Here he was conspicuous as an ardent free-trader and an uncompromising advocate of States Rights, opposed the protectionist tariff bills of 1824 and 1828, and consistently upheld the doctrine that slavery was a domestic institution and should be dealt with only by the individual states. In one of his speeches opposing the sending by the United States of representatives to the Panama Congress, he said, "The moment the federal government shall make the unhallowed attempt to interfere with the domestic concerns of the states, those states will consider themselves driven from the Union."

Although states' rights is often associated with the southern cause and slavery, Massachusetts Governor Caleb Strong defied President James Madison's request to call out the state militia to give assistance in prosecuting the War of 1812. After the war ended, southern men adapted the same policy, and applied it to the issue of slavery. A simmering resentment of the action taken by Governor Strong existed beneath the patina of happiness which is called the Era of Good Feeling. The resentment surfaced as early as 1819 when the slave trade was called piracy by the Congress of the United States.

In American politics, Senator Hayne is best known for his debate in January, 1830 with Senator Daniel Webster during which he cited the fact that New England had failed to fully participate in the war of 1812 to 1815. In December, 1814, the Federalists of New England met at Hartford, Connecticut in opposition to the war and the administration of President James Madison. Daniel Webster of New Hampshire, had been elected to Congress in 1812 by the party opposed to the war with England. He was reelected in 1814, which was an indication that the people of the New England States opposed the war. He was elected by Massachusetts to the Senate in 1827.

The debate arose over the so-called Footes Resolution, introduced by Senator Samuel A. Foote (1780-1846) of Connecticut, calling for the restriction of the sale of public lands to those already in the market, but was concerned primarily with the relation to one another and the respective powers of the federal government and the individual states, Hayne contending that the constitution was essentially a compact between the states, and the national government and the states, and that any state might, at will, nullify any federal law which it considered to be in contravention of that compact.

The resentment that the southerners held towards the people of New England erupted on January 19, 1830, when Senator Hayne attacked the people of New England. Senator Daniel Webster responded on the next day. Senator Hayne spoke again on the 21st, 25th, and 27th. Senator Webster spoke again on the 26th and 27th. This was the famed "Second Reply to Hayne," one of the greatest speeches in American history. The final few paragraphs are still riveting to read. Webster concluded with his immortal cry, "Liberty and Union, Now and Forever, One and Inseparable!" As unfair as it might be to Hayne, he is remembered more for being the disputant with Webster, and on the receiving end of perhaps the greatest speech in the history of the Senate, than for anything else he did.

However, the fact that the States of New England were lukewarm to the American cause during the war of 1812 could not be denied. By contrast, the State of South Carolina had fought fiercely against England. A cantankerous relationship continued to exist between the southerners and the people of New England until the time of secession from the Union and the outbreak of the Civil War.

Hayne vigorously opposed the tariff of 1832, was a member of the South Carolina Nullification Convention of November 1832, and reported the ordinance of nullification passed by that body on the November 24. Resigning from the Senate, he was Governor of South Carolina from December 1832 to December 1834, and as such took a strong stand against President Andrew Jackson, though he was more conservative than many of the nullificationists in the state. He was intendant (mayor) of Charleston, S.C., from 1835 to 1837, and was president of the Louisville, Cincinnati & Charleston Railway from 1837 to 1839.

He died at Asheville, North Carolina. His son, Paul Hamilton Hayne (1830-1886), was a poet of some distinction, and in 1878 published a life of his father.