“We were at our richest from 1870 to 1913. That’s when we were a tariff country,” said President Donald Trump recently, and he’s not wrong. But tariffs aren’t the whole story. The genius of the Gilded Age was interstate regulatory and tax competition.
That economy boomed. From 1870 to 1913, America’s gross domestic product grew at nearly 5% per year. Even though America’s population nearly tripled during that time, with 30 million immigrants, per capita GDP doubled. Steel production boomed, surpassing Britain, France, and Germany combined. Railway miles quadrupled. A period that began amid the ruins of civil war ended with America in first place among the world’s great economic powers.
Washington collected lots of tariffs then, but little else. Before the 16th Amendment paved the way for federal income taxes in 1913, Congress was spending barely 1% of…
