The Warehousing Act would explain how distribution points would develop in New York, Boston, and Philadelphia at the expense of ports like Portland, Newport, Dover, and New London. And why tariff collections at the smaller ports were low to non-existent. What it would not explain is why the warehouses were built in New York and Boston if those locations were hundreds of miles away from where the vast majority of those imports were destined. Why land them hundreds of miles away only to load them on ships again and send them South? If most imports were consumed by Southerners then why not warehouses in Charleston or New Orleans? Certainly not due to lack of space. After all, these were the same ports that exported hundreds of thousands of balse of cotton each year, certainly they could have handled imports as well and could have built warehouses to store them. And actually there were warehouses...some. Enough to handle the small demand for imports. But the large scale warehouses were built up North. Because that's where the demand for imported goods was.
It basically allowed merchants to unload their goods into a warehouse and store it there for up to three years without having to pay the tariff on it immediately. The tariff was then collected at a later date when the goods were removed from the warehouse and delivered to the buyer.
And if that buyer was in the South, as you claim, then wouldn't the tariffs be collected there? Upon receipt?
The merchant gained from this because he no longer had to provide payment for his cargo as he arrived in port. Before the warehousing act this was a problem because sometimes taxes on the cargo were paid by receipts from its sale after unloading it and merchants did not have excess reserves of cash to pay the tax.
But he did have to post a bond, which according to the law was twice what the expected duties on the goods were. And the bond was not returned until the goods were sent out of the port. So he did have money or securities tied up. This was not a cost-free system for the importer.
Instead the merchant could simply warehouse it, ship it to buyers in segments, and use the money from each sale to pay the tariff when the good was removed from the warehouse.
No he couldn't. According to the law: "...no merchandise shall be withdrawn from any warehouse in which it maybe deposited, in a less quantity than in an entire package, bale, cask, or box, unless in bulk, nor shall merchandise so imported in bulk be delivered except in the whole quantity of each, parcel, or in a quantity not less than one ton weight, unless by special authority of the Secretary of the Treasury." In other words, the goods had to leave the warehouse in the same quantity as they arrived in.
After 1846 New York City quickly became the heaviest user of this new warehousing policy because it had the most extensive warehouse capacity and out shipping networks.
New York gained from this because they built the warehouses to take advantage of it. These facilities didn't exist before the 1846 act, and could very well have been built in the South. Except that there wasn't the demand for the imports down there.
To take advantage of warehousing the merchants imported goods into New York City from all over the world not because the consumers were all in New York but because the warehouses were there. After they got to New York they were warehoused until a buyer was found and the tariff was paid.
And again, if these buyers were all in the South then wouldn't the tariff have been collected down there upon delivery? Yet it wasn't.
You said: "why were the warehouses built in New York and Boston if those locations were hundreds of miles away from where the vast majority of those imports were destined. Why land them hundreds of miles away only to load them on ships again and send them South?"
Federal regulations, enacted over decades, enabled Northern ports, shipping companies, and businesses to dominate trade.
Being out of the Union would allow for free trade with Europe.
Here is how it came about to be in 1860.
The success of the shipping trade of New England in the early 19th century was a deliberate effort of mercantilism, in which the South at first willingly participated.
The federal government set out at first to deliberately encourage the commercial trades there, especially ship-building and shipping. The raw material for Northern factories, and the cargoes of Northern merchantmen, would come from the South.
The July 4, 1789, tariff was the first substantive legislation passed by the new American government. But in addition to the new duties, it reduced by 10 percent or more the tariff paid for goods arriving in American craft.
It also required domestic construction for American ship registry. Navigation acts in the same decade stipulated that foreign-built and foreign-owned vessels were taxed 50 cents per ton when entering U.S. ports, while U.S.-built and -owned ones paid only six cents per ton. Furthermore, the U.S. ones paid annually, while foreign ones paid upon every entry.
This effectively blocked off U.S. coastal trade to all but vessels built and owned in the United States, and specifically the Northeast.
The navigation act of 1817 had made it official, providing "that no goods, wares, or merchandise shall be imported under penalty of forfeiture thereof, from one port in the United States to another port in the United States, in a vessel belonging wholly or in part to a subject of any foreign power."
The point of all this was to protect and grow the shipping industry of New England, and it worked. By 1795, the combination of foreign complication and American protection put 92 percent of all imports and 86 percent of all exports in American-flag vessels. American ship owners' annual earnings shot up between 1790 and 1807, from $5.9 million to $42.1 million.
New England shipping took a severe hit during the War of 1812 and the embargo. After the war ended, the British flooded America with manufactured goods to try to drive out the nascent American industries. They chose the port of New York for their dumping ground, in part because the British had been feeding cargoes to Boston all through the war to encourage anti-war sentiment in New England. New York was the more starved, therefore it became the port of choice.
The dumping bankrupted many towns, but it assured New York of its sea-trading supremacy. In the decades to come. New Yorkers made the most of the situation.
Four Northern and Mid-Atlantic ports still had the lion's share of the shipping. But Boston and Baltimore mainly served regional markets. Philadelphia's shipping interest had built up trade with the major seaports on the Atlantic and Gulf coasts, especially as Pennsylvania's coal regions opened up in the 1820s. But New York was king. Its merchants had the ready money, it had a superior harbor, it kept freight rates down, and by 1825 some 4,000 coastal trade vessels per year arrived there. In 1828 it was estimated that the clearances from New York to ports on the Delaware Bay alone were 16,508 tons, and to the Chesapeake Bay 51,000 tons.
Early and mid-19th century Atlantic trade was based on "packet lines" -- groups of vessels offering scheduled services. It was a coastal trade at first, but when the Black Ball Line started running between New York and Liverpool in 1817, it became the way to do business across the Atlantic.
The reason for success was to have a good cargo going each way. The New York packet lines succeeded because they took in all the eastbound cotton cargoes from the U.S. The northeast did not have enough volume of paying freight on its own.
So American vessels, owned in the Northeast, sailed off to a cotton port, carrying goods for the southern market. There they loaded cotton, or occasionally naval stores or timber, for Europe. They steamed back from Europe loaded with manufactured goods, raw materials like hemp or coal, and occasionally immigrants.
Since this "triangle trade" involved a domestic leg, foreign vessels were excluded from it under the 1817 law, except a few English ones that could substitute a Canadian port for a Northern U.S. one. Since it was subsidized by the U.S. government, it was going to continue to be protectionist, and not subject to competition.
By creating a three-cornered trade in the 'cotton triangle,' New York dragged the commerce between the southern ports and Europe out of its normal course some two hundred miles to collect a heavy toll upon it.
This trade might perfectly well have taken the form of direct shuttles between Charleston, Savannah, Mobile, or New Orleans on the one hand and Liverpool or Havre on the other, leaving New York far to one side had it not interfered in this way.
To clinch this abnormal arrangement, moreover, New York developed the coastal packet lines without which it would have been extremely difficult to make the east-bound trips of the ocean packets profitable.
Even when the Southern cotton bound for Europe did not put in at the wharves of Sandy Hook or the East River, unloading and reloading, the combined income from interests, commissions, freight, insurance, and other profits took perhaps 40 cents into New York of every dollar paid for southern cotton.
The record shows that ports with moderate quantities of outbound freight could not keep up with the New York competition. This was a triangle trade. Boston started a packet line in 1833 that, to secure outbound cargo, detoured to Charleston for cotton. But about the only other local commodity it could find to move to Europe was Bostonians. Since most passengers en route to England did not want the time delays in a layover in South Carolina, the lines failed.
As for the cotton ports themselves, sufficient demand began to justify packet lines in 1851, when New Orleans hosted one sailing to Liverpool.
Yet New York by the mid-1850s could claim sixteen lines to Liverpool, three to London, three to Havre, two to Antwerp, and one each to Glasgow, Rotterdam, and Marseilles. This was subsidized by the federal post office patronage procedure.
U.S. foreign trade rose in value from $134 million in 1830 to $318 million in 1850. It tripled again in the 1850s. Between two-thirds and three-fourths of those imports entered through the port of New York.
This meant that any trading the South did, had to go through New York. Direct trade from Charleston and Savannah during this period was stagnant. The total shipping that entered from foreign countries in 1851 in the port of Charleston was 92,000 tons, in the port of New York, 1,448,000. Relatively little tariff money was collected in the port authority in Charleston.
New York shipping interests, using the Navigation Laws and in collaboration with the US Congress, effectively closed the market off from competitive shipping, and in spite of the inefficiencies, was able to control the movement of Southern goods.
http://www.etymonline.com/cw/economics.htm
And that idea came from...?