Atkinson: Protection promotes War - Free Trade promotes Peace
Source: Edward Atkinson, Taxation and Work: A Series of Treatises on the Tariff and the Currency (New York: G.P. Putnam’s Sons, 1892). CHAPTER XVII.: Protection Promotes War; Free Trade Promotes Peace.
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By the admission of the most prominent advocates of the present system of high duties from 1861 to 1867, and also by the admission of the Senators whose letters have been quoted, it has been proved that this method of applying the protective idea is not based upon a principle.
It is not, therefore, “an admitted truth requiring no further proof,” nor is it “a rule of action among human beings.” A high-tariff system represents merely a policy of which the purpose is to give another direction to the common rule of action among human beings than men would adopt if not forced to do so by tariff taxation.
The declared purpose of this policy is either to raise or to maintain the rate of wages above the rates prevailing in other countries, or to divert capital from the investments which would otherwise be chosen by its owners into arts which would be freely chosen were there no such policy of taxation. The complement or correlative of such laws are those of a precisely similar character which are called for by workmen for limiting the hours of labor and regulating methods of payment. All these acts are in a certain measure socialistic or even communistic in their very essence.
Free Trade, on the other hand, requires no force; it is what men engage in of their own motive and for the joint benefit or mutual benefit of both buyer and seller. It is true to the definition of principle—it is “an admitted truth which requires no further proof,” that “the rule of action among human beings,” who have risen above the stage of savagery, is to trade freely; that is to say, to exchange products with each other for mutual benefit. It does away with distribution by war, slavery, and force, substituting exchange by mutual agreement for the profit of both buyer and seller. It is “an admitted truth which requires no further proof,” that this exchange of product for product is an exchange of service by which men help each other. Free Trade or commerce among men and nations tends to the maintenance of peace, order, and industry. Witness the relation of the Dominion of Canada with this country during the civil war. It fortunately happened that before the civil war a treaty of mutual reciprocity in trade had been negotiated which was not ended until after the struggle. Under these favorable conditions beneficial to both countries—such was the influence that, although every effort was made by the most capable agents of the States in rebellion to incite Canada to attack the North, not one single regiment was required to guard our northern frontier, and not one ship of war was required to be stationed before the dominating port of Halifax. One of the most potent arguments by which Chancellor Caprivi has lately carried the treaties of reciprocity between the German Empire with Austria, Italy, and other countries, is that when men exchange products with each other they may not fight. It is the first step of relief from the standing armies that are eating out the very heart of Europe.
But it is true that there still are a few cranks in this country, some even in the Senate of the United States, who regard commerce as a sort of passive international war; men seriously object to the import of what they call a flood of foreign luxuries, upon the ground that such an import is a warlike attack upon our domestic industry, regardless of the fact that the greater part of these imports consists of the necessaries or comforts of life, or of crude materials of foreign origin without which some branches of our domestic industry would be destroyed.
With singular fatuity, these legislators are among the most prominent advocates and upholders of bounties and subsidies to lines of steamships connecting the United States with foreign countries; their purpose being to help the United States inflict the injury upon them from which they assume to defend themselves, i. e., to flood other countries with our products; that is to say, to flood Great Britain with our cotton and our grain, and to flood other nations with our manufactured goods and wares, while refusing to accept payment for our surplus products in articles which are of foreign production that we need in place of these exports. Surely what is sauce for the gander is also sauce for the goose. Yet these advocates of bounties are the very men who hiss at a reduction of our tariff, and who impute to those who try to promote commerce without bounties a dishonest seeking after British gold. Let them pass, their light can easily be hidden under a bushel because it is so feeble.
The fallacy which underlies this crude theory of trade is the same as the misconception which has led to the commercial wars of the last three centuries,—the false idea that a country profits only in its trade when it imports gold or silver in exchange for goods; or that when it imports more goods than it exports it must be meeting with a loss. It is no longer worth while to waste time in dealing with such persons, because as fast as they die their places are taken by men of a broader type and of greater intelligence, and also because with them it is useless to discuss this question, as they have presented these fallacies until they have become incapable of reasoning upon the basis of facts.
Suffice it, while Protection by means of a high tariff has only been defended by its original advocates, as a temporary expedient or policy of which Free Trade is the ultimate end, on the other hand Free Trade is founded upon a principle so universal and so fully constituting a rule of action among human beings that it always has and always will require force to prevent its application.
A high tariff only finds its justification among those who regard international commerce as a state of war, while Free Trade is sustained by its advocates because it promotes peace, order, and industry, good-will and plenty among all the nations of the world.
Free Trade may be especially desired in that country in which science and invention applied to the greatest natural resources have developed the largest product at the lowest cost from which the highest rates of wages are derived. That is the condition of this country. Our selfish interest is in Free Trade because we should gain the most in commerce whatever tariffs other nations might oppress themselves with.
It is this aspect of the case that lifts the discussion above one of mere profit and loss, and which raises it to the highest plane in ethics and in morals.
While the intentions of the advocates of what is miscalled Protection, but which is in fact privation, are doubtless good, they are of the same kind as the intention with which the road to Sheol is said to be paved, and in their application they have almost made a Sheol of the civilized world for about four centuries.
It would perhaps be difficult to discriminate between the wars which have been conducted in the name of religion and those which have ensued from the attempts to restrict commerce. The religious wars (God save the mark!) of France and Spain, drove the Moors and the Moriscoes with their arts and literature into Africa and the Huguenots and Flemings to England, as the persecution of the Jews is now driving the traders and bankers of Russia from her soil, thereby turning what might have been only the ill-effects of a short crop into a famine.
From the time when Columbus discovered the West Indies, or when Amerigo Vespucci discovered America, down to the present date, nearly every war has originated or has been conducted for the purpose of preventing one nation sharing with another in the benefits of commerce.
The efforts of France and Great Britain, through the Berlin decrees of Napoleon and the Orders in Council, to deprive each other of the benefits of commerce, first compelled Napoleon to sell Louisiana to this country, thus transferring to us a territory which, stretching from the Gulf of Mexico to the borders of Canada, will presently be the dwelling-place of a greater people than will occupy either Great Britain or France; a part of whose commerce through the Sault St. Marie Canal that unites the great lakes even now exceeds the traffic of all Europe with the East through the Suez Canal.
The end of all these wars of a single century since the French Revolution of 1793 has been that France has been exhausted in her efforts to depose the Bourbons and the Napoleonic dynasty, varying her efforts to govern herself by futile attempts to prevent the union of the people of Germany and Italy.
The several nations of the world, mainly European nations, whose debts are recorded, are now burdened with a national debt, of which the aggregate amount is $26,621,222,135 net, mostly incurred for the conduct of wars undertaken or continued mainly for the restriction of commerce. This debt is increasing.
In the effort to prevent commerce among about twenty separate States occupying the continent of Europe, of which the area, omitting the frozen regions of Europe in the one case and Alaska in the other, is about the same as that of the United States, taxes are raised at the tariff barriers amounting to about $700,000,000, while armies numbering over 3,000,000 men in active service are kept in camp and barracks at a cost, with navies added, of about $1,000,000,000. As the result of this system, great areas of most fertile land in Eastern Europe are lying waste; Russia is famine-stricken; large districts in Italy are devastated by the pellagra, a loathsome disease due to the want of adequate nutrition; the people of Germany are distinctly under-fed in many parts, while all Europe is dependent in part upon us for food.
This whole waste of war and this whole condition of abject want are based upon and caused by the same stupendous blunder upon which the McKinley tariff act has been promoted, enacted, and is now sustained, to wit:
That international commerce is a state of passive war, and that in the exchange of products what one nation gains another must lose.
It is hard to maintain a judicial frame of mind in dealing with such pagan conceptions which belong to an age when men were just emerging from what John Fiske describes as the higher stage of barbarism that precedes civilization.
It may not be that this error will be removed by any process of reasoning, or by any mere demonstration of the facts; the remedy has come from the profound distrust of the very misconceptions on which this whole series of arguments and acts, culminating in the McKinley act, are but the logical development.
The intelligence of the country has at length condemned the whole policy, and it now demands to be governed in its legislation by those who represent the principle of Free Trade, which is founded upon the conception of mutual service, under the guidance of men who will put principle above policy in the conduct of the public duties with which they have been or may again be charged.
On the other hand, in support of the statement which has already been made, that the effect even of a very high tariff system has been exaggerated, one comparison in figures may be serviceable. The Statesman’s Year Book, for 1891, gives the customary statements of the imports and exports of all the European States, the colonies and dependencies of Great Britain, and the nations or States of North and South America. Disregarding fractions, the exports of Great Britain and her colonies and dependencies comes to six thousand million dollars ($6,000,000,000), or what we would call six billions; the sum of the imports and exports of all the other European States is eight thousand million dollars ($8,000,000,000), or eight billions; the sum of the imports and exports of the South American and Central American States makes thirteen hundred million dollars ($1,300,000,000); of the United States seventeen hundred million dollars ($1,700,000,000)—total three billions. The aggregate of the international commerce of all the countries, nations, or states in regard to which the facts can be ascertained, is seventeen thousand million dollars ($17,000,000,000), or seventeen billions. The product of the United States is computed at twelve thousand five hundred million dollars, of which perhaps five hundred million dollars’ worth may be consumed upon the farms or by those who consume the goods which they produce themselves. The rest is exchanged, it is all bought and sold. A single transaction or one exchange of this product, therefore, corresponds for purposes of comparison to the figures of the import and export in international commerce. Our domestic transactions on a single exchange come to twenty-four thousand million dollars ($24,000,000,000), or twenty-four billions. Our export and import amounted to seventeen hundred million dollars ($1,700,000,000), therefore constituting on single transactions a fraction over seven per cent. of our commerce, again bringing into conspicuous notice the fact that the domestic commerce only of the people of this country exceeds the sum of all the international commerce of all the nations of the earth of which we have any record.
Again, it may be remarked that the sum of the railway charge for carrying the freight only over the railways of the United States now amounts annually to a sum but little less than the volume of our exports and considerably exceeding the value of our imports from foreign countries.
It is difficult to compute the measure of the free commerce of the people of the United States who constitute a more numerous body occupying a wider area, than were ever before permitted to enjoy the benefit of absolute Free Trade.
The sum of our exports and imports combined comes to about twenty-eight dollars per head, our national product is not far from two hundred dollars’ worth per head, of which a single exchange would represent purchases and sales to the amount of four hundred dollars each, or nearly fifteen times the volume of foreign traffic. But each element in our product is dealt in many times, converted and re-converted until it is ready for consumption, so that the exchange of products and services among our own people cannot be less than three times the first value of our annual product, and that would bring the sum of our domestic transactions to the incomprehensible total of $40,000,000,000 or what we call forty billions of dollars in this present year.
Yet there are those among us who would debase our standard of value and by the free coinage of silver dollars under present acts of legal tender would endanger this whole traffic. The tax which would be put upon the work of this people by substituting a dollar which is only worth sixty-eight cents after it is melted, in place of a dollar which is worth after it is melted as much as it is in the coin—one hundred cents—would be so disastrous as to put the McKinley act out of sight and out of mind.
- Aquinas on fraudulent dealing
- Atkinson: Protection promotes War - Free Trade promotes Peace
- Bentham on Usury
- Boehm-Bawerk’s Theory of Capital
- Böhm-Bawerk, “On the Completion of Marx’s System (of Thought)” (1896, 1898)
- Böhm-Bawerk, “Zum Abschluß des Marxschen Systems” (1896)
- Cobden’s Speeches on Free Trade
- Cobden: An Appreciation I
- Cobden: An Appreciation II
- Condillac’s Economic Thought
- Coquelin on Competititon
- Coquelin on Industry
- Coquelin on Political Economy
- Demsetz and Property Rights
- Early Republican Economic Policy
- Eugen Richter and the Critique of Socialism
- Famous Economists and Political Philosophers
- Faucher on Property
- Fetter’s Economic Thought
- Friedman on “I, Pencil” & the Invisible Hand
- Friedman on Capitalism and Freedom
- Garnier on the Origin of the Term Laissez-faire
- Garnier on the Physiocrats
- Grampp on the Manchester School of Economics
- Hazlitt, The Future of Capitalism
- Heyne, Economics as a Way of Thinking
- Higgs on the Influence of the Physiocrats
- Hirst on the Manchester School
- Hutt, Reflections on the Keynsian Episode
- Ingram, History of the Early Austrian School of Economics
- Invisible Hand Explanations of Society
- Jasay, The Capitalist State
- Jevons on Richard Cantillon
- Kirzner on the Economic Point of View
- Kirzner, Entrepreneurship & the Market Approach to Development
- Lachmann and the Subjective Paradigm
- Lachmann, The Significance of the Austrian School
- Lalor’s Cyclopedia - 19thC French Political Economy
- Lalor’s Cyclopedia - Preface and Table of Contents
- Marshall on The Growth of Free Industry and Enterprise
- Martineau on Property & Slave Labour
- Martineau’s Primer on Laissez-Faire Economics
- Marx’s Works
- McCulloch on Smuggling
- McCulloch on the Balance of Trade
- McCulloch on the Corn Laws
- O'Driscoll, Spontaneous Order and Coordination
- Polanyi and Spontaneous Ordering
- Political Ideas of the Classical Economists
- Rae on the publication of the Wealth of Nations (1776)
- Richard Cobden’s “I have a Dream” speech (1846)
- Rothbard on the Prehistory of the Austrian School
- Rothbard on the Public Sector
- Say on Colonial Slave Labor
- Say on Markets
- Say on Property Rights
- Selgin on Free Banking
- Sennholz, The Chicago Monetary Tradition
- Sirc, Problems of Economic Resposibility
- Smart on Boehm-Bawerk
- Smart on Wieser’s theory of value
- The Economic and Ethical Thought of Paul Heyne
- The Manchester School of Economics by William Grampp
- Tullock and Scientific Inquiry
- Tullock, Application of Economics in Biology
- Viner on International Trade
- Walker on Public Revenue (1899)
- Walker on the Wage Fund (1899)
- Walker on Wages (1899)
- Wicksteed on the Psychology of Choice
- Yeager & Smith on Central Banking