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The North's Southern cash cow.

CONTRARY TO THE CLAIMS of Marxism, economics does not determine the political structure of a country; rather, the political structure of a country determines its economic system. The Soviet Union was proof of that. In the case of the U.S. government, this can be seen in the adoption of tariffs, beginning in 1789. The tariffs served political objectives, not economic needs. More often than not, they worked against the economic interests of the country as a whole. Tariffs were adopted because Washington, Hamilton, and others believed the country's long-term security required the United States to be economically, as well as politically, independent from the British. The goal of the tariff of 1789, and succeeding tariffs, was to build up local industries to supply local needs and reduce American dependence on British manufacturers. But as with all tariffs, somebody won, and somebody lost.

By 1861, the North was producing goods inferior to British wares and selling them to a captive American market at higher prices. The tariffs collected on British-made goods were being used to fund "internal improvements," a practice known as the American System. The federal government simply gave public funds to private companies to build the country's infrastructure: roads, railroads, turnpikes, harbors, and canals. These internal improvements frequently turned out to be more expensive than originally estimated and, if ever completed, were, like the Erie Canal, found to be redundant. The system flourished because the politicians who voted for such federal subsidies were financially rewarded by the businesses that received those public funds. Opponents of the practice denounced it as institutionalized corruption. This patronage system was a boon for Northern commercial interests.

The tariff was the principal cause of the Civil War. It was the reason the South seceded--and the reason the North waged a war against the South's secession.

It is because of the American System that the secession of the Southern states posed an existential threat to the Northern states. Without the revenue from Southern exports and the tariffs on Southern imports, a union comprising the Northern states would have constituted what today is termed a failed state. At the outbreak of the Civil War, Gen. Winfield Scott, commanding general of the U.S. Army, opined that, without the South, the North would dissolve into three separate republics: West Coast, Midwest, and East Coast. Initially, it appeared likely the North would, in fact, shatter into four independent countries. Democratic Congressman Daniel Sickles and DeBows Review, among others, urged New York City to secede from New York state and become "the Republic of New York," a city state that would flourish through free trade.

Northern newspapers reflected this fear. In an editorial on November 20, 1860, Cleveland's Daily National Democrat declared,
   The entire amount, in dollars and
   cents, of produce and of manufactured
   articles exported to foreign
   countries from the United
   States for the year ending June,
   1858, was $293,758,279, of which
   amount the raw cotton exported
   alone amounted to $131,386,661
   ... taking the estimate of the cotton
   used [in the] North...and
   adding it to the worth of the cot
   ton sent abroad, and we have
   over one hundred and fifty-eight
   million dollars['] worth of cotton
   as the amount furnished by
   the South. Deduct from the exports
   the silver and gold and the
   foreign goods exported, and the
   cotton crop of the South alone
   exported exceeds the other entire
   export of the United States, and
   when to this we add the hemp
   and Naval stores, sugar, rice, and
   tobacco, produced alone in the
   Southern States, we have near
   two-thirds of the value entire of
   exports from the South. Let the
   States of the South separate, and
   the cotton, the rice, hemp, sugar
   and tobacco, now consumed in
   the Northern States must be purchased
   [from the] South, subject
   to a Tariff duty, greatly enhancing
   their cost. The cotton factories
   of New England now, by getting
   their raw cotton duty free,
   are enabled to contend with the
   English in the markets of their
   own Provinces, and in other
   parts of the world. A separation
   would take from us this advantage,
   and it would take from the
   vessels owned by the North the
   carrying trade of the South, now
   mostly monopolised by them.

On December 10, 1860, an editorial in the Daily Chicago Times affirmed that,
   With her immense staples, [the
   South] has furnished near three-fourths
   of the entire exports of
   the country. Last year she furnished
   seventy-two per cent. of
   the whole...It is almost impossible
   to estimate the amount of
   money realized yearly out of the
   South by the North. It, beyond
   all question, amounts to hundreds
   of millions. By the present
   arrangement, also, we have
   a tariff that protects our manufacturers
   from thirty to fifty percent,
   and enables us to consume
   large quantities of Southern cotton,
   and to compete in our whole
   home market with the skilled labor
   of Europe. This operates to
   compel the South to pay an indirect
   bounty to our skilled labor,
   of millions annually. The result
   would follow any tariff, for revenue
   or otherwise.

But, the Daily Chicago Times continued,
   Let us, for a moment, reverse
   the picture, and look dissolution
   in the face: At one single
   blow our foreign commerce
   must be reduced to less than one-half
   what it now is. Our coastwise
   trade would pass into other
   hands. One-half of our shipping
   would lie idle at our wharves.
   We should lose our trade with
   the South, with all of its immense
   profits. Our manufacturers
   would be in utter ruin.
   Let the South adopt the free-trade
   system, or that of a tariff
   for revenue, and these results
   would alike follow. If protection
   be wholly withdrawn from
   our labor, it could not compete,
   with all the prejudices against
   it, with the labor of Europe. We
   should be driven from the market,
   and millions of our people
   would be compelled to go out of

In its editorial of January 15, 1861, the Philadelphia Press opined, "It is the enforcement of the revenue laws, NOT the coercion of the State, that is the question of the hour. If those laws cannot be enforced, the Union is clearly gone."

On March 12, 1861, the New York Evening Post wrote,
   That either the revenue from duties
   must be collected in the ports
   of the rebel states, or the ports
   must be closed to importations
   from abroad, is generally admitted.
   If neither of these things be
   done, our revenue laws are substantially
   repealed; the sources
   which supply our treasury will be
   dried up; we shall have no money
   to carry on the government; the
   nation will become bankrupt before
   the next crop of corn is ripe.

The Boston Transcript wrote on March 18, 1861,
   now the mask has been thrown
   off and it is apparent that the
   people of the principal seceding
   states are now for commercial
   independence. They dream
   that the centres of traffic can
   be changed from Northern to
   Southern ports ... by a revenue
   system verging on free trade ...
   The government would be false
   to its obligations if this state of
   things were not provided against.

An editorial in the Newark Daily Advertiser on April 2, 1861, declared: "We apprehend, that the Cotton States, especially the chief instigator of the present troubles--South Carolina,--have all along for years been preparing the way for the adoption of the policy of free trade."

The Pittsburgh Post wrote in its editorial on April 2, 1861,
   The argument is that by repealing
   the tariff, the commerce of the
   North may be enabled to compete
   with the commerce of the
   South upon equal footing. Repeal
   the tariff and place the commercial
   interest of the nations
   upon the same footing, and still
   the North would be the loser and
   not the gainer thereby.

The tariff was also explicitly cited as the reason for secession in the South. In November 1860, the Charleston Mercury declared,
   The real causes of dissatisfaction
   in the South with the North, are
   in the unjust taxation and expenditure
   of the taxes by the Government
   of the United States, and in
   the revolution the North has effected
   in this government from
   a confederated republic, to a national
   sectional despotism.

The New Orleans Daily Crescent wrote on January 21, 1861, that the people of the South
   know that it is their import
   trade that draws from the people's
   pockets sixty or seventy millions
   of dollars per annum, in the
   shape of duties, to be expended
   mainly in the North, and in the
   protection and encouragement
   of Northern interests ... These
   are the reasons why these people
   do not wish the South to secede
   from the Union.

British newspapers similarly emphasized the tariff as a cause of the South's secession. Eraser's Magazine, in an article entitled "The American Quarrel" (April 1861), observed that
   Congress was rapidly passing
   a new tariff of the most strongest
   protectionism to Northern
   manufacturers! ... The unseemliness
   of the measure has filled
   all England with astonishment.
   It is a new affront and wrong to
   the slave states, and raises a wall
   against the return of the seceders.

The December 21, 1861, issue of the Athenaeum commented,
   As a rule, the great mass of the
   public expenditures were made
   from the North, not in the South,
   so that Southerners found themselves
   doubly taxed--taxed first
   for the benefit of the Northerner
   manufacturers, and then, in the
   disbursement of the public funds,
   denied an equal participation in
   the benefits accruing therefrom.

As the North's fear of the loss of its tariff subsidies grew, demands soon appeared for an invasion of the South. In its editorial of May 17, 1861, the Montpelier Daily Green Mountain Freeman advocated such action:
   Millions and tens of millions of
   dollars, due from Southern traders
   for goods of recent purchase,
   and now perhaps mostly on their
   shelves, or due on the most sacred
   of honorary obligations,
   have thus been, within the last
   three months, unblushingly repudiated,
   and irrevocably lost to the
   mercantile classes of our cities.
   ...Let the North take her pay for
   all her wronged citizens in real
   estate, to be taken with less gentle
   hands than those of a levying
   Sheriff, and to be settled by her
   free people, who will convert that
   land of treason and barbarism
   into one of law, order, and civil
   society. Let those who would
   carp at this suggestion as too
   agrarian in the treatment of the
   South, bear in mind that it would
   be but a mild form of a just retribution

Here is where Fort Sumter in Charles ton Harbor, South Carolina, entered the calculations of the North. At the beginning of 1861, on January 19, three months before the Battle of Fort Sumter, the Chicago Daily Tribune declared,
   There is yet a single hope for
   freedom in this crisis, but that
   hope does not rest on the North.
   If the South Carolinians would
   only make a determined assault
   upon Fort Sumpter, level
   its walls to the sea, and slaughter
   its gallant commander and
   all his men--then perhaps the
   North would arise in vindication
   of the Constitution and laws, and
   teach the South that this country
   and government were not made
   wholly for slaveholders. That is
   now almost our only hope.

In vindication of the Constitution and laws. To what was the Chicago Daily Tribune referring? On April 15, 1861, within 48 hours of the battle, the New York Times provided the answer:
   The first act in the drama which
   has terminated in the surrender
   of Fort Sumter, instead of being
   a defeat, is, when we come to
   look at its effects, a most brilliant
   success. It has thrown upon the
   Confederated States the entire responsibility
   of commencing the
   war. It has given us time to arm
   for offensive operations and to
   collect and to place before every
   Southern port a fleet sufficient to
   enforce the revenue laws ...

President-elect Abraham Lincoln would have agreed. In his letter of December 29, 1860, to James Watson Webb, editor of the New York Courier and Enquirer, Lincoln had written, "I think we should hold the forts, or retake them, as the case may be, and collect the revenue."

On April 13, 1861, as the Battle of Fort Sumter was ending, Lincoln replied (citing his own First Inaugural Address) to the concerns of a committee from the Virginia Convention,
   As I then, and therein, said, I
   now repeat: "The power confided
   to me will be used to hold, occupy,
   and possess, the property,
   and places belonging to the Government,
   and to collect the duties
   and imposts; but, beyond what is
   necessary for these objects, there
   will be no invasion--no using of
   force against, or among the people
   anywhere" ... But if, as now
   appears to be true, in pursuit of
   a purpose to drive the United
   States authority from these places,
   an unprovoked assault has
   been made upon Fort-Sumpter
   [sic], I shall hold myself at liberty
   to repossess, if I can, like places
   which had been seized before
   the Government was devolved
   upon me.

Fulfilling the wishes of the Chicago Daily Tribune s editorial, Lincoln wrote to Gustavus Fox on May 1, 1861,
   You and I both anticipated that
   the cause of the country would
   be advanced by making the attempt
   to provision Fort-Sumpter
   [sic], even if it should fail; and
   it is no small consolation now to
   feel that our anticipation is justified
   by the result.

The Northern states did not fight the Civil War to end slavery. They waged war upon the South to preserve a political union, which was enriching them through tariffs, internal improvements, and mercantilism. This goal was declared their official policy in the Crittenden-Johnson Resolutions that the U.S. Congress ad opted in July 1861:
   Resolved ... That the present deplorable
   civil war has been forced
   upon the country by the disunionists
   of the Southern States
   now in revolt against the constitutional
   Government and in arms
   around the capital; that in this
   national emergency Congress,
   banishing all feelings of mere
   passion or resentment, will recollect
   only its duty to the whole
   country; that this war is not
   waged on our part in any spirit
   of oppression, nor for any purpose
   of conquest or subjugation,
   nor purpose of overthrowing or
   interfering with the rights or established
   institutions of those
   States, but to defend and maintain
   the supremacy of the Constitution
   and to preserve the Union,
   with all the dignity, equality, and
   rights of the several States unimpaired;
   and that as soon as these
   objects are accomplished the war
   ought to cease.

In 1862, the British Quarterly Review, in its article "The American Crisis," put the Crittenden-Johnson Resolutions into plain English:
   For the contest on the part of the
   North is now undisguisedly for
   empire. The question of Slavery
   is thrown to the winds. There is
   hardly any concession in its favor
   that the South could ask which
   the North would refuse, provided
   only that the seceding States
   would re-enter the Union ...
   Away with the pretense on the
   North to dignify its cause with
   the name of freedom to the slave!

In fact, to keep the Southern states in the Union, Congress passed the Corwin Amendment--the original 13th Amendment--on March 2, 1861, which, if ratified, would have prohibited the federal government from interfering with or abolishing the "domestic institutions" of the Southern states. The Southern states would have none of it. They wanted their political and economic independence. The issue was the tariff, not slavery.

For the contest on the part of the North is now undisguisedly for empire. How would that new order, an empire for the commercial interests of Northern states, differ from the Union from which the Southern states had seceded? The answer was provided by U.S. Sen. John Sherman, brother of Gen. William T. Sherman and chairman of the Senate Finance Committee. In a speech delivered in support of a bill on monetary centralization, he proposed a new system of government that bore a strong resemblance to 20th-century fascism: "All private interests, all local interests, all banking interests, the interests of individuals, everything, should be subordinate now to the interest of the Government." That the bill's cosponsor in the House was U.S. Rep. Elbridge G. Spaulding, a New York banker, confirmed "the interest of the Government" was to enrich Northern businessmen.

As Jeffrey Rogers Hummel documents in Emancipating Slaves, Enslaving Free Men: A History of the American Civil War, Sherman's new system enriched industrialists and financiers such as Andrew Carnegie, J. Pierpont Morgan, and John D. Rockefeller, as well as a host of what are today's "leading" American families. But much of this new wealth was acquired through fraud. Repelled by the abuse and impelled to take action, Congress enacted the False Claims Act (the "Lincoln Law") on March 2, 1863, imposing penalties on companies defrauding government programs and encouraging whistle-blowers to come forward by offering them 15 to 25 percent of all recovered damages.

It was too little, too late. By then, corruption had been thoroughly institutionalized. A powerful political-military-industrial complex had come into being. As Henry S. Olcott, special investigator for the U.S. War and Navy departments, lamented in The War's Carnival of Fraud (1878),
   It is my deliberate conviction,
   based upon the inspection of
   many bureaus, and the examination
   of some thousands of witnesses,
   in every walk of life, that
   at least twenty, if not twenty-five
   percent of the entire expenditures
   during the Rebellion, was tainted
   with fraud.

At the same time, this new system was impoverishing Northern laborers, whose wages, when adjusted for inflation, had fallen by one third. When, in response to such deteriorating economic conditions, Northern workers tried to unionize and strike in Cold Springs, New York; West Point, New York; Philadelphia, Pennsylvania; and Tioga County, Pennsylvania, Lincoln directed the U.S. Army to suppress them, as he had directed the U.S. Army to suppress the Confederacy and the Plains Indians.

On November 4, 1866, Lord Acton wrote to Robert E. Lee,
   I saw in State Rights the only
   availing check upon the absolutism
   of the sovereign will, and secession
   filled me with hope, not
   as the destruction but as the redemption
   of Democracy ...
   Therefore I deemed that you were
   fighting the battles of our liberty,
   our progress, and our civilization;
   and I mourn for the stake which
   was lost at Richmond more deeply
   than I rejoice over that which
   was saved at Waterloo.

Joseph E. Fallon writes from Rye, New York, and is the author of the e-book Lincoln Uncensored, available online from Laissez Faire Books.
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Author:Fallon, Joseph E.
Date:Jun 1, 2013
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