Protection
in political economy, the policy of encouraging home industries. A government may afford encouragement by paying a bounty on home productions, by paying an export bounty on shipments abroad, or by the easier and more usual method of imposing a tariff on importations of foreign goods. A tariff imposed for this purpose is known as a protective tariff. Protection is the opposite of free trade. It should be noted also that a protective tariff is not a revenue tariff; for the more completely a tariff protects, that is to say, the more completely a tariff shuts out foreign goods and gives the market over to home manufactures, the more decidedly it cuts off the collection of custom duties. If we raise our own fibers, and produce our own dyes, and weave our own textiles, and make up our own cloth into garments, all under protection that bars competition, it is evident that no clothing will come through our custom houses to pay revenue into the national treasury. The greater the degree of protection a tariff affords, the less it contributes to the national revenue.
The question of protection versus free trade is one of the big problems of the world and it is not settled. Under a policy of protection, carried to one extreme, each nation of the world would bar all products that could be produced at home or for which a domestic substitute could be found. Free trade carried out in full accords each person in the world the privilege of carrying, buying, and selling, the world over, without let or hindrance, save submission to lawful and necessary police and sanitary regulations. Free trade does not imply the admission of property without proper proof of ownership, nor does free trade imply admission without sanitary inspection. The United States is today the foremost protective nation; the United Kingdom is the representative of free trade.
Several topics may be noted in connection with a general discussion of protection:
1. NATIONAL INDEPENDENCE. This argument comes to the fore in time of war. During the Revolutionary War the patriots were hard pressed by the fact that we had been dependent on the mother country for manufactures of nearly every description. We had no way of making guns, no mills for the manufacture of paper, or powder, or cloth. The wayside blacksmith shop and the household loom were the dependence of the youngest nation in the world fighting with the most powerful nation,--the greatest military power on the globe. In this emergency the Continental Congress was obliged to turn to France for muskets and ammunition. Hamilton, the foremost exponent of a strong central government, urged the principle of protection as a political--a national--necessity. The War of 1812 also found the Union uncomfortably dependent on European sources for manufactures. During the Civil War the Confederate States were at a serious disadvantage because the manufactures of the nation were chiefly in New England. The federal government was in position to place orders for ammunition, accouterments, tents, blankets, boots and shoes, underclothing, and uniforms, while, aside from the contents of Federal arsenals, the Confederate authorities were in the predicament of the Continental Congress. This argument is an argument in favor of ultimate peace rather than an argument for protection.
2. INFANT INDUSTRIES. The reasonable protectionist is not in favor of imposing a protective tariff on articles that we are not likely to produce at home. No sane legislator would call a prohibitive tariff on diamonds a protective tariff. A tariff might, indeed, keep diamonds out of this country, but it would not, in the present state of science, stimulate the production of American diamonds. Diamond mines may be opened one day in this country, or methods of making artificial diamonds may some day become practical, but for the present there is no object in protecting American diamond mines and factories that have no existence. Diamond cutting, on the contrary, can be carried on in this country. Under the influence of a protective, though not a prohibitive, tariff on cut diamonds, the business of cutting has taken root in New York City and elsewhere. It is what may be called an infant industry. It is quite conceivable that under continued protection American workmen may develop skill, methods, and machinery that will enable them to control a large part of the cutting and polishing business and even sell cut diamonds in the European markets in competition with the Old World centers of the diamond-cutting industry. When that day comes, if ever, the American business of diamond cutting will no longer be an infant industry. Most Americans are in favor of protecting promising infant industries. Many of our manufactures have passed the stage of infant industries. The Steel Trust, still protected by an American tariff, is able to produce steel rails as cheaply as any other concern in the world. Our protected steel bridge builders are able to compete successfully with European concerns for bridge work in Africa. Certain American industrial interests, once protected as infant industries, are now charging the American people, their protector, higher prices than they are obtaining abroad. Robert Ingersoll summed up the situation once by saying that he was in favor of protecting an infant industry, but that, when the infant got up in its cradle and began to pound him over the head, he thought it time to withdraw protection.
3. HOME MARKETS. This was Henry Clay's pet argument. Protected manufactures mean factories at home and home markets for agricultural products. The gist of this argument is not that the demand for the farmer's wheat is greater, but that the demand is next door instead of on the other side of the Atlantic. It is argued with justice that, whether a farmer have a dozen eggs or a load of steers to sell, it is advantageous to have the consumer near by. The other side of the argument is the consideration of whether the farmer, in buying protected and therefore high-priced goods, pays so much for them that his advantage is lost. Of late years it is noticeable that the agent of the manufacturers who takes the floor in Congressional debate is the one who sees most clearly the enormous benefits derived by the farmer. And yet the argument is not to be scorned. Bismarck and his successors during the period 1879-1903 made much of the agrarian--the agricultural--argument, and launched Germany on a course of protected manufacturing.
4. PAUPER LABOR. This is a new argument. In the early days of American protection the principal of high tariff was urged on the score that wages were so high in this country that manufacturers could not compete with cheap European labor. The argument now put forth by the Congressional attorneys of the industrial concerns is that, even though protection may not be required on the ground of infant industries, it is now necessary for the sake of American wage earners; that without protection American wages must fall to the European level; and American labor be pauperized--reduced to poverty. As a matter of fact, the exclusion of children from European factories and the corresponding increase in wages paid by European employers has narrowed the gap between wages on the two sides of the Atlantic. More than this, the increased cost of living, particularly of clothing, has reduced the actual wage of the American factory operative. The claim that a protective tariff is required to keep ahead of pauper labor requires careful examination. The argument that the level of American wages should be kept above that of Europe seems just, but the application of the principle should not be left to the manufacturer. The extent to which machinery has supplemented human labor should be taken into account. The American people should not be required to pay dividends on watered stock on the score of maintaining wages.
5. VESTED INTERESTS. Infant industries become adult industries but the owners become so accustomed to protection that they begin to view it as a vested right and are unwilling to part with infant protection. They spend money to elect Congressmen to continue and to increase protection no longer needed. Their advocates in the political arena and in the halls of Congress are not inaptly termed "stand-patters." They are of the type found in the English House of Lords--defenders of privileges, not advocates of the people.
6. MONOPOLY. One of the most impressive arguments advanced by the American advocate of free trade is the fact that under protection a number of monopolies have grown up. Coal, sugar, petroleum, steel, copper, reapers, and numerous staple articles are controlled beyond doubt. It goes without question that the protection afforded during the infant stage enabled these monopolies to get on their feet. It is undisputed that these industries no longer need protection. If the American people had not fallen into the habit or the snare of electing a governing body that intrenches itself within the defenses of Washington and declares its independence biennially, short work could be made of protection for monopoly. If the tariff laws could be reached by a referendum, short work would be made of certain clauses. Yet, after all, it is doubtful whether protection is an important factor in the upbuilding of monopoly. Economy of production and reduction of expense in selling tend to create monopolies. Whether we regard monopoly as a monster of greed and rapacity, or whether we regard it as a triumph of the inventive mind, it is unlikely that a reign of free trade from pole to pole would ever lead back to the carting of oil to the seaboard in teamsters' wagons in place of the monopolistic oil pipe that now runs from Oklahoma to the harbor of New York City.
In 1860 Richard Cobden, the British apostle of free trade, was so much encouraged by the successful negotiation of commercial treaties with France and other countries that he exclaimed: "You might as well tell me the sun will not rise tomorrow as tell me that foreign nations will not adopt free trade in less than ten years from now." Nevertheless in 1910 it may be said that, on the whole, protection has gained ground, and that not only a greater number of articles of commerce are protected, but the "banner of protection" waves over a vastly greater extent of territory than it did in Cobden's day.
See Tariff