23. Abraham Lincoln establishes Protectionism (1860)

Lincoln is most often remembered for freeing the slaves, but many consider his contributions to business on an equal par. Lincoln, a former Whig, actually ran on a strong economic policy of American protectionism. Lincoln had been the first national candidate since Henry Clay to have the united support of the labor and manufacturers. That alliance would include the manufacturing districts of Illinois, Pennsylvania, Ohio, Kentucky, and Virginia that carried Lincoln to the presidency. It was no surprise that the Republican would be born at a 1856 convention in Pittsburgh. Lincoln carried industrial Pittsburgh’s Allegheny County by a record 10,000 votes. Lincoln called the concentration of votes in this manufacturing area “the State of Allegheny.” Pittsburgh had finally overcome the divides of the 1794 Whiskey Rebellion and turned solidly to the new Republican Party. Lincoln’s winning margins were similar in the iron districts of Ohio, where Iron Whigs and protectionist Democrats had found a new home in the Republican PartyIn western Virginia, the Pig Iron Aristocrats’ (iron manufacturers as they were known) support of the protectionist Lincoln split the state and created West Virginia. These Pig Iron Aristocrats had forged an alliance with iron labor as well. A strong pig iron industry was necessary for both management profits and labor employment. The German and Irish immigrants of the 1840s came for economic opportunity and they united with wealthy Scotch-Irish to form a new Republican machine in the iron districts of the middle states. Industry growth took priority over unionism and profits. These districts knew the recessions caused by free trade policies, believing the still lingering Panic of 1857 was a result of Democrat’s passing lower tariffs. As a result of war and protectionism, the pig iron industry would see great advances in technology. The Pig Iron Aristocrats were rewarded for their votes with the 1862 tariff act, which was the highest ever on pig iron at 32%. As the Pig Iron Aristocrats responded with massive investments in industry, the Congress moved the rate to 47% in 1864. The pig iron industry grew an amazing 65% during the Civil War. By the end of the war, the Pig Iron Aristocrats were a real national political force with wealth and the ability to employ tens of thousands. The American pig iron industry was the world’s greatest.
Besides technology, tariffs would drive pig iron production, and there is no demand such as that of war. As much as 25% of the union’s artillery (15% at Fort Pitt Foundry alone) was made in Pittsburgh. At least 80% of the union’s naval iron plate for ships. Most of the union’s armor plate was rolled in Pittsburgh. All of the artillery carriage axles and most railroad axles were forged in Pittsburgh. But most of the raw pig iron, however, came from Ohio. In 1860, Cleveland, Ohio had no iron foundries, but after the war, Cleveland had over 50 foundries. The Pig Iron Aristocrats were not only the ones who won the war, but also the ones who profited the most. The Republican tariffs assured a boom in national production for years to come. The great iron triangle of Ohio, West Virginia, and Pennsylvania saw growth as never before. The war would also simulate huge heaps in pig iron technology, railroads, and manufacturing. The huge profit margins in the pig iron related businesses assured those profits were poured back into the businesses. Just as important the pig iron end users such as the railroads experienced similar growth. The expansion of American industry during the war would be the infrastructure in place to make America the premier industrial nation. Lincoln took chances by promoting infant industries rather than buying off European sources. It proved not only smart business, but by war end the Union controlled its own destiny immune to foreign boycotts or pricing. In the end, Union manufacturing overwhelmed the South.
Lincoln used tariffs to raise money for the war as well, which was a basic use of tariffs as proposed by the Federalists earlier. Lincoln’s economic advisor, Henry C. Carey was a huge supporter of Clay’s American System. Carey became a key political ally of Clay, forming the Pennsylvania Society for the Encouragement of Manufacture, as well as the American Industry League. Carey was prolific writer in support of tariffs throughout his career. Carey requires some note because he was the most influential economist of the 1850s, 1860s, and 1870s. He was for easy money and strong tariff support; ideas supported by both Henry Clay and later in the 1890s by William McKinley. Carey understood the nature of the money supply as a stimulus, and supported the printing of greenback dollars. Today, of course, he would be considered an inflationist, but he argued while inflation hurt the bankers, it helped the manufacturers. He correctly identified the “enemy” as the eastern banking concerns as banking monopolists who favored importing and trade. Carey argued that these bankers were actually hostile to American industrial enterprise. Carey also predicted the banker’s takeover of the railroad industry to control trade. His writings foreshadowed the rise and dominance of J. P. Morgan in the McKinley era. Carey was the major influence on Lincoln’s tariff policy that would become the policy of the Republican Party for many decades. Carey’s disciples in the Congress such as “Pig Iron” Kelley, James Garfield, William McKinley and Thaddeus Stevens carried the protectionist banner in the time period between Henry Clay and Herbert Hoover. These men also demanded Congressional oversight to assure profits gained from tariff protection were invested back into the industry creating employment.
The Lincoln presidential victory of 1860 was by his success in the old “Iron Whig” districts of Ohio and the other Pig Iron Aristocracy districts in Pennsylvania, Maryland, Connecticut, and western Virginia. Lincoln’s protectionist assured these districts would remain Republican for many decades. The vote in these districts set new majority records as Lincoln’s protectionism played as well as his anti-slavery stand. The election would bring war to the nation, but prosperity to the iron districts of the North and the Midwest manufacturing districts. It would build a long-term Republican majority. The Congress passed the highest iron tariffs ever along with an increase in tariffs across the board. At the time the government’s main source of income was tariffs (not income taxes). Almost all industries benefited, but iron, glass, textile, and mining boomed. The protectionist representatives wrote the tariff bill, assuring iron received the highest level of protection. This political alliance would assure Republican protectionist policies for the next seventy years. Lincoln’s protectionism and policy of Amercian ecomonic growth would peak in 1890 with the McKinley Tariff Bill.

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