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Lessons from the Civil War
- By Mike Scruggs
- Category: Mike Scruggs' Column
The Menace of Sectionalist Politics and Protective Tariffs
Part 8 of 8 on the Morrill Tariff
Protectionist tariffs are a general menace to economic prosperity. Near the beginning of the Great Depression, one of the highest tariff bills in U.S. history, the Smoot-Hawley Tariff Act, was passed on June 17, 1930, by Congress and signed by Republican President Herbert Hoover, who had strongly opposed the bill. Its purpose was to protect suffering American workers, farmers, and businesses from foreign competition. Up until then, exporters were faring well and remained one of the relative strengths in the economy. The House passed the bill 264 to 147, with 244 Republicans and 20 Democrats voting for it. The Senate passed it 44 to 42, with 39 Republicans and 5 Democrats voting for it. As could have been predicted by historical experience, exports soon suffered, dropping 61 percent with even Canada introducing a retaliatory tariff against U.S. goods. Unemployment was at 7.8 percent when Smoot-Hawley passed and jumped to 16.3 percent in 1931 and peaked at 25.1 percent in 1933.62
Mark Thornton and Robert B. Ekelund Jr. in their 2004 book on the economics of the Civil War, summarize some of their general economic conclusions: Protective tariffs benefit some commercial or regional interests in the short to intermediate term, but they do more harm than good to the overall economy. Obviously, some interests are injured. Tariffs are essentially a redistribution of wealth through political means. Protected economic interests often become non-innovative drags on the economy and taxpayers.63
- Hits: 1629
The Tariff Road to Secession and War
- By Mike Scruggs
- Category: Mike Scruggs' Column
Protectionism versus Free Trade
Part 7 of 8 of a Series on the Morrill Tariff
Whig leaders in congress were again able to pass protectionist legislation in the Tariff of 1842, also known as the “Black Tariff.” This tariff primarily benefited the iron industry, nearly doubling the rates for both raw and manufactured iron goods. It also raised the percentage of dutiable items from about 50 percent to over 85 percent of all imported items. By 1843, imports had dropped by half, thus actually reducing total tariff revenues. Exports dropped approximately 20 percent. This was replaced by the 1846 Walker Tariff that lowered tariff rates to pre-1842 levels after the Whigs lost the presidency and Congress in the 1844 elections.50
The 1857 “Free-Trade” Tariff was passed by a nonpartisan coalition dominated by conservative Southern Democrats and reduced tariff rates to almost free-trade levels. This was strongly opposed by Northern industry and Northern industrial workers. When a financial panic caused by loose banking practices resulted in a Northern recession in 1857, the Republicans blamed it on free trade and the 1857 Tariff Law. By 1858, the Republicans had submitted new tariff legislation, the Morrill Tariff, to the House Ways and Means Committee.51
Like many modern legislative attempts to conceal the purposes, costs, and political and economic benefits and injuries of a bad bill, the title of the Morrill Tariff commences with deceptive obfuscation:
- Hits: 1570
The Nullification Crisis of 1832-1833
- By Mike Scruggs
- Category: Mike Scruggs' Column
Preview of Coming Sectionalist Disaster in 1860-1861
Part 6 of 8 of a Series on the Morrill Tariff
In 1832, another tariff bill was introduced, supposedly to correct some of the injustices of the 1828 Tariff of Abominations and to give some relief to the South. The 1828 Tariff had also produced a surplus of government income that many wanted to correct. However, the Northern beneficiaries of high tariffs succeeded in a bill that did not diminish their profit margins. Some of the abominations of the 1828 Tariff were relieved, notably the troubling “minimum” provisions, which caused unjust aberrations in the duties and invited fraud. The average dutiable rate was about 33 percent. The net relief to the South, however, was negligible, and many Southern Congressmen felt they had been betrayed and exploited by Northern political interests again.41
- Hits: 1772
Lessons from the 1828 Tariff of Abominations
- By Mike Scruggs
- Category: Mike Scruggs' Column
Foreshadows of the Morrill Tariff
Part 5 of 8 of a Series on the Morrill Tariff
The passage of the 1828 Tariff resulted in the defeat of John Quincy Adams in the 1828 presidential election by Andrew Jackson of Tennessee, who opposed the Tariff. His Vice President, John C. Calhoun of South Carolina, had become a relentless opponent of protective tariffs, and was one of strongest advocates for States Rights in the nation. Calhoun was a brilliant intellectual, elegant speaker, and consummate political organizer. Jackson, a fellow Southerner, had similar views but was not as committed to expeditious correction of the evils perpetrated by the tariff. Understandably, Jackson believed that materials important to military defense should be protected. But he also believed that the tariff should not be reduced until the national debt was paid off. This thinking must have alarmed Calhoun, since Southern States paid most of the tariff revenues, while the Northern States received a disproportionate share of the benefits to spend on Northern “internal improvements.” This meant that the South would be called upon to pay off most of a national debt caused by over expenditures on mostly Northern internal improvements—an outrageous injustice. U.S. tariff policy debates—arguing free trade and low tariffs versus protectionism and high tariffs—thus remained heated.
- Hits: 1444
Henry Clay and His American System
- By Mike Scruggs
- Category: Mike Scruggs' Column
Foreshadows of the Morrill Tariff
Part 4 of 8 of a Series on the Morrill Tariff
In 1816, many prominent Southerners and New Englanders felt that they would benefit enough from the nation’s overall growth from increased industrialization to compensate for their immediate disadvantage from higher tariffs. Even James Madison, Thomas Jefferson, and John C. Calhoun approved of the compromise. This compromise, however, bore the seeds of Northern addiction to protectionist tariffs. First advocated by Alexander Hamilton and his Federalist Party, high tariffs reduced foreign competition and allowed American manufacturers to raise their prices. The resulting increases in profitability (at consumer expense) raised their appetite for still more. In less than a decade, the continuous Northern cry for protectionist policies would give birth to Kentucky Representative Henry Clay’s “American System.” Clay, like Hamilton, favored protective tariffs, industrial subsidies, and a centralized national bank. These policies were later adopted by Clay’s Whig Party and then the new Republican Party in 1856. This also led to the growth of legislative logrolling (I’ll help you roll your log if you help me roll my log.). Logrolling increased legislative support for bills by expanding them to include mutual agreements beyond their central purpose. In the end, the 1816 Tariff had some legislative support in every state except North Carolina and Delaware. Of course, the moral problem with all this is that it amounts to ganging up to pass legislation that will benefit the most powerful interest groups at the expense of the overall national interest and less powerful commercial or regional interests. As a rule of thumb for the era, tariffs of 15 to 20 percent were seen as tolerable revenue tariffs, while tariffs of 20 percent or more were seen as protectionism that led to big profits for some and economic harm to others.
- Hits: 1856
Mike Scruggs is the author of two books: The Un-Civil War: Shattering the Historical Myths; and Lessons from the Vietnam War: Truths the Media Never Told You, and over 600 articles on military history, national security, intelligent design, genealogical genetics, immigration, current political affairs, Islam, and the Middle East.
He holds a BS degree from the University of Georgia and an MBA from Stanford University. A former USAF intelligence officer and Air Commando, he is a decorated combat veteran of the Vietnam War, and holds the Distinguished Flying Cross, Purple Heart, and Air Medal. He is a retired First Vice President for a major national financial services firm and former Chairman of the Board of a classical Christian school.
Click the website below to order books. http://www.universalmediainc.org/books.htm.