Yes he does: "little, if any thing, was gained by the protection which the United States maintained in the first part of this [the nineteenth] century."
Those are not equivalent statements.
The South was basically an agrarian economy. This input-producing region's major crops were tobacco, rice, and cotton, with much of the latter intended for export or for the textile mills of the North. Southerners had to earn their revenue to buy finished goods from the North and from abroad through the export of raw materials. Since tariffs on finished goods, such as textiles and luxuries, and on capital goods, such as machinery, raised the prices paid by Southerners, they believed correctly that the "terms of trade" were set against them by high protectionist tariffs. Thus, from the earliest days of the nation, the tariff issue was paramount to Southerners.Naturally, some Northern interests had a different perspective. Some entrepreneurs supported high protective tariffs on the basis of import substitution, using an "infant industry" argument popularized by a number of American and European writers. Industries, in this view, need to be protected by high tariffs on imported products until the domestic industry "grows up." Naturally, such tariffs did not benefit all Northerners; Northern consumers were also harmed due to these tariffs. But among those who prospered from protection were some Northern laborers as well as the broader interests of the region, some of them urban, from the spillover effects of the protective tariff.
The idea that protection in the form of tariffs, subsidies, and quotas should be accorded to "infant industries" in developing nations is an old one. The German politician-economist Friedrich List (1789-1846) was one of the most important originators of the argument in the nineteenth century. List, who came to America, influencing writer-economist Henry Carey (1793-1879) on the matter, argued that free trade that displaces either population or domestic industry is undesirable. In effect, he and Carey (and Alexander Hamilton before them) maintained that economic resources must be safeguarded so that their future existence and development are assured. Modern variants of the idea of protection relate to the famous argument based on "economies of scale," which exist when, as plant size increases up to a point, long-run unit costs decline (which occurs when certain workers become more proficient at narrowly defined tasks) and machines are more closely tailored to individual processes. Careful econometric study shows that the role of "learning by doing" in the antebellum textile industry did not justify protection, which was almost exclusively in the interests of textile producers. [11] The "infant industry" argument is basically just a veil for protectionist interests and policies.
FOOTNOTE:
11. Paul A. David, "Learning by Doing and Tariff Protection: A Reconsideration of the Case of the Ante-Bellum United States Cotton Textile Industry," Journal of Economic History 30 (September 1970): 521-601.
SOURCE: Mark Thornton and Robert B. Ekelund Jr., Tariffs, Blockades, and Inflation, 2004, Scholarly Resources, p. 16-7
Mark Thornton has a Ph.D in economics from Auburn University. He is currently a Senior Fellow at the Ludwig von Mises Institute and Book Review Editor of the Quarterly Journal of Austrian Economics.
Robert B. Ekelund Jr. has a Ph.D. in economics from Louisiana State University.