In recent decades, a revisionist history of American trade policy has developed an almost religious status in Washington D.C.
In this context, the candidacy of Donald Trump has been presented as a deviation from America’s historic “free trade” policy when, in fact, America was founded on Alexander Hamilton’s protectionist economic system whose greatest defenders would become Abraham Lincoln’s Republican Party.
Our nation’s long, successful record of trade protectionism has been “deliberately forgotten,” says economist Ian Fletcher.
Today, “standard economic history taught in the United States is distorted by ideology and has key facts airbrushed out,” Fletcher says:
The idea that America’s economic tradition has been economic liberty, laissez faire, and wide-open cowboy capitalism — which would naturally include free trade… is simply not real history. The reality is that all four presidents on Mount Rushmore were protectionists. (Even Jefferson came around after the War of 1812). Protectionism is, in fact, the real American way.
As Lincoln declared, “Give us a protective tariff and we will have the greatest nation on earth.” Lincoln warned that “the abandonment of the protective policy by the American Government… must produce want and ruin among our people.”
In 1816, Thomas Jefferson wrote, “manufactures are now as necessary to our independence as to our comfort… keep pace with me in purchasing nothing foreign where an equivalent of domestic fabric can be obtained, without regard to difference of price.”
In 1832, the Great Compromiser, Henry Clay, was vocal about his disdain for “free traders”: “It is not free trade that they are recommending to our acceptance. It is in effect, the British colonial system that we are invited to adopt; and, if their policy prevail, it will lead substantially to the re-colonization of these States, under the commercial dominion of Great Britain.”
Clay’s rival, Andrew Jackson, in explaining his support for a tariff, wrote: “We have been too long subject to the policy of the British merchants. It is time we should become a little more Americanized, and, instead of feeding the paupers and laborers of Europe, feed our own, or else, in a short time, by continuing our present policy, we shall all be paupers ourselves.”
“Under free trade, the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man,” said Republican President William McKinley. “[Free trade] destroys the dignity and independence of American labor… It will take away from the people of this country who work for a living— and the majority of them live by the sweat of their faces— it will take from them heart and home and hope. It will be self-destruction.”
Historically, “free trade” was a policy supported by Southern agrarians, who benefitted disproportionately from a low-tariff trading system. Northern industrialist Republicans favored higher tariffs to ensure American workers and industry would thrive, and be “protected” from foreign aggression that would seek to weaken America by making it reliant on foreign goods.
Yet this is now a forgotten history.
Following World War II, America began switching from a policy of protection, to a policy of “free trade,” which used international trade deals as a means of diplomacy and alliance-building, slowly eroding and ultimately destroying America’s status as the world’s dominant manufacturing power.
“For some time now our ‘best and brightest’ have been invoking false doctrines that are systematically undermining American prosperity,” writes Clyde Prestowitz, counselor to the Secretary of Commerce under President Reagan. “Reversing America’s traditional national economic-development policies, U.S. leaders after World War II increasingly embraced consumerism and a faith in the efficacy of unfettered markets and trade that evolved over time into a new gospel of laissez-faire globalization.”
It wasn’t until the mid-90s, however, that trade unilateralism and internationalism were fully embraced as the new dogma. Both Presidents Nixon and Reagan would be much more closely aligned with Trump on trade than they would be with today’s free trade dogmatists.
Under the leadership of Clinton and Bush, America began ceding control of its trading policies to international bureaucrats. Today’s Republican free traders are the champions of Clinton’s trade legacy — NAFTA, the WTO, and China’s entrance into the WTO.
If the founders had desired the dissolution of sovereignty and creation of international dependence guaranteed by organizations like the WTO or the Trans-Pacific Partnership Commission, it is perhaps unlikely they would have ever fought for independence in the first place. As Jackson said while discussing his support for trade protections: “If our liberty and republican form of government, procured for us by our revolutionary fathers, are worth the blood and treasure at which they were obtained, it surely is our duty to protect and defend them.”
Prestowitz says that the new consensus of trade globalism has now become so dominant that we’ve been led “to assume our current economic orthodoxy is the ‘American Way.’ Nothing could be further from the truth. In fact, it is a reversal of the doctrine of national economic development that made us the richest country on earth.”
Consider the recent comments of talk radio host Mark Levin as an example of the transmogrification of the Republican worldview on this issue. Mr. Levin recently suggested that the dangers of tariffs and protectionism are axiomatic — “It’s been tried and it’s failed miserably… It’s a fact… for me, it’s an open and shut case… it’s a disaster. I know it.”
During earlier times in our history, prominent political and business leaders spoke out against such free trade dogmatism. As Jefferson wrote in explaining why his views had evolved to favor more protectionist policies: “In so complicated a science as political economy, no one axiom can be laid down as wise and expedient for all times and circumstances, and for their contraries.”
In 1875, Joseph Wharton — the steel industrialist who founded the nation’s first business school and Trump’s alma mater, the Wharton School of the University of Pennsylvania — was more blunt in expressing his disdain for such religious free traders:
[They] assum[e] for their dogmas an infallibility as absolute as that claimed by the Pope for his dicta… and preaching everywhere the superior claims of their strange creed over the mere bonds of patriotism so that the revenues, development, and the existence of States are to perish in order that their fungus, Trade Philanthropy, may fatten for a while upon the decay, these verbose prophets of the new philosophy have become a nuisance and a source of infection which healthy political organisms can hardly afford to tolerate.
Beginning with Alexander Hamilton’s proposals for the industrial and technological development of the United States through use of subsidies, tariffs and patents, U.S. leaders pursued the “American System” of government-business partnership for national development of things like the Erie Canal, the telegraph, the transcontinental railroad, the aircraft industry, the RCA company founded by the U.S. Navy, and much more… [The American System] consisted of government policies and programs aimed at developing advanced infrastructure and protecting and subsidizing development of intellectual property and manufacturing industries.
“This, of course, was antithetical to the free-market, laissez-faire policies,” which Great Britain — and eventually the U.S. — would come to adopt.
Indeed, Henry Clay, the foremost proponent of the American System, made clear that ideological “free trade” was the American System’s antithesis:
When gentlemen have succeeded in their design of an immediate or gradual destruction of the American System, what is their substitute? Free trade! Free trade! 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.
Many of the founders demonstrated commitment to promoting American manufacturing.
At his inauguration, George Washington is said to have spurned the fashion of his day — opting not to wear an elegant suit from Europe but instead a woolen suit made of cloth woven at the Hartford Woolen Manufactory in Connecticut. “I hope it will not be a great while, before it will be unfashionable for a gentleman to appear in any other dress,” Washington wrote in 1789.
“I use no porter or cheese in my family, but such as is made in America,” Washington wrote, boasting that these domestic products are “of an excellent quality.”
One of the first acts of Congress Washington signed was a tariff among whose stated purpose was “the encouragement and protection of manufactures.”
Prestowitz further explains that in his 1791 Report on Manufactures, Alexander Hamilton, our nation’s first Secretary of Treasury, laid out a proposal that followed the “English mercantilist model closely” by calling for high tariffs to protect nascent American industry, supporting agriculture to encourage more exports, promoting “Buy American” policies and allocating federal funds for transit systems to facilitate commerce such as roads, bridges, and harbors.
Fletcher notes that “Hamilton’s policies were not adopted in toto right away.” It took the War of 1812 and witnessing Great Britain’s abusive trading practices “to push America firmly into the protectionist camp.”
While some founders were less protectionist than Hamilton, they were far more protectionist than today’s free traders. Indeed, the extent to which there was disagreement amongst the founders did not come close the chasm that exists today between the Paul Ryan, Wall Street Journal, Mark Levin “free traders” versus Pat Buchanan “protectionists.” Rather, their disagreements represented comparatively minor shades of variation between two schools of thought — both of which would today be regarded as protectionist.
Given the objections to Britain’s trading practices and the belief that trade needs to be “equal and reciprocal,” it seems unlikely the founders would support what former Nucor Steel chairman has described as the “unilateral trade disarmament” of our policies today.
Henry Clay explained that “equal and reciprocal” free trade “never has existed; [and] it never will exist.” He warned against practicing “romantic trade philanthropy… which invokes us to continue to purchase the produce of foreign industry, without regard to the state or prosperity of our own.” Clay made clear that he was “utterly and irreconcilably opposed” to trade which would “throw wide open our ports to foreign productions” without reciprocation.
In 1822, President Monroe observed that “whatever may be the abstract doctrine in favor of unrestricted commerce,” the conditions necessary for its success — reciprocity and international peace — “has never occurred and can not be expected.” Monroe said, “strong reasons… impose on us the obligation to cherish and sustain our manufactures.”
Likewise, in 1819 John Adams noted that he did not live in a world in which “all the nations of the earth” had adopted “the abolition of all restrictive, exclusive, and monopolizing laws.” Adams concluded that while foreign nations “preserve in cherishing such laws… I know not how we can do ourselves justice without introducing… some portions of the same system.”
In an 1816 letter, Jefferson, an agrarian who had originally been more supportive of “free trade,” expressed vexation that free traders attempted to use his earlier writings to promote their ideological agenda.
You tell me I am quoted by those who wish to continue our dependence on England for manufactures. There was a time when I might have been so quoted with more candor, but within the thirty years which have since elapsed, how are circumstances changed! […] [He] who is now against domestic manufacture must be for reducing us either to dependence on that foreign nation, or to be clothed in skins, and to live like wild beasts in dens and caverns. I am not one of these. Experience has taught me that manufactures are now as necessary to our independence as to our comfort.
Jefferson blasted the free traders who use his former opinion on trade “only as a stalking horse, to cover their disloyal propensities to keep us in eternal vassalage to a foreign and unfriendly people.”
Yet today religious free traders continue to use the founders’ legacy to promote their agenda. Indeed, compare the words of our founders and early Republican presidents to those of today’s conservative commentariat. This tension is perhaps best exemplified by Mark Levin, who has branded himself a constitutional scholar and “constitutional conservative.”
In a recent segment, Levin bizarrely suggests that the bureaucracy necessary for implementing Trump’s “protectionism” would go far beyond the scope of limited government envisioned by our founders:
Notice there’s never any discussion about the massive bureaucracy that’s going to be necessary if we have massive tariffs and protectionism — the power of the central government outside the constitution controlling… the movement of goods and services.
However, Lincoln would seem to disagree and argued that a tariff system was less intrusive than domestic taxation:
The tariff is the cheaper system, because the duties, being collected in large parcels at a few commercial points, will require comparatively few officers in their collection; while by the direct tax system, the land must be literally covered with assessors and collectors, going forth like swarms of Egyptian locusts, devouring every blade of grass and other green thing.
Curiously, anti-tariff purists seem to favor a taxation model that is the exact inversion of the founder’s model — i.e. where income, consumption or sales are directly taxed, but imports are not. Yet this policy, however, would likely only have the effect of incentivizing people involved in production to shift that production overseas.
Levin similarly suggests that unrestricted free trade is a necessity:
Ladies and gentlemen, I want you to look around your homes, I want you to look at your automobile in many cases. We kind of need trade, don’t we? Otherwise why are you buying all of these things?
“Can The Inhabitants of North America live without foreign Trade?” Adams asked.
Answering his own question, Adams concluded: “We must at first indeed sacrifice some of our appetites coffee, wine, punch, sugar, molasses… and our dress would not be so elegant… But these are trifles in a contest for Liberty.”
Levin has said he opposes Trump’s protectionism because it will create higher prices for consumers:
A tariff is really just a tax… imposed on the American people… While Trump and his surrogates may have the money to pay the higher prices his policies would cause, many Americans – who are already having difficulty making ends meet – do not.
However, in a declaration that would seem to apply to our relationship with China today, Adams warned against the allure of cheap foreign goods that result from illicit trading practices:
[British manufactures] disgorged upon us all their stores of merchandise and manufactures, not only without profit, but at certain loss for a time… The cheapness of these articles allures us into extravagance and luxury, involves us in debt, exhausts our resources, and at length produces universal complaint.
Republican President McKinley rejected the “cheaper is better” argument outright: “They [free traders] say, ‘Buy where you can buy the cheapest.’ That is one of their maxims… Of course, that applies to labor as to everything else. Let me give you a maxim that is a thousand times better than that, and it is the protection maxim: ‘Buy where you can pay the easiest.’ And that spot of earth is where labor wins its highest rewards.”
They say, if you had not the Protective Tariff things would be a little cheaper. Well, whether a thing is cheap or whether it is dear depends on what we can earn by our daily labor. Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer.
Additionally, Hamilton and Lincoln argued that based on economies of scale, any temporary increase in costs resulting from a tariff would eventually decrease as the domestic manufacturer produced more.
Hamilton explained that despite an initial “increase of price” caused by regulations that control foreign competition, once a “domestic manufacture has attained to perfection… it invariably becomes cheaper.”
Lincoln similarly said that, “if a duty amount to full protection be levied upon an article” that could be produced domestically, “at no distant day, in consequence of such duty,” the domestic article “will be sold to our people cheaper than before.”
Unlike Levin, Lincoln did not see a tariff as a tax on low-income Americans because it would only burden the consumer according to the amount the consumer consumed.
By the tariff system, the whole revenue is paid by the consumers of foreign goods… the burthen of revenue falls almost entirely on the wealthy and luxurious few, while the substantial and laboring many who live at home, and upon home products, go entirely free.
Levin argues that adopting protectionist policies to defend America’s industrial independence is not conservative. “What I see developing is not a conservative coalition, but a coalition on the Republican side of big government advocates,” Levin said. “The Republican Party now is a party of the progressive Republicans. Theodore Roosevelt… the protectionists, Ross Perot, Pat Buchanan, the No-Growthers.”
However, contrary to Levin’s suggestion, from 1871 to 1913 under the leadership of mostly Republican presidents, “the average U.S. tariff on dutiable imports never fell below 38 percent [and] gross national product (GNP) grew 4.3 percent annually, twice the pace in free trade Britain and well above the U.S. average in the 20th century,” notes Alfred Eckes Jr., chairman of the U.S. International Trade Commission under President Reagan.
Moreover, contrary to Levin’s telling of history, defending the American worker through trade protectionism was a priority of the original Republican Party. Free trade was the policy of Democrats. As Ian Fletcher has observed, “reading the speech of 19th-century Republican politicians today, with their expressions of concern for the wages of the American working man, one finds oneself wondering how the party slipped to its present day let-them-eat-cake position.” The Party of Lincoln had always been the Party of Protectionism. Indeed, Fletcher notes that Lincoln’s number two issue after slavery was the tariff.
In 1896, the GOP platform pledged to “renew and emphasize our allegiance to the policy of protection, as the bulwark of American industrial independence, and the foundation of development and prosperity. This true American policy taxes foreign products and encourages home industry. It puts the burden of revenue on foreign goods; it secures the American market for the American producer. It upholds the American standard of wages for the American workingman.”
In fact, the GOP’s original view on trade seemed guided by the same “America First” principle articulated by Donald Trump.
As Whig representative and later Republican senator, Justin Morrill explained during an 1857 tariff debate: “I am ruling America for the benefit, first, of Americans, and for the ‘rest of mankind’ afterwards.”
Morrill attacked free trade “devotees” declaring, “There is a transcendental philosophy of free trade, with devotees as ardent as any of those who preach the millennium… Free trade abjured 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.”
McKinley similarly made clear that the original Republican Party was a “workers’ party”:
The protective tariff policy of the Republicans… has made the lives of the masses of our countrymen sweeter and brighter, and has entered the homes of America carrying comfort and cheer and courage. It gives a premium to human energy, and awakens the noblest aspiration in the breasts of men. Our own experience shows that it is the best for our citizenship and our civilization and that it opens up a higher and better destiny for our people.
Interestingly, it is not only today’s Republican Party that has wiped McKinley from the nation’s memory bank, but also President Obama, who went so far as to strip his name from Alaska’s Mount McKinley — now dubbed Denali. Donald Trump proclaimed this a “great insult” and pledged that, if elected, he would change the name back.
Lastly, Levin goes so far as to accuse Trump of sounding Marxist because of his desire to make the Republican Party a “workers’ party”:
Now he [Trump] says the Republican is going to be a new party — the “workers’ party.” The “workers’ party”? You’re going to call it the “workers’ party”? Like the Communist social workers’ union? […] You’re going to sound like Marx now? […] We’re going to start talking about the proletariat? And the bourgeois next? That’s Bernie Sanders stuff!
While Levin presents himself as a guardian of our founders’ economic principles, his support for unilateral free trade ironically places his trading views closer to Karl Marx than it does to the legacy of Washington, Hamilton, and Lincoln.
In his 1848 address to the Democratic Association of Brussels, Marx declared that he was “in favor of free trade” because of its destructive capabilities for hastening social revolution:
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.