… is from pages 14-15 of the 2005 reprint of Harvard economist Frank Taussig’s classic 1888 work, The Tariff History of the United States (footnote deleted):
It is often said that the first tariff act, that of 1789, was a protective measure, and that in the debate on it the protective controversy appeared full-grown. But such considerations had little to do with the act; and the discussions on protection by no means indicate what was the real centre of interest. The act was modelled on the five per cent. import duty, which the Congress of the Confederation had tried in vain to impose, and its main object was to secure revenue for the new government, whose successful working was the one end which all the legislation of the first few years sought to bring about.
DBx: In the footnote on page 14 (#5) that I deleted from the above quotation, Taussig writes: “It is significant, for example, that Madison’s letters to Jefferson, then in Paris, about the debates on the tariff act of 1789, make no reference whatever to the protective discussion.”
…..
While it’s true that protective sympathies were expressed in 1789 during Congressional debate over the United States government’s first-ever tariff act, the historical record makes clear that the purpose of the tariff act of 1789 was to raise revenue for the government by taxing imports rather than to protect domestic industry by restricting Americans’ imports.
Revenue tariffs, of course, have some protective effects – but these effects, by reducing the size of the tax base, run contrary to the the purpose of raising revenue; these protective effects are an undesirable negative consequence. It’s likewise true that protective tariffs generally raise some revenues – but these revenues are incidental to the main purpose of protective tariffs, which is to reduce imports (that is, to reduce the size of the tax base). If a revenue tariff worked perfectly to achieve its end, it would have no protective consequences, for it would discourage not a single import; if a protective tariff worked perfectly to achieve its end, it would raise no revenue, for all tariffed imports would be discouraged from entering the country.
Keep the above historical fact and economics in mind next time you hear, as you will, some protectionist proclaim that America’s protectionist tradition traces all the way back to the first administration of President George Washington.
