the problem of a government surplus -- 6/13/14

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Today's selection -- from Benjamin Harrison by Charles W. Calhoun. For several decades after the Civil War, one of the biggest problems for the U.S. government was its large budget surplus. Tariffs had been increased to fund the Civil War, but they had not been reduced much afterwards because northern manufacturers still wanted the benefit of tariff protection (in fact, during most of the nineteenth century, the U.S. was consistently anti-free trade). High tariff revenues sapped the economy of needed spending, and the alternatives were to reduce tariffs, which was favored by Democrats, or increase government spending, which was favored by Republicans -- including our twenty-third president, Benjamin Harrison:

Official White Houseportrait of Benjamin Harrison, painted by Eastman Johnson

"One of the principal problems confronting the nation in [Benjamin] Harrison's time was the federal government's collection of ... excess revenue, which withdrew money from the private economy. During the Civil War, Congress had greatly increased import tariffs and internal duties to meet military expenses. Although taxes had been lowered somewhat after the war, every year since 1866 the government had collected a surplus of revenue, often far beyond current expenditures. Democrats, true to the longstanding doctrine of their southern wing, favored cutting the tariff to reduce the revenue. Republicans opposed any deep cuts that would jeopardize the protection of American producers from foreign competition. The issue had played an important part in the 1880 election, and now, as a senator, Harrison defended protectionism. Although he would accept the reduction of some rates, he was much more willing to reduce the revenue through the elimination of internal duties on nearly all commodities except alcohol and tobacco.

"In addition, from a political standpoint, defending tariff protectionism offered a way for Harrison to ... ally himself with American labor. [Lower] tariffs, ... which the Democrats advocated, 'means less work and lower wages,' he argued. 'I do not say that labor has its full reward here. I do not deny that the avarice of the mill owner too often clips the edge of comfort from the wages of his operative .... But in spite of all this I do affirm that there is more comfort and more hope for a laboring man or woman in this country than in any other.' Without the protective tariff, he insisted, that comfort and hope would be gone.

Harrison protrayed as wasting the surplus

"Rather than jeopardize protection to reduce the surplus, Harrison thought the government could spend much of the excess revenue in beneficial ways. He particularly advocated a generous pension policy for Union veterans of the Civil War. He sponsored 101 special pension bills as well as a general bill to pension all disabled veterans, which in 1884 passed the Senate but failed in the Democratic House. He supported expenditure on national public works, such as improving the navigation of the Mississippi River, although he opposed federal funding of land reclamation along the river, which he saw as the states' responsibility under the Constitution. ...

"Harrison also supported federal aid to education, aimed primarily at the South's illiterate population. ...

"Under the [presidential convention] chairmanship of Republican Ohio congressman [and future president] William McKinley, a vigorous champion of protectionism, the committee produced -- and the convention adopted -- a platform that declared the party to be uncompromisingly in favor of the American system of protection, whose destruction as proposed by Cleveland and the Democrats would injure business, labor, and farmers. To cut the surplus, the Republicans favored eliminating internal taxes and were willing to raise some tariff rates to prohibitive levels in order to curb imports and thus check the collection of revenue. For the revenue that remained, Republicans saw a myriad of uses, including defense, veterans' pensions, internal improvements, and subsidies for the nation's ailing merchant marine. ...

"[In 1889 in his inaugural address] Harrison declared that the Treasury surplus was 'not the greatest evil,' but it was a 'serious' one. Even so, he rated preserving protectionism much more desirable than penny-pinching frugality. He advocated expenditures to build a stronger navy and to support American commerce through subsidies to steamship lines. He drew the greatest round of applause when he called for more generous pension legislation for Union veterans and their widows and orphans."