The Magazine

TRADING DOWN

Apr 13, 1998, Vol. 3, No. 30 • By DAVID FRUM
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If America heeded that New Hampshire millworker and imposed a prohibitive tariff on foreign pulp and paper, American pulp and paper prices would quickly rise. That would be very nice for the owners of American mills, and -- who knows? -- they might even share some of the windfall with Buchanan's men on the line. But the tariff would have the effect of hiking the price of every cardboard box used to ship computers to Brazil and Argentina, the price of every medical textbook sold to India and Pakistan, the price of the liner in every compact disk American companies market in Germany and the Czech Republic. Insulating one industry from world standards of price and quality inevitably damage the ability of every other company in America to meet those standards in its own market.


Similarly, the tariff on Mexican lettuce and tomatoes that Buchanan wants would raise the price of produce for every household in America. Buchanan makes much of statistics showing that manufacturing wages in Germany now exceed those in the United States. But one reason that disposable incomes in the United States remain so much higher than they are in Europe is that Americans are not obliged to pay double and triple the world price for the food they eat.


Protectionism is an attempt to raise standards of living by systematically raising prices. As such, it is almost by definition bound to fail. That's not merely a theoretical point. When put to the test, protectionism has failed -- as the Brazilians know. And the Mexicans. And the people of India.


Buchanan tries to deny this record of failure, citing the spectacular growth of the United States under protectionism in the late nineteenth century. Generations of high-school students have groaned when their textbook opened to the tariff controversy in post-Civil War America, but surprisingly enough, this tariff history provides the most entertaining and informative part of The Great Betrayal. Such dusty, half-forgotten characters as Justin Morrill -- for thirty years one of the most powerful politicians in Washington -- spring to unexpectedly vivid life. And much of what Buchanan has to say about America's protectionist past is not entirely wrong. Protectionism probably did, in some ways, accelerate American industrialization. But that acceleration came at a terrible price, and it is a price that Buchanan declines to reckon or recount.


The apogee of American protectionism from 1873 to 1913 was, not coincidentally, a period stained by enormous internal strife. These were the years of the Pullman strike and the Haymarket Massacre, of Tom Watson and Mother Jones and the assassinations of Presidents Garfield and McKinley.


Americans who grew wheat and cotton, who felled timber and mined copper, were highly dependent on export markets. The goods they sold were priced at world prices, but tariffs ensured that the things they bought -- from farm equipment to shoes -- were priced far above the world prices. The trade policy of the late nineteenth century brutally exploited the South and West, and the farmers, loggers, and miners knew it. Buchanan calls present-day America a colony of Japan. It would be much closer to the truth to say that under the Morrill and McKinley tariffs, two-thirds of America was a colony of New York, Pennsylvania, Connecticut, and Massachusetts.


And even within the industrial Northeast, protectionism intensified class conflicts. Workers knew that business acumen alone was not what built the vast fortunes of the Andrew Carnegies and the Henry Clay Fricks. The government propelled certain men toward unimaginable wealth by barring potential competitors, and it was natural that their employees dreamed of using the same rough, coercive methods to get a share of the boodle. Anger in the South and West, anger in the mill and on the shop floor, helped elect in 1912 the first Democratic president in sixteen years -- and a free-trade Congress as well, which in 1913 reduced tariffs to levels undreamed of since before 1860. The First World War cut that free-trade experiment short, and in the 1920s the resurgent Republicans repealed it.


It's here that Buchanan manages to land his one good punch. The most notorious tariff in American history is the Smoot-Hawley tariff of 1930, which the current generation of conservative politicians and journalists has convinced itself sparked the Great Depression. How, Buchanan demands, can a tariff enacted in 1930 cause a slump that began in 19297 And how, he demands even more forcefully, can a 1930 tariff have proved so catastrophic, when the much more onerous Fordney-McCumber tariff of 1922 failed to halt the Roaring Twenties?