Protective Tariffs,
Taxation and
Banking
The battle still rages
Protective Tariffs
Another example of how you can’t please everyone.
What is a
Protective
Tariff?
In theory, it’s a duty (tax) on imported
products to raise their price, which
makes them less attractive to
consumers (the people who buy stuff),
thereby protecting domestic industries
from foreign competition.
Against
• People opposed to the protective
tariffs felt like they prevented
people from buying the foreign
products at lower prices.
• Southern states were still
agricultural and didn’t
manufacture much, so either way,
they were having to pay more for
things.
• Northern states seemed to be
making a lot of money off the
tariffs because they were
manufacturing more.
• Southern states saw the protective
tariffs as unnecessary and unfair.
For
• Those in favor of the
protective tariffs said it
protected domestic
industries from competition
from foreign industries who
sold their products at lower
prices.
• Northern states were way on
board with this because their
economy was based on
industry so people paying
more to them for
goods=bigger paychecks.
• Tariff of 1816 (this is the one we’re talking about):
After the War of 1812, the British dumped a bunch of
manufactured goods they had stored here in the
market.
•
It was cheap and the northern manufacturers couldn’t
compete with the low, low prices.
• This tariff was the first tariff passed by congress with
the implicit intent of protecting American industry.
• Tariff of 1824: Due largely in part to the work of a
man named Henry Clay, made the tariffs even more
restrictive and included things like glass, lead, wool
and cotton.
• Southerners sold a lot of cotton to the British.
• Tariff of 1828-It was passed under Andrew Jackson’s
presidency to make it appear he wanted free trade for
the south and protection for the north, but it just riled
everyone up even more.
And This is how we started on
the road to the civil war
• Tariff of 1789-Mostly to help the new country pay off
all the debts from the Revolutionary War.
Taxation
The gift that keeps on giving.
The way it
works
When taxes are high, it takes away
from consumers so that the
government can provide infrastructure
and services that benefit the economy
and citizens.
When taxes are low, consumers have
more money to spend and the
economy can grow.
The battle lines
Southern States
• Southern states had a high
rate of personal debt because
all of their money came from
agriculture and they had no
industry.
Northern States
• Northern states were less
effected by tax rates because
most taxation was based on
tariffs.
• So they could keep the
economy going, they kept
taxation and government
spending much lower than
northern states.
• Their economy was also
booming because of industry
and they had an influx of
immigrants to work in their
factories gave them plenty of
cheap labor.
• Raising taxes would be
another major blow to their
economy.
• So, more people + more cities
+more industry=more
economic diversity..
Andrew
Jackson was
not a tax fan
Andrew Jackson opposed a strong
central government and opposed
unreasonable taxation by the federal
government.
He thought taxation could quickly
lead to an abuse of power and control
over the American people.
Banking System
The one thing the north and
south agreed on
• As industry started to grow,
the northern states needed
loans to build more
businesses, so they relied on
the banks.
• Southerners also got a lot of
loans and used future crops
as collateral.
• So, the banking system kept
the economy going.
Alexander hamilton really
liked the banks, too
• Alexander Hamilton really
supported a national bank, but it
wasn’t in the constitution.
• He supported a more loose
interpretation of the Constitution
and decided the clause that said
when Congress is granted power,
they are also granted the
“necessary and proper” means to
carry out that law.
• He thought the national bank was
“necessary and proper,” so
looking at the clause the way he
did, the national bank was totally
constitutional.
Jefferson and
Madison liked it less
• They both thought the
power of the government
should be clearly stated in
the Constitution.
• They also believed the
Constitution should be
followed strictly.
• In following it strictly, the
national bank was
unconstitutional and
Alexander Hamilton was
not being very nice.
Bank of the
United States
The Bank of the United States ended up
being really powerful and controlled the
nation’s money supply.
Andrew Jackson said it was made up of
a bunch of wealthy elitists run by private
wealthy bankers.
So, when he was given a chance to sign a
new charter bank bill, he decided to veto
it instead.