Scott Reynolds Nelson: Lessons From America’s First Fiscal Cliff
Scott Reynolds Nelson teaches history at the College of William and Mary. He is the author of A Nation of Deadbeats: An Uncommon History of America’s Financial Disasters, published by Alfred A. Knopf in September.
America faced its first fiscal cliff in 1893. The date should be familiar. It was the start of the Panic of 1893, and it led to the biggest shift ever in the composition of the U.S. Congress. Contemporaries called it the “Avalanche of 1894.”
Then as now, a Republican-sponsored change in tax policy brought about the crisis. Throughout the 1880s the United States had run a budget surplus. Americans paid no income tax, but a tariff on imports paid most of the bills. Nearly 25 percent of this came from a tax on imported sugar. The so-called Sugar Trust, run by Henry O. Havemeyer, had long favored a high tax on refined sugar to protect American sugar refineries against foreign competition.
But in the late 1880s a new California rival, Claus Spreckels, used a little-known treaty with the Kingdom of Hawaii to import raw sugar tax-free from the distant island. This gave Spreckels a huge advantage over East Coast refiners, who imported most of their sugar from Cuba. In 1890, to destroy Spreckels’s advantage, Havemeyer persuaded Congress to eliminate the tariff on imported sugar. With no tax advantage to give him the edge, Spreckels, whose sugar had to be brought from much farther, lost the war for the American market. Unfortunately, the loss of the sugar tariff helped to rapidly drain the U.S. Treasury....
comments powered by Disqus
- Decades After Trinity Nuclear Test in New Mexico, U.S. Studies Cancer Fallout
- Lawrence Of Arabia's Hand-Drawn, WWI Map Is Up for Auction
- Thousands Of FBI Documents About Civil Rights Era Destroyed By Flooding
- Ancient Egyptian Woman with 70 Hair Extensions Discovered
- Europeans drawn from three ancient 'tribes'
- Conservatives press the case against the new AP framework for US history
- Who wrote the new AP US History framework? Now we know.
- Pro-Israel groups going after federal support of Middle East Studies
- 100th Anniversary of Beard's 'An Economic Interpretation of the Constitution' commemorated
- University of Illinois Bigwig to Native American Studies scholar Jean O’Brien: Drop Dead