Tariffs, taxes on foreign goods entering a country, served two purposes for the United States in the late 19th century. One was to raise revenue for the federal government, and the other was to protect domestic manufacturers from foreign competition, which is known as protectionism.
In December 1887, President Grover Cleveland, a Democrat, devoted his entire State of the Union Address to the issue of the tariff and called emphatically for the reduction of duties and the abolition of duties on raw materials. The speech succeeded in making the tariff and the idea of protectionism a true party matter. In the 1888 election, the Republicans were victorious with the election of Benjamin Harrison and majorities in both the Senate and the House. For the sake of holding the party line, the Republicans felt obligated to pass stronger tariff legislation.
William McKinley, of Ohio, was defeated by Thomas Brackett Reed to be Speaker of the House after the 1888 elections. McKinley instead became chairman of the House Ways and Means Committee and was responsible for framing a new tariff bill. He believed that a protectionist tariff had been mandated by the people through the election and that it was necessary for America’s wealth and prosperity.
In addition to the protectionist debate, politicians were also concerned about the high revenue accruing from tariffs. After the American Civil War, tariffs remained elevated to raise revenue and to cover the high costs of the war. However, in the early 1880s, the federal government was running a large surplus. Both parties agreed that the surplus needed to lessen but disagreed about whether to raise or to lower tariffs to accomplish the same goal.
The Democrats' hypothesis stated that tariff revenue could be reduced by reducing the tariff rate. Conversely, the Republicans' belief was that by increasing the tariff, imports would be lessened, and total tariff revenue would drop. The debate would be known as the Great Tariff Debate of 1888.