page_1059 < previous page page_1059 next page > Page 1059 Tariff A customs duty is a tax on commodities crossing a political boundary. A tariff, technically, is a schedule of such taxes, but the terms are often used interchangeably. In American politics the "tariff question" was a major, often passionate, political issue from the dawn of the Republic until modern times. A tariff can serve several purposes: like all taxes, it can raise money to pay the costs of government; it can protect domestic goods from foreign competition; and it can seek to force a foreign country to change a policy. A primary reason for calling the Constitutional Convention in the summer of 1787 was the fact that the central government under the Articles of Confederation lacked the power to lay taxes. It was thus dependent on the states for revenues, and these were usually late or not forthcoming at all. The new Constitution gave the federal government the power to tax and the sole power to lay tariffs, but it required that taxes be uniform throughout the United States. Further, Article I, Section 9, forbade the federal government to tax the exports of any state. Therefore customs duties could be laid only on imports from abroad. The tariff would be the most important tax laid by the federal government until the First World War, providing the majority of the government's revenue throughout that time, except during the Civil War years. Even before Alexander Hamilton was appointed the first secretary of the treasury, Congress established a tariff on various commodities. It was immediately evident that everyone in Congress felt the burden of the tariff should fall on someone else's constituents. Since New England imported large quantities of molasses from the West Indies to make rum, that region's representatives and senators sought to ensure that any duty on molasses would be as low as possible. Pennsylvania, before the new Constitution came into force, had passed a protective state tariff to foster its nascent iron industry, and it wanted this tariff to be duplicated by the federal government. Southern states, with no comparable industries, wanted no such duty. Virginia, with a surplus slave population, favored a ten-dollar-a-head tax on imported slaves. The more southerly states, slave importers, opposed it. On December 5, 1791, Hamilton submitted to Congress his Report on Manufactures in which he set forth his systematic vision of how the country should develop economically. In it he called for protective tariffs to foster American industry. Although this report, in retrospect, was the work of a man who saw the economic future more clearly than any of his contemporaries, Congress ignored it at the time and continued to set tariffs based solely upon the ebb and flow of political pressure. The first tariff, enacted on July 4, 1789, called for specific duties on thirty commodities such as steel, molasses, and hemp. It also provided for an ad valorem tariff on other goods that varied for each but averaged 7.5 percent. All other goods were taxed at 5 percent. To encourage American shipping, the law provided for a 10 percent reduction in tariffs on goods that arrived in American bottoms. After the War of 1812, using the tariff for protective purposes began in earnest. A duty of twenty-five cents per yard on cheap cotton cloth, enacted in 1816, virtually excluded it from entering the American market and sheltered the burgeoning New England mills from English competition. Protectionism rose steadily in the next decade, over the fierce opposition of New England shipping interests and southern planters, leading finally to the so-called Tariff of Abominations in 1828. This measure was deeply resented in most of the South and led directly to the concept of nullification, the idea that individual states could decide for themselves if acts of the federal government were constitutional. This in turn led to one of the many grave sectional confrontations that threatened the Union in the pre-Civil War era. After the nullification crisis had ended in compromise, the tariff trend was downward until the Civil War forced sharp increases. Following the war, American industry grew very rapidly in the North, traditionally favorable to a high tariff, and pressure for increased tariff  < previous page page_1059 next page >