Once he had assumed the responsibilities of office, McKinley immediately turned his attention to measures for assuring economic recovery. The tariff received first consideration, and even before his inauguration McKinley had worked with leaders of the House to secure legislation that would be acceptable. Nelson Dingley, who chaired the Ways and Means Committee, submitted a bill that did not drastically raise the duties of the Wilson-Gorman Tariff of 1894. While it passed the House quickly at the end of March, the Senate increased the rates, and in its final form it became the highest tariff in American history. McKinley had reservations, but he nevertheless signed the bill into law on 24 July 1897. One reason he did is that the provision for reciprocity trade agreements, though inadequate, promised an opportunity to bring the United States into an international economic system from which the world might secure extraordinary rewards. The distance McKinley had moved from protectionism to market expansion became apparent during the summer of 1897, when he told the Cincinnati Commercial Club that in addition to serving economic ends, good trade ensured goodwill. "It should be our settled purpose to open trade wherever we can," he argued, "making our ships and our commerce messengers of peace and amity."
A second measure for economic recovery involved carrying out the Republican party pledge to secure an international agreement on bimetallism. McKinley appointed a special commission to secure such an agreement, but little came of its efforts. England and France committed themselves to the gold standard, and Japan, Russia, and Germany followed soon after. Apart from positions taken by other nations, however, bimetallism quickly became a dead issue. New discoveries of gold in South Africa, Australia, and Canada brought a dramatic increase in world supplies and a corresponding decline in gold prices. The demand for silver quieted as the need for it disappeared. Production curves and indexes of business activity began to rise during the summer of 1897, and Americans began to turn their attention to other matters.
Economic trends, ideas, and programs interacted during the late nineteenth century. Business fluctuations prompted economic theorists, both professional and amateur, to develop explanations of recurrent crises. Between 1873 and 1896, monetary theories were often central in the arguments of economic analysts, but in those same years an alternative explanatory model attracted increasing attention. That model posited unlimited industrial and agricultural productivity, on the one hand, and a limited home market, on the other. Given such conditions, demand would stagnate while stocks and inventories built up unless American producers found new outlets beyond the home market. Here was a theory that provided not only an explanation of the business cycle but a program for action as well. It was a theory that bypassed controversies over the currency; bimetallists and monometallists could support trade expansion with equal enthusiasm.
No one found overproduction and market-expansion ideas more convincing than did McKinley. In 1895 he had delivered the keynote address to the new National Association of Manufacturers at its organizational meeting. "We want our own markets for our manufactures and agricultural products," he told a receptive audience. "We want a foreign market for our surplus products.. . . We want a reciprocity which will give us foreign markets for our surplus products, and in turn that will open our markets to foreigners for those products which they produce and which we do not." During McKinley's first presidential year his new insight into the importance of commercial expansion provided a frame of reference into which he could fit developments abroad. Increasingly, foreign affairs demanded his most careful consideration.
The first problem in foreign affairs to attract McKinley's attention was the annexation of Hawaii, a matter that had troubled his predecessor. Hoping for American ownership of the islands, sugar growers there had staged a revolution against Queen Liliuokalani in 1893. President Harrison had forwarded a treaty of annexation to the Senate, but Cleveland withdrew it on the grounds that it did not represent the will of the Hawaiian people. The Republican platform of 1896 had included a plank favoring annexation, and in December 1897, McKinley advised Congress to proceed. Troubles in Cuba were exacerbating tensions with Spain, and the president believed that the need for a base in the Pacific justified taking the islands. Congress finally passed a joint resolution annexing Hawaii, and McKinley signed it on 7 July 1898. By that time the United States was at war with Spain.