Lessons From Our Past Should Guide Our Future
An active industrial policy geared toward recovering our manufacturing capability can and has worked. There are many examples from U.S. history championed by both sides of the aisle. In fact, tariffs effectively built the wealth of this country and have been a very valuable tool for managing growth for the better part of 200 years. We should not strive to return to colonial “subject” status with respect to today’s new economic imperialists in Japan, China, Germany, the United Kingdom, the Netherlands, or Mexico.
Manufacturing Core To Early American Independence
In colonial America, England prevented American manufacturing by using tactics that included arresting and jailing anyone with manufacturing talent who would move from England to the colonies. In response to the English demand that we ship to them our timber, iron ore, rice, cotton, indigo, and natural resources, and import from them the manufactured finished articles thereby remaining a banana republic, Alexander Hamilton in his famous treatise “Report on Manufacturers” called for steps instead to build up our own manufacturing and to build our country. The first bill that passed in Congress on July 4, 1789, was a tariff bill, protectionism, a 50-percent tariff on 60 different articles.
Policy Of Protecting Key Strategic Industries Like Steel, Agriculture
Later, Abraham Lincoln decided against importing steel from England to build a transcontinental railroad. Instead, he decided to encourage development of our own steel plants. He put import restrictions on British steel thereby giving birth to one of the key industrial engines of growth in this country.
Franklin Roosevelt, in the darkest days of the Great Depression, developed a system of import quotas and subsidies for America’s agriculture. This system has remained to this day and that same group of farmers now receives annually over $180 billion worth of subsidies. This specific program is the subject of much free-trade discontent. However, few can imagine an America where we would put at risk the national security for the sake of ivory-tower free-trade ideology applied to agriculture and food production.
Protecting Industry Was A Common Practice
President Eisenhower, in the mid-1950s, applied oil import quotas. John F. Kennedy produced the seven-point Kennedy textile program of restrictions on textile imports in 1961. Ronald Reagan put import quotas on steel, machine tools, semiconductors, and a 50-percent import tariff on motorcycles.
Protecting US Industry Critical To Success Of First 100 Years
For the first 100 years of American independence, America was financed through protectionism. US net worth after that first century was twenty-five billion dollars more than the next wealthiest country, namely Great Britain. U.S. gross national product was more than twice that of Germany and Russia. The U.S. was so rich in goods and services that it was more self-sustaining than any industrial power in history. The U.S. had no federal income tax provision until 1913. Until that time, the government was supported almost entirely through tariffs and protectionism. Protecting the nascent U.S. chemical industry was a key in helping to defeat Germany.
In those days, more than half of the world’s cotton, corn, copper, and oil flowed from America, and at least one-third of all steel, iron, silver, and gold. Even if the U.S. was not flush with raw materials, excellent manufacturing guaranteed dominance of world markets. Wall Street was awash with foreign capital. It was calculated that America could afford to buy the entire United Kingdom including their national debt. Even the world-leading Bank of England began to borrow money on Wall Street. In short order, New York City seemed destined to replace London as the world’s financial center.
We Must Act To Protect And Restore Our Domestic Industry
Today we have unquestionably lost our manufacturing capability as evidenced by our massive trade deficits, dependence on imports, and foreign ownership of U.S. domestic industry. The only thing we now export in this country is title to our assets. This cannot be sustained. Protecting this country’s strategic industries is an absolute necessity, one that every other country in the world recognizes.