WEBVTT NOTE War and Economics in 19th-Century America 1 00:00:00.000 --> 00:00:05.400 Lew always gives me these very narrow topics, the war and economics in the 19th century, 2 00:00:05.400 --> 00:00:08.320 and so I have a half hour. 3 00:00:08.320 --> 00:00:12.960 And so, but I'm going to focus, really the focus of what I'm going to have to say is 4 00:00:12.960 --> 00:00:18.800 how a trade war turned into a shooting war, and I'm going to try to do that in a half hour. 5 00:00:18.800 --> 00:00:22.760 And a lot of you know that from the beginning of the American Republic, 6 00:00:22.760 --> 00:00:26.920 there was a political conflict between the nationalists on the one hand, 7 00:00:26.920 --> 00:00:35.920 led by people like Alexander Hamilton and the advocates of states' rights and decentralized government, or the Jeffersonians. 8 00:00:35.920 --> 00:00:40.920 I wrote that on the board. This is my version of PowerPoint. I call it West Virginia PowerPoint. 9 00:00:40.920 --> 00:00:46.920 I just pointed the blackboard that I scribbled onto. 10 00:00:46.920 --> 00:00:54.920 So Hamilton and his followers wanted a bigger government, stronger government, 11 00:00:54.920 --> 00:01:24.920 government's more centralized in the nation's capital for what purpose to one purpose was to centrally plan the economy more than the other people wanted it to and the Jeffersonians were dead set against all this and so there was this ongoing conflict for the first 70 years or so of the American Republic and the way in which this conflict manifested itself in the most visible way was over economic policy in particular and by the 1830s 12 00:01:24.920 --> 00:01:31.920 This economic policy that was being battled over in the conflict between nationalism and states' rights 13 00:01:31.920 --> 00:01:34.920 was labeled by Henry Clay as the American system. 14 00:01:34.920 --> 00:01:36.920 And I write about this in my book quite a bit. 15 00:01:36.920 --> 00:01:39.920 And the American system had three planks to it. 16 00:01:39.920 --> 00:01:45.920 Protectionist tariffs, central banking, and corporate welfare for the railroad and road building industries. 17 00:01:45.920 --> 00:01:46.920 That's it. 18 00:01:46.920 --> 00:01:52.920 And Abraham Lincoln, which I'm going to talk about later, when he got into politics in 1832, 19 00:01:52.920 --> 00:02:06.920 Right about the time the Whig Party was created and Henry Clay was the leader of the Whigs, he announced to his potential constituents in Springfield, Illinois that the purpose that he was getting into politics were three things. 20 00:02:06.920 --> 00:02:16.920 Protectionist tariffs, a central bank and internal improvement subsidies as they were called for the railroad corporations and that's it. 21 00:02:16.920 --> 00:02:19.920 That's what he claimed he was devoting his political career to. 22 00:02:19.920 --> 00:02:49.920 And so, this, there were a number of battles, fierce political battles over these things that some of you are familiar with, such as Andrew Jackson's veto of the bank bill in the, around 1832, but what I'd like to start off with was, what some people consider to be really the first, the first move in the direction of civil war, so called, which of course was not a civil war, it was a, or a war between the states, I call it the war for southern independence. 23 00:02:49.920 --> 00:03:19.920 but this was the Tariff of Abominations of 1828 and at the time Henry Clay was at the peak of his political power in the Congress and he was the sponsor of the Tariff of Abominations that raised the average tariff rate to around 50% and in some items like I believe wool was taxed at 200% imported wool 24 00:03:19.920 --> 00:03:49.920 and of course the southerners felt that they were being severely plundered by this because they had very little manufacturing in the south and such things as wool blankets they bought from northern manufacturers or from Europe and so you place a 200 percent tariff on the wool blankets and they're going to feel that whereas the beneficiaries of course of the manufacturers of the wool blankets all benefit to them and so but anyway this ended up in this controversy over the 25 00:03:49.920 --> 00:03:52.920 Tariff Nullification in South Carolina 26 00:03:52.920 --> 00:03:55.920 and there's an interesting book on this if anyone's interested by 27 00:03:55.920 --> 00:03:58.920 Chauncey Boucher, B-O-U-C-H-E-R 28 00:03:58.920 --> 00:04:01.920 called The Nullification Controversy in South Carolina 29 00:04:01.920 --> 00:04:04.920 and here's what he says about this, he says, 30 00:04:04.920 --> 00:04:07.920 At the session of the South Carolina legislature, which convened 31 00:04:07.920 --> 00:04:12.920 in November of 1825, this is right, this is before the tariff abominations, 32 00:04:12.920 --> 00:04:16.920 Judge William Smith introduced a set of anti-bank, 33 00:04:16.920 --> 00:04:22.620 Anti-Internal Improvement and Anti-Terrorist Resolutions, they were adopted. 34 00:04:22.620 --> 00:04:30.420 Before this session, there had appeared in South Carolina scattered evidence only of opposition to nationalism. 35 00:04:30.420 --> 00:04:37.420 But this episode may be said to mark the beginning of the formidable anti-nationalist movement in the state. 36 00:04:37.420 --> 00:04:43.620 So clearly, as I said, the way in which this conflict between nationalism and states' rights manifested itself 37 00:04:43.620 --> 00:05:13.620 was over these economic policies as early as 1825 and the South Carolinians went on to describe the tariff as a system of robbery, plunder and it was destructive to the southern states and it's kind of interesting to me that the first translator of Bastiat in America was a woman from South Carolina and so the people in South Carolina were pretty well schooled in the free trade doctrines of Friedrich Bastiat by the 1850s. 38 00:05:13.620 --> 00:05:24.020 by the mid-1850s. They also complained about this. They said, this kind of tariff, when they started talking about the tariff of abominations, 39 00:05:24.020 --> 00:05:34.420 they made one section tributary to another, and the revenue would be used by the administration of artful and corrupt politicians to buy up partisans and retain power. 40 00:05:34.420 --> 00:05:41.220 Sounds familiar, but keep in mind, at this time, the federal government was tiny. Even at the time the war broke out in 1861, 41 00:05:41.220 --> 00:05:47.060 The average American paid about $40 in federal taxes in today's money, today's dollars, 42 00:05:47.060 --> 00:05:51.860 and the only contact any citizen ever had with the federal government was through the postal service, 43 00:05:51.860 --> 00:05:57.140 was through mailing a letter or something like that, and there's no other contact with the federal government. 44 00:05:57.140 --> 00:06:01.700 James J. Kilpatrick wrote a great little book called The Sovereign States, 45 00:06:01.700 --> 00:06:04.820 and he comments on this tariff of abominations. He said this, 46 00:06:04.820 --> 00:06:09.140 Cotton shirts, woolen blankets and other staple items of an agrarian society 47 00:06:09.140 --> 00:06:15.860 became suddenly more expensive at a time when the South had virtually no industries of its own 48 00:06:15.860 --> 00:06:18.660 that might benefit from a protectionist policy. 49 00:06:18.660 --> 00:06:24.980 Virginia also joined in with the South Carolinians in denouncing this proposed tariff. 50 00:06:24.980 --> 00:06:27.780 They called it an unconstitutional exercise of power. 51 00:06:27.780 --> 00:06:30.420 Georgia, North Carolina and Alabama did also. 52 00:06:30.420 --> 00:06:34.500 They issued these proclamations that had violated the part of the Constitution 53 00:06:34.500 --> 00:06:38.900 that requires the duties and impose to be uniform across the population. 54 00:06:38.900 --> 00:06:43.780 which of course it did. They understood the incidence of tariffs back then and so they 55 00:06:43.780 --> 00:06:49.140 thought this was not only an act of plunder but unconstitutional act of plunder. On the other 56 00:06:49.140 --> 00:06:54.260 hand, Massachusetts, Ohio, Pennsylvania, Rhode Island, Indiana and New York legislatures issued 57 00:06:54.260 --> 00:07:00.100 proclamations in favor of protectionism, in favor of raising the tariff to 50 percent and higher 58 00:07:00.100 --> 00:07:05.380 and they won out with this battle of course. The law was passed and the tariff rates were raised to 59 00:07:05.380 --> 00:07:13.460 on average 50% from 15 to 20% so they're more than doubled at the time and that's what created 60 00:07:13.460 --> 00:07:22.260 this controversy and so the South Carolinians took the lead in opposing this tariff increase 61 00:07:22.260 --> 00:07:26.820 and they held a nullification convention. It wasn't a meeting of the state legislature, 62 00:07:26.820 --> 00:07:33.060 it was a political convention where representatives from all the various communities met and they 63 00:07:33.060 --> 00:07:38.480 They issued a proclamation that said we are not going to collect this higher tariff rate. 64 00:07:38.480 --> 00:07:43.580 If imports come into the port of Charleston, for example, we are not going to collect this 65 00:07:43.580 --> 00:07:44.580 money. 66 00:07:44.580 --> 00:07:48.100 We were nullifying this and they were in a big political battle with President Andrew 67 00:07:48.100 --> 00:07:50.200 Jackson over this at the time. 68 00:07:50.200 --> 00:07:57.640 And the law that they passed, the South Carolina legislature then passed a law to enforce this 69 00:07:57.640 --> 00:08:00.640 idea of nullifying the tariff. 70 00:08:00.640 --> 00:08:01.900 And here's what the law said. 71 00:08:01.900 --> 00:08:07.900 Authorized Importers to Recover Any Goods that Had Been Impounded by Federal Tariff Collectors 72 00:08:07.900 --> 00:08:15.900 Sheriffs Were Instructed to Seize the Private Property of the Tariff Collectors and Award it to the Importers 73 00:08:15.900 --> 00:08:19.900 Any Duties that Were Paid Were to be Reimbursed with Interest 74 00:08:19.900 --> 00:08:25.900 Anyone Arrested for Failure to Pay the Tariff was to be Immediately Liberated 75 00:08:25.900 --> 00:08:30.900 No Property Titles Were to be Recognized for Property Sold in Order to Pay the Tariff 76 00:08:30.900 --> 00:08:39.900 Tariff collectors and all their assistants were subject to fines and imprisonment for any attempts to resist the nullification law and collect the tariff. 77 00:08:39.900 --> 00:08:44.900 No public jail in the state could be used to imprison anyone for failure to pay the tariff. 78 00:08:44.900 --> 00:08:54.900 And my favorite, a fund of $200,000 was made available to the governor of South Carolina to purchase guns to enforce the nullification law through the state militia. 79 00:08:54.900 --> 00:09:09.700 In 1828 I imagine you could buy a lot of guns with $200,000 and so they were serious about this and President 80 00:09:09.700 --> 00:09:17.540 Andrew Jackson talked about the possibility of sending naval ships to Charleston Harbor or invading 81 00:09:17.540 --> 00:09:23.140 the state but then you know he must have smacked himself and thought he would go down in history 82 00:09:23.140 --> 00:09:33.140 History is one of the worst tyrants in all of human history if he were over mere tax collection to go down and bomb a city and kill people and burn buildings and loot and plunder. 83 00:09:33.140 --> 00:09:36.140 You know, only a Hitler would do something like that. 84 00:09:36.140 --> 00:09:46.140 And so he backed down. He backed down the South Carolinians' wand by forcing a compromise tariff, a lower compromise tariff. 85 00:09:46.140 --> 00:10:16.140 And so, and that was by 1832, 1833, the lower compromise tariff was settled upon, and from that period, from 1833 until about 1857, we had essentially free trade, we had the average tariff rate by 1857 was about 15%, one-five, and a great many items were exempted altogether, so the free traders, thanks to the efforts of the South Carolinians and their 86 00:10:16.140 --> 00:10:25.140 The New Hortz in Alabama, Georgia, Virginia and a couple of other southern states created a free trade ideal. 87 00:10:25.140 --> 00:10:38.140 Frank Taussig, the great historian of tariffs, said that 1857 was probably the high watermark of free trade in America in the 19th century, as far as that is concerned. 88 00:10:38.140 --> 00:10:42.140 But then that all changed. That all began to change in 1857. 89 00:10:42.140 --> 00:10:49.500 1857, there was a recession in 1857 and by that time the Whig Party of Henry Clay had 90 00:10:49.500 --> 00:10:54.500 gone by the wayside, disappeared, Henry Clay was dead, and the Republican Party picked 91 00:10:54.500 --> 00:10:57.060 up the protectionist mantle. 92 00:10:57.060 --> 00:11:00.740 And Abraham Lincoln, by the way, eventually picked up Henry Clay's mantle as the leader 93 00:11:00.740 --> 00:11:07.900 of that faction, the nationalist faction in American politics. 94 00:11:07.900 --> 00:11:13.900 And so the Republicans started arguing that the cure for the recession was high tariffs. 95 00:11:13.900 --> 00:11:23.900 That if only we would go back to that a tariff abomination of a 50% or so average tariff instead of a measly 15%, that would be the cure to the recession. 96 00:11:23.900 --> 00:11:26.900 Of course, that's total unmitigated nonsense. 97 00:11:26.900 --> 00:11:34.900 And at the time, the works of Adam Smith and Ricardo and John Baptist Say and other free traders were well known. 98 00:11:34.900 --> 00:11:39.700 were well known, and as I said, by the 1850s, the work of Bastiat was printed in English. 99 00:11:39.700 --> 00:11:42.900 It was especially popular in the southern states. 100 00:11:42.900 --> 00:11:53.100 And so when Abraham Lincoln was elected in 1860, before that, in the 1859 session of Congress, 101 00:11:53.100 --> 00:11:56.200 the moral tariff had passed the House of Representatives. 102 00:11:56.200 --> 00:12:00.700 And so this is before any secession took place, before Lincoln was even nominated. 103 00:12:00.700 --> 00:12:09.900 And the moral tariff, in two steps, increased the average tariff rate from 15% to 32% and then to 47%. 104 00:12:09.900 --> 00:12:16.400 And so, and this was put into place before secession, before the war, before Lincoln, by the House of Representatives. 105 00:12:16.400 --> 00:12:22.400 And of course, when Lincoln came in, the Senate quickly voted for it and he signed it, of course. 106 00:12:22.400 --> 00:12:29.900 And it's kind of been entertaining in some of the, as a lot of you know, I've been involved in what I'll politely call a spinning match 107 00:12:29.900 --> 00:12:36.860 with some of my critics or my Lincoln writings and they've gone berserk over my assertion 108 00:12:36.860 --> 00:12:43.300 that Lincoln was interested in economic policy because the official gospel, the civic religion, 109 00:12:43.300 --> 00:12:49.800 is that Abraham Lincoln re-entered politics when he ran for the Senate against Stephen 110 00:12:49.800 --> 00:12:56.220 Douglas and then later as the presidency and even though he was an old wig who fought for 111 00:12:56.220 --> 00:13:00.900 for these things in politics. That was all behind him. He no longer had any interest 112 00:13:00.900 --> 00:13:09.900 whatsoever in tariffs, subsidies for the railroads or banking. Slavery was his issue. Although 113 00:13:09.900 --> 00:13:15.780 if you look at his own words, they contradict that over and over and over again. James McPherson 114 00:13:15.780 --> 00:13:20.620 has said this, the great James McPherson, he's written that it was a new Lincoln. He 115 00:13:20.620 --> 00:13:25.620 turned over a new leaf, was no longer interested in money and power and all that. 116 00:13:25.620 --> 00:13:28.620 It sort of sprung a halo all of a sudden. 117 00:13:28.620 --> 00:13:32.620 But listen to what he said two weeks before he was inaugurated president, 118 00:13:32.620 --> 00:13:37.620 in two and a half weeks, in February 15th, 1861 speech in Pittsburgh, Pennsylvania, 119 00:13:37.620 --> 00:13:41.620 that you can read in any edition of the collected works of Abraham Lincoln. 120 00:13:41.620 --> 00:13:47.620 He said this, the tariff is to the government what a meal is to the family, which is true. 121 00:13:47.620 --> 00:13:52.740 At the time, the tariff accounted for about 90% of federal tax revenue. 122 00:13:52.740 --> 00:13:57.520 There were a few other excise taxes that raised money, but that's true. 123 00:13:57.520 --> 00:14:02.280 But then, in the same speech, he continued on to endorse the Republican Party's platform 124 00:14:02.280 --> 00:14:04.740 on the tariff. 125 00:14:04.740 --> 00:14:09.460 And here's what the platform said, Planck said, that while providing revenue for the 126 00:14:09.460 --> 00:14:14.300 support of the general government by duties upon imposts, sound policy requires such an 127 00:14:14.300 --> 00:14:44.300 and Adjustment of the Impost as to encourage the development of the industrial interest of the whole country and we commend that policy of national exchanges which secures to the working men liberal wages, to agriculture, remunerating prices, to mechanics and manufacturers an adequate reward for their skill, labor and enterprise, and to the nation commercial prosperity and independence." In other words, raise the tariff to 50% and all these good things will happen, is what they were saying. 128 00:14:44.300 --> 00:14:49.540 is adjustment of the imposts. Adjustment of the imposts is raising the tariff. And in 129 00:14:49.540 --> 00:14:55.300 the same speech he went on to say this, and I quote Abraham Lincoln, no subject should 130 00:14:55.300 --> 00:15:01.340 engage your congressional representatives more closely than that of a tariff. No subject, 131 00:15:01.340 --> 00:15:07.340 nothing, not even slavery should be more important to your representatives. Two and a half weeks 132 00:15:07.340 --> 00:15:13.900 before he became president he said that, and so some of these, some of my critics insist 133 00:15:13.900 --> 00:15:37.900 In the same speech, he gave his standard line in defense of tariffs, which was the mercantilist notion that there should be no international competition of any kind whatsoever allowed with any product that is manufactured here. 134 00:15:37.900 --> 00:15:42.940 here that was his position if we grow if we make shoes here in the US there should 135 00:15:42.940 --> 00:15:47.700 be zero imports of shoes if if we don't grow coffee we can take coffee we'll 136 00:15:47.700 --> 00:15:51.420 take coffee we don't grow coffee here and so anything that can be produced at 137 00:15:51.420 --> 00:15:55.940 home there should be no international competition he also espouse the mark a 138 00:15:55.940 --> 00:16:00.400 crude version of the Marxian labor theory of value where he said quote labor is 139 00:16:00.400 --> 00:16:05.580 the true standard of value and quote he criticized all transportation costs as 140 00:16:05.580 --> 00:16:12.260 has, quote, lost labor. That is, if a shoemaker in England shipped shoes to Boston, the shipping 141 00:16:12.260 --> 00:16:18.420 costs are lost labor and we should not permit that. We should not permit that importation. 142 00:16:18.420 --> 00:16:25.020 And so, clearly, this was very important to Lincoln. In fact, I would argue that Lincoln 143 00:16:25.020 --> 00:16:32.620 owed his nomination as president and his election as president to the protectionist interests 144 00:16:32.620 --> 00:16:34.740 Special in Pennsylvania and New York. 145 00:16:34.740 --> 00:16:39.140 At the nominating convention in 1860, 146 00:16:39.140 --> 00:16:41.460 there's an article in the July 1944 147 00:16:41.460 --> 00:16:45.320 American Historical Review on Lincoln and the Tariff 148 00:16:45.320 --> 00:16:48.880 that talks about the importance of his reputation 149 00:16:48.880 --> 00:16:52.700 as a career-long protectionist in getting the nomination. 150 00:16:52.700 --> 00:16:55.660 And the most influential newspaper in Illinois at the time 151 00:16:55.660 --> 00:16:57.980 was the Chicago Press and Tribune, 152 00:16:57.980 --> 00:17:05.980 by Joseph Meadow, M-E-D-I-L-L, and he started editorializing, promoting Lincoln as a presidential candidate. 153 00:17:05.980 --> 00:17:10.980 He said, Lincoln was an old Henry Clay Whig. He's right on the tariff and is right on all the other issues. 154 00:17:10.980 --> 00:17:13.980 Is there any one man who would suit Pennsylvania better? 155 00:17:13.980 --> 00:17:18.980 He was addressing Pennsylvania because Pennsylvania had the second largest number of delegates next to New York. 156 00:17:18.980 --> 00:17:24.980 And their strategy was to get the nomination, you had to win New York and Pennsylvania. 157 00:17:24.980 --> 00:17:26.980 If not, you're not going to get the nomination. 158 00:17:26.980 --> 00:17:28.880 So they keyed in on Pennsylvania. 159 00:17:28.880 --> 00:17:31.960 Lincoln himself lobbied for the job 160 00:17:31.960 --> 00:17:36.300 by writing to all the top political movers and shakers 161 00:17:36.300 --> 00:17:38.900 in Pennsylvania, telling them of boasting 162 00:17:38.900 --> 00:17:40.820 of his protectionist credentials. 163 00:17:40.820 --> 00:17:44.740 One such person was a Dr. Edward Wallace of Pennsylvania. 164 00:17:44.740 --> 00:17:47.540 And he wrote this to, this is a letter from Lincoln to Wallace. 165 00:17:47.540 --> 00:17:51.740 My dear sir, your brother, another doctor, Dr. W.S. Wallace, 166 00:17:51.740 --> 00:17:54.840 shows me a letter of yours in which you request him 167 00:17:54.840 --> 00:18:01.000 to inquire if you may use a letter of mine to you in which something is said upon the tariff question. 168 00:18:01.000 --> 00:18:08.800 I do not precisely remember what I did say in that letter, but I presume I said nothing substantially different from what I shall say now. 169 00:18:08.800 --> 00:18:16.000 In the days of Henry Clay, I was a Henry Clay tariff man, and my views have undergone no material change upon that subject. 170 00:18:16.000 --> 00:18:22.300 And he did the same. I have a list here of other Pennsylvania and Illinois Republican Party big shots 171 00:18:22.300 --> 00:18:33.300 that Lincoln wrote letters to reminding them of what a staunch protectionist he's been for 30 years in order to get the nomination. 172 00:18:33.300 --> 00:18:40.740 Then when the tariff plank was voted in at the Republican Convention, according to Professor Lutheran, who wrote this article I'm quoting, 173 00:18:40.740 --> 00:18:46.340 he said at the convention, the hilarity was contagious, finally pervading the whole vast auditorium. 174 00:18:46.340 --> 00:18:52.180 So when they passed the tariff plank in 1860, the Republican Convention, pandemonium broke out, apparently. 175 00:18:52.180 --> 00:18:58.480 And then when Lincoln won the nomination, he convinced the Pennsylvanians he was their man if they wanted high tariffs. 176 00:18:58.480 --> 00:19:03.720 And when he returned home to his hometown of Springfield, according to Lutheran, there was, quote, 177 00:19:03.720 --> 00:19:10.460 an immense wagon bearing a gigantic sign proclaiming protection for home industry. 178 00:19:10.460 --> 00:19:17.580 And so that's what the people who knew Lincoln best in his hometown after he won the nomination, 179 00:19:17.580 --> 00:19:21.740 that's what they had a big billboard sign on the top of the wagon protection for home 180 00:19:21.740 --> 00:19:27.740 industry that's to them that's what his nomination meant along with a lot of patronage I imagine 181 00:19:28.620 --> 00:19:34.220 the top economic advisor to Lincoln and the Republicans was a man named Henry C. Carey who 182 00:19:34.220 --> 00:19:39.340 was known as the Ajax of protectionism back then his nickname was the Ajax of protectionism 183 00:19:39.900 --> 00:19:47.180 and he said this at the time he said without a high protectionist tariff Mr. Lincoln's administration 184 00:19:47.180 --> 00:20:17.180 will be dead before the day of the inauguration and of course that makes sense because if if he owed his political career to the protectionists in Pennsylvania, New York and elsewhere among others well the way you play the game in politics to succeed in a political career is you have to pay off your your benefactors and so if you can't come through with that higher tariff your career is not very promising and of course Henry C. Carey who had been around for decades as 185 00:20:17.180 --> 00:20:21.180 He was a publicist for the Pennsylvania steel industry. 186 00:20:21.180 --> 00:20:25.180 He once bragged that he had never read The Wealth of Nations by Adam Smith, 187 00:20:25.180 --> 00:20:30.180 and yet he claimed to have refuted everything in it, even though he had never read it. 188 00:20:30.180 --> 00:20:34.180 Sort of like some of the critics of my book who have actually admitted they haven't read it. 189 00:20:34.180 --> 00:20:37.180 Actually, Jude Wineski said that. I haven't had time to read it, but... 190 00:20:37.180 --> 00:20:40.180 and he devoted one of his columns to criticizing it. 191 00:20:40.180 --> 00:20:45.180 Now, in the handout I gave you, in Lincoln's first inaugural address, 192 00:20:45.180 --> 00:20:50.460 The Moral Tariff had passed Congress. It was before the Senate. 193 00:20:50.460 --> 00:20:55.420 Lincoln's inaugurated on Inauguration Day and is to give his first inaugural address. 194 00:20:55.420 --> 00:21:01.580 Two days before he was inaugurated, the United States Senate passed a proposed constitutional amendment 195 00:21:01.580 --> 00:21:08.060 that had already passed the House that would ban the federal government from ever interfering in Southern slavery. 196 00:21:08.060 --> 00:21:10.460 The amendment is here in the hand-off. 197 00:21:10.460 --> 00:21:26.460 And then two days later, during the first inaugural address, Abraham Lincoln pledged his support for that amendment and said that he believed it's already unconstitutional for the federal government to interfere in southern slavery. 198 00:21:26.460 --> 00:21:38.460 And he says in the first inaugural that holding it such a provision to now be implied constitutional law, I have no objection to it being made express and irrevocable. 199 00:21:38.460 --> 00:21:43.180 and so he was in support of that so as far as he was concerned on the day he 200 00:21:43.180 --> 00:21:49.140 was inaugurated if slavery in the south lasted beyond his own lifetime that was 201 00:21:49.140 --> 00:21:54.380 okay with him that's what he said okay but at the same time in the same first 202 00:21:54.380 --> 00:22:00.940 inaugural in the same speech he promised that any state that failed to collect the 203 00:22:00.940 --> 00:22:06.140 increased tariff like South Carolina did in 1828 will be invaded he said that in 204 00:22:06.140 --> 00:22:15.140 So everybody here has probably heard of the saying coined by Bastiat that if goods can't cross borders, armies will. 205 00:22:15.140 --> 00:22:22.140 What Bastiat meant was just looking over the sweep of history that if people can't prosper through peaceful exchange, 206 00:22:22.140 --> 00:22:28.140 it increases the likelihood that one country will invade another and try to prosper by theft, by warfare. 207 00:22:28.140 --> 00:22:35.020 by Warfare. Lincoln's version of this was, if goods do cross borders, our army will. 208 00:22:35.020 --> 00:22:41.780 That's sort of his version of that. But let's take it in his own words. In his own words, 209 00:22:41.780 --> 00:22:47.620 which are also in the handout here in the bottom of the front page of your handout, 210 00:22:47.620 --> 00:22:52.260 is what he said in the first inaugural, the power confided in me will be used to hold, 211 00:22:52.260 --> 00:22:56.100 occupy and possess the property and places belonging to the government and to collect 212 00:22:56.100 --> 00:23:09.100 the duties and imposts, but beyond what may be necessary for these objects, collecting the duties and imposts, there will be no invasion, no using force against or among the people anywhere. 213 00:23:09.100 --> 00:23:15.540 So, you know, read that. And what is he saying? He's saying, if you fail, we're going to raise the moral tariff. 214 00:23:15.540 --> 00:23:20.660 The House has already passed it and everybody knew the Senate was going to go along with it, as was he. 215 00:23:20.660 --> 00:23:26.660 he was a life-long protectionist and any state that failed to collect it like the 216 00:23:26.660 --> 00:23:31.340 South Carolinians did in 1828 will be invaded he says collect it and there will 217 00:23:31.340 --> 00:23:36.060 be no invasion well the flip side of that is don't collect it and there will be an 218 00:23:36.060 --> 00:23:40.540 invasion and so he promised an invasion so on the issue of slavery he was willing 219 00:23:40.540 --> 00:23:44.220 to he was willing to see southern slavery exists long beyond beyond his own 220 00:23:44.220 --> 00:23:48.620 lifetime but on the issue of taxation he was totally uncompromising and promised 221 00:23:48.620 --> 00:23:56.380 The Military Invasion. Two professors, Robert McGuire and Norman Van Cot have an interesting 222 00:23:56.380 --> 00:24:03.460 article that was published in Economic Inquiry last year where they take a look at the importance 223 00:24:03.460 --> 00:24:10.660 of the tariff and they conclude that the importance of the tariff has been under misinterpreted 224 00:24:10.660 --> 00:24:18.120 or given too little weight by historians and they note that in 1857 there was this drumbeat 225 00:24:18.120 --> 00:24:34.120 for Protection, and they looked at the House vote, the House of Representatives vote, and it occurred before Lincoln came around, and the vote was 105 to 64 in the House, and it was completely lopsided in terms of Northern supporters and Southern opponents. 226 00:24:34.120 --> 00:24:45.120 There was only one yes vote for the moral tariff in the House from a secessionist state, Tennessee, and only 15 no votes out of 64 came from Northern states. 227 00:24:45.120 --> 00:24:51.280 So obviously there were a few southern protectionists and there were some northern free traders, 228 00:24:51.280 --> 00:24:56.480 especially in New York City, but in general it was completely lopsided. 229 00:24:56.480 --> 00:24:58.440 Now why is that? 230 00:24:58.440 --> 00:25:02.940 The main reason it is is what it was obvious that these tariffs were mostly on manufactured 231 00:25:02.940 --> 00:25:09.400 goods manufactured in the north, and so they obviously benefited financially, the manufacturers, 232 00:25:09.400 --> 00:25:13.060 but then anyone who paid higher prices for these manufactured things, whether you lived 233 00:25:13.060 --> 00:25:18.340 in Pennsylvania or South Carolina was harmed, but there was still a net benefit in general 234 00:25:18.340 --> 00:25:22.820 to the North, and in particular there was a concentrated special interest, the Northern 235 00:25:22.820 --> 00:25:29.820 manufacturers who politically pushed for this stuff, but at the same time the South, which 236 00:25:29.820 --> 00:25:36.500 was an agrarian society, had to pay all of this. And one reason why it hurt them especially 237 00:25:36.500 --> 00:25:41.940 was that the South exported at least three fourths of everything that was produced in 238 00:25:41.940 --> 00:25:48.140 in the South. It was an agricultural society, cotton and so forth was exported to Europe. 239 00:25:48.140 --> 00:25:53.820 And the reason why it hurt them especially is I can quote an international trade textbook 240 00:25:53.820 --> 00:25:59.300 that I dug up on something that's called the pass-through effect of a tariff. You study 241 00:25:59.300 --> 00:26:04.260 international trade, you learn about this. Once a tariff is increased, here's what the 242 00:26:04.260 --> 00:26:09.400 book says, importers pass on their higher costs to buyers and industrial buyers pass 243 00:26:09.400 --> 00:26:15.400 And so there's another little, I ran across an even simpler explanation of this, 244 00:26:15.400 --> 00:26:19.400 which is that we have to pass on those costs in the form of higher prices. 245 00:26:19.400 --> 00:26:26.400 Consumers hit directly or indirectly include the inflationary price increases in their wage and salary demands. 246 00:26:26.400 --> 00:26:29.400 Everybody tries to pass a tax to someone else. 247 00:26:29.400 --> 00:26:34.400 The only group that is powerless to pass the cost on further are the exporters 248 00:26:34.400 --> 00:26:42.400 And so, and there's another little, I ran across an even simpler explanation of this in a great old book by Frank Choterov called 249 00:26:42.400 --> 00:26:46.900 The Income Tax, Root of All Evil, and I recommend it to anybody who has not read this. 250 00:26:46.900 --> 00:26:52.400 But Choterov at one point was talking about the populace of the 1890s. 251 00:26:52.400 --> 00:26:58.400 And they, it turns out they found themselves in the same spot that the Southerners were in 1860, 252 00:26:58.400 --> 00:27:03.400 in terms of being major exporters who are being screwed by the tariff, 253 00:27:03.400 --> 00:27:05.700 by the same Republican tariff. 254 00:27:05.700 --> 00:27:09.800 By the way, the Republican Party raised tariffs to 47% on average and higher, 255 00:27:09.800 --> 00:27:14.400 and it stayed that way until Woodrow Wilson was president, or that range. 256 00:27:14.400 --> 00:27:19.400 Here's what Chodorov said about the farmers of the Upper Midwest in the 1890s. 257 00:27:19.400 --> 00:27:23.900 The plight of these farmers was made worse by the protective terrorist policy of the government. 258 00:27:23.900 --> 00:27:25.100 Same policy. 259 00:27:25.100 --> 00:27:29.000 The best they could get for their products was the competitive world price, 260 00:27:29.000 --> 00:27:32.900 while the manufacturers they bought from the East were loaded down with duties. 261 00:27:32.900 --> 00:27:36.740 Next to their demand for more money, the populace clamored for lower tariffs. 262 00:27:36.740 --> 00:27:41.460 And so they saw themselves as being especially plundered by this. 263 00:27:41.460 --> 00:27:46.780 A few moments, we started a minute late, so sit back now. 264 00:27:46.780 --> 00:27:49.040 I'm finishing up, I'm finishing up. 265 00:27:49.040 --> 00:27:55.260 Murray Rothbard, I also quote him as saying the same thing about this. 266 00:27:55.260 --> 00:27:58.420 So that's why Charles Adams came to the conclusion in his book, 267 00:27:58.420 --> 00:28:07.420 When in the course of human events, that in 1861, the Southerners were paying about 75% or more of all the Federal tariff revenue. 268 00:28:07.420 --> 00:28:15.420 Although most of the money that was collected was being spent in the North, because after all, there were twice as many Northern states, so they had twice as many senators. 269 00:28:15.420 --> 00:28:26.420 And also, the population of the North was more than double the population of the South, and so Congress was headed in that way, too, of Northern dominance, and this is what they wanted to do with their dominance. 270 00:28:26.420 --> 00:28:42.420 The final thing I'm going to say, to make Mark happy and sit down, is that after Fort Sumter, on April 19, 1861, Abraham Lincoln in his first act of war announced the blockade of the southern ports. 271 00:28:42.420 --> 00:28:47.420 And here's the reason he gave in his statement for the blockade of the southern ports. 272 00:28:47.420 --> 00:28:52.420 Whereas an insurrection against the government of the United States has broken out, and he names all the states, 273 00:28:52.420 --> 00:29:00.420 and then he says, and the laws of the United States for the collection of the revenue cannot be effectively executed therein comfortably, 274 00:29:00.420 --> 00:29:06.420 to that provision of the Constitution, which requires duties to be uniform throughout the United States, 275 00:29:06.420 --> 00:29:14.420 I, Abraham Lincoln, President of the United States, until Congress shall have assembled and deliberated on said unlawful proceedings, 276 00:29:14.420 --> 00:29:23.420 or until the same shall have ceased have further deemed it advisable to set foot a blockade of the ports within the states aforesaid. 277 00:29:23.420 --> 00:29:30.420 A lot of legalese there, but what he's saying is they're not collecting the tariff therefore we're going to blockade the ports and do something about this. 278 00:29:30.420 --> 00:29:32.420 And that was the first act of war. 279 00:29:32.420 --> 00:29:41.420 So in other words, the first thing he did was to keep his promise that he had made just a month or so earlier in the first inaugural that if you fail to collect the tariffs 280 00:29:41.420 --> 00:29:54.740 The Tariffs, there will be an invasion and the first step was the blockade of the southern ports and so that is how a trade war turned into a shooting war in my evaluation and my time is up so thank you.