In responding to the three pillars I have suggested should form the philosophical foundation of the Republican Party, Jim Pinkerton says, “To his credit, Terry doesn’t seem to agree with [Pat] Buchanan’s neo-Hooverite trade policy.” I hate to break it to you, Jim, but I do agree with Buchanan’s basic views on trade. I even proudly helped Buchanan with some research on his book The Great Betrayal–How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy. My focus on the trade issue may differ from Pat’s in some respects, but it comes from the same place: A commitment to the founding ideal of the American republic.
My view on trade derives, as does Buchanan’s, from George Washington’s and Abraham Lincoln’s–respectively, the founder of our nation and the founder of the Republican Party. Washington’s vision for America was partly realized in Lincoln’s struggle to preserve the Union–and two issues were central to that realization, slavery and the protection of American industry within the continental free-trade zone that Washington and his fellow framers created when they crafted the Constitution. It is an unavoidable fact that in the early history of our nation the most vehement slaveholders and the most committed free-traders were often the same people. Free trade, after all, then as now, inspires capital to seek out the cheapest possible labor, wherever it can be found. Then as now, the cheapest possible labor is slave labor. In the early part of the 19th century, British mercantilists capitalized on American slave labor, keeping the American South an agrarian backwater, where the indigenous elite shared economic interests with the British across the sea, not with their American brothers and sisters down in their own slave quarters or up North in the bustling factory towns of New England. In our day, free-trade money managers on Wall Street encourage American industrialists to cut costs and maximize profits by “downsizing” domestic manufacturing jobs and moving production overseas to places such as China–where slave labor this very moment produces goods for export. Free trade in America today is creating a new order in which the managers of large public-stock manufacturing firms nominally headquartered in the United States have a greater identity of financial interest with the Communist elite in Beijing than with working Americans in Toledo or Pittsburgh. This would have been anathema to George Washington.
In his definitive biography, Washington, the Indispensable Man, James Thomas Flexner wrote (as Buchanan quotes in his own book) that “historians who have for so long looked nervously away from the role of blacks in American history have failed to recognize the extremely important fact that Washington’s repugnance to slavery was a major reason for his backing Hamilton’s [economic nationalist] financial planning against Jeffersonian [free-trade attacks]. … The Hamiltonian system had no need for slavery.”
So abhorrent was free trade to George Washington, and so desirous was our Founding Father of creating an economic system that would be capable of creating decent jobs for freedmen, that he not only foresaw the possibility of secession over the issue but decided that if such a crisis should come he would side with the free North against his native and beloved Virginia. Writes Flexner: “Washington felt that it was the Virginia institution that would in the end have to give way. ‘I clearly foresee,’ he told an English caller, ‘that nothing but the rooting out of slavery can perpetuate the existence of our Union by consolidating it in a common bond of principle.’ To Randolph, he revealed a conclusion that tore at his most deeply seated habits and emotions. He stated that should the Union separate between North and South, he had made up his mind ‘to move and be of the northern.’ “
To Washington and his fellow framers, the questions of taxation, trade, national sovereignty, and individual liberty were inextricably interwoven. They saw the British mercantilistic system–and its taxation without representation of the American colonies–as a system designed to keep the American people economically dependent and politically subservient to a foreign parliament.
Before he became an armed revolutionary, Washington made Mount Vernon a self-sufficient farm, refusing to raise tobacco for export to England, instead raising corn for sale in America and producing goods formerly imported from Great Britain on the estate itself. As John C. Miller wrote in The Origins of the American Revolution (quoted in Buchanan’s Great Betrayal), “Many Americans recognized that if the colonies were to wage successful economic war with the mother country, it was necessary that they manufacture for themselves the necessities they had formerly imported from Great Britain. As the Tories unkindly pointed out, Americans had the alternative in 1768 of buying from Great Britain or going naked. … Colonial manufacturing came to be widely regarded as ‘the only way to unrivet the chains, and burst asunder the bands of iron that are fastened on us.’ “
Prime Minister William Pitt, one of the most pro-American of British ministers, nonetheless understood that American manufacturing would be the key to American independence and thus must be stopped at all costs if America was to remain a colony of the British crown. “If the Americans should manufacture a lock of wool or a horse shoe,” he said, “[he] would fill their ports with ships and their towns with troops.”
The Constitution created by the convention that George Washington presided over in Philadelphia specifically gave the federal government the power to regulate foreign commerce and impose duties on foreign trade, while creating a free-trade zone among the states. It specifically denied the federal government the right to directly tax the citizens, thus effectively forbidding an income tax. A free-trade zone, free of income taxes, protected at the national border by federally enforced tariffs–that was the founding idea of the American republic enshrined in the language of the Constitution itself.
For the framers, this system embodied not only the essence of nationhood but also a guarantee of limited government. The taxes produced from the duties that were the principal source of federal revenue under the original Constitution were self-limiting. The higher you raised the tariff, the less inclined people would be to buy the products taxed. Government revenue, and thus the size of government, faced an absolute ceiling. (It is no coincidence that the era of big government and the post-16th Amendment era of the income tax are coterminous. The welfare state could not have been created if the government wasn’t first given the power to impose confiscatory income taxes to raise the revenue to fund such a state.)
At the same time, a modest tariff protected entrepreneurs in the home market and created bonds of commerce, trade, and common financial interest between American capitalists and American workers, rather than, as in globalized free trade, between American corporate managers and Chinese Communists. As Buchanan points out in his book, when House speaker James Madison introduced the first tariff bill in the first Congress, he said, “Sir, a national revenue must be obtained; but the system must be such a one, that, while it secures the object of revenue, it shall not be oppressive to our constituents: Happy it is for us, that such a system is within our power; for I apprehend that both these objects may be obtained from an impost on articles imported into the United States.” One purpose of that legislation, Madison added, was “the encouragement and protection of manufacturers.”
Lincoln, the first Republican president, exactly adopted the economic views of Washington and Hamilton–and clearly understood the superiority of the tariff to the income tax. “The tariff is the cheaper system,” said Lincoln. “By the direct-tax system the land must be literally covered with assessors and collectors going forth like swarms of Egyptian locusts. By the tariff system the whole revenue is paid by the consumers of foreign goods, and those chiefly the luxuries, and not the necessaries of life. By this system the man who contents himself to live upon the product of his own country pays nothing at all.”
It was more than ironic that the lack of manufacturing in the free-trade, slaveholding South was one of the prime reasons Lincoln’s Washingtonian vision of the Republic emerged victorious from the Civil War. But it is more than passing strange that some latter-day Republicans reject the limited-government, republican vision of George Washington and instead adopt the free-trade, big-government internationalism of Franklin Roosevelt.
When I said in my original “three pillars” that the “long-term Republican aim should be to repeal the 16th Amendment, and with it the income tax (which is by nature confiscatory), and to return to a government funded only by consumption taxes (which are by nature self-limiting),” I meant precisely that we should return to the American system of Washington and Lincoln, a system which Jim, no doubt, believes is “protectionist,” and which I believe is indispensable to a fully republican form of government.
The one great flaw of the original Constitution was its acceptance of slavery. But in the economic nationalism embedded in that same Constitution, Washington believed he and Hamilton and like-minded framers had sewn the seeds not just for the manumission of the slaves but also for their prosperous employment and full assimilation into the American community. He was right.
He is still right. It may take decades of political action for America to fully achieve the vision Washington had in mind–free men, free soil, free trade between the states, and industry growing under the protection of the same tariff that limits the growth of the federal government–but that vision is the one the Republican Party should hold up now, as it did at its birth, under the stewardship of Abraham Lincoln.