Antecedents of the Civil War Part I

"There's an old Indian saying: Follow the cigar smoke, find the fat man there."
--Brig General John Buford (Gettysburg)

The Constitution was barely dry when some people such as Alexander Hamilton were already trying to exceed its bounds. Hamilton believed that the US would be better off with a strong central government more in line w/ the British design that the US had recently thrown off.

The Federalist Party that harbored Hamilton's platform was already sliding when Hamilton was killed in his famous duel with Aaron Burr in 1804. By 1815ish the Federalist Party was largely history. However, the idea of a dominant central government was not. The baton was passed to the National Republican Party which became the Whig Party which became the Republican Party.

Henry Clay and other future Whig leaders developed what became known as the American System to express the strong central government ideal. The American System stressed protectionist tariffs, central banking, and government funded 'internal improvements' as its primary planks.

The American System is what economists today call a mercantilist policy. Today, particular planks would also fit the label 'corporate welfare.'

Key backers of the American System were Northern businessmen who stood to get rich if this system was implemented. Southern states opposed the American System from the get go, arguing that most of the benefits would not flow in their direction, and that the successes of Northern producers would come out of the hides of Sourthern producers.

In the first half of the 1800s, Washington backers of the American System were able to implement the various planks with mixed success. Internal improvements primarily took the form of government funded transportation projects such as the Erie Canal. America's second attempt at central banking, the Second Bank of the United States, was enacted in 1816 only to be shut down by Andrew Jackson in 1833.

The element of the American System that was operationalized to the fullest degree during the first half of the 19th century was the tariff plank. Beginning in 1816, a series of tariffs were imposed on imported goods. Initially, tariff rates were 20-25% although future tariff acts taxed imports at rates north of 40%.

As with all tariffs, groups protected by the tariffs benefitted. In this case, those groups were the stakeholders of manufacturers primarily located in the Northern states. Losers included all buyers of protected goods, since similar good were available in unhampered markets for a cheaper goods.

The biggest losers were the Southern states. Because the Southern economy was primarily an agrarian one, Southern states needed to trade for manufactured goods. The South's primary trading partners were the North and Europe. The imposition of tariffs raised to cost of trade in the South, and tilted trade away from Europe and toward the North.

It did not take long before Southern states decried federal government policies, particularly with respect to tariffs, as unjust and unconstitutional.