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Content: 5][6]
These geostrategic and economic provocations caused a shift in domestic policy. The strict constructionistideologists of the dominant Jeffersonian Republican Party – though averse to concentrating power into the hands of the federal government – recognized the expediency of nationalizing certain institutions and projects as a means of achieving national growth and economic security. [ 7][8]
In his Seventh Annual Message to the Fourteenth Congress on December 5, 1815, President James Madison suggested legislation to create 1) a national bank with regulatory powers 2) a program of federally funded internal improvementsfor roads and canals, and 3) a protective tariff to shelter emerging American manufacturing from the advanced industries in Europe. [ 9]
The Federal deficit and the tariff debate[edit]
In December 1815, Treasury Secretary Alexander J. Dallas presented a federal budget report to Congress projecting a substantial government deficit by the end of 1816. Though his budget figures were not in dispute, the means of raising the funds were, and proposals for direct or excise taxes were generally unpopular.[10] Secretary Dallas called for a limited protective tariff on manufactures to forestall the deficit. His proposal provoked opposition from two economic sectors: commerce and agriculture. [ 11][12]
Commercial maritime centers in New England and the Mid-Atlantic states had anticipated a lucrative import and export exchange with the post-war reopening of European and global markets.[13] A protective tariff might provoke retaliatory measures, impeding free trade and profits. [ 14]
Agrarians in most regions of the US were also advocates of open markets. Northerners, like most Southerners, were still farmers (84% for the whole country).