Lecture2 - American Economic History ECN111B Why the Civil...

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http://ucdavis.econclasses.org/ECN111B glbrinkley@ucdavis.edu American Economic History – ECN111B Why the Civil War? Lecture 2
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Causes of the Civil War n According to the text, there were three potential causes of the Civil War: n Conflict between agricultural systems n Onerous tariffs n Volatility of property rights
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Onerous Tariffs n Tariffs placed on manufactures (cotton cloth) at 25% of value in 1816 (Ad Valorem tariff) n Minimum tax was 6.25 cents per yard of cotton cloth (lump sum tariff). n When the price of cotton cloth was over 25 cents, the tax was 25% of value. n When the price of cotton was less than 25 cents, the percentage tax was even higher. n Tax reached 82%. n Tax increased to 8.75 cents in 1828. n Tax decreased to 8.4 cents in 1833 n Tax minimum value ended in 1846 n Tariff imposed to: n generate national revenue n protect northern industry
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Tariff Impact on the South and Midwest n Year Ratio of Tax to price of cotton cloth n 1830-32 0.71 n 1842 1.08 n 1846 0.25 n John Calhoun estimated that the tax burden on the South was $4 per person for the 1830s. n A total of $15,000,000 transferred to the North. n The tax declined until it was essentially removed by 1857. n Manufactures taxed at the same rate as all other imports. n Tariff burden on the South had been declining for two decades prior to the beginning of the Civil War.
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Metzler Effect n The Metzler Effect refers to the economic rationale that an increase in tariffs could mean an increase in profit for the South. n
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Lecture2 - American Economic History ECN111B Why the Civil...

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