Jan

7

No one in the 18th century was a "free" trader. Even after the Treaty of Paris the British continued to insist that all exports from the new United States to Britain had to be carried in British ships. The Spanish and French had similar restrictions. (It was those same restraints on trade with the world that sparked Simon Bolivar's revolt.) The United States and the Dutch were the only commercial countries that had "open" trade laws, that permitted ships from any nation to land goods on their shores and carry them away without restriction other than the payment of an ad valorem duty. Tariffs were NOT "the nation's primary source of revenue for 150 years since its founding". They were the Federal government's primary source but only if you exclude sales of Federal lands. (Jackson's fight with the Second Bank of the United States really boiled down to an argument over how much those land sales would be paid for in IOUs; Jackson wanted specie only.)

The nation's primary source of government revenue, as a whole, was from property taxes and excises - i.e. sin taxes. As for the founders' reasoning on the question of "cheap imports", that was the least of their fears. The only debate among the founders was over how fast trade could be re-established after the ruins of the Revolutionary War. The Southerners were furious at the New Englanders for not paying off the debts owed to the American Tories (most of them New Yorkers) because that was the Brits' sticking point; the restrictions on American exports to Britain - which came almost exlusively from the Carolinas and Georgia - would not be lifted until the American loyalists debts and their claims on their confiscated properties were paid.

The New Englanders, on the other hand, were angry because the peace made by the Southerners (John Jay, being the most important of the Commissioners) had left their fishing rights to the Grand Banks unprotected. All the Americans were upset because the Brits maintained their forts on the Ohio and the Great Lakes and their alliances with the Indians, and that made it impossible for people to safely settle the Ohio country, even when they had treaty titles to the land. That especially upset Washington and Jefferson and everyone else because titles to the "Western" lands were the principal speculation of the Founders as a whole. The notion that the Founders understood that we Americans "had the technology, labor force and one of the largest consumer markets" is pure hip-hop-hooey. In terms of trade volumes, Jamaica and Cuba alone were the equal of Canada and the United States in 1790. Except for ship-building, the U.S. had zero technology; the first things enterprising American technologists did were to steal British patents and import German "mechanics".

The most likely "truth" - i.e. successful political lie - that will emerge from this trade depression is the notion that mercantilism really works. It will appeal to conservatives and liberals alike who want to "protect American jobs". That is much, much easier than doing what Washington did, which is to establish the U.S. dollar as a currency backed by specie and not subject to political manipulation and to create our domestic credit markets. That was the purpose of Hamilton's tariff, not protectionism.


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