SECTIONAL ISSUES 1815-1860

TRADE AND TARIFFS:

• Like other issues in the Era of Good Feelings, the tariff controversy was agitated by both the War of 1812 and the Panic of 1819. The Tariff Act of 1816 was enacted to protect American manufacturing against British postwar textile imports and promote national economic self-sufficiency. The Panic of 1819 encouraged high tariffs in order to protect American jobs. Except for the commercial interests of New England, high tariffs were supported in every section of the country. In time, the South and Southwest turned against protective tariffs concluding that they increased the costs of imports and inhibited the export of southern cotton.
• A complicated issue which can easily be oversimplified; related to international economic picture, diplomatic issues; tariffs can be specific (amount) or ad valorem (%).
• Purposes of tariff—to Raise revenue and Protect American industry. Traders tended to oppose very high tariffs. Manufacturing interests favored protectionism. Consumers, farmers hurt by higher prices on taxed imports. Agricultural areas eventually come to reject protectionism.

Summary:

• 1607-1789: British imperial rules controlled tariffs/trade. Early tariffs in colonial period were for revenue purposes, mildly protectionist. Leftover mercantilist ideas.
• 1789-1816: Under Constitution Congress has sole power to levy tariffs. Early tariffs designed chiefly for revenue with moderate protectionism.
• 1816-1828: The rise of protectionism.
• Industry needs protection after 1812 war—GB floods market
• Tariff of 1816 responds to British actions; protectionist
• 1818 Tariffs gradually raised rates on manufactures
• 1824 High on wool, cotton, iron, finished goods
• 1828 Tariff of Abominations leads to nullification crisis of 1832; highest level of protectionism before Civil War
• 1832-1860: Lowering of duties
• 1832-33 Compromise reached for S.C.—Tariffs lowered
• 1842 Whig tariff returns back up to 1832 levels
• 1846 Walker Tariff (Democratic) mainly for revenue
• 1857 Rates lowered further, free list enlarged

INTERNAL IMPROVEMENTS: South, west, needed roads, canals to get goods to market; Older sections had roads, etc.; didn’t want to spend money on what they already had; Federal government stayed mostly out of it. In 1817 Madison believed Constitutional amendment needed for U.S. to get into building of roads, canals. Calhoun supports under notion of "general welfare," military necessity. Also: Gallatin’s National Road Bill of 1807; National Road to Vandalia, Illinois. LAND POLICY.

• The liberal land acts of 1800 and 1804 reduced the price of public land and the minimum unit for sale. Sales boomed, then slumped during the War of 1812, then boomed again until 1818.
• Agricultural prices fell as foreign markets shrank and the Panic of 1819 destroyed many farms.
• The West strongly favored a cheap land policy while the North feared it would drain off cheap labor.
• The South worried about competition from cotton producers in the virgin lands of the Southwest.
• Westerners were also most enthusiastic for federally financed internal improvements like the National Road.
• LAND: Used for revenue, development, attract immigrants, etc. Settlers and speculators wanted cheap land. Established interests wanted to maximize profit to government.
• The Sales Boom; East wants high prices for revenue, West wants cheap land for speculation, expansion.

THE NATIONAL BANK.

• Charter not renewed in 1811—some question constitutionality, others oppose competition with state banks and the fact that most of its stock was foreign owned. Country in financial muddle after charter expires. $7 million in gold returned to England in 1811.
• But—absence of national bank during War of 1812 complicated war financing, lowered value of bank notes.
• Congress creates new 2^nd Bank of the United States in 1816--the first Calhoun, Clay, Webster show.
• Badly managed at first, endangered by Panic of 1819. New management, tighter credit policies save the bank, but at the expense of public favor.
• All sections split over bank; but westerners particularly opposed tight money policies.
• Functions: Control currency, enable government to do financial business easily.
• Banking Policy confused—tight vs. loose money, inflation/deflation; debtors, creditors. Madison says 1815 if state banks cannot control currency, national bank is necessary. Treasury Secretary Dallas introduces new bank bill.
• Lessons learned from war: A $35 million charter, 1/5 stock and directors from U.S.
• Starts badly, reckless practices, poor administration
• Improves when Biddle takes charge
• Marshall’s decision in M’Culloch v. Maryland important
• Jackson’s shortsighted bank veto in 1832 ("I will kill it!") leads to 1837 Panic.

  THE DIVISIVE ISSUE OF SLAVERY [See separate section] While there were squabbles over tariff, bank, and land policies, the most divisive sectional issue was slavery. This issue generated surprisingly little controversy from 1789 to 1819. Slave importations increased in the 1790s, but the slave trade was quietly abolished in 1808. Free and slave states entered the Union in equal numbers (11 each in 1819), and slave-produced cotton became king in the South. Southerners ardently defended slavery while most northerners were indifferent, believing slavery was a local issue. Many westerners, especially native southerners, also supported slavery.

• A moral, political and economic issue that will dominate American political and social life until the Civil War. Opinion divided in ALL sections of country.
• Moral issue grows after abolitionists preach against slavery
• Many southerners opposed to slavery but stuck with it because of invested capital in slaves
• Many Northerners opposed slavery but were afraid of flood of cheap labor if slaves freed
• Southern non-slave owning farmers resented unfair competition from slave labor.
• Free and slave states entered the Union in equal numbers (11 each in 1819), and slave-produced cotton became king in the South.
• Southerners ardently defended slavery while most northerners were indifferent, believing slavery was a local issue. Many westerners, especially native southerners, also supported slavery.

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