Reciprocity - 1860–1922



After 1860 the United States moved into a period of increasingly high tariffs. At the same time, the American economy became much more diversified, encompassing both commercial agriculture and industry. Various groups within these sectors disagreed on market priorities and the need for a protective tariff. This conflict carried over into political debates and made the tariff one of the primary political issues of the period. For the most part, the Republican Party supported high tariffs and the Democratic Party campaigned for reduction. Both, however, reflected the diverse nature of the economy and the concomitant effect on tariff views. As a result, most tariff acts were complicated bundles of regional, group, and political demands. Some free trade sentiment continued. In Free Land and Free Trade (1880), Samuel S. Cox argued that "under its benignant influence, the enmities, wars and brutalities of men will yield to concordant reciprocity." The physiocratic ideal had slipped on the American value scale, however, and the dominant protectionist group stressed national independence based on the home market. They agreed that world peace and internationalism were fine aspirations, but decidedly unrealistic in a world of nation-states. The reductionists wanted low tariffs but not free trade. Another group emerging in the 1870s stressed a limited form of reciprocity as a compromise between absolute protectionism and reduction, thus reflecting a combined interest in some home market protection and a vigorous push for foreign markets.

Internationally, protectionism surged during the late 1870s and 1880s. Ironically, American economic strength contributed to this reversal. The Bismarck tariff of 1879 reflected the desertion of free trade by the German agrarian conservatives in the face of American competition. The protective push was renewed after 1902, except for Britain.

Reciprocity underwent changes after 1860 in response to new priorities and interests. A rigidly exclusive version of reciprocity was utilized. American officials sought preferential agreements and special privileges, especially concerning customs duties. As a symbol of this trend, the nonexclusive Canadian Reciprocity Treaty was abrogated in 1866.

Reciprocity was also used to secure political advantages for the United States as part of exclusive economic arrangements. The first political use of reciprocity came in 1875 with the Hawaiian Reciprocity Treaty. The Hawaiians gave the United States special economic privileges that were denied to other nations, and in return Hawaiian sugar was given preferential treatment in the United States market. In addition, the Hawaiian government agreed not to make any territorial grants or to lease ports to other powers. The British protested that this treaty violated their most-favored-nation agreement with Hawaii, but the United States replied that this was a "special and extraordinary" case arising from "geographical and political reasons." This was the beginning of a limited United States imperial preference system that after 1900 was extended to Cuba, Puerto Rico, and the Philippine islands (the latter two by act of Congress). When the renewed treaty was ratified in 1887, the United States received exclusive rights to the use of Pearl Harbor. The Cuban Reciprocity Treaty of 1902 had been promised by Secretary of War Elihu Root to the members of the Cuban Constitutional Convention in order to secure their acceptance of the Platt Amendment. The treaty provided more privileges for Cuba in the American market than the United States received in Cuba. However, American officials believed the treaty would ensure Cuban prosperity and the strengthening of American influence by peaceful means.

During the 1870s the administration of Rutherford B. Hayes considered other reciprocity treaties, but only the Hawaiian treaty reached completion. In the early 1880s, Secretary of State James G. Blaine became a vigorous proponent of reciprocity as a means of opening markets, especially in Latin America, and broadening the domestic support of the Republican Party. Blaine initiated talks with Mexico, which were completed in 1882 by his successor, Frederick T. Frelinghuysen. The latter, with the support of President Chester A. Arthur, also started negotiations with the Dominican Republic, Spain (for Cuba and Puerto Rico), El Salvador, Colombia, and Great Britain (for the West Indies). Treaties were negotiated with the first two in 1884, and both emphasized tariff reductions or eliminations for American manufactured goods. The Mexican treaty also gave the United States a privileged concession by eliminating Mexican interstate taxes on American goods.

Rigid protectionists stalled consideration on these treaties. The Senate approved the Mexican treaty but added a proviso calling for enabling legislation by the House. This was not given, and the treaty lapsed. President Grover Cleveland withdrew the Spanish and Dominican treaties, and ended the other negotiations.

Blaine returned to the State Department and the reciprocity struggle in 1889. One of his first efforts was to push for a customs union at the Conference of American States (1889–1890). The Latin American states did not approve such a bold and exclusionary move, but they did recommend the negotiation of individual reciprocity treaties.

Blaine then began a campaign to have reciprocity bargaining powers included in the tariff bill being drafted by Congress. After much maneuvering, Congress finally included in the McKinley Tariff of 1890 a provision for a very restricted penalty method of bargaining. Sugar, molasses, coffee, tea, and hides (the "tropical list") were placed on the free list. The president was given the power to restore these items to the dutiable list for any country that had duties on American products that "he may deem to be reciprocally unjust or unreasonable." In addition, the president was given the power to negotiate reciprocity treaties with countries to bind the specified items on the free list. These did not require Senate approval. In 1891 and 1892 the United States concluded such agreements with ten countries. Eight treaties concerned the Western Hemisphere, and seven of these involved nations or possessions in the Caribbean and Central America. Penalty duties were imposed on three Western Hemisphere nations when they refused to make concessions.

The Wilson-Gorman Tariff of 1894 did not include bargaining provisions and undermined the agreements by reimposing the duty on sugar. Subsequently, the Republican Party, with some internal dissent, adopted reciprocity as a compromise position designed to secure the principle of protective tariffs yet give some consideration to groups arguing that the country had to build up foreign trade. "Protection and Reciprocity are twin measures of Republican policy and go hand in hand," the platform of 1896 declared. William McKinley became president in 1897 and immediately pressed Congress for a new tariff act that would ease the protective system and modify the policy of exclusive reciprocity.

The Dingley Tariff of 1897 increased duties but provided for three types of reciprocity treaties. The first was a limited version of the 1890 penalty-bargaining section. The new tropical list of free items consisted of coffee, tea, tonka beans, and vanilla beans. The only treaty of any consequence negotiated under this section was a reciprocity agreement with Brazil in 1904. Brazilian coffee remained on the free list (more than 50 percent of the crop), and the Brazilian government gave a 20 percent reduction on many American products.

The second and third types of reciprocity bargaining reflected the administration's growing concern over trade with Europe and the retaliatory measures enacted by countries such as France. These sections of the tariff act provided for concessionary bargaining. The second type authorized the president to negotiate agreements with countries exporting argol (crude tartar used in winemaking), brandy, champagne, all other sparkling wines, vermouth, paintings, and statuary. If "reciprocal and equivalent concessions" were given to American goods, the president was empowered to grant specified lower duties. The McKinley administration concluded four of these "argol agreements," and the administration of Theodore Roosevelt signed nine more. None of these had any significant effect.

The third type of bargaining provision marked an important modification in the system of exclusive reciprocity and had some potential for trade liberalization. It authorized the president to negotiate reciprocity treaties that could lower duties up to 20 percent on all goods. He also could negotiate the transfer to the free list of goods not produced in the United States. However, such treaties would have to be approved by both houses of Congress and would have five-year limitations.

President McKinley had appointed a reciprocity commission in 1897, under the leadership of John Kasson. This commission negotiated the treaties authorized by the tariff act, and thirteen of these (called the Kasson treaties) were under the provisions of the third section of the act. The treaty with France was the most significant, since it shifted most American products to the minimum schedule. However, the protectionists in Congress would not accept the Kasson treaties, realizing that the executive branch was proposing an important step toward open reciprocity concerning customs duties. In 1901, McKinley took the reciprocity fight to the public. In his last speech, at Buffalo, New York, a few hours before his assassination, he declared: "The period of exclusiveness is past. The expansion of our trade and commerce is the pressing problem…. Reci procity treaties are in harmony with the spirit of the times; measures of retaliation are not."

McKinley's death took much of the drive out of the reciprocity movement. The National Reciprocity Convention was held in November 1901, under the auspices of the National Association of Manufactures, and the National Reciprocity League was organized in 1902. Neither had any effect on congressional protectionists, and the executive branch under Theodore Roosevelt did not press the issue. As a result, the treaties failed, but a pattern had developed that still characterizes the reciprocity struggle. Leadership for trade liberalization through reciprocity would come from the executive branch and would encounter resistance from a Congress representing diverse interests.

The Payne-Aldrich Tariff of 1908 repealed all of the reciprocity agreements made by the Kasson commission. It did, however, mark a slight shift in bargaining objectives from special concessions to equality of treatment. The act set minimum rates and provided for penalty rates in cases of undue discrimination.

The reciprocity movement revived during the administration of William Howard Taft because of various political and economic factors. Taft, under considerable pressure to revise the tariff, believed that some limited reciprocity was needed to save the protective system. Canada seemed to offer several advantages for such a move, and a reciprocity treaty was negotiated in 1911. Newspapers rushed to support the treaty because of the provision for free admission of paper and wood pulp. The U.S. Congress approved the treaty, but it was rejected by the Canadian Parliament.

The Democratic-sponsored Underwood-Simmons Act of 1913 provided for a significant lowering of the tariff and the elimination of penalty bargaining. One section authorized trade agreements containing reciprocal concessions, but none were negotiated. The act also contained a peculiar reversion to the 1790s: lower duties for goods imported in American ships, unless existing treaties prohibited the discrimination. World War I soon obliterated all questions of reciprocity and bargaining, and the negotiating potential of the act was never tested. Protectionist pressures mounted after the war, leading to the Emergency Tariff Act of 1921.

Reciprocity as part of a concept of world order was a limited and inconsistent part of the open-door concept that reached maturity in the 1890s. Equality of opportunity and nondiscrimination tended to be applied to competition with other industrial powers in Asia and Africa, areas where American power was limited. In its new colonial empire the United States enforced a discriminatory commercial system and, despite the open-door rhetoric, the government made some efforts to achieve a privileged position in various Latin American countries. The effects were limited to the Caribbean and Central America. The administration of Woodrow Wilson tried to expand the Monroe Doctrine to include the restriction of European economic activity in these areas.

American officials also used the arguments of equality of opportunity and nondiscrimination to justify the "right" of Americans to invest in underdeveloped countries and have access to their raw materials. In some cases they defended this position by citing reciprocity. When the Mexican government attempted some regulation of foreign oil companies after the adoption of the constitution of 1917, State Department officials argued that such action violated the principle of reciprocity, since Mexican capital in the United States was not subject to discriminatory treatment. For Mexico and other underdeveloped countries, this was a hypothetical argument, since there was little if any Mexican capital invested in the United States.

Revolutionary nationalism, with its concomitant policy of control or elimination of foreign investments and properties, first emerged during this period. The United States and other industrial-creditor nations attempted to meet the challenge with a special definition of openness that implied a limitation on the sovereignty of the expropriating or regulating nations. How far would the United States go, and what means would it use, to enforce the open door? This question dogged American policymakers throughout the twentieth century. The results were mixed, and even ambivalent, as a result of changing circumstances and interpretations of national interest.

Part of the ambiguity was caused by the revival of the noncoercive, open world view. The peace movement prior to 1914 sought some type of world order beyond the open door. And, paradoxically, Woodrow Wilson in his Fourteen Points described a partial vision of an open world with the "removal, so far as possible, of all economic barriers, and the establishment of an equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance." To some Americans, the League of Nations seemed to promise the establishment of an open world order. Although a mixed opposition prevented United States entry, various Americans continued to try to implement peace and reciprocity by other means.



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