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McKinley or Lincoln? Tariffs vs. Greenbacks
April 8, 2025 | by Ellen Brown
President Trump has repeatedly expressed his admiration for Republican President William McKinley, highlighting his use of tariffs as a model for economic policy. But critics say Trump's tariffs, which are intended to protect U.S. interests, have instead fueled a stock market nosedive, provoked tit-for-tat tariffs from key partners, risk a broader trade withdrawal, and could increase the federal debt by reducing GDP and tax income.
The federal debt has reached $36.2 trillion, the annual interest on it is $1.2 trillion, and the projected 2025 budget deficit is $1.9 trillion – meaning $1.9 trillion will be added to the debt this year. It’s an unsustainable debt bubble doomed to pop on its present trajectory.
Rather than modeling the economy on McKinley, President Trump might do well to model it on our first Republican president, Abraham Lincoln, whose debt-free Greenbacks saved the country from a crippling war debt to British-backed bankers, and whose policies laid the foundation for national economic resilience in the coming decades. Just "printing the money" can be and has been done sustainably, by directing the new funds into generating new GDP; and there are compelling historical examples of that approach. In fact, it may be our only way out of the debt crisis. But first a look at the tariff issue.
Trump said at a 2024 campaign event, "In the 1890s, our country was probably the wealthiest it ever was because it was a system of tariffs." And in his second inaugural address on January 20, 2025, he said, "The great President William McKinley made our country very rich through tariffs and through talent."
That may have been true for certain industries, but it did not actually hold for the broader population. The Tariff Act of 1890, commonly called the McKinley Tariff because it was framed by then Representative William McKinley, raised the average duty on imports to almost 50%. The increase was designed to protect domestic industries and workers from foreign competition, but the 1890s were marked by severe economic instability.
The Panic of 1893 plunged the U.S. into a depression lasting until 1897. Unemployment soared to 18.4% in 1894, with over 15,000 businesses failing and 74 railroads going bankrupt. The stock market crashed, losing nearly 40% of its value between 1893 and 1894. Far from being the wealthiest era, this period saw widespread hardship that tariffs not only failed to prevent but exacerbated.
Farmers and factory workers were hit particularly hard. The McKinley Tariff raised the cost of imported goods, squeezing rural and working-class budgets. Farmers faced a deflationary spiral as crop prices plummeted. Real wages for industrial workers stagnated or declined, with purchasing power eroded from high tariffs inflating the prices of consumer goods.
In the 1860s, President Lincoln issued debt-free money in the form of unbacked U.S. Notes or "Greenbacks;" but new issues of Greenbacks were discontinued in the 1870s, and gold was made the sole backing of currency. The resulting economic distress fueled the Greenback movement, which sought a return to the "lawful money" issued by President Lincoln. The Greenbacks were considered lawful because they were issued directly by the government as provided in the Constitution, rather than by private banks. The Greenback Party faded, but its policies were adopted by the Populist Party and were pursued by a grassroots movement called "Coxey's Army." It staged the first-ever march on Washington in 1894, seeking a return to the Greenback solution. The march was considered the plot line for the 1900 classic American children's story, The Wizard of Oz, with the scarecrow as the farmers, the tin man as the factory workers, the lion as William Jennings Bryan, and Dorothy as populist leader Mary Ellen Lease. Like the powerless Wizard, then-President Grover Cleveland turned the marchers away at the gate. (For a fuller history, see my book, The Web of Debt.)
As with McKinley's tariffs, President Trump's tariffs are said by critics to be backfiring, contributing to a dramatic stock market drop and prompting retaliatory tariffs and trade withdrawals from other countries. Economists warn of broader fallout. According to a New York Times analysis on March 9, tariffs and retaliation could slash U.S. GDP growth by a full percentage point in 2025, and households are potentially facing an extra $1,000 annually in costs due to tariff-driven inflation. Internationally, the tariffs have triggered withdrawals and realignments. Reuters highlighted on March 10 that the U.S. stock market had lost $4 trillion in value as recession fears grew, and the S&P 500 lost $1.7 trillion just on April 3.
Rather than alienating our trading partners and stressing investors and consumers, Trump could take a page from Abraham Lincoln's playbook. Lincoln wasn't opposed to tariffs. Campaigning for the Illinois state legislature in 1832, he said, "My politics are short and sweet, like the old woman's dance. I am in favor of a National Bank, I am in favor of the Internal improvement system, and a high protective tariff. These are my sentiments and political principles." The tariffs were intended to protect the country's fledgling industries from foreign competition, but they needed a national bank to provide the credit necessary to flourish.
Please go to Web of Debt to continue reading.
McKinley or Lincoln? Tariffs vs. Greenbacks
April 8, 2025 | by Ellen Brown
President Trump has repeatedly expressed his admiration for Republican President William McKinley, highlighting his use of tariffs as a model for economic policy. But critics say Trump's tariffs, which are intended to protect U.S. interests, have instead fueled a stock market nosedive, provoked tit-for-tat tariffs from key partners, risk a broader trade withdrawal, and could increase the federal debt by reducing GDP and tax income.
The federal debt has reached $36.2 trillion, the annual interest on it is $1.2 trillion, and the projected 2025 budget deficit is $1.9 trillion – meaning $1.9 trillion will be added to the debt this year. It’s an unsustainable debt bubble doomed to pop on its present trajectory.
The goal of Elon Musk's DOGE (Department of Government Efficiency) is to reduce the deficit by reducing budget expenditures. But Musk now acknowledges that the DOGE team's efforts will probably cut expenses by only $1 trillion, not the $2 trillion originally projected. That will leave a nearly $1 trillion deficit that will have to be covered by more borrowing, and the debt tsunami will continue to grow.
Rather than modeling the economy on McKinley, President Trump might do well to model it on our first Republican president, Abraham Lincoln, whose debt-free Greenbacks saved the country from a crippling war debt to British-backed bankers, and whose policies laid the foundation for national economic resilience in the coming decades. Just "printing the money" can be and has been done sustainably, by directing the new funds into generating new GDP; and there are compelling historical examples of that approach. In fact, it may be our only way out of the debt crisis. But first a look at the tariff issue.
Trump Channels McKinley
Trump said at a 2024 campaign event, "In the 1890s, our country was probably the wealthiest it ever was because it was a system of tariffs." And in his second inaugural address on January 20, 2025, he said, "The great President William McKinley made our country very rich through tariffs and through talent."
That may have been true for certain industries, but it did not actually hold for the broader population. The Tariff Act of 1890, commonly called the McKinley Tariff because it was framed by then Representative William McKinley, raised the average duty on imports to almost 50%. The increase was designed to protect domestic industries and workers from foreign competition, but the 1890s were marked by severe economic instability.
The Panic of 1893 plunged the U.S. into a depression lasting until 1897. Unemployment soared to 18.4% in 1894, with over 15,000 businesses failing and 74 railroads going bankrupt. The stock market crashed, losing nearly 40% of its value between 1893 and 1894. Far from being the wealthiest era, this period saw widespread hardship that tariffs not only failed to prevent but exacerbated.
Farmers and factory workers were hit particularly hard. The McKinley Tariff raised the cost of imported goods, squeezing rural and working-class budgets. Farmers faced a deflationary spiral as crop prices plummeted. Real wages for industrial workers stagnated or declined, with purchasing power eroded from high tariffs inflating the prices of consumer goods.
In the 1860s, President Lincoln issued debt-free money in the form of unbacked U.S. Notes or "Greenbacks;" but new issues of Greenbacks were discontinued in the 1870s, and gold was made the sole backing of currency. The resulting economic distress fueled the Greenback movement, which sought a return to the "lawful money" issued by President Lincoln. The Greenbacks were considered lawful because they were issued directly by the government as provided in the Constitution, rather than by private banks. The Greenback Party faded, but its policies were adopted by the Populist Party and were pursued by a grassroots movement called "Coxey's Army." It staged the first-ever march on Washington in 1894, seeking a return to the Greenback solution. The march was considered the plot line for the 1900 classic American children's story, The Wizard of Oz, with the scarecrow as the farmers, the tin man as the factory workers, the lion as William Jennings Bryan, and Dorothy as populist leader Mary Ellen Lease. Like the powerless Wizard, then-President Grover Cleveland turned the marchers away at the gate. (For a fuller history, see my book, The Web of Debt.)
As with McKinley's tariffs, President Trump's tariffs are said by critics to be backfiring, contributing to a dramatic stock market drop and prompting retaliatory tariffs and trade withdrawals from other countries. Economists warn of broader fallout. According to a New York Times analysis on March 9, tariffs and retaliation could slash U.S. GDP growth by a full percentage point in 2025, and households are potentially facing an extra $1,000 annually in costs due to tariff-driven inflation. Internationally, the tariffs have triggered withdrawals and realignments. Reuters highlighted on March 10 that the U.S. stock market had lost $4 trillion in value as recession fears grew, and the S&P 500 lost $1.7 trillion just on April 3.
The Lincoln Alternative
Rather than alienating our trading partners and stressing investors and consumers, Trump could take a page from Abraham Lincoln's playbook. Lincoln wasn't opposed to tariffs. Campaigning for the Illinois state legislature in 1832, he said, "My politics are short and sweet, like the old woman's dance. I am in favor of a National Bank, I am in favor of the Internal improvement system, and a high protective tariff. These are my sentiments and political principles." The tariffs were intended to protect the country's fledgling industries from foreign competition, but they needed a national bank to provide the credit necessary to flourish.
Please go to Web of Debt to continue reading.
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