History of Cotton Tariff In America - Research Paper Example

History of Cotton Tariff In America No one knows how old is cotton, yet we all know that Cotton grew wild in several part of the world, in warm climates and most of the cotton growth is in U.S. The major states known for producing cottons are Alabama, Arizona, Arkansas, California, Georgia, Louisiana, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee and Texas, Florida, Kansas and Virginia (cotton.org.) However, it was generally believed that cultivation of cotton began in India. Lessons in world history taught us that cotton cloth was brought to Europe by the Arab Merchants about 800 A.D. In the documented sightings of Columbus, the Coronado Cotton was grown in 1500’s by American Indians ,by 1556, the Spaniards raised cotton crop in Florida( Story of Cotton, n.d). In the early 1600’s, cotton was introduced to North America and the first seed was planted by a colonist along the James River in Virginia. During the Height of British Empire in England ( around early 1700s) importation and manufacturing from cloth of cotton is prohibited, to protect the powerful English sheep and wool industry ( story of cotton,n.d.) The many restrictions kept the cotton industry from expanding to the American colonies. According to cottonsjourney.com, by 1815, cotton had become the most popular agricultural export, so in 1816 a tariff must be imposed to protect cotton as well and other agricultural product. By 1819, America is pushed to impose for protective tariff because of the credit crisis sparked by a sharp drop in world agriculture prices, this had to be done so as to minimize the threat of imported articles came from Europe( Hymand, et.al, 2006) . In 1820, a house bill was passed to propose an increase of 5% for the entire tariff schedule and even higher duties in cotton, finished clothing, wool cloth, iron and hemp. Good thing, it was ignored by the house , therefore, not enacted.( taxanalysts.com, n.d). The Middle and western supports the tariff, while the powerful mercantile interest and budding manufacturers of New England have split evenly over the bill. Since the south is lacking in industrial base, obviously it voted solidly against the bill. However, this meant going against the demographic tide, which is on its way in becoming a regional minority in congress. The states below the Mason Dixon line the Ohio River settle to 47% of the population in 1810 but in 10 years later its growth was only to 45% ( taxanalysts.com) Based on the Census of 1820, there was a clamor for gaining advantage of the West and Middle Atlantic regions in the Congressional reappointment, where support for a protective tariff grew. In fact, since 1816, 8 out of 12 senate seats usually represented pro-tariff states. So much was the concern for cotton that in ” In 1828 ,under the administration of John Adams Quincy, Jackson supporters tried to influence people of the government to raise tariffs on hemp, wool, flaw, liquor, and imported textiles”( taxanalysts.com) The tariff improved the rate on manufactured goods by 50% of their value which offered greater protection for New England cloth producers. Unfortunately, the south didn’t benefit for the entire scheme and stood by higher prices on goods that the region did not produce. The tariff also threatened to reduce the incoming flow of British products; it made things difficult for the British as they had to pay for the cotton that they have imported from the south. The economy of Calhoun’s South Carolina during that time was exclusively a slave economy( and agricultural too) since it was producing agricultural products such as cotton, rice and indigo. Because of this, South Carolina depends on the imports of the north. The south’s raw cotton: a 40% tariff on finished cotton goods have led higher than 40% higher consumer prices( taxanalysts.com). This resulted to 40% fewer sales since the buyers had less money to spend following the panic of 1819. Calhoun’s fight against economic policies deeply affected the south. According to some critics, Calhoun thought that tariffs redistributed wealth from northern manufacturers to south. Some factions were anxious that federal powers may be used to repress minorities( taxanalysts.com). In July 1832, Congress passed the legislation that caused the lowering of tariff, yet retained the high 1828 rates on manufactured cloth and iron. In November, “South Carolina Nullification announced that Tariffs of 1828 and 1832 are unconstitutional “ (taxanalysts.com).This resulted to forbidding collection of customs duties within the state. By 1846, Robert Walker , a Mississippian and Secretary of the Treasury for the Democratic Polk administration finally resolved to pass Walker Tariff (the act slashed all duties to the minimum) that is much needed for revenue. Democrats lowered the tariffs and economic panic hit soon “precipitating a fall in their imports in the wake of recession that followed after government revenues drop by 30% in response the nascent Republican Party have called for higher Tariffs “(1818-1860, taxanalysts.com). All throughout history, tariffs come and go as political parties imposed different tariffs. Today, the cotton industry has come a long way in terms of being more organized, less political and more productive. In fact, the last two years have seen fundamental changes in the U.S. cotton industry. The National Cotton Domestic mill use of cotton has declined from 11.4 million bales annually to less than 7.0 million bales. The U.S. crop of about 18-19 million bales (a decline compared to the 1991-1996 average) has looked increasingly to export markets” as domestic textile manufacturers have been driven out of business by cheap textile imports, many of which enter our market illegally or have been spurred by artificially low exchange rates”( Hymand et.al, 2006) The whole cotton industry is immense, in fact, “The industry and its suppliers, together with the cotton product manufacturers, account for one job of every thirteen in the nation. Annual cotton production is valued at more than $5 billion at the farm gate” ( National Cotton Council of America, 2001). In addition to the fiber, “cottonseed products are used for livestock feed, and cottonseed oil is used for food products ranging from margarine to salad dressing “(National Cotton Coucil) While cotton's farm gate value is significant, a more meaningful measure of cotton's value to the U.S. economy is its retail value. Taken collectively, the business revenue generated by cotton and its products in the U.S. economy is estimated” to be in excess of $120 billion annually”( Hymand et.al 2006) Cotton stands above all other crops in its creation of jobs and its contribution to the U.S. economy. References: "1816-1860: The Second American Party System and the Tariff." taxanalysts.com: Home Page -- Where Better Tax Law and Smarter Tax Debate Begin. http://www.taxanalysts.com/museum/ 1816-1860.htm (accessed March 8, 2010) "Cotton's Journey - The Story of Cotton - HISTORY." Welcome to Northcenters.com. http://www.cottonsjourney.com/Storyofcotton/page2.asp (accessed March 8, 2010). Hymand, Barbara, P.J. Van Blokland, and Jackie White. ( April 2006) "Cutting Back Tariffs – A Plan for America." Indian River research and Education Center. irrec.ifas.ufl.edu/files/student _ work/06_6_%20Hyman.pdf (accessed March 8, 2010). Nelson, T.Cotton. "Trade and U.S. Cotton - Facts and Objectives." National Cotton Council of America. http://www.cotton.org/news/releases/2003/cotton-trade.cfm (accessed March 8, 2010). "The Story of Cotton- Where Cotton Grows." National Cotton Council of America. http://www.cotton.org/pubs/cottoncounts/story/where.cfm (accessed March 8, 2010). Read More