Please -- only "the South" makes any claim about the Tariff being unfair to their section. It is "the South" that wants an unrealistic interpretation of the data to justify their secession. It is "the South" that must justify their doubtful claims -- or abandon the pretense that secession was about tariffs.
the South, unlike the North, was dependent on foreign trade for the majority of its income. Southerners earned most of their money by selling cotton and tobacco to foreigners. Europe, Britain much more than the other nations, purchased the lion's share of southern cotton.
The high tariffs imposed on U.S. imports severely diminished European ability to earn dollars by exporting their goods to us. A large portion of the revenues from sales of their goods to us would not go into European pockets but to the U.S. Treasury instead. The Europeans would have fewer dollars left over with which to buy our agricultural products. With fewer dollars in European pockets available for the purchase of cotton, the price of cotton must plunge in order to meet the reduced amount of money available in the market for its purchase. The South, therefore, liked low import tax rates because the low import taxes meant that foreigners had more money left over to bid for cotton. Under low tariff rates, high cotton prices would be a sure thing.
The example of the transactions of a British supercargo in the New York port makes the mathematics come alive for easy understanding. There are two examples, one without a tariff and one with the tariff.
In the first example, with free trade (that is, without a tariff), a ship from Liverpool, England, ties up at the wharf in New York. The supercargo, that is, the ship's officer who has charge of the cargo and its sale and purchase, watches while his ship is unloaded. Cranes lift bundles of bar iron and packages of woolen fabric from the hold and over the sides of the ship, depositing them on the dock. From there they are carried into the warehouse. The warehouseman pays the supercargo for the merchandise the sum $10,000.
The supercargo takes the money and walks over to the cotton exchange. He says, "Gentlemen, I will take $10,000 worth of cotton for my return trip to Liverpool."
The cotton broker says, "Sir, demand is heavy and cotton is at 35 cents per pound." "For $10,000 I can give you 28,857 pounds of cotton. That will be about fifty-eight 500-pound bales." "Do you have room in your hold, Sir?"
"Yes. I will take it all," says the supercargo. "Load up my ship." The cotton is loaded on board and the captain sails on the morning tide out of the harbor back to Liverpool with the load of cotton destined for the British cotton mills.
Then the United States government imposes a forty-percent tariff on iron and woolen fabric.
On its next trip, the ship from Liverpool again ties up at the wharf in New York. Bundles of bar iron and packages of woolen fabric again are unloaded from the hold to the dock and are carried into the warehouse. The warehouseman pays the supercargo $10,000 for the merchandise.
Now the supercargo must go to the U.S. Customs office and pay the customs officer forty-percent of the money, $4,000. He is left with only six-thousand dollars in his wallet.
Arriving at the cotton exchange, he says to the cotton broker, "I'm sorry, Sir, but your government has taken away a large share of the proceeds from the iron and woolens. Now I only have $6,000 left to give you for a load of cotton."
The cotton broker is anguished, because his normal percentage commission will yield less money for him than before. He cannot say, simply, "I'm sorry, but I will just have to sell it to someone else." He already knows that every other foreign buyer is in the same situation. The tariff has cut into their income in the same way.
The broker knows that he cannot just withhold the cotton. He can't let it sit in the warehouse, especially when there is no prospect of better business conditions tomorrow. He must sell the cotton for whatever money there is in the market to purchase it. The price of the cotton must decline accordingly. Now, the price of that fifty-eight bales of cotton has declined to $6,000 or twenty-one cents per pound. It is a forty-percent reduction in cotton revenue.
The planter's loss of cotton income is immediate and devastating.
The downward-sloping line on the scatter chart is the single most important fact to learn with respect to the cause of the U.S. Civil War.
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