Chapter 4 — Trade

Protection 
implies prevention. To protect is to preserve or defend. What is it that protection by tariff prevents? It is trade.

To speak more exactly, it is that part of trade which consists in bringing in from other countries commodities that might be produced at home.

But trade, from which "protection" essays to preserve and defend us, is not, like flood, earthquake, or tornado, something that comes without human agency. Trade implies human action. There can be no need of preserving from or defending against trade, unless there are men who want to trade and try to trade. Who, then, are the men against whose efforts to trade "protection" preserves and defends us ?

If I had been asked this question before I had come to think over the matter for myself, I should have said that the men against whom "protection" defends us are foreign producers who wish to sell their goods in our home markets. This is the assumption that runs through all protectionist arguments — the assumption that foreigners are constantly trying to force their products upon us, and that a protective tariff is a means for defending ourselves against what they want to do.

Yet a moment's thought will show that no effort of foreigners to sell us their products could of itself make a tariff necessary. For the desire of one party, however strong it may be, cannot of itself bring about trade. To every trade there must be two parties who mutually desire to trade, and whose actions are reciprocal. No one can buy, unless he can find someone willing to sell; and no one can sell unless there is some other one willing to buy.

In point of fact, not only is it impossible for one nation to sell to another unless that other wants to buy, but international trade does not consist in sending out goods to be sold. The great mass of the imports of every civilized country consists of goods that have been ordered by the people of that country and are imported at their risk. It is the demand of purchasers at retail that causes goods to be imported. Thus a protective tariff is a prevention by a people, not of what others want to do to them, but of what they themselves want to do.

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 a trade unless the parties to it agree, any more than there can be a quarrel unless the parties to it differ. England, we say, forced trade with the outside world upon China, and the United States upon Japan. But, in both cases, what was done was not to force the people to trade, but to force their governments to let them. If the people had not wanted to trade, the opening of the ports would have been useless.

Civilized nations, however, do not use their armies and fleets to open one another's ports to trade. What they use their armies and fleets for, is, when they quarrel, to close one another's ports. And their effort then is to prevent the carrying in of things even more than the bringing out of things — importing rather than exporting. For a people can be more quickly injured by preventing them from getting things than by preventing them from sending things away. Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. 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.

What difference does it make whether it would be possible or impossible for me to make for myself the thing for which I trade? If I did not want the thing I am to get more than the thing I am to give, I would not wish to make the trade. Here is a farmer who proposes to exchange with his neighbor a horse he does not want for a couple of cows he does want. Would it benefit these farmers to prevent this trade on the ground that one might breed his own horses and the other raise his own cows? Yet if one farmer lived on the American and the other lived on the Canadian side of the line this is just what both the American and Canadian governments would do. And this is called "protection."

In no one place will nature yield to labor all that man finds useful. Adaptation to one class of products involves non-adaptation to others. Trade, by permitting us to obtain each of the things we need from the locality best fitted for its production, enables us to utilize the highest powers of nature in the production of them all, and thus to increase enormously the sum of various things which a given quantity of labor expended in any locality can secure.

But, what is even more important, trade also enables us to utilize the highest powers of the human factor in production. All men cannot do all things equally well. There are differences in physical and mental powers which give different degrees of aptitude for different parts of the work of supplying human needs. And far more important still are the differences that arise from the development of special skill. By devoting himself to one branch of production a man can acquire skill which enables him, with the same labor, to produce enormously more than one who has not made that branch his specialty.

And as there are differences between individuals which fit them for different branches of production, so, but to a much greater degree, are there such differences between communities. Not to speak again of the differences due to situation and natural facilities, some things can be produced with greater relative advantage where population is sparse, others where it is dense, and differences in industrial development, in habits, customs, and related occupations, produce differences in relative adaptation. Such gains, moreover, as attend the division of labor between individuals, attend also the division of labor between communities, and lead to that localization of industry which causes different places to become noted for different industries. Wherever the production of some special thing becomes the leading industry, skill is more easily acquired, and is carried to a higher pitch, supplies are most readily procured, auxiliary and correlative occupations grow up, and a larger scale of production leads to the employment of more efficient methods. Thus in the natural development of society trade brings about differentiations of industry between communities as between individuals, and with similar benefits.

It is characteristic of all the inventions and discoveries that are so rapidly increasing our power over nature that they require the greater division of labor, and extend trade. Thus every step in advance destroys the independence and increases the interdependence of men. The appointed condition of human progress is evidently that men shall come into closer relations and become more and more dependent upon each other. Thus the restrictions which protectionism urges us to impose upon ourselves are about as well calculated to promote national prosperity as ligatures, that would impede the circulation of the blood, would be to promote bodily health and comfort.

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. Goods will not be imported into any country unless they can be obtained more easily by producing something else and exchanging it for them, than by producing them directly. And hence, to restrict importations must be to lessen productive power and reduce the fund from which all revenues are drawn.