Higher Tariffs, Lower Revenues? Analyzing the Fiscal Aspects of the "Great Tariff Debate of 1888"

26 Pages Posted: 5 Sep 2000 Last revised: 7 Oct 2010

See all articles by Douglas A. Irwin

Douglas A. Irwin

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 1997

Abstract

After the Civil War, Congress justified high import tariffs (relative to their prewar levels)" as necessary in order to raise sufficient revenue to pay off the public debt. By the early 1880s the federal government was running large and seemingly intractable fiscal surpluses revenues" exceeded expenditures (including debt service and repurchases) by over 40 percent during that" decade. The political parties proposed alternative plans to deal with the surplus: the Democrats" proposed a tariff reduction to reduce customs revenue, the Republicans offered higher tariffs to" reduce imports and customs revenue. 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 reduced customs" revenue.

Suggested Citation

Irwin, Douglas A., Higher Tariffs, Lower Revenues? Analyzing the Fiscal Aspects of the "Great Tariff Debate of 1888" (October 1997). NBER Working Paper No. w6239. Available at SSRN: https://ssrn.com/abstract=225997

Douglas A. Irwin (Contact Author)

Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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