The Ineffective Origin of Australian Protectionism? Victoria's McCulloch Tariff of 1866

Economic historians have identified Victoria's McCulloch Tariff of 1866 as the genesis of Australian protection of manufacturing—a trade‐policy regime that was to persist until the late‐twentieth century. The McCulloch Tariff imposed 10 per cent duties on a range of manufactured imports; this range was further extended by the closely following Customs Act of 1867. Victoria's pathbreaking protectionist legislation of 1866–1867 has, until now, escaped any direct cliometric assessment of its consequences. This article relies on what little industry‐specific data are available for Victoria in this period: annual data on the number of manufactories in operation in the years preceding and following the policy change. Following a difference‐in‐differences approach, this study finds no statistically significant association between the imposition of the 10 per cent duties and the number of manufactories. This finding is irrespective of changes in the regression sample, definition of an untreated industry, and estimation method used. The McCulloch Tariff is better remembered for the trajectory on which it placed Victorian economic policy.