Douglas Irwin is a very good economist. Let’s highlight his Historical Perspectives on U.S. Trade Policy:
The Civil War marked the beginning of a long period of high U.S. tariffs. These tariffs served the dual purpose of raising revenue for the federal government and keeping out foreign goods, ostensibly for the protection of U.S. labor and business. After the war, tariffs (which generated roughly half of government revenue) remained high to service the enormous debt burden that resulted from the war. Yet by the mid-1880s a curious problem had arisen: though much of the debt had been paid off, federal revenues were outstripping expenditures by as much as 50 percent. Republican and Democratic politicians agreed that the fiscal surplus should be reduced, but they proposed exactly the opposite policies for achieving this objective. Democrats advocated cutting tariff rates in an effort to reduce revenue. Arguing that this would simply encourage imports and raise even more revenue, Republicans proposed higher tariff rates to reduce fiscal revenue. This debate over the tariff “Laffer curve” essentially hinged on whether existing tariffs were above or below the revenue-maximizing rate, which in turn depended on the height of the tariff and the price elasticity of import demand.
Irwin examined this issue in his Higher Tariffs, Lower Revenues? Analyzing the Fiscal Aspects of the “Great Tariff Debate of 1888”:
This paper examines this debate and attempts to determine the revenue effects of the proposed tariff changes. The results indicate that the tariff and the price elasticity of U.S. import demand during the 1880s below the maximum revenue rate, and therefore a tariff reduction would have reduce customs revenue.
Irwin also contrasts the other policy agendas of the two parties.
I have seen it claimed that the earliest, or at least earlier than the US Civil War, instance of somebody making a quasi-Laffer Curve kind of argument came from Tory British politician Edmund Burke from the period of the American Revolution, who warned that if taxes on the American colonies were made too high, they would not be paid, or at least not fully, leading to reduced revenue in the end.
The Income Tax and Federal Reserve Act(based around JP Morgan’s own budding dynasty) were explicitly developed because of the desire to replace London and the de Rothschild controlled reserve currency “the pound” as the financial epicenter of the world. The Republicans at that time, were hardly isolationist, the technology for the massive global supply chain was not there yet into what we call “globalism” of today. They basically wanted a simple, less intensive, economy with little actual involvement with nation states in interference of other nations capital markets. This would prove to be their undoing. After spending the 20’s pumping capital privately all over the world, bad things were creeping up. The industrial revolution had crested in 1923 causing industrial growth which their tariffs were meant to spur, slowed dramatically. In response, the a major credit bubble formed in aggregate to take up the speed. 3rdly, Southern Democrats had used the immigration system to bring in many people from southern and eastern europe, put them in cities and drive a easy citizenship path to push up their vote totals making old strong holds, unsound. It all came together in 1929 when the system crashed, credit anstalt crashed and the bank of de Rothschild essentially died. By 1945, the US was the absolute ruler of the “free world”. Its currency king……….just as Woodrow Wilson and his bitch John W Davis suspected 30 years earlier. The Republican party abandoned their “non-interference policy” and in 1944 came to support Pax Americana. Tariffs hurt financial liquidity in a reserve currency nation. The financial system and debt expansion require more converts and in return they get a “standard of living” rise around that debt. This entangles America with the world and vice versa which forces english as the worlds language along with standards of capital expansion to build profit.
So tariffs had to go.