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Produced and published by the School of Historical & Philosophical Studies, The University of Melbourne
Published July 2008
Published July 2008
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Free trade was the dominant commercial ideology of an expanding British Empire in the 19th century. Laissez-faire theorists of government believed perfect free trade would see human wants satisfied and wars cease. Newly emergent economies in the USA and Victoria begged to differ, embracing protection of native industry by increasing tariffs on a selected range of imports. Liberals of the English tradition, free traders by conviction, agreed with protection as a temporary concession to promote infant industries. If it became permanent, they warned, it would create vested interests and undermine the common good. In Melbourne protection was taken up by political radicals (who called themselves liberals), manufacturers and workers who believed the State could support manufacturing industry and protect workers' conditions. Melbourne's merchants and their conservative political representatives were identified as free traders, although the Melbourne Chamber of Commerce embraced a range of views. The contest between free trade and protection merged with other volatile issues in the parliament, leading to constitutional conflict in the 1860s and 1870s, but by the 1880s protection had triumphed and local manufacturing thrived. But neighbouring colonies introduced their own tariffs, which made for complex, even irrational, customs systems and strengthened the case for Federation. With the formation of the Commonwealth in 1901, nominally free trade New South Wales 'gave in' to protectionist Victoria and its allies, accepting the 'new protectionism' in return for free trade between the States, enshrined in section 92 of the Constitution. Fiscal policy was delegated to the federal government, where protectionism held sway until the 1970s, when the Whitlam Australian Labor Party Government introduced a controversial 25% 'across-the-board' cut in tariffs. Subsequent Liberal and Labor governments have argued that free trade policies benefit consumers and the nation, but the impact on Melbourne's motor car, textiles and footwear industries has been marked.