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PROTECTION
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PROTECTION , in See also:economics a See also:system of commercial policy and a See also:body of See also:doctrine, which in their See also:modern forms are the outgrowth of the commercial and See also:industrial development of the 19th See also:century. The See also:common See also:definition of protection as a policy is the See also:attempt to develop a manufacturing See also:industry by a system of discriminating duties upon manufactured goods. imported from See also:foreign countries. But this is far too narrow a definition to suit the modern use of the See also:term, though the notion of discriminating tariffs is common and, we may say, basal to all See also:definitions. Protection as a policy includes not only discriminating tariffs, but also a large number of other features supplementary to this fundamental one and designed to emphasize its purpose. Thus a See also:scheme of bounties and premiums, of rebates and drawbacks, is everywhere considered an essential See also:element of the protective system. Nor is it any longer limited to the encouragement of manufactures, but includes as well the protection of See also:agriculture, forestry, See also:mining, fishing, See also:shipping, &c. In See also:short, one cannot give a comprehensive and satisfactory definition of protection to-See also:day without giving it a much wider See also:scope than that of a system of protective duties upon manufacturing industry. Many of its See also:advocates claim, and with some show of See also:reason, that the term protection, as now used to describe the com- mercial policy of a nation, should be so defined as to Nffitooa/ include all the means by which a See also:country undertakes Poticy. to secure through the See also:positive efforts of the govern- ment the See also:complete industrial and commercial development of all its resources and of all its parts. As its See also:object is thus comprehensive, its See also:justification is to be found in a See also:series of arguments based upon See also:political, economic, and social considerations. From this point of view the protective policy embraces not merely the system of discriminating import duties in favour of See also:home products—industrial, agricultural and mining, with which the policy began in the See also:United States, for example—but, also the system of bounties offered for the introduction and See also:establishment of new See also:industries; the policy of restricted See also:immigration of the less desirable classes of labourers, combined with the positive inducements to the skilled labour of other countries' to See also:transfer itself to the one in question; the system of discriminating or prohibitive See also:tonnage duties, known as See also:Navigation, Acts; the system of developing foreign markets by an active policy directed towards securing advantages for home products in foreign countries—in a word, all those pecuniary or other sacrifices which a country may make in See also:order to develop its material resources and establish, develop and See also:foster industry and See also:commerce. In this wide sense the comprehensive policy adopted by the United States, for example, includes the making, of a careful See also:geological and botanical survey of the whole country in order to discover and open up the vast natural See also:wealth of its domain in its mines, forests and See also:fields; the establishment of experiment stations to test the usefulness of new crops or means of making old crops more valuable; the See also:stocking of its See also:rivers with See also:fish and the afforesting of its mountains; the introduction of new or more valuable breeds of livestock; the See also:building of See also:rail-ways and canals, and the offering of inducements to private parties to undertake similar enterprises; the deepening of its rivers and harbours, &c.; and, finally, the develo¢irlent, at public expense, of a scheme of technical and commercial See also:education—See also:lower and higher—adapted to discover and See also:train all the See also:talent in the community available for developing the industry and commerce of the country. If such an See also:account of the features of a protective policy is objected to on the ground that See also:free See also:trade countries like See also:Great See also:Britain have also adopted some of them, it may be replied that in so far as they have done so they have adopted the principle of protection, namely, that See also:government shall adopt a positive policy looking towards the development, by government aid if necessary, of new branches of commerce and industry and the firmer establishment of old branches. It may further be pointed out that the countries which have adopted the protective policy most fully—the United States, See also:France, See also:Germany and See also:Russia—have most consistently followed out the policy here indicated and in all these countries it has been the so-called protectionist party which has identified itself most fully with the comprehensive policy here suggested.
As a doctrine, protection is the set of principles by which this
policy of government aid to industry is justified, and these
principles have been elaborated See also:hand in hand with
Economic
Doctrine. the development of the so-called Protective policy
sometimes outrunning its actual application and advocating its further See also:extension, more often lagging behind and seeking for means of explaining and defending what had already been done. The See also:present development of the system and theory of protection is a result of the growing predominance of capitalism in modern society, combined with the tendency of modern politics towards the organization and development of great See also:national states, with the resulting See also:desire to secure their industrial as well as their political See also:independence. It has been further favoured in certain ways by the fact that the See also:financial needs of modern states require a resort to indirect See also:taxation, thus making it easier for the capitalistic forces to exploit the tax system for their own benefit; while the See also:wars of the 19th century have favoured in many ways the tendency towards the See also:adoption of See also:special means, like high discriminating duties, to accomplish this end. Hand in hand with this has gone a steady tendency to see in the See also:state a powerful means of promoting the development of trade and industry, and a growing disbelief in the more extreme forms of the free trade doctrine, such as the type known as the See also:Manchester School, the theory of the laissez faire, laissez passer school of economics and politics.
Protection, both as a doctrine and policy, can be best under-stood by examining the course of its development in those countries adopting it most consistently. Germany and the United States offer the two striking examples of great modern nations adopting a system of protection and developing under its See also:influence. They may in a certain sense serve as types of the See also:kind of state which in the 19th century accepted and de-fended, in its politics at any See also:rate, the so-called protective system. In both cases the high protective system was associated with the development of See also:nationality, of industry, of capitalism, and of a financial system which favoured the growth of certain elements of the protective policy.
The protective system in the United States began with the
adoption of the Constitution in 1789, and found its first formal
See also:defence in the celebrated See also:report of See also: As there was no strong manufacturing See also:interest in existence, so there was no organized capitalistic effort to secure manipulation of the See also:tariff duties in the interest of special industries. There was See also:general agreement, however, that it would be desirable to develop a manufacturing industry in the colonies if it were practicable. A high degree of natural protection was already afforded by the cost of transportation. It was See also:felt, therefore, that a small See also:duty on manufactures would probably serve the purpose, since the development of the manufactures would favour the See also:production of raw material, which would therefore need no special encouragement. It was also felt that a small duty, continued for 465 a few years, would result in the establishment of the industry on such a See also:firm basis that all duties might be abolished. The introduction of this See also:form of protection, i.e. discriminating duties upon imported goods, was greatly assisted, if not originally caused, by the fact that the new government needed See also:money which could most easily be obtained by customs duties. Thus all those parties which were opposed to See also:direct taxes joined their efforts with those interested in securing protective duties, in order to commit the government to the policy of basing its See also:revenue system on a tariff on imports. To these considerations must be added the further one that the country had just thrown off political dependence on See also:Europe, and felt that it must now become industrially See also:independent also, if it were to be a great nation. These influences, then, namely, firstly, the desire of the statesmen of the See also:time to create a revenue system for the Federal government' which would make it absolutely independent of the states; secondly; the wish to develop an industry which would serve the needs of the new country while it promoted its complete independence of the Old See also:World, conspired to commit the Federal government from the beginning to a policy of protection based upon a system of discriminating duties. At the same time a system of discriminating tonnage dues and prohibitory regulations See also:relating to foreign shipping in the See also:coasting trade was adopted to promote and foster the shipping interest. Industry and commerce began to thrive as never before, largely because of the See also:absolute free trade which the Constitution had secured among the states of the See also:Union. The See also:long struggle between France and Great Britain, extending from 18o6 to 1812, for the See also:possession of the commerce and the trade of the world, combined with the retaliatory See also:measures of the See also:American government itself, practically destroyed American commerce for a time, and finally led to the See also:British-American See also:War of 1812, which closed in 1815. The financial system of the Federal government during this war was based on getting the largest returns from the customs, so that the duties were screwed up still higher. The ten years See also:period of non-intercourse, while it had seriously injured American commerce, had fostered the growth of American manufacturing; and when the See also:close of the War of 1812 brought with it an enormous influx of foreign goods,, particularly from the plethoric warehouses and factories of See also:England, it looked for a time as though the new American industries were destined to vanish as rapidly as they had grown up. And now for the first time appeared a strong, well-See also:developed, capitalistic party, which was, in spite of some drawbacks, destined to grow until it became one of the most characteristic features of the politics of the See also:republic. The manufacturers of the country determined the tariff policy of the country, and with few reverses pursued a steadily advancing course of victory down to the close of the 19th century. They secured the See also:maintenance of high duties at the close of the war of 1812, and managed to increase them steadily until the reaction of 1830-1833, when they were forced to content them-selves with a lower rate, which continued, with a slight interruption in 1842-1846, until the outbreak of the See also:Civil War in 1861. This was an opportunity which they knew how to utilize to the greatest See also:advantage. During the war, when the government was forced to exploit every possible source of revenue, the protectionist party knew how to turn the necessities of the government to its advantage. The rate of duties was pressed ever higher; and when the war closed, and the taxes could again be lowered, the protectionist managers knew how to lower or remit altogether the non-protective duties, and thus keep high, and even advance to a still higher point, the duties which protected them from foreign competition. In the meantime the country was turning from agriculture to manufactures at an unprecedented rate. The manufacturing party was becoming ever stronger and more aggressive. As it had also been the national party, it profited by the enormous development of the nationalist sentiment during and after the war. It now became patriotic to favour the development of a national industry. It was See also:treason to See also:advocate free trade—that had been the policy of the slave-holders' party, and the Slave-
holders' See also:Rebellion, as the Civil War was called, had See also:drawn its See also:Confederation and the new See also:German See also:Empire, to all the states now strength largely from the free-trade sentiment. The policy of the
protectionist party had See also:expanded with the growth of the country and the See also:necessity of coming to terms with the antagonistic elements. Thus at first the See also:platform of the protectionists had been one of reasonably See also:low duties on manufactured commodities, low duties on See also:half-manufactured and no duties at all on raw material. But as the country advanced, and it was seen how the interests of manufacturing had been quickened by the policy of discrimination, those engaged in producing raw materials and half-manufactured commodities demanded that they too should be considered. As this concession had to be made by the manufacturers, they were compelled to justify it by other arguments than those used at first. The See also:infant-industry argument gave See also:place to the proposition, that as long as the prices of raw materials and labour were higher in See also:America than abroad, it would be necessary to maintain countervailing duties at least equal to this difference, in order to protect American industry. One See also:branch after another of manufacturing or agriculture was included and given the benefit of protection. In order to have satisfactory theoretical basis for such a policy, the theory was advanced that foreign trade was a necessary evil, to be diminished as much as possible. The ideas were advanced and spread throughout the country: that the home See also:market should be reserved for home products; that the labourers should be protected against the influx of foreign cheap labour (See also:Chinese Exclusion Acts; restrictive immigration See also:laws); that prices should be kept high, so as to enable employers to pay high See also:wages; that shipping should be encouraged by subsidies, the See also:sugar industries by bounties; that the nation should become ever more independent of foreign nations for all its industrial products, and capable of holding its own against the world in industry as well as in arms.
The protective party has been the national party during a
time when the greatest question before the American See also:people
was whether it was to be one nation, or two, or twenty, and it
naturally profited by the inevitable victory of nationalism; it
has always stood for honest See also:payment of national and state
debts, if not in the See also:standard according to which they were See also:con-
tracted, in a still better one, and it has profited naturally by
this attitude in a country where the development of trade and
industry was rapidly and steadily towards a capitalistic state
of society in which such policy is favoured; it has stood for a
vigorous and active independence in the See also: The See also:history of the tariff policy in Germany had been very
similar to that of the United States. Beginning with the es-
Germany. tablishment of absolute free trade among the various
German states in the earlier customs union, it ex-
tended this policy, by the establishment of the See also:North German
included in the federation. The long-wished-for political union meant political independence, and when political independence was once achieved, industrial and commercial independence were next desired. Within the empire itself it was necessary, if the new organization were to be strong and vigorous, that the central government should become independent of the individual states; and this could be best effected by giving it a revenue system based upon import duties, which in the long run has enabled the central government to subsidize the state governments, and thus bring them still further under its influence. To develop this system the political support of some strong party was needed. This party was found in the protectionist elements, which have thus again become the national party in a state which was being rapidly nationalized; the industrial party in a society which was rapidly passing from the agricultural to the industrial See also:condition; the capitalistic party in a society which was rapidly becoming capitalistic in all its tendencies. It stood or industrial and commercial, as well as political, independence of other countries, and thus satisfied the longing for national unity and independence of a people which had suffered for centuries from disunion and dependence.
These two examples may serve to explain how the two most powerful industrial nations next to Great Britain became and remained highly protectionist in sentiment and in See also:action, and how they both opened the loth century with a more openly declared and a more fully developed system of protection than ever before.
Protection as a theory or doctrine is to a certain extent an outgrowth or modification of the old doctrines of mercantilism. In its modern form, however, it See also:dates really from Modern the celebrated report on manufactures made by Advocates Alexander See also: See also:Carey, and have in later years been carried along somewhat different lines to their logical conclusions by See also:Simon N. See also:Patten and See also:George Gunton. Starting from an argument in favour of temporary duties on manufactured goods imported from abroad until such time as the infant industry might take firm See also:root, the development proceeded through List, who favoured the maintenance of such duties until the country had passed into the manufacturing See also:stage as a whole, and then through Carey to Patten and Gunton, who maintain that a protective policy, extended to See also:cover agriculture, trade and mining, should be pre-served as the permanent policy of the country until the entire world is one nation, or all nations have reached the same level of political, economic and social efficiency. The protective policy, which a century ago was to be, in the view of its advocates, temporary and partial, has become to-day, in the arguments of its apologists, permanent and comprehensive. We must content ourselves here with a brief statement of the arguments of the leading and most successful defenders of modern protectionism. Alexander Hamilton, at that time secretary of the treasury, submitted his celebrated report on manufactures to the See also:Congress of the United States on the 5th of See also:December 1791. It Hamilton. is in a certain sense the first formulation of the modern doctrine of protection, and all later developments start from it as a basis. It is a positive argument directed to proving that the existence of manufacturing is necessary to the highest development of a nation, and that it may be wisely promoted by various means, of which the most important is a system of discriminating duties upon foreign imports. Among the See also:objects to be attained by the development of a flourishing manufacturing industry are mentioned: (r) Independence of foreign nations for military and other essential supplies. (2) A positive See also:augmentation of the produce and revenue of society, growing out of (a) See also:division of labour, (b) extensive use of machinery, (c) additional employment to classes of the community not ordinarily engaged in business. (3) An increase in the immigration of skilled labourers from foreign countries. (4) A greater scope for the diversity of talents and dispositions which discriminate men from each other. (5) A more ample and various field for enterprise. (6) In many cases a new, and in all a more certain and steady demand for the surplus produce of the See also:soil. (7) A more lucrative and prosperous trade than if the country were solely agricultural. Among the feasible means of promoting the development of such an industry he mentions the following: (I) Protective duties, or duties on foreign articles which are the rivals of the domestic ones, to be encouraged. (2) See also:Prohibition of See also:rival articles or duties See also:equivalent to prohibition. (3) Prohibition of the exportation of the materials of manufactures. (4) Pecuniary bounties. (5) Premiums. (6) Exemption of the materials of manufactures from duty. (7) Drawbacks of the duties which are imposed on the materials of manufactures. (8) The encouragement of new inventions and discoveries at home, and the introduction into the United States of such as may have been made in other countries; particularly those which relate to machinery. (9) Judicious regulations for the inspection of manufactured commodities. (to) The facilitating of the pecuniary remittances from place to place. The above suggestions contain the outline of a comprehensive scheme for developing the manufacturing resources of the country, and the United States has subsequently adopted, in one form or another, almost all of these propositions. Hamilton considered that the duties, &c., would not have to be very high or very long continued in order to accomplish their legitimate ends, after which they would become unnecessary, and would naturally be abolished. He conceded that, generally speaking, import duties were taxes on the customer, and therefore burdens—but burdens which might well be temporarily See also:borne for the See also:sake of the ultimate advantage arising from cheaper goods and diversified industries. He emphasized also the advantage of a home market for agricultural products, and seemed to think that the United States had to pay the cost of transportation both on the agricultural products it exported and the manufactured goods it imported. This report remained the armoury from which the protectionists See also:drew their weapons of offence and defence for two generations, and it has not yet ceased to be the centre around which the theoretical contest is waged even to-day in Germany and France as well as in the United States. The next great theorist in this field was the German, Friedrich List, who, while an See also:exile in the United States, became imbued with Ltst. protectionist ideas, and after doing substantial service for them in the country of his adoption, returned to Germany to do See also:battle for them there. He published his National System of Political See also:Economy in Germany in the year 1841. It had great and immediate success, and has exercised a wide influence in Europe on theoretical discussion as well as on See also:practical politics. List, like Hamilton, looked on protection as a temporary system designed to facilitate the passage of a country from an agricultural to a manufacturing state. He accepted free trade as generally and permanently true, but suited for actual adoption only in that See also:cosmopolitan era towards which the world is progressing. But in order to prepare for this cosmopolitan period it is first necessary for each nation to develop its own resources in a complete and harmonious manner. A comprehensive See also:group of national economies is the fundamental condition of a desirable world economy; otherwise there would be a predominance of one or of a few nations, which would of itself constitute an imperfect See also:civilization. Protection is a means of educating a nation, of advancing it from a lower to a higher state. He admits that it may involve a loss, but only in the sense that money expended for an education or an educational system is a loss, or that money spent for See also:seed See also:corn is a loss. To the cosmopolitan system of See also:Adam See also: Patten, the last, and in many respects the ablest, of the apologists for protection, we have the theoretical development corresponding to the practical outcome of protection as a comprehensive all-embracing scheme extending protection to all branches of industry alike—agriculture, manufacturing and mining—and aiming to be permanent in its form and policy. As Patten expresses it: " Protection now changes from a temporary expedient to gain specific ends (such as the establishment of manufactures), to a consistent endeavour to keep society dynamic and progressive. Protection has become See also:part of a fixed national policy to increase the value of labour with the increase of productive See also:power, and to aid in the spread of know-ledge and skill, and in the See also:adjustment of a people to its environment." The object of protection has now become, in the view of the theoretical American protectionist, not an approximation to See also:European industrial conditions, but as great a differentiation from them as possible. Carey's See also:works were translated into the leading European See also:languages, and contributed doubtless to the spread of protectionist ideas, though the extreme form in which his views were expressed, and the rambling illogical method of exposition, repelled many who might otherwise have been attracted by the course of his thought.
Economists of other See also:schools, with the exception of the more rigid British free traders, have allowed a relative validity to the doctrines of List; and even among older British economists, See also: J. See also: E. See also:Thompson, Protection to Home Industries (New See also:York, 1886) ; E. E. See also:Williams, The See also:Case for Protection (London, 1899) ; J. P. See also:Young, Protection and Progress: a Study of the Economic Bases of the American Protective System (See also:Chicago, 1900). Additional information and CommentsThere are no comments yet for this article.
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