The eternal conflict: Free trade, protectionism, and the enduring peril of monopoly

“ A protected industry goes to sleep, and monopoly, like the protective tariff, kills it outright. The country upon which all others depend for their supplies will be the land which will promulgate free trade, for it will be conscious of its power to produce its manufactures at prices lower than those of any of its competitors. France is in a better position to attain this end than England, for France alone possesses an amount of territory sufficiently extensive to maintain a supply of agricultural produce at prices that will enable the worker to live on low wages ”

“ All extremes are bad. Free trade is an extreme. Want of competition is bad. Extreme competition is bad. Healthy competition is that which is wanted.
Unlimited competition defeats its own purpose by crushing out weaker industries, diminishing the supply, and enabling the successful competitors to raise their prices as soon as the rival industry has been extinguished.
Even Mill admits that protection may ”

“ Yes! it is Free trade that has utterly ruined Ireland; that is rapidly dragging England down under its wheels; that drains the lifeblood of India and England’s dependencies.
Free trade is that idol which England worships, but which brings in its train disaster, bankruptcy, pauperism, drunkenness, and crime. It is Free trade that is destroying England’s industries, and is driving her capital to protectionist countries. It is Free trade that, if not soon abandoned, will soon bring about a national bankruptcy in England. ”

“ We too often talk about trade while using the vocabulary of war. In war, for one side to win, the other must lose. But commerce is not warfare. Trade is an economic alliance that benefits both countries. There are no losers, only winners. And trade helps strengthen the free world.
Yet today protectionism is being used by some American politicians as a cheap form of nationalism, a fig leaf for those unwilling to maintain America's military strength and who lack the resolve to stand up to real enemies-countries that would use violence against us or our allies. ”

“ It is commerce which is rapidly rendering war obsolete, by strengthening and multiplying the personal interests which are in opposition to it. And it may be said without exaggeration that the great extent and rapid increase of international trade, in being the principal guarantee of the peace of the world, is the great permanent security for the uninterrupted progress of the ideas, the institutions, and the character of the human race. ”

“ But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade. ”

“ I must continually repeat to them that restriction, by impeding commerce, by limiting the division of labor, by forcing it to combat difficulties of situation and temperature, must in its results diminish the quantity produced by any fixed quantum of labor. And what can it benefit us that the smaller quantity produced under the protective system bears the same nominal value as the greater quantity produced under the free [93] trade system? Man does not live on nominal values, but on real articles of produce ”

“ If we wish to judge between freedom of trade and protection, to calculate the probable effect of any political phenomenon, we should notice how far its influence tends to the production of abundance or scarcity, and not simply of cheapness or dearness of price. ”

“ You ask of us an effort equal to two, in order to furnish ourselves with produce only attainable at home by an effort equal to four. You can do it because with you Nature does half the work. But we will have nothing to do with it; we will wait till your climate, becoming more inclement, forces you to ask of us a labor equal to four, and then we can treat with you upon an equal footing!"
A is a favored country; B is maltreated by Nature. Mutual traffic then is advantageous to both, but principally to B, because the exchange is not between utility and utility, but between value and value. ”

“ But soon comes competition, and the price of coal and iron falls, until this gift of nature becomes gratuitous to all, and human labor is only paid according to the general rate of profits.
Thus, natural advantages, like improvements in the process of production, are, or have, a constant tendency to become, under the law of competition, the common and gratuitous patrimony of consumers, of society, of mankind. Countries, therefore, which do not enjoy these advantages, must gain by commerce with those which do ”

“ We pay more for wheat, because, to produce it, Nature requires more labor from man. It is evident that if Nature did for the latter what she does for the former, their prices would tend to the same level. It is impossible that the producer of wheat should permanently gain more than the producer of potatoes. The law of competition cannot allow it.
Again, if by a happy miracle the fertility of all arable lands were to be increased, it would not be the agriculturist, but the consumer, who would profit by this phenomenon; for the result of it would be abundance and cheapness. ”

“ We venture to think that it will be recognised that the Free Trade policy of the past gave us a well-distributed wealth which was an invaluable weapon in time of war, and that any attempt to impose import duties when peace comes will be admitted, even by the most ardent Tariff Reformers, as untimely when there is likely to be a world-wide scramble for food and raw materials, and the one object of every nation will be to get them wherever they can and as cheaply as they can. ”

“ I hold it to be scientifically provable, mathematically demonstrable, that as a nation, that is, that taking the nation as a whole, we are in an excellent commercial position, and that the great efficient cause thereof is Free Trade—that One-sided Free Trade which our Fair Trading friends exclaim against. Under our system of free imports we get here everything that the globe produces on the cheapest possible terms. This advantage no Protectionist nation enjoys. The poor among us are thus enabled to fight the battle of life on the most favourable terms possible. ”

“ Free trade is a revolt, a conflict, a reform, a reaction and recuperation of the body politic, just as free conscience, free worship, free speech, free press, and free soil have been. It is in no sense a theory.
9. Protectionism is not a theory in the correct sense of the term, but it comes under some of the popular and incorrect uses of the word. It is purely dogmatic and a priori. It is desired to attain a certain object—wealth and national prosperity. Protective taxes are proposed as a means. ”

“ The commerce of America is perfectly free, and ever will be so. She will consign away no part of it to any nation. She has not to her friends, and certainly will not to her enemies; though it is probable that your narrow-minded politicians, thinking to please you thereby, may some time or other unnecessarily make such a proposal. Trade flourishes best when it is free, and it is weak policy to attempt to fetter it. ”

“ Protection, on the other hand, is that state of affairs in which the nations are hindered from this free exchange by tariffs imposed for that special purpose.
Well, we all know that Free Trade as thus defined does not exist. We are said to be living under Free Trade, but in a strict sense that is not so. We are living under a system in which our imports alone are free; our exports to some of the principal markets not being free. It is only as regards our imports that we enjoy perfect freedom ”

“ The call for free trade is as unavailing as the cry of a spoiled child, in its nurse’s arms, for the moon, or the stars that glitter in the firmament of heaven. It never has existed, it never will exist. Trade implies, at least two parties. To be free, it should be fair, equal and reciprocal. But if we throw our ports wide open to the admission of foreign productions, free of all duty, what ports of any other foreign nation shall we find open to the free admission of our surplus produce? ”

“ Successful as a diplomatist, dictating the terms of peace forced upon the Chinese at the point of the bayonet, Sir Henry appeared now to have been an utter failure when he attempted to negotiate a Commercial Treaty on equal terms with astute Chinese diplomatists. The principal points for which Sir H. Pottinger may be blamed consist in his leaving the important opium question entirely in statu quo ante and in omitting to secure for Chinese subjects residing in Hongkong freedom to trade (in Chinese bottoms at least) with the whole of China. ”

“ Nothing short of an armed demonstration of force could induce the Chinese Mandarins to grant foreign trade a dignified modus vivendi. War with China was, at the close of the year 1834, a mere question of time. Strictly speaking it was simply a question of arousing public opinion in England to a recognition of the actual necessities of the case. But it took years to accomplish this, and meanwhile affairs in China were in a state of transition, which made the position of the British merchants and their Superintendents extremely awkward. ”

“ Nor can we blame the Chinese Authorities, who, accustomed by the policy of abject servility, maintained by the East India Company for two consecutive centuries, to deal with Europeans willing to forego for the sake of trade all claims of national and personal self-respect, were entirely taken by surprise when they suddenly encountered, on the part of the British Government, the identical notions of national self-adequacy and political supremacy which had hitherto been the undisputed monopoly of the Chinese Government. ”

“ Plow the fields, reap the waving grain. Create all things that man can use. Business will feed the hungry, clothe the naked, educate the ignorant, enrich the world with art—fill the air with song. Give us Protection and Prosperity. Do not cheat us with free trade dreams. Do not deceive us with debased coin. Give us good money—the life blood of business—and let it flow through the veins and arteries of commerce.
And let me tell you to-night the smoke arising from the factories' great plants forms the only cloud on which has ever been seen the glittering bow of American promise. ”

“ Thus, from 1860 to 1892 the tide of prosperity rolled unceasingly on. impelled by the vital principle of a protective tariff, until in the latter year. a forgetful people, led away by the false, but alluring promises of the leaders of Democracy, adopted a policy which, in three short years has produced more poverty and distress among our people than were ever before known during the history of our country in a time of peace. The policy of free trade is doomed in America. ”

“ A protective duty calculated upon such a basis does nothing more than secure free competition; free competition can only exist where there is an equality in the facilities of production. In a horse-race the load which each horse carries is weighed and all advantages equalized; otherwise there could be no competition. In commerce, if one producer can undersell all others, he ceases to be a competitor and becomes a monopolist. Suppress the protection which represents the difference of price according to each, and foreign produce must immediately inundate and obtain the monopoly of our market. ”

“ Protection to the farmer and planter in their efforts to draw the artisan to their side, looks to carrying out the doctrine of decentralization by the annihilation of the monopoly of manufactures established in Britain; and our present copyright system looks to the decentralization of literature by offering to all who shall come and live among us the same perfect protection that we give to our own authors. What is called free trade looks to the maintenance of the foreign monopoly for supplying us with cloth and iron ”

“ The object of what is now called Free Trade, is that of securing to the people of England the further existence of the monopoly of machinery, by aid of which Ireland and India have been ruined, and commerce prostrated. Protection seeks to break down this monopoly, and to cause the loom and the anvil to take their natural places by the side of the food and the cotton, that production may be increased, and that commerce may revive. ”

“ Free trade was the cry of the capitalists who felt themselves able to crush those of rival nations if allowed the opportunity to compete with them. Protection was the cry of the capitalists who felt themselves weaker than those of other nations, and feared that their enterprises would be crushed and their profits taken away if free competition were allowed. ”

“ The Free Traders were like a man who, seeing his antagonist is no match for him, boldly calls for a free fight and no favor, while the Protectionist was the man who, seeing himself overmatched, called for the police. The Free Trader held that the natural, God-given right of the capitalist to shear the people anywhere he found them was superior to considerations of race, nationality, or boundary lines. ”

“ You thereby place them at a disadvantage with people who are thrifty and industrious and are not restricted in their hours of work. The same amount of money now buys only half the labour it did forty years ago, this increases the cost of production. Competition forces your manufacturers to work only three or four days a week. This again increases it. Increased leisure gives opportunities for intemperance. This again has a deteriorating effect on produce. Your best hands emigrate to prosperous countries not cursed with free trade,—another cause of [80] deterioration in quality of manufactures. ”

“ The money spent on foreign produce, instead of being spent in England, is so much capital taken away from this country, helping foreigners to compete with you. You have, in fact, in Free Trade, the most ingeniously devised plan of impoverishing the country. We had a good start, and other countries have been a long time in catching us up, so that we did not feel their competition at first, but they are now passing us hand over hand. ”

“ Don’t you see that if we transferred a small portion of the tax on tea, sugar, coffee, &c., giving a preference to our dependencies in the case of wheat, we should not only encourage our home, but also our colonial, industries, which are trembling in the balance between existence and nonexistence for want of some slight fostering care.
You are like Nero fiddling while Rome was burning. You are fiddling with your Free Trade, whilst England is going to ruin.
How can it be otherwise? Unlimited foreign competition must necessarily end in disaster. ”

“ To hinder our fellow-citizens purchasing of foreigners, to force foreigners to purchase [111] from our fellow-citizens, are merely two consequences of one identical principle. Now, it is impossible not to recognize that according to this doctrine, general utility rests on monopoly, or interior spoliation, and on conquest, or exterior spoliation. ”

“ Farm prosperity and high employment will call for an immensely increased output of goods and services.
Growth and vitality in our economy depend on vigorous private enterprise. Free competition is the key to industrial development, full production and employment, fair prices, and an ever improving standard of living. Competition is seriously limited today in many industries by the concentration of economic power and other elements of monopoly. ”

“ That she would diminish her own prosperity, is an insufficient security against the abuse of such a monopoly. The landed interest diminished its own prosperity, by the oppression of commerce and labour. By justice, as to all three, a nation will prosper; by enabling either to draw wealth from the otiier two, by law, without industry, the common good or general interest is invariably wounded. ”

“ But are we not assured, by M. Considerant, that liberty leads fatally to monopoly? Are we not told that liberty is competition? and that competition, according to M. Louis Blanc, is a system of extermination for the people, and of ruination for trade? For that reason people are exterminated and ruined in proportion as they are free—take, for example, Switzerland, Holland, England, and the United States? ”

“ That capitalism would develop more rapidly if free trade were not restrained either by monopolies in general or by the "connections" or the yoke, (i.e., again the monopoly) of finance capitalism, or yet again by the colonial monopoly of certain countries?
Kautsky's reasoning can have no other meaning. Admitting that this is so, admitting that free competition, without any sort of monopoly, would develop capitalism and trade more rapidly. But the more rapidly capitalism and trade develops, the greater is the concentration of trade and capital which gives birth to monopoly. ”

“ Can we expect a perfect return to the old system of free competition? When men have once reaped the enormous returns that are yielded by the control of a monopoly, the ordinary profits of business seem tame and dull. There will surely be attempts to form the monopoly anew on a stronger and more permanent basis; and even if these attempts do succeed in producing only short-lived monopolies, the effect will be to keep the whole trade and all dependent upon it in a state of disquiet and uncertainty. ”

“ Whatever else the Protectionists failed to prove, they were able to demonstrate that the condition of the people in free-trade countries was quite as bad as anywhere else, and, on the other hand, the Free Traders were equally conclusive in the proofs they presented that the people in protected countries, other things being equal, were no better off than those in free-trade lands. The question of Protection or Free Trade interested the capitalists only. ”

“ Thus, as means are constantly being found for the maintenance of labor on cheaper and more wretched food, the minimum of wages is constantly sinking. If these wages began by making the man work to live, they end by making him live the life of a machine. His existence has not other value than that of a simple productive force, and the capitalist treats him accordingly.
This law of commodity labor, of the minimum of wages, will be confirmed in proportion as the supposition of the economists, free-trade, becomes an actual fact. ”

“ It is really difficult to understand the claim of the free-traders who imagine that the more advantageous application of capital will abolish the antagonism between industrial capitalists and wage workers. ”

“ Free trade increases productive forces. If industry keeps growing, if wealth, if the productive power, if, in a word, productive capital increases, the demand for labor,the price of labor, and consequently the rate of wages, rise also.
The most favorable condition for the worker is the growth of capital. This must be admitted. If capital remains stationary, industry will not merely remain stationary but will decline, and in this case the worker will be the first victim. He goes to the wall before the capitalist. ”

“ Millions of artisans in France and England were withdrawn from lathe and loom to fight in the battle line. What workers remained at their posts had to produce war supplies. Yet civilian and soldier needed food, clothing and arms. The demand for our products increased and the United States suddenly became the work-shop and the granary of the world.
The Allies, in control of the seas, became our principal foreign customers. American exports soared: those of France and England declined correspondingly. A huge balance of trade—the biggest in our history—swung to our favour. ”

“ The imports fell off with a rapidity never known before, except in time of war, in the history of our foreign commerce; the Treasury was unexpectedly left without the means which it had reasonably counted upon to meet the public engagements; trade was paralyzed; manufactures were stopped; the best public securities suddenly sunk in the market; every species of property depreciated more or less, and thousands of poor men who depended upon their daily labor for their daily bread were turned out of employment. ”

“ The trade of America is to be dealt out in private indulgences and grants,—that is, in jobs to recompense the incendiaries of war. They will be informed of the proper time in which to send out their merchandise. From a national, the American trade is to be turned into a personal monopoly, and one set of merchants are to be rewarded for the pretended zeal of which another set are the dupes ”

“ The opium trade had, by its financial operations, become so intertwined with the legitimate trade, that separate dealing with it was impossible. The import of opium into China, as it gradually expanded, gave an enormous impetus to the export of tea and silk from China to the European markets, and the whole opium trade had imperceptibly become a necessity both for China and for Europe; for China, because the craving for opium was so widespread among the Chinese people, that the demand for it defied the severest criminal enactments ”

“ In England public opinion was now at last fairly aroused, thanks to the keynote struck by the Queen's Speech from the Throne (January, 1840) in which Her Majesty identified her interests and the dignity of the Crown with the fate of Elliot and the British merchants in China. Whilst regretting or condemning the opium trade as a whole, the British public clearly perceived that British trade with China must be re-organized on an entirely new basis. Arrangements were quietly made by the Government to fit out an expedition to China. ”