The infant-industry argument in its general form recognizes that countries must usually pass through different stages of industrial develop ment, and ad•ocates protection as a means of accelerating progress during the periods of tran sition from one stage to another. The best state ment of this argument is that given by Fried rich List in his Des nationals System der politi sehenOckonomie (1841). The conclusions at which List arrived were based on the contrast between an industrial country like England and an agri cultural country such as Germany was at the time he wrote. In his opinion England's success as a manufacturing country was due chiefly to the development of certain industrial qualities among her people. Germany. he thought, might develop the same qualities among Germans by means of a protective policy which would force them to manufacture for themselves. Through protection the natural resources of the country necessary to the development of manufacturing would also be opened up to exploitation. From this point of protection is a temporary means by which an agricultural eouutry may transform itself into an industrial country. After the transformation is completed the new manu facturing industries, or at least a great many of them, will he quite capable of holding their own in competition with the manufacturing industries of other countries and protection will be no longer required.
The last stage in the development of protec tion in the United States was closely connected with the Civil War. The outbreak of that strug gle caused the withdrawal from Congress of the Representatives of the Southern States, who had been the most active opponents of the protective policy. Under the guidance of Representatives from the North and West successive tariffs were passed carrying the, policy of protection to the most extreme lengths which the country had known. Factors in this development were the anti-foreign sentiment which resulted from the somewhat hostile attitude of Europe and espe cially of England to the cause of the North. and the comprehensive system of internal revenue taxation adopted during the war. which had to be offset by higher import duties if American pro ducers were not to be placed at a disadvantage in competition with foreign producers. The change in the level of duties which resulted from this combination of eireumstances is indicated by the fact that whereas under the act of 1857 the high est duties imposed were 24 per cent. ail ralarem, under the act of ISG4 the average rate on duti able articles was over 47 per cent. During the first fifteen years after the close of the war the attention of Congress was occupied by questions of reconstruction. the resumption of specie pay ments, etc., and no change of importance was made in 11 e 1. riff txcept that it became increas in_lt 1 ton tire s the internal revenue duties were . I V on e removed. When attention was
nn con,:i.trated upon the tariff question the attitude of protectionists was that of conserva tivi s to continue a policy which had beta tried found successful, and upon advo ea., of free trade rested the responsibility of wishing to overturn an established institution. Down to 1894 all of the important changes made in the tariff were in the direction of increased protection. The Wilson Act of the latter year was a reactionary measure, but was so garbled in its passage through Congress that the tariff reform President of the period, Mr. Cleveland, allowed it to become a law without his signature. The victory of the Republicans in 18913. although not connected with the tariff issue. involved as an ineident a return to a highly protective policy. In fact, the Dingley Act of Is;97 marks the ex treme limit of protectionist policy in the United States down to date.
During this last period only one new argu ment of importance has been advanced in sup port of protection. the 'wages argument.' Before protection was the settled policy of the country one of the reasons urged in its favor was that since wages were higher in the United States, some special encouragement was necessary to the establishment there of new industries in compe tition with the low-wage labor of Europe. After protection became a settled fact, by an interesting inversion. the high wages of American labor began to be attributed to it. The wages argu ment runs as follows: In protected industries Higher wages are paid in the United States than in similar industries abroad. Protection, it is concluded. causes the high wages. and its with drawal would pauperize American labor. This view overlooks several important facts. First, equally high are paid in unprotected in dustries. and these industries, which include fa rming. mining. t ransportation. and many branches of manufacturing, vastly exceed in im portance and magnitude the protected industries. Second, employers. whether protected o• unpro tected, desire to secure their labor as cheaply as they can. and there is nothing in a protective tariff which forces them to pay higher wages than are current in the community in which the protected industries are situated. In other words. employers in protected industries pay the wages necessary to get the labor they require, and these depend not upon the protective tariff, but upon general industrial conditions. Third, it is not true that high wages and protection always go together. For example, wages in protectionist Germany are distinctly lower than in free-t•ade England. For these reasons the wages argument, although effective for campaign purposes, has never enjoyed much repute among trained econ omists. It is. however, urged in a more subtle way by some writers, and in this form merits consideration.