Because nobody is going to steal our businesses, nobody will close our factories and nobody will close our plants anymore. They are all coming back. [applause] susan President Trump has popularized the debate over tariffs in our country once again. How long throughout our history have tariffs been a subject of political debate . Peter tariffs have been the topic of discussion from the beginning. Tariffs make great rhetoric. Really power people up. One could argue that the United States was founded on a tariff thatll. Not american tariffs, but opposition to english tariffs. Susan we will spend some time we started asking questions about the tariff debate and we thought we would bring the audience along to learn more about the role of tariffs and American History. Before we get into the meat of this, what is a tariff . Peter it is a tax. There are many different kinds of tariffs. You will hear about protectionist tariffs, punitive tariffs. But at the end of the day, the difference between those tariffs is minimal. It depends on if you are paying the tariff, or paying for the tariffs. The most basic level is there are two ways that tariffs are adjudicated. One is that it is the percentage of the cost of the item being imported. The other is a fixed cost. When the United States was first founded, most of the tariffs were 5 of the value of an object coming in. There were some things that were specific. I think . 10 on a gallon of wine. They did not make a difference if it was good wine or bad wine, it was . 10 a gallon. Susan overall, with regard to tariffs, are there winners and losers when they are imposed . Peter tariffs are fascinating in that they are very mysterious. I like analogies. Thinking about tariffs is thinking about a big plate of spaghetti. Everybody loves spaghetti. Tariffs are very complicated and difficult to understand. Its almost impossible to pull a strand of spaghetti out of the plate without touching the others. Depending on your perspective, different people have remarkably different ideas about whether they are effective or not effective. People argue about that forever. They are taxes. It is very unclear. One thing that is absolutely clear about tariffs is the rhetoric about tariffs is extremely successful. This is something that politicians, throughout the history of this country, have used very effectively to get elected. Being in favor of or being opposed to tariffs. Susan before we get into the founding of the nation and the tariffs at the earliest days, i want to learn more about you. You spent much of your career at the American History museum, what is your job there . Peter i am a curator. I take care of a variety of collections. I am the project director for the American Enterprise exhibition. Which is the exhibit that looks at the history of the nation, of the people through the story of business and working people. Susan at this network we talk to academic historians, you are a public historian. What is your mission . Peter my job as a public historian is to get people excited about history, get people excited about thinking and learning. The mission is not so much to tell people what is right or wrong, or specific dates, but to make them understand that any topic is complicated and involved. The perfect example is tariffs. No one understands tariffs. Even the people involved will occasionally own up to the fact that they are very hard to decipher. For the public, whats really important is to know that tariffs have huge effects, and its very unclear what those effects will be. Unintended consequences are associated with tariffs quite often. Susan since the Trump Administration has brought tariffs back to the forefront, have you changed the way you talk about them in your exhibition . Peter no. The smithsonian is apolitical. Its important for us to represent all sides of the argument. We are excited that people are interested in tariffs, because it is a business story, and it makes people lean in more. We are not influenced by any one groups interest for or against something. Susan people are generally more interested in the topic. You make it easier to find . Peter as topics change, different portions of exhibition become more engaging. If you listen to peoples conversations, sometimes they are more heated than they were in the past. Susan we have a few of the items and you can explain how they tell the story of tariffs. How did you get started in all this . Peter in terms of Business History . Susan and your interest in doing this for a profession. Peter if you are interested in technology, i am a historian of technology, the aspect of it that touches people, how their lives are changed by technological innovation is important. The role of business in that story is complicated. For me, as a historian, that complication is really delightful. Understanding history is very gray. Maybe a conspiracy is actually true. That people have alternative motives, they will do one thing and Say Something else. It is a great learning experience that you can apply to the future. Susan what sparked your initial interest in taking this direction in your history studies . Peter i have always done Industrial History. I am a big fan of big, heavy greasy things. Being able to do Industrial History requires you to look at business, to think about it, who the people are and how labor is being formed. Economists are great people. They write wonderful books that are filled with great numbers that are often correct. Historian understands the anecdotal part. Why at the wto, why the protesters were marching in turtle suits was a fascinating time. Susan you made the point that the nation was born over tariffs. What is your point . Peter trade is what is important. Tariffs are a huge element of trade because they have become a bar to importing, and occasionally exporting more. The United States, as a set of british colonies, was interested in trade. It existed in a mercantile system. The british said you must send all this back to the mother country, we will turn it into finished goods and then you can buy it back at a higher price. People wanted to do the value added. They wanted to trade not only with england, but be able to trade with germany, with australia, with china. We have a big section and our exhibition that looks at the china trade in the 1840s. There were a series of tariffs that were put on to citizens of the u. S. , the stamp act would be one example. You had to pay a tax for any type of document. Had a huge founding that was put on it. Susan which led to the Boston Tea Party . Peter correct. Americans were unhappy about having to pay for that extra tax that was put on their tea. Sometimes they sent it back to england. Sometimes they locked it up in warehouses. In a violent act they destroyed the tea and true some of it into the harbor. Susan in the colonial period was the u. S. A producer of anything other than Agricultural Products . It was not the United States yet, were the colonies . Peter the british colonies were exporting a lot of food goods. Wood was very important. Trade itself was very important. Shipbuilding because of the , amount of wood of skilled craftsmen, you could build ships. Being part of that trade. We always talk about merchants. Part of our exhibition is the merchant era, which is 1770s to the 1850s. What we are saying is not merchants in the notion of somebody behind a store counter, but a merchant in terms of a trader. Somebody who is buying cargo and moving it around. The colonists were very involved, somewhere very involved in merchant trade. Most of them were in agriculture. The time of jefferson, which is much later after the country was founded. Probably 80 of americans were involved in agriculture in one form or another. Susan if people were to understand the roots of the american revolution, would you say they were in equal parts political and economic about trade . Peter there are many different causations for the revolution. The United States, the culture of the u. S. Had a very fine look at business, at making money, at creating opportunities throughout its history. One of the things that our exhibition does is argues big ideas. For thinking about the mentality and what drives people. That is the notions of opportunity, innovation, competition and common good. These are the heartfelt bases of the people of the United States. It separates them from many other countries. That notion of opportunity is really, at a part, american capitalism. The notion of common good is really american democracy. It really pushes for independence, for liberty, leave me alone, those great things are felt in that notion of democracy. But also opportunity. The chance to make money and do things. Susan one of the items that we want to show people from that period is the teapot. How would this have been used in society at that time . Peter this is just a wonderful piece on so many different levels. This is the english actually selling the fact that they are in trouble. The stamp act was much vilified in the u. S. People had an option of what types of pots they would have for their tea. Tea was a very important thing in the u. S. This was a piece that represented that political thought. That tea drinking is often associated with politics. With interchange about concepts. What makes this delightful is that it is made in england and was made for export. At the time, the Industrial Revolution is taking place, mechanization is taking off, and the potteries in england are becoming bigger and bigger and they need to expand their market. They are very interested in appealing to Anyone Around the world. The American Market is substantial. They make things that are lampooning themselves. There are many levels of interest involved. Susan another piece from that period is a dress that is for Martha Washington . Peter this is a great dress. Her gown. This is chinese silk. Silk at this time is imported. It really talks about the international kind of trade. If you look at the early period in the United States, there is a lot of conversation about the cult of weaving fabric, and this is a very american ideology. By the 1850s, americans are looking back, somewhat nostalgically and romantically, and at an earlier period they are talking about the age of homespun. The yankee woman spinning cotton, spinning silk and making fabric. That dress goes to speak to the fact that International Trade, even in the time of george washington, is very important. Susan if you were a politician of the era, your choice of clothing fabric might be a political statement . Peter absolutely. If you look at Benjamin Harrisons wife, her gown that she wears to the inaugural of harrison is silk, but it is woven in the United States, and it is emblazoned with icons of the nation. The burr oak and things like that. Keeley is a congressman, very big protectionist, he was very careful to always Wear Clothing that was american made. Only by america. America first, and made, made in the usa is something that has been around for a long time. Susan what are we to make of the fact that the first piece of legislation passed by the congress when we signed the constitution to become a nation on july 4, 1789, sign into place by president washington, placed a 5 tariff on most imported goods. Peter any government needs money to operate. There is no income tax at this point. There has to be some source of revenue. Tariffs in this early period, really up until 1913,s revenuegenerating. If you are going to have a federal government, this is the argument between hamilton and jefferson, is how strong should the federal government be. If you will have a federal government, you need to be able to build things and do things. That means funds. Some money is coming from land sales, but revenue from tariffs is one of the big drivers of government. Susan Alexander Hamiltons secretary of treasury. He is a leading voice for tariffs. Can you talk about how he promoted the idea, and what the political debates were between his group, the federalists, and jeffersons party. They had a very different point of view. Peter jefferson was a states right and he had a different vision for the nation. Really seeing the yeoman farmer as the quintessential american. Sandwiched between the notion of what jefferson probably would talk about the savagery of native americans, and the evil aristocrats of england, which would be factory workers. What he saw was the yeoman farmer with connection to the earth as a great thing. He saw local control as important. On the other part they sought manufacturing and cities as the future. As such, creating an economic platform where you have tariffs to protect those infant industries, was really critical. At this time they are really critical. Protecting those industries is a reasonable thing. Later on, people use the same rhetoric, but its tougher to say whether it is measured in later years as fairly used as a justification for taxes. Susan this period of time, the jeffersonian democrats and then ultimately the whigs. The jeffersonian democrats were low tariff people and the whigs were high tariff people. Peter the farmers, throughout much of American History, the farmers of the south are not keen on tariffs because they rarely help them. They increase the cost of goods. Jefferson was not for tariffs. Jefferson was not for creating a big government. He was keen on he eventually has to eat his words and become a person who puts tariffs into place. Not initially. Hamilton is looking at supporting the urban northeast with factories that are located in the tariffs are protecting them. The efficiency in the United States in the late 1700s is not very great. Cost of labor in the u. S. Is always extremely high. This is one of the two things you can say about the u. S. Throughout the entire history, there is a lot of land and not many people. Because of that, labor is consistently very high. In the u. S. , people keep turning to new techniques, greater efficiency machines in order to compete with other countries, like england, that had labor costs. Susan as we move into the 19th century, a major figure is henry clay. He also had this concept called the american system. What should we know about that period of time. Henry clays philosophies. Peter he is an interesting character that comes out of kentucky. You think he would be respecting the southern notion of being opposed to tariffs. But he is a protectionist and is promoting tariffs. In order to get people on board with the idea of tariffs, he argues the american system. Which has three elements. One, that you charge these high tariffs that will protect industries. That you create a central bank in order to create an Economic System that is easier to have monetary exchange. This appeals to both manufacturers, and to a degree, it appeals to the plantation owners because they are selling their cotton abroad. He also promotes infrastructure. He says that if we charge these tariffs, if we are taxing americans on these goods, raising the price on the goods, that we will take that money and turn around and improve canals. We will build roads. We will make navigation better. This will help everybody. So you put together this threepart alliance and tries to get people on board. He is a really interesting person. Really persuasive. Very effect. His campaign medallion from 1844 is one of my favorite things in our exhibition. Susan lets show it, because henry clay always had president ial ambitions, was never successful at it. Peter it is a wonderful piece. The side with his face on it, you can see he is not very telegenic. He doesnt really have the physique that people warm up to. The backside is the part that i love. This am a struck in 1844 and it was a campaign token. He would hand them out. In the back you can see henry clay, the champion of a protective tariff, then there is an image. Visual analysis is something that curators love to do. Looking at this tells you so much about what is going on. You can see this sailing ship is flying the american flag. You can see what line it is. In the foreground, you can see that there is industry. And agriculture. That you have a plow with a sheaf of wheat hung over it. The argument being that the protective tariff will help the manufacturers who are shipping their goods, but it will also help the farmer. This is really a sectional view. There is something not in the image. What is missing is a bale of cotton. In 1844, the biggest u. S. Export is cotton. Henry clay gave up on the south. Instead he is appealing to the west. In thinking about american politics, you always have to remember north and south is not the case. Its really north, south and west. The argument is that, if the more it does well, more people war have more money and they will buy more food and the food is coming from the west. He is building an alliance between the farmers to the west and the manufacturers of the north and largely gives up on the people of the south who are not going to vote for him anyway. Susan you told us the average tariffs were about 5 , maybe 10 . How high have the tariffs gotten by this time in general . Funding the whole government, right . Peter one of the major sources of income is tariffs. It changes at any given time. It is interesting to see how as tariffs goes up, the revenues go up and then they have to figure out how to reduce some tariffs to bring it down. It would be an argument that would be enjoyed because the notion of having too much money for government makes it do things that you dont want. The period that starts to make tariffs take off is the war of 1812. The u. S. Is pulled into a war wars are going on, the u. S. Tries to stay neutral, but even with its declared neutrality, american ships are being pulled in by the english and sailors are being oppressed. They are being taken into duty. Jefferson really wants to stop this, creates an embargo that is a total failure. Eventually the war of 1812 breaks out. For several years the u. S. Is at war with england. After that, the u. S. Continues to it needs money at the time so it has tariffs to generate money