Panic of 1857 Tariff Act of 1857

Panic of 1857 Tariff Act of 1857

The Tariff of 1857 was a major tax reduction in the United States. It created a mid-century low point for tariffs. It amended the Walker Tariff of 1846 by lowering tax rates around 17 percent.

Robert Mercer Taliaferro Hunter of Virginia authored the Tariff of 1857. The bill was a response to a federal budget surplus during the mid 1850s. Hunter planned to distribute this surplus in the form of a tax cut.

Supporters of the bill came mostly from Southern and agricultural states. These states tended to depend on exports and thus were inclined to support free trade. A handful of New England wool manufacturers also supported the bill. A series of political setbacks for the protectionist movement in the early 1850s had prompted the wool manufacturers to forego protection for their own goods in exchange for reduced tariffs on imported raw wool.

The bill did not represent a victory of one section over the other, and didn’t produce a clear division between parties. Its support was drawn from all political parties, representatives of northern merchants, manufacturers, railroad interests; and southern farmers and planters. Opposition for the bill came largely from two groups: the iron manufacturers of Pennsylvania and the woolgrowers of New England and the West.

Traditionally protectionist constituencies such as iron, glass and sheep farmers predictably opposed the bill.  When the Panic of 1857 hit the US later that year, protectionists the new Tariff schedule. Economists today repudiate this theory. These arguments did gain some traction at the time, however, and basically this straw man argument revived the protectionist movement. This revival led to renewed calls for increased tariffs.

The Tariff Act of 1857’s tax cuts lasted only three years. In 1861, the country reversed direction back toward protectionism, under the Morrill Tariff.