Tariffs – Circa1865

Andrew Jackson Provokes Civil War

Opponents of Andrew Jackson’s warlike threats after South Carolina’s fierce opposition to the protective tariff labeled it the “Force Bill” or the “Bloody Bill,” which authorized using military force to collect the government revenue. He warned that he would march to South Carolina with 200,000 men to quell any and all insurrection and should the Governor of Virginia attempt to prevent the passage of regiments bound for South Carolina, “I would arrest him at the head of his troops.”

Jackson awaited congressional sanction for his war upon a State; Lincoln’s actions were his own and taken while Congress was in recess.

Andrew Jackson Provokes Civil War

Senator John Tyler of Virginia called Charleston a “beleaguered city.” Suppose, he said, this bill were to pass and “the proud spirit of South Carolina” should refuse to submit. Would we then “make war upon her, hang her Governor . . . and reduce her to the condition of a conquered province?” Mr. Tyler saw South Carolina’s towns leveled, her daughters in mourning, her men driven “into the morasses where Francis Marion found refuge.” But he did not see them conquered. Rome had her Curtis, Sparta her Leonidas – and South Carolina had John C. Calhoun. Mr. Calhoun did not repudiate the heroic part. “I proclaim it,” said he, “that should this bill pass . . . it will be resisted at every hazard – even that of death.”

Oblivious to threat and to political entreaty, Andrew Jackson refused to give an inch. He insisted on the passage of the Force Bill. Henry Clay of Kentucky, a practiced dispenser of parliamentary miracles, could not uphold nullification and he would not uphold Jackson. Clay introduced a bill which in ten years would lower tariffs by twenty percent and South Carolina accepted peace from the hands of Mr. Clay rather than those of General Jackson.

But the late crisis had ended more tamely than Jackson had reckoned on. “I thought I would have to hang some of them & I would have done it.”

(The Life of Andrew Jackson. Chapter XXX, Marquis James. Bobbs Merrill Company, 1938, pg. 619-621)

A Posse and Grenades to Overawe South Carolina

On November 24, 1832, “the tariff acts were proclaimed void and not binding upon this State or its citizens,” after February 1, 1833. South Carolina Gov. Robert Y. Hayne declared the use of federal force in an attempt to collect duties after that date would be met by the State’s secession from the 1789 constitution. This would of course make South Carolina an independent country.

In reply to South Carolina’s decision not to comply with the increased and what it believed to be an unconstitutional tariff, Andrew Jackson threatened to fill that State with 100,000 troops raised from the other States, which he referred to as “a posse.” His vice-president later said that Jackson “yearned to lead this force in person.”

A Posse and Grenades to Overawe South Carolina

New York politician and Vice President Martin Van Buren politely disagreed with Jackson’s contention that the mere raising of troops by South Carolina, i.e., State militia, constituted actual treason. Even Jackson’s close political advisor regretted this wording in the President’s proclamation, which he saw as inviting trouble. This advisor saw that the root of the issue was a high protective tariff which went above and beyond a constitutional tariff to support the expenses of the federation’s government. The latter simply advised Jackson that “a gesture toward tariff reduction might pave the way to a happy solution of everything.”

“Mr. Van Buren’s anxieties arose chiefly from the fact that, like many others, he regarded the crisis through the spectacles of partizan politics . . . who feared a break with Southern leaders, notably those of Virginia. He feared the political aftermath of a break with them now, as Jackson had thrown such considerations to the winds, placing himself militantly at the head of union sentiment of the nation, irrespective of person or party.

This man of caution had raised two points which the man of action could not ignore:

The first concerned the definition of treason of actual treason and the constitutional right of the Executive to intervene in a State’s affairs. Legally he could do so only (1.) at the request of the Governor to suppress insurrection, or (2.) on his own initiative, to enforce the laws of Congress [if the State remained as a member of the federation].

Jackson dispatched seven revenue cutters and a ship of war to Charleston harbor, anchoring off the battery with their guns commanding the fashionable waterfront lined with the homes and brick walled gardens of the city’s elite.

“No State or States,” the President wrote Joel Poinsett, leader of the State’s unionists, “has a right to secede . . . Nullification therefore means insurrection and war; and other States have a right to put it down. I will . . . have the leaders arrested and arraigned for treason . . . in forty days I can have within the limits of South Carolina fifty-thousand men, and in forty more days more another fifty thousand.”

Poinsett, a veteran of the Mexican War and eager to suppress his fellow citizens desire for political independence, wrote Jackson on November 16, 1832: “Grenades and small rockets are excellent weapons in a street fight. I would like to have some of them.”

(The Life of Andrew Jackson. Chapter XXX, Marquis James. Bobbs Merrill Company, 1938, pg. 609; 615)

War Millionaires of America

Undoubtedly the cause of the 1861 war was the purely sectional Republican party which emerged from the ashes of the Whig party, anti-immigrant Know Nothings, and Transcendentalists. Though it lost the 1856 national election, it would win in 1860 by a plurality with the addition of a high protective tariff which pleased the protectionist New England States. Though several Southern States which had not departed before February 1861 attended the Washington Peace Conference in an attempt to save the federal union, Lincoln had instructed his Republican attendees to avoid compromise.

War Millionaires of America

“The [Civil] war, author Charles Beard held, was an important determinant of industrial change after 1865 because of the manner in which industrial interests made use of the political power they had won. In Beard’s view, the ascendant Republican party was the tool of the new capitalist class. These capitalists were united in subscribing to the basic proposition that the government ought to foster industrial expansion. Successive Republican congresses duly accomplished this by enacting the national banking law, a high protective tariff, a contract labor law, lavish land grants to railroads, and the Homestead Act which in addition to giving land to settlers also expanded the domestic market.

One of the [Civil] war’s main effects was its contribution to “the extraordinary growth of heavy industry (iron, machinery, agricultural implements, lumber, clay products)” – a trend which characterized the whole period 1850-1880. While economic forces generated by the war worked to the advantage of heavy industry, [Louis] Hacker wrote [Triumph of American Capitalism, 1940], “the young industrial capitalism had by 1860 already formulated its political program for continued growth – “protectionism, a well-guarded banking system, and adequate labor supply, and expanding domestic market made possible by a federally-supported public works program.”

By the time the war had ended in 1865, Congress had virtually enacted this program, taking “a long step forward in placing the services of the state at the command of private enterprise.” The economic legislation of the war and Reconstruction periods comprised “a new and vital force” that shaped the course of postwar change. “The progress of industrial capitalism was at last being rendered secure,” Hacker concluded, and it was being done in the halls of Congress.

Mechanization was undertaken in response to heavy demands generated by the war, and in order to do this successfully, ever larger capital outlays were necessary for industrialists. This came from large-scale organizers who could tap “the reservoir of credit” produced by wartime profits and flotation of federal securities.

The result was a basic structural transformation – “the concentration of manufacturing capital in fewer hands than before, the construction of larger plants, and the appearance of a new class of war millionaires.”

(Economic Change in the Civil War: An Analysis of Recent Studies. Harry N. Scheiber. Civil War History, Vol. 11, No. 4, December 1965. pp. 398-400)

Lincoln’s New America

Lincoln’s New America

“The Civil War ennobled no one, except perhaps its central figure, but it brought enormous and probably inevitable changes in the north. Those States actually gained wealth, population and power between 1861 and 1865, during the concurrent destruction of the American Confederacy. War manufactures exploded industrial production, made agriculture prosper, and a flood of immigration from Europe more than replaced the blood and bone buried in the South.

Until 1861, the full effect of the Industrial Revolution had been held in check by the powerful agronomists from Virginia to Texas. With this check removed, the industrial States consolidated their gains swiftly.

While the war itself was moving political power irresistibly toward the federal capital in Washington, money power was centralized in New York through the wartime Currency Acts. And an enormous centralization, through economic expansion, was going on [with] Businesses and enterprises formed that soon transcended the States themselves.

The removal of real power to a national capital was the first necessity for an expanded transportation and industrial complex that lay across many States. The concentration of fiscal power in New York broke the monetary freedom of State legislatures. As business enterprise became more and more national and spread on rails, old boundaries were, and had to be, meaningless. All this would, in quick time, forge a new society.

The old American of a huge farming, small holder class with a tiny mercantile and professional elite was not gone; vast islands of it remained. But it was submerged in flooding money and roaring steam.

If the men and interests behind the rise of the new industrial America did not realize fully where they were going, they understood their basic imperatives well enough. They needed certain things from government: high tariffs on industrial products; business subsidies and the diversion of public finances to railroads; centralized money control; continued massive immigration to curb native workers and create a labor pool; and a hard money policy, without which a solid financial-industrial complex was difficult to build.

The political instrument of this new force was the new Republican party . . . [where] refugees from Whiggery found a home. As virtually all foreign observers have seen, the erection of the immense American politico-industrial-financial machine in 1861 was not pure destiny; it took a certain kind of genius.

[But] the new wealth was more monstrously maldistributed than it had ever been. Millions of northern workers were little better off, in grimy tenements and working long, tedious days, than Texas slaves; many, in fact, were cared for worse. Native-born workers, who had enjoyed decades of scarcity and demand, begged for a limit to flooding immigration as they were drowned. In the 19^th century they were hardly sustained by the 20^th century illusion that they rose on each succeeding wave.”

(Lone Star: A History of Texas and the Texans. T.R. Fehrenbach. Collier Books, pp. 403-405)

Lincoln’s Tariff War

Lincoln, in his first inaugural address, promised no interference with the South’s labor system and admitted that a president lacked the authority to do so. But he did threaten to invade any State that failed to collect federal tariff revenues – despite the US Constitution’s Article III, Section 3, declaring treason to be waging war against one of “Them”, the States, or adhering to their enemy, giving them aid and comfort.

Lincoln’s Tariff War

“Once the Republicans were confident that Lincoln would win the 1860 election, and especially once the Southern Democrats began leaving the U.S. Congress, they did what they had been dreaming of doing for decades: They went on a protectionist frenzy that lasted for decades after the war.

The Morrill Tariff was passed by the House of Representatives in May 1860 and by the Senate in March 1861, just prior to Lincoln’s inauguration. Thus, the apparatus of protectionism was initiated before Fort Sumter and before the war. The Morrill Tariff was not passed to finance the war; it was passed because the old-line Whigs, who were now Republicans [including Lincoln], finally had the power to do it.

Even though it was passed before Lincoln officially took office, it is important to note that, as the Republicans’ presidential candidate, he was the leader of the party and, as such, most likely had a great deal to do with the political maneuvering on behalf of the tariff.

[In his classic 1931 book, “The Tariff History of the United States”] Frank Taussig explains that “in the next regular [congressional] session, in December 1861, a still further increase of [tariff] duties was made. From that time until 1865, no session, indeed, hardly a month of any session, passed in which some increase in of duties on imports were not made.” By 1862, the average tariff rate had crept up to 47.06 percent which “established protective duties [for Northern industries] more extreme than had been ventured on in any previous tariff act in our country’s history.”

The Republicans openly admitted that the purpose of their protectionist policy was not necessarily to raise money to finance the war but to pay off Northern manufacturers for their political support. The manufacturers were being taxed explicitly (through excise taxes) to help finance the war, and the tariff was a way to offset those losses. Congress enacted and Lincoln signed into law tariff legislation “whose chief effect was to bring money into the pockets of private individuals.”

Long after the war, Taussig concluded, “almost every increase in duties demanded by domestic producers was readily made” and “great forces were made by changes in legislation urged and brought about by those who were benefited by them.”

(Abraham Lincon and the Triumph of Mercantilism, Thomas J. DiLorenzo. Reassessing the Presidency. John V. Denson, ed., Mises Institute Press, 2001, pp. 220-221)

The Morrill Tariff War

The Morrill Tariff War

The United States House and Senate passed on March 2, 1861, a pro-slavery amendment by the required 2/3 vote which received the endorsement of newly elected President Abraham Lincoln. This would prohibit the United States government from ever interfering with the domestic institution of African slavery in any State. The amendment was ratified by at least three States prior to Lincoln’s ill-advised attempt to reinforce and supply Fort Sumter in mid-April, after which he began raising an army which a president is forbidden to do.

The amendment, as a clear assessment of northern political feeling at the time, indicates that the ensuing war was not prosecuted by the north for emancipation. If the American South’s only interest was “preserving slavery” it need only remain in the 1789 union and join the other States in ratifying the amendment.

At the very same time in early March the northern-dominated Congress passed the oppressive Morrill Tariff Act, which imposed a 40% sales tax on imported goods shipped primarily to the Southern States. This Act protected northern commercial interests.

The only way the American South could avoid the tariff was to withdraw from political union with the north, and initially the northern press supported this. Editor Horace Greeley wrote of “erring sisters” departing the union but entitled to determine their own political future – and not “pinned to the other States with a bayonet.”

In early March 1861 the Confederate States Congress convened and passed a minor 10% tariff which would bring the world’s shipping traffic to Southern ports instead of high-tariff northern ports. This sent a veritable shock wave through the commercial north as it would bankrupt those ports and business interests.

The north’s attitude of letting the “erring sisters” enjoy their political independence changed to invasion and conquest as the only remaining path to collecting their all-important tariff. Hence, all Southern ports from Virginia to Texas had to be brought under northern control.

As only Congress is authorized to raise and supply an army and would not convene until July, it looked the other way while State governors in the north supplied Lincoln with troops after the provocation at Fort Sumter.