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Tariff of 1789

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The Tariff of 1789, had two purposes as stated in Section I of the Bill which reads as follows;

"Whereas it is necessary for the support of government, for the discharge of the debts of the United States, and the encouragement and protection of manufactures, that duties be laid on goods, wares and merchandise:"[1]

The Federal legislature, acting under the recently ratified Constitution, authorized the collection of tariff and tonnage duties to meet the operating costs of the new central government, to provide funds to pay the interest and principal on revolutionary war debts inherited from the Continental Congress.[2] It also provided a degree of protection. "The protective acts of the states furnished the experience on which the national legislators based their proceedings".[3]

The debates over the purpose of the tariff exposed the sectional interests at stake: Northern manufacturers favored high duties to protect industry; Southern planters desired a low tariff that would foster cheap consumer imports.[4] The final bill extracted concessions from both interests, but delivered a distinct advantage to maritime and manufacturing regions of the country.[5][6]

Representative James Madison of Virginia navigated to passage, but was unable to insert provisions that would have discriminated against British imports[7][8] and shift the carrying trade to French and American vessels.

The Tariff Act was passed in the House by a vote of 31-19 on July 4, 1789.[9]

Import Duty Legislation and American Sectional Interests

The import fees “represented a compromise between the advocates of a high protective tariff and those who favored a tariff for revenue only [to maintain the central government].”[10] Charges up to fifty percent were imposed on selected manufactured and agricultural goods, including “steel, ships, cordage, tobacco, salt, indigo [and] cloth”. On the majority of items subject to duty, a five percent fee was levied, ad valorem [11] Molasses, an indispensable ingredient for Northeastern rum producers, was lowered from six cents per gallon to two and one-half cents.

Madison modified the terms of the tariff to balance sectional conflicts,[12] but conceded that that articles subject to high duties “were pretty generally taxed for the benefit of the manufacturing part of the northern community.” [13] He acknowledged the South – the main wealth-producing part of the nation – would inevitably “shoulder a disproportionate share of the financial burden involved in the transforming the United States into a commercial, manufacturing, and maritime power.” [14]

Tonnage Duty Legislation and US-Foreign Relations

In its final form, the tariff of 1789 erected “an American navigation system” superseding the individual state sanctioned fees designed to protect domestic shipping during the Articles of Confederation period from 1781 to 1789.[15][16]

The act established tonnage rates favorable to American carriers by charging them lower cargo fees than those imposed on foreign boats importing similar goods. Coastal trade was reserved exclusively for American flag vessels.[17] These provisions were consistent with mercantilist policies practice by European powers at the time.[18]

Dating from the Treaty of Paris ending the War for Independence in 1783, Great Britain had declined to seek a commercial treaty with the United States.[19] In addition, provisions of the treaty had gone unfulfilled, including compensation to slaveholders for African-American slaves emancipated by the British Navy during the War, and the failure to abandon Northwest military posts in US territory.[20][21] Despite this, Great Britain remained the dominant trading partner for the United States, the countries reverting to an essentially colonial era trade relationship.

Representative James Madison, presiding over the tariff debates in Congress, attempted to introduce discriminatory provisions into the tonnage legislation that would favor France and its colonial possessions, and shift American trade away from Great Britain.[22]

To effect this, Madison called for a sixty cent per ton fee upon foreign carriers lacking a commercial agreement with the United States, while France, which possessed a treaty, would be charged tonnage at thirty cents. This measure alone “was equivalent to levying economic war’ upon Great Britain.[23]

Madison’s proposals were intended to unify politically the agricultural and manufacturing interests in support of this commercial realignment at the national level, damaging to Great Britain and beneficial to revolutionary France.[24]

Many representatives of northern business were wary of abandoning Great Britain as their primary trading partner and merchant marine, and doubted whether France could adequately act “as the principle supplier and market for the United States.” [25]

The House of Representative, nevertheless, initially passed Madison’s “controversial” legislation[26] with the discriminatory provision intact. The Senate, however, removed it from the bill and sent it back to the House, where it was passed, without amendment, 31 to 19, on July 4, 1789.[27]

The Tariff of 1789 placed France and Great Britain on an equal footing with regard to shipping, manufactures and raw products delivered to American ports. All foreign-owned or -built ships paid fifty cents per ton duty; American-owned vessels were charged six cents per ton.[28]

Political and Sectional Responses to the Tariff

Madison’s attempt to enlist northern merchants and businessmen in supporting an economic contest with Great Britain elicited a cool response.[29] On the one hand, British capital and markets contributed to the general prosperity of the North, and secondly, a shift towards France would mean aligning the United States with a revolutionary government that exhibited what Federalist leadership regarded as “an excess of democracy”.[30][31] Alexander Hamilton, soon to enter the executive branch as Secretary of the Treasury, declined to support Madison’s proposal and warned that economic warfare with Great Britain would drastically reduce the import duty revenue that the tariff legislation called for, thereby placing at risk the funds anticipated to run the new federal government and finance the national debt.[32]

This dispute between Madison and Hamilton marked “the first important breach” between these two Federalist leaders,[33] which would deepen when Hamilton, as Treasury Secretary, launched his fiscal and economic programs - ending their long collaboration.[34] The legislation produced the first sectional strains within “the Federalist coalition of northern businessmen and southern planters.” [35] In the South, “agricultural interests” viewed the high tariff and tonnage rates as a triumph for northern merchants and manufacturers, the burden of which fell on southern staple crop exporters.[36]

This early application of Constitutional authority highlighted North-South social and economic differences and presaged the dissolution of the Federalist coalition, the formation of an agrarian alliance [37][38] and the rise of the First Party System.[39][40]

Notes

  1. ^ United States Statutes At Large, Vol. 1, Dennis & Co., Inc. Buffalo, N.Y. 1961, p. 24
  2. ^ Miller, 1960, p. 15
  3. ^ William Hill, Protective Purpose of the Tariff Act of 1789, The Journal of Political Economy, Volume 2, December 1, 1893, p. 54 http://archive.org/stream/jstor-1819831/1819831#page/n1/mode/2up
  4. ^ Miller, 1960, p. 15, p. 19
  5. ^ Miller, 1960, p. 17-18
  6. ^ Malone, 1960, p. 256
  7. ^ Miller, 1960, p. 16-17, p. 19
  8. ^ Malone, 1960, p. 256
  9. ^ Miller, 1960, p. 15, p. 14-15
  10. ^ Miller, 1960, p. 15
  11. ^ Miller, 1960, p. 15
  12. ^ Miller, 1960, p. 15
  13. ^ Miller, 1960, p. 16
  14. ^ Miller, 1960, p. 18
  15. ^ Hofstadter, 1957, p. p. 115
  16. ^ Miller, 1960, p. 16
  17. ^ Miller, 1960, p. 16
  18. ^ Miller, 1960, p. 19
  19. ^ Hofstadter, 1957, p. 125
  20. ^ Hofstadter, 1957, p. 123
  21. ^ Miller, 1960, p. 16
  22. ^ Miller, 1960, p. 16
  23. ^ Miller, 1960, p. 16-17
  24. ^ Miller, 1960, p. 16-17, p. 126-127
  25. ^ Miller, 1960, p. 18
  26. ^ Miller, 1960, p. 16
  27. ^ Miller, 1960, p. 19
  28. ^ Miller, 1960, p. 19
  29. ^ Miller, 1960, p. 18, p. 19
  30. ^ Brock, 1957, p. 47-48
  31. ^ Miller, 1960, p. 100
  32. ^ Miller, 1960, p. 18
  33. ^ Miller, 1960, p. 19
  34. ^ Miller, 1960, p. 100-101
  35. ^ Miller, 1960, p. 100
  36. ^ Miller, 1960, p. 18, p. 19
  37. ^ Hofstadter, 1948, p. 14
  38. ^ Miller, 1960, p. 100
  39. ^ Miller, 1960, p. 101
  40. ^ Malone, 1960, p. 265

References

Cited in footnotes

  • Brock, W.R. 1957. The Ideas and Influence of Alexander Hamilton in Essays on the Early Republic: 1789-1815. Ed. Leonard W. Levy and Carl Siracusa. New York: Holt, Rinehart and Winston, 1974.
  • Burstein, Andrew and Isenberg, Nancy. 2010. Madison and Jefferson. New York: Random House
  • Hofstadter, Richard. 1957. The United States: the History of a Republic (Englewood Cliffs, N.J.,: Prentice-Hall
  • Hofstadter, Richard. 1948. The American Political Tradition and the Men Who Made It. New York: A. A. Knopf.
  • Malone, Dumas and Rauch, Basil. 1960. Empire for Liberty: The Genesis and Growth of the United States of America. Appleton-Century Crofts, Inc. New York.
  • Miller, John C. 1960. The Federalists: 1789-1801. Harper & Row, New York. ISBN 13- 9781577660316
  • Staloff, Darren. 2005. Hamilton, Adams, Jefferson: The Politics of Enlightenment and the American Founding. Hill and Wang, New York. ISBN 0-8090-7784-1
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