Morrill Tariff

The Morrill Tariff of 1861 was an increased tariff in the United States, adopted on March 2, 1861, during the administration of President James Buchanan, a Democrat. It was a key element of the platform of the new Republican Party, and it appealed to industrialists and factory workers as a way to foster rapid industrial growth by limiting competition from lower-wage industries in Europe.

It was named for its sponsor, Representative Justin Smith Morrill of Vermont, who drafted it with the advice of Pennsylvania economist Henry Charles Carey. The passage of the tariff was possible because many tariff-averse Southerners had resigned from Congress after their states declared their secession. The Morrill Tariff raised rates to encourage industry and to foster high wages for industrial workers.[1] It replaced the low Tariff of 1857, which was written to benefit the South. Two additional tariffs sponsored by Morrill, each one higher, were passed during Abraham Lincoln's administration to raise urgently needed revenue during the Civil War.

The Morrill tariff inaugurated a period of continuous trade protection in the United States, a policy that remained until the adoption of the Revenue Act of 1913 (the Underwood tariff). The schedule of the Morrill Tariff and its two successor bills were retained long after the end of the Civil War.

History

Origins

A high tariff to encourage the development of domestic industry had been advocated for many years, especially by the Whig Party and its long-time leader Henry Clay. They enacted such a tariff in 1842, but in 1846 the Democrats enacted the Walker Tariff, cutting tariff rates substantially. The Democrats cut rates even further in the Tariff of 1857, which was highly favorable to the South.

Meanwhile, the Whig Party broke up, and this element of the Whig program was taken up by the new Republican Party, which ran its first national ticket in 1856. Some former Whigs from the Border States and upper South remained in Congress as "Opposition", "Unionist", or "American" (Know Nothing) members; they also supported higher tariffs.

The Panic of 1857 led to calls for protectionist tariff revision. Well-known economist Henry C. Carey blamed the Panic on the Tariff of 1857. His opinion was widely circulated in the high tariff (or "protectionist") media.

Efforts to revise the tariff schedules upward began in earnest in the 35th Congress of 1857–1859. Two proposals were submitted in the House. House Ways and Means Committee chairman John S. Phelps (D-Missouri wrote the Democrats' plan, which retained most of the low rates of the 1857 Tariff, with minor revisions to stimulate revenue.

Minority Ways and Means members Morrill and Henry Winter Davis (a Maryland "American") produced the Republican proposal, an upward revision of the tariff schedule. It replaced the existing ad valorem tariff schedule with specific duties and drastically increased tariff rates on goods produced by popular "protected" industries, such as iron, textiles, and other manufactured goods. Economic historian Frank Taussig argued that in many cases, the substitution of specific duties was used to disguise the extent of the rate increases.[2] Supporters of the specific rates argued that they were necessary, though, because European exporters were routinely providing their American customers with phony invoices showing lower prices for goods than were actually paid. Specific rates made such subterfuge pointless.

However, the House took no action on either tariff bill during the 35th Congress.

House actions

When the 36th Congress met in 1859, action remained blocked by a wrangle over the Speaker of the House until 1860, when Republican William Pennington of New Jersey was elected. A pro-tariff Republican majority was appointed to Ways and Means, and John Sherman of Ohio became chairman.

The Morrill bill was passed out of committee and brought up for a floor vote near the end of first session of the Congress (December 1859 – June 1860).

The vote was on May 10, 1860; the bill passed by a vote of 105 to 64.[3]

The vote was largely but not entirely sectional. Republicans, all from the northern states, voted 89–2 for the bill. They were joined by 7 northern Democrats from New York, New Jersey, and Pennsylvania. Five of these were "anti-Lecompton Democrats" (dissident Democrats who opposed the pro-slavery Lecompton constitution for Kansas).

14 northern Democrats voted against the bill.

In the Border States, 4 "Opposition" Representatives from Kentucky voted for it, as did its co-sponsor Winter of Maryland, a Maryland "Unionist", and a Democrat from Delaware. 8 Border state Democrats and an "American" from Missouri voted no.

35 southern Democrats and 3 Oppositionists voted against it; one Oppositionist from Tennessee voted for it.

Thus the sectional breakdown was 96–15 in the north, 7–9 in the Border, and 1–39 in the south.

There were 55 abstentions, including 13 Republicans, 12 northern Democrats, 13 southern Democrats, and 8 southern "Oppositionists" and "Americans". (The remaining Representatives were mostly "paired" with opposing Representatives who could not be present.[4]

Senate action

The Morrill bill was sent on to the Senate. However, the Senate was controlled by Democrats, and so the bill was bottled up in the Finance Committee, chaired by Robert M. T. Hunter of Virginia.

This insured that the Senate vote would be put off till the second session in December. It also meant that the tariff would be a prominent issue in the 1860 election.[5]

1860 election

The Republican party included a strong pro-tariff plank in its 1860 platform. They also sent prominent tariff advocates such as Morrill and Sherman to campaign in Pennsylvania and New Jersey, where the tariff was popular, by touting the Morrill bill. Both Democratic candidates, John C. Breckinridge and Stephen Douglas, opposed all high tariffs and protectionism in general.[6]

Historian Reinhard H. Luthin documents the importance of the Morrill Tariff to the Republicans in the 1860 presidential election.[7] Abraham Lincoln's record as a protectionist and support for the Morrill Tariff bill, he notes, helped him to secure support in the important electoral college state of Pennsylvania, as well as neighboring New Jersey. Lincoln carried Pennsylvania handily in November, as part of his sweep of the North.

On February 14, 1861, President-elect Lincoln told an audience in Pittsburgh that he would make a new tariff his priority in the next session if the bill did not pass by inauguration day on March 4.

Renewed Senate action

The second session of the 36th Congress began in December 1860. At first it appeared that Hunter would keep the Morrill bill tabled until the end of the term in March.

However, in December 1860 and January 1861, seven southern states declared secession, and their low-tariff Senators withdrew. Republicans took control of the Senate in February, and Hunter lost his hold on the Finance Committee.

Meanwhile the Treasury was in financial crisis, with less than $500,000 on hand and millions in unpaid bills. The Union urgently needed new revenue. A recent historian concludes, "the impetus for revising the tariff arose as an attempt to augment revenue, stave off 'ruin,' and address the accumulating debt."[8]

The Morrill bill was brought to the Senate floor for a vote on February 20, and passed 25 to 14. The vote was split almost completely down party lines. It was supported by 24 Republicans and Democrat William Bigler of Pennsylvania. It was opposed by 10 Southern Democrats, 2 Northern Democrats, and 2 Far West Democrats. 12 Senators abstained, including 3 Northern Democrats, 1 California Democrat, 5 Southern Democrats, 2 Republicans, and 1 Unionist from Maryland.[9]

There were some minor amendments related to the tariffs on tea and coffee, which required a conference committee with the House, but these were resolved and the final bill was approved by unanimous consent on March 2.

Though a Democrat himself, outgoing President James Buchanan favored the bill because of the interests of his home state, Pennsylvania. He signed the bill into law as one of his last acts in office.

Adoption and amendments

The Morrill Tariff took effect one month after it was signed into law. Besides setting tariff rates, the bill altered and restricted the Warehousing Act of 1846.

The Morrill Tariff was drafted and passed the House before the Civil War began or was even expected, and was passed by the Senate almost unchanged. Thus it should not be considered "Civil War" legislation.[10]

In fact, the Tariff proved to be too low for the revenue needs of the Civil War, and was quickly supplanted by the Second Morrill Tariff, or Revenue Act of 1861, later that fall.[11]

Impact

In its first year of operation, the Morrill Tariff increased the effective rate collected on dutiable imports by approximately 70%. In 1860 American tariff rates were among the lowest in the world and also at historical lows by 19th century standards, the average rate for 1857 through 1860 being around 17% overall (ad valorem], or 21% on dutiable items only. The Morrill Tariff immediately raised these averages to about 26% overall or 36% on dutiable items, and further increases by 1865 left the comparable rates at 38% and 48%. Although higher than in the immediate antebellum period, these rates were still significantly lower than between 1825 and 1830, when rates had sometimes been over 50%.[12]

The United States needed $3 billion to pay for the immense armies and fleets raised to fight the Civil War — over $400 million just in 1862. The chief source of Federal revenue had been the tariff revenues. Therefore Secretary of the Treasury Salmon P. Chase, though a long-time free-trader, worked with Morrill to pass a second tariff bill in summer 1861, raising rates another 10 points in order to generate more revenues.[13] These subsequent bills were primarily revenue driven to meet the war's needs, though they enjoyed the support of protectionists such as Carey, who again assisted Morrill in the bill's drafting.

However, the tariff played only a modest role in financing the war. It was far less important than other measures, such as $2.8 billion in bond sales and some printing of Greenbacks. Customs revenue from tariffs totaled $345 million from 1861 through 1865, or 43% of all federal tax revenue, while spending on the Army and Navy totalled $3,065 million.[14]

Reception abroad

The Morrill Tariff was met with intense hostility in Britain, where the free trade movement dominated public opinion. Southern diplomats and agents sought to use British ire towards the Morrill Tariff in order to garner sympathy, with the aim of obtaining British recognition for the Confederacy.[15] The new tariff schedule heavily penalized British iron, clothing, and manufactured exports with new taxes and sparked public outcry from many British politicians. The expectation of high tax rates probably caused British shippers to hasten their deliveries before the new rates took effect in the early summer of 1861. When complaints were heard from London, Congress counterattacked. The Senate Finance Committee chairman snapped, "What right has a foreign country to make any question about what we choose to do?"[16]

When the American Civil War broke out in 1861, British public opinion was sympathetic to the Confederacy, in part because of lingering agitation over the tariff. As one diplomatic historian has explained, the Morrill Tariff:[17]

"Not unnaturally gave great displeasure to England. It greatly lessened the profits of the American markets to English manufacturers and merchants, to a degree which caused serious mercantile distress in that country. Moreover, the British nation was then in the first flush of enthusiasm over free trade, and, under the lead of extremists like Cobden and Gladstone, was inclined to regard a protective tariff as essentially and intrinsically immoral, scarcely less so than larceny or murder. Indeed, the tariff was seriously regarded as comparable in offensiveness with slavery itself, and Englishmen were inclined to condemn the North for the one as much as the South for the other. "We do not like slavery," said Palmerston to Adams, "but we want cotton, and we dislike very much your Morrill tariff."

Many prominent British writers condemned the Morrill Tariff in the strongest terms. Economist William Stanley Jevons denounced it as a "retrograde" law. The well known novelist Charles Dickens used his magazine, All the Year Round, to attack the new tariff. On December 28, 1861 Dickens published a lengthy article, believed to be written by Henry Morley,[18] which blamed the American Civil War on the Morrill Tariff:

If it be not slavery, where lies the partition of the interests that has led at last to actual separation of the Southern from the Northern States? …Every year, for some years back, this or that Southern state had declared that it would submit to this extortion only while it had not the strength for resistance. With the election of Lincoln and an exclusive Northern party taking over the federal government, the time for withdrawal had arrived … The conflict is between semi-independent communities [in which] every feeling and interest [in the South] calls for political partition, and every pocket interest [in the North] calls for union … So the case stands, and under all the passion of the parties and the cries of battle lie the two chief moving causes of the struggle. Union means so many millions a year lost to the South; secession means the loss of the same millions to the North. The love of money is the root of this, as of many other evils... [T]he quarrel between the North and South is, as it stands, solely a fiscal quarrel.

Communist philosopher Karl Marx was among the few writers in Britain who saw slavery as the major cause of the war. Marx wrote extensively in the British press and served as a London correspondent for several North American newspapers including Horace Greeley's New York Tribune. Marx reacted to those who blamed the war on Morrill's bill, arguing instead that slavery had induced secession and that the tariff was just a pretext. Marx wrote, in October 1861:

Naturally, in America everyone knew that from 1846 to 1861 a free trade system prevailed, and that Representative Morrill carried his protectionist tariff through Congress only in 1861, after the rebellion had already broken out. Secession, therefore, did not take place because the Morrill tariff had gone through Congress, but, at most, the Morrill tariff went through Congress because secession had taken place.[19]

Legacy

According to historian Heather Cox Richardson, Morrill intended to offer protection to both the usual manufacturing recipients and a broad group of agricultural interests. The purpose was to appease interests beyond the northeast, which traditionally supported protection. For the first time protection was extended to every major farm product.

Planning to distribute the benefits of a tariff to all sectors of the economy, and also hoping to broaden support for his party, Morrill rejected the traditional system of protection by proposing tariff duties on agricultural, mining, and fishing products, as well as on manufactures. Sugar, wool, flaxseed, hides, beef, pork, corn, grain, hemp, wool, and minerals would all be protected by the Morrill Tariff. The duty on sugar might well be expected to appease Southerners opposed to tariffs, and, notably, wool and flaxseed production were growing industries in the West. The new tariff bill also would protect coal, lead, copper, zinc, and other minerals, all of which the new northwestern states were beginning to produce. The Eastern fishing industry would receive a duty on dried, pickled, and salted fish. "In adjusting the details of a tariff," Morrill explained with a rhetorical flourish in his introduction of the bill, "I would treat agriculture, manufactures, mining, and commerce, as I would our whole people—as members of one family, all entitled to equal favor, and no one to be made the beast of burden to carry the packs of others."[20]

According to Taussig, "Morrill and the other supporters of the act of 1861 declared that their intention was simply to restore the rates of 1846." However, he also gives reason to suspect that the bill's motives were intended to put high rates of protection on iron and wool to attract states in the West and in Pennsylvania:

"The important change which they (the sponsors) proposed to make from the provisions of the tariff of 1846 was to substitute specific for ad-valorem duties. Such a change from ad-valorem to specific duties is in itself by no means objectionable; but it has usually been made a pretext on the part of protectionists for a considerable increase in the actual duties paid. When protectionists make a change of this kind, they almost invariably make the specific duties higher than the ad-valorem duties for which they are supposed to be an equivalent...The Morrill tariff formed no exception to the usual course of things in this respect. The specific duties which it established were in many cases considerably above the ad-valorem duties of 1846. The most important direct changes made by the act of 1861 were in the increased duties on iron and on wool, by which it was hoped to attach to the Republican party Pennsylvania and some of the Western States"[21]

Henry Carey, who assisted Morrill while drafting the bill and was one of its most vocal supporters, strongly emphasized its importance to the Republican Party in his January 2, 1861 letter to Lincoln. Carey told the President-Elect "the success of your administration is wholly dependent upon the passage of the Morrill bill at the present session." According to Carey:

"With it, the people will be relieved — your term will commence with a rising wave of prosperity — the Treasury will be filled and the party that elected you will be increased and strengthened. Without it, there will be much suffering among the people — much dissatisfaction with their duties — much borrowing on the part of the Government — & very much trouble among the Republican Party when the people shall come to vote two years hence. There is but one way to make the Party a permanent one, & that is, by the prompt repudiation to the free trade system."

Congressman John Sherman later wrote:

The Morrill tariff bill came nearer than any other to meeting the double requirement of providing ample revenue for the support of the government and of rendering the proper protection to home industries. No national taxes, except duties on imported goods, were imposed at the time of its passage. The Civil War changed all this, reducing importations and adding tenfold to the revenue required. The government was justified in increasing existing rates of duty, and in adding to the dutiable list all articles imported, thus including articles of prime necessity and of universal use. In addition to these duties, it was compelled to add taxes on all articles of home production, on incomes not required for the supply of actual wants, and, especially, on articles of doubtful necessity, such as spirits, tobacco and beer. These taxes were absolutely required to meet expenditures for the army and navy, for the interest on the war debts and just pensions to those who were disabled by the war, and to their widows and orphans.[22]

Secession and tariffs

The Morrill Tariff and the secession movement

The Morrill tariff was adopted against the backdrop of the secession movement, and provided an issue for secessionist agitation in some southern states. The law's critics compared it to the 1828 Tariff of Abominations that sparked the Nullification Crisis, although its average rate was significantly lower.

Slavery dominated the secession debate in the southern states,[23] but the Morrill Tariff was addressed in the conventions of Georgia and South Carolina. On November 19, 1860 Senator Robert Toombs gave a speech to the Georgia legislature in which he denounced the "infamous Morrill bill." The tariff legislation, he argued, was the product of a coalition between abolitionists and protectionists in which "the free-trade abolitionists became protectionists; the non-abolition protectionists became abolitionists." Toombs described this coalition as "the robber and the incendiary... united in joint raid against the South." Anti-tariff sentiments also appeared in Georgia's Secession Declaration of January 29, 1861, written in part by Toombs.[24]

Robert Barnwell Rhett similarly railed against the then-pending Morrill Tariff before the South Carolina convention. Rhett included a lengthy attack on tariffs in the Address of South Carolina to Slaveholding States, which the convention adopted on December 25, 1860 to accompany its secession ordinance.

And so with the Southern States, towards the Northern States, in the vital matter of taxation. They are in a minority in Congress. Their representation in Congress, is useless to protect them against unjust taxation; and they are taxed by the people of the North for their benefit, exactly as the people of Great Britain taxed our ancestors in the British parliament for their benefit. For the last forty years, the taxes laid by the Congress of the United States have been laid with a view of subserving the interests of the North. The people of the South have been taxed by duties on imports, not for revenue, but for an object inconsistent with revenue to promote, by prohibitions, Northern interests in the productions of their mines and manufactures.[25]

The Morrill Tariff played less prominently elsewhere in the South. In some portions of Virginia, secessionists promised a new protective tariff to assist the state's fledgling industries.[26]

In the North, enforcement of the Morrill Tariff contributed to support for the Union cause among industrialists and merchant interests. Speaking of this class, the abolitionist Orestes Brownson derisively remarked that "the Morrill Tariff moved them more than the fall of Sumter."[27] In one such example the New York Times, which had previously opposed Morrill's bill on free trade grounds, editorialized that the tariff imbalance would bring commercial ruin to the North and urged its suspension until the secession crisis passed. "We have imposed high duties on our commerce at the very moment the seceding states are inviting commerce to their ports by low duties."[28] As secession became more evident and the fledgling Confederacy adopted a much lower tariff of its own, the paper urged military action to enforce the Morrill Tariff in the Southern states.[29]

Historiography

Historians, James Huston notes, have been baffled by the role of high tariffs in general and have offered multiple conflicting interpretations over the years. (Low tariffs, all historians agree, were noncontroversial and were needed to fund the federal government.) One school of thought says the Republicans were the willing tools of would-be monopolists. A second schools says the Republicans truly believed tariffs would promote nationalism and prosperity for everyone along with balanced growth in every region (as opposed to growth only in the cotton South). A third school emphasizes the undeniable importance of the tariff in cementing party loyalty, especially in industrial states. Another approach emphasizes that factory workers were eager for high tariffs because it protected their high wages from European competition.[30]

Charles A. Beard argued in the 1920s that very long-term economic issues were critical, with the pro-tariff industrial Northeast forming a coalition with the anti-tariff agrarian Midwest against the plantation South. According to Luthin in the 1940s, "Historians are not unanimous as to the relative importance which Southern fear and hatred of a high tariff had in causing the secession of the slave states."[31] However, none of the statesmen seeking a compromise in 1860-61 that would avert the war ever suggested the tariff might be the key to a solution, or might be a cause of the secession.[32] Beginning in the 1950s, historians moved away from the Beard thesis of economic causality. In its place, historians led by Richard Hofstadter began to emphasize the social causes of the war, centered around the issue of slavery. The Beard thesis has enjoyed a recent revival among economists, pro-Confederate historians, and neo-Beardian scholars. A 2002 study by economists Robert McGuire and T. Norman Van Cott concluded:

A de facto constitutional mandate that tariffs lie on the lower end of the Laffer relationship means that the Confederacy went beyond simply observing that a given tax revenue is obtainable with a "high" and "low" tax rate, a la Alexander Hamilton and others. Indeed, the constitutional action suggests that the tariff issue may in fact have been even more important in the North–South tensions that led to the Civil War than many economists and historians currently believe."

Economist Thomas DiLorenzo asserts that the tariff was the primary cause of the Civil War.[33] Nearly all Civil War historians disagree. Rather than causing secession, Marc-William Palen notes how the tariff was only able to pass through Congress following the secession of Southern states. Thus, secession itself allowed for the bill's passage, rather than the other way around.[34] Allan Nevins and James M. McPherson downplay the significance of the tariff dispute, arguing that it was peripheral to the issue of slavery. They note that slavery dominated the secessionist declarations, speeches, and pamphlets. Nevins also points to the argument of Alexander Stephens, who disputed Toombs' claims about the severity of the Morrill tariff. Though initially a unionist, Stephens would later cite slavery as the "cornerstone" reason behind his support of the secessionist cause.[35]

Notes

  1. Coy F. Cross II (2012). Justin Smith Morrill: Father of the Land-Grant Colleges. MSU Press. p. 45.
  2. econlib.org
  3. http://www.govtrack.us/congress/votes/36-1/h151
  4. Congressional Globe, 36th Congress, 1st Session, p. 2056
  5. Allan Nevins, Ordeal of the Union; Vol. IV: The Emergence of Lincoln: Prologue to Civil War, 1859–1861 (1950).
  6. "Tariffs, Government Policy, and Secession".
  7. Luthin, p. 622
  8. Jane Flaherty, "'The Exhausted Condition of the Treasury' on the Eve of the Civil War," Civil War History (2009) Volume: 55#2 pp 244+. Historian Bray Hammond emphasizes the Treasury's "empty purse". Bray Hammond, Sovereignty and the Empty Purse: Banks and Politics in the Civil War (1970)
  9. http://www.govtrack.us/congress/votes/36-2/s512
  10. Taussig wrote "It is clear that the Morrill tariff was carried in the House before any serious expectation of war was entertained; and it was accepted by the Senate in the session of 1861 without material change. It therefore forms no part of the financial legislation of the war, which gave rise in time to a series of measures that entirely superseded the Morrill tariff." The Tariff History of the United States
  11. Taussig
  12. U.S. Tariff Rates - Ratio of Import Duties to Values: 1821-1996
  13. Richardson, 100, 113
  14. Jerry W. Markham, A financial history of the United States (2001) vol 3 p 220
  15. Marc-William Palen, “The Civil War’s Forgotten Transatlantic Tariff Debate and the Confederacy’s Free Trade Diplomacy,” Journal of the Civil War Era 3: 1 (March 2013): 35-61
  16. Richardson p. 114
  17. Johnson p 14
  18. Unlike the situation with Household Words, no ledger survives giving the authorship of each article in ATYR, though Dickens scholar Ella Ann Oppenlander has attempted to provide a list in a work not easily procured, Dickens's All the Year Round: Descriptive Index and Contributor List (1984). The article that the above quote is from is widely regarded by scholars as a follow-up to an article from a week earlier, entitled American Disunion. Graham Storey in The Letters of Charles Dickens attributes both articles to staff writer Henry Morley, based on a letter by Dickens stating "you say nothing of the book on the American Union in Morley’s hands. I hope and trust his article will be ready for the next No. made up. There will not be the least objection to having American papers in it." and afterwards writing "It is scarcely possible to make less of Mr. Spence's book, than Morley has done." Dickens micromanaged the magazine, so none dispute that Dickens must have generally endorsed the ideas in the articles.
  19. Biographies
  20. Richardson p. 105
  21. Taussig p. 99
  22. John Sherman's Recollections of Forty Years in the House, Senate, and Cabinet: An Autobiography 1895.
  23. Dew p. 12. For example Dew notes that in South Carolina the Declaration of Causes adopted by the secession convention "focused primarily on the Northern embrace of antislavery principles and the evil designs of the newly triumphant Republican Party" and in Georgia its convention was "equally outspoken on the subject of slavery".
  24. "Declaration of Causes of Seceding States". Sunsite. University of Tennessee, Knoxville. Retrieved 2010-06-25.
  25. Address of South Carolina to Slaveholding States by Convention of South Carolina
  26. Carlander and Majewski, 2003
  27. "Emancipation and Colonization," Brownson's Quarterly Review, April 1862
  28. "The Tariff and Secession", The New York Times, March 26, 1861
  29. "The Great Question", The New York Times, March 30, 1861]
  30. James L. Huston, "A Political Response to Industrialism: The Republican Embrace of Protectionist Labor Doctrines," Journal of American History, June 1983, Vol. 70 Issue 1, pp 35-57
  31. Luthin, p. 626
  32. Robert G. Gunderson, Old Gentlemen's Convention: The Washington Peace Conference of 1861 (1981)
  33. Lincoln's Tariff War
  34. Marc-William Palen, "The Great Civil War Lie," New York Times, June 5, 2013
  35. Teaching American History library

References

Bibliography

External links