How Did Tariffs Work?

[unionblue]

ceaderstripper,

Found two sites concerning the economics of the Civil War and the tariff. Don't know how good they are or if they relate very well to this thread, but what the heck, I'm posting them anyway:

The Economics of the Civil War
http://eh.net/encyclopedia/?article=ransom.civil.war.us

The Antebellum Tariff on Cotton Textiles Revisited
http://www.nber.org/~confer/2000/si2000/graytemin.pdf#search='US%20Tariff%20Table%201860'

Sincerely,
Unionblue

[cedarstripper]

Originally Posted by unionblue

Do you recall the man, the conversation and the date? It is often brought up by those on this board who claim Lincoln really went to war over the tariff and I know that this conversation is dismissed by most historians but do you have any information on it?

"What will become of my tariff?" I've seen it brought up often too, but at the most, I think it is overrated as a cause of war. Looking it up quickly, it was allegedly said to a Colonel Baldwin of the Virginia Session Convention, as quoted in a book by Rev. Robert Dabney.

Assuming the quote is genuine (and I am skeptical) Lincoln is supposedly referring to allowing the confederacy to open Charleston as a Confederate Port of Entry. Its reasonable to assume that an effort to direct ship imports and exports would lose some tariff revenues, but probably have more impact on New York City shipping commerce. This is hardly enough to compete with Lincoln's need to preserve the Union though.

Sorry I can't offer anything I'm sure you don't know already.

There was a speech given to the Virginia Secession convention by a secession commissioner...I'm thinking it was Howard Benning. In it, he claimed that all the goods the South consumes she now gets from the North, and that if Virginia would join her sister slave states, she could become the new North, growing her cities and producing the manufactures the South would consume. He even assured her that if more protectionism was what she needed, he was almost certain the Confederate Congress would give her that.

It was apparent that the secession movement intended to shun Northern business as much as possible, either by producing her own or importing European. This was not for economic reasons, but rather an animosity towards the North that had festered. There was certainly cause for alarm for the disruption of commerce and what it might do to many northern interests.

[cedarstripper]

Originally Posted by unionblue

ceaderstripper,

Found two sites concerning the economics of the Civil War and the tariff.

Sincerely,
Unionblue

Thanks. I've read the second one by Irwin, but the first one is new and looks interesting.
Jane Flaherty (Texas A&M) wrote an article named Incidental Protection: An Examination of the Morrill Tariff. I have never read it, but I've seen comparisons of tariff rates that came from it. I'm under the impression that she is informative and balanced.
http://www.eh.net/lists/archives/abs...-2001/0004.php

There are some other sources, but I recently switched computers, and don't have my old bookmarked sites anymore. Starting over sucks!

[ole]

cedarstripper:

So nice to have a soul on board who can answer questions with reason, resource, and erudition.

An excellent and READABLE treatise! Thank you.

[cedarstripper]

Originally Posted by ole

cedarstripper:
An excellent and READABLE treatise! Thank you.

Thanks, but believe me, its more like the blind hog and the acorn kind of thing. I should have lurked around a bit on some of these older threads first before I jumped in. The knowledge and resources are impressive. I hope to learn much from you folks.

[unionblue]

Friends,

It has been suggested because President Lincoln made some inquries about revenue and mentioned the collection of that revenue once in his inaguaration speech, that somehow the tariff and the collection of revenue was his primary reason for going to war with the South. It is further supposed this was done because the Union/North was growing rich off of unfair collection of this revenue and it was an unfair burden on the South.

Previous entries on this thread have managed to dismiss most of the above as unjustified (to my own satisfaction I admit), but I have come across some information which might explain some of the concern about the collection of revenue.

The Federal government of the time had only two sources of income, the sale of land and the collection of the tariff. The sale of land was never a large source of revenue and the majority of the funds used to run the government was through the collection of the revenue generated by the tariff.

Now, before the war, the tariff was at it's lowest in many, many years. Yet there had been a financial crisis in the late 1850's, such a crisis in fact, that before President Buchanan's terms expired, he had recommended to the Congress that the tariff be increased in order to replenish the treasury and have funds available to operate the government.

I find it extermely interesting that when the Civil War began in April of 1861, the treasury had a grand total of two hundred thousand dollars in its coffers. The funny thing is, even with the call-up of 75,000 troops, the Union made no attempt to drastically increase its revenue until after the Battle of Bull Run in July of 1861. After that little dust-up, everyone knew the war was going to be a bit longer then everyone first thought and that it was going to take a lot more soldiers, equipment, etc., and the soldiers above all were going to have to be paid.

And how was the money raised at first? Secretary of the Treasury Salmon Chase borrowed from Northern banks, sold war bonds to patriotic investors, and finally and with great sorrow for Chase was a 'hard money' man, he turned to the option of printing money.

Of course, there was the Morrill Tariff which is regarded as the smoking gun of those who say the tariff was the cause of the war, but again, most tend to ignore the fact the original Morrill Tariff did not increase the tariff initially. It was after the war was in full swing that the dramatic increases occurred and these were done to finance a war.

Two hundred thousand dollars just wasn't going to cut it.

Just a bit of information to pass along.

Unionblue

[ole]

Neil:

Thanks for bringing this thread back up to the front. It crossed my mind to bring it up when talk on the other thread turned to Lincoln's desire to maintain tariffs. I got a bit too busy when the grass started growing, so I didn't get around to it. I'm glad you did. I'm afraid it won't dissuade anyone, however.

[unionblue]

ole,

You're welcome. Just wanted to see if there was any 'fresh' ground to cover.

Unionblue

[unionblue]

Something new on the tariff front:

"The idea that the South would pay a disproportionate share of import duties defies common sense as well as facts. The majority of imports from abroad entered ports in the Northeastern US, principally New York City. The importers paid duties at the customs houses in those cities. The Free States had sixty-two percent of the US population in the 1850s and seventy-two percent of the free population. The standard of living was higher in the free states and the people of those states consumed more than their proportionate share of dutiable products, so a high proportion of tariff revenue (on both consumer and capital goods) was paid ultimately by the people of those states -- a fair guess would be that the North paid about seventy percent of tariff duties. There is no way to measure this precisely, for once the duties were paid no statistics were kept on the final destination of dutiable products. But consider a few examples. There was a tariff on sugar, which benefited only sugar planters in Louisiana, but seventy percent of the sugar was consumed in the free states. There was a tariff on hemp, which benefited only the growers in Kentucky and Missouri, but the shipbuilding industry was almost entirely in the North, so Northern users of hemp paid a disproportionate amount of that tariff. There were duties on both raw wool and finished wool cloth, which of course benefited sheep farmers who were mostly in the North and woolen textile manufacturers who were almost entirely in the North, but it was Norhtern consumers who ultimately paid probably eighty percent of that tariff (woolen clothes were worn more in the North that the South, for obvious reasons). Or take the tariff on iron -- it benefited mainly Norhtern manufacturers (though there was an iron industry in the South as well), but sixty-five percent of the railroad mileage and seventy-five percent of the railroad rolling stock were in the North, which meant that Northern railroads (and their customers, indirectly) paid those proportions of the duties on iron for their rails, locomotives, and wheels. One can come up with many more examples."

SOURCE: North & South, January 2004, Vol. 7, Number 1, page 52.

Unionblue

[cedarstripper]

Union Blue:

Not quite everyone is in agreement with the text you offered.

James McPherson wrote the excerpt that you posted as a comment on one of Tom DiLorenzo's claims. DiLorenzo immediately fired back a nasty rebuttal in an article on Lew Rockwell in that same month. http://www.lewrockwell.com/dilorenzo/dilorenzo58.html


Here is an excerpt:

"The sentence that McPherson was asked to criticize was one in which I cite Charles Adams who, in When in the Course of Human Events, estimated that in 1860 Southerners were paying a disproportionate share of the federal import tariff, which at the time accounted for 95 percent of all federal revenues (See U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970)."

DiLorenzo had commonly been claiming more than just "the South was paying a disproportionate share." In his book, TRL, he claimed the South was "paying in excess of 80% of all tariffs." He sources Charles Adams' book When in the Course of Human Events, and in several articles and an interview, he cites Frank Taussig as writing this in Tariff History of the United States, though Taussig never writes any such thing. Adams' source for the claim is an 1860 speech by Jabez L. M. Curry, published in Perils and Duty of the South, in Southern Pamphlets on Secession.




Some more of DiLorenzo's rebuttal:

"McPherson relied on his "authority" as the "dean" of "Civil War" historians to make a "fair guess" that Northerners paid 70 percent of the tariff in 1860. But in the next sentence he essentially admits that his guess is completely useless by admitting that "there is no way to measure this precisely" since no statistics were kept on the final destination of dutiable products."

DiLorenzo makes cheap shots at McPherson with the same ease with which he aims them at Lincoln. McPherson needn't apologize for his ACW scholarship, and he needn't rely on it to make rational arguments based on factual statistics - namely that the vast majority of import tonnage entered through northern ports (mostly Boston and NYC), that the free states had 72% of the free population in the 1850s, and that a fair guess estimate was that the North paid about 70% of tariff revenues. McPherson rightly notes that a "fair guess" estimate is all that is possible, as the necessary records to determine this were not kept.

Size this up with Dilorenzo's entirely unsupported claim that the relative small population of the South paid in excess of 80% of tariff revenues, and McPherson's qualitative assessment of his own statement is even more appreciated. DiLorenzo might consider using this method to let his readers properly assess the validity of his claims, but then, noting that your claims are based on thin air probably doesn't go over well with publishers.

DiLorenzo goes on to try and make the case for the export market of the slave states being burdened more with tariffs than the economies of the free states by pleading a general economics argument which theorizes that declines in British imports due to tariffs = a decline in demand (and price) for southern cotton. Applying this reasoning to pre-war southern commerce though presents a problem in that demand for cotton generally outstripped production and consistently supported record prices. Britian was expanding its sales for cotton textiles in other markets around the British Empire, despite its twenty year old loss of market share to American textiles and the American market. If southerners actually didn't like that more of their cotton was ending up in mills in New England rather than Britian, then they didn't seem to show it.

And it seems to me that this arguing loss of demand burden is quite a retreat from the claim that Southerners paid over 80% of the tariffs. Jabez Curry certainly wasn't preaching in 1860 about lower demand for cotton - he was misusing an 1838 report from the Secretary of the Treasury. Not only has DiLorenzo had to fess up that he repeatedly attributted to Taussig what Taussig did not write, but he has had to witness the 80% claim go down in flames wherever it is examined.

I mean, before Dilorenzo and Adams made this 80% claim popular, who really knew that for every tariff dollar collected in a slave state port, about twenty were collected in a free state port. Thanks, Tom.