Henry Clay, part of the senatorial triumvirate that included Daniel Webster and John C. Calhoun, represented the voice and the interests of the emerging West. At the heart of his political and economic philosophy was the "American System" -- a strategy for bringing together the several sections of the nation. Clay was a proponent of protective tariffs to encourage domestic industries, urging that the revenues from such tariffs be used to establish a network of internal improvements. These two proposals, along with the continuance of the Bank of the United States, would, he claimed, help unify the states. The debate over tariffs, however, became a sectional issue, focusing not just on the problems of specific industries but on the whole relationship between government and private enterprise.
In 1789, our first year under the new Constitution, Congress passed the first tariff, primarily for revenue purposes. Forbidden by the Constitution to tax exports (goods leaving the United States), Congress had power to tax imports (goods entering the nation). As other taxes became more popular, the need for revenue tariffs diminished. As a means of protection, however, they gained importance. Because of a sectional depression in the early 1820s, tariffs became the dominant issue. In the North, manufacturers and farmers alike favored such a tax. Agricultural prices had nosedived; wheat growers in Pennsylvania and sheep ranchers in Ohio went out of business in large numbers. Industrial workers lost jobs as textile and iron works factories closed. As these conditions prevailed, the Tariff Act of 1824 was passed, imposing duties on items not previously included and raising rates from 25 to 37 percent of the value of imported goods. Unlike previous tariff issues, this one restricted more goods on the basis of protection than of revenue.
As an advocate of the protective tariff, Senator Clay expressed a view that has been propounded generally throughout our history. To encourage home industry, he claimed, it was necessary to keep out foreign goods that competed with domestic industries. Unloading their warehouses after the War of 1812, the British had been dumping goods in the American market below their cost, causing the shutdown of many factories. Only a tariff, claimed the Senator, could protect American workers and factories:The sole object of the tariff is to tax the produce of foreign industry, with the view of promotmg American industry. The tax is exclusively levelled at the foreign Industry. That is the avowed and the direct purpose of the tariff.Senator Webster, on the other hand, recognized that sections of this nation were witnessing an economic depression, but refused to concede that it was the result of imports. Instead he attributed it to a prosperity depends upon foreign trade. Tariffs, he explained, would curtail internatlonal trade, and thus impair American prosperity. Goods are imported because they are needed, and if such goods can be obtained elsewhere it is to the nation's benefit to buy them at a lower price. Let cheap labor outside the country produce goods more cheaply than inside it; labor could then turn to more useful endeavors:Labor in this country is independent and proud. It has not to ask the patronage of capital, but capital solicits the aid of labor… The mere capacity to labor in common agricultural employments to our young men the assurance of independence… The true inquiry is can we produce the article a useful state at the same cost, or nearly the same cost at which we can import it?
Webster's argument was especially relevant to the Southern economy, which was largely dependent on one crop: cotton. Restriction of imports put Southern planters in a double bind. England was the main market for their cotton, and high tariffs meant fewer English manufactured goods were imported -- and so, they could not buy as much cotton. And, if the people in the South could not buy inexpensive English goods, they had to pay higher prices for the same goods produced in New England.
Before long, other sectional issues would emerge that would gnaw at the very fabric of this nation. The great tariff debate was but a portent of a nation seriously divided and sectionalized.
- What was the American System?
- Contrast a revenue tariff with a protective tariff. Do our tariffs today come closer to the former or the latter? Explain?
- State the major arguments by Clay in support of a tariff.
- State the major arguments by Webster against the tariff.
- What were the main features of the Tariff Act of 1824?
- Describe the sentiment today for restrictions on imports into this country.
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