Phillip W. Magness at Cato:
- James Madison viewed tariffs as necessary to raise revenue but was caught off-guard by early attempts to enact tariffs for industry protection.
- Alexander Hamilton and Henry Clay supported the use of tariffs to stimulate infant industries. However, there’s little evidence the American System of tariffs and industrial subsidies was responsible for American economic growth in the 19th century.
- Contrary to the “national conservative” narrative, many of the leading figures of the American Founding opposed the protectionist arguments of Hamilton and Clay.
- From 1789 to 1934, tariff-seeking industries were notorious for diverting resources into rent-seeking, or the lobbying of Congress for preferential rates with bribes and backroom deals.
- Corruption associated with protectionist tariff policy of the late 19th century directly led to adoption of the 16th Amendment and the federal income tax as an alternative revenue system.
- Modern American trade policy was restructured in 1934 to bypass the disastrous Smoot–Hawley Tariff Act of 1930, which exacerbated the Great Depression and illustrated the tendency of protectionist tariffs to serve corrupt interest groups.
