In the year 1831, Albert Gallatin celebrated his 70th birthday. At a stage in life when most people were lucky to be alive and were taking it easy, Gallatin showed few signs of slowing down. Before the end of the year, he would play a principal role in the founding of New York University and become a key figure in the remarkable Free Trade Convention in Philadelphia.
The Democratic-Republicans under Jefferson and Madison repealed internal excise taxes and instead put the country on the path to rely primarily on tariffs to fund the federal government. At first, they aimed to keep those taxes on imports no higher than needed to fund the “ordinary expenses” of the government. But in 1816, they introduced the country’s first “protective” tariffs, aimed at helping certain industries by making the products of their foreign competition artificially high. One result was to ignite a debate that factored into the sectional strife of the Civil War a half-century later, and which stirs passionate debate in Congress and the country even today.
Indeed, the high tariff rates fueled the “nullification” crisis of 1832, in which South Carolina attempted to nullify the tariffs. South Carolina felt that the policy protected Northern manufacturing interests at the expense of Southern agricultural exports, namely cotton.
As the decade of the 1830s dawned, the average American duty imposed on imports exceeded 40 percent of their value, easily twice as high as needed to fund the government. For believers in free trade, this was intolerable. It provoked a movement to hold a nonpartisan convention to help abolish protectionism.
More than 200 delegates from 15 of the then-24 states convened in Philadelphia in the early fall of 1831. Dubbed the “Free Trade Convention,” it addressed the tariff question head-on and issued two primary documents—an address to the American people and a memorial to the U.S. Congress. Albert Gallatin exerted huge influence over the first and was the author of the second.
In his superb biography of Gallatin, “Jefferson’s Treasure,” historian Gregory May explains that his subject’s prominence as an outspoken pro-free trade advocate and distinguished former Treasury secretary meant that the Convention naturally looked to him for guidance. May cites a letter that Gallatin wrote later to Pennsylvania Congressman Joseph Reed Ingersoll, in which he said, “I was, as far as I know, the earliest public advocate in America of the principles of free trade, and I have seen no cause to change my opinion.”
While united in the conviction that high tariffs to protect domestic industries must be reduced, the conventioneers grappled with questions that often divided them. How high is too high? What constitutes the “ordinary expenses” of the government? Are there special circumstances that might justify temporary protective duties? Should tariffs be cut gradually or immediately? If tariffs are imposed, should they be uniform or customized to the industries demanding protection?
One faction, principally from Southern states, wanted the Convention to declare that tariffs, at least those intended for “protection,” were unconstitutional. Gallatin differed with that perspective. He thought the Constitution gave considerable power to Congress to determine its methods of taxation. He also wanted the Convention to stay away from positions that might appear extreme and threaten the unity of the free trade movement. He had proved himself to be a master diplomat in personally negotiating the treaty that ended the War of 1812, and he proved it again by deftly navigating competing views at the Convention.
“The free trade men rallied around a central, and quite simple, precept of political economy: that a country acquired the most wealth and stood most prosperous when its capital and labor were best applied and thus most productive.”
Gallatin’s imprint is most evident in the Convention’s message to Congress. It called for eliminating the national debt (an achievement briefly realized later in the same decade when Andrew Jackson occupied the White House). Tariffs should fund the ordinary expenses of the government and no more, which by Gallatin’s calculation would result in rates half as high as the existing ones.
The combination of the Convention’s address to the American people, the memorial to Congress, and an “exposition” that provided supporting evidence became, in Belko’s words, “the primary source of information for the opponents of protection—indeed the textbook for free traders of the day.”
For his role in it all, Gallatin earned praise from free traders and vitriol from protectionists. Sen. Henry Clay of Kentucky, an unapologetic high-tariff champion, viciously attacked the former Treasury secretary on the floor of the Congress, claiming his Swiss birth inclined Gallatin to favor the interests of foreigners over those of Americans.
It did not matter to Gallatin what Clay or anybody else said. Free trade was a natural extension of a primary reason America was formed—namely, to empower individuals to exercise the basic human right to engage in voluntary, mutually beneficial commerce. It would promote peace between nations. It would deny the government power to favor one interest or section over another based on the lobbying power of groups that sought special favors. These principles were affirmed by the Convention’s memorial to Congress.
