Thursday, January 17, 2019

The impact of attitude..................

..................................and psychology on the economy has always seemed vastly underrated.

     Observing the tariff bill's emergence from across the Atlantic, the London Standard's editor concluded that the legislation's "ultra-protectionism" would guarantee Britain's continued supremacy in the overseas carrying trade.  He foresaw for America political and economic havoc in the form of "further deficits, gold shipments, a fatiguing succession of strikes and panics and fanatics as political saviors."  It didn't turn out that way.  The country's devastating deflationary spiral that had begun in 1891 had turned around, with raw-material prices reaching their lowest point in 1896 and manufacturing goods beginning a steady rise in value about a year later.  This turnaround unleashed a spurt of economic activity, with mining, manufacturing, and farming all contributing potent spurts of productivity and growth.  Not even high tariffs could dampen this surge of economic activity.  "Wealth of all descriptions began to increase in an unheard of way," wrote Tarbell.   Commercial interests quickly credited the president with these favorable portents, and McKinley naturally took pride in what he viewed as the vindication of his decades-long protectionist embrace, though the evidence was scant that the new tariffs actually had any impact on the economic rebound. The "business men of both parties not only express satisfaction with the situation," New York's John McCook wrote to the president, "but rightly attribute the results accomplished, to the manner in which you have been able to . . . carry through what was practically an adverse Senate, the tariff legislation."

-Robert W. Merry, President McKinley:  Architect of the American Century

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