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At last, on July 4, 1789, Congress passed “an Act for laying a Duty on Goods, Wares, and Merchandises imported into the United States.” It included duties on 76 items, beginning with rum and ending with horse carriages, each taxed according to its importance to the congressmen and senators who had assembled at Federal Hall that summer. Everything else was taxed at 5 percent. Despite this compromise,tariff policy continued to divide the country. Congress kept the duties on raw materials low while steadily increasing duties on finished goods, which helped Northern manufacturers control costs while raising prices. By contrast, Southern farmers had to pay more for farm equipment and other manufactured products yet received little protection for their crops. The simmering tensions erupted after Congress passed a heavily protectionist tariff bill in 1828. South Carolina's government denounced the "Tariff of Abominations" and claimed the right to nullify the law, provoking a constitutional crisis. Once again, Congress eventually found a compromise, but resentment over the issue continued to stoke
North-South tensions leading into the Civil War. By the late 1800s, American manufacturers no longer needed protection from Europe, but powerful industrialists manipulated the political system to drive tariffs ever higher. The Tariff Act of 1897 filled 70 pages and enumerated 705 categories of merchandise from aluminum and peppermint to feather dusters and “toothpicks of wood or other vegetable substance.” Many duties were exquisitely designed to benefit specific corporations, known as trusts, whose lobbyists drafted parts of the bill. Small businesses, unable to compete with the politically-connected trusts, folded or sold out. Southern and Midwestern farmers, squeezed by falling produce prices and rising costs for shipping and equipment, struggled to keep their land. As the inequity surged, political unrest rippled through the nation's interior. Populist third parties rose like furies from the savannas of Georgia to the plains of Montana. At the Democratic National Convention of 1896, rank-and-file delegates stunned the party establishment by nominating William Jennings Bryan, a fiery Nebraskan orator who called high tariffs "the means of extortion" by which trusts established monopolies. The moment of reckoning was still to come, however. Bryan's politics were too radical for most voters, and the Democrats were too fractured. Republicans began the 20th century with pro-tariff stalwart William McKinleyin the White House and a huge majority in Congress. But cracks began to appear within the GOP as well.Midwestern insurgents protested unfair tariffs and accused the Republican establishment ofcorruption. WhenTheodore Roosevelt became presidentafter McKinley's assassination, he stunned Republican elites by attacking the trusts.He privately wished to reduce tariffs as well but refrained for fear of splitting the party. After Roosevelt camethe flood. William Taft, his bumbling successor,