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The Pamphlet Collection of Sir Robert Stout: Volume 51

Chapter XI. — Free Trade Practised Internally by all Protectionist States

page 39

Chapter XI.

Free Trade Practised Internally by all Protectionist States.

The avowed and no doubt sincere object of the protectionist statesman is "to foster native industry, by employing it to supply the wants of the community, instead of paying tribute to the foreigner by resorting to him for the supply of those wants." This is only the isolation principle in another shape. If you wish for an outlet for your productions, you must submit to employ and pay the foreigner for his productions to the same value, for you will have to receive them in payment for yours. If, on the other hand, you wish your country's wants to be supplied exclusively by its own inhabitants, you must cease interchanging commodities with the outer world, lose the advantages of division of labour on a large scale, and, as the Japanese formerly did from choice and on system, or as our remote ancestors did from ignorance and necessity, shut yourselves up within your own circle of resources.

But even then you are not relieved from the detested presence of free trade. It rains paramount within your own country. It may not exercise its alleged baneful influence on your relations with other countries, but it does exercise its full influence (baneful or not) on the relations of one part of your country with the rest. All the commercial intercourse that takes place between the various provinces of your empire is entirely governed by free trade principles. Yet it is not found that this unrestricted competition benefits some to the injury of others. On the contrary, each part works harmoniously with the rest, and all are left free to adjust their dealings under the natural laws of supply and demand. Each district settles down to that form of industry to which circumstances have best adapted it, and requires no Government interference to protect it against the competition of neighbouring districts. All trades in all places within that page 40 country are open to all men, and no one would deem it to be a benefit that a heavy tax should be imposed on the cheap and good wares produced in one spot, in order to force the sale of dear and bad wares produced in another In fact, the principle of free trade has been, and is, acted upon to the fullest extent by all governments within the limits of their own dominions. There may have been some few apparent exceptions, such as the octroi duties on the introduction of certain commodities into some Continental towns, and similar local taxes, but these were levied for the purpose of revenue, not of protection. In the completest and widest sense, it is a fact that no government, however protectionist in its practice towards other countries, has ever acted counter to free trade principles within the range of its own empire.

It is not easy to justify this inconsistency. If free trade be an evil as between the United States of America and the other countries of the world, how can it be a good as between, say, Pennsylvania and the other states of the Union? The economic relations of these to each other are not in any way affected or modified by the fact of their being members of the same political confederation. The native industries of Kentucky and Illinois remain exposed to the competition of the well-organised and old-established industries of New York and Massachusetts in spite of their being all represented in Congress at Washington. If protection be so beneficial to the country at large, why not extend its blessings to each of the states of which it is composed?

Until recently, Italy was split up into several different realms, and each was (of course for the "good of the people") "protected" against the productions of the other. But when the Italian states merged into one nation, those restrictions were removed. If those protective shields against competition had really worked efficiently for the "good of the people," their removal must have occasioned great suffering and distress, but no "cry of anguish" has reached us on that score. If, twenty years ago, it had been really good for the people of Piedmont and of Naples respectively to have had few commercial dealings with one page 41 another, the mere accident of a change of government cannot have altered the eternal fitness of things, or made it right now, as it was wrong then, to leave those two populations exposed to the terrible misfortune of unrestricted commercial intercourse with each other.

Again, let us imagine the deplorable contingency (which we most sincerely trust may never occur) of the Western and Eastern States of America separating and forming two several independent republics, what then about protective customs' duties? If it be a wise and beneficial policy for the present United States to protect its people against the cheap manufacturers of old Europe, it would follow as a necessary consequence, that it would also be a wise and beneficial policy for the Western republic to protect its people against the comparatively cheap manufactures of the older Eastern states. To judge by all historical precedents of what men would do under such circumstances, we should infer that the government of the new dominion would undoubtedly (unless they were very much in advance of the present state of public opinion in America) adopt the usual old policy of "fostering native industry" by means of the protective system. But here again there would be a manifest and palpable inconsistency. If, in case of separate sovereignty, the welfare of the Western republic of America required the adoption of a protective policy against the Eastern states, why should such not be required now? The pleas as to fostering native industry, protecting infant manufactures, and being independent of extraneous supplies are as urgent at the present time as they would be then. Why are those pleas to be only attended to in case of secession, and disregarded while the Union is maintained? Are we to believe that, under the present form of government, commercial prosperity is only obtainable by free trade, while, under another, it would only be obtainable by protection?

Each state of the Union is at present exposed to the competition of more than forty other states and territories extending over a vast continent and occupying a space equal to one-fifteenth of the habitable part of the globe, and yet none of them have uttered a syllable of complaint page 42 in respect to the system of free trade which prevails among them, or asked for the enactment of defensive tariffs to protect them against each other. Yet, at the same time, the aggregate of these forty or fifty states fancy that they cannot get on without a defensive tariff to protect the entire body of them from other countries. If one-fifteenth of the world can prosper under internal free trade, why should not a third, or a half, or indeed the whole of the world?

But let us glance at another contingency. At present, the United States and the Dominion of Canada form two separate and distinct governments. Accordingly, each is hedged round by chevaux de f rise of tariffs, and their commercial intercourse is checked and hampered by import duties and restrictions having for avowed object the protection of their respective populations and the increase of their prosperity. According to the protectionist theory, each nation is benefited by these arrangements, and would be injured by their removal. Very good; but let us suppose that political changes were to bring about the admission of Canada into the Union, and a fusion of the two dominions into one federal republic, what would happen with regard to the fiscal regulations which are now declared to be essential to the prosperity of both populations? Would they be persevered in? It is not likely; it would be an unexampled anomaly that one part of a republic should be debarred from free commercial intercourse with the other parts. Consequently, the principle of free trade which now governs the commercial relations of the different states of the Union among themselves would be extended to Canada, and the results of unrestricted commercial intercourse between the two dominions, now so carefully guarded against, would have to be faced. On the protectionist theory, those results should prove ruinous to both parties; but can anyone seriously believe that such would be the case?