Tariffs, Blockades, and Inflation: The Economics of the Civil War

From Mises.Org

This is a book review by Thomas DiLorenzo in the Journal of Libertarian Studies.

Mr. DiLorenzo reviews a book by Mark Thornton and Robert B. Ekelund, Jr titled "Tariffs, Blockades, and Inflation: The Economics of the Civil War"

"Thornton and Ekelund rigorously apply the basic principles of Austrian economics and public choice theory to illuminate some of the central causes and consequences of the war, including the dispute over the extension of slavery into the new territories, the tariff, central banking, wartime inflation, and the Union blockade, as well as the birth of "Lincoln's New Deal," the massive expansion of the federal government that occurred during and after the Lincoln administration."

"With each of these policies, there were sharp division between the north and south from the very beginning of the republic. For example, although there were some northern free traders and southern protectionists, by the 1850s, the majority of support for protectionism came from the north while southerners were largely opposed to it. This was due to the fact that the north was increasingly industrialized, whereas the south was an agricultural society that relied most heavily on selling its cash crops - tobacco, cotton, and rice - on international markets'

"At the time, the south contributed less than 15% of the nation's manufacturing output, so protectionism primarily benefited northern manufacturers from international competition, at the expense of the south. If those northern manufacturers had to pay more themselves for other "protected " items, they could easily pass on most of these costs to their customers - many of whom were southerners -since the demand for their products was rendered more inelastic by protectionism."

"The south, on the other hand, simply paid through the nose. Since southern farmers sold some three fourths of what they produced on world markets, they simply had to eat the costs of tariffs, and were unable to raise their prices to any significant extent in response to the higher tariff rates that made clothing, farm tools and machinery, and many other manufactured items more expensive."

"Thornton and Ekelund correctly point out that "the tariff became the single most important domestic economic issue prior to the Civil War", and was "a major factor in the coming of the Civil War". They make their point with a chart showing that the tariff accounted for 95 percent of all federal tax revenues in 1860s. This is undoubtedly why Abraham Lincoln announced to a Pittsburgh audience some two weeks before being inaugurated as president that "the tariff is to government what bread is to the family." He said this while making a stump speech in favor of the Morrill Tariff, which roughly doubled the average tariff rate just days before he took office. (He would eventually sign several other tariff bills that raised the average rate to almost 50%).

"Thornton and Ekelund argue that the tariff was of paramount importance to southern secessionists due to "tariff uncertainty." Beginning in 1824, there were wide swings in tariff rates, with periods of high rates leading to the effective economic plundering of the south. With the ascendancy of the Republican Party and the election of Lincoln, the writing was on the wall that there would be a "politically driven return to high protective tariffs on manufactured goods". Once the war started, "the Yankees were for the most part fighting not to abolish slavery, but for their economic interests and to preserve the Union."

So basically the South had been getting screwed by the North for over 40 years with those tariffs and unless the Southerners had become completely sissified less than 100 years after their grandparents went to war with the British over taxes, it seems pretty reasonable to me that secession was about the tariffs and not preserving Slavery, which according to the Repunklican, Lincoln promised not to to interfere with anyway.


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