Tariffs

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Tariffs

Free Trade v. Protection. During Jefferson’s Embargo and the War of 1812 Americans began to develop, out of necessity, the type of manufacturing that Alexander Hamilton had prized. When the war ended and cheap British manufactured goods flooded American markets, eastern manufacturers cried for protective tariffs that would raise the prices of foreign goods. On the other hand, Southerners and Westerners had less financial interest in manufacturing, and as consumers opposed high tariffs which translated to higher prices. Tariff policy, as much as banking and internal improvements, was central to political debates and caused a split in the Democratic Party.

1816. The first postwar Congress prepared and passed the first obviously protective tariff in United States history. Pushed through the House by Henry Clay and John C. Calhoun, the Tariff of 1816 increased rates by approximately 25 percent. In contrast to later tariff struggles, southerners and northeasterners actually opposed

this first tariff, while the Middle States and the old Northwest supported it. This alliance would change as New England’s manufacturing interests expanded. Many items were covered under this tariff, including cotton cloth.

1824. Protectionists argued that in spite of the 1816 tariff, the British had dumped cheap goods in the United States and contributed to the Panic of 1819. They pushed through a higher tariff that favored the Middle Atlantic states and New England. Duties increased on woolens, cotton, iron, and finished products. Westerners secured a much higher duty on hemp and raw wool. Sugar, molasses, coffee, and salt were also on the protected list.

Abominations. Protectionists were aided by a plot hatched by Jacksonians to discredit President John Quincy Adams by raising rates so high that even hightariff advocates would reject them. Thus, the Jacksonians could take credit for favoring tariffs, even as they cried to sabotage the bill. The plan backfired when the bill passed on 11 May 1828, and Adams signed in. The Tariff of 1828 raised duties on hemp, iron, raw wool, molasses, distilled spirits, and flax, while lowering the rate for woolens. It was an extremely high tariff, the product of duplicity and disliked to varying degrees by everyone. But Northern manufacturers and Western farmers found more to like than did Southern planters, who had to pay far higher prices on the manufactured goods they needed. Southerners prepared to defend their section against the Tariff of 1828, which they referred to as the “Tariff of Abominations.”

Nullification. Calhoun and South Carolina led the charge against the tariff and sought to defend southern rights. Calhoun, who had previously been a nationalist, feared that an expansive central government would someday threaten slavery. He formulated a concept of the Union in which the Constitution was a contract between the states and federal government, not between the people and the federal government. Calhoun argued that states could nullify or void federal laws that they believed were unconstitutional. South Carolina called a nullification convention and nullified the 1828 tariff, as well as a tariff passed in 1832 that reduced rates on many items but still protected northeastern manufacturing. Andrew Jackson, though opposed to government intervention in favor of special interests, wanted an assertive government to defend the people’s liberty. Nullification threatened federal power, and so Jackson reacted vigorously. He secured a Force Bill from Congress authorizing the federal army to enforce federal law in South Carolina, even as Clay worked out the details of a compromise tariff.

Compromise . On the same day Jackson signed the Force Bill, he signed a new tariff bill. The 1833 tariff gradually reduced rates over the next decade. By 1842, for example, the rate on cotton was to be cut in half. Most rates were to be reduced to the 1816 levels. At the same time, manufacturers had ten years to prepare for increased competition. South Carolina repealed its nullification and accepted the new tariff, though it did nullify the Force Bill. Jackson wisely ignored this final defiance.

1846. The 1833 tariff was followed by a tariff in 1842 that maintained the status quo and gave some protection to northern industry. But by the mid 1840s American manufacturing had developed to the point that many Democrats, except those from industrial states, doubted the benefits of protection. In 1846 the Walker Tariff (named after its sponsor, Mississippian Robert Walker, James Polk’s treasury secretary) significantly reduced rates to an average of 26 percent.