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Starting in 1816 with the passage of the first national protective tariff, the North was set on a path of mercantilism. The New England states desired protection for their industries from competition from British manufactures. These industries included iron smelting, textile manufacturing, glass and ceramics. The Western states sought protection from Caribbean molasses which was used by distilleries to make rum. They wanted to protect their market for grain by having it distilled into whiskey. Prior to 1816 the average tariff was around 5% of the value of the import. After 1816, the tariff was around 20%. The South, which was involved in international trade with the export of agricultural products, tobacco, rice, and, by 1860, particularly cotton, paid about 85% of the national taxes while having about 1/3 of the total population.

Though paying most of the taxes, the South received very little of the benefit. Northern manufacturers were protected from competition and the money collected from the tariff was spent building roads, railroads, bridges, and canals in the North.

The South supplied the world with about three quarters of its cotton fiber. The Morrill Tariff, signed by President Buchanan just before leaving office, would have doubled the tax rate on most imports, and destroyed the South's ability to market its cotton to Europe.

Because slavery and free Negroes were banned from most U.S. administered territories, Southerners felt that though they funded the Union's government they were being treated less than equally.

So, the South needed the tariff lowered and the territories open to slavery in order to restore equality of state membership in the Union. That was not going to happen. The Northern section of the country controlled both houses of Congress and the presidency. There was little prospect that would change.

The solution the South turned to was to exercise their state sovereignty and leave the Union peacefully. The seceding states formed a free trade Confederacy with a very low import tariff, similar to the one the Union had prior to 1816. The North could keep the territories. The South could continue to export cotton to Europe.

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