Vital Signs

The North's Southern Cash Cow

Contrary to the claims of Marxism, economics does not determine the political structure of a country; rather, the political structure of a country determines its economic system.  The Soviet Union was proof of that.  In the case of the U.S. government, this can be seen in the adoption of tariffs, beginning in 1789.  The tariffs served political objectives, not economic needs.  More often than not, they worked against the economic interests of the country as a whole.  Tariffs were adopted because Washington, Hamilton, and others believed the country’s long-term security required the United States to be economically, as well as politically, independent from the British.  The goal of the tariff of 1789, and succeeding tariffs, was to build up local industries to supply local needs and reduce American dependence on British manufacturers.  But as with all tariffs, somebody won, and somebody lost.

By 1861, the North was producing goods inferior to British wares and selling them to a captive American market at higher prices.  The tariffs collected on British-made goods were being used to fund “internal improvements,” a practice known as the American System.  The federal government simply gave public funds to private companies to build the country’s infrastructure: roads, railroads, turnpikes, harbors, and canals.  These internal improvements...

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