Posted on 07/27/2018 7:34:50 AM PDT by Kaslin
"Make America Great Again!" will, given the astonishing victory it produced for Donald Trump, be recorded among the most successful slogans in political history.
Yet it raises a question: How did America first become the world's greatest economic power?
In 1998, in "The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy," this writer sought to explain.
However, as the blazing issue of that day was Monica Lewinsky and Bill Clinton, it was no easy task to steer interviewers around to the McKinley Tariff.
Free trade propaganda aside, what is the historical truth?
As our Revolution was about political independence, the first words and acts of our constitutional republic were about ensuring America's economic independence.
"A free people should promote such manufactures as tend to render them independent on others for essentials, especially military supplies," said President Washington in his first message to Congress.
The first major bill passed by Congress was the Tariff Act of 1789.
Weeks later, Washington imposed tonnage taxes on all foreign shipping. The U.S. Merchant Marine was born.
In 1791, Treasury Secretary Alexander Hamilton wrote in his famous Report on Manufactures:
"The wealth ... independence, and security of a Country, appear to be materially connected with the prosperity of manufactures. Every nation ... ought to endeavor to possess within itself all the essentials of national supply. These compromise the means of subsistence, habitation, clothing, and defence."
During the War of 1812, British merchants lost their American markets. When peace came, flotillas of British ships arrived at U.S. ports to dump underpriced goods and to recapture the markets the Brits had lost.
Henry Clay and John Calhoun backed James Madison's Tariff of 1816, as did ex-free traders Jefferson and John Adams. It worked.
In 1816, the U.S. produced 840 thousand yards of cloth. By 1820, it was 13,874 thousand yards. America had become self-sufficient.
Financing "internal improvements" with tariffs on foreign goods would become known abroad as "The American System."
Said Daniel Webster, "Protection of our own labor against the cheaper, ill-paid, half-fed, and pauper labor of Europe, is ... a duty which the country owes to its own citizens."
This is economic patriotism, a conservatism of the heart. Globalists, cosmopolites and one-worlders recoil at phrases like "America First."
Campaigning for Henry Clay, "The Father of the American System," in 1844, Abe Lincoln issued an impassioned plea, "Give us a protective tariff and we will have the greatest nation on earth."
Battling free trade in the Polk presidency, Congressman Lincoln said, "Abandonment of the protective policy by the American Government must result in the increase of both useless labor and idleness and ... must produce want and ruin among our people."
In our time, the abandonment of economic patriotism produced in Middle America what Lincoln predicted, and what got Trump elected.
From the Civil War to the 20th century, U.S. economic policy was grounded in the Morrill Tariffs, named for Vermont Congressman and Senator Justin Morrill who, as early as 1857, had declared: "I am for ruling America for the benefit, first, of Americans, and, for the 'rest of mankind' afterwards."
To Morrill, free trade was treason:
"Free trade abjures patriotism and boasts of cosmopolitanism. It regards the labor of our own people with no more favor than that of the barbarian on the Danube or the cooly on the Ganges."
William McKinley, the veteran of Antietam who gave his name to the McKinley Tariff, declared, four years before being elected president:
"Free trade results in our giving our money ... our manufactures and our markets to other nations. ... It will bring widespread discontent. It will revolutionize our values."
Campaigning in 1892, McKinley said, "Open competition between high-paid American labor and poorly paid European labor will either drive out of existence American industry or lower American wages."
Substitute "Asian labor" for "European labor" and is this not a fair description of what free trade did to U.S. manufacturing these last 25 years? Some $12 trillion in trade deficits, arrested wages for our workers, six million manufacturing jobs lost, 55,000 factories and plants shut down.
McKinley's future Vice President Teddy Roosevelt agreed with him, "Thank God I am not a free trader."
What did the Protectionists produce?
From 1869 to 1900, GDP quadrupled. Budget surpluses were run for 27 straight years. The U.S. debt was cut two-thirds to 7 percent of GDP. Commodity prices fell 58 percent. U.S. population doubled, but real wages rose 53 percent. Economic growth averaged 4 percent a year.
And the United States, which began this era with half of Britain's production, ended it with twice Britain's production.
Under Warren Harding, Cal Coolidge and the Fordney-McCumber Tariff, GDP growth from 1922 to 1927 hit 7 percent, an all-time record.
Economic patriotism put America first, and made America first.
Of GOP free traders, the steel magnate Joseph Wharton, whose name graces the college Trump attended, said it well:
"Republicans who are shaky on protection are shaky all over."
And yet Trump has Europe discussing zero tariffs for the first time.
I wonder how that came about?
Europe charges 10% on our vehicles and we charge 2.5% on theirs. As long as we’re at a 4:1 disadvantage these economists don’t care. If we raise our tariffs to match, they scream that we started the trade war.
Where do the idiots learn this type of twisted logic.
The answer is in this: Small startup companies are known for taking bold risks. Large companies are known for being painfully conservative behemoths. The reason is simple. Startups have nothing to lose and everything to gain. And most of the time they go bankrupt. We mostly only hear about the ones where the gamble paid off. Large companies have little to gain and much to lose.
The rules for startups and large companies are completely different.
Same with countries. Also, the environment is completely different now. There is nowhere left to expand without pulling a Hitler. We play by different rules today.
No.
Nice article. It sure explains things clearly.
It’s not the first time. There was a tariff deal on the table that accomplished this and more, but Trump tore it up. It was called TTIP, but his fear of acronyms led him to dismiss it.
In the meantime, he got nothing. Europe was going to buy soybeans anyway. The ones they bought last year (from Brazil) now go to China, so the US ones will be the cheapest to deliver. LNG cargoes are not inter-governmental. The EU has no control over where a private company like Shell sends LNG, and they’ll send it to Asia, where the price is highest. Europeans use Russian pipeline gas because that’s the cheapest. Germany has no LNG terminals.
It was a complete cave by Trump, and a good thing, because his tariff policies regarding Nafta and the EU and automobiles are stupid. China is a different story. Listen to Lighthizer on China.
Good article. Thanks for posting.
We all adjust to the environment and that is true in economics as well. If something is widely accepted as true it becomes true to most even if there are reasons to doubt.
The arguments we hear today are based on a false premise that “free trade” means we don’t protect our markets while they protect theirs. Trump is turning that idea upside down.
Proud to have voted for Pat Buchanan in the primary against Daddy Bush.
He’s been right all along.
Of note:
Smithsonian Free Trade has never existed in the history of the nation-state. Never. Yet we have millions of adherents.
How can that be?
And how is it that most of them are Republicans?
Are Republicans stupid?
I’ve said this before: Trump is carrying out the Buchanan presidency that we didn’t have in the 1990’s.
Drain the swamp (in the context of Bob Torricelli and the House post office scandal), America First slogans, tariffs, immigration reform. All signature issues Pat brought forward.
Free trade is great for the consumer side of us but not for the producer side of us.
Each one of us is simultaneously both a consumer and a producer, but before we can consume we first must produce.
Without an income from a job you can forget about consumption, regardless how cheap prices are.
A few observstions:
1. Lots is protectionist countries never became great. Argentina is an example.
2. Protestant moral virtues, respect for private property, and work ethic surely had something to do with our success.
They charge 10% tariffs on our vehicles and we charge 2.5% on their’s.
What part of that makes sense to you?
Rather than dumping on Trump for not agreeing to that deal, why don’t you spend more time trying to figure out why he didn’t agree to it?
If it would have accomplished his goals, why wouldn’t he sign it and then claim credit for having done so?
Agreed.
I fail to see the legitimacy of handwringing over tariffs as Trump appears to be using them.
A no-tariff environment is the best, most people agree.
And permanent tariffs are not desirable, when used to make up for an inherent inequality in a formerly tariff-free sector to protect that native sector, most people agree.
But in a case of economic warfare, where your foe is charging a 10% tariff on your goods, and their goods have no tariff coming here, what should be done? Just sit back and take it, as the USA has since the end of WWII?
Tariffs are a weapon in that war, and like all weapons, should be used if needed.
Absolutely.
I have no problem with tariffs up to 2.5% anyway, since we have certain government administrative costs.
Yes. Anyone who studies US history knows that.
No, we charge 25% on theirs. And we will get no tariff reductions from them unless we remove the chicken tax on pickup trucks.
When did the 25% start?
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