"The only case in which, on mere principles of political economy, protecting duties can be defensible, is when they are imposed temporarily (especially in a young and rising nation) in hopes of naturalizing a foreign industry, in itself perfectly suitable to the circumstances of the country. The superiority of one country over another in a branch of production often only arises from having begun it sooner. There may be no inherent advantage on one part, or disadvantage on the other, but only a present superiority of acquired skill and experience. A country which has this skill and experience yet to acquire may in other respects be better adapted to the production than those which were earlier in the field: and besides, it is a remark of Mr. Rae, that nothing has a greater tendency to promote improvements in any branch of production than its trial under a new set of conditions. But it cannot be expected that individuals should at their own risk, or rather to their certain loss, introduce a new manufacture, and bear the burden of carrying it on until the producers have been educated up to the level of those with whom the processes are traditional. A protecting duty, continued for a reasonable time, will sometimes be the least inconvenient mode in which the nation can tax itself for the support of such an experiment. But the protectionism should be confined to cases in which there is good ground of assurance that the industry which it fosters will after a time be able to dispense with it; nor should the domestic producers ever be allowed to expect that it will be continued to them beyond the time necessary for a fair trial of what they are capable of accomplishing."*

There is no one more ready than I am to recognize the high authority of Mr. Mill as an economist, and I will at once admit that the arguments which he advances in favor of the imposition of protection in a young country would

*See Principles of Political Economy, by J. S. Mill, fifth edition, vol. ii, p. 525.

be conclusive if there were a reasonable probability that the conditions under which he supposes that such a protective duty could be imposed would ever be realized. It will be observed in the passage above quoted that he is most careful to explain that protection can only be justified as a temporary expedient; and every word which he says in support of protection rests on the supposition, that when an industry has been fairly established the protective duty will be at once voluntarily surrendered by those who are interested in the particular industry. It is, however, incontestably shown by what has happened in the United States and other countries where protection has been long estab. lished, that it is absolutely impossible to impose a protective duty under the stipulations on which Mr. Mill so emphatically insists. Whatever professions may be made by those who first ask for protection that it is only required for a limited period, and that it is only needed to enable an industry to tide over the obstacles which may beset its first establishment, it is invariably found that when an industry has once been called into existence through protection, those who are interested in it, whether as employers or employed, instead of showing any willingness as time goes on to sur render protection, cling to the security and aid which they suppose it gives their trade with ever-increasing tenacity. This is shown in a very striking manner by the experience of nearly a hundred years of protection in the United States. In no single instance has a protective duty, when once imposed in that country, been voluntarily relinquished. Far from any tendency being shown by those who are connected with the industries which enjoy protection to face free competition, they constantly display a feeling of greater dependence, and demand with reiterated urgency, additional safeguards against their foreign rivals. A well-known. American economist, Professor Sumner, has said: "Instead of strong, independent industries, we have to-day only a

hungry and clamorous crowd of 'infants.'" Again, Mr. Wells, with equal force, has remarked: "Although the main argument advanced in the United States in support of protective duties is that their enactment is intended to subserve a temporary purpose, in order to allow infant industries to gain a foothold and a development against foreign competition, there has never been an instance in the history of the country where the representatives of such industries, who have enjoyed protection for a long series of years, have been willing to submit to a reduction of the tariff, or have voluntarily proposed it. But, on the contrary, their demands for still higher and higher duties are insatiable and never intermitted."*

No amount of theoretical reasoning as to the desirability of imposing a protective duty as a temporary expedient in a young country, can outweigh the warnings derived from experience that no security can be provided against the permanent continuance of a protective duty when it has been once imposed. If, after protection has been in operation for nearly a hundred years in the United States, the various protected interests display a growing determination to resist any change in the direction of free trade, what reason is there to suppose that what has happened in America will not in future years occur in Australia and other countries, if they should carry out the policy which now seems to find favor with them, of calling into existence various branches of industry by the imposition of protective duties?

"Cobden Club Essays," second series, 1871, p. 529.

CHAPTER XVI.

PROTECTION AND ITS USES.

BY PROFESSOR W. D. WILSON, *

Cornell University.

WHAT MAKES A TARIFF PROTECTIVE.

TARIFF, to be protective to any particular form of

Α industry, must, of course, always be equal to the

Thus,

difference between the rate at which the commodity can be produced in the country of its production, and that at which it can be produced in the country of its consumption. if cotton cloth can be produced in England, and sold, after cost of transportation here, for ten cents per yard, and it cannot be produced here for less than twelve, two cents per yard would be a protective tariff, and anything below that could not operate as protection; above that, it would be, virtually, prohibition.

EFFECT OF A TARIFF THAT IS BELOW PROTECTION.

A tariff that falls below the point at which it is protective, cannot fail to increase the price of the article to the consumer; for it would raise the price of the article by the amount of the tariff, without creating any competition among domestic producers, so as to reduce the price, by means of their competition, one with another.

"First Principles of Political Economy with reference to Statesmanship and the Progress of Civilization." Phila., H. C. Baird.

Or again, a tariff upon articles, that for any reason a nation cannot produce, as for example, cotton in England, would only enhance the price to the extent of the tariff, and for the same reason, as a "revenue tariff," as it is sometimes called, would raise prices there permanently. There are, or can be no domestic producers to reduce it by competition, (1) among themselves, or (2) with foreign producers.

A tariff then, upon ́articles which we cannot produce, or a tariff that fails to be protective upon what we can produce, but does not, only increases the price of the article to the

consumer.

And even a tariff for protection, if it be needed at all for that purpose, will raise the price of the imported article for the time being. But if it be an article which the laborers of that country can produce to advantage, the tariff will have the effect of creating an increased demand for labor, and thus, by raising the price of labor in all branches of industry, it will enable the people of the country generally to buy the article more easily than before, even at the advanced price.

LIMITS WITHIN WHICH PROTECTION IS POSSIBLE.

And here, I think, we have a hint at the limits within which protection by way of tariff can be good statesmanship for any country. Protection for its own sake, and with a mere vague notion of doing good somehow, is but an idle fancy of a not very clear brain.

A protective tariff on what cannot be produced is almost a contradiction in terms. But a tariff with a view to protect what can be produced only at great disadvantage, will be an unnecessary tax upon the industry of the surrounding country; for the reason that it takes so much more labor to produce the article in the one country than in the other.

But the test is the amount of labor-not the wages, or the cost of the labor.