Tariff of 1789

The Tariff Act of 1789, was the first major Act passed in the United States under its present Constitution of 1789 and had two purposes as stated in Section I of the Act which reads as follows;

The Federal legislature, acting under the recently ratified US Constitution, authorized the collection of tariff and tonnage duties to meet the operating costs of the new central government, to provide funds to pay the interest and principal on revolutionary war debts inherited from the Continental Congress. It also provided a degree of protection. "The protective acts of the states furnished the experience on which the national legislators based their proceedings." The general range of duties was by no means such as would have been thought protective in later days; but the intention to protect was there.

The debates over the purpose of the tariff exposed the sectional interests at stake: Northern manufacturers favored high duties to protect industry; Southern planters desired a low tariff that would foster cheap consumer imports. The final bill extracted concessions from both interests, but delivered a distinct advantage to maritime and manufacturing regions of the country.

Representative James Madison of Virginia navigated to passage, but was unable to insert provisions that would have discriminated against British imports and shift the carrying trade to French and American vessels.

The Tariff Bill was passed in the House by a vote of 31-19 on July 1, 1789; the resultant enrolled Bill was signed by the Speaker of the House and the President of the Senate on July 2, 1789; and President Washington signed the Act in law on July 4, 1789.

The American Revolution was followed by an economic reorganization, which carried in its wake a period of uncertainty and hard times. During the conflict, labor and investment had been diverted from agriculture and legitimate trade to manufacturing and privateer. Men had gone into occupations that ceased with the end of the war. Lowered prices, resulting from the cessation of war demands, in combination with the importation of the cheaper goods of Europe, were fast ruining such infant manufacturing concerns as had sprung up during the war, some of which were at a comparative disadvantage with the resumption of normal foreign trading relations.

Another factor which made the situation even more distressing was the British Navigation Acts. The only clause in the treaty of peace (1783) concerning commerce was a stipulation guaranteeing that the navigation of the Mississippi would be forever free to the United States. John Jay had tried to secure some reciprocal trade provisions with Great Britain but without result. Pitt, in 1783, introduced a bill into the British Parliament providing for free trade between the United States and the British colonies, but instead of passing the bill, Parliament enacted the British Navigation Act 1783, which admitted only British-built ships and manned ships to the ports of the West Indies and imposed heavy tonnage dues upon American ships in other British ports. It was amplified in 1786 by another act designed to prevent the fraudulent registration of American vessels and by still another in 1787, which prohibited the importation of American goods by way of foreign islands. The favorable features of the old Navigation Acts that had granted bounties and reserved the English markets in certain cases to colonial products were gone; the unfavorable ones were left. The British market was further curtailed by the depression there after 1783. Although the French treaty of 1778 had promised "perfect equality and reciprocity" in commercial relations, it was found impossible to make a commercial treaty on that basis. Spain demanded, as the price for reciprocal trading relations, a surrender by the United States for 25 years the right of navigating the Mississippi, a price that the New England merchants would have been glad to pay.

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