The Tariff of 1816: Protectionism in the Early National Period

Summary

• The War of 1812 left the United States with a significant national debt, prompting the need for a new tariff to finance debt obligations and protect American industries.
• Secretary of the Treasury Alexander Dallas proposed a protective tariff with three classes of duties on imported goods, focusing on goods already produced in the US, new US industries, and luxury goods.
• The Tariff of 1816 garnered surprising support from South Carolina and other Southern states, despite their usual opposition to tariffs.
• The bill passed in the House and Senate, setting average tariff duties at 20-25 percent and providing a definite advantage to the domestic iron industry.

Along with the debt, there was also a concern that the British might use the end of the war as an excuse to flood the market with cheap goods at a loss to snuff out nascent US manufacturing sectors as a form of retaliation. To finance these debt obligations and counter the perceived threat from the British, the government turned to a tariff, which is a tax on imports.

The Dallas Tariff

The plan for a new tariff was introduced by Secretary of the Treasury Alexander Dallas, on February 13, 1816. In his report to the House of Representatives, he recommended three classes of duties on imported goods:

1. Goods that were already produced in the US (including glass, carriages, and paper).
2. Goods that were relatively new US industries (including axes, nails, and buttons)
3. Luxury goods that weren’t produced in the hose US.

The idea of a protective tariff, which helped national industries by making imported goods more expensive, was not a new idea in 1816. Alexander Hamilton promoted the idea throughout his tenure as the first Secretary of the Treasury under George Washington. Hamilton supported the Tariff Act of 1789 had a protective intent for American business at its core. But to this point, no tariff had put protection at its core.

Unlikely Support for the Tariff of 1816

A surprising source of support for the Tariff of 1816, which was also known as the “Dallas Tariff” after Alexander Dallas, came from the South Carolina congressional delegation and other parts of the South. In general, Southern politicians were not in favor of tariffs, which they felt forced them to pay more for goods and helped suppress the development of the region’s manufacturing sector. There was also an argument that low tariffs kept more money circulating in the US economy, which in turn gave Southerners more borrowing power to invest in land, slaves, and other domestic investments.

As the House debated the details of the final version of the tariff and readied for a final vote on the floor, South Carolina’s John C. Calhoun stepped up as a vocal supporter. Calhoun’s support seemed to stem mostly from a sense of nationalism sparked by the War of 1812. He argued that the Dallas Tariff provided for the “security of the county,” and urged that it be passed.

This support came back to haunt Calhoun during the battle over the 1828 “Tariff of Abominations,” which he emphatically did not support, to the point where he threatened “nullification,” an act that might well have sparked a constitutional crisis. Opponents challenged his inconsistency with his position in 1816. His answer was, essentially, that he had gotten caught up in the moment.

Voting for the Tariff of 1816

After hammering out the final details, the bill passed in the House by a vote of 88-54. The Senate made a weak attempt to kill the bill by moving to delay the vote ahead of a planned adjournment, but the motion failed, and the bill passed by an unrecorded vote.

The final version set average tariff duties at 20-25 percent ad valorem (meaning a percentage of the value of the import.) The rate varied by industry; for example, the duties on iron imports were doubled, which gave the small-but-growing domestic iron industry a definite advantage. In all, though, duties were slightly lower than they had been during the war.

Although Americans often have extraordinarily strong opinions on tariffs, the Tariff of 1816 drew little public interest and little debate. It expired in 1819.

Sources:

Bolt, William K.. Tariff Wars and the Politics of Jacksonian America. United States, Vanderbilt University Press, 2017.

Peart, Daniel. Lobbyists and the Making of US Tariff Policy, 1816-1861. United States, Johns Hopkins University Press, 2018.

Skeen, C. Edward. 1816: America Rising. United States, University Press of Kentucky, 2014.

Cover Image: Alexander James Dallas, c. 1790.

Updated: March 14, 2024