The Role of Tariffs in the Civil War – Part 1

This entry is part 2 of 3 in the series Tariffs
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The Role of Tariffs in the Civil War – Part 1

This guest post is about the role of tariffs in the Civil War is by Allen Mesch. Allen is a writer and fan of political thrillers. He is a Civil War historian and has visited more than 81 battlefields and museums and taken over 3,700 photographs. He is a 40 year veteran of the oil and gas industry and provides consulting and training services. Allen teaches classes on the American Civil War at Collin College. Allen’s site is http://salient-points.blogspot.com

I received an -mail from Dennis M. saying that  I had understated the impact of “crippling tariffs” on the Southern economy.  Dennis cited the import tariffs from 1789 to 1842 and said that the North paid its  “debts on the back of the South, while crippling the Southern economy and bolstering Northern manufacturing.”
I found his comments interesting on many levels and they raised several questions.
·        Where did the money collected go?  Was it used to pay “Northern debts?”
·        Were these tariffs designed to hurt the Southern economy?
·        While the tariffs hurt the South were they beneficial to the whole nation?
·        Did the tariffs help cause the Civil War?
·        Why didn’t Southern businessmen use the tariff protection to industrialize the South?
Let’s start with a review of the tariffs and their role in government finance.  According to US statistical data, tariff income provided a substantial portion of the Federal government’s budget.
Year
Tariff Income,
$ million
Budget %
of Tariff
Average
Tariff, %
1792
4.4
95.0
15.1
1795
5.6
91.6
8.0
1800
9.1
83.7
10.0
1805
12.9
95.4
10.7
1810
8.6
91.5
10.1
1815
7.3
46.4
6.5
1820
15.0
83.9
20.2
1825
20.1
97.9
22.3
1830
21.9
88.2
35.0
1835
19.4
54.1
14.2
1840
12.5
64.2
12.7
1845
27.5
91.9
24.3
1850
39.7
91.0
22.9
1855
53.0
81.2
20.6
1860
53.2
94.9
15.0
2010
25,289
1.2
1.3
Tariffs have played different roles in trade policy and the nation’s economic history. Tariffs were the largest source of federal revenue from the 1790s to World War I, when income taxes became the major source of government funding.  From 1789 to 1861, the US Government enacted the following tariffs:
·        1789: Hamilton Tariff – Rates were between 5 and 10%. Alexander Hamilton wanted to establish the tariff as a regular source of government                                                                  revenue and to encourage the growth of domestic manufacturing to lessen America’s dependence on foreign-made                                                                    products.
·        1790: Tariff of 1790 – Increased average rate from 5% to 7-10% and increased the number of items taxed.
·        1792: Tariff of 1792 – Increased tariff rates.
·        1816: Tariff of 1816 – protective tariff introduced in 1816 and in force between 1816 and 1824.
·        1824: Tariff of 1824 – Designed to protect American industry in the face of cheaper British commodities, especially iron products, wool and                                                               cotton textiles, and agricultural goods.
·         1828: Tariff of 1828 – Protect industries in the northern United States which were being driven out of business by low-priced
                                                           imported goods by putting a tax on them. The South was harmed directly by having to pay higher prices on goods the
                                                           region did not produce, and indirectly because reducing the exportation of British goods to the US made it difficult for                                                              the British to pay for the cotton they imported from the South. The reaction in the South, particularly in South
                                                          Carolina, would lead to theNullification Crisis of 1832. The tariff marked the high point of US tariffs.
·        1832: Tariff of 1832 – reduced tariffs to remedy the conflict created by the tariff of 1828, but it was still deemed unsatisfactory by some in the                                                           South, especially in South Carolina.
·        1833: Tariff of 1833 – The “Compromise Tariff” of 1833 was proposed as a resolution to the Nullification Crisis. It was adopted to gradually
                                                          reduce the rates after southerners objected to the protectionism found in the Tariff of 1832 and the 1828 Tariff of                                                                        Abominations, which had prompted South Carolina to threaten secession from the Union. This Act stipulated that
                                                         import taxes would gradually be cut over the next decade until, by 1842, they matched the levels set in the Tariff of                                                                   1816—an average of 20%.
·       1842: Tariff of 1842 – The “Black Tariff”
·        1846: Walker Tariff – The Walker Tariff was enacted by the Democrats, and made substantial cuts in the high rates of the “Black Tariff” of 1842,                                                           enacted by the Whigs. The Walker Tariff reduced rates by 25% to 35%; it coincided with Britain’s repeal of the Corn Laws
                                                          and led to an increase in trade. It was one of the lowest tariffs in American history.
·        1857: Tariff of 1857 – The Tariff of 1857 was a major tax reduction and created a mid-century low point for tariffs. It amended the Walker
                                                          Tariff of 1846 by lowering rates to around 17% on average.  The bill was offered in response to a federal budget surplus                                                             in the mid 1850s.
·        1861: Morrill tariff – The Morrill Tariff of 1861 was an protective tariff adopted on March 2, 1861 during the administration of President                                                                      James Buchanan.
Where did the money collected go?  Was it used to pay “Northern debts?”
If we examine the above tariffs, it is apparent that they changed from being an instrument to raise Federal revenue to a device to protect Northern industries. This was most apparent in legislation from 1824 to 1842.  Tariff levels fluctuated based on the political party in power.  Conflict over tariffs, perhaps even more than the tariffs themselves, contributed to the North-South schism.
The revenue raised by tariffs was not used by the North to pay its debts.  Tariffs provided the Federal Government with enough money to pay its operating expenses and to redeem at full value U.S. Federal debts and the debts the states had accumulated during the Revolutionary War.  Tariffs helped pay for wars and military actions including the Second Cherokee War (1776-1777), Chickamauga Wars (1776-1794), Northwest Indian War (1785-1795), First Barbary War (1801-1805), War of 1812 (1812-1815), Second Barbary War (1815), the First Seminole War (1816-1818), Florida Wars (1835-1842), the Mexican American War (1846-1848), and Utah War (1857-1858).  The tariff money also helped pay for roads, canals, and railroads and western expansion.  So ALL Americans benefited from the revenue raised.
Series Navigation<< The Role of Tariffs in the Civil War – Part 2The Role of Tariffs in the Civil War-Part 3 >>

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