November 28, 2012, 12:25 pm
Coxey’s Army in Washington, D.C., in an image from the Library of Congress
America faced its first fiscal cliff in 1893. The date should be familiar. It was the start of the Panic of 1893, and it led to the biggest shift ever in the composition of the U.S. Congress. Contemporaries called it the “Avalanche of 1894.”
Then as now, a Republican-sponsored change in tax policy brought about the crisis. Throughout the 1880s the United States had run a budget surplus. Americans paid no income tax, but a tariff on imports paid most of the bills. Nearly 25 percent of this came from a tax on imported sugar. The so-called Sugar Trust, run by Henry O. Havemeyer, had long favored a high tax on refined sugar to protect American sugar refineries against foreign competition.
But in the late 1880s a new California rival, Claus Spreckels,…