In America the depression of commerce and industry resulting from the war with England continued unabated. To relieve the situation, the Secretary of the Treasury, A.J. Dallas, proposed as a measure of relief the chartering of a new national bank with increased capital and enlarged powers and the readjustment of the tariff by the imposition of higher duties. The bank was chartered for twenty-one years with a capital of $35,000,000, a portion of the stock to be owned by the government and the institution to have in its management five government directors in a board of twenty-five. The tariff policy of Madison was sustained by the Southern party and opposed by the Federalists, especially in New England. Thus it became more a question of sectional interests than of abstract political economy. The capital of New England was invested in shipping, so that the exclusion of articles of foreign production was bound to injure, by a high tariff, New England's carrying trade. On its part, the South sought to establish a home market for its cotton--almost the only staple of the Gulf States. Efforts were made to encourage the domestic manufacture of those coarse fabrics which were indispensable in a slave-holding region. The question thus grew into a struggle between slave labor and free trade. The free-trade party was led by Daniel Webster, and the tariff party by Calhoun. During the first year of the new tariff the value of foreign imports fell off about thirty-two per cent. In the adjustment of capital and trade to an enforced industrial policy, the American people passed through a commercial crisis which paralyzed the flourishing sea-ports of the New England coast. Newburyport, Salem, Plymouth, New London, Newport, and intermediate places sank from lucrative commercial centres into insignificant towns. Manchester, Lowell, Fall River, Pawtucket, Waterbury and other New England cities on the other hand became great manufacturing places.
The Fourteenth American Congress, under the leadership of Clay, imposed a protective tariff of about twenty-five per cent on imported cotton and woollen goods, with specific duties on coal and iron. The average duties on imports amounted almost to prohibition. Late in the year Indiana was admitted as the nineteenth State.