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Protective Tariffs

Protective Tariffs

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National governments have used tariffs for two purposes. Tariffs imposed for this purpose are known as protective tariffs, and have always divided opinion between consumers of imports, who have opposed them, and manufacturers, who have benefited from them.In the first session of Congress in 1789, James Madison was an acknowledged leader. Sitting in the House of Representatives, Madison used his influence to create compromises between the desires of northern manufacturers and the southern regions, from which he came, which was consumers of manufactured imports and exporters of raw materials, saw a protective tariff as a penalty on themselves.

Opposition of

…the presidential campaign was the protective tariff. Cleveland opposed the high tariff, calling it unnecessary taxation imposed upon American consumers, while Republican candidate Benjamin Harrison defended protectionism. On election day, Cleveland won about 100,000 more popular votes than Harrison, evidence of the esteem in which the president was held and…

…also focused attention upon the tariff, the principal source of this excess revenue. In 1883 Congress had reviewed the tariff and made numerous changes in the rates, increasing the tariff on some items and reducing it on others, without materially decreasing the revenue received. Cleveland believed that the surplus presented…

…the tariff question, opposing the protective tariffs of 1816 and 1824, which were harmful to the dominant commercial interests of New England. He reasoned that such a stimulus to manufacturers was both unconstitutional and inexpedient, for Congress had been given the power to levy duties only for raising revenue, and…

Role in

…turned to protecting agriculture through tariffs, with the major exceptions being Great Britain, Denmark, and the Netherlands. In the first decade of the century there was an increasing demand for agricultural products, which was a result of industrialization and population growth, but World War I produced devastating losses in land…

…and other glass, the first protective tariff passed under the new U.S. Constitution, was proposed. Amelung’s ambitious project failed to prosper, however, and in 1790 he petitioned Congress for help. After debating whether such a loan was within its constitutional powers and whether it was advisable to set such a…

Protective tariffs are designed to shield domestic production from foreign competition by raising the price of the imported commodity. Revenue tariffs are designed to obtain revenue rather than to restrict imports. The two sets of objectives are, of course, not mutually exclusive. Protective tariffs—unless they…

Protective tariffs have historically been employed to stimulate industries in countries beset by recession or depression. Protectionism may be helpful to emergent industries in developing nations. It can also serve as a means of fostering self-sufficiency in defense industries. Import quotas offer another means of…

Protective tariff

By drawing boundaries against wrongful conduct, law provides a protective zone of freedom within those boundaries.

For instance, how do you balance honesty with any protective urge?

And not that anyone would know I have a self-protective urge, but I do have one.

Former Texas governor Ann Richards was a big fan of the Texas Rangers, a contingent of which was her protective detail.

Overnight people shed their fears, their protective camouflage and their restraints.

But they have tied their credit system in the bonds of narrow banking laws and their trade in those of a cramping tariff.

Fortunately the results would not be immediately apparent, otherwise he would be compelled to raise his tariff for cheap suits.

Let us look at their two main measures—the new tariff and the new corn-law.

There is a perfect identity of principle, both working to the same good end, between the existing corn-law and the new tariff.

The ideas are simpler, the numina seem less cold and more protective, the worshippers more sensible of divine aid.

America's History of Protectionism

Protectionism has been a frequent feature of the republic since its founding.

IN LATE August 1985, while President Ronald Reagan vacationed at his ranch above Santa Barbara, California, his political director, Ed Rollins, had dinner one Saturday night with reporters for the New York Times and Washington Post. The mischievous politico leaked a story that received front-page treatment Monday morning. President Reagan had decided, the newspapers reported, to reject the pleas of U.S. shoe manufacturers for import tariffs designed to protect them from foreign competition. No big surprise there. Reagan was known as a fervent free trader, hostile to tariffs and other barriers to global commerce.

But discerning Washington hands detected a curious disparity in how the two influential newspapers handled the story. The Post focused on the shoe decision, noting only in passing, that Reagan also was weighing actions to counter unfair practices used by U.S. trade partners. The Post headline read, “Reagan Set to Reject Shoe Curbs.” But the Times turned that around with a top headline that stated, “Reagan Weighing Trade Sanctions, Officials Report.” The paper’s lead paragraph emphasized the president’s decision to weigh “punitive actions” against errant nations abusing America’s free-trade principles.

This led to confusion about Reagan’s true stance on trade at a time when that issue was roiling the country’s politics and when some White House clarity was needed. The president had his press secretary inform White House reporters that Reagan would deliver a major trade address in about a month. A trade-policy struggle within the administration ensued that was so intense that the president’s speechwriters were barred from creating the final draft of the speech.

This episode exemplifies the contention that has surrounded the trade issue throughout American history, starting with Alexander Hamilton, the country’s first treasury secretary and also its first significant protectionist. Today, protectionism is back. The main drivers of this new surge are Republican presidential nominee Donald Trump and the Democratic insurgent Bernie Sanders. Even Hillary Clinton is playing a role. Far from being an aberration, opposition to free trade has been a constituent part of America’s history.

THE ED ROLLINS episode reflected the fact that Reagan faced a political problem of serious magnitude in his second term. Protectionist sentiment was growing in Congress, unleashed by burgeoning imports primarily from Asia. Some three hundred protectionist bills had been introduced in Congress to help various industries beset by foreign competition, including electronics, appliances, textiles, clothing, toys and automobiles. The struggling shoe industry had placed itself at the vanguard of this movement. In fifteen years, U.S. shoe manufacturers had shuttered two-thirds of their domestic factories as shoe imports to the United States grew from just 22 to 76 percent. In 1977, Reagan’s predecessor, Democrat Jimmy Carter, had imposed quotas on shoes imported from Korea and Taiwan, but Reagan had allowed them to lapse.

Now, in the autumn of 1985, some Reagan aides, notably Rollins himself and U.S. Trade Representative Clayton Yeutter, were telling the president that, if he didn’t throw a bone here and there to beleaguered manufacturers, angry protectionists in Congress would gain sufficient strength to challenge the administration’s free-trade stance. Officials at the Commerce, Labor and Agriculture Departments agreed. But Secretary of State George P. Shultz and Treasury Secretary James A. Baker III opposed imposing protectionist measures unilaterally. They favored negotiations with trading partners to end unfair trading practices, using existing sanctions authority as a bargaining chip.

The shoe industry presented a revealing case study. The U.S. International Trade Commission, an independent federal agency, had responded to industry pleas by recommending quotas on shoe imports, restricting them to 60 percent of the American market for five years. But footwear retailers retorted that restrictions would cost consumers billions of dollars in higher shoe prices. One dissenting trade commissioner said the quotas would only save twenty-six thousand U.S. jobs at the cost of $1.28 billion to consumers annually, three times the wages of the workers whose jobs would be saved. Reagan rejected the quota idea. Other administration officials suggested a 30 percent tariff to be phased out over five years—a compromise designed to give the domestic industry relief without imposing actual import restrictions. Reagan rejected this option as well. One official told reporters that he “just didn’t buy the argument that we should accept a small dose of protectionism to head off a larger injection.”

But the administration still needed a coherent policy. Reagan needed to assuage agitated congressional protectionists while still preserving his fundamental free-trade convictions. The presidential speech, slated for Monday, September 23, 1985, was designed to serve this purpose. Just after noon on the Thursday before the scheduled address, White House speechwriter Bentley Elliott completed the final draft. Elliott and his fellow speechwriters saw themselves as the president’s keepers of the conservative flame—free-market believers who followed the dictum so popular among administration hard-liners, “Let Reagan be Reagan.” The draft was a rousing defense of free trade and a pugnacious attack on the nettlesome protectionist forces swirling around Capitol Hill. This, thought Elliott, was what Reagan wanted.

But when the draft reached the office of White House Chief of Staff Donald Regan, he exploded. One of Regan’s top aides called it “an abomination,” and Regan thought the draft took on a politically risky tone that could anger members of Congress and fuel protectionist fires. Regan sent it back for a rewrite, then called Elliott into the Old Executive Office Building to say the task was being yanked away from him. A Regan aide, Alfred Kingon, would write the speech in the West Wing. Out went the rousing free-trade rhetoric in came rough language directed at what the United States considered unfair practices employed by its trading partners. A top Regan hand dismissed the speech-writing team as “just a bunch of ideologues who are hep on free trade.”

When a Wall Street Journal reporter got his hands on Elliott’s final draft and utilized it to pry out elements of the internal dispute, both sides used the reporter to cast darts at the opposition through quotations in the subsequent story. Thus did a nasty internal controversy become a public spectacle. And all this occurred in an administration that fully favored free trade the only question was the tactical response to protectionist agitations welling up from within the country. Such was the capacity of the trade issue to wreak political havoc.

PROTECTIONISM HAS been a significant part of the country’s trade history going back to its first revenue law, crafted in 1789 by George Washington’s financial wizard, Hamilton. This original tariff bill imposed an average taxation level of only about 8.5 percent on imported goods. Hamilton argued that any protection encompassed in those duties, as opposed to revenue requirements, should be discontinued as soon as protected industries established themselves in the American economy. But northeastern industrialists predictably asserted that protection should be substantial and permanent to ensure national prosperity.

The trade issue comes into focus through an understanding of the political conflict between Hamilton and Thomas Jefferson at the dawn of the American republic. Hamilton favored executive power wielded by elites for the purpose of economic expansion and national greatness. He advocated federal-level projects and policies—particularly a powerful national bank and protective tariffs to help budding manufacturers and finance federal action—to pull up the nation from above. Hamilton’s views, refined by the next generation of political leaders, became the foundation for Henry Clay’s Whig Party and his philosophy of government, which he called the “American System.” This model emphasized the construction of federal public works such as roads, bridges and canals. High tariffs would also be enacted, in order to pay for civic programs and boost industrial expansion.

By contrast, Jefferson and his later devotee, Andrew Jackson, opposed high levels of governmental intrusiveness into the private economy. Such policies, they argued, would inevitably lead to special privileges for the favored few. They wanted to keep tax levels as low as possible and reduce federal interference so the people could build up the nation from below.

The Hamilton-Clay forces won the first battles. They created a national bank (actually, two banks, both chartered at different times by the federal government) and enacted a major tariff bill during the presidency of John Quincy Adams, whose philosophy was in the Hamilton-Clay mold (Clay was his secretary of state). This bill slapped high duties on iron, molasses, distilled spirits, flax and various finished goods. Northern producers thrived under the protections of the tariff. But southerners hated the bill for two reasons: it raised prices on necessities not produced in the South and by crimping the importation of British goods, it reduced Britain’s ability to purchase southern cotton. Southerners called Adams’s import tax the “Tariff of Abominations.”

South Carolina decided it would escape this particular abomination through a highly provocative doctrine called “nullification.” The idea was that the state would exercise what it considered its sovereignty in declaring the law null and void. Here we had the country’s first really high tariffs generating severe regional tensions that culminated, during the subsequent Jackson administration, in an ominous constitutional crisis. As a Democrat, Jackson despised high tariffs, but he had declined to expend the political capital required to reduce the Tariff of Abominations. He found himself in the position of having to defend the tariff against what he deemed treasonous threats from a southern state. Jackson quickly made clear he would not tolerate this assault on the Constitution.

Protective Tariffs: The Primary Cause of the Civil War

Although they opposed permanent tariffs, political expedience in spite of sound economics prompted the Founding Fathers to pass the first U.S. tariff act. For 72 years, Northern special interest groups used these protective tariffs to exploit the South for their own benefit. Finally in 1861, the oppression of those import duties started the Civil War.

In addition to generating revenue, a tariff hurts the ability of foreigners to sell in domestic markets. An affordable or high-quality foreign good is dangerous competition for an expensive or low-quality domestic one. But when a tariff bumps up the price of the foreign good, it gives the domestic one a price advantage. The rate of the tariff varies by industry.

If the tariff is high enough, even an inefficient domestic company can compete with a vastly superior foreign company. It is the industry’s consumers who ultimately pay this tax and the industry’s producers who benefit in profits.

As early as the Revolutionary War, the South primarily produced cotton, rice, sugar, indigo and tobacco. The North purchased these raw materials and turned them into manufactured goods. By 1828, foreign manufactured goods faced high import taxes. Foreign raw materials, however, were free of tariffs.

Thus the domestic manufacturing industries of the North benefited twice, once as the producers enjoying the protection of high manufacturing tariffs and once as consumers with a free raw materials market. The raw materials industries of the South were left to struggle against foreign competition.

Because manufactured goods were not produced in the South, they had to either be imported or shipped down from the North. Either way, a large expense, be it shipping fees or the federal tariff, was added to the price of manufactured goods only for Southerners. Because importation was often cheaper than shipping from the North, the South paid most of the federal tariffs.

Much of the tariff revenue collected from Southern consumers was used to build railroads and canals in the North. Between 1830 and 1850, 30,000 miles of track was laid. At its best, these tracks benefited the North. Much of it had no economic effect at all. Many of the schemes to lay track were simply a way to get government subsidies. Fraud and corruption were rampant.

With most of the tariff revenue collected in the South and then spent in the North, the South rightly felt exploited. At the time, 90% of the federal government’s annual revenue came from these taxes on imports.

“Cartoon drawn during the nullification controversy showing the Northern domestic manufacturers getting fat at the expense of impoverishing the South under protective tariffs.” – Encyclopedia of Britannica

Historians Paul Collier and Anke Hoeffer found that a few common factors increase the likelihood of secession in a region: lower wages, an economy based on raw materials and external exploitation. Although popular movies emphasize slavery as a cause of the Civil War, the war best fits a psycho-historical model of the South rebelling against Northern exploitation.

Many Americans do not understand this fact. A non-slave-owning Southern merchant angered over yet another proposed tariff act does not make a compelling scene in a movie. However, that would be closer to the original cause of the Civil War than any scene of slaves picking cotton.

Morrill Tariff Cartoon, featured in Harper’s Weekly on April 13, 1861 saying:THE NEW TARIFF ON DRY GOODS.
Unhappy condition of the Optic Nerve of a Custom House Appraiser who has been counting the Threads in a Square Yard of Fabric to ascertain the duty thereon under the New MORRILL Tariff. The Spots and Webs are well-known Opthalmic Symptoms. It is confidently expected that the unfortunate man will go blind.

Slavery was actually on the wane. Slaves visiting England were free according to the courts in 1569. France, Russia, Spain and Portugal had outlawed slavery. Slavery had been abolished everywhere in the British Empire 27 years earlier thanks to William Wilberforce. In the United States, the transport of slaves had been outlawed 53 years earlier by Thomas Jefferson in the Act Prohibiting the Importation of Slaves (1807) and the Abolition of the Slave Trade Act in England (1807). Slavery was a dying and repugnant institution.

The rewritten history of the Civil War began with Lincoln as a brilliant political tactic to rally public opinion. The issue of slavery provided sentimental leverage, whereas oppressing the South with hurtful tariffs did not. Outrage against the greater evil of slavery served to mask the economic harm the North was doing to the South.

The situation in the South could be likened to having a legitimate legal case but losing the support of the jury when testimony concerning the defendant’s moral failings was admitted into the court proceedings.

Toward the end of the war, Lincoln made the conflict primarily about the continuation of slavery. By doing so, he successfully silenced the debate about economic issues and states’ rights. The main grievance of the Southern states was tariffs. Although slavery was a factor at the outset of the Civil War, it was not the sole or even primary cause.

The Tariff of 1828, called the Tariff of Abominations in the South, was the worst exploitation. It passed Congress 105 to 94 but lost among Southern congressmen 50 to 3. The South argued that favoring some industries over others was unconstitutional.

The South Carolina Exposition and Protest written by Vice President John Calhoun warned that if the tariff of 1828 was not repealed, South Carolina would secede. It cited Jefferson and Madison for the precedent that a state had the right to reject or nullify federal law.

In an 1832 state legislature campaign speech, Lincoln defined his position, saying, “My politics are short and sweet, like the old woman’s dance. I am in favor of a national bank . . . in favor of the internal improvements system and a high protective tariff.” He was firmly against free trade and in favor of using the power of the federal government to benefit specific industries like Lincoln’s favorite, Pennsylvania steel.

The country experienced a period of lower tariffs and vibrant economic growth from 1846 to 1857. Then a bank failure caused the Panic of 1857. Congress used this situation to begin discussing a new tariff act, later called the Morrill Tariff of 1861. However, those debates were met with such Southern hostility that the South seceded before the act was passed.

The South did not secede primarily because of slavery. In Lincoln’s First Inaugural Address he promised he had no intention to change slavery in the South. He argued it would be unconstitutional for him to do so. But he promised he would invade any state that failed to collect tariffs in order to enforce them. It was received from Baltimore to Charleston as a declaration of war on the South.

Slavery was an abhorrent practice. It may have been the cause that rallied the North to win. But it was not the primary reason why the South seceded. The Civil War began because of an increasing push to place protective tariffs favoring Northern business interests and every Southern household paid the price.

6/30/2013: We were surprised by some of the reactions to our recent article on protective tariffs as one of the primary causes of the Civil War. We have written a post expanding on our citations and reasoning in Jefferson Davis Posthumously Responds to Our Readers’ Reactions

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@horsebite - I agree that free trade is important. I don't want to keep other countries from selling their things here. I just want the same rules for all. And I agree that other countries should not face tariffs here in the U.S., as long as they do not put them on our products.

@ Nepal and parkthekarma - To be fair, all countries place tariffs on some imported goods. So even if U.S. goods face tariffs, so do the goods of other countries coming into the U.S. in many cases.

I agree with you that a level playing field and free trade is very important, and I think all countries should work toward this. parkthekarma June 14, 2011

@ Nepal2016 - You are so right! I have worked for one of the "Big 3" for almost 30 years now, and it seems like our industry has been on the ropes so many times while more and more imported cars are coming in here. It started as just a trickle in the 60s and 70s, but now everywhere you look you see a foreign car. I know that we sell a lot of cars in Europe, but not every country opens their markets like we do.

I am very proud of the cars I make. I think our vehicles can compete everywhere, but we just need a level playing field to allow us a fair shot. Nepal2016 June 12, 2011

What annoys me about protective tariffs is they are often so one sided. It seems like Americans who oppose protective tariffs believe that all trade coming into the U.S. should be free, which is an admirable goal on paper, but it seems like we (the U.S) are the only ones playing fair.

Look at Japanese cars. They come over to American in droves, but then how many of our cars go there? And when they do, what kind of taxes and tariffs are put on them to make sure that only a small percentage of our stuff gets sold there? I'm all for fair trade but if it's going to be fair, let's make it fair!

History of Protective Tariff Laws

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Protective Tariffs - History

Following the crises with France and Britain, the federal government came to rely almost exclusively on the tariff as a source of funding. As the nation’s economic and political systems began to mature and diversify, however, the consensus on the tariff’s role gradually broke down. Particularly within the context of sectional and partisan conflict, the tariff assumed a political significance beyond its putative revenue-generating function.

1816 The 14th Congress passed the Tariff Act of 1816 levying a series of 25 percent duties designed to encourage domestic manufacturing. In the wake of the conflict with Britain, nationalist war-hawks like Henry Clay and John Calhoun sought to nurture independent industry that had sprung up during the Embargo era, while reducing reliance on British manufactures. Even so, the Tariff Act of 1816 was only mildly protectionist, more in keeping with those enacted since 1789 than with those that would follow after 1820. Manufacturing interests in the United States (particularly in the West and New England) did not yet carry the political clout in Congress that mercantile and shipping interests (who tended to oppose tariffs) did. In fact, no sustained popular support for protection developed much before 1819.

1819 In the wake of the Panic of 1819, a credit crisis sparked by a sharp drop in world agricultural prices, numerous economic interests pushed for protective tariffs to minimize the threat of cheap imported goods from Europe, setting the stage for the later tariffs of 1824 and 1828.

In the landmark case McCulloch v. Maryland, the Supreme Court struck down a Maryland state tax on notes issued by the Baltimore branch of the Second National Bank of the United States. The Maryland legislature had designed the tax to preserve the competitive advantage of state-chartered banks and to reign in the Second Bank’s powers to monitor reserves and regulate credit. Speaking for the Court, Chief Justice John Marshall rejected the defendants’ claims that (1) Congress had no constitutional authority to charter a Bank and (2) Maryland had a right to tax activities within its borders. He rebutted the first argument with an expansive reading of the "necessary and proper" clause. Favoring the Federalists’ "loose construction" of the Constitution, he determined control of currency and credit well within the purview of congressional authority. In rejecting the second point, Marshall concurred with Daniel Webster, legal counsel for the bank, who insisted that a tax employed in this manner would render the national government dependent on the states. "The power to tax is the power to destroy," Marshall asserted, and in so doing he proclaimed the dominance of national statutes over state legislation.

1820 A House bill to increase the entire tariff schedule by 5 percent — with even higher duties on cotton and wool cloth, finished clothing, iron, and hemp — passed the House but was not enacted. Nevertheless, the failed measure reflected important trends that would influence the course of tariff policy in the future. Middle and Western states provided the bulk of support for the tariff. New England, with its mix of powerful mercantile interests and budding manufacturers, split evenly over the bill, while the South, lacking any real industrial base, voted solidly against it. But the South was swimming against the demographic tide, on its way to becoming a regional minority in Congress.In the decade from 1810 to 1820, the South's rate of growth peaked at 28 percent, as compared with 38 percent for the rest of the nation. The states below the Mason-Dixon line and the Ohio River comprised 47 percent of the population in 1810, but only 45 percent just 10 years later. Congressional reapportionment based on the Census of 1820 redounded to the advantage of the West and Middle Atlantic regions, where support for a protective tariff grew enthusiastically. Similarly, 8 of the 12 Senate seats added since 1816 tended to represent pro-tariff states.

1824 Henry Clay, a champion of federally sponsored internal economic development (articulated in a set of policies, including protective tariffs, known collectively as the American System) served as Speaker of the House. He controlled the selection of committee chairman, and installed John Tod of Pennsylvania, an ardent protectionist, to head the Committee on Manufactures. Tod wasted little time reporting out a bill that levied a 35 percent duty on imported iron, wool, cotton, and hemp. Since the federal Treasury reported a surplus, the rate increases had little to do with revenue needs.

Congressional reapportionment reflecting population increases in the Ohio Valley and the North enabled the protective tariff to pass over southern opposition. More unified support for the tariff among New England legislators bespoke of the expansion of manufacturing in the region. Representatives like Daniel Webster of Massachusetts who previously opposed protection now advocated it unconditionally. Without protective duties, which accounted for an estimated three-fourths of textile manufacturing’s value added, half the New England industrial sector would have gone bankrupt, since European technology produced cloth much more cheaply than American mills could.

1828 During the administration of John Quincy Adams, Jackson supporters lobbied to raise tariffs on hemp, wool, fur, flax, liquor, and imported textiles, a package catered to the benefit of states in the Mid-Atlantic, Ohio Valley, and New England. In fact, the tariff elevated the rate on manufactured goods to about 50 percent of their value, resulting in significantly greater protection for New England cloth manufacturers. The South, by contrast, did not benefit at all from this scheme, and stood to get soaked by higher prices on goods the region did not produce. The tariff also threatened to reduce the flow of British goods, making it difficult for the British to pay for the cotton they imported from the south.

Jackson supporters, with a strong southern base, normally opposed the protective tariffs advanced by the Adams faction. The 1828 bill represented a blatant appeal to sections where the Jacksonians were weaker politically. Congressional supporters of Jackson felt they had little to lose, figuring their rivals would shoulder the blame in the upcoming election anyway. The marked upward revision of the tariff rates enacted by the Tariff of 1828, dubbed the Tariff of Abominations by its southern opponents, formed the basis for the nullification crisis.

Calhoun was one of the most fervent War Hawks during the 1812 crisis with Britain, and a sponsor of the tariff enacted in 1816. Constitutionally speaking, his early career seemed to mark him as a loose contructionist. During the late 1820s, however, his views began to undergo significant revision. The South Carolina senator ultimately emerged as the era’s leading states’ rights sectionalist.

Calhoun had based his earlier support for the tariff on the perceived need to assist fledgling, defense-related industries ­ part of a broader strategy to overcome the nation’s commercial dependence on Britain. By 1826, defense was no longer a salient issue. The infant industries of 1816 were now querulous adolescents, clamoring for an extension of the protective tariff system. The economy of Calhoun’s South Carolina was exclusively a slave economy, producing agricultural products like cotton, rice, and indigo. Having no manufacturing concerns of its own, South Carolina depended on imports from the North and abroad tariffs made both more expensive. The so-called "40 bales theory" articulated southern economic reservations. The theory attempted to explained how tariffs on manufactured goods reduced demand for the South’s raw cotton: a 40 percent tariff on cotton finished goods led to 40 percent higher consumer prices, which translated to 40 percent fewer sales, since consumers had less money to spend following the Panic of 1819. And 40 percent fewer sales meant cotton manufacturers purchased 40 percent less cotton. Calhoun’s rise to prominence as a national figure led him to take up the fight against economic policies that hurt the South.

Calhoun’s opposition to tariffs, or more accurately the federal powers they implied, cannot be separated from his pressing desire to preserve the slave system. He feared that as border-south states gravitated to northern economic orbits, slavery in those states would grow less economically viable, their percentage of black slaves would diminish, and anti-slavery factions would succeed in eliminating slavery there (the percentage of slaves in states like Maryland had dropped precipitously since 1790). If slavery evaporated at the periphery, Calhoun believed, southern slave interests would face perpetual political perils. The same geographic coalitions that enacted the tariff laws in Congress could succeed in limiting slavery’s expansion into western territories, and might even threaten the institution in the deep south. Kentucky’s Henry Clay, one of the congressional champions of the tariff, actually proposed that some of the revenue collected be used to fund state colonization societies dedicated to relocating African Americans overseas. By diffusing the American black population abroad, such organizations effectively sought to phase out slavery in the United States. In this context, Calhoun and his supporters targeted the tariff issue to test the limits of federal power, since the south had continually lost tariff-related battles.

From Calhoun’s perspective, tariffs redistributed wealth from the South to northern manufacturers, which meant that federal power was being routinely employed to benefit one section over another. The fear that certain factions would capture federal powers to repress minorities had resonated since the Constitution had first been debated. The Virginia and Kentucky Resolves of 1798 [external link] , drafted in reaction to Alien and Sedition Act, hypothesized a limited compact among states authorizing a federal government of limited powers. Under this scheme, Congress could pass only those acts that served a common purpose — protective tariffs didn’t fit those requirements.

Calhoun believed a measure’s constitutionality turned on whether it provided equal benefits to all interests. In his South Carolina Exposition and Protest (1828) he argued that the Tariff of 1828 was unconstitutional, and that the states had the right to nullify such laws within their borders by calling nullification conventions. Following this act of interposition, if three-fourths of the rest of the states affirmed Congress’s power to enforce the law, the dissident state had the option of seceding from the Union. Implicit in this scheme was the concept of the concurrent majority: If each state possessed a veto, then every conceivable interest would theoretically be represented. Calhoun trusted such a system to ensure a truly disinterested government where all interests had to be in accord. The threat of a state veto would prevent federal taxes not fair to all, which, in fact, meant most taxes. An institutionalized paucity of funds would discourage patronage-minded office seekers. For Calhoun, the concurrent majority would foster both disinterested laws and disinterested representatives, tempering the excesses of a corrupt democratic spoils system.

1832 In July, Congress passed legislation that lowered tariff rates somewhat, but retained the high 1828 rates on manufactured cloth and iron. In November, South Carolina’s special Nullification Convention declared the Tariffs of 1832 and 1828 unconstitutional [external link], and forbade collection of customs duties within the state.

Democrat Andrew Jackson served as both president and the leader of a national party. That party included pro-tariff states like Pennsylvania that had proffered supported for his candidacy. Jackson had never been as captivated by the tariff issue as most southern, agrarian, states-rights Jacksonians had (particularly South Carolinians), even though they represented his majority constituency. Jackson concerned himself more with defeating the National Bank and Indian removal. In December, he called for a further easing of tariff rates. Simultaneously, however, he declared secession a "revolutionary act" in his Nullification Proclamation [external link], and specifically attacked the idea that secession represented a viable constitutional option.

1833 Jackson responded to the nullification controversy with an olive branch and a sword. The Tariff of 1833, or Compromise Tariff, instituted automatic reductions in duties between 1833 and 1842. The corresponding Force Bill authorized the president to use arms to collect Customs duties. Henry Clay, known as the Great Compromiser, negotiated the Compromise Tariff directly with Calhoun. He feared the possibility of civil war, and wanted to preserve the tariff principle. Jackson desired to preserve the principle of national supremacy while mitigating the high tariffs that had triggered conflict in the first place.

1837 A financial panic induced by a reduction in the flow of British capital investment triggered an extended economic depression, lasting from 1837 to 1843. The Whig Party made its greatest political gains campaigning for more active government programs to stimulate the economy along the model of Henry Clay’s American System. This platform included higher tariffs.

1840 In an electoral sweep, the Whigs gained a congressional majority and won the presidency (their candidate, William Henry Harrison, died soon after the election, with Virginia’s John Tyler replacing him). The party platform endorsed revenue tariffs designed to generate significant funds, part of which were to be distributed to the states to pay for internal improvements (roads and canals), another component of the American System.

1842 During the depression, the Whigs wanted to cancel the final round of rate reductions mandated under the Compromise Tariff, because they needed revenue to distribute to the states for internal improvements. President Tyler, however, vetoed the measure. Eventually he, too, realized the need for funds, and signed a new bill that maintained some tariffs above 20 percent, while abandoning revenue distribution. Tyler was an aristocratic Virginia planter and more of a states-rights, anti-Jackson Whig than an advocate of the Whig economic program. He actually opposed the urban commercial interests of his own state. Because the conservative Tyler viewed Jackson as a threat to states rights, he had joined an opposition movement that included a wide variety of Jackson opponents, including those like Clay and Daniel Webster who desired a stronger federal government. The organization that eventually coalesced into the Whig party was a "big tent," initially galvanized in opposition to a single individual. Subsequently, its opposing wings coexisted uneasily. Tyler scuttled most of the party’s economic initiatives, infuriating northern interests.

1846 Robert Walker, a Mississippian and Secretary of the Treasury for the Democratic Polk administration, convinced Congress to pass the Walker Tariff. The act slashed all duties to the minimum necessary for revenue. Polk believed the Democrats had a mandate to overturn the Clay-Whig American System. But numerous northern Democrats had supported a modestly protective tariff, and were disappointed that Polk broke his campaign promise to combine the revenue tariff with a measure of protection. Polk alienated this constituency just as he had done with Western Democrats when he vetoed the 1846 Rivers and Harbors Bill.

In Britain, Parliament repealed the Corn Laws (external link] (tariffs on imported bread grains). Along with the Walker Tariff, the repeal of the Corn Laws seemed to signal a new era of freer world trade.

1846-1848 Trade and tariff revenues were so buoyant that the Polk administration did not have to raise taxes to pay for the Mexican War. Existing rates funded more than 60 percent of the $100 million of wartime costs, while borrowing covered the rest. After the war, the persistent robustness of Customs duties enabled the federal government to pay off nearly all its Mexican War debts by the time of the Civil War. Demoralized by the popularity of the Polk administration’s economic programs, congressional Whigs lost their enthusiasm for campaigning on the American System.

1850s Low tariffs became less of a salient issue in the 1850s, when wages and profits rose during economic boom-times. But the economic upturn caused political problems for the Whig Party. The American System seemed more and more irrelevant. Elected in 1848, Whig President Zachary Taylor was not personally connected with Clay or the American System. He had run instead on a "Friend of South" campaign in wake of the northern Democrat-inspired Wilmont Proviso (the 1846 proposal that slavery be excluded from the territory annexed during the war with Mexico). Slavery issues tended to dominate political debate.

1857 Democrats lowered tariffs further. An economic panic hit soon thereafter, precipitating a fall-off in imports in the wake of the recession that followed. Government revenues plummeted by 30 percent. In response, the nascent Republican Party called for higher tariffs.

Debunking the Civil War Tariff Myth

Dr. Marc-William Palen is lecturer in imperial history at the University of Exeter, and research associate at the U.S. Studies Centre, University of Sydney. He is the author of “The Great Civil War Lie,” New York Times, 5 June 2013 “The Civil War’s Forgotten Transatlantic Tariff Debate and the Confederacy’s Free Trade Diplomacy,” Journal of the Civil War Era (March 2013).

The outbreak of the American Civil War is now more than 150 years past. All the while, the question of what caused the conflict continues to spark disagreement, this despite a longstanding consensus among specialists that slavery – a cultural, political, ideological, and economic institution that permeated (and divided) mid-19th-century American society – was the primary cause of the war. One of the most egregious of the so-called Lost Cause narratives instead suggests that it was not slavery, but a protective tariff that sparked the Civil War.

On 2 March 1861, the Morrill Tariff was signed into law by outgoing Democratic President James Buchanan to protect northern infant industries. A pernicious lie quickly formed around the tariff’s passage, a lie suggesting that somehow this tariff had caused the US Civil War. By ignoring slavery’s central role in precipitating secession and Civil War, this tariff myth has survived in the United States for more than a century and a half – and needs to be debunked once and for all.

In trying to make their case but lacking adequate evidence for the 1860-61 period, “Lost Cause” advocates instead commonly hark back to the previously important role that another protective tariff had played in the 1832 Nullification Crisis. They then (mistakenly) assume the political scenario to have been the same three decades later – that southern secession from 1860-61 was but a replay of the divisive tariff politics of some thirty years before. From this faulty leap of logic, the argument then follows that the Republican Party’s legislative efforts on behalf of the Morrill Tariff from 1860 until its March 1861 passage became the primary reason for southern secession – and thus for causing the Civil War.

Because of the unfortunate timing of the Morrill Tariff’s passage – coinciding closely as it did with the secession of various southern states – this has remained perhaps the most tenacious myth surrounding the Civil War’s onset, and one that blatantly ignores the decidedly divisive role of slavery in mid-century American politics and society. Accordingly, the sesquicentennial of the Civil War has witnessed a slew of ahistorical tariff-centered explanations for the conflict’s causation, articles like “Protective Tariffs: The Primary Cause of the Civil War,” which appeared in Forbes Magazine in June 2013. Although the article was quickly pulled from the Forbes website following a rapid response from historians on Twitter (#twitterstorians), this particular piece of tariff fiction still exists on the author’s website as well as in a local Virginia newspaper, the Daily Progress.[1]

Similar tariff-driven arguments for the war’s causation continue to be given voice in American news outlets, in viral Youtube videos, and even on a recent Daily Show episode:No, not by host Jon Stewart, but by that evening’s guest, Judge Andrew Napolitano, a FOX news analyst and NYC law professor. In response to Stewart’s question “Why did Abraham Lincoln start the Civil War?”, Napolitano answered: “Because he needed the tariffs from the southern states.”[2]

The Civil War’s tariff myth has somehow survived for more than a century and a half in the United States. Let’s put an end to it.

In debunking the tariff myth, two key points quickly illustrate how the tariff issue was far from a cause of the Civil War:

1. The tariff issue, on those rare occasions in which it was even mentioned at all, was utterly overwhelmed by the issue of slavery within the South’s own secession conventions.

2. Precisely because southern states began seceding from December 1860 onwards, a number of southern senators had resigned that could otherwise have voted against the tariff bill. Had they not resigned, they would have had enough votes in the Senate to successfully block the tariff’s congressional passage.

In other words, far from causing the Civil War or secession, the Morrill Tariff of March 1861 became law as a result of southern secession.

The Tariff Myth’s Transatlantic Origins

Okay. So the Morrill Tariff clearly did not cause either secession or the Civil War. Then how and why did the myth arise?

As I have recently explored in the New York Times (“The Great Civil War Lie”) and at greater length in the Journal of the Civil War Era, the Civil War tariff myth first arose on the eve of the bill’s March 1861 passage. But the myth did not originate in the United States – it first took root in Free Trade England.

Southern congressmen had opposed the protectionist legislation, which is why it passed so easily after several southern states seceded in December 1860 and the first months of 1861. However, this coincidence of timing fed a mistaken inversion of causation among the British public, with many initially speculating that it was an underlying cause of secession, or at least that it impeded any chance of reunion.

The tariff thus played an integral role in confounding British opinion about the causes of southern secession, and in enhancing the possibility of British recognition of the Confederacy. And thus “across the pond” the myth was born that the the Morrill Tariff had caused the Civil War.

Nor was the tariff myth’s transatlantic conception immaculate. As I’ve previously noted, it was crafted by canny Southern agents in the hopes of confounding British public opinion so as to obtain British recognition of the Confederacy:

Pro-Southern business interests and journalists fed the myth that the war was over trade, not slavery – the better to win over people who might be appalled at siding with slave owners against the forces of abolition. On March 12, 1861, just 10 days after the Morrill Tariff had become law, The London Times gave editorial voice to the tariff lie. The newspaper pronounced that “Protection was quite as much a cause of the disruption of the Union as Slavery,” and remarked upon how the Morrill Tariff had “much changed the tone of public feeling” in favor of “the Secessionists.”

The pro-North magazine Fraser’s made the more accurate observation that the new Northern tariff had handily given the Confederacy “an ex post facto justification” for secession, but British newspapers would continue to give voice to the Morrill myth for many months to come.

Why was England so susceptible to this fiction? For one thing, the Union did not immediately declare itself on a crusade for abolition at the war’s outset. Instead, Northern politicians cited vague notions of “union” – which could easily sound like an effort to put a noble gloss on a crass commercial dispute.

It also helped that commerce was anything but crass in Britain. On the question of free trade, the British “are unanimous and fanatical,” as the abolitionist and laissez-faire advocate Richard Cobden pointed out in December 1861. The Morrill Tariff was pejoratively nicknamed the “Immoral” tariff by British wags. It was easy for them to see the South as a kindred oppressed spirit.[3]

As a result, over the course of the first two years of the Civil War, the tariff myth grew in proportion and in popularity across the Atlantic, propagated by pro-South sympathizers and by the Confederate State Department.

Debunking the Tariff Myth

It would take the concerted efforts of abolitionists like John Stuart Mill, alongside Lincoln’s Emancipation Proclamation, to debunk the Civil War tariff myth in Britain:

The Union soon obtained some much needed trans-Atlantic help from none other than the English liberal philosopher John Stuart Mill. By the beginning of 1862, the tariff myth had gained enough public traction to earn Mill’s intellectual ire, and he proved quite effective at voicing his opinion concerning slavery’s centrality to the conflict. He sought to refute this “theory in England, believed by some, half believed by many more … that, on the side of the North, the question is not one of slavery at all.”

Assuming this to be true, Mill asked, then “what are the Southern chiefs fighting about? Their apologists in England say that it is about tariffs, and similar trumpery.” Yet, Mill noted, the Southerners themselves “say nothing of the kind. They tell the world … that the object of the fight was slavery. … Slavery alone was thought of, alone talked of … the South separated on slavery, and proclaimed slavery as the one cause of separation.”

Mill concluded with a prediction that the Civil War would soon placate the abolitionists on both sides of the Atlantic. That, as the war progressed, “the contest would become distinctly an anti-slavery one,” and the tariff fable finally forgotten.

Mill’s prescient antislavery vision eventually begin to take hold in Britain, but only after Abraham Lincoln himself got involved in the trans-Atlantic fight for British hearts and minds when he put forth his Emancipation Proclamation in January 1863.

By February, Cobden happily observed how Lincoln’s Emancipation Proclamation had aroused “our old anti-slavery feeling … and it has been gathering strength ever since.” […] And so, two years after the Morrill Tariff’s March 1861 passage, Northern antislavery advocates had finally exploded the transatlantic tariff myth.[4]

It only took the British public about two years to see through the tariff myth, and to recognize the centrality of slavery. In contrast – and tragically – for more than 150 years afterwards the same tariff myth has somehow continued to survive in the United States.

[1] “Protective Tariffs: Primary Cause of the Civil War,” Daily Progress, 23 June 2013. See, also, Mark Cheatham’s critical response to the Forbes piece, “Were Tariffs the Cause of the Civil War?“, showing how slavery overwhelmingly dominated state secessionist conventions and Phil Magness’s dismantling of both extreme ends of the debate in “Before You Start Claiming that Tariffs Caused the Civil War…” and “Did Tariffs Really Cause the Civil War? The Morrill Act at 150.”

What Was Thomas Jefferson's Position on the Protective Tariff?

Thomas Jefferson's position on the protective tariff was a negative one, though he accepted that it was necessary. Jefferson had at one time believed in free trade, but he came to understand that it would never work unless all nations agreed to it, states US History.

Jefferson believed that a strong central government would inevitably threaten individual liberties. He favored a simpler, agrarian society. Though the tariffs would encourage the growth of the city culture that Thomas despised, he realized that they were a necessary evil. Jefferson also realized that tariffs and taxes were the only ways to fix the nation's debt. Though Jefferson favored the tariff, he did little to support it, and his Democratic-Republican party showed little interest in it, states The North Carolina History Project. Jefferson did foresee the consequences of the tariff, which supported the manufacturing and industrial economy, but his opinion was that a strong economy and self-sufficient nation were more important than his dream of an agrarian society. Though some of Jefferson's supporters felt betrayed by his stand on the tariff, there was undoubtedly strong and logical reasoning behind his decision. Jefferson also settled on the tariff as a means to avoid direct taxation of citizens, states The Freeman.