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To: PeaRidge
So, then why did you bring it up?

If it's not the Morrill tariff that you're talking about, then tell me what your great mystery of 1859/1860 is.

405 posted on 01/24/2014 3:02:11 PM PST by Partisan Gunslinger
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To: Partisan Gunslinger
Your previous statement is categorically misleading by implying that the lower tariffs in the 1850s was the status quo at the beginning of secession.

It certainly was not. It was the re-beginning of severe protectionist tariffs imposed by the republican party of Lincoln.

Protectionist Tariffs, i.e. the Morrill Tariff, was going to cause the decline of the Southern Economy.

How?

Many posters here like yourself have fixated on the specific percentages of certain tariffs in order to draw conclusions of the relative impacts of the tariffs on different sections of the country.

Speculation on the percentages and their impact on secession vary widely, and are misleading.

The true cost of tariffs, and especially for protectionist ones like the proposed Morrill tariff as described in the Republican platform, and which was to be approved by the Republican government, first in 1860 and then in 1861, were measured not in the tax revenue it generated but the impact it had on (1) price and (2) trade.

Beginning with the impact on price, it was common knowledge that items that attracted protectionist policies were almost always goods that cost more domestically than the world price when they were imported from abroad. Therefore the tariff sought to raise the import price with a tax, bringing it up to or higher than the domestic price and thereby turning the market over to the domestic producer who had no motivation to adjust to lowering of prices elsewhere.

But inherent to lower prices are certain benefits received by the consumer. When goods are cheap, consumer money goes further and can buy more. This benefit, called the consumer surplus, is lost and redistributed elsewhere when prices are raised by a tariff.

Part of it transfers over into the producer surplus in the protected domestic industry. The producer gets it as a benefit of the tariff, which shifts the market to his product over the cheaper import. Another part goes into the government in the form of tax collections. And the third part, the consumer surplus, is lost entirely as dead weight.

These three aspects of the tariff burden consumers, by way of higher prices, with an inescapably lesser benefit being returned to the producers, thus incurring a net loss.

Naturally people attempt to minimize their personal burdens by passing their costs from the tariff onto others in higher prices elsewhere, so a tariff even on one item eventually spreads into a burden throughout the whole economy.

As costs of the tariff are passed through onto others they will eventually reach exporters as well. But since exporters must sell at the world price in order to get merchants from abroad to take their goods they cannot pass the tariff burden onto the merchants with higher prices of their own. Thus exporters end up bearing the heaviest weight of the tariff. (the Southern growers)

The Southern economy was entirely export-based and it alone accounted for some 75% of the entire nation's exports. In light of that fact it is of little wonder why they objected to higher tariffs and of little wonder why they complained of bearing the real costs of those same tariffs.

With regard to the issue of international trade, it was a two way street. As the businessmen imported goods, they paid for them in return, and to do so they exported goods of their own and/or offered credit as payment. As a result of this, imports and exports were inescapably intertwined and interdependent. When a barrier existed to impede one, the other stopped as well. That is how blockades work.

They knew that tariffs, and especially protective tariffs, also functioned economically in the same way that a blockade worked militarily. That is why higher tariff status, or sanctions, had been placed against countries as a tool of economic war. They were essentially barriers to importation because they imposed intentionally prohibitive taxes on imported goods in order to benefit the domestic producer of that same good.

The proposed Morrill tariff would do this at one of the highest levels ever to practically all major imports into the United States. But since trade was a two way street and since imports were heavily intertwined with and codependent with exports, the barrier on imports would harm exports and kill off trade in general.

To complicate things further, high import tariffs would have a way of provoking other countries to impose so-called retaliatory tariffs of their own against the United States. The moment this would happen a trade war would emerge and the former trade between those two countries would evaporate even further.

Every one knew the southern economy was almost entirely dependent upon exports.

The Southerners knew what would happen to their export-dependent economy when trade would stop due to a barrier such as a high protective tariff.

423 posted on 01/25/2014 9:24:34 AM PST by PeaRidge
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To: Partisan Gunslinger
The elevated levels of tariff taxation imposed by Morrill would lead to vast changes in the trade system, and would be an intended or unintended consequence of Republican policy making.

When the trade dies off so does that economy, and thus a second major reason as to why the South hated tariffs so much. For all practical purposes the Morrill tariff would gut them not once but twice. It gutted them by way of prices since, as exporters, they were the least able of any sector of the economy when it comes to passing on the higher prices to others. It also gutted them by way of undermining international trade, upon which their economy was directly dependent.

Trade and tariff wars had existed for centuries, and had been a major reason for the ongoing wars between France and Great Britain. Ultimately, wisdom prevailed on the European continent, and all barriers to free trade had been eliminated.

Against the backdrop of the obvious advantages of free trade to the overall economy, the Republicans persisted in their efforts to pass the Morrill Tariff. Southern politicians knew how determined the Republicans were in their efforts to establish protectionist measures and they made every effort to resist until it became apparent that the election of 1860 was going to result in sufficient Congressional reapportionment to permit their defeat.

424 posted on 01/25/2014 9:29:24 AM PST by PeaRidge
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