Tariffs shall promote skill and liberty
List elaborated on the system of differentiating and temporary protective tariffs regarding different questions: incentives and security for the investor (List, 1837a, p. 89; 1841, pp.
167-8); need for uninterrupted production and stability (List, 1841, p. 298); protection and importance of the home market (ibid., pp. 24, 186-7, 191); trade war and dumping (ibid., pp. 95, 299); differentiated tariffs according to skill, experience, machinery and capital involved (List, 1837a, p. 145; 1841, pp. 178-9); according to necessity of life (List, 1841, p. 311); according to time, that is a bell shape of tariffs along the time axis (List, 1837a, p. 145; 1841, p. 314); special key branches such as the machine tool industry (List, 1841, p. 314); historical setting (List, 1837a, p. 145; 1841, pp. 115, 130, 314, 329); fiscal side secondary in importance (List, 1837a, p. 36); necessity of averting inefficient monopolies (ibid., p. 81; 1841, pp. 81, 169-71); necessity of state credit and interest-free loans as a kind of subsidy or negative tariff (List, 1841, pp. 296, 300, 315); state investments in infant industry, preferential interests rates to the investors; and temporary subsidies to promote infant industry (ibid., p. 315).The German term for infant industry tariff was Erziehungszoll or education tariff, as opposed to Schutzzoll - or protection tariff - of ‘grandfather industry’. The fiscal side to his proposals were, however, totally secondary in importance (List, 1837a, p. 36). The economic activities to be protected more than any other were knowledge-intensive activities, since these activities had most to give at a later stage through raising the productive potential of the economy. Knowledge-intensive activities were also the most vulnerable since they were more difficult to foster and maintain. Accordingly, they had to be cultivated and fiercely protected and cared for with the utmost attention.
List explains the similar British practice repeatedly (List, 1841, p. 39; cf. p. 111).List criticized excessive protection that did not conform to the promoting principles of awaking and sharpening the productive powers of the nation but instead stupefied and blunted them (ibid., pp. 309-11).
The period in which List was active (1811-1846), had a poorly developed system of regulation in comparison to modern systems over 150 years later. The easiest or sometimes even the only way to regulate was mainly through the means of prohibition and tariffs. This is why the same strategy today would suit the developing countries best, with their, relatively speaking, poorly developed regulatory structure and infrastructure. More industrially developed countries, on the other hand, potentially have many more financial regulatory instruments available. Many of these instruments are not being used today because of free-trade treaties and customs unions.
One instrument of very great importance in the industrialization process after List has been and still is public procurement (purchase) for various purposes related to a standard liberal conception of public duties, such as the upkeep of infrastructure in the widest sense: health, education, transport, law, security, defence etc. List seems to have missed this option, and the reason is possibly the small scale of public procurement of his time. His pupils, however, saw this clearly and extended his general principles into this field, utilizing public procurement to promote domestic know-how, production, jobs and a wider tax base.