Today’s post at the Marotta On Money blog is one of those incredibly rare pieces that shows the real reason that the Southern states seceded from the union – punishing tariffs designed to enrich the North at the expense of the South. There are very few men who have the kind of broad understanding of the issues and of economics to see beyond the prescribed slavery-is-the-only-cause story, but Mr. Marotta does just that. Here is a key section from the post, but please take a few minutes to read the entire post – it is very informative and well-written.
As early as the Revolutionary War, the South primarily produced cotton, rice, sugar, indigo and tobacco. The North purchased these raw materials and turned them into manufactured goods. By 1828, foreign manufactured goods faced high import taxes. Foreign raw materials, however, were free of tariffs.
Thus the domestic manufacturing industries of the North benefited twice, once as the producers enjoying the protection of high manufacturing tariffs and once as consumers with a free raw materials market. The raw materials industries of the South were left to struggle against foreign competition.
Because manufactured goods were not produced in the South, they had to either be imported or shipped down from the North. Either way, a large expense, be it shipping fees or the federal tariff, was added to the price of manufactured goods only for Southerners. Because importation was often cheaper than shipping from the North, the South paid most of the federal tariffs.
Much of the tariff revenue collected from Southern consumers was used to build railroads and canals in the North. Between 1830 and 1850, 30,000 miles of track was laid. At its best, these tracks benefited the North. Much of it had no economic effect at all. Many of the schemes to lay track were simply a way to get government subsidies. Fraud and corruption were rampant.
With most of the tariff revenue collected in the South and then spent in the North, the South rightly felt exploited. At the time, 90% of the federal government’s annual revenue came from these taxes on imports.
Historians Paul Collier and Anke Hoeffer found that a few common factors increase the likelihood of secession in a region: lower wages, an economy based on raw materials and external exploitation. Although popular movies emphasize slavery as a cause of the Civil War, the war best fits a psycho-historical model of the South rebelling against Northern exploitation.
Many Americans do not understand this fact. A non-slave-owning Southern merchant angered over yet another proposed tariff act does not make a compelling scene in a movie. However, that would be closer to the original cause of the Civil War than any scene of slaves picking cotton.