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Protection or Free Trade

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Author Topic: Protection or Free Trade  (Read 5001 times)
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« on: October 26, 2010, 02:41:14 pm »



THE protective theory has certainly the weight of most general acceptance. Forty years ago all civilized countries based their policy upon it; and though Great Britain has since discarded it, she remains the only considerable nation that has done so, while not only have her own colonies, as soon as they have obtained the power, shown a disposition to revert to it, but such a disposition has of late years been growing in Great Britain herself.

It should be remembered, however, that the presumption in favor of any belief generally entertained has existed in favor of many beliefs now known to be entirely erroneous, and is especially weak in the case of a theory which, like that of protection, enlists the support of powerful special interests. The history of mankind everywhere shows the power that special interests, capable of organization and action, may exert in securing the acceptance of the most monstrous doctrines. We have, indeed, only to look around us to see how easily a small special interest may exert greater influence in forming opinion and making laws than a large general interest. As what is everybody's business is nobody's business, so what is everybody's interest is nobody's interest. Two or three citizens of a seaside town see that the building of a custom-house or the dredging of a creek will put money in their pockets; a few silver miners conclude that it will be a good thing for them to have the government stow away some millions of silver every month; a navy contractor wants the profit of repairing useless iron-clads or building needless cruisers, and again and again such petty interests have their way against the larger interests of the whole people. What can be clearer than that a note directly issued by the government is at least as good as a note based on a government bond? Yet special interests have sufficed with us to institute and maintain a hybrid currency for which no other valid reason can be assigned than private profit.

Those who are specially interested in protective tariffs find it easy to believe that protection is of general benefit. The directness of their interest makes them active in spreading their views, and having control of large means—for the protected industries are those in which large capitals are engaged—and being ready on occasion, as a matter of business, to spend money in propagating their doctrines, they exert great influence upon the organs of public opinion. Free trade, on the contrary, offers no special advantage to any particular interest, and in the present state of social morality benefits or injuries which men share in common with their fellows are not felt so intensely as those which affect them specially.

I do not mean to say that the pecuniary interests which protection enlists suffice to explain the widespread acceptance of its theories and the tenacity with which they are held. But it is plain that these interests do constitute a power of the kind most potent in forming opinion and influencing legislation, and that this fact weakens the presumption the wide acceptance of protection might otherwise afford, and is a reason why those who believe in protection merely because they have constantly heard it praised should examine the question for themselves.

Protection, moreover, has always found an effective ally in those national prejudices and hatreds which are in part the cause and in part the result of the wars that have made the annals of mankind a record of bloodshed and devastation—prejudices and hatreds which have everywhere been the means by which the masses have been induced to use their own power for their own enslavement.

For the first half century of our national existence American protectionists pointed to the protective tariff of Great Britain as an example to be followed; but since that country, in 1846, discarded protection, its American advocates have endeavored to utilize national prejudice by constantly speaking of protection as an American system and of free trade as a British invention.
Just now they are endeavoring to utilize in the same way the enmity against everything British which long oppressions and insults have engendered in the Irish heart, and, in the words of a recent political platform, Irish-Americans are called upon "to resist the introduction into America of the English theory of free trade, which has been so successfully used as a means to destroy the industries and oppress the people of Ireland."

Even if free trade had originated in Great Britain we should be as foolish in rejecting it on that account as we should be in refusing to speak our mother tongue because it is of British origin, or in going back to hand and water power because steam engines were first introduced in Great Britain. But, in truth, free trade no more originated in Great Britain than did the habit of walking on the feet. Free trade is the natural trade—the trade that goes on in the absence of artificial restrictions. It is protection that had to be invented. But instead of being invented in the United States, it was in full force in Great Britain long before the United States were thought of. It would be nearer the truth to say that protection originated in Great Britain, for, if the system did not originate there, it was fully developed there, and it is from that country that it has been derived by us. Nor yet did the reaction against it originate in Great Britain, but in France, among a school of eminent men headed by Quesnay, who were Adam Smith's predecessors and in many things his teachers. These French economists were what neither Smith nor any subsequent British economist or statesman has been—true free traders. They wished to sweep away not merely protective duties, but all taxes, direct and indirect, save a single tax upon land values. This logical conclusion of free-trade principles the so-called British free traders have shirked, and it meets today as bitter opposition from the Cobden Club as from American protectionists. The only sense in which we can properly speak of "British free trade" is the same sense in which we speak of a certain imitation metal as "German silver." "British free trade" is spurious free trade. Great Britain does not really enjoy free trade. To say nothing of internal taxes, inconsistent with true free trade, she still maintains a cordon of custom-house officers, coast guards and baggage searchers, and still collects over a hundred million dollars of her revenue from import duties. To be sure, her tariff is "for revenue only," but a tariff for revenue only is not free trade. The ruling classes of Great Britain have adopted only so much free trade as suits their class interests, and the battle for free trade in that country has yet to be fought.

On the other hand, it is absurd to talk of protection as an American system. It had been fully developed in Europe before the American colonies were planted, and during our colonial period England maintained a more thorough system of protection than now anywhere exists
—a system which aimed at building up English industries not merely by protective duties, but by the repression of like industries in Ireland and the colonies, and wherever else throughout the world English power could be exerted. What we got of protection was the wrong side of it, in regulations intended to prevent American industries from competing with those of the mother country and to give to her a monopoly of the American trade.

The irritation produced in the growing colonies by these restrictions was the main cause of the revolution which made of them an independent nation. Protectionist ideas were doubtless at that time latent among our people, for they permeated the mental atmosphere of the civilized world, but so little disposition was there to embody those ideas in a national policy, that the American representatives in negotiating the treaty of peace endeavored to secure complete freedom of trade between the United States and Great Britain. This was refused by England, then and for a long time afterward completely dominated by protective ideas. But during the period following the revolution in which the American Union existed during the Articles of Confederation, no tariff hampered importations into the American States.

The adoption of the Constitution made a Federal tariff possible, and to give the Federal Government an independent revenue a tariff was soon imposed; but although protection had then begun to find advocates in the United States, this first American tariff was almost nominal as compared with what the British tariff was then or our tariff is now. And in the Federal Constitution state tariffs were prohibited—a step which has resulted in giving to the principle of free trade the greatest extension it has had in modern times. Nothing could more clearly show how far the American people then were from accepting the theories of protection since popularized among them, for the national idea had not then acquired the force it has since gained, and if protection had then been looked upon as necessary the different States would not without a struggle have given up the power of imposing tariffs of their own.

Nor could protection have reached its present height in the United States but for the civil war. While attention was concentrated on the struggle and mothers were sending their sons to the battle-field, the interests that sought protection took advantage of the patriotism that was ready for any sacrifice to secure protective taxes such as had never before been dreamed of—taxes which they have ever since managed to keep in force, and even in many cases to increase.

The truth is that protection is no more American than is the distinction made in our regular army and navy between commissioned officers and enlisted men—a distinction not of degree but of kind, so that there is between the highest non-commissioned officer and the lowest commissioned officer a deep gulf fixed, a gulf which can only be likened to that which exists between white and black where the color-line is drawn sharpest. This distinction is historically a survival of that made in the armies of aristocratic Europe, when they were officered by nobles and recruited from peasants, and has been copied by us in the same spirit of imitation that has led us to copy other undemocratic customs and institutions. Though we preserve this aristocratic distinction after it has been abandoned in some European countries, it is in no sense American. It neither originated with us nor does it consort with our distinctive ideas and institutions. So it is with protection. Whatever be its economic merits there can be no doubt that it conflicts with those ideas of natural right and personal freedom which received national expression in the establishment of the American Republic, and which we have been accustomed to regard as distinctively American. What more incongruous than the administering of custom-house oaths and the searching of trunks and hand-bags under the shadow of "Liberty Enlightening the World?"

As for the assertion that "the English theory of free trade" has been used "to destroy the industries and oppress the people of Ireland," the truth is that it was "the English theory of protection" that was so used. The restrictions which British protection imposed upon the American colonies were trivial as compared with those imposed upon Ireland. The successful resistance of the colonies roused in Ireland the same spirit, and led to the great movement of "Irish Volunteers," who, with cannon bearing the inscription "Free Trade or——!" forced the repeal of those restrictions and won for a time Irish legislative independence.

Whether Irish industries that were unquestionably hampered and throttled by British protection could now be benefited by Irish protection, like the question whether protection benefits the United States, is only to be settled by a determination of the effects of protection upon the country that imposes it. But without going into that, it is evident that the free trade between Great Britain and Ireland which has existed since the union in 1801, has not been the cause of the backwardness of Irish industry. There is one part of Ireland which has enjoyed comparative prosperity and in which important industries have grown up—some of them, such as the building of iron ships, for which natural advantages cannot be claimed. How can this be explained on the theory that Irish industries cannot be reestablished without protection?

If the very men who are now trying to persuade Irish-American voters that Ireland has been impoverished by "British free trade" were privately asked the cause of the greater prosperity of Ulster over other parts of Ireland, they would probably give the answer made familiar by religious bigotry—that Ulster is enterprising and prosperous because it is Protestant, while the rest of Ireland is sluggish and poor because it is Catholic. But the true reason is plain. It is, that the land tenure in Ulster has been such that a larger portion of the wealth produced has been left there than in other parts of Ireland, and that the mass of the people have not been so remorsely hunted and oppressed. In Presbyterian Skye the same general poverty, the same primitive conditions of industry exist as in Catholic Connemara, and its cause is to be seen in the same rapacious system of landlordism which has carried off the fruits of industry and prevented the accumulation of capital. To attribute the backwardness of industry among a people who are steadily stripped of all they can produce above a bare living to the want of a protective tariff or to religious opinions is like attributing the sinking of a scuttled ship to the loss of her figurehead or the color of her paint.

What, however, in the United States at least, has tended more than any appeals to national feeling to dispose the masses in favor of protection, has been the difference of attitude toward the working classes assumed by the contending policies. In its beginnings in this country protection was strongest in those sections where labor had the largest opportunities and was held in the highest esteem, while the strength of free trade has been the greatest in the section in which up to the civil war slavery prevailed. The political party which successfully challenged the aggressions of the slave power also declared for a protective tariff, while the men who tried to rend the Union in order to establish a nation based upon the right of capital to own labor, prohibited protection in the constitution they formed. The explanation of these facts is, that in one section of the country there were many industries that could be protected, while in the other section there were few. While American cotton culture was in its earlier stages, Southern cotton planters were willing enough to avail themselves of a heavy duty on India cottons, and Louisiana sugar growers have always been persistent sticklers for protection. But when cotton raised for export became the great staple of the South, protection, in the absence of manufactures, was not only clearly opposed to dominant Southern interests, but assumed the character of a sectional imposition by which the South was taxed for the benefit of the North. This sectional division on the tariff question had no reference whatever to the conditions of labor, but in many minds its effect has been to associate protection with respect for labor and free trade with its enslavement.

Irrespective of this there has been much in the presentation of the two theories to dispose the working classes toward protection and against free trade. Workingmen generally feel that they do not get a fair reward for their labor. They know that what prevents them from successfully demanding higher wages is the competition of others anxious for work, and they are naturally disposed to favor the doctrine or party that proposes to shield them from competition. This, its advocates urge, is the aim of protection. And whatever protection accomplishes, protectionists at least profess regard for the working classes, and proclaim their desire to use the powers of government to raise and maintain wages. Protection, they declare, means the protection of labor. So constantly is this reiterated that many suppose that this is the real derivation of the term, and that "protection" is short for "protection of labor."

On the other hand, the opponents of protection have, for the most part, not only professed no special interest in the well-being of the working classes and no desire to raise wages, but have denied the justice of attempting to use the powers of government for this purpose. The doctrines of free trade have been intertwined with teachings that throw upon the laws of nature responsibility for the poverty of the laboring class, and foster a callous indifference to their sufferings. On the same grounds on which they have condemned legislative interference with commerce, free-trade economists have condemned interference with hours of labor, with the rate of wages, and even with the employment of women and children, and have united protectionism and trades unionism in the same denunciation, proclaiming supply and demand to be the only true and rightful regulator of the price of labor as of the price of pig-iron. While protesting against restrictions upon the production of wealth they have ignored the monstrous injustice of its distribution, and have treated as fair and normal that competition in which human beings, deprived of their natural opportunities of employing themselves, are compelled by biting want, to bid against one another.

All this is true. But it is also true that the needs of labor require more than kind words, and are not to be satisfied by such soft phrases as we address to a horse when we want to catch him that we may put a bit in his mouth and a saddle on his back. Let me ask those who are disposed to regard protection as favorable to the aspirations of labor, to consider whether it can be true that what labor needs is to be protected?

To admit that labor needs protection is to acknowledge its inferiority; it is to acquiesce in an assumption that degrades the workman to the position of a dependent, and leads logically to the claim that the employee is bound to vote in the interest of the employer who provides him with work. There is something in the very word "protection" that ought to make workingmen cautious of accepting anything presented to them under it. The protection of the masses has in all times been the pretense of tyranny—the plea of monarchy, of aristocracy, of special privilege of every kind. The slave owners justified slavery as protecting the slaves. British misrule in Ireland is upheld on the ground that it is for the protection of the Irish. But, whether under a monarchy or under a republic, is there an instance in the history of the world in which the "protection" of the laboring masses has not meant their oppression? The protection that those who have got the law-making power into their hands have given to labor, has at best always been the protection that man gives to cattle—he protects them that he may use and eat them.

There runs through protectionist professions of concern for labor a tone of condescending patronage more insulting to men who feel the true dignity of labor than frankly expressed contempt could be—an assumption that pauperism is the natural condition of labor, to which it must everywhere fall unless benevolently protected. It is never intimated that the landowner or the capitalist needs protection. They, it is always assumed, can take care of themselves. It is only the poor workingman who must be protected.

What is labor that it should so need protection? Is not labor the creator of capital, the producer of all wealth?
Is it not the men who labor that feed and clothe all others? Is it not true, as has been said, that the three great orders of society are "workingmen, beggarmen and thieves?" How, then, does it come that workingmen alone need protection? When the first man came upon the earth who was there to protect him or to provide him with employment? Yet whenever or however he came, he must have managed to get a living and raise a family!

When we consider that labor is the producer of all wealth, is it not evident that the impoverishment and dependence of labor are abnormal conditions resulting from restrictions and usurpations, and that instead of accepting protection, what labor should demand is freedom? That those who advocate any extension of freedom choose to go no further than suits their own special purpose is no reason why freedom itself should be distrusted. For years it was held that the assertion of our Declaration of Independence that all men are created equal and endowed by their Creator with unalienable rights, applied only to white men. But this in nowise vitiated the principle. Nor does it vitiate the principle that it is still held to apply only to political rights.

And so, that freedom of trade has been advocated by those who have no sympathy with labor should not prejudice us against it. Can the road to the industrial emancipation of the masses be any other than that of freedom?
« Last Edit: February 22, 2011, 02:03:22 pm by Geolibertarian » Report Spam   Logged

"For the first years of [Ludwig von] Mises’s life in the United States...he was almost totally dependent on annual research grants from the Rockefeller Foundation.” -- Richard M. Ebeling

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