In the 19th century and the early part of the 20th, we used protective tariffs on SOME goods to "protect" those industries. Research has shown that certainly steel didn't need those tariffs after 1840---they were counterproductive.
Please post a reference for tis assertion that the tariffs on steel by the 1840's were counter productive. I find this assertion most interesting becaus esteel was not all that common as Iron as of 1840
A quick perusal of the internet yeilds teh following.
In October, 1855, Bessemer took out a patent for his process of rendering cast iron malleable by the introduction of air into the fluid metal to remove carbon. Bessimer's industrial process was similar to a Chinese method to refine iron into steel, developed in the second century BCE. They called this process the "hundred refinings method" since they repeated the process 100 times. The story of Bessemer's steel process is a classic example of the military's impetus to technological development. During the Crimean War Bessemer invented a new type of artillery shell. The Generals reported that the cast-iron cannons of the time were not strong enough to deal with the forces of the more powerful shell. Bessemer then developed an improved iron smelting process that produced large quantities of ingots of superior quality. Modern steel is made using technology based on Bessemer's process. Much of the modern industrial age has built upon steel created for cannons of war. Among the many honors of Bessemer's life were a Knighthood by the British crown and the Fellowship of the Royal Society. Bessemer died in London on March 14, 1898.
Most of our goods did not benefit from a tariff, especially the cutting edge machine technologies like the McCormick Reaper, the Singer Sewing Machine, the refrigerated box car, electric items, and the telegraph.
However these new technologies were all developed during an age when the benefits of capital investment in the USA were clear because of the protective tariffs.
It was Vanderbilt's UNSUBSIDIZED steam lines that drove the British subsidized lines off the oceans.
Actually you are exagerating since one mus include the Canadian Cunard line and such other british steam ship lines which lasted from their founding as sail opeations until into teh 20th Centrury
It was the unsubsidized American products that captured world markets.
Of course.
None of these benefitted from a tariff.
I will accept none of these were diectly protected by a tariff. Your statement does not include indirect benfits from an improved climate for capital investment.
Interestingly, textiles did, but textiles were not our leading sector by 1840---the non protected sectors were.
No further comment necessary
When we subsidized the RRs, it was a disaster. EVERY ONE of the "protected" railroads---the Union Pacific, the Central Pacific, etc.---went broke in the Panic of 1873.
No one is is trying to defend subsidies. the initial reason for teh subsidies had more to do with defense and unifying tye nation than it did building a long term viable business of railroads west of teh Mississippi.
Only James J. Hill's UNSUBSIDIZED Great Northern remained profitable.
Clearly this had to do with tehinefficient sibsidization process of building the subsidized railroads which were compensated by the mile of track laid with land along the right of way. There was no incentive for quality so iron rails were used and the route was not laid out for the most economies. th e Great Norther was laid out to make a prfit from tranporting freight and passengers from the start. Iron rails were used and decisions were made with teh market not land to be sold in mind.
Likewise, Rockefeller benefitted from no tariff as he beat the Russians in the world kerosene market. (Now, I will admit that he did benefit from government treaties and diplomacy---but no tariffs!)
why would an emerging Kerosene industry need tariffs per se. and since his primary competion was as you state the Russian empirre at this time one wonders how serios that competition really was. The best study of this is by Doug Irwin, whos articles have appeared in the American Economic Review. Americans have ALWAYS competed against "near slave-wages" of the rest of the world precisely because America's wages have always been exceptionally high, requiring firms to invest in capital over labor, which in turn put a premium on hiring the best (most talented, skilled) labor, which in turn drove labor prices up. In the meantime, that talented skilled labor made improvements in the products and machines that drove productivity up, which then drove up profitability. There has never BEEN a time when America had lower wages than most of the rest of the world---and only very briefly were our wages lower than England's, from about 1790 to 1830. 310 posted on 08/08/2003 6:42 PM EDT by LS
The best study on the antebellum tariff is Doublas Irwin and Peter Temin, "The Antebellum Tariff on Cotton Textiles Revisited," Journal of Economic History, 61, Sept. 2001, 777-805; and Temin, "Product Quality and Vertical INtegration in the EArly Cotton Textile Industry," (same source), 48, (1988), 891-907. A contrary viewpoint is expressed in C. Knick Harley, "International Competitiveness of the Antebellum American Cotton Textile Industry," (same journal), 52 (1992), 559-584, but then see the comments by Harley following the Irwin/Temin article. The main problem is lack of data prior to 1830, due to the poor collection of reports, but Irwin and Temin conclude that "the u.S. cotton-tetile industry was largely independent of the tariff by the early 1830s." Even after the tariff was drastically lowered---AND IMPORTS SUBSTANTIALLY INCREASED---there was no decline in domestic output, because we made "different stuff" than the British did. Harley tries to explain the differences by claiming the reasearchers were using "different sources" than he was---unpersuasive. (BTW, Temin, if I'm not mistaken, used to be a "pro-tariff" guy).
On Vandy, see Burt Folsom's very readable book, "Myth of the Robber Barons." It's quite well researched. And no, Vandy's triumph was no insignificant. It was quite impressive, as was his victory over SUBSIDIZED businesses every time he contronted them.
As for the late 19th century, Irwin's paper "Explaining America's Surge in Manufactured Exports, 1880-1913" (Review of Economics and Statistics, May 2003, 364-376) shows that natural resource changes, particularly the discovery of the Mesabi iron ore range, accounted for the productivity improvements and price declines, not other factors (especially not tariffs). "However these new technologies were all developed during an age when the benefits of capital investment in the USA were clear because of the protective tariffs." Irrelevent. Has nothing to do with the tariff. They were enacted because it was profitable to do so.
Your comment on Bessemer is interesting. Carnegie did not benefit greatly from the light steel tariff, yet he instantly replaced his furnaces with Bessemer the minute he could, and then outproduced the British, even accounting for the tariff.
This cirucular argument that the non-protected areas surged BECAUSE they were not protected is amazing. Indeed, no further comment IS necessary, and I'll leave it to readers to figure out which of the two of us is more logical.
I'm not going to go through two pages worth of discussions, so keep it to one or two questions---it starts to get too much like teaching. :)