The bill was conceived as part of a solution to the purely domestic matter of avoiding a projected federal deficit reported by Secretary of the Treasury Alexander J. Dallas.
International developments added key facts to the debate; in 1816 there was widespread concern among Americans that war with the United Kingdom might be rekindled over economic and territorial issues.
[1] Sectional characteristics of the country were also taking shape: the Northeast was transitioning from trade and shipping towards industrial enterprises; the Deep South concentrating on cotton cultivation, and the West seeking transportation routes to market their agricultural goods.
[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 improvements for roads and canals, and 3) a protective tariff to shelter emerging American manufacturing from the advanced industries in Europe.
[9] 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.
[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.
[20] Southern legislators were keenly aware of the effect that British merchants were having on the US economy and emerging American industries by flooding manufactured goods onto the US market.
[23][24] Rejecting doctrinaire anti-Federalism, Representative John C. Calhoun of South Carolina called for national unity through interdependence of trade, agriculture and manufacturing.
[26][27] John Quincy Adams, as US minister to Great Britain, concurred with Calhoun, discerning a deep hostility from the capitols of Europe towards the fledgling United States.
[29] This faction of the Jeffersonian Republican Party remained adamant in upholding the principles of state sovereignty and limited government, rejecting any protection whatsoever as an assault upon "poor men and on slaveholders".
[31][32] Second, the tariff would only be applied to cotton and woolen products, and iron; the bulk of imported goods the South regularly bought from foreign countries would not be affected.
[33] Those who backed tariffs believed that the economic benefits that would accrue to the North and the West were in the national interest, and that the South could absorb a mild and temporary increase in the cost of imported goods.
Finally, Jeffersonian Republicans, emerging from the War of 1812 with the opposition Federalist Party in disgrace, felt sufficiently in control of the political landscape to permit an experiment in centralizing policies.
[37] Low grade printed fabrics from British India, however cheaply they were priced, were accessed at a fixed rate of twenty-five cents per square yard.
[48] In the three years following the passage of the Dallas tariff, the issues that prompted appeals for protection – trade wars, geostrategic disputes and the federal deficit – had largely been resolved.
[52] By 1820, the support for higher tariffs was less an argument for government revenue, than an effort by Western and Northern interests to establish protection as a principle of economic national well-being.