The development of core capitalism in the antebellum United States: tariff politics and class struggle in an upwardly mobile semiperiphery


Christopher Chase-Dunn

in Albert J. Bergesen (ed.) Studies of the Modern World-System.

New York: Academic Press, 1980



In the context of an expanding and deepening capitalist world-economy, "national development" can be understood as upward mobility in the hierarchical division of labor between the core and the periphery. Most areas that are incorporated into the expanding world-economy become organized as peripheries and are unable to escape this position. The process of peripheralization, or as Andre Gunder Frank calls it, the "development of underdevelopment," reproduces the structures that perpetuate peripheral capitalism and block the emergence of core capitalism. Occasionally, however, a nation is able to overcome the forces of peripheralization and develop core activities by which it reorganizes its relationship to the larger world-economy.

In the late sixteenth and early seventeenth centuries, core capitalist manufacturers and farmers in semiperipheral England were able to recapture the home market from core producers in the United Provinces. This was the beginning of England's long rise to world hegemony culminating in the nineteenth century. Similarly, shipbuilders and merchants of New England and the middle colonies in the eighteenth century were able to begin the process of capital accumulation in types of production that allowed them to compete with producers of core products in England. The later rise of the United States to core status and world hegemony stems from these developments.

This chapter summarizes recent work, which reinterprets the original successes of the New England merchants and shipbuilders from the world system perspective, but its main task is to investigate the struggles in the antebellum period (1815-1860), which allowed U.S. core producers to expand and attain political hegemony in the Federal state. It is the story of core production and how the controllers of core production struggle for sufficient state power to realize their coreness over the long haul. The particular focus of this investigation is the politics of the import tariff. Tariff politics are one reflection the class forces that were contending for state power in the antebellum period. Domestic core producers seeking to compete with British products in the home market needed tariff protection. Peripheral producers (exporting raw materials to England and importing manufactured goods) opposed tariffs because they raised the price of the imports and because they feared British retaliation. Thus, the conflict that eventually led to the Civil War was not "sectional" except insofar as geography contributed to the emergence of classes that had contradictory interests vis á vis the world-economy.1  This class struggle between core capitalists and peripheral capitalists within the United States is the focus of this paper. The problematic here is not, then, the emergence of core activities, but rather their survival. The establishment of shipbuilding firms and textile factories in New England did not inexorably lead to the rise and triumph of core capitalism, but rather the forces of peripheral capitalism and competing interests in England constantly challenged the very survival of these core producers.


Definitions of Core and Peripheral Types of Production


Immanuel Wallerstein's world-system perspective involves a reinterpretation of the nature of capitalism. For Wallerstein, the capitalist system is constituted by an economic division of labor between core areas and peripheral areas. The political side of capitalism is the institution of unequal and competing nation-states which political scientists call the "international system." The capitalist world-economy has expanded and deepened since its emergence in Europe in the long sixteenth century, but its basic nature has not changed (Chase-Dunn and Rubinson, 1977).

Core areas of the system are areas where core types of production are most concentrated. Peripheral areas are areas where peripheral production is most concentrated. At the most analytic level, core activities are those types of production that employ relatively capital-intensive techniques and

utilize skilled, highly paid labor. Peripheral activities are those types of production that use relatively labor-intensive techniques and employ coerced, low-wage labor. At a less abstract level, we can usually identify core production as the production of highly processed goods. But this is not always the

case. As Arghiri Emmanuel (1972) has pointed out, textile manufacturing, a key core activity in the nineteenth century, has become a peripheral activity in the twentieth century relative to the capital-intensive production currently occurring in core. Similarly, peripheral activities cannot always be identified in terms of the production of raw materials. Wheat production in the twentieth-century United States is more capital intensive than much manufacturing activity occurring in the contemporary periphery.

Peripheral production often creates a class of merchants in the periphery who exchange peripheral products for core imports. These merchants align themselves with the political interests of peripheral producers and the core areas for which they are producing. Thus, they often oppose the development of domestic core activities that would threaten their import-export business. These mediators of the core-periphery exchange occasionally have reason to support the development of core activities in peripheral areas, however. These exceptions are worthy of attention, especially in the case under investigation.

Wallerstein (1978) argues that there are no semiperipheral activities as such, but rather there are semiperipheral states that incorporate within their boundaries a relatively equal mix of core and peripheral types of production. Upwardly mobile semiperipheral states are ones in which core producers are in the ascendance, while downwardly mobile semiperipheral states are dominated by peripheral producers or former core producers who were pushed out of the world market. The state in the semiperiphery is more crucial than in core or peripheral areas, and class struggle for the control of

the state is intense because of the very contradictory interests of the core producers and peripheral producers.

The conceptualization of classes utilized in this study focuses on production relations that are both national and worldwide. Arghiri Emmanuel's (1972) theory of unequal exchange provides a basis for understanding world classes that is grounded in the production and distribution of surplus

value. This theory implies that wage differentials beyond differences in productivity create unequal exchange between core states and peripheral areas of the world economy, and that this affects the interests of classes. Nicos Poulantzas (1975) has argued that class position is determined not only by

the relationship between the direct producer and his or her immediate overseer, but also by the political, legal, organizational, and ideological structures in which each producer is located. The state, then, is a major constituent of production relations, and, in the world-economy, one's relationship

to states (foreign and domestic)" is an important determinant of class position. I would argue that the wage differentials, which cause unequal exchange, are a consequence of class struggle and political processes that are not exogenous to capitalist development, but are rather an integral part of it.


The Origins of Core Capitalism in North America


From the world-system point of view, one of the main effects of the capital accumulation process is to reproduce the core-periphery division of labor through unequal development. The mechanisms by which the "development of underdevelopment" occurs have been studied in operation in Eastern Europe, Latin America, Asia, and Africa. Yet some areas have managed to escape the process of peripheralization.2 Although a general explanation for these exceptions has not yet been formulated, there are case studies that form the basis for a theoretical understanding.3

A great deal has been written about the development of capitalism in North America, and much of this has had an implicitly comparative perspective. It has been asserted that the protestant ethic of the Puritans inclined them toward thrift and investment, and that the democratic ideas of the Glorious Revolution in England encouraged those bold embattled farmers to resist exploitation. These ideas, it is held, led to the creation of a new society in which individualism and competitive capitalism expanded unfettered by the feudal remnants of the Old World. While it would be unwise to neglect the effects of ideology, the world-systems perspective directs us to the institutional and structural conditions under which such ideologies contribute to social development. Not all Puritans, and not all English subjects, were able to establish core industries in the late seventeenth and early eighteenth centuries.

Karl Marx understood that the colonists of North America did not arrive empty handed. They brought with them a recipe for the creation of a purified form of capitalism.


In these colonies, and especially in those which produced only merchandise such as to-

bacco, cotton, sugar, etc. and not usual food stuffs, where, right from the start, the colo-

nists did not seek subsistence but set up a business. ...They did not act like the Ger-

mans, who settled Germany in order to make their home there, but like people who,

driven by motives of bourgeois production, wanted to produce commodities, and their

point of view was, from the outset, determined not by the product but by the sale of the

product [Marx, 1863/1968:239; italics in the original].


Samir Amin (1976) argues that "simple commodity production"4 was established in North America and allowed to develop unfettered by the existence of feudal remnants which survived in European society But he distinguishes between peripheral capitalism, which developed under the influence of the

core, and the proto-core capitalism, which developed independently of the core. Wallerstein (1980) points out that the colonists of New England did not produce exports for the core during the first 40 years of their existence. Instead, simple commodity production developed without regard to the

core-periphery division of labor.

Andre Gunder Frank (1979) argues that it was the combination of a relatively egalitarian distribution of land (with most farmers engaged in both subsistence and commodity production) and the "benign neglect" of British mercantile policy during the turmoil of the Glorious Revolution and

its aftermath that allowed core capitalism to develop in New England. He contends that an agrarian class structure composed mostly of yeomen is a necessary, but sufficient, condition for the emergence of core capitalism. Other peripheral areas, such as Costa Rica, the Spanish West Indies, Argentina, and Jamaica {before its development as a sugar island} as well as Canada, had a yeomanry without developing core industry.5 Such a class structure provides the basis for the development of a diversified domestic market for core commodities. This potential home market, however, does not automatically lead to the development of core industries. In areas where there is a strong colonial administration, industries that are potential competitor with producers in the mother country are discouraged. In addition, merchants mediating the core-periphery exchange often oppose the development of domestic core industries.

Why did this not happen in New England? Wallerstein {1980} argues that the key core industry which developed in seventeenth century New England was the shipbuilding industry and its associated fishing industry and carrying trade. How and why was the shipbuilding industry able to develop in New England, and why did it not develop elsewhere in the periphery? Wallerstein agrees with Frank that part of the answer is benign neglect. The British were preoccupied with political struggles at home; this prevented them from realizing their mercantile grand plan to develop colonies that would enrich the mother country .The wave of colonization, which started under the Tudors, developed with little direct interference-or support.

In the southern colonies and the British West Indies, soil and climate facilitated the creation of classical peripheral capitalism using coerced labor {slaves} to produce agricultural commodities for export to the core. But in the less hospitable North, the production of staple exports was much less

profitable. In New England, poor soil and climate were capable of sustaining only subsistence production and production for the local market on small owner-worked farms. Thus, the agrarian class structure of New England was characterized by a relatively equal distribution of land tenure and

income. In the middle colonies soil and climate were more favorable and larger farms produced cash crops such as wheat, some of which was exported. With the exception of the Hudson River valley,6 these farms were worked by their owners and the distribution of land tenure was fairly equal. The attempt by the Dutch West India Company to introduce slaves into agriculture in New Amsterdam was thwarted by the greater demand for slaves from southern planters. The slaves imported in the North were quickly sold to higher bidders and reexported. Governor Stuyvesant's tax on the export of slaves was to no avail. The economics of slavery favors a long growing season since the slaves must be fed all year round. The great and owners of the Hudson Valley preferred tenants who were responsible for their own subsistence through the winter.

The upper South is another intermediate case. In the Chesapeake tidewater, natural conditions favored the growing of tobacco. This was most efficiently done on middle-sized plantations using small slave labor forces. These plantations were smaller than the great agrarian enterprises producing indigo, rice, and sugar further south, but larger than the farms of the middle colonies or New England. The ruling class of the upper South was a larger percentage of the population than in the deep South. There was also a large number of small owner-worked farms growing tobacco in the upper South. The adoption of more republican and less aristocratic political institutions in the upper South stems from this (Greene, 1976). Thus, the God-given conditions of agronomy seem to have had more effect on the class structure than the revealed knowledge of the Puritans or the Catholic doctrine of Maryland. Soil and climate favorable to the employment of slave labor would quickly have transformed Boston into Charleston.

Stein and Stein (1970) suggest that part of the success of the British colonies was due to their extermination of indigenous populations and the creation of culturally homogenous settlements in which the working classes were paid relatively high wages. This argument confuses what Frank's treatment makes clear. First, a yeoman-based, culturally homogenous class structure is insufficient by itself and is not solely the product of British colonialism. The less profitable (and more neglected) areas of the Spanish empire also evolved such a class structure. Second, the British lost no time in importing African slaves when they found conditions favorable to plantation agriculture. Finally, British, Dutch, and French colonists in northern North America made every effort to extract wealth from the indigenous peoples (seen most vividly in the fur trade) but the less hierarchial indigenous social

organization of the native North Americans rendered them particularly unsuitable as slaves or serfs. As it was, New England had to fall back on one natural resource it had: timber (Clark, 1916). The export of lumber was not as profitable, however, as the building of ships with the lumber. The shipbuilding industry was stimulated by the fishing industry and the opportunities for entering the carrying trade among the colonies and between the core and the periphery.

Shepherd and Walton (1972) have shown that the so-called "triangle trades" were not usually carried on by individual shippers. Most shippers shuttled between the northern colonies and England, while some traded with southern colonies and the West Indies, and others sailed to Southern

Europe and Africa. As Shepherd and Walton (1972) have stated


trades involving two or more overseas areas, such as from the West Indies to Great Britain and back to the colonies, were not typical. It is possible, of course, to describe the

pattern of international settlements as triangular or multilateral (for example, the West

Indies earned surpluses in their trade with Britain, the continental colonies earned surpluses in their West Indies trade, and Britain earned surpluses in its American trade) [p. 156].


By 1770, the negative balance of trade of the American colonies with Britain

was largely compensated by so-called "invisible exports" such as merchandising and shipping services, and these incomes returned largely to the merchant shippers of New England and New York. Thus, the merchant shippers accumulated investment capital from their profitable mediation between the European core and the American, West Indian, and African peripheries.

But buying cheap and selling dear (merchant capitalism) does not in itself create the basis of core production, and the merchants who mediate the exchange between core and peripheral areas most often come to have a stake in the exchange, leading them to resist changes in the division of labor.

For example, the merchants of New England and New York often opposed tariff protection of domestic core manufactures and sided with peripheral capitalists in the early nineteenth century. What led the eighteenth century merchants of New England, New York, and Philadelphia to invest their

profits in production that would compete with core industries (e.g. shipbuilding) rather than invest in peripheral production? And why were they allowed to do so ?

The answer to the first question is that they had a comparative advantage in shipbuilding and profits were high. Even though labor costs were higher than in England, the low cost of raw materials encouraged New Englanders to build ships for their own use and for export. Shepherd and Walton (1972:244) report that an estimated 57% of the shipping tonnage built in the colonies during 1769-1771 was sold aboard.

But why was this North American industry-and the complementary carrying trade and fishing industry allowed to compete with similar producers from the mother country? Competitive advantage in production (the ability, in this case to produce ships more cheaply than others) is no guarantee that such production will be allowed to develop, especially in a mercantile world of monopoly protection. Shipbuilders, fishermen, and merchant mariners in England were undoubtedly opposed to the competition from the colonies.

Benign neglect was undoubtedly part of the answer. The political turmoil in England and the rivalry between England and France allowed the emerging Yankees some space. But it was also the eighteenth century upturn in the world-economy, and especially the rapid increase in trade in the Atlantic economy, which facilitated the emergence of core production in New England. In an expanding economy the interests of consumers in buying cheaply come to outweigh the interests of producers in maintaining monopoly, at least relative to periods of contraction. The development of the shipbuilding industry and the ability of the New England merchants to insert themselves into the core-periphery Atlantic economy in a semiperipheral {intermediate) position allowed them to accumulate capital rapidly and to expand their operations. The increased space for core production was a

function of expansion of the world economy as a whole.

This explains why core production survived outside the previously core areas during this period. But why did this development occur in New England as opposed to elsewhere? Wallerstein suggests that it was to New England's benefit, relative to other areas in the periphery, that it was a British colony. Britain was uniquely Britain, but it was also the emerging hegemonic core power of the world-economy and was experiencing a rapidly accelerating industrial revolution. It was less important that the colonies inherited British cultural and institutional characteristics {such as parliamentary democracy) than that Britain had a unique location in the world economy. During the colonial period, the British colonies had greater access to the most advanced technological developments through information flows and immigration of skilled labor than did the colonies of other core powers. After the War of Independence, the North Americans were suspicious of, and resistant to, British attempts to influence and control them. This is in contrast to the Latin American new nations, which made

their anti-imperial revolts with the aid of the British and in order to do business with them.

The settler colonialism of the British-sending whole communities rather than only overseers to direct the extraction of surplus from natives is due in part to the racism of the English who, unlike the French, insisted on bringing their women with them rather than marring daughters of the

local chiefs.7 Settler colonialism was also due to the intensified commercialization of agriculture in Britain, which drove migrants to the cities and to the colonies.

To summarize, five factors contributed to the emergence of core activities in New England: (a) the natural conditions of New England that discouraged peripheral agriculture and encouraged the shipbuilding and maritime industries; (b) a relatively egalitarian class structure; (c) the expansion

of the Atlantic economy which created space for the emergence of the core producers and lessened the resistance of those already engaged in these industries; (d) the benign neglect of the British during the seventeenth and early eighteenth centuries; and (e) the advantage of being a British colony

rather than a colony of another core power.


The Expansion of Core Capitalism in the Antebellum Period


We have reviewed arguments about the original emergence of core activities in New England arid the middle colonies. "Here we turn to the question of how these activities were expanded and politically protected in the period between 1815 and 1860. The discussion will focus on the issue of

tariff politics. The state is understood to be the main mechanism by which classes and alliances of classes distort market forces in their own interest.8 From the world-systems point of view, this is not exogenous to the workings of capitalism. The state system and the utilization of state structures by

competing and conflicting classes in the world-economy are understood to be the political side of capitalism. The arena of market competition is always larger than the political domain of any single state, and so the differentiation between economic and political institutions occurs at the level of the

whole system rather than at the national level.

The politics of import duties reflects the struggle between classes that have different interests in relation to the larger world economy. This does not imply that these interests are perfectly reflected, or that individuals always know their own economic interests. As Marx pointed out, politics

often reveals only a shadowy relationship to the underlying class forces operating in society .This investigation of tariff politics tends to confirm that insight. Yet the outlines of the struggle between core capitalists, peripheral capitalists, and the other classes that ally with or oppose them, can be discerned in the tariff history of the United States between 1815 and 1860. As to the correspondence between the attitudes of individuals and their class interests, we do not assume a naive "economic man" model. In a study of recent United States tariff politics and attitudes, Bauer, Pool, and Dexter

(1968) have shown that individuals often do not know what their interests are, and that, in response to social pressures, they often act in ways which are inconsistent with their own interests. Benjamin Franklin, as a Philadelphia manufacturer, supported free trade and the doctrine that agriculture is inherently superior to industry.

On the other hand, aggregate political processes do tend to reflect the economic rationalities of conflicting interests. This will be seen in the following account of nineteenth century tariffs, but it is also illustrated in the study by Bauer, Dexter, and. Pool. They document the transition from the long-standing policy of protectionism to free trade in the late 1950s. Then the U.S. economy had attained economic hegemony in the larger world and producers shared a common interest in expanding to foreign markets, rather than in protecting the home market. As such, it was similar to the British adoption of free trade in the 1840s and the Dutch advocacy of free trade in the seventeenth century.

From the point of view of U.S. core capitalists, what had been accomplished by 1815? The main political accomplishment was the construction of a sovereign state, independent of imperial control and capable of protecting the interests of its producing classes-both core and peripheral-in the larger world economy. The contrasting case of Canada and the other northern colonies shows the importance of political independence. The continuation of the colonial system in Canada stimulated the export of timber with "differential duties" until the British adopted free trade in 1846 (Lower, 1973).

Wood (1977) compares nineteenth-century India and the United States to show the different effects of British influence. Direct colonial control of India led to the perpetuation of that country’s peripheral position in the world-economy.  The railroad system that the British built created an infrastructure that entrenched colonial control but did not promote independent economic development. British investment in U.S. railroads was much more at the behest of U.S. core capitalists, and had a beneficial effect on the integration.  

The American Revolution and the process of early state formation need to be reinterpreted from a world-systems perspective but I will not attempt to do so here. Clearly core and peripheral producers and colonial merchants supported the formation of an independent state.9 Core producers did not dominate the new state, but neither were they excluded from it. The anticolonial victory did not, in itself, guarantee the upward mobility of the United States in the world-economy. After all, the Latin American republics successfully established formal political independence in the early nineteenth century, but economic "neo-colonialism" continued to produce the development of underdevelopment and they remained in a peripheral position in the world division of labor (Stein and Stein, 1970). This leads us to consider the upward mobility of the United States as problematic, and to inquire how the class forces supporting the development of domestic core production were capable of winning out over the interests that supported the maintenance of peripheral production for export to the established core in Europe.

The creation of the Federal state and the Constitution in 1789 was a necessary step in the direction of further upward mobility (national development), but did not guarantee it. The Constitution institutionalized the interests of property owners (both core and peripheral capitalists, as well as merchants) in the state. It consolidated the power of the planters, the merchants, and the nascent manufacturers over the small farmers, artisans, and slaves and created a semiperipheral state capable of enforcing its own mercantile policy to protect the international interests of these dominant classes. At first this was evidenced by tariffs and navigation laws favorable to the carrying trade of the merchants and shippers. A navy was necessary to enforce these laws and to protect American ships. The war with Tripoli in 1801 was an effort to halt piracy of U.S. vessels in the Mediterranean, as well as to demonstrate to the European powers that the u.s. could intimidate Barbarians as well as any core power (Field, 1969).

The interests of potential core producers were not strongly supported by the Federal state prior to the tariff of 1816, but there had been an intellectual defense of the protection of core activities. Alexander Hamilton, as Secretary of the Treasury in 1791, addressed to Congress an eloquent pre-Listian defense of import substitution entitled " A Report on the Subject of Manufactures". Hamilton's argument was partly a defense against the claim of the Physiocrats that agriculture is inherently more productive than industry. But Hamilton also argued for protection against core imports on the grounds that the core powers discriminated against U.S. agricultural exports.


In such a position of things, the United States cannot exchange with Europe on equal

terms; and the want of reciprocity would render them [the U.S.) the victim of a system

which would induce them to confine their views to agriculture, and refrain from manufactures. A constant and increasing necessity, on their part, for the commodities of Europe, and only a partial and occasional demand for their own, in return, could not but expose them to state of impoverishment compared with the opulence to which their political and natural advantages authorize them to aspire [Cole, 1928:265].10


The significance of Hamilton's position is made clear by a comparison with the Latin American republics. In the United States after the War of Independence, as in Latin America, politics became polarized around the issue of centralization versus local autonomy. But there was one essential difference. For example, in Argentina the centralizers were based on urban merchant interests in Buenos Aires who mediated the core-periphery exchange. The ideology of these centralizers was free international trade (and their own monopoly over this trade) (Burgin, 1946).11 In the United States, on the other hand, some of the centralizers argued for protection of domestic industry against competition from core imports. This difference reflects the different prior histories of the areas, which allowed fledgling core activities to develop in the u.s. but not in Latin America.

The contention between Hamilton and Jefferson was, in part, over different visions of the future of the United States. Although Jefferson later opted for a policy of expansion and competition for power in the larger world economy, his original vision was of an Arcadian society composed gentleman farmers, isolated from the vicissitudes of world market competition but freely importing and exporting to meet the needs of a stable, no-growth agricultural republic. It has been pointed out that Jefferson's own arcadia, contrary to all his. Jacobin sympathies, was based on slave labor

{Vidal, 1973). The struggle between the Federalists {Hamiltonian centralists) and Republicans Jeffersonian decentralists) resulted in the political victory of the Virginians and their subsequent adoption of most of the Hamiltonian program, including territorial expansion, a permanent navy, a sound fiscal basis for the Federal State, the creation of the first United States Bank.

The Napoleonic Wars were a great stimulus to the carrying trade because the U.S. was granted neutral status by the European powers. Merchants enjoyed a virtual monopoly over the carrying trade between the West Indies, Latin America, and Europe. The interruption of this profitable business by Jefferson's Embargo and Non-Intercourse Acts and Madison's declaration of war against Britain caused New England to consider secession from the Union at the Hartford Convention in 1814. But these Acts and protection from import competition afforded by .the war with Britain stimulated the growth of import-substituting manufactures, especially in Pennsylvania, Massachusetts, and Rhode Island. Peacetime was a disaster to these new industries as the post-war market was flooded with cheap English "gee-gaws" auctioned in New York City at prices below their cost of production. Dumping of core products in New York was a conscious policy of British manufacturing interests. As Lord Brougham explained to Parliament in 1816, it was "well worth while to incur a loss upon the first exportation, in order, by the glut, to stifle in the cradle those rising manufactures in the United States, which war had forced into existence, contrary to the natural course of things." {Forsythe, 1977: 69). The newly established cotton textile manufacturers were shut down until the tariffs of 1816 and later years provided protection from English imports.

The United States tariff policy between 1815 and 1860 can be roughly outlined as follows. The war duties (intended for revenue) were replaced in 1816 with a tariff that, although not high, was intended to be protective. The average rate in 1816 was 25% ad valorem. This was increased in 1824 to 33%, and again in 1828 to 50% (Freehling, 1967). In 1833, Southern planter and Northern merchant opposition forced the adoption of the Compromise Tariff that lowered rates slowly until 1842. In 1842 protection was renewed until 1846 when the Walker Tariff, a victory for the free traders, was adopted. In 1857 tariffs were lowered even further. The Republicans passed the ultra-protectionist Morrill Tariff and protectionism reigned from then until after World War II.

This tariff history reflects the process of class formation in the antebellum period. Core manufacturers expanded after the War of 1812 and, in alliance with farmers, succeeded in passing protectionist legislation. The peripheral capitalism of King Cotton expanded even more rapidly and the core and peripheral interests contended for power in the Federal state by making alliances with other classes: merchants, workers, and yeoman farmers. Peripheral capitalism in the South was by no means moribund. Indeed it was a dynamic and differentiated economy based on commodity production with slave labor. By the 1840s the upper South had become a slave-breeding and semi-industrial region (Bateman and Weiss, 1976). But the main form of appropriation in this slave-based peripheral economy remained the production of cotton for the European core of the world-economy. The plantocracy of the South was able to dominate the Federal state during most of the antebellum period by allying with Western farmers and Northern workers in the Democratic Party. This alliance, which ushered in the period of low tariffs in the 1840s and 1850s, eventually foundered on the issue of the legal status of slavery in the new territories of the West.

The access of core producers to state power before 1815 can be assessed by examining tariff politics. As argued, tariff politics and tariff policies are a reflection of the strength of classes with conflicting interests in the world economy. Pennsylvania created protective tariffs "during the period of the Articles of Confederation (Eiselen, 1932) but the tariffs enacted by the Union from 1789 to 1816 were, with few exceptions, designed only as a source of revenue. Other state policies, such as the Navigation Acts and creation of the permanent navy to defend shipping, clearly benefited shipping interests and merchants, but these policies were supported by the planters. The interests of Northern merchants and Southern planters were harmonious, but they came into conflict with the core capitalist manufacturers who were spawned by the dearth of imports during the Embargo and the War of 1812.

The post-war slump and flood of British imports showed that the United States remained an economic neo-colony of Britain. In 1815 the success of the manufacturers was by no means certain. The Tariff of 1816 was a crucial turning point because the Federal state began to use its power

for the first time to foster core capitalism.


The Rise of Protectionism

            Protectionism became the policy of the Federal government between 1816 and 1832 for several reasons. Core producers were strong enough to flood Congress with memorials demanding relief from the influx of cheap foreign goods, and there was little opposition to such pleas. The War of 1812 made obvious the dependence of the United States on European imports and there was wide support for the development of manufacturing that would lessen this dependence. John C. Calhoun, later the champion of the Southern anti-tariff cause, supported protectionism for national development until the mid-twenties. The Tariff of 1816 passed the House 88 to 54. It was not a party line bill and sectional divisions were only faintly visible. The 8 Southern states were split 25 for and 39 against. There was strong support from Kentucky and a majority in favor in South Carolina and Tennessee. New England was split. The only solid protectionist area was the middle states, New York, Pennsylvania, New Jersey,and Delaware. Ohio voted solidly for the bill (Forsythe, 1977).

What determined which commodities would be protected and how high the rates would be for different commodities? If the theory of protection for "infant industries" had been followed we would expect those industries that were weakest but most essential for national security and economic development to be the ones given the most protection. Eiselen's (1932) thorough study of the politics of protection in Pennsylvania concludes, however, that it was not generally the weakest industries that received protection, but rather those that were strong enough to exercise influence on Congress. Pincus's (1977) econometric study of the Tariff of 1824 shows that industries which were concentrated in a particular geographical area, rather than spread over a wide area, were more likely to organize political pressure and receive protection. Competition within a particular industry could also influence the height of the tariff wall. Zevin (1971) reports that in 1816 Francis Lowell, a cotton textile manufacturer who had recently observed production techniques in England and returned to invent his own power loom, lobbied against the high rate proposed by the less efficient textile producers in Providence. The tariff that was adopted was high enough to allow Lowell and the other producers who adopted mechanized production to make a profit, but low enough to drive out the

less efficient producers.

The Panic of 1819 followed the post-war boom. The price of agricultural commodities fell rapidly and unemployment in the cities of the North reached alarming proportions. The last great Corn Law was passed by Parliament in 1815 to protect English agriculture from foreign imports. This,

and the recovery of agriculture in Europe, caused American exports of grain to fall. The declining price of their produce induced the farmers of Pennsylvania and other Northern states to rally to the cause of industrial protection. Similarly the unemployed mechanics and workingmen were told by the  Philadelphia protectionist, Matthew Carey, that a high tariff would promote industrial employment and raise wages (Tayor, 1953). Eiselen (1932) in reflecting on the ebb and flow of Pennsylvania protectionist enthusiasm during the antebellum period, notes that economic slumps always resulted in a clamoring for tariffs as prices fell, while good times reduced tariff enthusiasm.

Henry Clay of Kentucky proposed his " American System" to promote the alliance between agriculture and industry based on the protected development of the diversified national market. In Clay's scheme the Federal government would stimulate manufacturing by applying a protective (but not prohibitive) tariff. The revenues resulting from the tariff would enable the government to sell Western land cheaply and to finance internal improvements in transportation between the agricultural West (and, presumably, the South) and the industrial East. Clay's program created the political alliance among core capitalists, farmers, and labor, which supported increasing protectionism until Southern opposition reversed this trend in 1833. The program of internal improvements began in 1818 with the completion of the National Road, a Federally built highway that connected Baltimore with the Ohio Valley (Broude, 1964). The General Survey bill of 1824 proposed an elaborate national transportation system of roads and canals, most of which were later built under the auspices of the separate states, but with Federal encouragement (Goodrich, 1960). The Erie Canal was completed in 1825.

The maritime and commercial interests of New England were against protection at first. To his later embarrassment, Daniel Webster made spirited free trade speeches at the behest of the shipping concerns of New Hampshire. Commercial interests were opposed to import tariffs because their profits were gained mainly from the core-periphery trade. Financial connections with London led many New York and New England merchants to oppose protection of American core industries throughout the antebellum period.

The shipbuilders of New England, formerly the most developed core capitalists in America, also opposed the tariff bills that Congress passed during the first era of protection. They did this in part because some of the commodities protected were raw material inputs into their industry, particularly hemp and iron. Core products were not the only protected commodities. Indeed core producers obtained protection by making alliances with other producers. Logrolling resulted in tariff bills that supported both core products, such as textiles and glass manufactures, and also raw ma-

terials, such as coal, iron, hemp, and lead. Shipbuilders were understandably unwilling to support legislation which increased their costs. In addition, the “Tariff of Abominations” (1828) was intentionally constructed by the Jacksonians to be unpalatable to New England in order to embarrass the Adams administration. It included tariffs on sugar and molasses, which were offensive to the New England distilleries.

New England eventually came over to protectionism, however, “In 1825, the great firm of W. and S. Lawrence of Boston turned its interest and capital from importing to domestic manufacturing, and the rest of State Street fell in behind it. So did Daniel Webster, who was now to become Congress' most eloquent supporter of protection [Forsythe, 1977]." What were the effects of the tariffs? Free traders, as we shall see claimed broadly evil consequences. Advocates of protection argued that stimulated industrial growth and enhanced both profits and wages. Henry C. Carey, the first American contributor to the science of political economy blamed every economic slump in the antebellum years on free trade and attributed every period of prosperity to protection (Stanwood, 1903). Taussig's (1964) classic study of tariff history and industrial growth, first published in 1892, concluded that, especially after 1824, tariffs did not great contribute to the growth of particular industries. According to Taussig the protection afforded by the War of 1812 and the Tariffs of 1816 and 1820 were helpful to some infant industries, but probably not essential for the survival and growth.

The onslaught of British imports after the War of 1812 was only partly affected by the tariffs, which, although protectionist in intent, were not very effective (Pincus, 1977:102). An exception was the protection of cotton textiles. Most protected items were given an ad valorem rate based on a percentage of their import price. In 1816 cotton textiles were also given a “minimum" rate, which meant that, no matter how low the market price dropped, they would be treated as if their price was a certain minimum. This minimum rate proved to be extremely important when the price of British textiles dropped rapidly in the years following 1816.

Eiselen (1932) argues that for most industries the effect of protection on prices was only temporary .A price rise due to a tariff increase encouraged new firms to enter production and the increased competition tended to drive prices back down again. David (1975) argues that the temporarily higher profits may have allowed manufacturers of cotton textiles to "learn by doing," that is, to experiment with production techniques and to increase efficiency.12 His econometric analysis of six firms during the period from 1834 to 1860 does not provide much support for this argument,

however, and he concludes that Taussig's contention about the tariff effect is basically correct. Zevin's (1971) econometric study of the causes of growth in the textile industry finds that the largest portion of the phenomenal growth of factory cloth production in New England in the period from 1815 to 1833 is due to change in the composition of total production between home and factory, that is, the growth of demand for manufactured cloth as a replacement for homespun.13 He concludes that the tariff made a negligible contribution to the growth of American demand for New England mill products.

On the other hand, Fogel and Engerman (1971), studying the growth of iron production between 1842 and 1858, estimate that reductions in the tariff rate caused a 10.8% fall in the price of domestic iron and a 29% reduction in output. Taussig never claimed, however, that the tariff had no effects, but rather that it was not essential to the establishment and growth of particular industries. Protection undoubtedly affected the timing and rate of growth of industry, and, from the perspective of the competitive world-economy, timing can be very important. The advances made by the core industries in the 1820s and 1830s enabled them to survive and prosper in the period during the 1840s and 1850s when peripheral producers reestablished their control of the Federal state. Zevin (1971) reports that between 1820 and 1830 American consumption of cotton cloth increased from 50 to 175 million yards, while the share of that consumption supplied by New England increased from about 30% to about 80%. By 1825 even Hezekiah Niles, the ardent Baltimore protectionist, admitted that American coarse cotton textiles no longer needed protection. By 1832 these coarse cottons were competing with British products in the markets of the Far East. Thus further protection of cotton textiles was redundant.

Even though Taussig's careful study of individual industries led him to the conclusion that protection was not essential to the birth and survival of any single industry by itself, he nevertheless acknowledged the importance of the protectionist movement in stimulating the overall transition from the agricultural and mercantile economy that existed before 1815 to the more diversified manufacturing economy that developed thereafter. This observation helps us understand the ambivalence of the shipbuilders and commercial interests of New England who were the key core industries of the earlier era.

            Shippers and mercantile capitalists were hurt badly by the ending of the Napoleonic Wars. Their semi-monopoly over the Atlantic Trade and the credibly profitable "business" of privateering came to an end. The post slump was not followed by a new expansion of the maritime industry until the, thirties. Nevertheless, there was considerable United States support for the Latin American independence wars against Spain, especially from traditionally Catholic city of Baltimore (Bornholdt, 1949).14 In 1823 President Monroe refused Canning's proposal for a joint British-United States

declaration in support of Latin American independence and issued the precociously paternalistic Monroe Doctrine forbidding European interference in Pan-American affairs.

In the 1820s world shipping revived and increased competition caused freight rates to fall. The maritime industry recovered slowly from the postwar slump. Nevertheless, regularly scheduled packet lines leaving at designated intervals connecting New York City with the ports of Europe were established, but profit rates were lower than in manufacturing (North, 1966). This explains the growing integration of the maritime interests with domestic manufacturing, and the increasing support for protectionism. But, at the same time, the forces of opposition were gathering.


The Rise of Opposition to Protection


The peripheralized colonial Southern economy based on tobacco, rice, and indigo seemed to have reached its zenith before the turn of the century. It was predicted by contemporaries such as Jefferson that slavery would wither away; others thought that the South would turn toward maritime and industrial activities. But the invention of the cotton gin and the demand for cotton to feed the mills of the English midlands gave plantation slavery a new lease on life. The cotton gin made cultivation of the short fiber, upland cotton commercially profitable with the application of slave labor.

The growth of the new core-periphery division of labor between the South and England also had effects on the maritime and commercial interests of the North, particularly New York City. New York merchant shippers bought most of the cotton from the planters, at first transporting the cotton to New York for inspection before shipment to Liverpool. Later the New York merchants established factors in the port cities of the South that enabled them to ship directly (Buck, 1925). But they maintained financial control of most of the trade between the south and England. Credit facilities by which American merchants could purchase English goods with drafts on London banks were established by specialized merchant-banker firms such as Baring Brothers and George Peabody and Company. Peabody, a Baltimore dry goods merchant, established a firm in London for this purpose and hired another dry goods importer, Junius Spencer Morgan of Boston; through this connection, the Morgan family entered the calling of high finance (Hidy, 1951).

Opposition to protectionism arose in the South after the Panic of 1819. Cotton prices fell from 31¢ a pound in 1818 to 14¢ in 1920; 10¢ in 1826; and 8¢ in 1831. This was due to the worldwide expansion of cotton production. The cotton planters of South Carolina were hit particularly hard by this fall in prices because it corresponded with increasing soil exhaustion on their upcountry plantations. Cotton planters further west and low country rice planters were less severely affected (Freehling, 1968). The antiprotectionist movement in South Carolina began to develop after 1819-particularly among the cotton planters.

Pincus (1977) points out that, in a democratic polity, a minority with a great deal to win or lose can frequently have its way when the cost to the majority of individuals is small arid dispersed. Thus producers often exert more influence over the state than consumers because they stand to gain much more than consumers (individually) stand to lose. This is part of the explanation of the fact that most nations most of the time have protectionist tariffs. It is also consistent with the development of strong opposition to protection among Southern "consumers" in the antebellum United States.

These consumers were not simply individuals buying for their own use. Tariffs on coarse woolen and cotton textiles came to be opposed by the Southern planters who were purchasing these commodities to clothe their slaves. It was not that these buyers, and the New York merchants who were their agents, were too small and dispersed to mobilize, rather they were simply unmobilized in 1816.

Both Northern merchants and Southern planters came to fear that their British customers would retaliate against U.S. protection by obtaining their raw materials from other than U.S. producers. Also Southern exporters were made aware that, as international economists have demonstrated, a tariff on imports is not only a tax on consumers of imports but is also effectively a tax on exporters. Dr. Thomas Cooper, a disciple of Adam Smith and President of the College of South Carolina, suggested that the time had come for the marriage between the states was somewhat less than a transcendent relationship received a great deal of criticism from the patriots of the North, but Cooper’s logic was based on this inflammatory, but not entirely inaccurate, appraisal:


There is not a petty manufacturer in the Union, from the owner of a spinning factory, to

the maker of a hobnail, ...from the mountains of Vermont to the swamps of Patapsco,

who is not pressing forward to the plunder; and who may not be expected to worry

Congress with petitions, memorials and querulous statements for permission to put his

hands into the planter's pocket. The avowed object now is, by means of a drilled and

managed majority in Congress, permanently to force upon us a system, whose effect will

be to sacrifice the South to the North, by converting us into colonies and tributaries

 tax us for their own emolument claim the right of disposing of our honest earnings forbid us to buy from our most valuable customers irritate into retaliation our

foreign purchasers, and thus confine our raw material to the home market short,

 to impoverish the planter and to stretch the purse of the manufacturer [Bancroft, 1928:32].


Southern memorials to Congress complained bitterly of the unequal effects of the tariff and the failure of the program of internal improvements to benefit the South. Senator George MacDuffie argued that, of every 100 bales of cotton produced in the South, 40 of them were stolen by the North. This was an exaggeration, but Van Deusen's (1928) study shows that the costs to the South were by no means insignificant.

The Tariff of 1828 raised rates and extended protection to a large number of commodities not protected before, including a number that angered New England. Antiprotectionist sentiment was growing and free traders hoped that the election of Andrew Jackson would bring relief. But Jackson did not act to lower the duties. Southern planters organized an unsuccessful boycott of Northern products and leading politicians appeared in public in homespun to dramatize their cause. The most rabid of the South Carolinians were talking of secession when Calhoun devised what he thought to be

a compromise that would preserve the Union. Antitariff politicians had argued that tariff protection was unconstitutional. Calhoun (anonymously at first) proposed the doctrine that states have the right to nullify Federal laws that they deem unconstitutional (Bancroft, 1928). Nullification received enthusiastic support in South Carolina, but not in the other Southern states. In 1832 the South Carolina legislature called a convention and adopted nullification unilaterally, but President Jackson stood firm against this challenge to the sovereignty of the Federal state and, after some sabre-rattling, the South Carolinians backed down.

            The controversy over the tariff is often portrayed as being based on sectionalism, and indeed the Congressional voting record on the tariff acts from 1820 on shows that it was increasingly the Southern states that opposed protection. I would argue, however, that it was largely a class conflict between core capitalists interested in creating a diversified and integrated national economy and peripheral capitalists specializing in the exchange of raw materials for European core products. These two groups contented throughout the antebellum period for the support of other politically important classes: merchants, farmers, and increasingly, workers. Evidence for this contention can be seen within sections as well as between them.

Boucher (1968) shows that the backcountry, non-slave-owning yeomen of South Carolina did not support the political actions taken by the antitariff forces in the state. And Freehling (1968) demonstrates that the merchants of Charleston were much more likely to support the Unionist cause than the planters. Farmers in the North and West alternately supported protection or opposed it as their fortunes in the world market changed. The closing of the European markets for their produce caused them to support protection and the development of the home market. But later growth of grain exports to Europe brought them to the cause of free trade. The middle states, with the biggest concentration of manufacturers producing for the home market, were staunch supporters of protection. Kentucky, a slave state, was strongly protectionist not only because its hemp was in competition with foreign peripheral producers for the shipbuilding market of the maritime states, but because it was a manufacturer of cotton bagging. And as we have seen, the merchants of New England shifted their support to protection when they became interested in investments in domestic manufacturing.

It is interesting to ask what differences there were in the 1820s between the farmers of Pennsylvania and the upcountry cotton planters of South Carolina that caused them to respond in exactly opposite ways to the falling prices of their export commodities. In theory, the planters could have supported Clay's scheme on the basis that an internal demand for cotton would be created by domestic textile production. Similarly the farmers of Pennsylvania could have opposed protection in the hope that the European market would again buy their commodities-not necessarily a worse bet than the growth of the home market demand for food. There are many differences between the planters and the yeomen. The farmers were employing only themselves and their families, while the planters were employing slave labor. Freehling (1967) reports that planters recognized in the 1820s that the abolition movement would eventually pose a threat to their "peculiar institution." The Denmark Vesey conspiracv in Charleston, a planned slave revolt foiled in 1822, was attributed to the antislavery sentiments expressed in Congress during the debate over the Missouri Compromise in 1820 (Genovese, 1976).

            Another difference between yeomen and planters, which may account for their divergence on the tariff question, was the nature of British trade regulation. The Corn Law was directed against grain, but not against cotton. Thus the British state, in reflecting its own class coalitions, was exercising political power against the Pennsylvania farmers but not against the cotton planters of the South. This most probably affected opinions about the

proper policy of the United States government.


Compromise and the Jacksonian Economy


In 1828 part of Calhoun's strategy against the tariff was to split the alliance between Northern manufacturers and Western farmers. He envisioned a coalition in which Southern and Western agriculture would oppose tariffs and support liberal land policies. Northern manufacturers tended to

oppose cheap land policies that drew away their employees, which created a labor shortage and upward pressure on wages. Western Senator Thomas Hart Benton, in response to a Connecticut Senator's proposal to limit the sale of public lands, suggested the similarity between restrictions on land sales and the protective tariff-both were indirect subsidies to manufacturers (Forsythe, 1977). Senator Robert Hayne of South Carolina proposed a combined program of low tariffs and low land prices, but Daniel Webster temporarily forestalled this alliance by transforming the discussion into a debate about states rights. His stirring invocation of patriotism carried the day, but the rise of Jacksonian democracy was not to be halted by a single debate.

The regime crisis (Forsythe, 1977) over nullification caused by the unhappy Southerners resulted in the Compromise Tariff of 1833, the first of Henry Clay's political recipes for balancing the contradictions between core and peripheral capitalism. The bill was supported by the South and the West and opposed by New England and the middle states. It was mostly a face-saving device for the South, however. The principle of protection was abandoned and henceforth tariff advocates had to couch their proposals in terms of "incidental protection." But the bill specified that tariff rates were to be lowered slowly until 1842, when they were to be drastically reduced to an average of 20% ad valorem. The stated object of the slow reduction was to give manufacturers a period of adjustment before opening the ports. But many protectionists expected that the Southern opposition would cool and the proposed reduction in 1842 would never come to pass.

            Cotton exports were the largest export commodity from 1815 to 1861, increasing from 32% of all exports in 1815 to 56% in 1835, and the varying from 40% to 57% from 1835 to 1860 (North, 1966). Wheat flour exports to England, which would become one of the most important export commodities after the Civil War, began to grow rapidly in 1829 (Potter, 1960: Table IV). This new interest in the foreign market undoubtedly lessened the enthusiasm of U.S. wheat growers for protectionism. The convergence of interests between the planters of the New South and the farmers of the Ohio Valley was also facilitated by the development of New Orleans as their common entrepot, and by the growing importance of the South as a market for Western produce.

In addition, both farmers and planters were increasingly dissatisfied with the tight money policies of Eastern bankers; the 1830s saw the growth of labor organizations opposed to municipal monopolies and restrictive land sales policies that were associated with Eastern financial and manufacturing interests. The Democratic Party chose Andrew Jackson, an Indian fighter from Tennessee, to symbolize the new coalition of farmers, laborers, and planters.15 Jackson was not sympathetic to free trade, nor did he yield to nullification, but his election was the beginning of the coalition between the South and the West, which was to increasingly delimit the power of the domestic core capitalists in the Federal state in the 1840s and 1850s.

The Bank War, in which Jackson and the soft money forces refused to recharter the Second United States Bank, was the first attack on the institutionalized power of the indigenous core capitalists. The dissolution of the U.S. Bank and the growth of state banks has been alleged to have caused the rampant inflation of the 18305. Temin (1969), however, argues that most of the credit expansion and inflation was actually caused by an increase in the supply of silver specie from an influx of investment capital from Britain and a change in the balance of payments in the China trade. The reduced need to pay for Chinese exports in silver (because of increased opium smuggling

into China) allowed Mexican silver, previously used in the China trade, to be imported into the United States. This increased bank reserves and allowed the expansion of credit. Temin may be correct that the dismantling of the U.S. bank was not the cause of the credit expansion and the influx of specie, but the decentralization of banking did eliminate the only institution that might have been able to modify the effects of international economic forces. As such, it was symptomatic of the decline of the political power of core capitalists and their policies of economic nationalism.

The 1830s saw an incredible economic boom based mainly on the expansion of cotton production in the New South, but also on the growth of the West and the continued growth of manufacturing in the East. The price of cotton rose from 8¢ a pound in 1831 to an average of 14¢ a pound between 1834 and 1837. This, along with Jackson's easy land policy easy credit, caused land sales to rise dramatically in 1835 and 1836. In Mississippi and Louisiana plantation banks were established to finance the expansion of slave-grown cotton. English capital was invested in the securities of these banks. In the West, extensive state-sponsored canal projects were undertaken by floating bonds in London; in the East, the first railroad expansion was financed by British rail sales in exchange for stock in the newly created railroad firms. Speculation in land and cotton trading was heavy.

In an attempt to slow the land boom and “excessive trading," Jackson declared the Specie Circular, which required that all further public land sales be paid for with specie-gold or silver. Many historians have seen this as the act that brought about the Panic of 1837, but Temin (1969) argues

that it was the contraction of credit initiated by the Bank of England that punctured the bubble. The monetary crisis of 1837 had no real affect on production, but the Crisis of 1839 initiated a depression which, according to North (1966), was as severe as great depression of the 1930s.

The increasing interdependence of the economies of the United States and Britain in this period has been documented by Potter (1960,1976). The new core-periphery division of labor was based primarily on slave-grown cotton exports, but the agricultural produce of the free farmers played an increasing, role from 1830 onward. British investment capital flowed into the U.S. in the 1830s but was stung by the crash of 1839 in which thousand of firms failed and nine states defaulted on securities held by English investors. Domestic manufacturing continued to expand but was faced with stiff competition from a growing influx of British imports.

In the 1830s, the cities of the East saw the growth of labor unions, city centrals, and labor parties opposed to municipal monopolies and in support of the 10-hour day and the extension of free public education (P. Foner,1975). The depression that followed the crisis of 1839 saw the demise of most of these early labor organizations and the rise of Utopian movements and religious sects. Waves of Irish and German immigrants from Europe and the massive movement of population toward the West discouraged stable working class political organization and encouraged both ethnic politics and Utopian escapism, which have been recurring features of American political life.



Table 9.1

Ratio of British General Imports to the United Statesa to

the U.S. Realized National Income in Manufacturingb



Year            Ratio         Year                Ratio



1821           .365           1869               .146

1829           .249           1879               .104

1839           .387           1889               .078

1849           .191           1899               .039

1859           .241


a-United States Bureau of the Census, 1975 part 2:907.

b-Martin, 1939, tables 1 and 17.



The maritime and shipbuilding industry of the East experienced a new expansion as a result of the growth of the Atlantic economy and the trade with China and Latin America. Philadelphia, New York, and Boston merchants joined the British in opium smuggling and the tea and porcelain trade with the Chinese treaty ports (Basu, 1979; Goldstein, 1978). American clipper ships set new speed records in an era when time was becoming an increasingly important element in economic calculation.

Even though manufacturing continued to grow, the core capitalists of the United States faced an increasingly difficult battle against British imports. The struggle for the home market was by no means yet won. Table 9.1 shows that the ratio of imports from the United Kingdom to the United States Realized National Income in manufacturing increased dramatically between 1829 and 1839.16 This was not a result of the Compromise Tariff of 1833 since rates were only mildly reduced. Imports were encouraged by favorable terms of trade, as U.S. prices were high and British goods correspondingly cheap. The growth of imports created a negative trade balance

but this was offset by the inflow of British investment capital.

The reduced influence of indigenous core capital over the Federal state was not due to its absolute decline. Indeed, manufacturing continued to expand throughout the antebellum period. The loss of power in the state came from the shifting of alliances and the increasing importance of Southern cotton production as the major export commodity. Core capitalists achieved protectionist Federal policy in the early part of the period-from 1816 to 1833-because of the unmobilized Southern opposition and because the free farmers supported the notion of developing the national market. Also some agricultural and mining raw materials were brought into the protectionist camp through logrolling. The weakening of the protectionist forces in 1833 was due to the desertion of the farmers, who saw a new opening if the world market, and also to the increased mobilization of the Southern planters, rather than to an actual decrease in the power and prosperity of the manufacturers. The Crisis of 1839 brought new demands for protection and the tariff was renewed at a high rate until 1846. But in that decisive year the nation and the world turned toward free trade.


Free Trade


The Compromise Tariff of 1833 prescribed that tariffs should be cut drastically in 1842. The low rates were in effect for only two months before Congress, responding to new clamoring for protection, doubled the rates for textiles, iron goods, and many other products. Since the South opposed the bill, Northern and Western Democratic votes were necessary to enact it as law. As had happened before, the years of depression influenced farmers and workers to support protection, and the bill passed with considerable support from the West. But this was the last protectionist bill to be passed until the enactment of the ultra-protectionist Morrill Tariff in 1861.

By 1846 the economy was recovering and with it the Southern-Western alliance against protection. The peripheral producers of the South achieved their last ascendancy in the Federal state in an alliance with the West cemented in the Democratic Party. In the election of 1844 protection was an issue; Polk had tried to be on both sides of the question. But his appointment of Robert J. Walker from Mississippi as Secretary of the Treasury made his true sentiments plain. The Walker Tariff, which was passed by Congress in 1846, lowered rates drastically and was considered a great victory for free trade. Its support was more along party lines than along sectional ones. It passed the House 114 to 95 with 18 Democrats voting against it: 11 from Pennsylvania; 4 from New York; 2 from New Jersey; and 1 from Maryland. Only 2 Whigs supported the bill. Thus the Western Democrats, and many Northern ones, supported the bill (Stanwood, 1903).

Secretary Walker argued that the bill would be good for farm prices because it would expand the foreign market. He claimed that adoption of the bill would bring reciprocity from England in the repeal of the Corn Law. In fact the Corn Law was repealed prior to the final passage of the Walker

Tariff, and Anti-Corn Law League propagandizing in the United States was thought by some to have had an illegitimately large influence on the decision. Protectionists disparaged the bill as a product of foreign intervention in American politics (Eiselin, 1932).

Walker also attacked the argument that protection raises the wages of the working class, and argued, on the contrary, that it increases the power of capital over labor. "When the number of factories is not great, the power of the system to regulate the wages of labor is inconsiderable; but as the profit of capital invested in manufactures is augmented by the protective tariff there is a corresponding increase of power, until the control of such capital over the wages of labor becomes irresistible [quoted in Stanwood, 1903:47]." This argument was apparently successful in obtaining the support of Northern Democrats from labor constituencies.

In 1845 the potato famine in Ireland caused prices of American agricultural commodities to rise due to increased foreign demand. The recovery of .the West from the crash of 1839 had been slow but the new demand caused a renewal of expansion and brought the West back into the free trade coalition with the South. This raises the question of the world class position of the free farmers

of the United States. Were they core producers or peripheral producers?



You Pay a Tax of Tenpence

Upon every Stone of Flour you and your wives

And little ones consume.

If there was not the Infamous CORN LAW you and you Families

Might buy THREE LOAVES for the same money that you now pay for Two.

Upon every Shilling you spend for Bread, Meat, Bacon, Eggs,

Vegetables, & pay 4d. Tax for Monopoly.


With The

Infamous Bread Tax!

Figure 9.1. Handbill. (From Free Trade by Norman McCord, Newton Abbot, Great Britain: David & Charles, 1970, p. 75.)



As producers of raw materials for export they had political interests in common with the planters. But agricultura1 production is not necessarily peripheral production. Capital-intensive, high-wage wheat grown in the twentieth century U.S. is clearly a core product. Nor is the determination of class location in the world-system simply a matter of the formal nature of production relations. Yeomen in seventeenth century England were core producers relative to the larger world economy, but this was not due entirely to their legal status as middle-sized, self-employed capitalist farmers. Yeomen in twentieth century Africa producing cash crops for export are peripheral producers selling the labor of themselves and their families to a world market that is coercive in the sense that the prices at which they sell their products and buy core products are determined by a political structure which exploits them (Lipton, 1977).

So we cannot answer the question about the free farmers of the antebellum period by looking at their formal legal control over property, nor by determining whether they sell primarily to the national or the world market. We must ask about the returns of their labor from the exchanges in which they were engaged. Unfortunately,-I have not been able to locate data on the "wages" of the free farmers. It seems likely that their average incomes, including subsistence production in an abundant natural environment, were high compared to the wages of other core workers. At least they were high enough to cause migration from England, Germany, and the Atlantic states.

It is also known that the terms of trade of the free farmers varied over time with the rise or fall of the prices of their products relative to the prices of the goods they bought on the market. If the yeomen were peripheral producers we might expect them to have the same reaction to changes in the terms of trade as the planters had. In fact, as we have seen, reactions were just the opposite. Hard times caused farmers to support protection, while planters were driven to greater efforts in favor of free trade. Thus, even though careful analysis of the relative incomes of the antebellum farmers has not been done, it seems reasonable to conclude that they were core producers.

Was the period of free trade from 1846 to 1861 a period of crisis for core capitalist manufacturers? Clearly, their power over the Federal state was reduced. There is evidence that some were hurt by the tariff reduction. Fogel and Engerman (1971) attribute the slow growth of iron production to the effects of the low tariff. Table9.1 shows that the conquest of the home market by domestic core producers was temporarily forestalled. The ratio of British imports to Realized National Income in manufacturing increased from 1849 to 1859. This import boom was financed by a new wave of British capital investmentspecially in railroads-and also by the export to London of much of the gold produced by the California gold rush. Exports of wheat and cotton to Europe grew, but not nearly enough to cover the new expansion of imports.

Nevertheless, the conclusion that manufacturers were badly hurt by their temporary loss of power in the Federal state would be unjustified. The growth rate of manufacturing industry between 1844 and 1854 was 69%, higher than any other decade in the antebellum period. And manufacturers recovered much more quickly from the slump of the early 1840s than did the agriculturalists of the South or the West (North, 1966).

Many industries in the U.S. no longer needed protection from imports. Cotton textiles were cheaper in New York than in Manchester. The home market had been conquered by 1839, and the temporary setback of the decade from 1849 to 1859 does not contradict the conclusion that core production was so well established by this period as to be able to succeed in the world market without direct protection from the state.

The 1840s and the 1850s saw changes in the world economy that reduced the salience of the protection issue to core capitalists in the United States. Schumpeter (1939) points out that this period saw a long-term upswing in the pace of economic growth throughout the world. There was a reduction in tariff barriers all across Europe as the benefits of trade came to outweigh the injuries done to .domestic producers (Fjelden, 1969). As the British economy shifted from the production of mass consumption goods toward the production of capital goods (Hobsbawm, 1968), the capitalists

of other core states developed their own mass consumption industries by importing British machinery and railroad equipment.

The Crystal Palace Exhibition of 1851 was a great promotional effort to expand the export of British technology, a reversal of the earlier attempt to monopolize production techniques (Landes, 1969). The international division of labor between core producers became less autarchical and protectionist as a result (Krasner, 1976). Cobden and Bright traveled widely, lecturing on the beneficial effects of a world free market. Their arguments were acted upon because the actual gains from free trade to consumers came to outweigh the costs to producers. And the producers, including core capitalists in the United States, had less to lose because the pace of growth was expanding and they wanted to import capital goods from England.

But free trade among core powers does not necessarily mean the relaxation of political coercion over peripheral areas. The 1840s was a decade of U.S. expansionism. Texas was annexed in 1845; a treaty with Britain brought Oregon into the Union in 1846; and, the war with Mexico gained California in 1848. The South was the main supporter of the war with Mexico but the manufactures’ opposition to territorial expansion and cheap land was reduced by the great influx of Irish immigrants willing to work in the urban industries of the East for low wages. One consequence of the territorial expansion was a renewal of the conflict over the status of new states. Though temporarily resolved by the Compromise of 1850, this was the issue that finally divided the forces of core capitalism from those of peripheral capitalism.

The Tariff of 1857 lowered rates even further. The politics of this tariff bill illustrate well the decline in the salience of the tariff issue for many manufacturers. The main debate was between producers of woolen textiles and woolgrowers. The woolen manufacturers argued that the tariff on raw wool was driving them out of business and advocated a reduction. Except for Pennsylvania iron masters and the woolgrowers, there was very little protectionist sentiment in 1857.

Hofstadter (1964) used the Tariff of 1857 to attack the Beard and Beard (1964) thesis that the tariff was an important economic issue dividing the North and the South. He points out that this tariff act was called the "manufacturers bill" because the woolen manufacturers succeeded in lowering the duties on raw wool, and that the bill was also supported by the commercial interests of New York. The tariff issue had been an important source of conflict between Northern manufacturers and Southern planters earlier in the century, but Hofstadter was correct that this issue was no longer as volatile by 1857. His case that economic interests were not involved in the coming conflict is hardly supported by the example of the commercial interests of New York, however. These were the same mercantile

interests who had previously supported the politics of the Southerners because of their involvement in the core-periphery trade. And these same New York merchants were to threaten secession in 1861 because of their ties to the South (P. Foner, 1946). The Beards were correct that the conflict had an economic and a class basis, but it was not a war primarily between the capitalists of the North and the "precapitalist" South.


Protection Again: The Irrepressible Conflict


The Panic of 1857 came a few months after the passage of the tariff bill. It was similar to the depression of 1839 in that it followed a period of rapid inflation, economic expansion, foreign investment, importation, and Westward movement. But the expansionary phase was based on the growth of manufactures and Western free agriculture rather than slave-grown cotton as the growth of the 1830s had been. And, as before, the fall of grain prices (partly resulting from the end of the Crimean War which allowed Russian wheat back on the world market) and the fall of wages and employment renewed the spirit of protectionism.

            The new growth of the labor movement (especially among immigrant German workers), the opposition to the extension of slavery to the Western states, and the renewed enthusiasm for cheap land led to the birth of the Republican Party .The greatest issue of the new party was "free soil" and the passage of the Homestead Act (E. Foner, 1970). The Republicans attracted Democratic voters with the slogan "vote yourself a farm" and they supported pro-labor legislation. Lincoln avowed the principle that labor is the source of all wealth and won the support of immigrant workers by his opposition to an alliance between the Republicans and the Know-Nothings (P. Foner, 1975). The Republicans were antagonistic to the "money power" of the East, but they eventually adopted protectionism in order to appeal to the manufacturers.

The success of the Republicans and the split between the Northern and Southern Democrats broke the alliance between the farmers of the West and the planters of the South, which had allowed the Southerners to control the Federal state through the Democratic party. The crumbling of this alliance provoked the Civil War17 even though the Republicans never advocated the abolition of slavery but only prevention of its extension to the West. Southern peripheral capitalism was expansionist because of its extensive nature and the quick exhaustion of the soil, but this was not the main reason why the South desired the extension of slavery to the West. The main issue for the South was control over the Federal state. Planters opposed the creation of free states because the alliance with free farmers was tenuous and they felt they would have less and less power in the Federal state. The result would be a direct attack on their "peculiar institution" and their subjugation to the North as an internal colony. Therefore, when the South- West coalition crumbled and Lincoln won the election in 1860, South Carolina did not even wait for him to take office. As Rubinson (1978) has pointed out, the Presidency was everything because there was hardly a Federal bureaucracy in which the South could have institutionalized control. South Carolina seceded immediately, and most of the other slave states followed when it became clear that the North would make war in order to preserve

the Union.

The argument that the conflict between the North and the South was due to the economic inefficiency of slavery has been sufficiently demolished. Let me only add that plantation slavery remained highly profitable and the Southerners were well aware that emancipation in the British West Indies in 1834 had increased the cost of sugar production considerably. Slavery was not simply the basis of an aristocratic civilization, it was a profitable business. The plantocracy of King Cotton was probably the most successful peripheral capitalism in the whole history of the world-system because it was less encumbered by precapitalist institutions than the Hispanics, Germanics, Slavs, or even the British, and French colonies had been. This was truly successful capitalist agriculture and its very success led to dreams of slave empire and the challenge to the Northern and Western interests (Genovese 1965). After all, the slaveholders started the Civil War. The core capitalists, workers, and farmers of the North only grudgingly made war to keep the Union intact.

The contention that capitalism and slavery were incompatible for political or cultural reasons simply does not fit with the historical facts. Barrington Moore's (1966) observation that the legal and political legitimation of slavery contradicted the more opaque form of exploitation that existed in

the North is true, but insufficient to explain the violent conflict which developed. Similarly Eugene Genovese's (1969) characterization of the divergence between the political culture of the aristocratic and precapitalist South from that of the fully developed capitalist mode of production based on wage labor in the North does .not explain the Civil War. Regardless of cultural differences both the North and the South were capitalist, only the North had become an area of core capitalism employing relatively high wage labor, while the South had remained an area of peripheral capitalism utilizing coerced low "wage" slave labor (Wallerstein, 1979b).

The evidence that supports the foregoing contention is to be seen in the political history that led to the Civil War. Northern manufacturers were not against slavery. In fact, in the face of increasing labor struggles they may have been envious of it. Their biggest conflict with the South had been over

the tariff issue, and that was no longer crucial to them by 1860. The main cause of the Civil War was the opposition of the free workers and farmers to the extension of slavery to the West. These core workers and farmers were not abolitionists. The main issue for them was the threat of competition

with slave labor for the lands of the West. Their unhappiness with the Compromise of 1850 was seen most vividly in the battle for Kansas and in the fight against Southern opposition to the Homestead Act.

The Lincoln Administration did not contemplate emancipation until well after the war had begun, and then mainly to head off English and French support for the South (Case and Spencer, 1970). Queen Victoria adopted a formally neutralist stance. The cotton famine caused by the blockade of Southern ports resulted in massive unemployment in the English midlands. English support for Southern naval raiders allowed them to sink a large portion of the Northern merchant marine.18 The Emancipation Proclamation generated enough support for the Northern cause in England and France to prevent further aid to the South.

It was not slavery that was the main issue but the question of who would dominate the Federal state. Free farmers and workers found themselves at odds with the interests of the peripheral capitalists of the South on the issue of the frontier, and so cast their lot with core capital. In so doing, they destroyed the plantocracy and created a strong core state. The Civil War and Reconstruction firmly established the hegemony of core capitalism and core labor over the Federal state. The upward mobility of the United States was hereafter assured by the alliance between classes that was only disturbed by quibbling over shares of an expanding pie, rather than by the regime crisis that had characterized the antebellum period.




What can be concluded from this examination of antebellum tariff politics? The world-system perspective led us to expect that class forces contending for state power would be important to the success or failure of core capitalism in the United States. This study confirms that there was a great deal of conflict between core and peripheral producers over the tariff and that the nascent core capitalists needed alliances with other classes in order to overcome the opposition of peripheral capitalists and the influence of extant core states. But the prevalent conclusion among economic historians that the tariff was not crucial to the survival of individual core industries does not support the idea that protection was essential to the upward mobility of the United States in the world-economy. This conclusion is supported by the research of Zevin (1971), Taussig (1964), and David (1970) and is only partly contradicted by Fogel and Engerman's (1971) study of the iron industry. What has not been done is an analysis of the overall sectoral effects of protection. It is possible, as Taussig implies, that protection was not crucial for any single industry but was nevertheless important to the manufacturing sector as a whole. Further research needs to be done before a definite conclusion can be reached.

Nevertheless, the tariff issue is significant as a reflection of contradictory class interests as perceived by the actors. The world-system perspective helps us interpret the changing political alliances of classes and interest groups. As mediators of the core-periphery trade the merchants often sided with the peripheral capitalists, but when the imperial core state (Britain) became unusually hostile, or when manufacturing became more profitable than the maritime trade, they supported the politics of the domestic core capitalists.

The class alliances of the free farmers were a function of their changing position in the larger world-economy. This is not to say, as did Weber, that class location is reducible to market position. The repeal of the Corn Law changed the world market position of American farmers, but this was not

consequence of the "sphere of circulation. " It was a change in the politically structured conditions of agricultural production.

The world-system perspective also reinterprets the class position and alliances of American wageworkers, thereby shedding some new light on " American exceptionalism." As Aglietta (1978} has argued, the original reliance of the propertied classes on farmers and mechanics for support against the British in the War of Independence created apolitical constitution that allowed the extension of citizenship and political rights to men of little or no property. In addition, the conflict between core and peripheral capitalists caused both to try to mobilize the farmers and mechanics behind them. As we have seen, both free traders and protectionists argued that adoption of their tariff policy would raise wages.

In addition, the dynamism of American economic growth was both a cause and consequence of the interaction between capital and labor. The open frontier allowed expansion and -even with massive immigration- kept wages higher than they were in Europe. This encouraged capitalists to utilize laborsaving machinery, and also provided an expanding home market for manufactures and agricultural commodities. Thus the political constitution, the class structure, and the rate of economic growth created the relative harmony between capital and labor which Henry C. Carey elevated to a universal economic truth (Marx, 1858/1973 }. It also created the tendency for the reproduction.of an underclass excluded from the mainstream of economic development.

The end of continental expansion created the contradiction that led to the Civil War. It was not the cultural incompatibility of slave society and wage-labor capitalism, but the diminishing amount of new territory in which to expand that led to the confrontation between core capitalism and peripheral capitalism. And this was less a struggle between core capitalists and peripheral capitalists (as the earlier controversy over the tariff had been) than a fight between peripheral capital and core labor and farmers. The victory redounded to the favor of the manufacturers, but it was not primarily their interests that led to the conflict.

It may be argued that the world-system perspective would lead us to expect that the Civil War was caused by the conflict between core capitalists and peripheral capitalists over the foreign policy of the Federal state, and indeed this was my expectation when I began this study. The foregoing conclusion focusing on conflict between core labor and peripheral capital over the "internal" policies of the state is not inconsistent with a sophisticated version of the world-system perspective, however. The examination of class conflict as it occurs in the context of the world-economy seeks to eliminate the internal-external distinction, which has confused much previous analysis. The confrontation was caused by "internal" scarcities only because the policy of annexation had come upon natural and political limits. And the alliance between core capital and core labor, which is one of the most interesting hypotheses of the world-system perspective, can be seen in formation in the Civil War. This class coalition made possible the creation of a strong core state that could rise to hegemony in the world-economy.

This study also reveals that tariff politics are not always an ideal indicator of struggle between core and peripheral producers. This is because the salience of international boundaries and state regulation of trade varies with changing conditions in the larger world-economy. State boundaries and other institutions that are used to intervene politically in the market are more crucial during periods of economic contraction than in periods of expansion. Class conflicts are generally less severe in expansionary periods and so tariffs do not accurately reflect contradictory class interests in these periods.

A more complete understanding of the rise of core capitalism in the United States requires the investigation of the world class basis of other types of state intervention in the economy. Federal land policy, Indian removal, immigration policy, regulation and deregulation of currency and credit, the extension of suffrage, internal improvements, and the expansion of public education are all important issues that reveal the nature of class contradictions and harmonies. Further research should combine an analysis of these with our knowledge of tariff politics in order to provide a fuller explanation of the rise of core capitalism in the antebellum period.


Acknowledgments: I would like to thank William P. Quinn for his help on this chapter.






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1 This theoretical perspective calls our attention to the importance of larger forces, such

as the world market and international political and economic power, but it does not, as Robert

Brenner (1978) claims, ignore the importance of class struggles. On the contrary, class relations

are seen to exist at the level of the whole system, and class struggles are understood to take

place across, as well as within, state boundaries (Wallerstein, 1976a). State boundaries overlay

the structure of world classes and are an important influence on the subjective and organiza-

tional interests of classes. Capitalist production relations include both wage labor in the core

and various forms of coerced labor in the periphery, as well as the relationship between these

different types of labor control. From this perspective class formation, state formation, and

nationbuilding are processes that occur within, not exogenous to, the operation of the capitalist

mode of production. Brenner's (1978:88-90) contention that it was class forces in Virginia,

rather than in the world-system, which determined the direction of development ignores the

question of how the class structure of Virginia came into being.

The working out of the logic of capitalist development is, of course, influenced by exoge-

nous variables, such as climate, soil fertility, geographical features, and the institutional struc-

tures of precapitalist societies which are incorporated into the world division of labor. These

exogenous factors influence the outcomes of struggles between classes, states, firms, and so on.

But the main determinants of success or failure come from the process of uneven development

itself, and the success of some means the failures of others. The opportunities for increases in

income are limited by the socially created and sustained scarcities, which the interests of super-

ordinate world classes place on the production and distribution of surplus product.

2 The conditions that allowed Japan to avoid peripheralization and develop core activities are described by Frances Moulder (1977). England's upward mobility is analyzed by Wallerstein (1974) and Frank (1978). Wallerstein (1980) also explains the emergence of semiperipheral Sweden and Prussia, as well as New England in the late seventeenth and early eighteenth centuries.

3 This is an ironic reversal of approach when compared to the modernization literature

which sought to understand and promote the development of "backward" nations in the basis

of generalizations derived from the history of "advanced" ones.

4 Simple commodity production exists when there is no differentiation between capital

and labor. Producers own the means of production and produce commodities for sale on a

market. The free farmers working their own land and producing cash crops constituted a large

part of the colonial economy in the Northern and middle colonies.

5 These are the areas that were least profitable in terms of the exploitation of raw materials and labor, and thus subsistance farming created a relatively egalitarian class structure. In

areas where mines or plantations created an incentive for labor exploitation, either indigenous

or imported coerced labor forces were utilized, resulting in a much more hierarchical class

structure. Mintz (1969) supports this analysis with his comparison of Puerto Rico and Jamaica

in the early nineteenth century. The two islands, which are very similar geographically, were

going through a transformation of class structure in exactly opposite directions. Jamaica,

which had been a sugar colony for 150 years was, because of soil exhaustion, returning to a

rather egalitarian subsistence economy, while Puerto Rico, which had been a neglected Spanish

colony with a subsistence economy, was in the process of becoming a plantation economy

based on coerced wage labor.


6 Dutch settlements (of Protestants) in the Hudson River valley evolved an agrarian class

structure of large landlords and leasehold tenants who worked on the estates (Kim, 1978 }. This

land tenure pattern remained after the British took control of the area (Lynd, 1964 }. This indicates that, in regions where soil productivity and climate is intermediate, political and institutional factors more easily affect the type of class structure that develops.


7 The conscious policy of separation from indigenous peoples evolved from the earlier

experience in Ireland where English overlords had become completely merged with the Gaelic

population and thus beyond control.

8 This description of the role of the status reflecting the combined interests of dominant

classes does not exclude the possibility that the state apparatus itself occasionally exercises influence in its own behalf. My position is not a vulgar "instrumentalist" one (Gold, Lo, and

Wright, 1975). For the case under investigation, however, a sophisticated structuralist theory

of the state is hardly required. The "relative autonomy" of the u.s. Federal state in the antebel-

lum period is out of the question. The state apparatus itself was small (Crenson, 1975); thus the

vectors of class interest operated on state policy relatively unmediated by a government bureaucracy.

9 From a world-system perspective it is understandable why emergent core producers in

a peripheral area and small commodity producers relatively independent of the core-periphery

division of labor might support a War of Independence. But why would Southern planters and

Northern merchants tied to the core-periphery exchange support it? Of course, many large

property owners did not. Tory sentiment in the South and in the commercial cities of the mid-

dle colonies (especially New York) was high. But many merchants and planters were in debt to

British creditors (Thompson, 1978). The planters shared with Northern farmers a resentment

Of the increase in what was perceived as illegitimate taxation. Merchants resented the reorganization and attempted enforcement of the Navigation Acts. And the planters also resented British attempts to limit expansion westward with the Proclamation Line of 1763. Plantation agriculture quickly exhausted the soil and necessitated expansion to fresh areas. Aptheker (1960) suggests that rivalry between British and planter land companies in the Ohio Valley contributed to Whiggish sentiment in Virginia. But Frank (1978) argues that none of the above grievances would have been sufficient in the absence of the cyclical economic slump that followed the expansion of the first half of the eighteenth century. This, and the defeat of the French by the British in the Seven Years War (and consequent French support for the Americans) made the anti-imperial revolt possible.

10 The theory of unequal exchange (Emmanuel, 1972) does not appear full-blown here, but the argument bears a striking similarity to the “instability and inelasticity of demand” formulations of United Nations economists concerned with contemporary Latin American dependency.

11 The “free trade” postures of the Latin American regimes did not preclude all tariffs, but rather avoided a policy which systematically protected domestic core producers from British competition (Burgin, 1946). The occasional regimes that did advocate independent national development and protection were ineffectual and short-lived due to the strong opposition of peripheral producers supported by the British (Frank, 1967; Hale, 1968).

12 Whereas it has often been assumed that high wages were the main incentive for investment in machinery in the textile industry, David (1975:146) cites an unpublished work by Zevin which contends that one large firm held a monopsony (buyer monopoly) in the local labor market, and that this circumstance, probably shared by other leading firms, enabled manufactures to pay workers less than their marginal productivity even though labor was scarce. So it was labor scarcity rather than high wages that motivated these forms to employ additional machinery.

13 Zevin (1971) assumes that most of the increased demand for manufactures came from the rapidly expanding West, whereas North (1966) emphasizes the importance of the growing southern market.  But Lindstrom’s (1978) study of the composition of demand and interregional trade demonstrates that most of the demand for manufacturers came from the East itself. The rapidly growing old maritime cities (Boston, New York, Philadelphia, and Baltimore), the new industrial centers (Pittsburgh, Wilmington, Providence), and the increased use of manufactures by the rural populations of the East were the main consumers of American core products in this period.

14 The clue which led me to Bornholdt’s (1949) article was a small. Seemingly incongruous, bust of Simon Bolivar encountered on walk up Baltimore’s North Charles Street.

15 Part of the Jacksonian coalition involved an agreement to expand at the expense of the

American Indians. Jackson's fame as an Indian fighter and his toleration of the abrogation of

treaties and removal of Indians from the lands of the South was an early example of the dark

side of American democracy. An alliance between popular forces and large investors touted as

democracy was cemented by a common front against an underclass, in this case indigenous

peoples. It is characteristic of upwardly mobile semiperipheral states that the class coalition

upon which they are based is relatively progressive in that it includes a larger percentage of the

"lower orders" than the class coalitions upon which other contemporary states are based. And,

as well, the ideologies used to mobilize development in these countries are usually relatively

egalitarian. Citizenship is cemented by treating some groups as non-citizens. In the U.S., it has been blacks, Indians, and recent immigrants. In Britian, it was first the propertyless Englishmen and later the Irish, Scots, and Welsh (Hechter, 1975). In the Soviet Union, it has been certain national minorities and political deviants. Thus the upwardly mobile countries mobilize national development by incorporating rather larger numbers of the population within the political community and the scope of development, and this an advantage relative to other countries because it solves some of the Keynesian problems of effective demand by creating a large home market.  The exclusion of an internal underclass does not function primarily as a mechanism of economic exploitation, but rather to maintain the solidarity of the larger “egalitarian” alliance.



16            In order to study the development of core capitalism in the United States we need to know the extent to which the home market was dominated by British imports. None of the studies that examine the relationship between the United States and Britain in the nineteenth

century organize their comparisons in a way which would reveal this. North (1966) and Potter (1960, 1976) stress the importance of the Atlantic economy in explaining U.S. economic development, but they never directly examine the trend in the proportion of the commodities

consumed in the U.S. that are imported from Britain. Rather, they show the trend in the value of imports by itself. Potter examines British exports to the U.S. as a percentage of all British exports, but neither combines the British imports with data on U.S. production or income.

Table 9.1 does this. It shows the ratio of U.S. Realized National Income in manufacturing

to the value of British imports. We do not have data on imports from Britain before 1821, but if

it is correct to extrapolate the trend in table 9.1 backward in time, then the proportion of the home market served by imports from Britain was high until 1839. Then this proportion declined until 1849, experienced a small rise to 1859, and the declined continuously. The years are not exact as data on Realized national Income for intervening years are not available, but we can safely conclude that the peak of British domination of the home market was around 1839 or earlier, and this domination declined from then on, except for a slight recovery during the 1850s. Data on Realized National Income in manufacturing are computed from Martin (1939) and British imports from U.S. Bureau of the Census (1975).

17 Northern sympathizers called it the Civil war. Southerners called it the War for Southern Independence. A neutral name is the War between the States.

18 This injury and the emerging British superiority in ocean steamships caused the American maritime industry to go into a decline from which it did not recover until the end of the century.