Popular Science Monthly/Volume 38/November 1890/The Logic of Free Trade and Protection
By ARTHUR KITSON.
IN an interesting chapter on the history of tariff legislation Mr. Blaine, in his Twenty Years in Congress, thus presents the issue:
"It is natural that both sides of the tariff controversy should endeavor to derive support for their principles from the experience of the country. Nor can it be denied that each side can furnish many arguments which apparently sustain its own views and theories. The difficulty in reaching a satisfactory and impartial conclusion arises from the inability or unwillingness of the disputants to agree upon a common basis of fact. If the premises could be candidly stated, there would be no trouble in finding a true conclusion. In the absence of an agreement as to the points established, it is the part of fairness to give a succinct statement of the grounds maintained by the two parties to the prolonged controversy—grounds which have not essentially changed in a century of legislative and popular contention."
This presentation of the case describes precisely the difficulty under which all discussions on the tariff question in this country have hitherto labored. We believe, however, the difficulty in agreeing upon a common basis is one of inability rather than one of unwillingness; for, where facts are contradictory, how is it possible to establish a common basis? The advocates of two opposite and distinctly contradictory theories can scarcely be expected to find a common basis of fact in a collection of instances which favor both theories. In such a case it would be reasonable to suppose one of two things: either that the theories were per se insufficient to account for the given effect, or that they were totally unfounded. The champions of both free trade and protection have hitherto waged their combats clothed in mail. Their swords have been of lead; their lances, wood. And, like the modern French duels, no lives have been lost and no blood shed. Hence the duration of the contest; hence its fruitlessness. Tariff discussions have been conducted on the assumption that the prosperity of trade was due to one of two systems. Instead of working from effect to cause, the cause has been assumed, and the struggle has been an endeavor to reconcile given facts with given theories. Hitherto it has been a drawn battle. As often as the advocates of commercial restriction have laid claim to those periods of national prosperity when their system happened to be in vogue as evidence of its success, the free-traders have as often and with equal right claimed like success under eras of free trade. And when these have associated times of commercial depression with the protective system, their opponents have retorted by instancing years in which free trade was accompanied with panics and business stagnation. The high-tariff periods of 1824 to 1833 and 1842 to 1846 are offset by the low-tariff period of 1840 to 1856, and the panic of 1857 by that of 1873. The growth of the iron industry under protection is balanced by the death of the shipbuilding industry during the same time. With such instances, gathered from a century's experience, the cause of the duration of this contest—which threatens to be perpetual—becomes apparent when we consider the lines along which the battle has hitherto been conducted. In England it was conducted somewhat differently, hence the results were different. There the leaders fought with sterner weapons, and the fight was fought to a finish. The difference between the English free-traders and the so-called free-traders of the United States consists in the former professing what their name indicates. They have followed their theory to its logical conclusion. The latter, however, have always stopped short of absolute free trade. Often, in fact, the dispute on this side of the Atlantic has been nothing more than one of "tweedle-dee" and "tweedle-dum." Instead of a difference of principle, it has generally been one of percentages. We think the fruitlessness of these controversies has been due principally to the method of reasoning employed. Both sides have used the same arguments, and both have been equally effective. Both parties have rested their claims on the teachings of experience, and both have drawn equal encouragement from similar results. It becomes evident that so long as this position is maintained, so long the discussion will remain in statu quo ante bellum.
Recently, attention has been called to a renewal of the combat, and the occasion has received more than ordinary attention, owing to the great distinction of the combatants. Indeed, it is doubtful whether at any time in the nation's history there has been so deep and general an interest felt in the subject as exists to-day. The chief feature in the renewed controversy is in the presentation of the free-trade argument from the English standpoint, and the method of reasoning there employed, with that used by the distinguished advocate of protection, which is so familiar to us. We shall endeavor to show that the former is the only method by which a satisfactory and truthful result can be obtained in any discussion regarding a subject of so complex a nature as trade. No word more aptly describes the nature of the Gladstone-Blaine controversy than "duel." The nature of the dispute necessitates direct antagonism. Free trade and protection stand directly opposed to each other. Like similar poles of a magnet, they are mutually repellent. They stand as much opposed to each other as virtue and vice. There are no grounds, nor can there be, for any compromise. One is freedom, the other restraint. The one recognizes a natural, the other an artificial law. If one is right, the other is wrong. The combatants in the recent contest are champions of their respective schools. Both were well equipped for the encounter, and each side has undoubtedly had the best words possible spoken in its behalf. Especially is this true in the article for protection. No abler advocate of the system could have been chosen. Moreover, this duel means more to Mr. Blaine and the Republican party than a mere intellectual contest. Far beyond any literary value the discussion may possess lies its political significance. A great political battle has been recently fought on this very issue, and, unless our prophets and wiseacres completely err, the presidential election of 1892 will occupy the same battlefield. Every incentive that pride and ambition can furnish conspired to urge Mr. Blaine to endeavor, to the best of his ability, to successfully refute his opponent's arguments and put him utterly to rout, even though he appear in the person of so illustrious and respected a man as the English ex-premier.
In any dispute arising between freedom on the one hand and restriction on the other, the burden of proof necessarily falls upon the advocate of restriction. Freedom is first in the order of things. Restriction is an innovation, and should explain its raison d'être. It would be sufficient for the free-trader to deny the advantages claimed for the protective system, and leave its advocate to prove his case. Mr. Gladstone has, however, gone further, and has not only given a general denial, but, by a series of arguments as brilliant as they are logical, demonstrated the superior advantages that flow from free trade.
The nature of the succeeding remarks finds its apology in the absence of anything like logic in the disquisitions of modern political writers. When so great an authority as the acknowledged leader of the Republican party is willing to risk his cause on arguments such as those contained in his recent magazine article; when the President of the nation seriously and deliberately tells the country that the import duties levied on commodities are paid not by the consumer, but by the foreign producer; when, in spite of the warnings given by the numerous and almost continuous series of labor troubles that have taken place for some years past, congressional orators assure themselves that wages are high and the working classes in a very satisfactory condition; when, in order to create a profitable trade, a party proposes to subsidize ocean steamships to do what they otherwise find it unprofitable to do it would seem that the greatest need of the day was a compulsory system of instruction in dialectics, with a view more especially to impress on the mind of legislators the relations between cause and effect.
The two methods of reasoning employed in this discussion appear in marked contrast to each other, and it is interesting to see how their advocates are led to conclusions directly opposite. Vulgarly speaking, it is the school of Aristotle opposed to that of Bacon.
Mr. Gladstone deduces his results from general truths. Mr. Blaine arrives at his conclusions by induction. These two methods, known as the method of syllogism and that of induction, have been practiced by mankind in all ages, before the days when reasoning became an art and logic a science. Both may be employed with safety where practicable, and both will lead to the detection of truth, if properly carried out. Induction is used in discovery, syllogism in verification. The latter begins where the former ends. Induction requires both patience and skill, and, if ill performed, will as assuredly lead to error as to truth when well performed. Both are constantly used by those who never heard of a major or a minor premise, of comparentiæ or rejectiones. The man who, learning that alcohol is poisonous, refuses to drink whisky, reasons by the method of syllogism. Likewise, the man who carries an umbrella on a cloudy day does so from reasoning by the method of induction. In the former, having given our premises, we at once deduce a conclusion, and our only care is to see that our premises are correct. The inductive method is a far more elaborate and hazardous proceeding, and can only achieve success where patiently and exhaustively carried out. Its operation is thus described: "It requires an exhaustive enumeration of instances in which the given complex effect is present, in which it is not present, and in which it is present in various degrees or amounts. By the process of exclusion or elimination we may discover a phenomenon, constantly present when the effect is present, absent whenever the effect is absent, and varying in degree with the effect." The danger to avoid is an insufficient enumeration of instances. It is this danger that causes such popular delusions as "that it is unlucky to start a voyage on a Friday," or "that for thirteen to sit at a table betokens ill." Macaulay tells of a judge who was in the habit of propounding a theory that the cause of Jacobinism was the bearing of three names, and then demonstrating it by the rules of induction. Not long since a writer in one of the periodicals, noticing that the great majority of the Presidents of the United States bore but two names, warned the Republican party against nominating a man for the Presidency who had more! There is no proposition under heaven, however monstrous, which may not be reasoned out by the inductive method when so applied. It led Henry C. Carey to say that "the material prosperity of this country could be more fully promoted by a ten years' war with Great Britain than it could be in any other way." It will be seen at once wherein the difference between this induction and that which led Newton to the discovery of the law of gravitation consists. The difference is not in the kind, but in the number of instances. Let there be but one instance in which a heavy body having been projected upward failed to return to the ground, and away goes the stability of Mr. Newton's theory. If the believer in the superstition of the number thirteen will make a few experiments, he will very soon relieve himself of his delusion; and had the sagacious writer reasoned properly, he would have found the names of John Quincy Adams and Ulysses S. Grant ample material with which to annihilate his theory. A further difficulty in the application of the inductive method consists in the existence of a multiplicity of causes, and the impossibility often of discovering and separating them. Social problems are affected by causes so numerous and so complex that their detection and distinction are frequently impossible; and until we know what they are, can we do more than state that such and such a result is produced by a variety of causes, some of which may be known and some unknown? But as to what particular cause the effect is mainly due, and to what degree others influenced the result, we have no better means of knowing than the astronomer has of understanding the cause of the variation in the moon's orbit, when he is ignorant of the Newtonian laws. The sick man, having dosed himself with a variety of drugs and suddenly finding himself restored to health, has no reason for claiming that this or that particular compound had the salutary effect, if his knowledge is limited to this one or similar experiments; and so long as we fail to discover instances in which the disturbing causes are absent, or in which they can be eliminated, so long the method of induction remains useless. The problem of trade is an example at hand. Mr. Blaine informs us that trade is affected by a multitude of causes, such as locality, the age and population of a country, wars—both domestic and foreign—by emigration, pestilence, and famine. He states that "the unknown quantities are so many that a problem in trade or agriculture can never have an absolute answer in advance." "If," he says, "the inductive method of reasoning may be trusted, we certainly have a logical basis of conclusion in the facts here detailed. And by what other mode of reasoning can we safely proceed in this field of controversy?" What, indeed! And does Mr. Blaine really think it safe procedure to undertake the solution of a problem by a method the success of which is absolutely dependent upon a knowledge of all the quantities that are involved, when, as he states, the unknown quantities are so many? The truth is—and it evidently dawned upon him when he asked that question the method of inductive reasoning can not be applied successfully in this discussion, The problem before him is to show that. the system of commercial restriction has been a greater source of wealth for the United States than free trade would have been.
He goes at once to the experience of the country and selects the following instances for examination: The high protective periods of 1812 to 1816, 1824 to 1833, 1842 to 1846, and 1861 to the present time; the partially protected period of 1833 to 1842 and the free-trade periods of 1816 to 1824 and 1846 to 1861. Here are seven instances, in four of which the effect is present, in one partially present, and in two absent. Now, assuming that all causes but one be eliminated, and assuming that one to be protection, the first four periods should be marked by the production of great wealth, the fifth by the production of moderate wealth, and the last two by the production of the least—or even by the loss—of wealth, calculated, of course, on a time basis such as per annum. Now, what do we find? Assuming that Mr. Blaine's rapid and cursory summary of those periods is correct, we learn that during the first-named period the country was sustained through a war, and that genuine prosperity characterized the other three mentioned high-protected periods, excepting that from 1873 to 1879, in which the business of the country was prostrated and the panic of 1873 ensued. We further learn that the partially protected period of 1833 was very disastrous to trade, resulting in the panic of 1837, and that that of 1816 to 1824 was equally disastrous, while the greater part of the free-trade period of 1846 to 1861 was characterized by the greatest prosperity. Here, then, we find prosperity under a high protective system and prosperity during a free-trade era. Similarly, we find disaster under high protection, disaster under low protection, and disaster under free trade; and from this confusion Mr. Blaine mildly tells us he has proved his case, and by the great method of Bacon too! Could anything be further from the truth? If his argument proves anything at
all, it proves that tariff legislation, taken separately, had no more influence on the national prosperity than the movement of the planets. To make matters even worse, he attempts to account for the instances that make against him by ascribing the results to other causes. For example, in the case of the free-trade period, 1846 to 1856, he tells us that the war with Mexico, the Irish famine, the discovery of gold in California, and the Crimean war combined to defeat the natural result of free trade, and, instead of there being a minus, there was a plus quantity. What else is this than a simple begging of the question? By assuming that the result was due in this instance to a plurality of causes, sufficiently strong to totally destroy and even reverse the effect which he believes free trade would have produced alone, he leaves the ground open for a similar assumption by his opponents during those periods which apparently make for his theory. Wars, famines, and gold discoveries have happened at other times—times in which protection was in force. These would doubtless produce similar effects in disturbing the predicted results, and would act as disastrously against Mr. Blaine's theory in the one instance as for it in the other. It was of reasoning such as this of which Bacon wrote: "The very form of induction that has been used by logicians in the collection of their instances is a weak and useless thing. It is a mere enumeration of a few known facts, makes no use of exclusions or rejections, concludes precariously, and is always liable to be overthrown by negative instances."
For a satisfactory and anything approaching a reliable application of empiricism, it would be requisite to ascertain precisely what effect the increase of population, emigration, the variations of the seasons—causing excessive rains, droughts, and storms—also inventions, political contests, fires, robberies, etc., had upon trade; and until such an application can be made, no one can truly say such and such a period of prosperity was due directly to the tariff. The element of time plays one of the most important parts in this method. Our greatest and most general truths have taken ages to make themselves apparent. We come now to the examination of the argument by which free trade is sustained.
Mr. Gladstone deduces his conclusion from these premises: "International commerce is based not upon arbitrary or fanciful considerations, but upon the unequal distribution among men and regions of aptitudes to produce the general commodities which are necessary or useful for the sustenance, comfort, and advantage of human life." There can be no dispute on this point. It is a self-evident truth. Aristotle tells us that he who rejects self-evident truths has no surer foundation on which to build. It follows, as a natural conclusion, that whatever interferes with or checks the natural flow of goods and commodities from one region to another, and from one class of men to another, is a decided loss to both classes. "If," adds Mr. Gladstone, "every country produced all commodities with exactly the same degree of facility or cheapness, it would be contrary to common sense to incur the charge of sending them from one country to another."
It has been the aim of protective legislation to offset those special aptitudes of production which foreign nations possess by artificial barriers. Such legislative acts have constituted, virtually, a leveling process whereby the natural flow of trade has been stopped. This has necessarily been attended with expense and loss of wealth. The premises may be stated in a different way. Since trade produces wealth, whatever increases trade increases wealth, and that which restricts trade restricts the production of wealth. Protection is restriction. Hence, protection hinders the production of wealth. It may be varied in another way: The growth of wealth is proportional to the growth of trade, and the growth of trade is proportional to its freedom from restraint. Hence the growth of wealth is proportional to the freedom which trade enjoys. Similarly, that monstrous statement that "protection does not tend to keep up prices" may be thus exploded; by stating the fact that free competition tends to reduce prices, and that protection hinders free competition. Ergo, protection hinders the reduction of prices. The premises here laid down are as self-evident as any truths regarding trade can be. In fact, they are contained in the definition of the words "free trade" and "protection" themselves. The protectionists have admitted them again and again, but yet so blinded have they become by their own method of induction, that they have been prevented from following out what reason dictates. The question is analogous to that of slavery. It was an argument used repeatedly during the Southern dispute that the slaves were better off under the slave trade. Numerous instances were given where the slave preferred to remain in slavery than to accept his freedom. Nevertheless, the question was decided on general principles, and the moral course has proved the economical one.
The party of protection, instancing the growth of the United States during the last quarter century—corresponding with the operation of the Morrill Tariff Act—challenges comparison with any period of equal duration in the world's history. It is doubtful if history could show any period which would stand comparison—so far as the amount of material wealth created during so short a term is concerned. Nevertheless, if this be so, it must not be forgotten that there have never been in the history of the world such gigantic forces at work, nor so rich and varied a field for their operation. If, instead of standing awe-stricken at the vastness of the results, we contemplate the magnitude and proportion of the original factors, we shall cease to marvel. Remembering the immense area of the country, the fertility of its soil, the number and riches of its mines, the number and navigability of its rivers, the availability and inexhaustibility of its fuel; remembering the amount of available labor, both human and mechanical—the latter representing hundreds of millions of human arms, and the former increased by supplies drawn from the Old World to the extent, also, of millions; remembering the number and utility of mechanical inventions designed to assist in the production of wealth; and bearing in mind that during this period the country has been free from war, that she has had to keep neither navy nor standing army—when we contemplate all this, instead of losing our mental balance, we shall most probably feel a sense of disappointment that the results are not even greater. If it were possible to estimate the original factors in the production of wealth as they have here existed during the last twenty-five years and calculate the product that should naturally follow, we should more than likely find it greatly in excess of that now existing.
Who can estimate the influence of inventions alone? It is supposed that England to-day uses, in steam-power only, a force equal to an army of eight hundred millions of men in the production and transmission of commodities. These, bear in mind, are men of iron, who never flag so long as fuel is supplied, who never grow weary, who never strike, who work as readily twenty-four hours per day as ten, and whose cost of maintenance is infinitesimal in comparison to that of men of flesh and blood.
There was invented in the latter part of the eighteenth century a machine that has done more for producing wealth than all the acts for fostering trade and developing industries that were ever devised by man. Eli Whitney has done more for the prosperity of his country than all the tariff discussions before or since his time. The supremacy of England in trade and commerce throughout the world is due more to Watt and Arkwright, to Stevenson and Crompton, than to either Walpole, Pitt, or Peel. Mr. Edison is a greater force in the national prosperity than all the measures for the encouragement of trade passed by Congress during his life-time. The beneficial influence inventions have had on civilization is only comparable to the evil that war and pernicious legislation have achieved.
The early history of the colonies furnishes, we think, a remarkable illustration of what can be done without the fostering care and protection of a paternal government. In 1606 there was not a single English-speaking person in this country. A century later a colony had sprung up numbering one million souls, with industries established that bid fair to outrival those of England. In 1700 the population exceeded one quarter the entire population of England and Wales. Ships were being built and sent to England. The ship-carpenters of Great Britain petitioned Parliament to suppress an industry that threatened to supplant their own. The wool manufacturers became alarmed as they found the colonists rapidly acquiring their trade. Bar iron was manufactured and shipped to England cheaper than that from Sweden. The hat industry developed in the face of English rivalry. In 1700 the total exports amounted to $1,919,700, in 1730 it was $2,789,640, and in 1760 it had grown to be $3,698,460. And all this was in spite of acts of Parliament designed to cripple the colonial trade and ruin its industries. Act after act was passed, forbidding any one engaging in various manufactures under severe penalties. At this time England was, as Mr. Blaine says, not only severely but cruelly protective. Notwithstanding all this, the colonial trade grew and prospered, and England felt that she had a keen competitor in many of the manufactures in which she had hitherto considered herself supreme. Surely we have here an answer to those who ask "what industries would to-day be existing but for the great system of protection?" We present this period, commencing from the arrival of the first colonist and extending to the outbreak of the Revolution, and leave our high-tariff friends to reconcile its teachings with their remarkable theories—if they can. One advantage, it will be noticed, has accrued to the free-trade party by the recent controversy. It appears in the form of an admission. Mr. Blaine admits—with a certain degree of caution—that an insistence on the application of protection to all countries as the wisest policy would be erroneous. He says: Were I to assume that protection is in all countries and under all circumstances, the wisest policy, I should be guilty of an error. This will play sad havoc with our friends, the protectionist optimists, who hold their system, as Mr. Gladstone says, "to be an economical good"—good for all lands, all ages, and all people. But why does Mr. Blaine not insist on the universal application of his theory? On what reasonable grounds does he restrict its field of operation? Science teaches us that the more applicable a theory becomes, the nearer it approaches universality, the more certain may we be of its truth; and, conversely, the less applicable it becomes as its territory enlarges, the more its incorrectness is exposed. The free-trader recognizes this law and refuses to restrict his system by any artificial boundaries. He strikes at once at the root of the subject. He sees that trade finds its basis not in any system of legislation, but in human wants and desires. Wants lead to industries, and industries to commerce. One form of production necessitates another. Food, clothing, and shelter are requisite to mankind in all parts of the globe. Climate, soil, and topography determine only the kind requisite. Mr. Blaine considers the universal application of Mr. Gladstone's theory as a "most remarkable feature." It would have been a much more remarkable feature had he restricted it. The "feature" which the protectionist does not seem to understand is that free trade is not simply a "theory" any more than human freedom is. Both are moral truths. And just as Mr. Blaine believed in loosening the shackles that held the slave in bondage, so the free-trader believes in throwing off all the fetters that hold trade in check. Similarly, as he would denounce him who held human freedom to be a policy—wise only under certain conditions and in certain countries—so the free-trader feels Mr. Blaine's suggestion to be equally absurd and immoral. Free trade is not a mere policy. It is based upon the "live-and-letlive" principle, and the highest testimony to its wisdom, as well as its truth, is its universal applicability. It recognizes neither religion, color, language, nor climate, and is limited only by human existence. It is at this point that the ethical side of the question may well receive notice. To Mr. Blaine it appears amusing that his opponent should see any question of ethics in the subject at all. We believe that to most people the strongest feature in the slave question was its appeal to the moral sentiment. It was certainly this phase that inspired the most eloquent appeals and the greatest oratorical efforts. Similarly, it is this same sentiment that animates the mind of Mr. Gladstone. The idea is expressed by Herbert Spencer as follows: "The ability to exercise the faculties, the total denial of which causes death—that liberty to pursue the objects of desire, without which there can not be complete life—that freedom of action which his nature prompts every individual to claim, and on which equity puts no limit save the like freedom of action of other individuals, involves, among other corollaries, freedom of exchange. Government—which, in protecting citizens from murder, robbery, assault, or other aggression, shows us that it has all essential function of securing to each this free exercise of faculties within the assigned limits—is called on, in the due discharge of its function, to maintain this freedom of exchange, and can not abrogate it without reversing its function and becoming aggressor instead of protector. Thus, absolute morality would all along have shown in what direction legislation should tend. . . . An enormous amount of suffering would have been prevented; that prosperity which we now enjoy would have commenced much sooner; and our present condition would have been one of far greater power, wealth, happiness, and morality. . . .The moral course proves to be the politic one."