Dallas tariff

The United States passed the Tariff of 1816 and enforced it between 1816 and 1824.

Introduced following a report from Secretary of the Treasury Alexander J. Dallas and adopted by the Fourteenth Congress, the tariff was staunchly supported by Henry Clay, then Speaker of the House, who saw the measure as important to support developing American industries. There was significant opposition to the measure led by Daniel Webster and John Randolph.

The tariff was important in the Compromise of 1833, which ended a brief Nullification Crisis during which South Carolina threatened secession from the United States.

Background

The level of tariffs had been increasing in the United States since the passage of a general administrative tariff act. The First Barbary War led to a slight rise of the tariff called the Mediterranean Fund, with the tariff applicable to staple imports ranging from ten to fifteen percent. These tariffs were doubled in order to pay for the War of 1812. These tariffs were believed to have led to the strengthening of American industry not only in New England but also in New York and Pennsylvania.

Introduction

The Tariff of 1816 was put in place after the War of 1812. Britain had developed a large stockpile of iron and textile goods. Because this stockpile was so large, the price of British goods soon plummeted in comparison to that of American goods. Consequently, many Americans bought British goods rather than American goods, hurting American manufacturers. James Madison and Henry Clay devised a plan to help American producers called the American System. It included a protective tariff more commonly known as the Tariff of 1816, which increased the price of British goods so that American goods could compete with them. The northern United States were quite pleased by this tariff since the North's economy was increasingly based on manufacturing.

Although most Northerners, like most Southerners, were still farmers (84% for the whole country), the North was increasingly industrial, with 20 percent of its workforce engaged in manufacturing, compared to 8 percent in the South.^[1] Many industries and workers in the North competed with British imports and benefited from the tariff. The Southerners, however, were outraged, since they were net consumers of the manufactured goods which now cost more. Further their agricultural exports to Britain might be threatened if Britain retaliated.

Dallas recommended the retention of the tariff regime in place during the 1812 War in a report published in February 1816 in order to develop American industry in the event of another war with the United Kingdom or other European powers. The proposal was adopted by President Madison and congressional leadership, including Speaker Clay. A House committee recommended the adoption of this tariff predicting that it would only be necessary for a few years until the United States was strong enough to defend itself against foreign powers. The tariff was popular in areas such as Pennsylvania and New York where manufacturing industry was growing rapidly. It was supported widely in those states to defend American manufacturers against competition from British manufacturers. It was also popular in the West, including in Clay's home state of Kentucky, where those who hoped to develop hemp and flax as crops desired new tariffs to support these infant industries.

The proposal was less popular with New England merchants who were hoping to restore trade with Britain and other European powers and import products from Europe in return for U.S. exports such as cotton. Daniel Webster represented their viewpoint and he managed to win some concessions about the level of the tariff. It was also less popular in the South as it would increase the costs of production of their export crops notably cotton. It was also opposed by people who saw it as raising the costs of living of the poor. John Randolph in his speech in opposition raised both of these points. "Upon whom bears the duty on coarse woollens and linens and blankets, upon salt and all the necessaries of life? Upon poor men and upon slaveholders." (1) However, the tariff was supported by notable Southern leaders such as President Madison and former president Thomas Jefferson. Notably, John C. Calhoun, who would later be a strong opponent of future tariff regimes, supported the Dallas tariff in the Congress. The act was passed in April 1816 with rates of 25 percent against woollen and cotton goods and a highest rate of 30 percent. Further, no duty on cotton and woollen goods was to be less than six and a quarter cents a yard which would have a regressive impact over time. The measure had support from elected representatives from every state except Delaware and North Carolina.

History

The tariff was retained until 1824 when it was massively increased. In 1828, the so-called "Tariff of Abominations" was introduced increasing the rate of tariffs significantly to assist Northern manufacturers. This was massively unpopular as it raised the costs of production significantly. Further, as the measure increased the price of cotton goods, British textile manufacturers sold less in the U.S. and reduced their purchases from Southern cotton growers accordingly. This tariff was massively unpopular in the South and opposition was led by Calhoun, who was then Vice President and broke with President John Quincy Adams over the issue. Calhoun then became Vice President under Andrew Jackson, who introduced the Tariff of 1832. This measure reduced the level of tariffs somewhat, but not enough to satisfy Calhoun. He resigned in order to become a Senator for South Carolina. This prompting the Nullification Crisis, in which South Carolina declared the 1828 and 1832 tariffs "null and void," and began to raise a military force in support of its action. The crisis was averted through the Compromise of 1833 negotiated by Clay where tariff rates were progressively returned to the level of the Dallas tariff by 1842. This averted further threats of nullification although the debate was a precursor to the arguments over slavery in the future.

References

1. ^ Census of 1820, passim

• Webroots - US History for the Early 19th century
• "Alexander James Dallas." Dictionary of American Biography Base Set. American Council of Learned Societies, 1928-1936. Reproduced in Biography Resource Center. Farmington Hills, Mich.: Thomson Gale. 2005.
• "Henry Clay." Gale Encyclopedia of U.S. Economic History Gale Group, 1999. Reproduced in Biography Resource Center. Farmington Hills.