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The Tariff of 1828 was supposed to protect northern states from competition with European manufacturers. Instead, though, it increased prices for manufactured goods in the South and stopped Southern cotton exports to Europe. Overall, it caused a lot of economic hardship.
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A new tariff was passed in 1832 to hopefully fix the problems created because of the Tariff of 1828 and improve the South's economic situation.
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The Tariff of 1832 was not enough for the South, so they passed the Ordinance of Nullification, which declared both tariffs void in SC. They also passed laws to enforce the ordinance, like giving themselves authorization for creating a military force and getting access to arms.
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In response to the nullification ordinance, Jackson gave a proclamation appealing to the citizens of South Carolina. He tried to get them to go against the ordinance and declare their allegiance to the Union. He said if they didn't, he would get the U.S. army to enforce the tariff on them.
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Clay created a compromise which made taxes that were over 20% of the value of the good would be decreased every year.