiles of Britain. After the assassinations of Lincoln and Garfield, McKinley would be the last president from this generation of the Old Guard who understood this fight quite intimately, that is, the fight between the American System vs that of the free trade, pro-Wall Street British System. In a speech in Boston, Massachusetts on October 4, 1892, William McKinley stated:[1]
In other words, under a protectionist system, the price of goods will be higher for the very reason that labor is NOT cheap. With higher wages people can afford goods that are slightly more expensive. With cheap labor, everything becomes cheaper, the worker and the good, whereas, the protective system values a skilled workforce and the quality products it will produce. Frederick Douglass, a man who was born into slavery in the South and rose to become an advisor to Abraham Lincoln, had similar criticism of the system of free trade that had been forced onto the world by the British Empire:
William McKinley served as a member of the U.S. House of Representatives from Ohio from 1877-1884 and 1885-1891. On May 18, 1888 McKinley made a speech in Congress opposing the Mills Bill (1888) proposal sponsored by the Democrats to significantly reduce tariff rates (by up to 50%). It was sold to the public as a benefit to consumers and would lower the cost of living. Grover Cleveland was president at the time (1885-1889).
In this speech McKinley goes over the difference between a revenue tariff (what was being proposed by the Democrats at the time via the Mills Bill) and a protective tariff (from the American System school):
McKinley defines what a revenue tariff is, which is “a tariff or tax placed upon such articles of foreign production here as will produce the largest revenue with the smallest tax.” In order to achieve this McKinley explains, you need to largely increase the amount you are importing. Such that the more you import, with the smallest tax or duty, the larger the revenue you can generate off of this tax. For example, if you tax 10 cents per can of Coca Cola, the higher the number of cans you import, the more revenue you will make. As we should be able to appreciate already from this series, that is the very opposite of what you want to accomplish if you want your manufacturing home base and industries to grow. You want to use your domestic consumer base to support your own economy by buying the goods you can already produce at home and to increase investment in your manufacturing capabilities such that your consumer base is supporting the economic foundation of the nation. This way there is more wealth to invest in the people’s standard of living and goods ultimately become more affordable and of a higher quality (i.e. the more streamlined things become the higher the efficiency and the lower the cost). McKinley makes the point that a revenue tariff does not differentiate between a good that is made at home vs abroad which is made clear in the Mills Bill Tariff proposal he is criticizing. He gives the example (from the Mills Bill itself) of wool, which the Americans can produce enough at home to meet their needs. However, wool is a product that is not being tariffed (under the proposed Mills Bill) as an imported good despite great competition from foreign markets, whereas sugar is tariffed when Americans can only produce one-eleventh of their needs. Thus, with this sort of tariff application, the consumer is actually paying more. By tariffing goods, like sugar, that cannot be produced sufficiently at home the consumer has nowhere to buy the product except as an import. It is effectively a tax, NOT a real protective tariff to boost domestic growth. Meanwhile such lack of differentiating products made at home vs abroad will work to destroy domestic industries such as the wool industry. Thus, it should be clear here, that not all tariffs work as protective tariffs, and are not necessarily going to be beneficial to the domestic economy. Simply invoking the word “tariff” is not some sort of magical formula that will save American industry without looking into the details of how it is in fact being applied. McKinley ends with “A large revenue would come from this source [foreign], because the foreign would take place of the domestic production. This duty [tax] is a revenue one, and gives no protection whatever to the home producer…if produced at home a revenue tariff would soon destroy their production.” Thus, McKinley makes it quite clear, a revenue tariff has the same outcome as that of free trade, which is to destroy home production. The revenue generated is really going into a small number of pockets while domestic industry and the consumer base pay the real heavy cost of a revenue tariff. Unfortunately, despite President Trump trumpeting his desire to revive McKinley style protective tariffs, his “tariff everything” approach to American “protectionism” is in fact doing the very opposite and is using a revenue tariff application rather than that of a true protective tariff as the actual words of McKinley himself testify to. It is like saying you are making big bucks for America by taxing home producers and consumers, it is counter-productive for growth and lowering cost of living. Suffice to say, that a revenue tariff will always work at the cost of domestic production and the consumer base. It also showcases that despite US Secretary of Treasury Scott Bessent repeating ad nauseam that the American people are not being taxed, and will not be paying higher prices with the “tariff everything” approach, McKinley has made it crystal clear, that a revenue tariff is in fact a tax, and yes, the consumer will be paying more. McKinley continues in his speech to Congress in 1888 to define what is a proper protective tariff (as opposed to the Mills Bill revenue tariff):
Thus, McKinley specifies that a protective tariff only places a duty on foreign imports that compete with domestic products. Except for luxury goods, essential foreign imports that are non-competing with a domestic product, go tariff free, so that the domestic consumer may have access to such goods, such as coffee, tea, spices, and drugs without being charged a duty. McKinley states “Articles of common use, comfort, and necessity which we can not produce here it sends to the people untaxed and free from custom-house-exactions.” McKinley goes on to state on what is a protective tariff:
In other words, the mission and purpose of the protective tariff is to protect the home industries and domestic workforce including a decent wage, its mission is not to simply generate “revenue” through a form of taxation on imported goods. To make this clear, let us return to the example of sugar during this time. The United States was producing sugar, but only 1/11 of its domestic needs. So, as McKinley makes the point, it does not make sense to tariff sugar since they did not produce enough to meet the domestic demand. Thus, it is not enough that you are producing the product, but that you can meet the domestic demand that effects how a protective tariff should function. In other words, some industries will be able to increase production to meet the demand and thus protectionism greatly benefits such industries. However, some industries are unable or are many years behind meeting the domestic demand, thus a tariff on the competing foreign product will not help to boost domestic production but will effectively just work as a revenue tax, which increases the burden on the consumer with no advantage to domestic production. From this we can see that 10/11 of the sugar demand within the United States during McKinley’s time is considered non-competing. Thus, foreign imports of sugar should be allowed in without any tariff in sufficient quantities to meet this non-competing demand. This is adjusted accordingly to how the domestic market progresses. In the case of wool, Americans could meet this domestic demand in full and thus it made sense to put a high tariff on foreign imports of wool. Applying this McKinley wisdom today let us look at the American aluminum industry. The United States during the time of Trump’s announcement of 25% tariff on pretty much everything included that of aluminum. However, according to the US Chamber of Commerce (published December 17, 2025):
As the image above showcases, the United States relies on Canada for 70-75% of its imported aluminum. Trump’s mentality that Canada has been “screwing” the United States on deals is in fact not true but rather the opposite. Canada has been supplying essential metals such as aluminum and steel at very affordable prices. For the U.S. to demand that these prices drop significantly (which Canada cannot afford to do without going into the negative) or they will receive a 25-50% tariff - will not only hurt the Canadian economy but that of the United States. By Trump tariffing these metals, metals that are essential to build-up American industry and its manufacturing base, you are in fact greatly raising the costs for domestic production and domestic consumption of those products. This is a revenue tariff, since you are tariffing a product that the domestic base cannot meet the demand - thus you are just placing a tax. In other words, this is NOT a protective tariff. There is money being made here for sure but not for the benefit of the nation, but rather at the cost of the domestic producer and consumer. Such a system, whether it be a revenue tariff or free trade, as McKinley himself noted, works to undermine American industry - always. In fact, the revenue tariff, just like free trade, benefits the financier class the greatest, including Wall Street, whom US Secretary of Treasury Scott Bessent (former lieutenant to George Soros) has a very intimate relationship with to this day. As made clear in Part IV of this series, you cannot claim to be both for free trade and protectionism. In other words, you cannot proclaim to be both for Main Street and Wall Street, if someone is saying this to you, such as a Mr. Bessent, they are lying to you, plain and simple.
Aluminum is a key resource needed for a wide variety of products including in transportation (automotive and aerospace industries), construction of buildings, packaging, power lines, electronics (including computers and phones) and household items. Thus, aluminum is absolutely a key material required in domestic manufacturing. Putting a high tariff on such a crucial metal creates a higher cost of production for all of these industries which raises the cost and prices of whatever they in turn produce domestically. The Trump Administration imposed a 25% tariff on Canadian aluminum on March 12, 2025 and Canada responded by imposing 25% reciprocal tariffs on a range of US aluminum products since March 13, 2025. The Trump Administration then imposed a 50% tariff on imported aluminum (including Canada) effective June 4, 2025 which remains in effect to this date! It’s like watching a shooting duel with clowns, an excruciatingly slow accumulation of bodily injuries. “I shoot you in the foot, then you shoot me in the knee, then I shoot you in the hip etc. etc.” Suffice to say, the bodily injuries are to the domestic industry base and the people of the nations who have come under fire in this asinine tariff war. And I think that is its true intention. The Mills Bill proposal in 1888, which had proposed a reduction in tariff rates (by up to 50%) had been passed by the Democratic-controlled House, but it was successfully defeated in the Republican-controlled Senate. Recall the argument made by the Democrats was that it was going to save the consumer money but would require a drastic increase in imports to make revenue on its “small” tax (ie: flood the domestic market with imported goods). As made clear in the McKinley speech at Boston in 1892 quoted earlier, the goal is not the cheapest price for a good, but the highest wage for the worker and the highest quality for the good. The Adam Smith maxim of free trade is “Buy where you can buy CHEAPEST”, whereas McKinley promoted the American System maxim “Buy where you can pay the EASIEST.” A much superior maxim when we take into consideration the horrific cost to a system where everything becomes cheap including its people. Under the American System protectionism, because labor is not cheap, it can afford to pay slightly higher for a higher quality good, rather than the duplicitous system of British free trade which promotes greater affordability at the cost of your livelihood. There is a difference between a consumer paying more for a domestic product vs a foreign product. The payment towards a domestic product is an investment into your nation’s economy. A higher price paid, such as with a revenue tariff, on a foreign product, is not a return to the domestic economy, as I hope I have made the case clear in this paper. In 1890 McKinley introduced what is famously known as the McKinley Tariff, which raised tariffs on imported goods to protect American industries from foreign competition. It aimed to boost domestic production and economic growth during a time of rapid industrialisation in the United States. The McKinley Tariff increased duties on competing imports to nearly 50%. However, it should hopefully be clear now to the reader, that this was not akin to a “tariff everything” rule. The McKinley Tariff was designed to prioritize domestic industrial growth, including very importantly “infant” industries which cannot afford to compete with streamlined competitor foreign products. A notable success was the tinplate industry which transitioned from near-zero domestic production to a world-class competitor within a decade due to the McKinley protective tariff. It also worked to support manufacturing hubs, supported workers and created higher wages and benefits from their work, and successfully shielded American industries such as steel and textiles from foreign competition. It also used the concept of reciprocity or reciprocal trade, which is a term we hear bandied about today but with an entirely different application by the Trump Administration. This will be discussed further in Part IV of this series (second instalment). It was Grover Cleveland (the same president that the Mills Bill was proposed under) who would ultimately repeal the McKinley Tariff during his second term as president in 1894. In the next paper of this series, I will discuss why McKinley was assassinated and why Teddy Roosevelt was the antithesis to McKinley’s legacy.For more on the difference between a revenue tariff and protective tariff and its application today see Part I and Part II of this series:
Cynthia Chung is the President of the Rising Tide Foundation and author of the books “The Shaping of a World Religion” & “The Empire on Which the Black Sun Never Set,” consider supporting her work by making a donation and subscribing to her substack page Through A Glass Darkly.
Footnotes:[1] Speech in Boston, MA (Oct. 4, 1892) William McKinley Papers, Library of Congress [2] For the full quote by Douglass refer here: https://cynthiachung.substack.com/p/quote-of-the-day-frederick-douglass?utm_source=publication-search
|
Thursday, 12 February 2026
The Difference Between William McKinley’s American System School of Protective Tariffs and Today (Third Instalment)
Subscribe to:
Post Comments (Atom)
The Sunday Slowdown Edit
Six beautiful reads for cooking, escaping, unwinding and easing into the week ahead. ...
-
Rex Sikes posted: " Take this quote of William Atkinson Walker's to heart. Understand it and apply it in your life. ...
No comments:
Post a Comment