American Civil War : High Tariffs

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American Civil War : High Tariffs

Tariffs
Commercial restrictions through tariffs have been an integral part of American history. The federal government has used forms of commercial restriction as a source of revenue and to protect American industry and labor.  Before the Civil War, the federal government obtained close to ninety percent of its revenue from tariffs, and because of this, the government avoided income taxation.
 
Americans have used protective and revenue tariffs. Protective tariffs help new American industries compete with established foreign industries. Proponents of protective tariffs claim that all segments of America benefit from tariffs. Foes of protective tariffs argue that protective tariffs help a few interests at the expense of many. By barring foreign goods from American markets, American manufacturers can charge whatever price they want for their goods and force American consumers to pay exorbitant prices. Conversely, revenue tariffs are used to provide the government with revenue and offer only incidental protection to industries.
 
The Articles of Confederation did not grant Congress the power to enact tariffs. In the spring of 1781, with the outcome of the Revolution undecided and the nation heavily in debt, Congress asked the thirteen states for the power to levy an impost. North Carolina was among the first states to grant Congress the power because Tar Heels preferred an impost to a tax on land. Furthermore, North Carolina had few ports from which they could collect duties on imports. Despite the efforts of its supporters, the impost never became law.
 
Some scholars have suggested that the Founding Fathers replaced the Articles with the present-day Constitution of the United States because of the commercial flaws of the Articles. In the new federal constitution, Congress obtained the power “to lay and collect taxes, duties, imposts, and excises.” One of the first pieces of legislation that the first Congress passed was the tariff of 1789. Most imported goods received a duty of only five percent ad valorem (in proportion to the value) under this tariff.
 
The Republican Party of Thomas Jefferson showed little interest in the tariff.  During the War of 1812, the British navy prevented goods from coming to American shores. As a result, Americans manufactured their own products. To protect infant manufacturers, Congress passed the nation’s first protective tariff: the tariff of 1816.  Average duties stood at around twenty-five percent ad valorem. Every North Carolina Congressmen voted against this measure.
 
Congress attempted to raise tariff levels with the Baldwin Tariff of 1820 but failed by a single vote in the Senate. Lemuel Sawyer was the only Tar Heel to support this tariff in Congress. In 1824, Speaker of the House Henry Clay argued that a protective tariff would increase the national wealth. It would also create a home market where agricultural prices and wages increased.  P. P. Barbour first argued that a protective tariff was unconstitutional. The bill passed by only five votes in the House and four in the Senate. The distribution of the vote revealed that the tariff had become a sectional issue. Every North Carolina Congressmen opposed the tariff in 1824. Importers now paid duties of about thirty-five percent ad valorem.
 
Some manufacturing interests claimed that the tariff of 1824 did not offer them enough protection. They successfully passed the tariff of 1828, which Southerners branded as the “tariff of abominations.” Once again, every North Carolina Congressmen disproved of a tariff bill. Average import rates now stood close to fifty percent.
 
Opponents of the tariff in South Carolina nullified this tariff and the subsequent tariff of 1833, which lowered average duties to about thirty three percent ad valorem (South Carolina Ordinance of Nullification). President Andrew Jackson equated nullification with treason and talked of hanging his own vice president, John C. Calhoun, whom he held responsible for the crisis over the tariff. At the end of 1832, Calhoun resigned the vice presidency and returned to Washington, D.C. as a Senator. There, he helped pass a compromise tariff that gradually lowered duties over the span of ten years with the sharpest cuts coming after 1840. Every North Carolina Congressmen endorsed the compromise tariff.
 
Few in North Carolina supported the doctrine of nullification but most agreed with South Carolina over the unconstitutionality of a tariff. The state legislature concurred with Jackson and called nullification a “revolutionary” and “subversive” doctrine. Some of the leading proponents of states’ rights in the state such as Willie P. Mangum, however, broke with Jackson over his handling of the crisis.
 
The accord of 1833 lasted until 1842. President John Tyler vetoed several tariff bills so protectionists called his impeachment and tried to change the rules to provide that only a majority was required to override a presidential veto. With a nearly bankrupt treasury, Tyler finally approved the tariff of 1842, which restored many of the levels of the tariff of 1832. Every North Carolinian in Congress, regardless of party, opposed this tariff.
 
James K. Polk, who had been born in the Old North State and graduated from the University of North Carolina, entered the Executive Mansion with a commitment to lowering the tariff. The Walker tariff slashed duties to about twenty percent ad valorem. The vote on the Walker tariff divided North Carolina Congressmen along partisan lines. The four Whigs opposed the measure while the six Democrats supported it. Advocates of high tariffs claimed that the Walker tariff would ruin the country, but its low duties on iron actually allowed for the railroad boom of the 1850s. Congress then lowered most of the duties of the Walker with the tariff of 1857.
 
The Panic of 1857 resurrected the tariff debate. The Republicans needed an issue other than the opposition to the extension of slavery, and Republican leaders seized on the protective tariff. Justin S. Morrill proposed a tariff bill in 1860, which passed the House but stalled in the Senate. After the first Southern states seceded, little opposition to the tariff remained in the Senate and the Morrill tariff passed with ease. North Carolina Congressmen opposed the measure at every step.
 
During the Civil War, no session of Congress occurred where Congress did not alter the tariff schedules. Few items remained duty free by the end of the war. The tariffs helped keep the federal government solvent and allowed it to pay for a costly war. Congress increased the levels of protection after the war. The issue continued to polarize political parties. Republicans sponsored a high protective tariff and Democrats advocated free trade principles. These Democrats believed that there should be no barriers to trade. North Carolina Populists criticized the “money power” of corporations, trusts, railroads, banks, and protective tariffs. In 1887, President Grover Cleveland addressed their concerns when he devoted his entire message to Congress to reforming the tariff. The presidential election of 1888 became a referendum on the tariff and the Republican candidate, Benjamin Harrison, won more electoral votes than Cleveland but lost the popular vote to the incumbent. Cleveland won North Carolina by over thirteen thousand votes.
 
In 1890, Republicans passed the McKinley tariff of 1890 on a strict party line vote. At the time, this tariff became the highest in the nation’s history. American voters took their wrath out on Republicans who lost the presidency and both houses of Congress in 1892 over the tariff. Democrats then tried to lower duties but the Wilson-Gorman tariff of 1894 made few reductions to the McKinley tariff.
 
The Dingley Tariff of 1897 restored levels close to those of the McKinley tariff. At the start of the twentieth century, Republicans second-guessed the usefulness of high tariffs. Reformers in the GOP argued that high tariffs aided trusts. In one of his first actions as president, William H. Taft called a special session of Congress to lower the tariff. This action pleased farmers and reformers in the Old North State. Congress responded with the Payne-Aldrich Tariff of 1909. This bill lowered duties on about thirty-percent of enumerated goods but raised duties on about ten-percent of goods.   About sixty percent of the goods, then, were unaffected.
 
The Underwood-Simmons Tariff of 1913 marked the most significant lowering of tariff duties since 1857. Average duties stood at around twenty-five percent. To offset the loss of revenue from tariff duties, Congress passed and the people ratified the sixteenth amendment, which granted Congress the power to collect an income tax. After World War I, Congress raised tariff rates once again through the Fordney-McCumber tariff of 1922.
 
To cope with the Great Depression, Republicans in Congress passed the Smoot-Hawley Tariff of 1930. This became the highest tariff in the nation’s history and also one of the biggest blunders in American history since it inaugurated a series of trade wars in the middle of a severe economic crisis. The New Deal proposals of Cordell Hull that eventually won the support of Franklin D. Roosevelt chipped away at high tariffs. The policy of reciprocity allowed the president to raise or lower tariff levels with other nations depending on the restrictions those nations imposed on American exports. In 1934, Congress gave the president this power with the Trade Agreements Act.
 
The destruction of authoritarian regimes and the rise of American influence abroad negated the need for protective tariffs. The United States participated in the General Agreement on Tariffs and Trade (GATT) until the World Trade Organization replaced it in 1995. Congress ratified the North American Free Trade Agreement (NAFTA) in November 1993, and this removed most obstacles to trade between the United States, Canada, and Mexico.  In 2005, Congress approved the US-Central American Free Trade Agreement (CAFTA). This agreement removed most trade restrictions between the United States and over thirty nations in Central America.
 
Foes of these free trade alignments contend that they threaten national sovereignties. The process of globalization (some contend) enriches members of multinational corporations and hurts common people. In contemporary America, free trade has become the norm as neither of the two principal political parties in America support protectionism.

(Sources and related reading listed below.)

Recommended Reading: When in the Course of Human Events: Arguing the Case for Southern Secession. Review: As a historian, I have learned that the heart of any great work in history lies in the ample and accurate use of primary sources, and primary sources are the great strength of this work. While countless tomes have debated the perceived moral sides of the Civil War and the motivations of the various actors, this work investigates the motives of the primary players in the era and in their own words and writings. This gives the work an excellent realism and accuracy. The author, Charles Adams, has earned a reputation as one of the leading economic historians in the field, particularly in the area of taxes. He utilizes this background to investigate the American Civil War, and comes to some very striking conclusions, many that defy the politically-correct history of today. His thesis postulates that the Civil War had its primary cause not in slavery or state's rights, but rather in cold, hard economic concerns. Continued below...

He shows that the North used its supremacy in Congress to push through massive tariffs to fund the government, and that these tariffs fell much harder on the export-dependent South than upon the insular north. In fact, the total revenue from the "Compromise" Tariffs on the 1830s and 40s amounted to $107.5 million, of which $90 million came from the South. The majority of the revenue, moreover, was spent on projects “far from the South.” According to Adams, this disparity finally pushed the South to seek its own independence. Supporting this conclusion is the fact that the South enacted extremely low tariffs throughout the war, whereas the north enacted the Morrill Tariff of 1861, which enacted tariffs as high as 50 percent on some goods. Adams also chronicles the oft-overlooked excesses of the Lincoln Administration, and compares them to the actions of Julius Caesar. Using the letters and reports of the times, he tells how Lincoln suspended habeas corpus, trod roughshod over the Constitution, jailed thousands of U.S. citizens who dared disagree with him and even wrote a warrant for the arrest of the Chief Justice of the United States. Adams also ably uses the viewpoints of British and other Europeans to describe different contemporary views on the struggle. These provide excellent outside insight. On the whole, readers will find the book a superb and scholarly analysis, providing fresh insights into the motivations and causes of the defining war in American history. AWARDED 5 STARS by americancivilwarhistory.org

 

Recommended Reading: Tariffs, Blockades, and Inflation: The Economics of the Civil War (The American Crisis: Books on the Civil War Era). Review: What role did economics play in leading the United States into the Civil War in the 1860s, and how did the war affect the economies of the North and the South? Tariffs, Blockades, and Inflation uses contemporary economic analyses such as supply and demand, modern market theory, and the economics of politics to interpret events of the Civil War. Simplifying the sometimes complex intricacies of the subject matter, Thornton and Ekelund have penned a nontechnical primer that is jargon-free and accessible. Tariffs, Blockades, and Inflation also takes a comprehensive approach to its topic. It offers a cohesive and a persuasive explanation of the how, what, and why behind the many factors at work on both sides of the contest. Continued below... 

While most books only delve into a particular aspect of the war, this title effectively bridges the gap by offering an all-encompassing, yet relatively brief, introduction to the essential economics of the Civil War. This book starts out with a look at the reasons for the beginning of the Civil War, including explaining why the war began when it did. It then examines the economic realities in both the North and South. Also covered are the different financial strategies implemented by both the Union and the Confederacy to fund the war and the reasons behind what ultimately led to Southern defeat. Finally, the economic effect of Reconstruction is discussed, including the impact it had on the former slave population. This book includes the related Tariff Acts, Tariff Panics, and so-called excessive Tariffs... what is presently referred to as “High Taxes and Taxation.” It is an interesting read for the casual reader as well as the Civil War buff!

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High Tariffs and the Civil War Northern and Southern Tariffs Unfair Taxation

Sectionalism Causes Origins of the American Civil War

Sectionalism and Southern Secession What is Sectionalism

Southern States Secede: Secession of the South History

American Tariffs during the Civil War South and North Tax Unfairness
States' Rights and the US Constitution and Supreme Court
Nullification Crisis What caused the South Carolina Nullification Crisis
Causes of the American Civil War What caused the Civil War

Recommended Reading: The Impending Crisis, 1848-1861 (Paperback), by David M. Potter. Review: Professor Potter treats an incredibly complicated and misinterpreted time period with unparalleled objectivity and insight. Potter masterfully explains the climatic events that led to Southern secession – a greatly divided nation – and the Civil War: the social, political and ideological conflicts; culture; American expansionism, sectionalism and popular sovereignty; economic and tariff systems; and slavery. In other words, Potter places under the microscope the root causes and origins of the Civil War. He conveys the subjects in easy to understand language to edify the reader's understanding (it's not like reading some dry old history book). Delving beyond surface meanings and interpretations, this book analyzes not only the history, but the historiography of the time period as well. Continued below…

Professor Potter rejects the historian's tendency to review the period with all the benefits of hindsight. He simply traces the events, allowing the reader a step-by-step walk through time, the various views, and contemplates the interpretations of contemporaries and other historians. Potter then moves forward with his analysis. The Impending Crisis is the absolute gold-standard of historical writing… This simply is the book by which, not only other antebellum era books, but all history books should be judged.

 

Recommended Reading: The Great Tax Wars: Lincoln--Teddy Roosevelt--Wilson How the Income Tax Transformed America (432 pages) (Simon & Schuster). Review: A major work of history, The Great Tax Wars is the gripping, epic story of six decades of often violent conflict over wealth, power, and fairness that gave America the income tax. It's the story of a tumultuous period of radical change, from Abraham Lincoln and the Civil War through the progressive era under Theodore Roosevelt and ending with Woodrow Wilson and World War I. During these years of upheaval, America was transformed from an agrarian society into a mighty industrial nation, great fortunes were amassed, farmers and workers rebelled, class war was narrowly averted, and America emerged as a global power. Continued below...

The Great Tax Wars features an extraordinary cast of characters, including the men who built the nation's industries and the politicians and reformers who battled them -- from J. P. Morgan and Andrew Carnegie to Lincoln, T. R., Wilson, William Jennings Bryan, and Eugene Debs. From their ferocious battles emerged a more flexible definition of democracy, economic justice, and free enterprise largely framed by a more progressive tax system. In this groundbreaking book, Weisman shows how the ever controversial income tax transformed America and how today's debates about the tax echo those of the past. About the Author: Steven R. Weisman has covered politics, economics, and international affairs for The New York Times for more than thirty years. Previously a deputy foreign editor at the Times, he now writes editorials for the paper about government, politics, and international subjects, including the battles over taxes in the last two presidential elections. He lives with his wife, Elisabeth Bumiller, and family in the Washington, D.C., area.

 

Recommended Reading: Battle Cry of Freedom: The Civil War Era (Oxford History of the United States) (Hardcover: 904 pages). Description: Published in 1988 to universal acclaim, this single-volume treatment of the Civil War quickly became recognized as the new standard in its field. James M. McPherson, who won the Pulitzer Prize for this book, impressively combines a brisk writing style with an admirable thoroughness. James McPherson's fast-paced narrative fully integrates the political, social, and military events that crowded the two decades from the outbreak of one war in Mexico to the ending of another at Appomattox. Packed with drama and analytical insight, the book vividly recounts the momentous episodes that preceded the Civil War including the Dred Scott decision, the Lincoln-Douglas debates, and John Brown's raid on Harper's Ferry. Continued below...

 It flows into a masterful chronicle of the war itself--the battles, the strategic maneuvering by each side, the politics, and the personalities. Particularly notable are McPherson's new views on such matters as Manifest Destiny, Popular Sovereignty, Sectionalism, and slavery expansion issues in the 1850s, the origins of the Republican Party, the causes of secession, internal dissent and anti-war opposition in the North and the South, and the reasons for the Union's victory. The book's title refers to the sentiments that informed both the Northern and Southern views of the conflict. The South seceded in the name of that freedom of self-determination and self-government for which their fathers had fought in 1776, while the North stood fast in defense of the Union founded by those fathers as the bulwark of American liberty. Eventually, the North had to grapple with the underlying cause of the war, slavery, and adopt a policy of emancipation as a second war aim. This "new birth of freedom," as Lincoln called it, constitutes the proudest legacy of America's bloodiest conflict. This authoritative volume makes sense of that vast and confusing "second American Revolution" we call the Civil War, a war that transformed a nation and expanded our heritage of liberty. . Perhaps more than any other book, this one belongs on the bookshelf of every Civil War buff.

 

Recommended Reading: Lincoln and Douglas: The Debates that Defined America (Simon & Schuster) (February 5, 2008) (Hardcover) . Description: In 1858, Abraham Lincoln was known as a successful Illinois lawyer who had achieved some prominence in state politics as a leader in the new Republican Party. Two years later, he was elected president and was on his way to becoming the greatest chief executive in American history. What carried this one-term congressman from obscurity to fame was the campaign he mounted for the United States Senate against the country's most formidable politician, Stephen A. Douglas, in the summer and fall of 1858. Lincoln challenged Douglas directly in one of his greatest speeches -- "A house divided against itself cannot stand" -- and confronted Douglas on the questions of slavery and the inviolability of the Union in seven fierce debates. As this brilliant narrative by the prize-winning Lincoln scholar Allen Guelzo dramatizes, Lincoln would emerge a predominant national figure, the leader of his party, the man who would bear the burden of the national confrontation. Continued below...

Of course, the great issue between Lincoln and Douglas was slavery. Douglas was the champion of "popular sovereignty," of letting states and territories decide for themselves whether to legalize slavery. Lincoln drew a moral line, arguing that slavery was a violation both of natural law and of the principles expressed in the Declaration of Independence. No majority could ever make slavery right, he argued. Lincoln lost that Senate race to Douglas, though he came close to toppling the "Little Giant," whom almost everyone thought was unbeatable. Guelzo's Lincoln and Douglas brings alive their debates and this whole year of campaigns and underscores their centrality in the greatest conflict in American history. The encounters between Lincoln and Douglas engage a key question in American political life: What is democracy's purpose? Is it to satisfy the desires of the majority? Or is it to achieve a just and moral public order? These were the real questions in 1858 that led to the Civil War. They remain questions for Americans today.

 

Recommended Reading: CAUSES OF THE CIVIL WAR: The Political, Cultural, Economic and Territorial Disputes Between the North and South. Description: While South Carolina's preemptive strike on Fort Sumter and Lincoln's subsequent call to arms started the Civil War, South Carolina's secession and Lincoln's military actions were simply the last in a chain of events stretching as far back as 1619. Increasing moral conflicts and political debates over slavery-exacerbated by the inequities inherent between an established agricultural society and a growing industrial one-led to a fierce sectionalism which manifested itself through cultural, economic, political and territorial disputes. Continued below...

This historical study reduces sectionalism to its most fundamental form, examining the underlying source of this antagonistic climate. From protective tariffs to the expansionist agenda, it illustrates the ways in which the foremost issues of the time influenced relations between the North and the South.

Sources: Alfred Eckes, Opening America’s Market: U.S. Foreign Trade Policy Since 1776 (Chapel Hill, 1995); Richard E. Ellis, The Union at Risk: Jacksonian Democracy, States’ Rights, and the Nullification Crisis (New York, 1987); Eric Foner, Free Soil Free Labor, Free Men: The Ideology of the Republican Party Before the Civil War (New York, 1970); William W. Freehling, Prelude to Civil War: The Nullification Controversy in South Carolina, 1816-1836 (New York, 1965); Richard Hofstadter, “The Tariff Issue on the Eve of the Civil War,” American Historical Review, XLIV (October, 1938); James L. Huston, The Panic of 1857 and the Coming of the Civil War (Baton Rouge, 1987); H. Paul Jeffers, An Honest President: The Life and Presidencies of Grover Cleveland (New York, 2000); William E. Leuchtenburg, Franklin D. Roosevelt and the New Deal, 1932-1940 (New York, 1963); Jackson T. Main, The Antifederalists: Critics of the Constitution, 1781-1788 (Chapel Hill, 1961); H. Wayne Morgan, William McKinley and His America (Kent, 2003); Phillip Shaw Paludan, A People’s Contest: The Union and Civil War, 1861-1865 (Lawrence, 1988); Jonathan J. Pincus, Pressure Groups and Politics in Antebellum Tariffs (New York, 1977); Joanne Reitano, The Tariff Question in the Gilded Age: The Great Debate of 1888 (University Park, PA, 1994); Robert V. Remini, Henry Clay: Statesman for the Union (New York, 1991); Martin Van Buren and the Making of the Democratic Party (New York, 1951); Robert Seager II, And Tyler Too: A Biography of John and Julia Gardiner Tyler (New York, 1963); Edward Stanwood, American Tariff Controversies in the Nineteenth Century. Vol. 1 of 2. (Boston, 1903); Robert F. Wesser, “Election of 1888,” Arthur M. Schlesinger (ed.), History of American Presidential Elections. Vol. 4 of 4. (New York, 1971); Paul Wolman, Most Favored Nation: The Republican Revisionists and US Tariff Policy, 1897-1912 (Chapel Hill, 1992); William Frank Zornow, “North Carolina State Tariff Policies, 1775-1789,” North Carolina Historical Review, XXXII (April, 1955); William K. Bolt, University of Tennessee, John Locke Foundation.

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