Since practically the entire revenue each year of the government was derived from tariffs on imported goods, maintaining the export of US goods was absolutely vital to the operation of the country.
The total income of the Treasury for 1857 was $68,900,000. The portion of Treasury income from tariffs was $63,800,000. The Treasury spent $67,700,000 for the calendar year. The normal expenditures of the Government for operation of the government, the army and navy, interest on public debt, and pensions were $35,400,000. Therefore, discretionary treasury spending, authorized by Congress was almost double the normal operation of the government.
Congressional discretionary spending continued to soar. Financed by increasing public debt, the government increased the debt of the country by 43%, due to its inability to control spending.
The entire system was vulnerable. Money from the sale of cotton and tobacco in overseas markets bought goods that were then imported. In 1858, Tariffs from the sale of these goods produced 65% of the revenue of the entire treasury. The value of raw cotton sold to Northern mills, which was then finished and sent in trade to Europe accounted for another 5% of the value of imports. Thus, the treasury was not only totally dependent upon tariffs, but largely tariffs on goods purchased with money earned from the sale of Southern exports.
As the recession of 1857 deepened, Northeastern financiers and overseas bankers doubled the interest rate they required for purchase of the government’s treasury notes. The rate rose to an unprecedented 12%. The bankers also required of a pledge of government owned land as collateral. This pledge had never been required, and demonstrated the precarious financial condition of the US Treasury.
The south wasn’t levied or taxed, foreign goods were.