My own speculation is that this is the beginning of the Finance driven deficit spending spree upon which the nation was about to embark to the great joy of the major financiers in New York.
It's too early for John Maynard Keynes, but i'm sure some folk back then had a natural preference for pump priming spending sprees in which the money funneled through them.
I think John Keynes just came along later with a good sounding justification for what they wanted to do anyway.
The author seems to advocate that national debt caused Morrill and that Morrill caused secession; and that collapse of tariff revenue causing a US Treasury failure forced Lincoln to invade.
Here is more from that article.
“To understand the measures to be submitted to [the Thirty-seventh] Congress, it is necessary to have a clear conception of the condition of the Treasury at that time, and of the established financial policy of the government immediately before the war,” asserted John Sherman (R-Ohio).
Yet historians rarely include the state of the prewar Treasury in their assessment of the Civil War financial legislation. Most studies of Civil War finances offer only a brief mention of the “unsatisfactory condition of the Treasury in 1860,” then proceed with an analysis of the wartime legislation. Little consideration is given to the problems inherited by the new Republican administration or the government's financial structure (before) the outbreak of the war.
In fact, one noted scholar has declared that “the modern state's inheritance from the antebellum period was nil".
Contrary to this precedent, it should be argued that the state of the Treasury in early 1861 greatly influenced the development of wartime financial policy.
Four difficulties in particular challenged the Republicans.
First, the spendthrift policies of the Buchanan administration critically reduced the balance in the Treasury and forced them to rely on deficit financing. By 1860, the “Buchaneers” had created the largest debt ever accumulated by an administration without engaging in war. When the fighting began, the Republican Treasury secretary, Salmon P. Chase, found a reluctant and therefore expensive market for wartime securities. Because the Union started the war with an exhausted Treasury and poor credit, they had few resources available to deal with the setbacks of late 1861 that resulted from the contingencies of war.(Another way of saying secession...my comment.)
Second, this necessitated the introduction of the high interest rate seven-thirties; when this loan faltered, the Republicans had to turn to more controversial financing strategies. These measures resulted directly from the “poverty of the Treasury” at the onset of the war.
Third, in an effort to address the deficiencies in the Treasury, the Thirty-sixth Congress passed legislation to increase government revenue. Congress passed this bill, known now as the Morrill tariff, at the urging of President Buchanan, to address the “exhausted condition of the Treasury.”
This point has not been emphasized enough. Indeed the established literature suggests that the tariff adjustment occurred as the “first statement of a new protectionism peculiar to the Republicans.
However, Buchanan signed the Morrill tariff into law on March 2, 1861, during the last days of the Thirty-sixth Congress and two days before Abraham Lincoln's inauguration. Rather than initiate the advent of a new brand of protectionism, the impetus for revising the tariff arose as an attempt to augment revenue, stave off “ruin,” and address the accumulating debt.
Finally, the “fiscal federalism” that emerged in the United States during the antebellum era placed severe constraints on the options open to the Treasury when the war began. Expected to operate with economy, and relying overwhelmingly on tariff revenue as the primary source of income, the national government had few ready options available in the...
End of article.
With crowds of businessmen, bankers, and politicians filling the halls of the White House, demanding that Lincoln do something to stop the financial crisis, and Treasury Secretary Chase warning that bonds were only selling sporadically and at ridiculously high interest rates, Lincoln knew the problem.
> Lincoln to Baldwin, "But what about my tariff"?
Just days later he instructed junior officers to set out for Charleston and Pensacola with orders to land troops.