Tuesday, September 27, 2011

The Role of Tariffs in the Civil War - Part 2

Continuing our discussion of The Role of Tariffs in the Civil War...

Were these tariffs designed to hurt the Southern economy?
While the tariffs were designed to protect American industries, they were not designed to punish the South.  Most industries were in the North due to a good supply of raw materials, plentiful skilled labor, and cheap energy. At the dawn of the Industrial Revolution, American business and political leaders recognized  that the country would have to have a strong industrial base to compete with the European nations and insure the young country's survival. 
Southern businessmen had limited resources to draw on.  They did not have access to raw materials, energy, or skilled labor.  Moreover, they were tied to flawed agricultural society that was based on slave labor.  Their unwillingness or inability to see the possibilities of a transition to an industrial economy cost the South dearly.  It forced them to defend slavery and, when the war broke out, it left the South without the necessary industry to support the war effort.
Ultimately, the tariffs were beneficial. 
How did the tariffs hurt the Southern economy?
While not designed to hurt the Southern economy, the impact on the South was profound.   The "40 bales theory" tried to quantify the impact of tariffs on the South.  The theory attempted to explained how tariffs on manufactured goods reduced demand for the South’s raw cotton: a 40% tariff on cotton finished goods led to 40% higher consumer prices, which translated to 40% fewer sales, since consumers had less money to spend following the Panic of 1819. And 40% fewer sales meant cotton manufacturers purchased 40% less cotton.
What enraged the South was that the Federal Government was seen as using policy to favor the economic health of one part of the country at the expense of another.  Southern leaders worried that Northern Abolitionists would use the same tactic to end slavery and destroy the heart of the Southern economy.
While tariff funds did not go to Northern industrialists, the northern manufacturers could obtain higher prices by virtue of the higher prices paid for foreign imports. Manufacturers would be allowed to raise prices to the level of foreign imports.  These prices would be passed on to both northern and southern consumers.  Based on the population distribution, northern consumers should have paid more in total than their neighbors in the South.
The South contended that the tariffs would hurt cotton production and exports.  Plantation owners argued that while northern industries increased output and market share, southern plantations would see less demand.
The statistics don't support that conclusion as shown in the following graph using data from the Economic History Association.

Wednesday, September 21, 2011

The Role of Tariffs in the Civil War - Part 1

I received an -mail from Dennis M. saying that  I had understated the impact of "crippling tariffs" on the Southern economy.  Dennis cited the import tariffs from 1789 to 1842 and said that the North paid its  "debts on the back of the South, while crippling the Southern economy and bolstering Northern manufacturing."
I found his comments interesting on many levels and they raised several questions. 
·        Where did the money collected go?  Was it used to pay "Northern debts?"
·        Were these tariffs designed to hurt the Southern economy?
·         While the tariffs hurt the South were they beneficial to the whole nation?
·         Did the tariffs help cause the Civil War?
·        Why didn't Southern businessmen use the tariff protection to industrialize the South? 
Let's start with a review of the tariffs and their role in government finance.   According to US statistical data, tariff income provided a substantial portion of the Federal government's budget. 

Tariff Income,
$ million
Budget %
of Tariff
Tariff, %


Tariffs have played different roles in trade policy and the nation's economic history. Tariffs were the largest source of federal revenue from the 1790s to World War I, when income taxes became the major source of government funding.  From 1789 to 1861, the US Government enacted the following tariffs:
·        1789: Hamilton Tariff - Rates were between 5 and 10%. Alexander Hamilton wanted to establish the tariff as a regular source of government revenue and to encourage the growth of domestic manufacturing to lessen America's dependence on foreign-made products.
·        1790: Tariff of 1790 - Increased average rate from 5% to 7-10% and increased the number of items taxed.
·        1792: Tariff of 1792 - Increased tariff rates.
·        1816: Tariff of 1816 - protective tariff introduced in 1816 and in force between 1816 and 1824.
·        1824: Tariff of 1824 - Designed to protect American industry in the face of cheaper British commodities, especially iron products, wool and cotton textiles, and agricultural goods.
·    1828: Tariff of 1828 - Protect industries in the northern United States which were being driven out of business by low-priced imported goods by putting a tax on them. The South was harmed directly by having to pay higher prices on goods the region did not produce, and indirectly because reducing the exportation of British goods to the US made it difficult for the British to pay for the cotton they imported from the South. The reaction in the South, particularly in South Carolina, would lead to the Nullification Crisis of 1832. The tariff marked the high point of US tariffs.
·        1832: Tariff of 1832 - reduced tariffs to remedy the conflict created by the tariff of 1828, but it was still deemed unsatisfactory by some in the South, especially in South Carolina.

·    1833: Tariff of 1833 - The "Compromise Tariff" of 1833 was proposed as a resolution to the Nullification Crisis. It was adopted to gradually reduce the rates after southerners objected to the protectionism found in the Tariff of 1832 and the 1828 Tariff of Abominations, which had prompted South Carolina to threaten secession from the Union. This Act stipulated that import taxes would gradually be cut over the next decade until, by 1842, they matched the levels set in the Tariff of 1816—an average of 20%.
·       1842: Tariff of 1842 - The "Black Tariff"
·        1846: Walker Tariff - The Walker Tariff was enacted by the Democrats, and made substantial cuts in the high rates of the "Black Tariff" of 1842, enacted by the Whigs. The Walker Tariff reduced rates by 25% to 35%; it coincided with Britain's repeal of the Corn Laws and led to an increase in trade. It was one of the lowest tariffs in American history.
·        1857: Tariff of 1857 - The Tariff of 1857 was a major tax reduction and created a mid-century low point for tariffs. It amended the Walker Tariff of 1846 by lowering rates to around 17% on average.  The bill was offered in response to a federal budget surplus in the mid 1850s.
·        1861: Morrill tariff - The Morrill Tariff of 1861 was an protective tariff adopted on March 2, 1861 during the administration of President James Buchanan.
Where did the money collected go?  Was it used to pay "Northern debts?"
If we examine the above tariffs, it is apparent that they changed from being an instrument to raise Federal revenue to a devise to protect Northern industries.  This was most apparent in legislation from 1824 to 1842.  Tariff levels fluctuated based on the political party in power.  Conflict over tariffs, perhaps even more than the tariffs themselves, contributed to the North-South schism.  
The revenue raised by tariffs was not used by the North to pay its debts.  Tariffs provided the Federal Government with enough money to pay its operating expenses and to redeem at full value U.S. Federal debts and the debts the states had accumulated during the Revolutionary War.  Tariffs helped pay for wars and military actions including the Second Cherokee War (1776-1777), Chickamauga Wars (1776-1794), Northwest Indian War (1785-1795), First Barbary War (1801-1805), War of 1812 (1812-1815), Second Barbary War (1815), the First Seminole War (1816-1818), Florida Wars (1835-1842), the Mexican American War (1846-1848), and Utah War (1857-1858).  The tariff money also helped pay for roads, canals, and railroads and western expansion.  So ALL Americans benefited from the revenue raised.

Tuesday, September 13, 2011

Fort Negley, TN

After Confederate forces were driven from Forts Henry and Donelson  in February 1862, Confederate commanders decided to leave Nashville.  After Nashville was abandoned, it was almost immediately occupied by Union forces, who began preparations for its defense. Fort Negley was the largest of the fortifications protecting the city.  The fort was a star-shaped limestone block structure atop a hill south of the city. Captain James St. Clair Morton supervised the fort's construction. The fort is 600 feet long, 300 feet wide, and covers four acres.  The fort was constructed from 62,500 cubic feet of stone and 18,000 cubic feet of earth at a  cost $130,000.

It was mainly built by the labor of local slaves, newly freed slaves, and free blacks. The newly freed slaves flocked to Nashville after it was taken by Union forces with the understanding that their status as slaves was to be revoked were they to work for the Union. The  free blacks were forcibly conscripted for the work.  Records show that 2,768 blacks were officially enrolled in its construction. During construction 600-800 men died and only 310 ever received any pay.  The fort, completed in 1862, was named for Union Army commander General James S. Negley.

On April 19, 1861, Negley was appointed brigadier general in the Pennsylvania Militia. He raised a of Pennsylvania volunteers and served under Robert Patterson in the Shenandoah Valley in 1861. His appointment as brigadier general expired on July 20 but he was reappointed brigadier general of volunteers on October 1, 1861. In October, he was placed in command of the 7th Brigade in the Department of the Ohio. He commanded the Union expedition against Chattanooga during the Confederate Heartland Offensive. The expedition proved to be a successful demonstration of the Union Army's ability to strike deep into the heart of Confederate held territory.
On November 29, 1862, he was appointed major general of volunteers and took command of the 8th Division in the Army of the Ohio. His division became the 2nd Division in George H. Thomas' Center Wing of the XIV Corps during the Battle of Stones River. On the second day of fighting, he led a successful counterattack against Maj. Gen. John C. Breckinridge on the Union left flank. He commanded his division during the Tullahoma Campaign and the Battle of Chickamauga. During the maneuvering that preceded the battle, Negley's division, in the advance of Maj. Gen. George H. Thomas's corps, was almost trapped in a cul-de-sac named McLemore's Cove, but command confusion in the Confederate Army of Tennessee allowed them to escape. After the Union defeat at Chickamauga, Negley, whose division became scattered during the second day's fighting, was relieved of command, but was acquitted of any wrongdoing during the battle. When Ulysses S. Grant became general-in-chief in 1864 he discussed restoring Negley to command. However, after serving on several administrative boards, Negley resigned in January 1865

When the Battle of Nashville finally began in December 1864, it was largely fought on the heights farther south of the city than Fort Negley.  Despite its then-impressive appearance, Fort Negley never played a leading military role. Shortly after the war, the fort was abandoned and fell into ruin.  During the Reconstruction period, the area was used as a meeting place for the Ku Klux Klan.

The remains of Fort Negley are located  at Chestnut Street and Fort Negley Blvd, Nashville TN 37203 (just southeast of intersection of I-40 and I-65). An interpreted trail leads from the parking lot through the fort. Signs describe the Battle of Nashville from the fort’s perspective. Open daylight hours. Free. A visitor center, also free, with exhibits and an introduction to the fort is open Tuesday–Saturday 9 am–4:30 pm. 615-862-8470
For more information, p
lease see:
     Fort Negley