Mises Daily

Gods, Generals, and Tariffs

The anticipation surrounding the new movie “Gods and Generals,” which opens today, underscores the continuing fascination that Americans (and the world) have with the meaning of the Civil War. It also reflects a growing awareness that the simple story of Northern liberators versus Southern slaveholders fails to do justice to the truth. But what continues to be missed are the economic roots of the North-South conflict—roots which represent deviations from the free-trade ideal.

In a May 10, 2002 article on mises.org (”Lincoln’s Tariff War“) I elaborated on the argument in my book, The Real Lincoln, that the tariff was a far more important cause of the War between the States than most historians and economists admit.  Charles Adams also makes a very powerful case for the importance of the tariff in precipitating the war in his book, When in the Course of Human Events.  Professors Robert A. McGuire of the University of Akron and T. Norman Van Cott of Ball State University provided additional support for this argument in a July 2002 article in Economic Inquiry, one of the top peer-reviewed economics journals (”The Confederate Constitution, Tariffs, and the Laffer Relationship”).  

These authors note, as I do in my book, that the Confederate Constitution outlawed protectionist tariffs altogether.  Article I, Section 8 allows for the collection of “taxes, duties, imposts and excises” but only “for revenue necessary” to finance the government and not to protect any business or industry from international competition.  ”Nor shall any duties or taxes on importations from foreign nations be laid to promote or foster any branch of industry . . .”  

The actual tariff rates that were put into effect by the Confederate government averaged 13.3 percent, with dozens of commodities exempt altogether.  This was lower than the 15 percent average tariff rate of 1857 that Frank Taussig said, in his Tariff History of the United States [FULL TEXT] was the closest to the free-trade ideal ever accomplished by the United States during the nineteenth century.   (Taussig was speaking of the U.S. government’s tariff rates; the Confederate government’s tariff policy was in reality the high water mark of free-trade policy in the nineteenth century.)

In sharp contrast, when the Republican Party gained power in the late 1850s the top item on its agenda was to increase the average tariff rate from 15% to 32% and then to over 47%.  The Republican Party would dominate national politics in America until World War I, and the average tariff rate would remain at about that level all during that time.  

Abraham Lincoln was a lifelong protectionist and owed his nomination at the 1860 Republican Party convention to the fact that he won the support of the Pennsylvania and New York delegations (the two largest) by convincing them that no other candidate was more devoted to protectionism than he was.  And, as Richard Bensel wrote in Yankee Leviathan, the protectionist tariff was nothing less than the cornerstone of the 1860 Republican Party platform.

Professors McGuire and Van Cott write of how “many longtime protectionists in the Northeast” argued that “low tariffs were responsible for the ‘crisis’ in financial markets and the ensuing depression” of the late 1850s.  ”As a result, a drum beat for protection among various Northeasterners, industries, and labor groups commenced in late 1857.”

Southerners had been battling this protectionist cabal since at least 1824.  Since they purchased the big majority of their manufactured goods from Europe or the North, and since they were so export dependent, protectionism imposed a harshly disproportionate burden on the Southern states.  There were some Southern protectionists and some Northern free traders, but still, the overwhelming majority of the protectionists came from the North, and free traders from the South.  

The U.S. House of Representatives, under the influence of this Northern protectionist lobby, “actually passed the Morrill tariff in its 1859–60 session, prior to the departure of southern congressman from the House of Representatives,” write McGuire and Van Cott (emphasis added). “This vote took place on 10 May 1860, well before Lincoln’s election, Confederate secession, and Lincoln’s inauguration.”  

This suggests that the Morrill Tariff was not a “war tariff” put into place to finance the war but the usual kind, designed to thwart free trade and plunder consumers, especially Southern consumers.

Moreover, the House vote of 105–64 was very lopsided in terms of Northern supporters and Southern opponents of the Morrill Tariff (Congressman Justin Morrill was a steel manufacturer from Vermont).  ”Only one yes vote was from a secessionist state (Tennessee)” and “only 15 no votes came from northern states.”  

This means

[T]hat 87% of northern congressmen but only 12.5% of southern congressmen (and just 1 out of 40 congressmen from secessionist states) voted in favor of the Morrill tariff, the year prior to secession. The handwriting was on the wall for the South, and ultimately for the Confederacy, after the Panic of 1857.

Northern newspapers that were associated with the Republican Party openly advocated protectionist tariffs as a tool of plunder directed at the Southern states.  As the Daily Chicago Times editorialized on December 10, 1860:

The South has furnished near three-fourths of the entire exports of the country.  Last year she furnished seventy-two percent of the whole . . . We have a tariff [the Morrill Tariff] that protects our manufacturers from thirty to fifty percent, and enables us to consume large quantities of Southern cotton, and to compete in our whole home market with the skilled labor of Europe. This operates to compel the South to pay an indirect bounty to our skilled labor, of millions annually.

Cognizant that the Confederate Congress was about to adopt a much lower tariff rate, the Chicago paper warned that if the North were to “let the South adopt the free-trade system,” the North’s “commerce must be reduced to less than half what it is now . . . leading to very general bankruptcy and ruin.”

On March 12, 1861, a week after Lincoln’s inauguration and a month before Fort Sumter, the New York Evening Post, another Republican Party mouthpiece, advocated a preemptive strike against the Southern free traders with a naval attack that would “abolish all ports of entry” into the Southern states.  

The Newark Daily Advertiser, meanwhile, expressed its disgust that Southerners had apparently “taken to their bosoms the liberal and popular doctrine of free trade,” and that they “may be willing to go . . . toward free trade with the European powers.”  ”The chief instigator of the present troubles—South Carolina—have all along for years been preparing the way for the adoption of free trade,” and must therefore be stopped “by the closing of the ports” by military force.  

When Lincoln was inaugurated his party had just doubled the average tariff rate and was planning on increasing it even more.  Then, in his First Inaugural Address, he promised a federal invasion of any state that did not collect the higher tariffs, as South Carolina had refused to do when it nullified the “Tariff of Abominations” in 1832.  

As he said:  ”The power confided in me will be used to hold, occupy, and possess the property, and places belonging to the government, and to collect the duties and imposts; but beyond what may be necessary for these objects, there will be no invasion—no using force against, or among the people anywhere” (emphasis added).   

Collect the higher tariff rate, he said, and there will be no invasion.  Fail to collect it, and there will be an invasion.  Two years later, he would deport the most outspoken member of the Democratic Party opposition, Congressman Clement L. Vallandigham of Ohio, after Vallandigham said this in a speech:

[T]he Confederate Congress . . . adopted our old tariff of 1857 . . .fixing their rate of duties at five, fifteen, and twenty percent lower than ours.  The result was . . . trade and commerce . . . began to look to the South . . . .  The city of New York, the great commercial emporium of the Union, and the North-west, the chief granary of the union, began to clamor now, loudly, for a repeal of the pernicious and ruinous tariff.  Threatened thus with the loss of both political power and wealth, or the repeal of the tariff, and, at last, of both, New England—and Pennsylvania . . . demanded, now, coercion and civil war, with all its horrors, as the price of preserving either from destruction . . . .  The subjugation of the South, and the closing up of her ports—first, by force, in war, and afterward, by tariff laws, in peace, was deliberately resolved upon by the East.

As McGuire and Van Cott conclude:  ”[T]he tariff issue may in fact have been even more important in the North-South tensions that led to the Civil War than many economists and historians currently believe.”

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