Presidents and Economics: James K. Polk and the Walker Tariff
James K. Polk was inaugurated as President on March 4, 1845, at the age of 49, which made him the youngest man to assume the presidency up to that time. A disputed legend claims that Polk set four clearly defined goals for his administration:
1. Reestablish the Independent Treasury System.
2. Reduce tariffs.
3. Acquire some or all of Oregon Country.
4. Acquire California and New Mexico from Mexico.
On the first of these goals, Polk was on the same page as his mentor, Andrew Jackson, who was opposed to a national bank. The Second National Bank had been chartered by President James Madison in 1816. The efforts to renew the Bank's charter put the institution at the center of the general election of 1832, in which the Bank's president Nicholas Biddle and pro-Bank National Republicans led by Henry Clay clashed with Andrew Jackson. Failing to secure recharter, the Second Bank of the United States became a private corporation in 1836, and was liquidated in 1838. President John Tyler vetoed two bills proposing a new national bank that were proposed by Clay. The issue of whether or not to have a national bank system remained alive during Polk's administration.
Polk signed legislation in August 1846 which provided that the public revenues would be retained in the Treasury building and in sub-Treasuries in various cities. The Treasury was to pay out its own funds and be completely independent of the banking and financial system of the nation.
On the second on his goals, Polk brought about the Walker Tariff. This was a set of tariff rates adopted in 1845. It made substantial cuts in the high rates of the tariff of 1842, enacted by the Whigs. It was based on a report by Secretary of the Treasury Robert J. Walker. The Walker Tariff reduced tariff rates from 32% to 25% and it resulted in an increase in trade.
When he became President, Polk directed Walker to work out the details of the tariff. In 1846, Polk delivered Walker's tariff proposal to Congress. Walker urged its adoption in order to increase commerce between the U.S. and Britain. He also predicted that a reduction in tariff rates would stimulate trade, including imports and would result in a net increase in customs revenue.
Congress, then controlled by Democrats, agreed with Walker's recommendations. Southern Democrats, who had little industry in their states, were especially supportive. Rather than setting fixed rates for specific items on a case-by-case basis, the Walker Tariff established general schedules into which all goods could be classified. It reduced rates across the board on most major import items except luxury goods such as tobacco and alcoholic beverages.
As Walker had predicted, trade increased substantially, and net revenue collected also increased, from $30 million annually under the previous tariff in 1845, to almost $45 million annually by 1850. It also improved relations with Britain. The 1846 tariff rates initiated a fourteen-year period of relative free trade by nineteenth century standards which lasted until the Tariff of 1861.
The Walker Tariff and the Independent Treasury ticked off two of the four items on Polk's famed presidential to-do list.
1. Reestablish the Independent Treasury System.
2. Reduce tariffs.
3. Acquire some or all of Oregon Country.
4. Acquire California and New Mexico from Mexico.
On the first of these goals, Polk was on the same page as his mentor, Andrew Jackson, who was opposed to a national bank. The Second National Bank had been chartered by President James Madison in 1816. The efforts to renew the Bank's charter put the institution at the center of the general election of 1832, in which the Bank's president Nicholas Biddle and pro-Bank National Republicans led by Henry Clay clashed with Andrew Jackson. Failing to secure recharter, the Second Bank of the United States became a private corporation in 1836, and was liquidated in 1838. President John Tyler vetoed two bills proposing a new national bank that were proposed by Clay. The issue of whether or not to have a national bank system remained alive during Polk's administration.
Polk signed legislation in August 1846 which provided that the public revenues would be retained in the Treasury building and in sub-Treasuries in various cities. The Treasury was to pay out its own funds and be completely independent of the banking and financial system of the nation.
On the second on his goals, Polk brought about the Walker Tariff. This was a set of tariff rates adopted in 1845. It made substantial cuts in the high rates of the tariff of 1842, enacted by the Whigs. It was based on a report by Secretary of the Treasury Robert J. Walker. The Walker Tariff reduced tariff rates from 32% to 25% and it resulted in an increase in trade.
When he became President, Polk directed Walker to work out the details of the tariff. In 1846, Polk delivered Walker's tariff proposal to Congress. Walker urged its adoption in order to increase commerce between the U.S. and Britain. He also predicted that a reduction in tariff rates would stimulate trade, including imports and would result in a net increase in customs revenue.
Congress, then controlled by Democrats, agreed with Walker's recommendations. Southern Democrats, who had little industry in their states, were especially supportive. Rather than setting fixed rates for specific items on a case-by-case basis, the Walker Tariff established general schedules into which all goods could be classified. It reduced rates across the board on most major import items except luxury goods such as tobacco and alcoholic beverages.
As Walker had predicted, trade increased substantially, and net revenue collected also increased, from $30 million annually under the previous tariff in 1845, to almost $45 million annually by 1850. It also improved relations with Britain. The 1846 tariff rates initiated a fourteen-year period of relative free trade by nineteenth century standards which lasted until the Tariff of 1861.
The Walker Tariff and the Independent Treasury ticked off two of the four items on Polk's famed presidential to-do list.