The Policy of a Protective Tariff

§ 4.

The infant-industry argument. Most free-trade writers concede a limited validity to the claim that protection may be used to encourage infant industries and thus diversify the industries of the country. If the natural resources of a land are adapted to an industry, it may be called into be ing earlier by a fostering protective tariff. This is merely anticipating and hastening the natural order of progress. In the American colonies the manufactures of such goods as iron, cloth, hats, ships, and furniture sprang up and con tinued not only without "protection," but despite numerous harassing trade restrictions made in the interest of English merchants. Can it be doubted that many of these industries would have developed and flourished after the adoption of the Constitution with no other favoring influences than those of rich resources and of economy in freights? In the Mis sissippi Valley since 1880 natural gas, abundant coal, ore, and timber have made possible a great growth of industries without protection against the eastern states. Industries ca pable of eventual self-support must in most cases naturally appear in due time. Economic forces will bring them out. Protection of infant industries may be likened to a hothouse, anticipating the season by a few weeks and at great cost. The question is whether the mere possession of the hothouse is a luxury worth the price, if meantime the products can be got more cheaply by trade. English manufacturers flourished in the nineteenth century because they were well established, had excellent coal supplies, good stores of iron ore, and low-paid labor which did not have the opportunity of better alternatives, as did the American workman. If America had imported more (it would not have been all) of her iron and coal, the English mines would have begun to shown signs of exhaustion earlier, and America's advantage surely would have asserted itself in time. Her iron manu factures undoubtedly were hastened—they cannot truly be said to have been created—by the protective tariff.

The peculiar advantages of a new country attract labor and enterprise into a few lines. Industries are forced into an earlier diversification by tariffs. Which is the better eco nomic situation? Contrast the life of the workers in Iowa, the Dakotas, and Minnesota, or Kansas, if you please, with that in crowded tenements of New York and in the mining regions of Pennsylvania. Is it so certain that a dense popu lation congested in cities and crowded in factories and mines is a more ideal social aggregation than is a community of prosperous farmers? The smoky industrialism fostered by protection often puts a premium on a low grade of immi grants, crowds them into city slums and into forlorn mill towns, and keeps them aliens to the American spirit. It would be surprising if Americanism on the western plains were not as sound as in the crowded cities. But the infant industry argument appeals strongly to the enterprise and the speculative spirit of Americans, who like to do all things rapidly and on a large scale. Every village aspires to be a great industrial center. Americans are impatient of the

suggestion that things "will come in time"; they like things to come at once.

It must, however, be recognized that in a new country there is often a certain monotony and poverty of life because of the lack of diversified industries. There are not sufficiently varied avenues for the expression and use of the manifold talents of the nation. There are unused materials and op portunities; but the initial expense of experimentation, the initial difficulties of gathering and training a working force, are discouraging to individual enterprise, prices being as they are. A protective tariff is not necessarily and always the best way, but it is one way of helping private enterprise to establish and conduct such industries through their initial period. But, as has been pointed out by many writers, the infant-industry argument is self-limiting, and involves always the assumption that the industries selected as fit for protec tion are such as ultimately, and within a moderately short period, can grow into self-dependence. The infant must sometime grow to be a man and stand on his own legs, or he is either a chronic invalid or a degenerate.

§ 5. The home-market argument. The home-market argu ment seeks to show a more permanent need for a tariff. At the same time it appeals to the farmers, whom it has been hard to reconcile to a policy that in America 2 has been peculiarly favorable to manufacturers. The home-market argument extols the advantages of having near to the farms customers for agricultural products, and dwells on the greater steadiness of domestic trade. War or political changes, it is said, may change the demand for products. This is true, but no other changes have affected American agriculture so radi cally as the peaceful development of domestic transportation and the opening of the West.

The main economic claim made in the home-market argu ment is that the shipping of food to Europe and the import ing of manufactures involve a great cost for double freights that could be saved by manufacturing at home. The farmer is supposed to pay this cost. The obvious defects in this view are : first, there is nothing to show that the freight is not partly or entirely paid by the European, either the manu facturer or the food consumer; secondly, home trade "saves the freights" for the farmer only in case he can buy goods under a tariff with less of his own labor and products than under free trade. The payment of freight charges is true 2 In European countries, on the contrary, the rates that have been mainly effective have been those levied upon food products, and the agricultural landholders have been the "protected interests," such as the England "landed aristocracy," the German agrarian "Junkers," and the French peasant landowners.

economy when the goods can be bought at a distance on more favorable terms than near home. The freight argument at tempts to prove too much, for it condemns every trade within the country of goods produced a stone's throw away from the consumer.