Tariffs in the United States
The Hamilton Tariff of 1789
(enacted 1789-07-04) was the second statute ever enacted by the new UnitedStates government. The new Constitution allowed only the federal government to levy tariffs, so the oldsystem of state rates disappeared. Most of the rates of the tariff were between 5 and 10 percent, depending onthe value of the item. As Secretary of the Treasury, Alexander Hamilton was anxious to establish the tariff asa regular source of revenue for the government and as a protection of domestic manufacture. The former wasof immediate necessity; the latter was not. Instead, it established the principle of protectionism that was to become a persistent political dispute throughout the next century and a half.
The Tariff of 1816
was put in place after the War of 1812. Britain had developed a large stockpile of ironand textile goods. Because this stockpile was so large, the price of British goods soon plummeted incomparison to that of American goods. Consequently, many Americans bought British goods rather thanAmerican goods, hurting American manufacturers. James Madison and Henry Clay devised a plan to helpAmerican producers, called the American System. It included a protective tariff more commonly known asthe Tariff of 1816, which increased the price of British goods so that American goods could compete withthem. The northern United States were quite pleased by this tariff. Since the north's economy was based onmanufacturing, many of its industries and workers competed with British imports and benefited from thetariff. The Southerners, however, were outraged, since they were net consumers of the manufactured goodswhich now cost more; further their agricultural exports to Britain might be threatened if Britain retaliated.The tariff was popular in areas such as Pennsylvania and New York where manufacturing industrywas growing rapidly. It was supported widely in those states to defend American manufacturers againstcompetition from UK manufacturers. It was also popular in the West in states such as Kentucky, Clay's homestate, where it was hoped to develop hemp and flax as crops and who wanted new tariffs to support theseinfant industries. The proposal was less popular with New England merchants who were hoping to restoretrade with the UK and other European powers and import products from Europe in return for US exportssuch as cotton. 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. However, the tariff was supported by notable Southern leaders such as President Madison and former president Thomas Jefferson. Notably, John C. Calhoun who would be a strong opponent of future tariff regimes supported the Dallas tariff in the Congress.
The Tariff of 1824
(enacted 1824-01-07) was a protective tariff in the United States designed to protectAmerican industry in the face of cheaper British commodities, especially iron products, wool and cottontextiles, and agricultural goods. The second protective tariff of the 19th century, the Tariff of 1824 was thefirst in which the sectional interests of the North and the South truly came into conflict. The Tariff of 1816eight years before had passed into law upon a wave of nationalism that followed the War of 1812. But by1824, this nationalism was transforming into strong sectionalism. Henry Clay advocated his three-point"American System", a philosophy that was responsible for the Tariff of 1816, the Second Bank of the UnitedStates, and a number of internal improvements. John C. Calhoun embodied the Southern position, havingonce favored Clay's tariffs and roads, but by 1824 opposed to both. He saw the protective tariff as a devicethat benefited the North at the expense of the South, which relied on foreign manufactured goods and openforeign markets for its cotton. And a program of turnpikes built at federal expense, which Clay advocated,would burden the South with taxes without bringing it substantial benefits. Nonetheless, Northern andWestern representatives, whose constituencies produced largely for the domestic market and were thusmostly immune to the effects of a protective tariff, joined together to pass the tariff through Congress,