Tariff Or Laissez-Faire

Tariff or Laissez-Faire US History/Napp Name: ______“In the late 1800s, many Americans embraced a laissez-faire policy. This means government should not interfere in the economy, except to protect property rights and maintain peace. They believed a free market, in which companies compete, leads to more wealth for everyone. This policy promotes keeping taxes low and limiting government debt. The chance to gain wealth attracted entrepreneurs. These are people who risk their capital in organizing and running businesses. Many New Englanders invested capital in building factories and railroads. Foreign investors also invested in American industries.

In many ways, the U.S. government was laissez-faire in the late 1800s. In other ways, it actively aided industry. Congress passed the Morrill Tariff. It nearly tripled tariffs. This made imported goods cost more than American goods. The government gave land grants to western railroads and sold land with mineral resources for less than its true value. High tariffs ran counter to laissez-faire policies. Tariffs also caused foreign countries to raise tariffs against American goods. This hurt Americans trying to sell goods abroad, particularly farmers. Despite this effect, many business and government leaders thought tariffs helped new American industries compete with large European industries. By the early 1900s, many American industries were large and competitive. Business leaders then began to push for free trade.” ~ The American Vision

1. According to the theory of laissez faire, 4. In the late 1800s, the theory of laissez- the economy functions best when the faire capitalism was used by many government industrialists to (1) subsidizes business so that it can compete (1) petition the government for assistance worldwide during times of financial crisis (2) regulates businesses for the good of the (2) oppose colonial expansion in Africa and majority Asia (3) owns major industries (3) argue against government regulation of (4) does not interfere in business business practices (4) defend limits on the number of 2. In the late 1800s, supporters of laissez- immigrants allowed to work in factories faire capitalism claimed that government regulation of business would be 5. In the period from 1865 to 1900, the (1) essential to protect the rights of United States Government aided the consumers development of the West by (2) necessary to provide jobs for the (1) maintaining free and unlimited coinage unemployed of silver (3) useful in competing with foreign nations (2) offering low-interest loans to businesses (4) harmful to economic growth (3) granting land to railroad companies (4) providing price supports for farm 3. A tariff benefits products (1) domestic industries (2) consumers 6. A tariff (3) foreign industries (1) raises prices of foreign goods (4) foreign sellers (2) lowers prices of foreign goods Event What Happened Where and When Who Was Involved Did It Happen Whiskey Tax and Farmers rejected a Western Farmers in western Rebellion tax on whiskey and Pennsylvania in 1791 Pennsylvania and started a rebellion. and 1794 President President Washington Washington sent troops to put the rebellion down. Law was restored. Tariff of 1832 Southerners called South Carolina in Farmers in South for the nullification 1832 Carolina and of the Tariff of 1832 President Jackson and threatened to leave the union. President Jackson sought a compromise on the tariff even as he rejected the idea of secession.

1. At times, the United States Government 4. The Whiskey Rebellion of 1794 arose in has passed protective tariffs to southwestern Pennsylvania when the federal (1) encourage foreign trade government (2) help the nation’s manufacturers (A) Levied an excise tax on whiskey. (3) reduce the cost of consumer goods (B) Tried to prohibit the sale of whiskey. (4) improve the quality of goods (C) Allowed the import of foreign whiskey. (D) Halted the export of American whiskey. 2. How did the high protective tariff of 1828 (E) Tried to prohibit the manufacturing of affect southern planters? whiskey. (1) It protected them from foreign competition. 5. In his reaction to the Whiskey Rebellion, (2) It increased the cost of European Washington demonstrated imports. (A) That the government would react with (3) It increased their reliance on goods from compassion and understanding to the plight the North. of the disadvantaged. (4) It protected their land from migrating (B) The national government’s ability to Native Americans. accept criticism. (C) That the national government would not 3. The Nullification Crisis of 1832 involved a allow violent resistance to the laws it dispute over enacted. (1) Distribution of federal surpluses. (D) The need for a permanent standing (2) Protective tariffs. army. (3) Internal improvements. (4) Public land policy. Cartoon drawn during the nullification controversy showing the manufacturing North getting fat at Southern expense; Library of Congress

Explain how the manufacturing North was getting fat at the expense of the South: ______

Define, once again, nullification: ______

What is the danger of nullification to the union of states? ______

Questions about tariffs:

1: A tariff is a tax on an imported good. Therefore, what does a tariff on an imported good do to the price of the good? ______2: How does a tariff affect consumption of imported goods? ______3: How do tariffs on imported goods then affect the consumption of domestic goods? ______1. What was a main reason large plantations 5. During the early 1800s, which factor developed in the South during the colonial contributed the most to the start of the period? Industrial Revolution in the United States? (1) British laws discouraged tenant farming. (1) a restriction on European immigration (2) Cotton could only be grown in wetlands. (2) the end of the slave labor system (3) Southern mountains led to the (3) an abundance of natural resources development of isolated, self-sufficient (4) the availability of electricity farms. (4) The coastal plain in the South contained 6. The principal reason Congress raised large areas of fertile soil. tariff rates in the late 1800s and early 1900s was to 2. Before the start of the Civil War, many (1) increase personal income taxes Southern political leaders supported (2) lower prices for American consumers (1) States rights (3) guarantee high wages to American (2) higher tariff rates workers (3) voting rights for women (4) protect United States businesses from (4) repeal of the Fugitive Slave Act foreign competition

3. In the early 1800s, which factor was most 7. The climate and topography of the important in the development of Northern southeastern United States had a major manufacturing centers? impact on the history of the United States (1) abundance of water power before 1860 because the region (2) availability of slave labor in the North (1) became the center of commerce and (3) development of gold mines manufacturing (4) access to passes through the Appalachian (2) developed as the largest domestic source Mountains of steel production (3) was the area in which most immigrants 4. Climatic conditions in the southern chose to settle colonies most directly influenced the (4) provided agricultural products that were development of processed in the North and in Europe (1) democratic institutions (2) a canal system (3) the plantation system (4) the coal industry

Let’s Examine the Opposite of a Tariff! Let’s Examine NAFTA! “On January 1, 1994, the North American Free Trade Agreement between the United States, Canada, and Mexico (NAFTA) entered into force. All remaining duties and quantitative restrictions were eliminated, as scheduled, on January 1, 2008. 1- What is NAFTA? ______2- What are the benefits of NAFTA to the U.S. economy? ______3- What are the disadvantages of NAFTA for the U.S. economy? ______