Circa1865

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)