Friday, August 12, 2011

Newspaper Clippings from 1860 & 1861

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THE NEW TARIFF ON DRY GOODS.

Unhappy condition of the Optic Nerve of a Custom House Appraiser who has been counting the Threads in a Square Yard of Fabric to ascertain the duty thereon under the New MORRILL Tariff. The Spots and Webs are well-known Opthalmic Symptoms. It is confidently expected that the unfortunate man will go blind.

Mike Scruggs

Although it is denied by the high priests of politically correct Civil War history, some scholars have ventured to speculate whether the fierce 37-year North-South political battle over import taxes and trade policies could have at last driven seven major cotton-producing states in the South to secede from the Union in 1860 and 1861. While Northern industrialists prospered under high protective tariffs, the South suffered. High tariffs on manufactured goods meant higher costs of living and doing business in the South. It also meant reduced volume and lower prices for cotton and other agricultural exports to Britain

Under the tariff system, the South was paying over 80 percent of all Federal taxes, while almost 80 percent of the taxes collected funded Northern projects. In addition, the Morrill Tariff, passed by the House in May 1860, raised the tariff rates by 67 percent, going from 20 percent to over 36 percent effective in 1861 and advancing to 47 percent within three years, more than doubling the 1860 rate. In addition, tariffs hurt exporters, and the South accounted for nearly 80 percent of the nation’s exports in 1860.

Most American economists today have concluded that protectionism is a policy that may help protected industries for a while, but it hurts everybody else. Protectionism is just another way of redistributing the national income, from consumers, taxpayers, and non-protected businesses to politically connected businesses. It also weakens industries and nations by rewarding political entrepreneurs seeking to advance their business through favorable government legislation and regulation rather than innovative competition. It is a form of government intervention that produces lobbyists and political corruption rather innovation and productive jobs.

A frightening historical example of the general menace of protective tariffs, and especially their impact on exports, was the Smoot-Hawley Tariff of 1930, which was only a little higher than the Morrill Tariff. Smoot-Hawley was undoubtedly responsible for a significant share of the 61 percent drop in exports during 1931. Unemployment was 7.8 percent when Smoot-Hawley was passed but rose to 16.3 percent in 1931 and peaked in 1933 at 25.1 percent.

The Republican platform of 1860 had a strong protectionist plank, and Lincoln made high tariffs his chief campaign issue in 1860. Keeping slavery out of new territories and states was second to high tariffs in priority, and the emancipation of slaves was not in the 1860 Republican platform at all. The new Confederate Constitution outlawed protective tariffs and set a policy course of low tariffs and free trade.

Two days before Lincoln’s election in November of 1860, the Charleston Mercury editorialized:

“The real causes of dissatisfaction in the South with the North, are in the unjust taxation and expenditure of the taxes by the Government of the United States, and in the revolution the North has effected in this government, from a confederated republic, to a national sectional despotism.”

At first Northern public opinion as reflected in Northern newspapers of both parties recognized the right of the Southern States to secede and favored peaceful separation.

A November 21, 1860, editorial in the Cincinnati Daily Press said this:

“We believe that the right of any member of this Confederacy to dissolve its political relations with the others and assume an independent position is absolute.”

The New York Times, on March 21, 1861, reflecting the great majority of editorial opinion in the North summarized in an editorial:

“There is a growing sentiment throughout the North in favor of letting the Gulf States go.”

Northern industrialists became nervous, however, when they realized a tariff dependent North would be competing against a free-trade South. They feared not only loss of tax revenue, but also considerable loss of trade. Newspaper editorials began to reflect this nervousness.

On December 10, 1860, the Daily Chicago Times reflected on the ruin and bankruptcy that Southern free trade might bring upon the North:

“Let the South adopt the free-trade system [and the North’s] commerce must be reduced to less than half what it is now…Our labor could not compete…with the labor of Europe [and] a large portion of our shipping interest would pass into the hands of the South.”

On March 12, 1861, the New York Evening Post advocated that the U.S. Navy “abolish all ports of entry” into the South. It seemed to them to be cheaper than the administrative expense of collecting the tariff.59

Also in March of 1861, the North American Review, published in Boston, warned of a Southern Confederacy whose constitution forbade protective tariffs and whose Congress advocated free trade policies.

“Slavery is not the cause of the rebellion…Slavery is the pretext on which the leaders of the rebellion rely to fire the Southern heart and through which the greatest degree of unananimity can be produced.”

The Newark Daily Advertiser, on April 2, 1861, editorialized that Southern free trade “must operate to the serious disadvantage of the North,” and should be stopped by military force.

The Boston Transcript, on March 18, 1861, warned:

“The mask has been thrown off, and it is apparent that the people of the principal seceding states are now for commercial independence. They dream that the centers of traffic can be changed from Northern to Southern ports. The merchants of New Orleans, Charleston, and Savannah are possessed of the idea that New York, Boston, and Philadelphia may be shorn, in the future, of their mercantile greatness, by a revenue system verging on free trade…The government would be false to its obligations if this state of things were not provided against.”



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