Freeman

PERSPECTIVE

A Powerful Case for Free Trade

Trade Extinguishes War, Eradicates Prejudice, Diffuses Knowledge

JUNE 01, 1996 by HENRY GEORGE

While Adam Smith presented the best-known practical case for free trade, the most powerful rhetorical case came from Henry George in his book Protection or Free Trade (1886). Here are some of the most memorable passages:

Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.

Can there be any greater misuse of language than to apply to commerce terms suggesting strife, and to talk of one nation invading, deluging, overwhelming or inundating another with goods? Goods! What are they but good things—things we are all glad to get?

It may be to the interest of a shopkeeper that the people of his neighborhood should be prohibited from buying from anyone but him, so that they must take such goods as he chooses to keep, at such prices as he chooses to charge, but who would contend this was to the general advantage? Broken limbs bring fees to surgeons, but would it profit a municipality to prohibit the removal of ice from sidewalks in order to encourage surgery? Yet it is in such ways that protective tariffs act. Economically, what is the difference between restricting the importation of iron to benefit iron-producers and restricting sanitary improvements to benefit undertakers?

Every tax that raises prices for the encouragement of one industry must operate to discourage all other industries into which the products of that industry enter. Thus a duty that raises the price of lumber necessarily discourages the industries which make use of lumber, from those connected with the building of houses and ships to those engaged in the making of matches and wooden toothpicks; a duty that raises the price of iron discourages the innumerable industries into which iron enters; a duty that raises the price of salt discourages the dairyman and the fisherman; a duty that raises the price of sugar discourages the fruit-preserver, the maker of syrups and cordials, and so on. Thus it is evident that every additional industry protected lessens the encouragement of those already protected.

It is sometimes said that protection does not increase prices. It is sufficient answer to ask, how then can it encourage? To say that a protective duty encourages the home producer without raising prices, is to say that it encourages him without doing anything for him.

Men of different nations trade with each other for the same reason that men of the same nation do—because they find it profitable; because they thus obtain what they want with less labor than they otherwise could.

Trade is not invasion. It does not involve aggression on one side and resistance on the other, but mutual consent and gratification. There cannot be trade unless the parties to it agree, any more than there can be a quarrel unless the parties to it differ.

Trade, by permitting us to obtain each of the things we need from the locality best fitted to its production, enables us to utilize the highest powers of nature in the production of them all.

If to prevent trade were to stimulate industry and promote prosperity, then the localities where he was most isolated would show the first advances of man. The natural protection to home industry afforded by rugged mountain-chains, by burning deserts, or by seas too wide and tempestuous for the frail bark of the early mariner, would have given us the first glimmerings of civilization and shown its most rapid growth. But, in fact, it is where trade could be best carried on that we find wealth first accumulating and civilization beginning. It is on accessible harbors, by navigable rivers and much traveled highways that we find cities arising and the arts and sciences developing.

Trade has ever been the extinguisher of war, the eradicator of prejudice, the diffuser of knowledge. It is by trade that useful seeds and animals, useful arts and inventions, have been carried over the world, and that men in one place have been enabled not only to obtain the products, but to profit by the observations, discoveries and inventions of men in other places. Wits are sharpened, languages enriched, habits and customs brought to the test of comparison and new ideas enkindled.

The most progressive peoples . . . have always been the peoples who came most in contact with and learned most from others.

 

—Henry George

Protection or Free Trade

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June 1996

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