(November 14, 2019) Historians hostile to Confederate heritage sometimes use the graph below to falsely claim that antebellum Southern complaints about tariffs were unjustified because New York alone accounted for the great majority of tariff collections. The assertion is false for two reasons.
First, the graph merely shows where tariffs were collected, not where the consumers who actually absorbed the cost of the duties resided. Since the eleven states that would become the Confederacy contained 29% of America’s population, it’s reasonable to assume that they paid about 29% of America’s tariffs in the form of inflated prices for the imported goods.
Second, and more importantly, Southerners complained about the unfairness of protective tariffs, not revenue tariffs. The classic example of a revenue tariff was the one on coffee, an item that could not be produced in America but was consumed in every state. In contrast, protective tariffs were not intended to raise revenue and were outlawed in the Confederate constitution. They were designed to protect domestic manufacturers from overseas competition. In fact, an optimal protective tariff raises no revenue because it blocks all competitive imports for the sheltered item. Most antebellum protective tariffs benefitted Northern producers, such as iron makers. They caused the antebellum South to buy $200 – $300 million of domestic goods annually from the North that would have otherwise been sourced from Europe. In contrast, the graph suggests that America’s total tariff bill was only $48 million in 1859.
New York’s tariff collection dominance resulted from a shipping pattern known as the “cotton triangle.” On the eve of the Civil War cotton accounted for about two-thirds of all American exports and New York was the pivot point. The following “cotton triangle” explanation is excerpted and edited from Doug Harper’s website:
Early-and-mid nineteenth century Atlantic trade depended upon scheduled service “packet lines.” By 1817 such lines became the way to do trans-Atlantic business. The successful port needed to have good two-way cargo volumes. The New York packet lines succeeded because they sucked in all the eastbound cotton cargoes from the South. Thus, Northeastern-owned American vessels sailed to a cotton port carrying goods for the Southern market where they loaded cotton for Europe, which got 80% of its feedstock from America. They steamed back from Europe loaded with manufactured goods and occasionally immigrants.
Since this “triangle trade” involved a domestic leg between New York and Southern ports, foreign vessels were excluded by an 1817 law. Being thus protected by the federal government and subsidized with postal contracts, the “cotton triangle” became a monopolistic trade practice for American shipowners and New York trading interests.
By creating a three-cornered trade, New York dragged the commerce between the Southern ports and Europe out of its normal course and collected a heavy toll upon it. This trade might have otherwise become direct shuttles between Southern ports and Europe had New York not interposed by developing its coastal packet lines, without which it would have been nearly impossible to make its east-bound transoceanic packet runs profitable.
New York’s income from triangle trade for financing, insurance, shipping, commissions and other services amounted to perhaps 40% of every dollar paid for Southern cotton. By the time Southern ports started offering transatlantic packet service in 1851, New York was far ahead in terms of departure-arrival frequencies and routes.
America’s foreign trade rose from $134 million in 1830 to $318 million in 1850 and tripled again in the 1850s. Between two-thirds and three-fourths of imports entered through New York. Thus, any trading the South did had to go through that city.
Since New York was collecting as much as 40% of the value of America’s cotton, it initially hoped to persuade the seceding states to voluntarily return to the Union and was sympathetic to their complaints. After the Confederacy revealed its intent to remain independent and levee much lower tariffs than the United States, New Yorkers realized they were about to lose the “cotton triangle” monopoly. Consequently, they began urging the federal Government to militarily coerce the cotton states back into the Union. They chose war in order to protect their own economic interests. As always, money makes the world go ’round.
Learn more about the cotton trade and the furtive intersectional trade between the North and South by reading:
Trading With the Enemy by Philip Leigh
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