Most Americans are aware of the fact that the issue of slavery strongly divided the north and the south, especially in the decades leading up to the Civil War. With those were not the only issues that divided North and South. Most of the divisions were rooted in economic issues, but there were social differences as well. Heavy immigration into the northern states altered the nature of northern society, whereas largely because of slavery, immigration into the southern states was minimal. Underneath all of the differences was the issue of states rights, first elucidated in the Kentucky and Virginia Resolutions of the Jeffersonian era. The fundamental question was, how far could the federal government go in imposing its will upon the states? Did the states have to sit by as the federal government spent money for improvements in one region, while neglecting another. The money in the federal coffers that came mostly from tariffs and land sales (there was no national income tax yet) was to be shared, was it not? The issues discussed below illustrate the sharp divisions between the two sections of the country.

TRADE AND TARIFFS

Tariffs—duties levied on imported goods—have two purposes: to raise revenue and protect American industry. The raising of revenue is deemed necessary to support the cost of protecting America's ports and boundaries. A nation must regulate what is imported, and that regulation costs money. Today, for example, they help the defray the expense of customs offices at ports and airports, and those customs collectors had been in seaports since colonial times. Revenue tariffs, however, have small individual costs and do not appreciably affect the cost of imported goods to the consumer. There considered a normal part of doing business with another country.

Protective tariffs, on the other hand, are designed to raise the price of imported goods in order to encourage the purchase of comparable domestic products. High protective tariffs do tend to support domestic production, but they also hurt trade and are thus opposed by commercial traders—those in the import-export business. Since high protective tariffs are often reciprocated by other nations (on different products), high tariffs tend to stifle trade in general. On the other hand, because manufacturing in the U.S. was not as advanced as in England during the early 19th century, manufacturing interests favored protectionism.  Consumers and farmers were hur, however, by higher prices on taxed imports, and agricultural areas eventually came to reject protectionism. Since manufacturing was more and more centered in the North as cotton and grain production boomed in the South and West, tariffs divided the country along regional lines. The nullification controversy mentioned in the section on Jacksonian Democracy illustrates the problem.

Tariffs and international trade issues continue to be controversial political issues to this day. In addition to retaliatory tariff actions, United States government has protested against other countries providing subsidies to industries that export heavily to the United States. For example, if a country subsidizes its steel industry by reducing corporate taxes, that will enable exports of steel products to the United States to be sold at competitive prices, which hurts American business.

Like other issues in the Era of Good Feelings, the tariff controversy was agitated by both the War of 1812 and the Panic of 1819.  The Tariff Act of 1816 was enacted to protect American manufacturing against British postwar textile imports and promote national economic self-sufficiency.  The Panic of 1819 encouraged high tariffs in order to protect American jobs and businesses.  Except for the commercial interests of New England, high tariffs were  at first supported in every section of the country.  In time, the South and Southwest turned against protective tariffs because they increased the costs of imports and inhibited the export of southern cotton. As the pace of manufacturing increased, the demand for increased protectionism grew, sharpening the differences between different areas of the country.

Summary of Tariffs

• 1607-1789:  British imperial rules control tariffs and trade through the navigation acts. Tariffs in colonial period were for revenue purposes, and were mildly protectionist. They were based on the earlier philosophy of mercantilism.
• 1789-1816:  Under the Constitution Congress has the sole power to levy tariffs.  Early tariffs were designed chiefly for revenue with moderate protectionism. 
• 1816-1828:  The rise of protectionism. 
  • Industry needs protection after the War of 1812 war as Great Britain floods the American market with their exports
  • The tariff of 1816 responds to British actions as if heavily protectionist.
  • 1818. Tariffs gradually raises rates on manufactures as more and more manufactured goods are produced in America.
  • 1824  High tariffs are passed on wool, cotton, iron, and other finished products.
• 1828  The Tariff of Abominations leads to nullification crisis of 1832; highest level of protectionism before Civil War
• 1832-1860:  Duties on imports are gradually lowered as protest from the South and West escalate.
• 1832-33:  In response the nullification controversy, a compromise was reached with South Carolina and tariffs are lowered.
• 1842: The tariff passed by Congressional Whigs raises duties back up to 1832 levels.
• 1846:  The Walker Tariff (Democratic) mainly for revenue is passed.
• 1857:  Ratesare lowered further, and the free list (articles on which no duties are charged) is enlarged.

INTERNAL IMPROVEMENTS:

The older sections of the country, in New England and along the Atlantic coast, has spent a considerable amount of state revenue to improve facilities such as roads and harbors. They were not anxious to see the federal government spend money on what they had already done with their own revenue. On the other hand, the South and West, recently settled and less heavily populated, needed roads and canals in order to get their goods to market. With larger areas to cover, such improvements were expensive.

In 1817 President Madison was of the belief that a constitutional amendment was necessary in order for the United States to get into the business of building roads and canals. John C Calhoun, still a nationalist who had not yet adopted the states rights position as he did later, argued that internal improvements could be justified under the "general welfare" clause of the preamble to the Constitution. Furthermore, as Secretary of War, he felt that they were a military necessity, needed for the nation's defense. Treasury Secretary Albert Gallatin first proposed building a national road in 1807, and a National Road Bill was passed in 1808. But funds were not available at the time. The National Road (also known as the Cumberland Road) was built by the federal government 1811 and 1837. The road began in the Baltimore region and terminated in Vandalia. Illinois.

LAND POLICY

In the early 1800s liberal land acts kept the prices on public land low and required only minimum size units for sale. Land sales boomed and then slumped again during the war of eighteenth twelve. They rose again following the war until 1818, and then the Panic of 1819 saw agricultural prices slump precipitously, which resulted in the destruction of many farms. Farmers in the West, wanting to expand their holdings, favored a cheap land policy, while in the North it was feared that low land prices would drain off cheap labor.
The South was worried about competition from cotton producers who were opening up plantations in the unsubtle lands of the Southwest. As land sales expanded west,, that enhanced Western demands for internal improvements such as the National Road.
The sale of public land by the government was used to raise revenue, to develop the country further, to attract immigrants, and so on. Settlers of course wanted cheap land, and sodas speculators who bought land cheap, and as it was developed, could sell it for higher prices. The settled areas of the Northeast, where land interests were established, wanted to maximize the profit to the government rather than sell land at cheap prices.
The bottom line was a sales boom accompanied by a conflict, in which the East wanted high land prices for revenue and the West wanted cheap land for speculation and expansion.

THE NATIONAL BANK.

The National Bank was another issue that caused a controversy within the country.

The First National Bank was created under Secretary of the Treasury Alexander Hamilton in 1791. The purpose of the bank was to help finance public projects of the United States government, and to enable government to do financial business easily. The bank charter was not renewed in 1811 for a variety of reasons. Some opponents feared that it would compete unfairly with state banks, and others complained that much of its stock was foreign owned. The absence of the financial institution, however, resulted in a financial model during the ar of 1812, which had to be financed by other means.

Because of that experience Congress created a second Bank of the United States in 1816, and arguments on both sides were carried out by John C. Calhoun, Henry Clay, and Daniel Webster, three of the most important political figures of the first half of the 19th century. The chief function of the new National Bank was to control the value of money. State banks, whic had proliferated, could issue their own banknotes with little capital support, but when those notes came into the possession of the federal government, as through land sales, the National Bank could demand of the state banks that those notes be redeemed in specie, or hard currency, something that state banks often lacked. The policy often led to bank failures.

As with the other issues mentioned above, the sections of the country were split over the bank. Westerners in particular were opposed to the tight money practices imposed by that National Bank, because they wanted easy money for the land speculation and other developments. Farmers opposed the National Bank because it worked against inflation. Farmers opposed the National Bank because it worked against inflation. Since farmers often had to borrow money early in the planting season, which they would repay by the sale of crops during the harvest season months later, they favored an inflationary policy which would raise the price of their crops at sale time, making it easier for them to repay their loans. An especially tight money policy would lead to deflation, which would harm anybody who invested for profit, hoping to pay off their loans and make a profit at a later date.

The argument in favor of the banks was that since state banks could not control or would not control the value of their notes, a national bank was necessary in order to bring order to the financial system. The practical reason for the existence of the National Bank was to enable the United States government to conduct its financial business in an orderly manner. For example, when Jefferson purchased the Louisiana Territory from France, the transaction was handled through the National Bank. John Marshall’s decision in M’Culloch v. Maryland was important in establishing the constitutionality of the bank. Maryland headed attempted to prevent the National Bank from operating in that state, which would've challenged the right of the federal government to created in the first place. Marshall's court argued that the necessary and proper cause of the Constitution was sufficient justification for the government to create a national bank.

Treasury Secretary Alexander Dallas organize the Second Bank of the United States in 1816 with a 20 year charter. He brought the nation's finances back under control after the turmoil of the war years. It was that Second Bank that caused the controversy surrounding the election of 1832, when President Andrew Jackson was bitterly opposed to the bank. Supporters of the bank attempted to extend its charter with the bill designed to embarrass Jackson, but he vetoed the bill, and because opposition the bank was strong in the areas that supported Jackson, the veto was sustained. Thus the national government lacked a banking system until the Federal Reserve System was created in 1913.

THE DIVISIVE ISSUE OF SLAVERY

Slavery has been called with good reason the great paradox of American history. Historians have often wondered how a nation built on the premise that “all men are created equal” could at the same time have endorsed the enslavement of Africans. It should be noted that, as one historian has said, “Slavery was old when Moses was young.” Until the Age of Enlightenment—the 18th-centurythe moral issues of slavery were hardly raised. But as more and more discussion of individual freedom and the nature of human institutions took place, critics began to view slavery is a moral shortcoming. It was outlawed in Great Britain before the American Revolution and throughout the Empire by the 1830s.

While there were squabbles over tariff, bank, and land policies, slavery was the most divisive sectional issue. This issue generated surprisingly little controversy from 1789 to 1819. Slave importations increased in the 1790s, but the slave trade was quietly abolished in 1808. Free and slave states entered the Union in equal numbers (11 each in 1819), and slave-produced cotton became king in the South. Southerners ardently defended slavery while most northerners were indifferent, believing slavery was a local issue. Many westerners, especially native southerners, also supported slavery. For many, the Missouri Compromise of 1820 settled the issue more or less for good.

While the young nation was preoccupied with organizing its government and sorting out the nature of American democracy, the issue of slavery continued to be treated as a political or economic issue. Most of the founding fathers—Washington, Jefferson, Madison, Adams, Franklin, Hamilton—all understood that slavery was an institution that brought no glory to the country, and each of them feared to some degree the price that the country would eventually pay for having embraced slavery. As Jefferson said in 1820, “We have the wolf by the ear, and we can neither hold him, nor safely let him go.”

But in the late 1820s the abolitionist movement began and placed the issue in a different context. Slavery was no longer merely politically troubling or economically slanted: slavery began to be seen as a moral evil, and slave owners were seen as sinners. In response to the attacks of the abolitionists, Southern slave owners and those who supported the institution had three choices: they could ignore the abolitionists and continue to operate as if nothing had happened; second, some could—and did—begin to free their slaves, so that a substantial number of free blacks lived in the South in 1860; third, the most ardent supporters of the institution could claim that the charges were false, and that slavery was a positive good—God's order of things. This was the approach taken by the most radical slave owners, those who eventually became willing to see the country split rather than to give up their peculiar institution

Slavery or remained a moral, political and economic issue that dominated American life until the end of the Civil War, and its legacy has continued into modern times. Although the issue tended to follow geographical lines, opinion was divided in all sections of country. Many southerners opposed slavery but stuck with it because of invested capital in slaves. Many Northerners opposed slavery but were afraid of a flood of cheap labor if the slaves were freed. Southern non-slave owning farmers resented unfair competition from slave labor. In short, it posed a dilemma for anyone aware of its dark presence, and as is well known, it took a great war to finally end it.

1819: AFRICAN SLAVE TRADE—$50 bounty granted to informers of illegal slaves being imported when seized;
1820: Foreign Slave Trade declared piracy; death penalty assigned for U.S. citizens engaged in slave trade. 
1820: Missouri Compromise

States' Rights. Sometimes sectional differences in the country could be seen in terms of individual states' rights. The American Revolution had been fought against centralized power, and in the great debate over the Constitution, those who opposed ratification had also feared an excess of centralized—or federal—power. The Kentucky and Virginia Resolutions of 1798 in response to the Sedition Act of that year were a manifestation of states' rights. The South Carolina protest against what they called the “tariff of abominations” in 1828 was an individual states' rights issue, as was the nullification crisis of 1832. Sometimes the states or regions may have had a strong case. For example, in the case of protective tariffs, which were imposed to support northern industry in the face of European competition, a case could be made that the Constitution was designed “to promote the general welfare” of the entire country, and not the particular welfare of a certain section.

Leaders like Alexander Hamilton, however, had repeatedly made the case that an order for America to be strong, it needed to develop its own industry and commerce without being dependent upon European nations. In any case, instead of issuing its ordinance of nullification, South Carolina might well have challenged the constitutionality of the tariff in the federal courts. Whether they would have won their case remains to be seen; it is likely that John Marshall, who supported both judicial nationalism and economic nationalism, as when he declared that the federal government had sole control over interstate commerce, might well have ruled against South Carolina. But the legitimacy of the tariff was never tested in the courts.

The states' rights issue was sharply outlined in the famous debate between Senator Robert Hayne of South Carolina and Daniel Webster of Massachusetts in 1830. The question was, did the federal government—the union—or did the states have the last word in political power. Jackson had declared in his proclamation to the people of South Carolina at the right of the state to nullify or oppose federal law was “impracticable absurdity.” and Daniel Webster is ringing oratory extolled the virtues of the Union, which he described as “dear to every American heart.” 1861 and thousands of Yankee young men were willing to go off and fight for the principal of the Union, just as many Southern boys were fighting for what they believe to be Southern states' rights.

Life on a Southern Plantation