Protectionism

PROTECTIONISM FORMS PART of an American political legacy inherited from the colonial era as part of Great Britain's mercantilist traditions. Independence did not change the need to protect America's infant industries. Hence, protectionism formed a critical part of Secretary of the Treasury Alexander Hamilton's approach to the economy as reflected in his Report on Manufacturers (1791). The method employed to deliver this protection from foreign competition was a system of import charges or duties.

Protectionism also offered the federal government a way to raise revenue, which was the clear purpose behind the first tariff in 1789. The tariff would remain the principal source of government revenue until World War I and the onset of income tax. Other early tariffs, such as the 1816 Tariff, were clearly protectionist. This tariff charged a 25 percent rate on imported textiles, and even more on certain manufactured goods. The 1824 Tariff expanded these rates to include a wider range of imported goods such as wool, iron, lead, and glass.

The height of this early protectionist drive came in the Tariff of 1828, also known by its opponents as the Tariff of Abominations, which increased rates to almost 50 percent. Although beneficial to the emerging economic interests of New England manufacturers, it was seen in other areas as a penalty on their economies. This was particularly the case in South Carolina. Enforcement hurt cotton exports and made the cost of manufactured imports astronomical. Southern criticism of the tariff became a campaign issue that benefited Andrew Jackson's faction in what would soon become a separate Democratic Party.

Jackson exploited this unpopularity in his 1828 campaign against President John Quincy Adams, who had signed the tariff bill. Although Jackson benefited from this opposition, and by 1832 had overseen tariff reductions, the tariff still created bitter feelings in the south, a situation that was exploited by South Carolina's Senator John C. Calhoun. Calhoun elevated the disagreement to the point that it is remembered as the Nullification Crisis. South Carolina threatened secession from the union if tariff reduction did not occur. The tariff had emerged by mid-century as a key political divide. The Whigs were committed to protective tariffs, while the Democratic Party opposed high tariff legislation.

Whig control of Congress allowed the tariff to be increased in 1842. With the Democrats in a majority and James K. Polk in the presidency, the tariff was lowered in 1846. Duties were further lowered in 1857, under Democratic President James Buchanan to a 20 percent average. The Civil War transformed America and saw the rise of Republican dominance of both the presidency and Congress with the withdrawal of southern Democratic opposition. Republican support of high tariff policies that favored domestic manufacturing over agriculture became a political mainstay of the party.

The period after the Civil War became an era of protectionist Republican tariffs. This shaped national debate on the issue, and Republican practice until 1913. Rates generally remained high, but a number of exemptions were included in the legislation. American industrial strength had expanded during these years and did not seem in need of so much protection, nevertheless, high tariff policy was embraced in exchange for native business support.

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