The Tariff History of the United States

The Tariff History of the United States The Tariff History of the United States By F.W. Taussig Henry Lee Professor of Economics in Harvard University FIFTH EDITION Revised, with Additional Material, Including a Consideration of the Aldrich-Payne Act of 1909 G.P. Putnam’s Sons New York and London The Knickerbocker Press G.P. Putnam’s Sons New York and London and The Knickerbocker Press © 1910, [1892] Cover prepared by Chad Parish. Introduction © 2010 by the Ludwig von Mises Institute and published under the Creative Commons Attribution License 3.0 Text typeset and reprinted in 2010 by the Ludwig von Mises Institute. Ludwig von Mises Institute 518 West Magnolia Avenue Auburn, Alabama 36832 mises.org ISBN: 978-1-61016-132-9 Note to the First Edition Of the papers printed in this volume none is now presented to the public for the first time. The essay on “Protection to Young Industries as Applied in the United States” was first published in Cambridge in 1882, and was republished in a revised edition in New York in 1883. The paper on “The tariff of 1828” appeared in the Politi- cal Science Quarterly for March, 1888. That on “The His- tory of the Tariff between 1830 and 1860” was printed in the Quarterly Journal of Economics for April, 1888. “The History of the Present Tariff” was published in New York in 1885. All, however, have been revised for the present volume, and considerable additions have been made. I have avoided repetitions, so far as this was possible, and have attempted to connect the narrative of the separate parts. Although not originally written with the design of presenting a complete history of our tariff legislation, these papers cover in some sort the entire period from 1789 to 1887. F.W.T. Cambridge, Mass., July, 1888. Note to the Fifth Edition In previous editions, the narrative was brought to date by chapters on the acts of 1890, 1894, and 1897. It is now again brought to date by the addition of a chapter on the act of 1909. One further change is made in the present edition. The chapter on “Some Aspects of the Tariff Question,” which came at the end of the volume in the third and fourth editions, is omitted. That chapter considered cer- tain industries—the manufacture of silks, fine woollens, glassware, earthenware, the production of hemp, flax, and beet sugar—as they had developed to the year 1890. Since then, great changes have taken place, and the narrative as it stood was incomplete, and in some respects misleading. I hope before long to take these subjects up again, and to bring to date this part of our tariff history also. The pressure of other tasks makes it impossible to do so at the moment, and hence the chapter is omitted in the present edition. Cambridge, Mass., November, 1909 Contents PART I Protection to Young Industries as Applied in the United States Chapter I I. The Argument for Protection to Young Industries . 11 II. Industrial History of the Colonies and of the United States before 1808 . 16 III. The Cotton Manufacture . 29 IV. The Woollen Manufacture . 38 V. The Iron Manufacture. 45 VI. Concluding Remarks . 56 Chapter II The Early Protective Movement and Tariff of 1828. 63 Chapter III The Tariff, 1830–1860 . 97 PART II Tariff Legislation, 1861–1909 Chapter I The War Tariff. 135 Chapter II The Failure to Reduce the Tariff after the .War . 149 9 10 Tariff History of the United States / Taussig Chapter III How Duties were Raised above the War Rates . 169 Chapter IV The Tariff Act of 1883 . 197 Chapter V The Tariff Act of 1890. 215 Chapter VI The Tariff Act of 1894. 243 Chapter VII The Tariff Act of 1897 . 273 Chapter VIII The Tariff Act of 1909. 305 Appendix, Tables . 345 I. Imports and Duties, 1860–1907 II. Duties of 1861, and those of 1864 which were retained, without change till 1883 III. Revenue from internal taxes and from the tariff, 1860–1907 IV. Product, Imports, and Foreign and Domestic Prices of Copper, 1875–1886 V. Product, Imports, and Foreign and Domestic Prices of Steel Rails, 1871–1908 Index . 355 Protection to Young Industries 11 Part I CHAPTER I Protection to Young Industries as Applied in The United States I. The Argument for Protection to Young Industries F THE ARGUMENTS in favor of protection, none has been more frequently or more sincerely urged than that which is expressed in the phrase “protec- Otion to young industries.” None has received so generally the approval of economists, even of those little disposed to acknowledge the validity of any reasoning not in accordance with the theory of free exchange. Mill gave it the weight of his approval in a passage which has been frequently cited. Later English writers have followed him in granting its intrinsic soundness. The reasoning of List, the most prominent pro- tectionist writer among the Germans, is based, so far as it is purely economic, on this argument, and since List’s time the argument has taken an established place in German trea- tises on political economy, even though it be admitted that the conditions to which it fairly applies belong to the past. 11 12 Tariff History of the United States / Taussig The argument is, in brief, that it may be advantageous to encourage by legislation a branch of industry which might be profitably carried on, which is therefore sure to be carried on eventually, but whose rise is prevented for the time being by artificial or accidental causes. The essential point of the argument lies in the assumption that the causes which prevent the rise of the industry, and render protection necessary, are not natural and permanent causes,—not such as would permanently pre vent, under a state of freedom, the growth of the industry. Let it be supposed, for instance, that the industry to be encouraged is the cotton manufacture. The natural advantages of a given country for making cotton cloths are good, we may suppose, in comparison with the advantages for producing other things. The raw material is cheap, power for machinery is abundant, the general intel- ligence and industry of the people—which, since they admit of but very slow change, must be considered natural advantages—are such as to fit them for complex industrial opera- tions. There is no permanent cause why cotton goods should not be obtained at as low cost by making them at home as by importing them; perhaps they can even be produced at lower cost at home. But the cotton manufacture, let it be further supposed, is new: the machinery used is unknown and complicated, and requires skill and experience of a kind not attainable in other branches of production. The industry of the country runs by custom in other grooves, from which it is not easily diverted. If, at the same time, the communication of knowledge be slow, and enterprise be hesitating, we have a set of conditions under which the establishment of the cotton manufacture may be prevented, long after it might have been carried on with advantage. Under such circumstances it may be wise to encourage the manufacture by duties on imported goods, or by other analogous measures. Sooner or later the cotton manufacture will be introduced and carried Protection to Young Industries 13 on, even without assistance; and the government’s aid will only cause it to be established with less friction, and at an earlier date, than would otherwise have been the case. It may illustrate more clearly the conditions under which such assistance may be useful, to point out those under which it is superfluous. The mere fact that an industry is young in years—has been undertaken only within a short period of time—does not supply the conditions under which protection is justified by this argument. An industry recently established, but similar in kind to other branches of production already carried on in the country, would hardly come within its scope. But where the industry is not only new, but forms a departure from the usual track of production; where, perhaps, machinery of an entirely strange character, or processes hitherto unknown, are necessary; where the skill and experience required are such as could not be attained in the occupa- tions already in vogue; under these circumstances protection may be applied with good results, if no natural disadvantages, in addition to the artificial obstacles, stand in the way. The manufacture of linen goods in the United States, at the present time, probably supplies an example of an industry which, though comparatively new, can hardly be said to deserve protection as a young industry. The methods and machinery in use are not essentially different from those of other branches of textile manufactures. No great departure from the usual track of production is necessary in order to make linens. Man- ufactures of the same general character are established on all sides. Work-people and managers with experience in similar work can be easily found. Moreover, the means of obtain- ing and communicating knowledge at the present time are such that information in regard to the methods and machinery of other countries can be easily obtained, while workmen can be brought from abroad without difficulty. Those artificial obstacles which might temporarily prevent the rise of the 14 Tariff History of the United States / Taussig industry do not exist, and it may be inferred that, if there are no permanent causes which prevent linens from being made as cheaply in the United States as in other countries, the manufacture will be undertaken and carried on without needing any stimulus from protecting duties.

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