Tariff of 1828

Posted: April 05, 2016

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The conversation below is between senators George Wood from South Dakota, Ford Abbott of Michigan and Andrew Jones of Vermont. George and Abbot are Republicans while Andrew is a Democrat. The discussion takes pace in 1829 after the enactment of the 1828 tariff.

“I think the duty will help much. We have the capacity to supply our market with local textiles,” said Andrew. “I beg to differ” interjected abbot. “The current situation is worsening by the day. Why do we need the tariff anyway? Don’t you think it is shrinking the economy? I believe the only way to move forward is to liberalize the economy.” “Sure Abbot. That’s very true. Look at what a tariff does. It’s like all other taxes. There is no doubt that it will increase the federal government’s revenue. It will also protect the newly commissioned firms, but what about the prices in the economy? They will naturally go beyond the expected levels. I am sure that next year we will all be talking about inflation. It’s already being felt in the South. And as usual, we will all blame it on the Federal Reserve, or maybe Wall Street. Do we need to solve one problem that will cause multiple ripple effects that cause runaway problems? I don’t think it is prudent. That tariff cannot be put into effect! I will support its repulsion at any time.”

“Yeah! I see” said Andrew. “It’s all about the price level and long-term benefits to the economy. Of course the application of the tariff will have different results and effects in different regions of the federation.” “True.” Said George. “The south will be most affected. Based on history, the current tariff of 1828 increases the list of items that are taxable including raw materials. Britain supplies most of the goods to southerners who also provide them with the requisite raw materials to produce these goods. It will cause a lot of damage because the products imported by southerners from Britain will be double taxed making them more expensive than they were in 1827. I believe that the most reasonable way of handling the dumping crisis is to increase the capacity of our production by enhancing technology. In the same time, the federal government should consider introducing a subsidy instead of taxing imports. In the long run, the country will start exporting even cheaper products. It is all about sacrifice”.

“And for sure, farmers in the south are losing, so are the consumers and manufacturers in the region. Goods from the north are somewhat expensive, and as things are today, many may not be in a position to afford particular commodities, such as textiles. A boycott is likely to be witnessed if prices keep moving up. Already John Adams lost the presidency because of the punitive taxes. The south is ruthless with anyone who touches on their welfare in a negative fashion” “that’s true George.” Said Abbot. “And we even had seven democrat-republican senators affiliated to President John Quincy loose in the north. The public is aware of the catastrophic effects the bill has on commerce. And they are feeling it in the pocket.”

“Now, that’s tricky. I guess I have been slow at getting the facts.” Said Andrew. “I understand what you are saying. Now we need to push for amendments to Congress. That way, we shall be able to win politically as the peoples’ voice in parliament. I take the lead hoping that you will join my caravan. Thanks you, but I have to leave now.” “Let's chat tomorrow, and don’t forget to start working on the amendments as soon as early as possible,” George said as they all shook hands in affirmation.  

 

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