Financing the Federal Government

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Financing the Federal Government


Tariffs. During the Civil War the federal government had levied an income tax, which had accounted for about 20 percent of its revenues. With various domestic manufacturers and sales taxes adding another 23 percent, internal revenues exceeded tariffs, or taxes on imported goods, as a source of federal funds. After the war most domestic taxes were phased out, and the income tax expired in 1872. The primary means of financing the federal government became tariffs. American producers and manufacturers had long relied on the government to use tariffs as a way to block foreign competition with their products on the domestic market. For example, Louisiana beet growers, Pennsylvania iron and steel manufacturers, West Virginia coalmine owners, and Ohio and Texas wool growers all feared that lowpriced imports would drive them out of the American market. High tariffs imposed on such foreign goods priced them above domestic products. Yet other industriesincluding iron manufacturers who required foreign ore and Chicago meatpackers who bought foreign saltdepended on foreign imports for their daily operations and advocated lowering tariffs to keep down their production costs. Farmers and cattlemen with large foreign markets also favored low tariffs as a means of encouraging foreign countries to lower their customs duties on American products. As a result of competing business interests, the major tariff legislation passed during the 1880s and 1890s was the culmination of intense negotiation by politicians who traded votes in exchange for guarantees of support for their own tariff requests, and the resulting laws were filled with hundreds of adjustments and exceptions for special interests. As one commentator said of the 1883 tariff, Its general character cannot be easily described; in truth, it can hardly be said to have any general character.

Tariff Politics. The tariff question was one of the few issues on which the two major parties took distinctly different

positions. Republicans favored protectionism and Democrats backed reductionism. The Democrats called their unsuccessful Mills Tariff Bill of 18 8 8 and their successali Wilson-Gorman Tariff Act of 1894 examples of their promise to reduce tariffs, while the Republicans viewed the McKinley Tariff Act of 1890 and the Dingley Tariff Act of 1897 as triumphs of Republican protectionism.

Regional Differences. Protectionist tariffs hurt consumers because without foreign competition the selection of goods on the market was limited and American producers and manufacturers kept prices artificially high. Yet workers in industrial states often favored protectionist tariffs because high profits for manufacturers meant more factory jobs. For consumers in the West and South, which had fewer factories, the favoring of manufacturers over fair pricing seemed unfair and abusive at a time when the incomes for farmers and ranchers were severely reduced.


John A. Garraty, The New Commonwealth, 1877-1898 (New York: Harper & Row, 1968);

Morton Keller, Affairs of State: Public Life in Late Nineteenth Century America (Cambridge, Mass.: Harvard University Press, 1977);

Page Smith, The Rise of Industrial America: A Peoples History of the. I Post-Reconstruction Era (New York: McGraw-Hill, 1984).


Grover Cleveland was an urilikely ladies man. Weighing nearly three hundred pounds, he was described by his physician as very corpulent, with a short, thick neck, and by one biographer as having hanging jowls and a walrus mustache that he began wearing in his early thirties. He assumed the presidency at the age of forty-seven as a bachelor with a reputation as a man who enjoyed a good cigar, a stout drink, and a pretty lady. As a young man in Buffalo, where he worked as a lawyer, Cleveland did much of his politicking in the neighborhood bars, where beer cost a nickel a Stein and lunch was free to drinkers; in the evenings he frequented the beer gardens, which offered a pleasant atmosphere and free-spirited camaraderie.

Among Clevelands lady friends in Buffalo was Mrs. Maria Crofts Halpin. When she told Cleveland in 1870 that she was pregnant with their child, he responded by offering her seclusion during her pregnancy and financial support. He is said to have refused to marry her because he suspected she had other male companions and that the baby might not be his. His successful campaign that year for Erie County sheriff may have also affected his decision. When her son was born, Cleveland had him placed in an orphanage and later arranged for a friend to rear him, to the consternation of Mrs. Halpin, who apparently had little say in the matter.

In 1874 Clevelands friend and former law partner Oscar Folsom died, naming Cleveland as executor of his estate and guardian of his daughter, Frances. Cleveland looked after her diligently and watched her grow with increasing affection. By the time he was elected president in 1884, Frances Folsom was an attractive young lady and the apple of her guardians eye. He married her in 1886, the year she graduated from college. She was twenty-two; he was forty-nine. Theirs was the first wedding to take place in the White House, and Cleveland was the first serving president to take the vows of matrimony. Frances Cleveland was an immediate hit in Washington. The presidente associates appreciated her domesticating influence on her sometimes gruff and unceremonious husband. The birth of the Clevelands daughter, baby Ruth, after his first term had expired and he lost his bid for reelection, further softened Clevelands image and helped him in his successful campaign for reelection to the presidency in 1892. However, not even the birth of the Clevelands second daughter, Esther, in 1893, the first baby born in the White House, and another daughter in 1895, when the president was fifty-eight, was enough to save Cleveland from the political effects of the Panic of 1893. Cleveland left office for good in 1896 and turned his attentions to his family. The Clevelands had two more children, both boys, after his second term.

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Financing the Federal Government

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