II.  Free trade and protection?

Free trade is undoubtedly the ultimate industrial ideal; not as a natural right, but as a matter of mutual advantage, that everything may be manufactured in the most economical place and way.  The geographical division of labor is as generally advantageous as the assignment of highly specialized tasks within a community.  Import duties result in diverting labor into less economical channels, and hence entail a loss to the community as a whole.  The prosperity of the United States has been in considerable measure the result of its complete internal free trade.  On this general truth the best economists are pretty universally agreed.  The argument that a tariff wall is necessary to maintain our generally higher standard of wages and living is pure fallacy, as, indeed, can be seen in the fact that wages in free-trade England are higher than in protectionist Germany.  The only legitimate economic question is whether special advantages may accrue from protecting certain industries under certain peculiar conditions.  For example, a new industry, in the conduct of which skill has not yet been acquired, may need nursing while it is growing strong enough to produce as cheaply as foreign competitors.  Again, when foreign nations impose a tax upon our products, it may be politically expedient to impose a counter-tariff, as a means toward reciprocity and eventual free trade.  But the discussion of such situations involves no ethical principles, and may be left to the economists and statesmen.

The considerations that concern the moralist are rather such as these:  Is it advisable to keep our own people self-sufficing, producing all they need to consume?  Is it permissible to protect (by a subsidy, which is equivalent to an import duty in other matters) our foreign merchant marine, so as to have the satisfaction of seeing our flag flying in foreign ports and the assurance of plenty of transports, colliers, etc, in case of war?  Or is it better for humanity that the nations should become mutually interdependent, requiring one another’s products and somewhat at one another’s mercy in case of war?  There can be no doubt that the narrower, “patriotic” view retards the deepest interests of humanity, and that free trade is to be sought not only as a means toward economic prosperity, but as an avenue toward universal peace.

The other dominant ethical aspect of the situation lies in the fact that the tariff plays into the hands of certain monopolies, enables them to maintain high prices and make excessive profits, which international competition would reduce.  As actually used, the American tariff is largely an instrument for favoring special classes of manufacturers at the general expense, and so is to be condemned.

On the other hand, where manufacturers are enabled by the tariff merely to make fair profits, and economic considerations would dictate a removal of the duty and the shifting of labor to industries where it could be more regard for vested interests should make us pause.  To ruin an industry in which capitalists have invested their fortunes and laborers have acquired skill, although it would be in the end for the general good, would work unjust hardship to them; in such cases, then, a tariff should be lowered only with great caution, or some compensation should be made to the individuals who suffer loss thereby.