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Full text of "The Great Betrayal: How American Sovereignty And Social
Justice "
See other formats
I
E
ERICK J.
BUCHANAN
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H O W American Sovereignty and
Social Justice Are Being Sacrificed
to the Gods of the Global Economy
THE GREAT BETRAYAL
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$29.95 in Canada
Pat BUCHANAN has seen firsthand the
devastating effects of America’s slavish
devotion to global free trade. As a Repub-
hcan candidate for president in 1992 and
1996, he met plenty of American workers
who had been sacrificed to the Global
Economy, and saw towns and entire re-
gions abandoned by the industries that
once supported them. While America
boasts of having a strong economy—a
powerful stock market, booming corpo-
rate profits, record CEO salaries—the men
and women he met on the campaign trail
told a far different story. With free trade
now supported by both parties, more and
more businesses are closing up shop in the
United States and moving elsewhere, tak-
ing thousands of jobs with them. The
result is a sharp drop in Middle America’s
standard of living—a trend that has con-
tinued for twenty-five years—and a
national divide between the global elites
and those who have been left behind.
Now, in The Great Betrayal, Buchanan
charges the architects of NAFTA and
GATT with selling out the middle class
and turning their backs on the nation. As
the voice of populist conservatism, he
speaks to the desperation of the millions
of Americans who have lost their jobs
as a result of the free-trade policies of
the Global Economy Hr «hows how by
exporting jobs to Af ga Mexico, the
orate elite is destroy www the American
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T BI EWM,
Other books by Patrick J. Buchanan
Right from the Beginning
Conservative Votes, Liberal Victories
The New Majority
GREAT
BETRAYAL
——
How American Sovereignty and Social Justice
Are Being Sacrificed
to the Gods of the Global Economy
PATRICK J. BUCHANAN
Little, Brown and Company
Boston New York Toronto London
Copyright © 1998 by PJB Enterprises, Inc.
All rights reserved. No part of this book may be reproduced in any form or by any
electronic or mechanical means, including information storage and retrieval systems,
without permission in writing from the publisher, except by a reviewer who may quote brief
passages in a review.
First Edition
LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA
Buchanan, Patrick J.
The great betrayal : how American sovereignty and social justice are being sacrificed
to the gods of the global economy / by Patrick J. Buchanan. — Ist ed.
p- cm.
Includes bibliographical references and index.
ISBN 0-316-11518-5
1. United States — Foreign economic relations. 2. Free trade.
3. Working class — United States.
4. United States — Economic conditions — 1981- I. Tide.
HF1455.B83 1998
337.73 — dc21 97-38818
mo 8 7 w6 SSeS 2 1
MV-NY
Published simultaneously in Canada by Little, Brown & Company (Canada) Limited
Printed in the United States of America
For My MOTHER AND FATHER
Catherine E. Buchanan
(1911-95)
William B. Buchanan
(1905-88)
CONTENTS
Book One
A TaLe oF [wo NATIONS
Chapter 1 The Two Americas 3
Chapter 2. Triumph of the Free Traders:
A Forgotten Hero of Free Trade 21
Chapter 3 How Free Trade Is Killing America ae
Chapter4 Anatomy of a Murder D
Chapter 5 Masters of the Universe: |
The New Transnational Elite 93
Book Two
WHERE AND How WE LosT THE Way
Chapter 6 What Our Fathers Believed 111
Chapter 7 ‘The Rise of American Nationalism:
“Buy from Us — Or Go Naked!” 115
Chapter 8 Jefferson to Jackson 136
Chapter 9 ‘The Great Protectionist:
“An Old Henry Clay Tariff Whig” 156
Chapter 10 Free Markets vs. Free Trade ie
Chapter 11 ‘The Time of the Protectionists 206
Chapter 12 The Great Smoot-Hawley Myth 232
Book Three
THE COUNTERREVOLUTION AND THE
COMING OF A NEw POPULISM
Chapter 13 1933-93
Chapter 14 Counterrevolution
Chapter 15 A New Nationalism
Acknowledgments
Notes
Index
257
261
282
Book One
A TALE oF Iwo NATIONS
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Consumer Price Index, 1800-1995
Source: U.S. Bureau of Labor Statistics
The Great Betrayal 65
to China for persecuting dissidents, bullying Taiwan, and selling
missiles to Iran, America’s mightiest defense contractors — Allied
Signal, Boeing, GE, Hewlett-Packard, Honeywell, Lockheed-
Martin, McDonnell Douglas, Rockwell International, TRW, and
United Technologies — lobbied against suspension. If even vital de-
fense contractors are so “hooked” on their China trade that they can
no longer see the national interest, then free trade is costing Amer-
ica far more than even the $40 billion annual trade deficit with
Beijing.
THe CoMING CRISIS OF THE GLOBAL ECONOMY
As Robert Gilpin writes, there are three rival conceptions in politi-
cal economics. The classical liberal views economics from the stand-
point of the individual; the Marxist sees things in terms of classes;
the traditionalist has an organic view of society and subordinates
economics to the nation.”
Classical liberals and advocates of worldwide integration believe
that international relations are essentially harmonious. Since the
nineteenth century, they have argued that free trade is not a zero-
sum game. One nation’s gain is not another’s loss. All peoples and
nations benefit from free trade, and it is the duty of governments to
remove all barriers to trade.
Politics, however, is a zero-sum game. For every winner there is
a loser. GOP congressional victory in 1994 meant the Democrats’
defeat. Clinton’s reelection doomed Dole’s career. “In power terms,
international relations is [also] a zero-sum game.” ” One nation’s rise
entails another’s decline. The collapse of the Soviet empire en-
hanced the power of the United States; and as China grows in
power, people speak of the end of the American Century.
In the global arena, politics trumps economics; and it is relative,
not absolute, power that counts. As German mercantilist writer Von
Hornigk observed three hundred years ago: “Whether a nation be
today mighty and rich or not depends not on the abundance or se-
66 PATRICK J. BUCHANAN
curity of its power and riches, but principally on whether its neigh-
bors possess more or less of it.”
Nations will abide by the rules of an international system as long
as that system works to their advantage. America and Germany re-
jected Britain’s call for free trade in the nineteenth century because
they saw their national interest in protectionism. Postwar Japan lis-
tened to our discourse on open markets and went its own mercan-
tilist way. As long as Western wealth, technology, and jobs are
moving eastward — through foreign aid, loan guarantees, and huge
U.S. trade deficits — China will go along. But when wealth and its
all-important by-product, power, no longer move eastward, China
will walk away from this global system as casually as the Europeans
walked away from their war debts. This is the way the world works.
Nations are rivals, antagonists, and adversaries, in endless struggle
through time to enhance relative power and position. So it has been;
so it shall ever be.
COMPARATIVE ADVANTAGE OR COMMON SENSE
Finally, classical free-trade theory fails the test of common sense.
According to Ricardo’s law of comparative advantage, the core
principle of free-trade dogma, if America makes better computers
and textiles than China does, but our advantage in computers is
greater than our advantage in textiles, we should (1) focus on com-
puters, (2) let China make textiles, and (3) trade U.S. computers for
Chinese textiles. Thus, both nations will do what they do best, and
the production of computers and textiles is maximized.
The doctrine begs a question. If Americans are more efficient
than Chinese in making clothes — i.e., an American worker with
America-made equipment can produce more high-quality goods
at less cost than can a Chinese worker, why surrender the more-
efficient American industry? Why shift to reliance on a Chinese
textile industry that will take years to catch up to where American
factories are today?
The Great Betrayal 67
And if America has an absolute advantage over China in produc-
ing textiles, what exactly is China’s “comparative advantage”? If we
contend that China has a “comparative advantage” merely because
textiles are its most efficient industry, how can America ever acquire
comparative advantage in textiles?
Ricardo’s theory is at root not about economics or excellence or
more-efficient producers capturing markets. It is a globalist dogma.
It demands that more-efficient producers in advanced countries give up in-
dustries to less-efficient producers in less-advanced nations. Textiles is the
perfect example. The U.S. industry, with its high-tech equipment,
computerized plants, and well-paid, skilled workers, is the most ef-
ficient on earth. Yet, it is being dismantled, piece by piece, and sent
off to Third World countries where labor is paid twenty-five cents
an hour, where the looms cannot match the modern equipment in
U.S. mills, and where the factories operate in conditions rivaling the
“satanic mills” of William Blake.
Is child labor or slave labor more efficient than U.S. free labor?
Of course not. Are Chinese factories more efficient than U.S. facto-
ries? Of course not. What, then, is China’s “comparative advan-
tage”? Answer: cheapness. The only advantage China has over the
United States lies in its industrial retardation, exploited labor, and
utter neglect of health, safety, and environmental concerns. For
America to pursue a trade policy that compels our greatest compa-
nies to shutter plants here and open them in China pays homage to
Ricardian ideology — by rewarding Maoism.
Wuy AMERICA SLEPT
Why haven’t the harsh consequences of globalism for working
Americans persuaded more politicians to take a second look? Be-
cause, for many, free trade is a matter of faith. They can no more
give it up than Gus Hall can give up his belief in communism or
‘Teddy Kennedy his belief in liberalism. For 150 years the London
Economist has been preaching free trade. What does The Economist
68 Patrick J. BUCHANAN
care that factories are moving out of the United States? It was not
shaken in the faith when factories moved out of Great Britain.
When The Economist began publishing, Great Britain produced
nearly a quarter of the world’s goods; now Britain produces about 3
percent. If one’s allegiance is to one world, who cares if America is
the dominant power? ‘To a citizen of the world, a hollowing out of
America’s industrial power is an inconsequential, even a positive, de-
velopment. It matters deeply only to American patriots.
During the Smoot-Hawley ‘Tariff debate, labor leader Matthew
Woll suggested a less-flattering reason why it is harder to persuade
an economist than an autoworker that free trade is ruinous:
With few exceptions they [economists] are free traders. They are nei-
ther producers nor creators of any commodity or article of trade. They
are generally cloistered in the atmosphere of the schoolroom and their
mental wares do not enter into the competition with producers where
lower wage levels and longer working hours prevail and where stan-
dards of living are not only lower but in other respects much inferior to
the standards built up in our own country under the American tariff pol-
icy. Briefly, these economists and college professors are consumers, not
producers.”
The same holds for diplomats, bureaucrats, foundation-fed
scholars, journalists, professors, and politicians — all of whom tend
to be pro-free trade. For them, the policy is not only politically cor-
rect, it’s cost-free.
A COLONY OF THE WORLD
Another hidden cost of the Global Economy is the slow attrition of
our national independence. Trade, as a share of the GDP, has shot
up from an average 10 percent before 1970 to 23 percent in 1995,
and will rise to an estimated 36 percent by 2010. This startling pro-
jection is from the Office of the U.S. Trade Representative.” Before
The Great Betrayal 69
1960 America was self-sufficient in oil. Now we import 10 million
barrels a day, half of all the oil we consume, and maintain vast air and
naval forces in the Persian Gulf to protect the West’s supplies. Out
of fear for that supply, the United States had to go to war in 1991.
Yet, rather than take alarm at this growing dependency on foreign
sources of supply and foreign markets, some conservatives are posi-
tively cheerful. Columnist George F. Will writes that it is foolish
for America to pursue “the chimera of autarky — national self-
sufficiency, independent of the interrelations of trade.”*” But how
wise is it for the United States to have a fourth, or a third, of its gross
national product tied to trade, and much of that with shaky, unreli-
able, and even hostile regimes?
Was not the peso crisis of 1994 a fire alarm in the night? When
the crisis struck, Michael Camdessus of the International Monetary
Fund warned that in the absence of a U.S.-led bailout that could cost
$50 billion, potential “world catastrophe” loomed. Sir James Gold-
smith, founder of the British Referendum Party, asked a pointed
question:
Financial crises in Latin American countries have been recurring phe-
nomena for many decades. What has suddenly transformed them into
potential world catastrophes?
Submarines are built with watertight compartments, so that a leak in
one area will not spread and sink the whole vessel. Now that we have
globalized the world’s economy, the protective compartments no longer
exist. Thus, we have globalized problems. A crisis in Mexico has become
a “potential world catastrophe.” *
If a debt crisis in Mexico can bring down the financial house of
the United States, what is the benefit to America to justify so in-
credible a risk?
In the three years after the Mexico City crisis, nothing was done
to shelter America from another “potential world catastrophe,” and
in mid-1997, the pointed warning of Sir James proved prophetic.
The Thai stock market began to fall, bringing down the cur-
rency, the baht, with it. Within weeks the “contagion” spread to
70 Patrick J. BUCHANAN
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PERCENT
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2010
YEAR (EST.)
Foreign Trade as a Share of GNP/GDP
Source: Historical Statistics of the United States and U.S. Department of Trade
Malaysia, the Philippines, and Indonesia. From there it began to
rock the stock markets of North Asia — Taiwan, Hong Kong, South
Korea, Japan. By late fall, the South Korean won had lost half of its
value; Seoul’s stock market was at a ten-year low; the Japanese mar-
ket was at a two-year low and falling to a level at which Japan’s banks
were in peril. Almost every Asian currency had collapsed against the
U.S. dollar; and the contagion had spread to Brazil, South Africa,
Russia, and Eastern Europe.
The year 1998 shaped up as one in which U.S. taxpayers would
be put at risk for scores of billions of dollars in IMF bailout money
to “trade partners,” as these partners were about to flood America
with imports and swamp what was left of the U.S. manufacturing
base — running U.S. trade deficits and dependency up to levels un-
seen since the time of Madison.
Is it not time to rebuild those “watertight compartments” that
The Great Betrayal 71
once insulated the U.S. financial system from the chronic monetary
collapses of our neighbors south and east?
Again, how farsighted is such global interdependence? During
the Bush era it was said that the United States could not take a tough
stand in trade talks with ‘Tokyo, lest an angry Japan dump its hoard
of U.S. debt onto the world market, forcing up U.S. interest rates
and thereby inducing an American recession. In the name of na-
tional security, what benefit are we reaping from trade with Japan,
to justify this vulnerability to Japanese retribution?
The American Revolution was fought for an economic as well as
a political independence. Our Founding Fathers believed, almost to
a man, that ending our reliance on foreign trade was a national im-
perative. They sacrificed mightily to achieve an independence we
are now frittering away. We are today reverse-engineering American
history, returning to a level of dependency on trade that once put
America at the mercy of the predatory powers of the Old World.
The most self-sufficient nation of half a century ago is again be-
coming a colony — a colony of the world.
PAWNING AMERICA’S SOUL
In building a global free-trade regime, say its advocates, we shall
replicate the U.S. model on a planetary scale. What’s good for
America is good for mankind! The fallacy here is that the 180-odd
nations of the UN are not remotely comparable to the original thir-
teen states of the Union. Those thirteen states, the building blocks
of the U.S. free-trade zone, had been allies in revolution: they
shared a common religion, language, history, culture, destiny, and
standard of living; they had achieved a high measure of economic in-
tegration. Before the Founding Fathers met in Philadelphia in 1787,
America was already an embryonic nation. But the political price the
states paid in Philadelphia to become a free-trade zone is the price
the nations of the world, including America, will have to pay to cre-
ate a global free-trade zone: the surrender of national sovereignty!
heb Patrick J. BUCHANAN
At Philadelphia each state had to yield control of its borders, its
tariffs, its trade, and its rights to defend itself and to coin its own
money. Under the Constitution, New Yorkers and Virginians could
cross each other’s territory and settle on each other’s land; and the
United States would enforce that right with arms if necessary. As the
South would discover in 1861, the Constitution was the beginning
of the end of state sovereignty.
But to transfer state sovereignty to a national government led by
Washington, Adams, Jefferson, and Hamilton is a far cry from trans-
ferring U.S. sovereignty to a global regime run by faceless foreign
bureaucrats of the WTO or the UN. That would be tantamount to
treason. Yet, that is the endgame — as the Europeans have begun to
discover.
Global free trade is a Faustian bargain. A nation sells its soul for a
cornucopia of foreign goods. First the nation gives up its indepen-
dence; then its sovereignty, and finally its birthright — nationhood
itself. Adam Smith saw the inexorability of the progression: “Were
all nations to follow the liberal system of free exportation and free
importation, the different states in to which a great continent was
divided would so far resemble the provinces of a great empire.” ”
Europe is proving the point, reenacting Philadelphia in 1787.
The process has been underway for half a century. The European
Coal and Steel Community became the European Economic Com-
munity, which evolved into the European Community (EC). Now
the EC has become the EU (European Union). The end of the line:
a United States of Europe in which Britain and France enjoy the
same sovereign rights as Missouri and Mississippi. The process is in-
exorable, and the nations of Europe are approaching the fail-safe
point. Go forward, and there is no turning back; they will cease to
be truly independent nations.
Britain is today facing that choice. “Euroskeptics” are imploring
conservative comrades not to submit, not to give up the pound for a
single European currency. Being part of a new European superstate,
The Great Betrayal ie
they say, is not worth a surrender of British sovereignty. No con-
sumer cooperative is worth a country.
Before the nations of Europe proceed, they should consider Canada.
Most of Canada’s GNP is now in trade, and 80 percent of that trade
is with the United States. Its economic ties now run north-south
more strongly than east-west. The TV shows and movies Canadians
watch, the magazines they read, are more and more MADE IN THE
USA. Canadians today fear the loss of their national identity. Quebec,
desperate to retain its French language and culture, is ever on the
verge of breaking free. In a recent crisis, a leader in the Maritime
Provinces warned that if Quebec broke away, the Maritimes would
seek admission to the United States. Said the leader, We now have
more in common with New England than with Ontario.
Why is this true? Because of free trade. Many times this century
Canadians were warned against joining a U.S. free-trade zone that
must result in a dilution and eventual disappearance of Canadian in-
dependence. The poet laureate of the British Empire, Rudyard
Kipling, asked in 1911:
How can 9 million people enter into such arrangements as are proposed
with 90 million strangers on an open frontier of four thousand miles
and at the same time preserve their national integrity? It is her own soul
Canada risks today. Once that soul is pawned for any consideration
Canada must inevitably conform to the commercial, legal, financial, so-
cial and ethical standards which will be imposed upon her by the sheer
admitted weight of the United States.”
When the U.S.-Canada free-trade zone was negotiated, opposi-
tion leader John N. Turner challenged Prime Minister Brian Mul-
roney, echoing the warning of Kipling:
We have built a country, east and west and north, on an infrastructure
that resisted the continental pressure of the United States. For 120
74 Patrick J. BUCHANAN
years, we’ve done it, and with one stroke of the pen you’ve reversed that,
thrown us into the north-south pull of the United States. And that will
reduce us, I’m sure, to an economic colony of the United States, be-
cause when the economic levers go, the political independence is sure
to follow.”
Turner was right. Watching frustrated Canadians fight a rear-
guard action to defend their culture, a traditionalist must empathize.
But Canada was warned that the price of economic union with the
United States was the loss of its soul. For small nations like Belgium
and Holland, losing one’s self in a common market may be a neces-
sary sacrifice to keep pace with modernity. But the United States is
not some small or middle-sized nation. America is a continent-wide
nation that was wholly self-sufficient at the end of World War I],
and can become so again. We do not need to trade away our sover-
eignty for a seat at the table of some global regime. For no great na-
tion can yield its sovereignty and still remain great.
America will soon face the same choice that the nations of Europe
now face. NAFTA with Mexico means the gradual merger of the
two economies. Eventually there must come a demand for open
borders and a single currency. Make no mistake. We are in the be-
trothal stage of a courtship at the end of which comes a union of
America and Mexico — and that is the end of the nation we grew
up in.
The transnational elites have seen the brave new world coming
and opened their arms. “I believe the nation-state is finished,” says
Robert Bartley, the editor of the Wall Street Journal who champions
a five-word amendment to the U.S. Constitution: “There shall be
open borders!”
Tear down the border posts! Throw open America’s doors to all
who wish to shop here, sell here, move here, live here. Nationality
means nothing. America is one giant global mall; as Theodore Roo-
sevelt said, a “polyglot boarding house” for the world.
For the United States that is the end of History.
Chapter 4
ANATOMY OF A MURDER
One of the best things that ever happened to
America’s automobile industry is Japan’s au-
tomobile industry."
— George F. Will, 1996
T show the devastation that free-trade ideology has wrought on
America’s industrial heartland, many industries could serve as case
studies: radio and television manufacture, in which America once led
the world but which is no longer done here; the disappearance of the
shoe industry from New England; the abandonment of the textile
industry of the South. But to show best what America has sacrificed
to this Moloch of free trade, consider that greatest of industries, the
one with which this nation has been more closely identified than
with any other: automobiles.
For decades the U.S. auto industry employed more workers than
any other, consumed more raw materials than any other, paid more
taxes than any other, and dominated world production more than
any other. Yet, today that industry is contracting, packing, and leav-
ing America, forever, if we do not change our national policy. What
76 Patrick J. BUCHANAN
happened to the mighty American auto industry? Let’s start at the
beginning.
Henry Ford was the greatest industrialist of his age. By 1913 the
assembly lines he had perfected were turning out a thousand Model
Ts a day. With half a million flivvers on America’s roads in 1914,
Ford announced a legendary decision: he was raising the minimum
wage of assembly-line workers to five dollars a day. Ford said he
wanted his workers to be able to buy the marvelous machines they
were building. While credited with industrial statesmanship, Ford
and his partner, James Couzens, acted partly out of desperation. The
turnover in their labor force was running at 350 percent a year.
Couzens, critics say, came up with the idea of doubling pay to five
dollars a day, to put an end to labor strife and keep more highly
skilled workers who would not ruin the new machinery in Ford’s
plants; but Henry took credit for the idea.’
By the 1930s General Motors had eclipsed Ford to become the
number one corporation in America and the world; and in Detroit
GM executives were the new royalty. By the early 1940s Detroit had
been converted into the forge and furnace of the arsenal of democ-
racy. Studebaker, which had built the wagons that the pioneers used
to cross the Great Plains, built the Weasel armored personnel car-
rier. Willys-Overland built the jeeps that carried Eisenhower's
armies across Europe. Ford built Sherman tanks. Packard produced
the engines for PT boats and the P-40s of the Flying Tigers; Buick,
the engines for the B-24 Liberator bomber; Chevrolet, the engines
for the Flying Boxcar. Oldsmobile built B-25 Mitchell bombers like
the planes Colonel “Jimmy” Doolittle used in his 1942 “Thirty
Seconds Over Tokyo” raid off the aircraft carrier Hornet. Nash-
Kelvinator produced the navy Corsair, America’s first 400-mph
fighter. Hudson helped build the Helldiver attack plane that suc-
ceeded the Dauntless, made famous for its heroic exploits in the Bat-
tle of Midway, where four Japanese carriers were sent to the bottom
of the ocean. And GM led all manufacturers in war production.’
When the war ended, Detroit converted its assembly lines with
Yankee efficiency and began churning out the powerful, fashionable,
and fancy new cars that were the prewar specialty of the United
The Great Betrayal il
States. By 1946 hundreds of thousands of new automobiles were
rolling off the assembly lines, and Detroit was a thriving, throbbing
city of 2 million, its name a synonym for industrial ingenuity and
power. The entire world came to Motown to see how the Americans
did it.
Half a century later, Detroit had become the symbol and standard of
urban decay, a burned-out city of a million where on Devil’s Night
vandals set fire to trash cans, gutted buildings, and abandoned
homes. In 1996 I was driven downtown to an interview with the
radio legend J. P. McCarthy. For blocks on end, we silently viewed
the hollowed-out ruins and vagrant homeless people. Detroit
seemed a city fought over by hostile armies, then abandoned. This
looks like pictures of Beirut, I thought.
A friend who grew up in Ypsilanti tells of how his father and uncle
set out one day to revisit the old Detroit neighborhood. As they
came closer to where they had grown up, they grew silent. Within a
mile, they turned around. They didn’t want to see what had become
of the home in which they had been raised.
What happened to Detroit cannot be separated from what hap-
pened to the American auto industry, not all of whose wounds were
self-inflicted. Indeed, the U.S. auto industry can justifiably claim to
have been a victim of abuse, neglect, and abandonment by the gov-
ernment of the United States.
A BEETLE ATTACK
As late as 1983 GM still had 800,000 employees worldwide, with
600,000 in the United States. Including family members, a million
and a half U.S. citizens relied on GM for their livelihood. For an-
other 300,000, GM retirement benefits were their principal source
of income, which meant that yet another 450,000 Americans de-
pended on GM checks. Two million Americans thus depended di-
78 Patrick J. BUCHANAN
rectly on GM. How vital an element of the American economy was
GM? As retired executive Gus Stelzer writes:
GM bought more steel than any other firm. It spent more money with
hospitals, doctors, dentists, nurses . . . than any other private institu-
tion. ... Dividends paid by GM provided income to over 1,100,000
stockholders, many of whom were widows....In total, in 1983...
GM provided all, or a significant share, of income for over 4,000,000
Americans.
At the same time, GM was, by far, the largest generator of tax rev-
enue for federal, state and local government. In 1983, GM paid $4.9 bil-
lion in federal and state income and payroll taxes, property and other
taxes. Its employees and retirees were estimated to have paid an addi-
tional $4.5 billion in taxes. GM suppliers, and their employees, were es-
timated to have paid another $10 billion in taxes to thousands of U.S.
political agencies. And, finally, it was estimated that GM stockholders
paid another $1.2 billion in taxes on dividends they received. Thus, in
one year, GM generated over $20 billion in tax revenues, and this made
no allowance for a ripple multiplier effect which easily doubled that
figure.’
Yet, remarkably by the early 1980s, America’s greatest company,
this strategic national asset, had been under attack for three
decades — ever since GM president Charles E. “Engine Charley”
Wilson made his famous statement in congressional testimony:
“Whats good for America is good for General Motors, and vice
veraa. >
The first threat to the once-invincible U.S. auto industry came
from the little German car that became omnipresent on America’s
roads by the early sixties, the Volkswagen Beetle. When one consid-
ers its paternity, the Beetle’s popularity seems astonishing. For the
Beetle’s first and greatest patron was Adolf Hitler! Three months
after taking power in 1933, Hitler met with young Ferdinand
Porsche, an Austrian engineer and disgruntled former employee of
Daimler-Benz. Porsche sold the Nazi chancellor on the idea of a car
that could “travel more than fourteen kilometers per liter of petrol,
The Great Betrayal 79
seat four passengers, and be priced at around 1,000 reichsmarks (or
about $142) compared to the cheapest American car, which cost
around $425.”°
The idea of challenging the Americans — the world’s standard
for industrial power and technological excellence — appealed to
Hitler. He ordered a “people’s car” built so Germans could live like
Americans, one in five of whom owned a car. In 1933 only one in a
hundred Germans could make that boast.
By 1938 Porsche and colleagues had laid the foundation in Lower
Saxony for Volkswagen City. The ceremony of incorporation on
May 26, 1938, was a gala affair with seventy thousand present, fea-
turing Hitler himself: “I undertake the laying of the cornerstone in
the name of the German people. This factory shall arise out of the
strength of the entire German people and it shall serve the happi-
ness of the German people.”’
“The Strength Through Joy Car”® it was called, and two hundred
SS men were continuously test-driving it on Germany’s new auto-
bahns.’ Dr. Robert Ley, head of the German Labor Front, a former
Gauleiter in Cologne, declared, “It is the Fiihrer’s will that within a
few years no less than 6,000,000 Volkswagens will be on German
roads. In ten years’ time there will be no working person in Ger-
many who does not own a ‘people’s car.’ ”"®
It was not to be. In 1939 Volkswagen City was turned over to the
Nazi warlords and was among the first industrial enterprises to ex-
ploit concentration camp labor. Since the new plant had been built
in open farmland, however, it was an easy target for British Air Mar-
shal Arthur “Bomber” Harris and U.S. Army Air Corps General
Hap Arnold. Two-thirds of Volkswagen City was obliterated. Yet,
Volkswagen continued turning out war matériel for Hitler’s Reich
until it perished in the flames of 1945.'' When U.S. troops occupied
the plant on April 14-15, 1945, they found emaciated Hungarian
Jewish slave laborers still there, survivors of thousands sent from
Auschwitz, Dachau, and Bergen-Belsen.”
And that is the early history of the Volkswagen Beetle.
80 PATRICK J. BUCHANAN
> oe
To American auto executives it was a joke. Small, ugly, noisy, lumpy,
underpowered, with its air-cooled engine in the rear and a tiny front
trunk, with none of the new conveniences, it seemed no match for
the big, sleek American “road hogs” of the 1950s. There was an ar-
rogance in Detroit in those days. “Americans,” said young Henry
Ford,
like to blast along over interstate highways at eighty miles an hour in big
cars with every kind of power attachment, windows up, air conditioning
on, radio going, one finger on the wheel. Thats what they want, and
that’s what they buy, and that’s what we manufacture. We build the best
cars we can to meet the taste of the American people.”
To Ford, small cars were “little shitboxes,” and every small car, be
it American or foreign-made, was a “g m little Volkswagen.” *
Volkswagen succeeded because it fit the counterculture mood of
the era. Driving a Beetle was a form of protest. Beetle drivers
honked to one another on the roads. In 1958 one hundred thousand
were sold in the United States; four years later a million Beetles were
on America’s highways.
But Volkswagen had another advantage. Not only was the Beetle
a fine, fuel-efficient (34 miles per gallon) little car, the German
workers who built it were paid one-fourth the wages of a GM
worker and were taxed at oné-third the U.S. rate. Germans weren’t
spending 9 percent of their GNP defending their country. We were,
with a large share of that 9 percent going to defend West Germany.
Every U.S.-built Chevy or Ford carried in its sticker price the cost
of America’s defense of the free world. The Beetle, priced at $1,495
in the mid-fifties, $500 below the lowest-priced U.S. car, carried
none of this burden.
The Beetle’s promoters thought it would cut General Motors
down to size. It didn’t. The companies crippled or killed by the Bee-
tle were the ones that made small American cars, using American
autoworkers: Kaiser Motors and its Henry J., Studebaker and its
The Great Betrayal 81
Champion, American Motors and its Nash Rambler. A pattern had
been set.
[Volkswagen] was followed by the Renaults, Citroens and Peugots from
France, the Saabs and Volvos from Sweden, the Fiats from Italy, the
MGs and Jaguars from England, the BMWs, Audis, Porsches and Mer-
cedes from Germany, and the Yugo from Communist Yugoslavia. All
were made under conditions that were illegal in America and all were
subsidized by their governments who granted tax relief on imports to
the U.S."
As Americans were financing the defense of Europe, Europeans
were invading and capturing the markets of U.S. auto companies,
killing them off one by one and destroying the jobs of American
workers. And the U.S. government collaborated with the adversaries
of America’s greatest industry, with demagogic politicians bullyrag-
ging our own auto companies for failing to be “competitive.”
‘THE JAPANESE INVASION
By 1964 Commerce Secretary Luther H. Hodges was confidently
reporting that the worst of the foreign invasion was over.
The U.S. market for foreign cars appears to have leveled off. The im-
ports reached their peak in 1959 when 668,070 cars were brought in. In
1960 and 1961, imports declined when U.S. manufacturers met their
competition head-on with a lively line of U.S. compact cars."
Hodges was whistling past the graveyard. For a far better planned
and more massive invasion was already being prepared across the
Pacific. Before World War II the only cars on Japanese roads were
U.S. imports. Japan did not have an auto industry, but Tokyo did
have a law on the books restricting foreign companies from building
82 PATRICK J. BUCHANAN
cars in Japan.” As late as 1957 Japan produced only 182,000 cars, ex-
porting 6,500.'* In the early 1960s Japanese cars were considered
junk; even at low prices they could not compete with U.S. cars. How
did Japan succeed in capturing a huge slice of the U.S. auto market?
Hondas, Datsuns, Toyotas, Suzukis, and Mazdas, etc., were all
made under conditions that violated most U.S. laws. Their labor costs
were only 15% of U.S. rates. Their per-capita tax burdens were barely
30% of ours. [Tokyo] gave huge tax rebates to their auto producers who
exported to the U.S. in violation of antidumping concepts. The ex-
change rate was 360 yen to the U.S. dollar. As a result of these highly
discriminatory advantages, they were able to price their products 25%
to 50% below prices of U.S. cars of comparable size.”
With these advantages, the Japanese were selling a million cars a
year in the United States by 1970, and “blame America first” jour-
nalists and politicians were denouncing U.S. auto companies as too
blind or bullheaded to build the small cars that Americans de-
manded. The charge was unjust and untrue. American companies
had been building excellent small cars: Corvair, Falcon, Dart, Valiant,
Tempest, Chevy II, Nova, Henry J. But American cars, built in U.S.
factories that had to abide by U.S. tax and labor laws — and meet
environmental, safety, and health standards that foreign factories did
not — could not be priced at the same low levels. In Lordstown,
Ohio, in 1969 GM put up the most modern assembly plant in the
world, using state-of-the-art technology to assemble the new Vega
to compete with Japanese imports. The Vega, priced at $1,995, did
not even recover GM’s costs, many of which had been created by
U.S. laws. As the government continued to pile new costs on U.S.
companies, it threw open America’s doors to foreign cars made in
foreign factories that carried none of those costs. In the battle for the
U.S. market, the U.S. government had fixed the outcome in favor of
the foreign companies.
The Great Betrayal 83
Tue Auto Pact oF 1965
But we are getting ahead of the story.
In 1965 the United States negotiated the Auto Pact with Canada
which declared that for every U.S. car sold in Canada, one would be
built in Canada, thus effectively shutting down part of the U.S. in-
dustry, packing it up, and shipping it north. Why would the United
States do such a thing? Well, the pact was signed at what came to be
known to Canadians as the “cultural shock conference” at LBJ
Ranch, in a setting that provides an insight into the business acumen
of the U.S. government of the era:
The purpose was the signing of the auto pact, an enormously important
trade agreement striking down barriers on automobiles and parts. John-
son signed, knowing practically nothing about it and would soon snap
at ambassador Charles Ritchie: “You screwed us on the auto pact!” Sec-
retary of State Dean Rusk, the other powerful presence at the signing,
knew nothing about it either. It was part of his aversion to the world of
trade and finance. “I still think economics is a dismal science.” The re-
sult was that the agreement, to [Prime Minister Lester] Pearson’s cha-
grin, became a sidelight to the wild weekend’s other fare — booze,
gossip, raucous ranch tours, pyjama talk. In Ritchie’s phrase, it was a
“burlesque circus.””°
The story is amusing; the consequences are not. In that crucial
era America had as leaders men deeply ignorant of industry, trade,
and finance who gave away a huge part of the manufacturing base on
which millions of America’s highest-paid workers depended and
which had taken the better part of a century to build. From its birth
until the New Deal, America was led mostly by men who knew that
nation-states are rivals and antagonists, who understood that manu-
facturing is a key to national power, and who were familiar with and
proud of how America in a single century had developed from thir-
teen rural colonies into the greatest nation on earth. But since the
New Deal, the United States had been led by men ignorant of, or
84 Patrick J. BUCHANAN
dismissive of, that incredible history. Like prodigal children, they
gave away — for reasons of foreign policy, or even foreign popular-
ity — a patrimony that belonged to us all.
As a result of the Auto Pact, “a $657 million automotive products
trade surplus with Canada in 1965 turned negative. Over the next
twenty-five years the United States experienced automotive deficits
with Canada in all but one year.”?' Thirty years later, Canada was
producing 2.4 million cars and trucks a year, vehicles that would
have been built in the United States. According to a Wall Street Jour-
nal report filed from ‘Toronto in late 1996,
under the 1965 Auto Pact between Canada and the U.S., the Big Three
auto makers agreed to make at least one vehicle in Canada for every one
sold in Canada, in return for duty-free exporting and importing. Be-
cause of Canada’s advantages for production [including a cheapened
Canadian dollar], the U.S. auto makers have built extensive operations
here and have easily lived up to the bargain. The ratio of vehicles produced
to vehicles sold in Canada by all auto makers bas grown to more than two-to-
one today.” (Emphasis added.)
The annual U.S. merchandise trade deficit with Canada is among
this nation’s largest, reaching $23 billion in 1996, thanks to the Auto
Pact.
Under NAFTA, Canada, like Mexico, has become a launching
platform for Japan into the U.S. market. By the fall of 1996 Toyota
was doubling production at its Corolla plant in Ontario; Honda was
building a huge new minivan plant there, and Canada’s auto indus-
try accounted for 4 percent of the GDP. “One in every five jobs in
Canada depends on the automotive industry,” said a proud Canadian
economist.” Whose jobs did they used to be?
Why did LBJ give away a huge slice of our auto industry? Some
say that he was rewarding Canada for supporting us in Vietnam; oth-
ers, that this was his way of saying thanks for Canada’s taking up UN
peacekeeping tasks on Cyprus. Whichever is true, part of another
great U.S. industry was sacrificed on the altar of Cold War solidar-
The Great Betrayal 85
ity, and again it was American workers who were making the sacri-
fices.
When the Yom Kippur War broke out in October 1973, Richard
Nixon came to the rescue of a beleaguered Israel. Arab nations re-
taliated with an oil embargo. Gas prices surged, and U.S. demand
for small cars soared. Detroit was now accused of not anticipating
that demand. While America was rescuing Israel with a massive air-
and sealift, our allies were reaping windfall profits on their smaller
cars. And in part because the United States had begun to terminate
the tax incentives once given the oil industry, our self-sufficiency in
oil was history. Thus, the run-up in imported oil prices proved a
double blow.
Hammered constantly by press propaganda, new regulations, rising
taxes, and exploding imports, the GM giant began to stumble and
falter. As Gus Stelzer writes:
Between 1990 and 1992 GM lost over $20 billion, even though it had
already reduced its work force by more than 100,000 people in the pre-
ceding decade. . . . In mid-December, 1991 GM shocked the country
by announcing it would close another 21 plants and terminate another
74,000 employees, the ripple effect of which would cause another
200,000 to lose their jobs. It was a tragedy of historic proportions.
No American business institution ever contributed more to the well-
being of this nation, yet found itself facing a fight for its very life. But
that tragedy was compounded by the cavalier and spiteful manner in
which the established press, consistent with a vendetta of more than 30
years, spewed more of its venom to imply that it was all due to inept,
bloated management. . .. GM was raped by the policies of its own gov-
ernment.”*
What “Engine Charley” had said was true, when he said it. In the
1950s what was good for America was good for GM, and vice versa.
86 Patrick J. BUCHANAN
We see that now as we watch GM “outsourcing” work, closing U.S.
plants, and opening factories in Latin America and Asia, as America
and GM hand in hand descend the staircase from the industrial
zenith they both once knew.
By 1997 GM president John F. Smith, Jr. — his company’s share
of the U.S. market down to 30 percent — was predicting that half of
GM sales after the turn of the century would be outside the United
States.” Production is leaving as well. “The goal in the very near
term is to have fifty percent of our capacity outside of North Amer-
ica,” says Mark Hogan, who heads operations in Brazil and Ar-
gentina. GM’s newest plants are going up in Argentina, Poland, and
China. “GM's days of building new plants in North America may be
over,” says the Wall Street fournal. Declares Louis Hughes, head of
GM’°s international expansion: “We are on our way to becoming a
transnational corporation.” GM executives now openly admit that
they prefer to be seen as a global, rather than as an American, com-
pany.”
It is grossly unfair to damn for a lack of patriotism GM and all the
other U.S. companies now siting new plants outside the United
States. Not all wanted to leave the land of their birth; not all wanted
to be rid of their American workers. Many had no choice: they had
to leave, or die. Many of our greatest corporations were driven out
of America, whipped into exile by government policies that man-
dated ever higher costs on production here and by trade policies
which told U.S. executives that they could avoid such costs if they
moved overseas. For forty years the U.S. government has been
stacking the deck against industries that wanted to stay home and
hire Americans, and it bears the primary responsibility for the dein-
dustrializaton of this country.
By 1997 even Mexico was running an $11.9 billion automotive
trade surplus with the United States, exporting 560,000 cars to
America while importing only 46,000, a pro-Mexico ratio of 12:1. Is
this because Mexican factories are more efficient, or Mexican em-
ployees better workers? Of course not. It is because the policies pur-
sued by the government of the United States are virtually designed
to rid this nation of its core industrial base.”
The Great Betrayal 87
APPEASEMENT OF JAPAN
Twenty-five years ago, when Japan began to consolidate its grip on
the U.S. auto market, wages in Japan were still only one-fifth those
of U.S. autoworkers. But when the UAW went on strike in 1970, for
a three-year, 35 percent pay increase, the Nixon administration
sided with the union, exempting strike dues from income taxes and
giving food stamps to the families of striking workers. The Nixon
administration thus subsidized a shutdown of the U.S. auto industry
at the very moment U.S. trade officials were in Tokyo promising
Japan even freer access to the U.S. market.
Another blow fell when a U.S. court ordered GM’s dealer net-
work — its crown jewel, with twelve thousand outlets and half a mil-
lion employees — opened up to foreign-built cars. To create this
network, to make GM dealers part of a corporate family, GM had
invested billions of dollars over fifty years in start-up capital; inven-
tory financing; training for service, sales, and other personnel; and
twenty-five thousand field personnel. Now the federal government
was ordering GM to open up this long-nurtured establishment to
Japanese firms that were plotting, with Tokyo’s guidance, to overrun
GM's markets. Writes Stelzer: “The government edict was tanta-
mount to telling a home owner that he must allow a stranger to oc-
cupy his home, eat from his table and alienate the affections of his
wife.” ?
The Japanese were no such fools. When President Bush, on his
fateful January 1992 mission, asked Japan to reciprocate and open up
its dealerships to American cars, the CEO of Nissan said in effect,
Let the Americans start their own dealerships; we don’t owe them
anything. Bush and the auto executives he took to Tokyo came home
running on empty.
On his Japan trip, the president became ill, and his speech at the
Japanese Welcoming Committee Luncheon was delivered by Trea-
sury Secretary Nicholas Brady. In the speech, Bush, his eye more on
88 Patrick J. BUCHANAN
his adversary in New Hampshire than on America’s adversary in
Japan, declared, “This century has taught us... that isolationism
and protectionism lead to war and deprivation.” ”
This is ahistorical nonsense. In repeatedly blaming isolationists
for a world war they desperately wanted to stay out of, Bush does an
injustice to his fellow Americans. It was not American isolationists
but Japanese militarists who launched that sneak attack on Pearl
Harbor. As for protectionism, it was the precise policy by which Mr.
Bush’s hosts in Tokyo had raised Japan from the ashes of World War
II and looted America to become the second industrial nation on
earth.
The Japanese “miracle” was not produced by free trade; it is a
product of economic nationalism. Indeed, the purpose of the Bush
visit was to beg Japan to open markets long shut to America. But
why should the Japanese give up a trade policy that is working well
for them, to adopt one that is failing for us? Only traditional good
manners must have prevented the Japanese from laughing out loud
at Nick Brady. As author David Halberstam writes:
By the mid-eighties, its staggering victory in automobiles assured,
[Japan] was the most insular of international giants. Trade with Japan
was so one-sided as to smack of reverse colonialism: The Western na-
tions shipped raw materials to the Japanese, who turned them into fin-
ished goods that they sold back to the West.”
Japanese imports not only crippled America’s new-car industry,
they ruined our used-car industry. Some 70 percent of Americans
who turned in a Chevy, Ford, or Olds used to buy a new Chevy,
Ford, or Olds. With the cheaper imports now carrying warranties,
chains of loyalty that went back generations snapped.
In 1975 Japan had 9 percent of the U.S. auto market; Ford, GM,
and Chrysler, 80 percent. Today, Japan has 30 percent of the U.S.
market, and the GM-Ford-Chrysler share has shrunk to 64 per-
cent.” Singing hallelujahs to the free-trade god, we let protectionist
Japan cart off a third of our greatest market. Historians of American
The Great Betrayal 89
35
30
25
=
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Ta)
5
25
fx)
et
10
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0
(oN (aa) Ke) CO © N + Ke) a0 S N Si wV
Ne) ~ ~ ™ QO ee) oe) 20 ee) an on On an
On aH On an OH On On an On an aH a OS
YEAR
Japanese Share of U.S. Car Sales
Source: American Automobile Manufacturers Association; Ward’s Automotive Reports
decline will shake their heads as they relate to one another how this
happened.
In the 1980s Japan — to get around Ronald Reagan’s import
quotas — finally built a few assembly plants here, but the high-value
manufacture of Japanese auto parts is still done, by and large, out-
side the United States.
Unfortunately, this sad story of a magnanimous, foolish America
giving away her inheritance to greedy rivals is going to get sadder.
The nations of Asia and Latin America have seen how Japan became
90 PATRICK J. BUCHANAN
= 30.0
<
wi
=E
O
x
~ 20.0
15.0
10.0
5.0
© oc = N t © oo = o + Ne
~ ™~ o0 (e e] o0 (e 9] o oO a i ime
aN eN S S S x x N N & a
YEAR o GM
Japan
Shares of the U.S. Passenger Car Market: GM vs. Japan
Source: American Automobile Manufacturers Association; Ward's Automotive Reports
a great manufacturing nation; they are intent on copying Japan,
preparing their own twenty-first-century invasions of the U.S. mar-
ket. Massive overcapacity is being deliberately built into national au-
tomobile industries. As London’s Economist reports, auto companies
in Asia and Latin America are adding to the world’s production far
more cars than the entire world market can absorb:
South Korea alone is building an industry with capacity about five times
greater than the demand for cars in its domestic market. The South Ko-
The Great Betrayal 9]
reans do not intend to confine their competition to the developing
world.”
To the free-trade fanatics at The Economist, “there is nothing to
lament in all this. On the contrary, when too many cars pursue too
few customers, consumers are sure to benefit.”** But the United
States is not a consumer cooperative. We are a country, a people, and
a mighty auto industry is a vital strategic and industrial asset. Only a
senile republic would let a little clique in South Korea overrun the
U.S. auto industry. And the only impediment to totally recapturing
our auto market for America’s workers is this hedonistic free-trade
ideology we preach from a global pulpit as foreign nations pick our
pockets.
America’s situation is not irreversible. As Japan’s capturing 30
percent of our auto market was due to the folly of our mindlessly
pursuing free trade, recapturing our auto market can be effected, in
less than a decade, by a new policy of economic nationalism. The
United States should set as a national goal that virtually all cars sold
in the USA — Chevys, Fords, Chryslers, Toyotas, Hondas, BMWs,
Volvos, Datsuns — be MADE IN THE Usa. Nor is it difficult to devise
trade and tax policies to guarantee this. Only that foolish consis-
tency that is the hobgoblin of little minds holds us back. If Ameri-
cans revisit their history (as we shall in Part Iwo), we can rediscover
the principles and ideas that made us the first and greatest techno-
logical and manufacturing power in history — and that can take us
to new heights in the new century.
Fritz, Bos, AND PHIL
During the South Carolina primary of 1996, Senator Robert J. Dole
and his new ally Phil Gramm appeared at the BMW plant in Spar-
tanburg to denounce protectionism and hail the plant as one of
America’s great benefits from free trade. As South Carolina’s own
92 PATRICK J. BUCHANAN
senator Ernest “Fritz” Hollings instructed, the gentlemen were
“misinformed”:
The opposite is the case. Under President Reagan, a modest application
of protectionism was employed. With the threat of trade sanctions, vol-
untary restraint agreements, in steel, cars, televisions and roller bear-
ings were obtained. Ergo, we now have in South Carolina Nucor steel,
BMW cars, Hitachi televisions and Koyo roller bearings. Some time
ago, Eastman Kodak brought a case against Fuji for dumping photo-
graphic paper in the United States — at 360 percent below cost! As a
result we will soon dedicate a $200 million Fuji facility in Greenwood,
S.C. Protection not only saves jobs, it creates new ones.”
Why did BMW come to America? Out of fear of import quotas
and because the fall of the dollar against the German mark made
production here less costly. BMW also came because South Car-
olina offered millions of dollars in roads, rail links, plant-site con-
cessions, and tax holidays. But Columbia paid too high a price. With
a modest tariff on imported cars, South Carolina could have saved
its money, and BMW would have come running hat in hand.
Chapter 5
MASTERS OF THE UNIVERSE
‘THe New I[RANSNATIONAL ELITE
I think the nation-state is finished.'
— Robert Bartley,
WALL STREET JOURNAL
Gone ts the tight connection between the
company, its community, even its country.
Vanishing too are the paternalistic corporate
heads who used to feel a sense of responsibil-
ity for their local community. Emerging in
their place is the new global manager?
— Robert B. Reich, 1991
l. the late nineteenth century a dynamic American capitalism
spawned a new elite, the captains of industry, or “robber barons” and
“malefactors of great wealth,” depending on one’s point of view. Yet,
for all their eccentricities and faults, John D. Rockefeller and Cor-
nelius Vanderbilt anid their peers saw themselves as American patri-
ots, master builders of the greatest nation on earth, with duties to
that nation and, for the best of them, to their workers. In his early
years, Henry Ford seemed to exemplify the breed. In 1914 he star-
tled critics when he doubled the wages of his married workers. A
worker, Ford explained, “is not just an individual. . . . He is a house-
holder. . . . The man does the work in the shop, but his wife does the
work in the home. The shop must pay them both.” The alternative
was the “hideous prospect of little children and their mothers being
forced out to work.”?
94 Patrick J. BUCHANAN
With the coming of the Global Economy, the idea that the head
ofa family must be paid a “living wage,” so that his wife and children
would not be driven into the labor market, seems quaint. As our cen-
tury comes to a close, the participation of wives, even mothers with
children under the age of six, in the labor force is at the highest level
in history. Some consider that a triumph of equality. Ford saw the
world differently, and he saw himself as pater familias of Ford Motor
Company, a patriarch to whose employees he had social and moral
obligations. Men and women of wealth who possess that sense of
obligation — similar to what a good commander feels toward his
soldiers — are a dying breed. But a few are still among us. Roger
Milliken and Aaron Feuerstein are two.
“CONSERVATIVES OF THE VIEART
More than a decade ago, the head of the textile giant Milliken In-
dustries, a legendary benefactor of conservative causes, came to the
White House. At seventy, Roger Milliken still ran the family busi-
ness, which ranks among the most successful privately owned com-
panies in America. Milliken had come to persuade the White House
not to veto a bill to give his industry relief from a flood of imports
that were killing the jobs of his workers.
My answer was direct. He was, I told Roger Milliken, in the of-
fice of the stoutest free trader in the West Wing, with the lone ex-
ception of “that fellow down the hall.” The Oval Office was fifty feet
away. Ronald Reagan was not going to sign the textile bill. Milliken
left disappointed; I supervised the writing of the veto message.
Milliken had been waging a long losing battle to save the indus-
try to which he had devoted his life and halt the deindustrialization
of his country. His people depended on him; they were losing their
jobs in the scores of thousands every year, and Milliken felt a duty to
lead the fight for them.
OO $’$< a
The Great Betrayal 95
Ten years later Roger Milliken flew me from his headquarters in
South Carolina to La Grange, Georgia, to inspect the ruins of a
650,000-square-foot carpet dyeing and finishing plant that em-
ployed 680 workers. On January 31, 1995, the plant had been gut-
ted by fire; it looked like something out of Berlin 1945. Destruction
was total. But when we arrived, the people of La Grange gave the
famous industrialist a rousing reception.
The day of the fire, Milliken had directed his executives to fly in
with a message for anyone who thought that his company would
take the insurance money and run to Mexico: Roger Milliken was
not walking away from La Grange, a company town where one in
five workers is employed at one of seven Milliken plants. In half a
year, Milliken told the people of La Grange, they would have up and
operating on the site “a world-class textile plant with the most mod-
ern machines, systems and technology available in the world.”*
In designing the new plant, Milliken solicited ideas from em-
ployees. Some were put to work constructing a scale model of the
burned-out plant, from which to try out ideas on how to configure
the new plant. Displaced workers went to the top of the list for hire
at other plants across the South. One week after the fire, the La
Grange High School band was at the airport. The first group of Mil-
liken workers was flying by chartered jet to a plant in England to fill
the orders La Grange could no longer meet. Jean Railey watched
her son-in-law depart. “Everything went like clockwork,” Railey
said, “but I don’t think I know anybody who doubted for a minute
that it would be that way.” Within weeks of the fire, nearly all the La
Grange workers had jobs. A reporter described what he had seen as
a “powerful, if anachronistic, image of small-town Southern pater-
nalism — a company taking care of its company town.”*
Reconstructing a carpet plant like the one in La Grange would
normally require two years. But Milliken brought in three thousand
construction workers and craftsmen and put them on round-the-
clock shifts. The people of La Grange opened their homes to the
workers. One twenty-nine-year-old welder, Thomas Dorsey from
Leesville, Louisiana, said he wished “the job would never end.”° On
96 Patrick J. BUCHANAN
August 14, 1995, Milliken spoke outside the newest, most modern
carpet factory in the world. He had kept faith with his people, and a
great company had done right by its workers.
In the week of the Georgia primary, I toured the new plant. What
I said there of Roger Milliken is true of too few of today’s capitalists:
here, I said, is a businessman who believes that “when he succeeds,
all his workers succeed. And when times are tough, everybody shares
in the sacrifice. That is what the ideal of free enterprise is all about.”’
Ten months after the La Grange fire, on December 1, 1995, another
fire broke out a thousand miles to the north, in Lawrence, Massa-
chusetts, destroying a plant of Malden Mills. Three thousand work-
ers assumed it was the end of the line, the beginning of months of
scratching for new jobs while collecting unemployment. They, too,
were wrong.
Like Milliken, seventy-year-old Aaron Feuerstein looked on his
workers as his extended family. He announced that he would keep all
three thousand on the payroll of his family-owned business for a
month, as he began to rebuild the factory. He then paid his workers
a second month, then a third.* “When he did it the first time, I
was surprised. The second time was a shock. The third . . . well, it
was unrealistic to think he would do it again,” said Bill Cotter, a
nineteen-year veteran at the factory. Said Bill’s wife, Nancy, “It was
the third time that brought tears to everyone’s eyes.” “Another per-
son would have taken the insurance money and walked away,” said
one employee.’
By the end of the third month, many of Feuerstein’s workers had
been able to find other jobs. His decency and humanity had tided
them over. But it had cost him and his family millions of dollars.
Why did he do it? Said Aaron Feuerstein:
I have a responsibility to the workers, both blue-collar and white-collar.
I have an equal responsibility to the community. It would have been un-
conscionable to put 3,000 people on the streets and deliver a death blow
The Great Betrayal 97
to the cities of Lawrence and Methuen. Maybe on paper our company
is worth less to Wall Street, but I can tell you it’s worth more. We’re
doing fine.”
In an interview with Parade, Feuerstein quoted the first-century
Jewish scholar Hillel: “In a situation where there is no righteous per-
son, try to be a righteous person.” |" By mid-summer 1996, 85 per-
cent of the workers at his gutted plant were busy at the newly rebuilt
one. The rest were still being helped by their old boss.
Roger Milliken and Aaron Feuerstein belong to a tradition that
is passing away, a tradition of men of authority who act on the bib-
lical dictum that of those to whom much is given, much is asked.
Milliken and Feuerstein are “conservatives of the heart.”
“FORGET THE SALUTE TO THE FLAG”
As America’s Industrial Revolution spawned a new elite, so, too, has
the Global Economy. In mind-set and outlook, however, this new
elite is a breed apart, another species altogether. Unencumbered by
any national allegiance, it roams a Darwinian world of the border-
less economy, where sentiment is folly and the fittest alone survive.
In the eyes of this rootless transnational elite, men and women are
not family, friends, neighbors, fellow citizens, but “consumers” and
“factors of production.”
Social critic David Morris, who considers global free trade
“the Great Destroyer” — as did Karl Marx, who welcomed it —
writes that:
the emphasis on globalism rearranges our loyalties and loosens our
neighborly ties. “The new order eschews loyalty to workers, products,
corporate structure, businesses, factories, communities, even the na-
tion,” the New York Times announces. Martin S. Davis, chair of Gulf and
98 Patrick J. BUCHANAN
Western, declares, “All such allegiances are viewed as expendable under
the new rules. You cannot be emotionally bound to any particular
asset.”
We are now all assets.”
Efficiency is the highest value in the Global Economy, and patri-
otism — country coming before commerce — yields to utilitarian-
ism. Between our new global elite and the Millikens and Feuersteins
is a epoch. Former Labor Secretary Robert B. Reich relates a telling
anecdote:
Charles (Mike) Harper, head of ConAgra, the giant food-processing
and commodity-trading company, which is crucial to the economy of
Omaha, Nebraska, recently threatened to move the company unless
the state changed its tax code. The bonds of loyalty could slip over the
weekend, Harper warned: “Some Friday night, we might turn out the
lights — click, click, click — back up the trucks, and be gone by Mon-
day morning.”
Inspect the executive ranks of America’s Fortune 500 companies,
Ford Motor, Alcoa, and IBM. Less and less are they American. More
and more of their profits come from outside the United States, and
their CEOs point with pride to their lengthening rosters of foreign
managers."
Unlike their preglobal predecessors, global managers feel little alle-
giance to us. In the global enterprise, the bonds between company and
country — between them and us —are rapidly eroding. ... We are
witnessing the creation of a purer form of capitalism, practiced globally
by managers who are more distant, more economically driven — in
essence more coldly rational in their decisions, having shed the old af-
filiations with people and place."
These global executives see themselves as citizens of the world,
not as citizens of the United States. When Gilbert Williamson,
president of NCR, was asked about the problem of U.S. workers
The Great Betrayal 9
being unable to compete in the Global Economy, he brushed off the
question:
I was asked the other day about U.S. competitiveness, and I replied that
I don’t think about it at all. We at NCR think of ourselves as a globally
competitive company that happens to be headquartered in the United
States.'®
That is the authentic voice of the transnational elite. In quoting
Williamson, the Washington Post’s Hobart Rowen went on to say ap-
provingly, “The modern corporation looks first to satisfying cus-
tomers and to rolling up profits — forget the salute to the flag.” Y
Forgotten, too, is the American worker. The immense fortunes of
these elites are “tied to enterprises that operate across national
boundaries,” wrote social critic Christopher Lasch. Thus, they are
more concerned with the smooth functioning of the system as a whole
than with any of its parts. Their loyalties — if the term is not itself
anachronistic in this context — are international rather than regional,
national, or local... . The privileged classes in Los Angeles feel more
kinship with their counterparts in Japan, Singapore, and Korea than
with most of their own countrymen.”
Men and women employed by these “privileged classes,” how-
ever, retain an antiquated belief that it is an honor to be an Ameri-
can. “Every meeting we have in the union, we open it with the
pledge of allegiance,” says machinists union president George
Kourpias. “Maybe the companies should start doing that at their
board meetings.” '’ But as Rowen reminds us, in the modern corpo-
ration they “forget the salute to the flag.””°
Many transnationals still carry fine old American names, but
their workforces are less and less American. In 1985 GE employed
243,000 Americans; ten years later it was 150,000. GM has shrunk
its U.S. workforce to 314,000. IBM has lopped off more than half of
its U.S. workers, 132,000 in the past decade. Writes journalist
William Greider:
100 Patrick J. BUCHANAN
By 1995, Big Blue had become a truly global firm — with more em-
ployees abroad than at home (116,000 to 111,000). Even Intel, a thriv-
ing semiconductor maker, shrank U.S. employment last year from
22,000 to 17,000. Motorola has grown, but its work force is now only
56 percent American. . . . Officials at the Communications Workers of
America, which represents AT&T workers, recall that Ma Bell once
made all its home telephones in the U.S. and now makes none here.”!
As Americans look to exports for future growth, they should re-
alize that the nation’s greatest exporting companies — Boeing, GE,
GM, AT&T, Motorola — make fewer and fewer of their products in
factories inside the United States.
COMPANIES WITHOUT A COUNTRY
The transnational corporation is a mutant of the old multinational.
Unlike yesterday’s IBM, which was a U.S. corporation with sub-
sidiaries abroad, the new transnational has no country. Writes
Greider:
A transnational company is one that operates in the global marketplace,
that does its research wherever there are scientists and technicians, that
manufactures where economics dictate (in many countries, that is), and
that has a management that doesn’t feel any allegiance to the economic
or national security interests of the country in which it is incorporated.
It obtains its financing from institutions around the world. In short, it
regards itself as a free agent in a global economy.”
Boeing, the legendary U.S. aircraft company begun in Seattle in
1916, got a new chairman in February 1997. In his baptismal inter-
view with Financial Times, Philip Condit said that he wants Boeing
to be seen as a “global enterprise” and would be happy if, twenty
years hence, no one thought of Boeing as an American company.
The Great Betrayal 101
Condit’s goal, said Financial Times, is “to forge links with non-U.S.
companies in a drive to rid itself of its image as an American
group.” Added Condit:
I believe we are moving toward an era of global markets and global
companies. I think it is advantageous that your workforce, your execu-
tive corps, reflect that. I would expect the nationalities of our executives
to be considerably broader.”
Asked about the danger of technology theft in joint projects with
foreign companies, Condit replied, “I’m a believer that technology
transfers very readily. I think trying to say ‘I’ve got a technological
edge and I’m going to hold on to it’ is impossible.” > Would not this
stance compromise Boeing’s role as a pivotal U.S. defense contrac-
tor? Condit brushed aside the concern: “As we move in an interna-
tional direction, we will have to find ways — the US government
will have to find ways — of dealing with that.”” A part of Boeing’s
assembly line is already in China; when asked later for his “feelings
about human rights violations in China,” Condit shot back:
Oh, yeah, absolutely. And I’m going to put it in context: they are the
same ones that I have about human rights violations in the United
States... . Some of the struggles we’ve had with civil rights don’t look
all that shiny. People have been shot. People have been beaten. I hap-
pened to be in China during the Rodney King beating.”
The old corporate mind-set was nationalist-protectionist. The
new one is internationalist-free trade. Indeed, much of what is
called trade today is not truly trade at all. The Financial Times esti-
mates that of the $6 trillion in world trade in 1995, $2 trillion was
between corporations and their own foreign subsidiaries.” When
U.S. merchandise imports totaled $740 billion in 1995, $350 billion,
or 47.4 percent, was actually “related party trade” — i.e., merchan-
dise produced abroad by the foreign workers of corporations that
still list the United States as their last known address.” Princeton
102 PaTRICK J. BUCHANAN
professor Helen V. Milner believes that the new global orientation
of big business explains why protectionist policies have fallen out of
favor:
These large multinationals with extensive global trade networks have
come to prefer a “free trade system,” one without barriers obstructing
their trade and production flows. These firms have been antiprotec-
tionist, even in times of economic distress.”
When a transnational corporation ships millions of dollars in
goods to the United States from overseas plants, it becomes a po-
tential loser from policies designed to preserve and protect produc-
tion znside the United States. ‘Thus, the corporation invariably works
to disrupt any common front to defend U.S. markets. “With strong
ties to the Japanese industry, RCA had no desire to see quotas placed
on Japanese imports,” writes Milner.” RCA thus opposed the filing
of unfair trade complaints by American television manufacturers in
the 1970s, breaking industry ranks and weakening the political pres-
sure the industry could muster. No relief arrived, and the U.S. in-
dustry went under. RCA had colluded with Japan to prevent any
rescue, letting the U.S. television-manufacturing industry die, cry-
ing in vain for help.
Both Democratic and Republican administrations have crafted their
trade policies in concert with these transnationals. The trade deals
are then sold to Congress as having “business support.” Americans,
however, fail to grasp the radical change in the orientation of these
transnationals. Their interests and U.S. national interests are more
often in conflict than in harmony.
Transnational firms also control the Advisory Committee for
Trade Policy and Negotiations (ACTPN). Established by the ‘Trade
Act of 1974, the ACTPN was to provide “outside” advice to the gov-
ernment from groups affected by trade deals. There seems little ap-
preciation of just how far “outside” these corporations now are. Of
the thirty-seven members of the ACTPN, advising on the GATT-
The Great Betrayal 103
WTO agreement, thirty-four represented transnational big busi-
ness. Only one, Jack Valenti of the Motion Picture Association of
America, refused to sign the ACTPN report.
To win congressional support for “free trade” deals, the giant
companies that dominate business organizations and fund think
tanks and political campaigns forge compromises between the
transnational and “national” firms. National companies are
promised an opening of foreign markets to replace domestic mar-
kets lost to imports. But with the United States now importing a
third of all manufactured goods we consume, we are running out of
domestic market to trade away. Between 1990 and 1995 the “world”
market for American exports increased at a real annual rate of 7.6
percent. But the U.S. market for foreign imports grew by 9.6 percent a
year. America’s best market is here at home, and we are giving it
away.
The political clout that the transnationals command can be seen
in GOP platforms. In their 1972 platform Republicans noted the
rise of these corporations and, reacting on sound conservative in-
stincts, stated boldly:
We deplore the practice of locating plants in foreign countries solely to
take advantage of low wage rates in order to produce goods primarily
for sale in the United States. We will take action to discourage such un-
fair and disruptive practices that result in the loss of American jobs.”
By 1976 the “party of business” felt it prudent to drop the 1972
language and not even mention what was afoot. The old adage
“trade follows the flag” is passé. Today the Republican Party follows
big business, as it lowers the American flag.
Among the arguments made for shifting authority over trade to
the executive branch is that Congress, with 535 members, is too be-
holden to “special interests.” Members of Congress, it is said, rep-
resent local and state interests. Only the president, chosen by the
nation, can see the national interest. Disinterested diplomats, di-
rected by the president, are thus more qualified to negotiate trade
treaties for the good of the country.
104 Patrick J. BUCHANAN
But this rationale begs the question: since diplomats know little
about modern business and industry, upon whom do they rely for
counsel in deciding what to fight for and what to give away? Who
was in Geneva at the elbow of Mickey Kantor, the Hollywood
lawyer who led the U.S. delegation at the GATT negotiations? An-
swer: the ACTPN, the hired hands of the U.S. transnationals. “The
executive branch depends almost entirely on business for technical
information regarding trade negotiations,” writes Jeff Gerten, for-
mer undersecretary of commerce. “The role of American firms as de
facto agents of foreign policy is expanding.” ®
The final GATT treaty, advertised as a bold step toward global
free trade, was thus nothing but a mammoth insiders’ deal among
the transnational giants of America, Europe, and Japan to carve up
the world, just as the imperial powers carved up the continent of
Africa in Berlin in 1884.
Wuo ArE IHEY?
Seeing themselves as the first citizens of a new world, the transna-
tional elites yearn to be free of the nations to which they once gave
allegiance. They dream of a day when the nation-state is as obsolete
as the feudal castle. “The expansion of our consciousness to the
global level offers mankind perhaps the last real chance to build a
world order that is less coercive than that offered by the nation-
state,” writes A. W. Clausen, ex-president of BankAmerica Corpo-
ration and the World Bank.** Echoing Clausen, William I. Spencer,
former president of First National City Corporation, declared,
“The political boundaries of nation-states are too narrow and con-
stricted to define the scope and sweep of modern business.” We
must “defang the nationalist monster,” says Peter Drucker.”
As the church was the despised enemy of the intellectuals of the
eighteenth century who echoed Voltaire’s “Ecrasez |’infame!” the
nation-state is the impediment to progress for the transnational
The Great Betrayal 105
elite. Carl A. Gerstacker of the Dow Chemical Company once
dreamed aloud about a brave new world:
I have long dreamed of buying an island owned by no nation and of es-
tablishing the World Headquarters of the Dow Company on the truly
neutral ground of such an island, beholden to no nation or society.”
“Beholden to no nation or society” — that is the dream!
They want to be rid of the burden of America! A spokesman for
Dow rival Union Carbide seconded Gerstacker: “It is not proper for
an international corporation to put the welfare of any country in
which it does business above that of any other.”*” Putting America
first bespeaks a lack of loyalty to the corporation. No man can serve
two masters, and the company comes before the country.
Twenty-five years ago, in Between Two Ages, Zbigniew Brzezinski
looked to the horizon and saw the Global Economy coming — and
its progeny: the Masters of the Universe. “A global human con-
sciousness is for the first time beginning to manifest itself,” exulted
Brzezinski.**®
Today we are again witnessing the emergence of transnational elites . . .
composed of international businessmen, scholars, professional men,
and public officials. The ties of these new elites cut across national
boundaries, their perspectives are not confined by national traditions,
and their interests are more functional than national.”
Brzezinski joined banker David Rockefeller in creating the ‘Iri-
lateral Commission, a group of the most influential of those transna-
tional elites. But he offered a word of caution. The growing distance
from the common man, of these “international professional elites,”
Dr. Brzezinski warned, risks “a dangerous gap between them and the
politically activated masses, whose ‘nativism’ — exploited by more
nationalist political leaders — could work against the ‘cosmopoli-
tan’ elites,” *
106 PATRICK J. BUCHANAN
“ALL COUNTRIES .. . ARE ARTIFICIAL
In the new world, envisioned long ago by the classical liberals, the
smooth functioning of that mightiest of machines, the Global Econ-
omy, is the highest good, and its corporate offspring have memo-
rized their new gospel. “For business purposes, the boundaries that
separate one country from another are no more real than the equa-
tor,” said the president of IBM’s World ‘Trade Corporation in 1974.
“They are merely convenient demarcations of ethnic, linguistic and
cultural entities.” The WTC slogan: World peace through world
trade!” George W. Ball, once described as “part of a new transna-
tional elite that felt frustrated and unduly restricted by the tradi-
tional nation-state system,” * vented his exasperation with the claims
of nation and country:
The urgent need of modern man [is] to use the world’s resources in the
most efficient manner. That can be achieved only when all the factors
necessary for the production and use of goods — capital, labor, raw ma-
terials and plant facilities — are freely mobilized and deployed accord-
ing to the most efficient pattern — and that in turn will be possible only
when national boundaries no longer play a critical role in defining eco-
nomic horizons.*
Where does one’s loyalty lie? That is the issue raised by the onset
of the Global Economy and the rise of the transnational elite. To
whom, to what, do we owe allegiance and love? Is the day of the
nation-state over? Robert Bartley of the Wall Street Journal believes
so. So does Strobe Talbott, Clinton’s roommate at Oxford and ar-
chitect of his Russian policy:
All countries are basically social arrangements. . . . No matter how per-
manent and even sacred they may seem at any one time, in fact they are
all artificial and temporary. ... Within the next hundred years. . . na-
tionhood as we know it will be obsolete; all states will recognize a sin-
gle, global authority. A phrase briefly fashionable in the mid-20th
The Great Betrayal 107
century — “citizen of the world” — will have assumed real meaning by
the end of the 21st.*
To Talbott, the WTO, IMF, and World Bank are “protomin-
istries of trade, finance and development for a united world.”*
How are traditional Americans, jealous of their liberty and proud
of their heritage of independence, to be persuaded to give up their
national sovereignty for a seat at the table of Strobe Talbott’s new
world order? By stealth. In 1974 Richard N. Gardner, later Clinton’s
ambassador to Spain, echoed Brzezinski’s warning not to awaken the
sleeping giant of American patriotism but to proceed by subtlety and
indirection:
The “house of world order” will have to be built from the bottom up.
... An end run about national sovereignty, eroding it piece by piece,
will accomplish much more than the old-fashioned frontal assault.”
Like a shipwrecked, exhausted Gulliver on the beach of Lilliput,
America is to be tied down with threads, strand by strand, until it
cannot move when it awakens. “Piece by piece,” our sovereignty is
being surrendered. By accession to NAFTA, GATT, the UN, the
WTO, the World Bank, the IMF, America has ensnared itself in a
web that restricts its freedom of action, diminishes its liberty, and
siphons off its wealth. Most Americans do not understand this. And
even to raise the question is to provoke ridicule as a reactionary
caught up in conspiracy theories.
Nevertheless, as Citicorp’s Walter Wriston concedes, power is
slowly shifting away from nation-states to transnational institutions:
When a system of national economies linked by government-regulated
trade is replaced — at least in part — by an increasingly integrated
global economy beyond the reach of national regulation, power changes
hands.*
“The unraveling of national sovereignty,” adds UN Under-
Secretary-General Brian Urquhart, “seems to be a feature of the
108 Patrick J. BUCHANAN
post-Cold War period.” Indeed, the Cold War has been super-
seded by a new struggle that many patriots do not even know is un-
derway. “The real divisions of our time,” writes scholar Christian
Kopff, “are not between left and right but between nations and the
globalist delusion.” ® And a question needs to be directed straight to
the Right: whose side are you on? If Clinton and Talbott look to
a new world order, and believe free trade is the ship to carry us
there, to what port do you believe global free trade is transporting
America?
DISSOLVING THE BONDS OF LOYALTY
Were Richard Cobden alive, he would be rhapsodic. For Cobden
hated the British empire. In 1835 he railed that it can “never be got-
ten rid of except by the indirect process of free trade which will
gradually loosen the bonds which unite our colonies to us by a mis-
taken notion of self-interest.”*' But an acid that can dissolve the
bonds of loyalty to a mother country can also dissolve the bonds of
loyalty that bind a great and diverse republic. Look at Canada, Italy,
Britain. The centrifugal forces pulling them apart are at work here
in the United States.
Do we Americans believe in the vision of Cobden, a world of
open borders and untrammeled trade, where nations fade away in
the brilliant dawn of a new world order? Or do we hold to the grand
old ideas of sovereignty and independence for which our Founding
Fathers risked their lives, fortunes, and sacred honor? It’s time to
choose. Nor can the decision be put off much longer, or it will be
made by default. Not to decide is to decide. By Newton's first law, a
body in motion continues to move in the same direction until an
outside force intervenes to divert or stop it. Unless we intervene to
halt this momentum and recapture our country, America will wake
up like Gulliver, tied down forever, our destiny no longer ours to
decide.
Book Two
WHERE AND How
WE Lost THE Way
Se Dee
f
Chapter 6
WHAT OUR
FATHERS BELIEVED
O. dependence on overseas markets to buy American goods,
and on foreign countries to sell us theirs, is approaching what it was
when we were thirteen colonies.
Trade has exploded as a share of the U.S. economy, from a his-
toric average of 10 percent, to 23 percent today, to an anticipated 36
percent in 2010. Imports in 1997 crossed the $1 trillion mark, and
total U.S. trade is now more than $2 trillion a year. The benefits:
sleek and slimmed-down U.S. corporations are on top again, the
envy of Europe and Japan. As corporate profits surge, the Dow-
Jones has a built-in expectation of even greater profits. Stocks are
selling at twenty times earnings. America’s elite is prospering as
never before.
The cost: America is no longer one country. The wages of work-
ing Americans stopped rising when the free-trade era began. Real
112 PATRICK J. BUCHANAN
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Average Weekly Earnings, 1960-95 (in 1982 Dollars)
Source: U.S. Bureau of Labor Statistics
wages in 1994 were 19 percent below their peak year of 1973.
Forced to compete with tens of millions of immigrants, and hun-
dreds of millions of hungry Asian and Latin American workers who
make 5-10 percent of U.S. wages, American workers are being un-
dercut all over the world. To transnational corporations, U.S. work-
ers are expensive and troublesome, and the easy way to keep profits
rising — and stock prices and executive stock options soaring — is
to shut down here and move production outside the United States.
The social costs? As workers’ wages stagnated and fell, wives and
mothers entered the job market in record numbers to maintain the
family standard of living. In 1960 fewer than one-fifth of women with
children under the age of six were in the labor force; today almost two-
The Great Betrayal Hits:
thirds are. No other modern nation has so many of its married
women in the labor force. While this keeps median family income
(which fell 5.8 percent between 1990 and 1995) from collapsing, the
price is paid in falling birthrates and rising delinquency, in teenage
drug abuse, alcohol abuse, promiscuity, illegitimacy, and abortions
— and in the high divorce rate among working parents. The Amer-
ican family is paying a hellish price for the good things down at the
mall.
As the commands of commerce take precedence over the claims
of families and the call of patriotism, national unity takes a backseat
to ethnic solidarity. In Britain this is manifest in the resurgence of
Welsh and Scottish nationalism; in Canada, in the drive for an inde-
pendent Quebec; in Italy, in the secessionist Northern League. The
deconstruction of the United States can be seen in resegregated stu-
dent dorms, ethnic gangs, a revival of ethnic and racial politics, se-
cessionist movements in the Southwest, all the way over to the white
militias and the Southern League.
Another cost of the Global Economy is the corruption of poli-
tics — from BCCI to Lippogate to the buying and selling of trade
and foreign policy by hirelings of Mexico, Japan, Taiwan. “Influence
in Washington is just like in Indonesia. It’s for sale,” smirked the
Japan Economic Journal in 1981.' In the mid-1990s, Asian moneymen
brazenly attempted to buy the Democratic National Committee and
get a hook in the president with huge gifts to his legal-defense fund.
High among America’s imports from the Global Economy: the
sleaziest of foreign practices.
The most perilous aspect, however, is the loss of U.S. sovereignty
and the potential loss of nationhood itself. Look at Europe. Nations
there are meekly transferring control of their defense and foreign
policy, of trade and immigration policy, to a superstate called the
European Union; they are even giving up control of their curren-
cies, which means control of their destinies. And what is happening
to France, Britain, Germany, Italy, will happen here if we do not
wake up. Once a nation has put its foot onto the slippery slope of
global free trade, the process is inexorable, the end inevitable: death
of the nation-state.
114 Patrick J. BUCHANAN
Our embrace of the Global Economy is dividing us into two unequal
Americas; the elites beckoning us there betray everything the
Founding Fathers stood for, fought for, died for. Do the American
people understand that
e the independence for which the patriot fathers fought was eco-
nomic as well as political?
e Washington, Hamilton, and Madison, architects of the nation,
abhorred “free trade” and built the tariff wall behind which
America secured her economic independence?
e Jefferson ended his days as fierce an economic nationalist as
Andrew Jackson, the other father of the Democratic Party?
e Abraham Lincoln was America’s Great Protectionist?
e the Global Economy is the brainchild of utopian European intel-
lectuals, none of whom ever built a great nation?
e the Republican eras of economic nationalism — 1865-1913 and
the Roaring Twenties — were times of U.S. growth and prosper-
ity unmatched before or since?
e free-trade policy is the legacy not of conservatives but of one-
worlders and liberals like Woodrow Wilson?
° the charge that Smoot-Hawley was a cause of the Great Depres-
sion, Hitler, and World War II is a myth perpetuated by free-
trade zealots, some of whom wish to see the old American
republic disappear into a new world order?
If we are to take back our country, we must understand where and
how it was taken from us. We must know America’s true history. We
are today building a Global Economy and a new world order based
on the blueprints of intellectuals and zealots whom our greatest men
ridiculed for 150 years. To see how we are betraying that heritage
and squandering that patrimony, we need to know what that her-
itage and patrimony are. So, let us go back and retrace the footprints
of those greatest Americans.
Chapter 7
THe RISE OF AMERICAN
NATIONALISM
“Buy FROM Us — Or Go Naxkep!”
The war of the American Revolution chiefly
grew out of the efforts of Great Britain to
cripple and destroy our Colonial industries to
the benefit of the British trader, and . . . the
Independence conquered, was an Industrial
as well as Political Independence.’
— Senator John Logan,
THE GREAT CONSPIRACY, 1886
Roa home from the French and Indian War, the newly
married George Washington took over the Custis family plantation.
Each dawn he was up on horseback, supervising Mount Vernon.
Everything depended on the success of a single crop:
Tobacco! That was always the end product. It was cut when ripe, hung
in special barns, and when just dry enough put in hogsheads weighing
from 660 to 1100 pounds. And then off to England to restore his bal-
ance with Cary & Co., and to pay for new purchases.’
From his first days Washington was writing in protest to Robert
Cary & Co. that his tobacco was being sold for less than his neigh-
bors’. The response usually contained a sharp demand that Wash-
ington pay down his debt. An accounting from Cary in 1763 was
116 Patrick J. BUCHANAN
“transmitted ... with the additional aggravation of a hint at the
largeness” of what was owed.’ “I shall endeavor to discharge it as fast
as I can conveniently,” the humiliated veteran of Fort Necessity and
Fort Duquesne wrote back.*
Cary, however, had little to complain of. It was making a
double profit: one from selling Washington’s tobacco, another from
acting as purchasing agent for Mount Vernon. Washington, who
could oversee neither transaction, was wholly dependent on
Cary to do him justice, as Cary collected interest on the mounting
debt.
In the mid-1760s an exasperated Washington stopped growing
tobacco for England and began to grow wheat for Americans. His
new business proved a startling success. In 1769 his wheat crop was
six times what it had been in 1764. He built a schooner and put more
seines into the Potomac, pulling out schools of shad and herring,
added to his number of weavers, and built a commercial mill that
European visitors marveled at for the quality of its flour. The Custis
plantation was thriving. Washington was showing his countrymen
the way to independence.
But there remained a grating dependency on English goods. When
the successful planter decided to purchase “a superfine blue broad-
3) cc
cloth coat with silver trimmings,” “a fine scarlet waistcoat full
laced,” and “one pair crimson velvet breeches,” they could be
bought only in England. Washington sent his measurements. What
came back fit so wretchedly that Washington asked in despair
whether the tailor could not have gone out into the streets of Lon-
don and gotten a six-foot man with long limbs, and measured him.’
A lover of military history, Washington ordered for his mantel-
piece busts of Alexander the Great, Julius Caesar, Charles XII of
Sweden, and the King of Prussia, “not to exceed 15 inches high,”
and smaller busts of the Duke of Marlborough and Prince Eugene.
Back came a bust of Aeneas carrying his father out of Troy, and oth-
ers of Bacchus and Flora.°
The final straw came with Washington’s proudest purchase.
The Great Betrayal ele
Wishing to present himself on Virginia’s roads as the success he had
become, he ordered a coach “in the newest taste . . . made of the best
seasoned wood ... by a celebrated workman.” The coach was to be
green, “unless any other color [is] more in vogue.” To hasten its ar-
rival, he sent cash. Cary shipped a “new handsome chariot made of
the best materials, handsomely carved.” Its interior was lined with
green morocco, trimmed with lace, and its windows sported ma-
hogany venetian blinds. It was magnificent.
As it came off the boat, the chariot gleamed, a vision of transatlantic el-
egance elevating provincial America. However, the English builder had
not bothered to use for export seasoned wood. Before the chariot had
been in use two months, some panels had slipped out of their mouldings
and others had split from end to end.
If only Washington had ordered his chariot from Philadelphia,
where an American maker would not have despised and cheated his
American market!’
This dependence on Britain galled other Americans of indepen-
dent spirit, too. Jefferson later wrote that English merchants con-
spired to get Americans into debt by initially paying good prices and
offering easy credit; then, when the planter was hooked, they cut his
prices. Virginia planters, said Jefferson, had become a “species of
property annexed to certain mercantile houses in London.”*® Wash-
ington and other Virginians such as Richard Henry Lee began to
look to manufacturing as the key to unlock the prison door of their
dependency. As historian John C. Miller writes:
Many Americans recognized that if the colonies were to wage success-
ful 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.”?
118 Patrick J. BUCHANAN
“Let us be ashamed to be dependent on other Countries for our
Manufactures,” exclaimed a New Yorker. “Let it be our glory to
make use only of such Articles as are manufactured in this Coun-
try.”'° These were brave sentiments; but such thinking came per-
ilously close to treason. For Washington and his rebellious friends
were tampering with the economic order of the empire.
Since Jamestown, the colonies had been ruled under the mercan-
tilist system; for a century, their commerce had been controlled by
the Acts of Trade and Navigation. Out of America came raw mate-
rials; back went the finished goods of British industry. Trade was
done in British ships. Colonial trade with the West Indies, France,
and Spain was strictly regulated. In 1766 the London Magazine
quoted a proud Englishman: “The American is apparelled from
head to foot in our manufactures . . . he scarcely drinks, sits, moves,
labours or recreates himself without contributing to the emolument
of the mother country.”'' Colonies were not even allowed to print
their own Bibles; they had to be imported from London, Dublin,
and Edinburgh, the centers of printing in the British Isles. Behind
the mercantilist system lay a conviction common to all British
statesmen:
The British Colonies are to be regarded in no other light, but as sub-
servient to the commerce of their mother country; the colonists are
merely factors for the purpose of trade, and in all considerations con-
cerning the Colonies, this must be always the leading idea.”
“THE SEEDS OF REBELLION
After victory in the Seven Years War delivered France’s North
American empire to the king, Britain bestrode “the narrow world
like a Colossus.” In the courts of Europe, British diplomats walked
ahead of the humiliated French, to whom all had deferred in the
time of the Sun King. And the English carried themselves so. Of his
contemporaries, Horace Walpole wrote that they were “born with
The Great Betrayal 119
Roman insolence” and acted with “more haughtiness than an Asiatic
monarch.” "
Not unreasonably, Britain decided that the cost of defending and
administering the vast North American empire should be shared by
the colonies. For Parliament was convinced that they benefited most
from the imperial ties, which was not as it was meant to be. Indeed,
an investigation by the Lords of the Treasury into why the Molasses
Act of 1733 had failed to raise the anticipated revenue had con-
cluded, on October 4, 1763:
We observe with concern that through neglect, connivance, and fraud,
not only the revenue is impaired, but the commerce of the colonies is
diverted from its natural course and the salutary provisions of many
wise laws to secure it to the mother country are in great measure de-
feated."
The colonies, their lordships concluded, were swindling the
mother country! Parliament’s response: the American Revenue Act
of 1764, known as the Sugar Act, which put duties on molasses,
sugar, wine, silk, and linen and required the colonies to buy rum
from Great Britain. (Rum, John Adams would write, “was an essen-
tial ingredient in American independence.”)" The Sugar Act was the
work of one Charles Jenkinson, whose intent went far beyond rais-
ing revenue.
The increase in our Colonies is certainly what we wish, but they must
increase in a manner as will keep them useful to the Mother Country.
... With this view all the provisions of [the act] are formed, and as far
as it is necessary for this purpose to restrain the commerce of our
Colonies, it is an evil to which I think they ought to submit for the good
of the whole.”
The Sugar Act was followed by the Currency Act, denying the
colonies the right to issue paper money, and the Stamp Act of 1765,
requiring stamps on all newspapers, pamphlets, legal papers, bills
of lading, mortgages, skins, parchments, college diplomas, alma-
120 Patrick J. BUCHANAN
nacs, calendars, playing cards, tavern licenses, and advertisements.
Lawyers, printers, editors, merchants, and clergymen were hardest
hit. New York Governor Cadwallader Colden thought this tax a
grave mistake. “Associations of lawyers are the most dangerous of
any next to the military,” the governor warned." He was right.
Parliament had misjudged the mood in the colonies; the Stamp
Act caused an uproar. “Taxation without representation is tyranny!”
went the cry through Colonial taverns and towns. A Boston mob
sacked the home of Lieutenant Governor Thomas Hutchinson and
scattered manuscripts and books on American history that he had
been collecting for thirty years. Colonial pacts were formed to cut
back on purchasing British goods. Orders were canceled. British
ports gradually shut down; the unemployed walked the streets.
British merchants began to call for a repeal. In March of 1766 the
House of Commons, following the wish of Prime Minister William
Pitt (‘America must be embraced with the arms of affection”) and
the will of George III, repealed the Stamp Act.
Celebrations broke out. Pitt and the king were heroes. In New
York’s Battery Park, statues were erected to both. Americans felt that
they had powerful friends in the government, men like Pitt, the
Great Commoner, soon to be Earl of Chatham. They were right —
up to a point. On “No taxation without representation!” Pitt stood
with the Americans: “We may bind their trade, confine their manu-
factures, and exercise every power whatsoever, except that of taking
their money out of their pockets without their consent,” he declared
in the House of Commons.” But on where manufacturing must be
done, Pitt stood behind the mercantilist system. “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.””°
Little noticed on the day the Stamp Act was repealed was that
Parliament, enraged by the colonists’ assertion that they could not
be taxed without their consent, passed the Declaratory Act, which
stated, in explicit terms, that the colonies were
subordinate unto, and dependent upon the imperial crown . . . of Great
Britain; and that the King’s majesty . . . in parliament assembled, had,
The Great Betrayal 121
hath, and of right ought to have, full power and authority to make laws
and statutes . . . to bind the colonies and people of America. .. in all
cases whatsoever.”!
Here were sown the seeds of rebellion.
“THE Worst Man Taart Lives”
In 1767 Charles ‘Townshend was Chancellor of the Exchequer.
Though detested by the king, he had been brought into the cabinet
by Pitt. “Mr. Charles “lownshend’s conduct,” wrote George III, “is
what I should not have thought any other man capable of, but him-
self very much so, for I look on him as the worst man that lives. . . .
I would as soon employ a common thief.” ”
‘Taunted that he would never dare tax the Americans, Townshend
declared, “I will, I will!”*? He decided to make up for a shortfall in
revenue by imposing new duties on America’s imported glass, paint,
lead, paper, and tea. On June 15, 1767, the Townshend Acts passed.
Americans responded with calls not to import any of the goods cov-
ered by the new duties. Parliament retaliated by extending the Trea-
son Act of Henry VIII to North America — any man charged would
be returned to England for trial — and voted to send two regiments
to Boston. In the capital of the greatest empire on earth, exaspera-
tion with its obstreperous colonies was rising. Asked his thoughts on
the cousins across the sea, Samuel Johnson responded, “Sir, they are
a race of convicts, and ought to be thankful for anything we allow
them short of hanging.” **
The Townshend Acts contradicted Pitt’s policy of not directly
taxing the Americans without their consent. Why had Pitt failed to
stop them? Because Pitt was gone. On taking power in 1766, he had
come down with the gout; worse, the Earl of Chatham, the one
statesman who might have averted the American Revolution, was
going insane. Now, with the work done for which his name would
122 Patrick J. BUCHANAN
be remembered, Townshend passed from this earthly scene at the
age of forty-two. “Our comet is set,” wrote Walpole:
All those parts and fire are extinguished; those volatile salts are evapo-
rated; that first eloquence of the world is dumb! That duplicity is fixed,
that cowardice terminated heroically. He joked on death as naturally as
he used to do on the living.”
Townshend had struck the spark that ignited the revolution that
changed the world. Ironically, when imposing those duties, he had
as tutor to his stepson a Scottish moral philosopher who, said a bi-
ographer, “fed Charles Townshend with the material for his luckless
budget of 1767.”
The tutor’s name was Adam Smith.
“SUBMIT OR L[RIUMPH”
When the British regiments landed, Bostonians refused to quarter
the “lobsterbacks.” On March 5, 1770, following a snowball fight, a
mob attacked the troops and badly beat a soldier with sticks and
stones. He was rescued by a platoon, one of whom opened frre, trig-
gering a volley that killed five Americans. The Boston Massacre had
been witnessed by John Adams, who believed the assault had been
provoked, and who bravely undertook the legal defense of the
British soldiers.
Meanwhile, America’s “nonimportation” decisions were destroy-
ing Britain’s colonial trade. Only a fraction of anticipated revenue
was being realized. In April of 1770, Lord North had the acts re-
pealed, except for the duty on tea. George III was determined to im-
press on the colonies that they were subject to all laws of Parliament
and crown: “I am clear that there must always be one tax to keep the
right, and as such I approve the Tea Duty.” *
Their victory sealed, the colonists split into two camps. Most
Americans wanted to end the nonimportation agreements. They
The Great Betrayal 123
were not rebels; they did not seek a conflict with the king and feared
that radicals like the Sons of Liberty and Sam Adams, “the orches-
tra leader of revolution,” wanted to get on with the confrontation.”
Parliament soon played directly into the hands of Sam Adams. To
save the failing British East India Company, it passed the Tea Act,
giving the company a monopoly on the sale of tea to the colonies,
cutting out our honest American merchants and smugglers alike.
The enraged colonists retaliated by refusing to allow the tea to be
off-loaded in American ports.
On December 16, 1773, 150 men dressed as Mohawks boarded
three British ships in Boston Harbor and, as thousands watched,
dumped the cargo of tea overboard. John Adams instantly recog-
nized the importance of the act of defiance: “This Destruction of the
Tea is so bold, so daring, so firm, intrepid & inflexible, and it must
have so important Consequences, and so lasting, that I cannot but
consider it as an epocha in History.”
For once, George II agreed. When word reached England of the
Boston ‘Tea Party, he wrote to Lord North: “The dye is now cast... .
The Colonies must either submit or triumph.””
Parliament’s answer: the Intolerable Acts, as they were called in
the colonies. The port of Boston was closed until full restitution was
made. Massachusetts was stripped of the right to elect its leaders.
General Thomas Gage was made governor to put the rebels in their
place, and more regiments were sent to Boston. Parliament was
rapidly turning Loyalists into rebels. Gage discovered that the
colonists were uniting behind the Bostonians. On May 27, 1774, at
the Raleigh ‘Tavern in Williamsburg, the Virginia Assembly called
for a Colonial congress, which met in September in Philadelphia.
Patrick Henry roused the delegates by declaring, “The distinctions
between Virginians, Pennsylvanians, New Yorkers, New Englanders
are no more. I am not a Virginian, but an American.” ”
Parliament met the colonial defiance by augmenting Gage’s force
to ten thousand troops and imposing the Restraining Acts, which re-
stricted America’s trade to only Britain, Ireland, and the British
West Indies and forbade the colonies from trading with one another.
The crisis was out of control. On March 22, 1775, Edmund Burke
124 Patrick J. BUCHANAN
rose in Parliament to decry the folly of Lord North and plead that
the colonists be accorded all the rights of Englishmen. He was too
late. On April 18, 1775, Gage ordered eight hundred men ona night
march eighteen miles to Concord to destroy the munitions that his
spies had told him were there. Alerted by William Dawes, seventy
Minutemen were waiting at Lexington under Captain John Parker.
So began the Revolution. Men who had counted themselves loyal
British subjects began taking up arms against a “tyrant” they had
toasted seven years before. And nothing did more to ignite the re-
bellion than the cloying British control of America’s internal com-
merce, constant British interference with American trade, and the
mother country’s insistence that her colonies existed for her benefit
and were subject to her maternal dictation.
The war that began with the “shot heard round the world” thus
was fought for economic freedom as well as for political indepen-
dence. And the lessons of those years were burned into the minds of
the patriot fathers: the empire had used its control of manufacturing
to keep the colonies in submission. As we could not rely on British
goodwill for our liberty, so too could we never again rely on British
trade for our prosperity or on British industry for the needs of na-
tionhood. The umbilical cord to the mother country had to be cut.
WASHINGTON’S GRAND STRATEGY
When Washington came home from Yorktown, he was more than a
Virginian; he was an American who had turned his back forever on
Europe. Never again could the liberated colonies rely on British
goods carried in British ships. Never again could king and Parlia-
ment hold the power to strangle America with customs duties, em-
bargoes, or blockades. Washington intended to replace bonds of
trade across the ocean with bonds of commerce over the Alleghenies
into the West.
Unlike most of his great American contemporaries, Washington
was a man of the West. “No other President... before Andrew
The Great Betrayal eS
Jackson was so largely a product of the west and the frontier. ...
Washington had served in the wilderness as a surveyor, a messenger
traversing unknown trails, an explorer, and an Indian fighter.”
Washington saw America’s future in the West. But looking west, he
saw America’s expansion blocked. There were no roads for Western
farmers and frontiersmen to transport their goods over the moun-
tains; they had to move them by water. But Spain controlled the
Mississippi, outlet to the sea for Kentucky, Tennessee, western Vir-
ginia, and western Pennsylvania; and Spain had closed New Orleans
to American commerce. Jo the northwest Britain had refused to
honor the terms of the peace and would not surrender the forts con-
trolling the Great Lakes. Britain had also closed the outlet to the At-
lantic through the Saint Lawrence.
The crisis, Washington believed, would be grave if either European na-
tion, “instead of throwing stumbling blocks in their [the western set-
tlers’] way as they now do, should hold out lures for their trade and
alliance.” Then the new west, far from strengthening the American
Utopia, might become a very dangerous neighbor.”
“The Western settlers . . . stand as it were as upon a pivot; the
touch of a feather would turn them any way,” Washington con-
cluded after a trip over the mountains.” Rather than challenge Span-
ish power, he wanted to win the West by the art of peace, “clearing
rivers, building bridges, and establishing conveniences for travel-
ing,” ** to tie the West to the coast with bonds of commerce, before
Britain or Spain awoke to its opportunity.
Washington came up with a stupendous idea. Having crossed the
Blue Ridge and the Alleghenies many times, he knew that the head-
waters of the Potomac were close to the rivers that flowed into the
Ohio. He wanted to join these rivers with a canal so goods from the
Northwest could be floated down the Potomac to Alexandria and
then put onto ocean-going ships. The hometown he had laid out as
a surveyor would become America’s greatest port. Washington was
passionate on the subject. Visitors who came to Mount Vernon to
dine on stories of Trenton and Yorktown came away saying that all
126 Patrick J. BUCHANAN
the general talked about was his Potomac Canal. At his table, the
spirits flowed freely and the great man was seen to rise many times,
glass in hand, to toast loudly, “Success to the navigation of the Po-
imach”
BRITAIN DECLARES A [RADE WAR
As the western crisis preoccupied Washington, another was brewing
overseas from a familiar source. While the son of William Pitt had
urged reconciliation, Lord Sheffield pressed Britain to retake con-
trol of trade with the former colonies, without the burden of ruling
them. In his Observations on the Commerce of the American States,
Sheffield argued that
Parliament should endeavor to divert the whole Anglo-American trade
to British bottoms. America cannot retaliate. It will not be an easy mat-
ter to bring the American States to act as a nation. They are not to be
feared as such by us. . .. We might as reasonably dread the effects of a
combination among the German as among the American States.”
Sheffield prevailed. By a series of Orders in Council in 1783,
American ships were excluded from ports in Canada and the West
Indies and were to be treated in British ports like the ships of a Eu-
ropean power. His purpose, said Sheffield, was the “strangling in the
birth” of American shipping. Americans, however, were already
doing that to one another.
CHAOS IN COMMERCE
Since Yorktown, the former colonies had been governed under the
Articles of Confederation and Perpetual Union. All power over
trade was retained by the states. Memories of the Townshend Acts,
The Great Betrayal 7
the Tea Act, the Intolerable Acts, were too vivid for the states to re-
linquish control. The sole exception: Congress was charged with
“regulating the trade and managing all affairs with the Indians, not
members of the states.” But with their competing tariffs, trade re-
strictions, and transit fees for passage through their territories, the
states had created commercial anarchy.
Interstate brawls caused ... grave disquiet. .. . The New York Assem-
bly in 1787 increased customs duties on foreign merchandise and as-
sessed heavy entrance and clearance fees on all vessels coming from or
bound to New Jersey and Connecticut. New Jersey retaliated by taxing
the lighthouse on Sandy Hook. . . . Virginia and Maryland, long at log-
gerheads because Maryland’s charter gave her jurisdiction over the Po-
tomac up to the Virginia shore, managed to make a peaceable
settlement at a joint conference in Alexandria. Pennsylvania and
Delaware were also concerned because some of their commerce had to
pass through Virginia’s territorial waters.”
With the country drifting toward an internecine economic war,
American nationalists began to envision a unified economic and
trading system, with a strong central government to oversee it. The
Virginia assembly, “in a nationalist mood, invited all the states to
send delegates to a convention at Annapolis, ‘to take into consider-
ation the trade of the United States.’ ”** The Annapolis Convention
of 1786 would be the forerunner to the Philadelphia convention of
1797.
When he traveled to Philadelphia to take up the presidency of the
Federal Constitutional Convention, Washington was firmly in the
nationalist camp. His allies were the brilliant young man he had
come to look upon almost as a son, Alexander Hamilton, and the fel-
low Virginian who would author the Constitution, James Madison.
But not all the Founding Fathers shared the nationalism of Hamil-
ton and his patron. Benjamin Franklin and Thomas Jefferson were
free traders. Commerce, said Dr. Franklin, should be “as free be-
128 Patrick J. BUCHANAN
tween all the Nations of the World, as it is between the several
Countys of England. . . . No Nation was ever ruined by Trade.” ”
Jefferson’s views at the time, however, were of little help in de-
vising a policy to deal with the crippling chaos in America’s domes-
tic commerce and foreign trade. In 1785, he had written that
were I to indulge in my own theory, I should wish them [the Americans]
to practice neither commerce nor navigation, but to stand, with respect
to Europe precisely on the footing of China. We should thus avoid wars,
and all our citizens would be husbandmen.”
Repelled by the idea of America becoming a manufacturing na-
tion, Jefferson believed farming, husbandry, and planting superior to
all other ways of life. In a celebrated passage he had declared:
Those who labor in the earth are the chosen people of God, if ever he
had a chosen people, whose breasts he has made his peculiar deposit for
substantial and genuine virtue. It is the focus in which he keeps alive
that sacred fire, which otherwise might escape from the face of the
earth. Corruption of morals in the mass of cultivators is a phaenomenon
of which no age nor nation has furnished an example. ... While we
have land to labour then, let us never wish to see our citizens occupied
at a workbench, or twirling a distaff.... For the general operations of
manufacture, let our work-shops remain in Europe. ... The mobs of
great cities add just so much to the support of pure government, as sores
do to the strength of the human body.*'
Only it was not Thomas Jefferson who was “laboring in the
earth” of Virginia; it was the men and women whose ancestors had
been brought over from Africa.
The Great Betrayal 129
CONGRESS WINS CONTROL OF [RADE
As the delegates had been sent to Philadelphia to rewrite the Arti-
cles of Confederation, not to write a new constitution, what hap-
pened has been described as a coup d’état. Only the towering
prestige of Franklin and Washington enabled the conspirators to
succeed.
When the great work was done and the Constitution was sent to
the states for ratification, all power to regulate trade had been
stripped from the states and given to Congress — an extraordinary
transfer of power when one reflects that the Revolution, still fresh in
the mind of every patriot, had been ignited by British interference
with America’s trade. With just two sentences, the Founding Fathers
had created something new in history, the world’s largest free-
trade zone, a common market of hundreds of thousands of square
miles — for the benefit of Americans alone:
No Tax or Duty shall be laid on Articles exported from any State.
No State shall, without the Consent of the EES, lay any Im-
posts or Duties on Imports or Exports.”
Mandating that Congress “shall regulate” foreign trade, the
framers imposed the national obligation to protect this internal free
market from predators; it was to be the privileged sanctuary of the
American people. At Philadelphia, however, the states paid a historic
price. As Washington wrote in his letter of transmittal to the Con-
gress:
It is obviously impracticable in the federal government of these states,
to secure all rights of independent sovereignty to each, and yet provide
for the interest and safety of all: Individuals entering into society, must
give up a share of liberty to preserve the rest.”
130 PATRICK J. BUCHANAN
SLAVERY — AND FREE [TRADE
There is another reason why Washington shared Hamilton’s na-
tionalist vision: slavery. Hamilton was an outspoken foe of slavery,
and Washington detested it, though he was a slave owner himself.
All his life his conscience troubled him, and he sought ways to im-
prove the lives of those in his custody. On taking command of the
revolutionary forces, he was astonished to find free blacks in the
New England army and soon ordered Rhode Island forces desegre-
gated. Anticipating Confederate generals like Patrick Cleburne,
Washington “reached the point of urging that, even in the Deep
South, slaves be enlisted with the promise of freedom at the war’s
end.”* Alone among Virginia’s Founding Fathers, he decreed that
on his and Martha’s death, his slaves be set free.
Washington also knew that the agrarian republic of Jefferson’s vi-
sion depended on slavery. Were slavery abolished, who would tll the
fields of Jefferson’s Arcadia? But the system forming in the mind of
Hamilton had no need for slaves. Hamilton envisioned an America
that was not only an agrarian country but was also a mighty indus-
trial nation that could stand alone in the world.
Washington’s repugnance to slavery was a major reason for his backing
Hamilton’s financial planning against Jeffersonian attacks... . The
Hamiltonian system had no need for slavery. Washington felt that it was
the Virginia institution that would have in the end 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.” *
Washington and Hamilton, both soldiers, understood that to de-
fend America’s independence, we would have need of those “work-
shops” that Jefferson abhorred. How else could America guarantee
The Great Betrayal 131
the necessities of nationhood? Where else would the republic ac-
quire the ships and guns to hold off the predator empires of Europe?
Hamilton knew that disunity and weakness in the face of a Great
Britain determined to reimpose its will had almost brought us to
ruin. Having won its liberty dearly, America needed the means to
defend itself in a world where empires looked with jealousy and ha-
tred on the infant republic. To Hamilton, that meant a strong cen-
tral government and a manufacturing base capable of sustaining the
nation and supporting the army and navy needed to secure Ameri-
can independence in a hostile world.
TOWARD NATIONAL SELF-SUFFICIENCY
The first American nationalists had triumphed in Philadelphia.
After the necessary states ratified the Constitution, Washington
rode to New York to become president. Hamilton was sworn in as
secretary of the treasury. And Madison, Speaker of the House, began
to shepherd through the new Congress its first a apne the Tar-
iff Act of 1789. Said the Speaker:
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 oppres-
sive 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.*
On the thirteenth anniversary of the Declaration of Indepen-
dence, the Tariff Act of 1789 became the second bill signed by
Washington. Its stated purpose: “the encouragement and protection
of manufactures.” This was America’s declaration of economic in-
dependence. Most imported goods were subject to a 5 percent ad
valorem duty, i.e., they were taxed at 5 percent of their value. Some
imported items carried specific taxes, like wine, ten cents a gallon,
and boots, fifty cents a pair.”
| 32 Patrick J. BUCHANAN
“A free people . . . should promote such manufactories as tend to
render them independent on others for essential, particularly mili-
tary supplies,” Washington declared in his first address to Con-
gress.”
Two weeks after Washington signed the Tariff Act, Congress
enacted the ‘Tonnage Act, taxing all foreign shipping. The U.S.
merchant marine was born. So, the nation’s course was set for six
generations.
Under mercantilism, the colonies had been subservient to the
mother country. Under the American system, territories over the
mountains were to be brought into the Union “on an equal footing
with the original states” as soon as their populations justified doing
so. Under mercantilism, the mother country had kept her colonies
dependent upon her for manufactured goods. Under the American
system, the states were to grow to depend on one another. Under
mercantilism, the mother country had imposed duties on America’s
imports and taken the money back to England. Under the American
system, the United States imposed tariffs on British imports, and
American capital remained here, to develop the United States.
ARCHITECT OF THE NaTION
A teenager when the Revolution broke out, Alexander Hamilton had
risen to become aide-de-camp to Washington, a general, and an au-
thor of the Federalist Papers. When Robert Morris, the “financier of
the Revolution,” declined Washington’s offer to become secretary of
the treasury, he recommended Hamilton. It was a providential pro-
posal.
Born to an unknown father and an immigrant with no ties to any
one state, this veteran of Valley Forge and Yorktown was a born na-
tionalist. Envied for his brilliance, disliked for his brashness, dispar-
aged for his origins (Adams called him the “bastard brat of a Scotch
pedlar”), Hamilton gave his love, loyalty, and eventually his life to
his country.”
The Great Betrayal 133
On December 5, 1791, Treasury Secretary Hamilton delivered
his famous Report on Manufactures. The goal of U.S. trade policy was
national self-sufficiency. America had to stand on its own. Calling
for subsidies to build a web of turnpikes, roads, and canals and for
tariffs to shelter the home market, Hamilton’s report would become
our blueprint of economic independence. In it he spoke of those ne-
cessities of nationhood for which Americans could not depend on
foreign trade:
The wealth . . . independence and security of a Country, appear to be
materially connected with the prosperity of manufactures. Every nation
... ought to endeavour to possess within itself all the essentials of na-
tional supply. These comprise the means of Subsistence habitation cloth-
ing and defence.”
Of that report, future senator Arthur Vandenberg would write in
his 1921 tribute, The Greatest American, that it “remains to this day
the most lucid and convincing and complete defense of a protective
tariff system which has ever been given to the American people.” *!
This was the Washington-Hamilton plan to “create a more per-
fect union”: tie the seacoast to the West with bonds of commerce.
Use tariffs to favor U.S. manufacturers and raise the revenue to pay
off the war debt. Establish public credit. Institute a policy of “inter-
nal improvements” — roads, canals, bridges, turnpikes — to bind
the states together into a nation.
Protectionism, then, is not some alien dogma. It is America’s own
invention, the defense perimeter of the world’s greatest free-trade
zone, an integral element of the American free-market system, and
an indispensable contributor to national prosperity. Protectionism
was MADE IN THE USA. As we shall see, it is free trade that is the for-
eign import.
134 PATRICK J. BUCHANAN
“Too Lonc SUBJECT TO BritisH PREJUDICE”
On April 30, 1789, John Adams escorted Washington out onto the
second-story portico of Federal Hall at Broad and Wall Streets in
New York. A thunderous roar rose from a crowd that stretched up
both avenues as far as the eye could see. “Never has [a] sovereign
reigned more completely in the hearts of his subjects than did Wash-
ington in those of his fellow-citizens,” the French minister mar-
veled. “He has the soul, look and figure of a hero united in him.” ”
Washington put his right hand on the chest of his brown broad-
cloth suit and bowed. A moment later, he put the same hand on a
leather-bound Bible and took the oath as president of the United
States. At the crowning moment of American independence,
George Washington finally had a suit that fit! It had been tailored at
Mount Vernon of cloth that Washington had taken special care to
order from a mill in Hartford. “This apparel,” writes Douglas
Southall Freeman, “was to advertise American industry; it was, also,
in a homely way to proclaim American liberty since the device on
the buttons was that of a wing-spread eagle.” In January of 1789
Washington had written to Lafayette:
I have been writing to our friend Genl. Knox this day, to procure me
homespun broad cloth, of the Hartford fabric, to make a suit of cloaths
for myself. I hope it will not be a great while, before it will be unfash-
ionable for a gentleman to appear in any other dress. Indeed we have al-
ready been too long subject to British prejudices. I use no porter or
cheese in my family, but such as is made in America.”
In seeking timely delivery of the cloth, one of the commissaries
of Washington’s army, Colonel Jeremiah Wadsworth, wrote that it
was being purchased in the “hope it will be worn by one whose ex-
ample will be worth more than any other encouragement that can be
given to our infant Manufactures.” * Washington would set the style
and fashion for all Americans, that of buying American. It was what
the old hero had in mind.
The Great Betrayal 135
The gesture succeeded splendidly. The following morning the
New York Journal reported: “The President . . . appeared dressed in
a complete suit of homespun clothes, but the cloth was of so fine a
fabric and so handsomely finished that it was universally mistaken
for a foreign manufactured cloth.” The Dutch representative
wrote his government: “His Excellency was dressed in plain brown
cloths which had been presented to him by the mill at Hartford,
Connecticut.”*” On the day he became the first president of the
United States, Washington was showing his fellow Americans how
to put America first.
Chapter 8
JEFFERSON TO JACKSON
Our commerce on the ocean . . . must be paid
for by frequent war:'
— Thomas Jefferson
LETTER To JOHN Jay, 1785
Protection . . . of our own labor against the
cheaper, ill-paid, half-fed, and pauper labor
of Europe, is, in my opinion, a duty which
the country owes to its own citizens.’
— Daniel Webster
kaa by the success of the Tariff Act of 1789, Washington
and Hamilton raised tariffs again in 1790. Revenue poured in. The
war debt was being discharged, the credit of the republic was getting
established. America had begun her long drive to self-sufficiency. By
1803, when Napoleon offered to sell Louisiana for $15 million,
President Jefferson had $5 million in the Treasury left over from the
$12.4 million in tariff revenue of the previous year. He seized the
offer. That Bonaparte had no right to sell Louisiana, and Jefferson
no authority to buy it, seemed not to matter to either. Said
Napoleon, This accession of territory affirms forever the power of
the United States; I have given England a rival that “sooner or later
will humble her pride.” ? Two weeks after closing the sale, Napoleon
launched a war against England that would last until the eagle was
chained to the rock of Saint Helena in the Atlantic.
{N
The Great Betrayal 137
JEFFERSON'S UNILATERAL DISARMAMENT
During the Napoleonic Wars, the United States’ problem was a fa-
miliar one to twentieth-century Americans. The nation had de-
clared its neutrality but did not maintain the naval power to
guarantee its neutral rights. Despite the splendid showing of Amer-
ican warships in the Revolution, the “pure Republicans” of Jeffer-
son’s party, such as John Randolph, believed a navy to be the natural
enemy of liberty; Jefferson himself believed in a policy not far dis-
tant from unilateral disarmament. On his taking office,
the army was reduced by a “chaste reformation,” as Jefferson called it,
from about 3500 to 2500 men. ... During the election and before, the
Republican [Jeffersonian] press had viciously attacked the navy as a sink
of waste and corruption, an English imitation, and the like. Jefferson,
who knew nothing about ships, shared these feelings to some extent. An
act of the last Federalist Congress allowed the President to reduce the
respectable navy that had been built up . . . to thirteen frigates; and Jef-
ferson not only did that, selling the rest of the navy for merchantmen,
but stopped all new construction, discharged all naval contractors, and
had a majority of the frigates that were retained hauled out to save the
expense of pay and rations. Naturally, they went to pieces; wooden ships
could not be “put up in mothballs” like modern steel warships.’
“I believe that gunboats are the only water defense which can be
useful to us,” Jefferson had written, “and protect us from the ruinous
folly of a navy.”* Federalists hooted at his naïveté and his lilliputian
fleet. In a world at war, the brilliant intellectual who was America’s
president had chosen to defend her peace and honor by leaving her
naked to attack while trading vigorously with both belligerents.
138 PATRICK J. BUCHANAN
“I Hap ONLy To Open My HAND”
With the U.S. Navy rotting in dry dock, American merchants began
shipping with abandon to England and to Bonaparte’s empire. The
British merchants whose markets we were merrily pirating were en-
raged. Even more so were British patriots whose countrymen were
dying. In England, Americans were looked on as the avaricious col-
laborators of a criminal regime.
Desperate for seamen to replace crews lost in battle or to deser-
tion, His Majesty’s navy began boarding U.S. merchant ships and
seizing “British subjects” for impressment into service. Eight to ten
thousand Americans were eventually kidnapped in this way. The Re-
public fumed, but the practice continued. On June 22, 1807, the
British went too far. The fifty-gun Leopard maneuvered alongside
the U.S. frigate Chesapeake off Hampton Roads, and its captain de-
manded to send a party aboard to search for British nationals. ‘The
American captain refused. Leopard opened fire, pouring broadside
after broadside into the unprepared Chesapeake, killing three Amer-
icans and wounding eighteen before the U.S. ship struck its colors.
The British boarded; four sailors were taken off. When the crippled,
battered frigate limped back into port, there was a clamor for war.’
“Never since the battle of Lexington,” Jefferson wrote, “have I seen
this country in such a state of exasperation as at present, and even
that did not produce such unanimity. I had only to open my hand
and let havoc loose.”’
Reluctant to go to war against the world’s mightiest naval power,
Jefferson persuaded Congress to pass the Embargo Act of 1807. No
U.S. ship could carry cargo to Europe. To punish Britain and
France, America had declared a blockade on herself. Jefferson called
his policy “peaceable coercion”; as he explained in a letter to George
Logan,
our commerce is so valuable to them that they will be glad to purchase
it when the only price we ask is to do us justice. I believe we have in our
The Great Betrayal 139
own hands the means of peaceable coercion; and that the moment they
see our government so united as that they can make use of it, they will
for their own interest be disposed to do us justice.’
“Peaceable coercion” proved a colossal bust. The British contin-
ued to kidnap American sailors while the Embargo Act ravaged the
U.S. export trade, which fell from $48 million in 1807 to $9 million
in 1808. Tariff revenue fell by more than half.’ New England mer-
chants began talking secession, and smuggling from U.S. ports and
through Canada soared. So rampant was the defiance of Jefferson’s
embargo that
when Napoleon seized Spain, in 1808, and put his brother Joseph on its
throne, he also seized 250 American vessels and their cargoes in Span-
ish ports. When the U.S. ambassador demanded an explanation,
Napoleon calmly replied... that he was only helping to enforce the
Embargo Act."
Before he left office in 1809, Jefferson’s Embargo Act was re-
pealed and replaced by the Nonintercourse Act, which prohibited
U.S. ships from trade only with Britain and France. Jefferson’s em-
bargo, however, had produced an immensely beneficial result. It
drove capital out of shipping and into manufacturing, spurring U.S.
industrial development, especially in New England. Cut off from
Europe, Americans turned inward and began to use their native in-
genuity and natural resources. Unwittingly, Jefferson had taken
America far toward realizing the Washington-Hamilton vision of a
self-sufficient republic.
Under James Madison, U.S.-British relations worsened. The
British despised “Little Jemmy,” five feet two inches tall in his stock-
ing feet, and believed (with justification) that he had swindled their
Spanish ally out of West Florida. From Canada the British began to
arm the Indians committing atrocities against pioneers in the Ohio
Valley. American rage grew. With the arrival of the “coonskin Con-
gressmen” from the West in 1811 and the election of Henry Clay as
140 Patrick J. BUCHANAN
Speaker of the House, the “war hawks” got their wish. In June 1812
the United States declared war on Great Britain; a principal cause of
this war, too, had been interference with U.S. trade.
The War of 1812 was, as the Duke of Wellington said of Waterloo,
a “damn near-run thing” for the United States. Royal warships
swept our commerce from the seas; a British army invaded Wash-
ington and burned the Capitol and White House. Parliament
planned to cut the United States in half at the Mississippi and effect
the secession of New England, a hotbed of antiwar and Federalist
sentiment. Napoleon’s sudden return from Elba, however, concen-
trated British minds wonderfully — and elsewhere — and elicited a
just peace to the United States. Then Andrew Jackson’s stunning
victory over a veteran British army at New Orleans restored Amer-
ican honor. As Bismarck would observe, Divine Providence seemed
to be looking out with special care for idiots, drunks, and the United
States of America.
THe FREE [TRADERS SEE THE LIGHT
These perilous years changed forever the minds of two presidents
about free trade. Jefferson had been a romantic. In 1774 he had
called “free trade with all parts of the world” a “natural right.” To
John Adams he had written, “I think all the world would gain by set-
ting commerce at perfect liberty.” '' Adams agreed. Even with America
under British blockade in 1777, he had written a friend: “I am
against all shackles upon Trade. Let the Spirit of the People have its
own way.” ”?
Neither Jefferson nor Adams believed this any longer. Depen-
dence on trade had left the nation dangerously vulnerable to great
naval powers and their blockades and had been high among the rea-
sons the United States was forced to fight. Adams and Jefferson, rev-
olutionaries in 1776, rivals a generation later, were now venerable
The Great Betrayal He
statesmen and wiser men. In an 1815 letter to French economist
Jean-Baptiste Say, Jefferson argued passionately for protectionism
— to guarantee America’s independence:
The prohibiting duties we lay on all articles of foreign manufacture
which prudence requires us to establish at home, with the patriotic de-
termination of every good citizen to use no foreign article which can be
made within ourselves, without regard to difference of price, secures us
against a relapse into foreign dependency.”
Now the echo of his old rival Hamilton, Jefferson was enraged by
those dredging up his thirty-year-old quotations. In a blazing Janu-
ary 9, 1816, letter to Benjamin Austin, Jefferson conceded that he
had once supported free trade. But “how are circumstances
changed!” Citing abuses by Britain and France, the Sage of Monti-
cello thundered:
1
He... who is now against domestic manufacture, must be for reducing
us either to dependence on that foreign nation, or to be clothed in skins,
and to live like wild beasts in dens and caverns. I am not one of these;
experience has now taught me that manufactures are now as necessary to our
independence as to our comfort; and if those who quote me as of a different
opinion, will keep pace with me in purchasing nothing foreign where an
equivalent of domestic fabric can be obtained, without regard to differ-
ence of price, it will not be our fault if we do not soon have a supply at
home equal to our demand, and wrest that weapon of distress from the
hand which has wielded it. (Emphasis added.)
When critics cited his former notions about an agrarian republic
that left manufacturing to Europe, Jefferson denounced them for
using his Notes on the State of Virginia “as a stalking horse, to cover
their disloyal propensities to keep us in eternal vassalage to a foreign
and unfriendly people.” * He had come to believe that free trade and
a reliance on Europe for manufactured goods could no longer be
reconciled with American patriotism.
Thomas Jefferson had become an economic nationalist.
142 PATRICK J. BUCHANAN
THe TArirF Act oF 1816
With Europe embroiled in the Napoleonic Wars, America was free
to extend its reach across the mountains, to thicken the bonds of
unity, and to grow in industrial might. During Jefferson’s embargo
and Madison’s war, U.S. trade with Europe had shrunk to one-tenth
of what it had been in 1807. Forced to fall back on its own inge-
nuity, industry, and resources, America had become a self-reliant
nation."
Between 1809 and 1815, the number of cotton spindles in the
United States rose from 31,000 to 500,000. Production of woolen
goods rose from $4 million to $20 million. In 1807 four new facto-
ries were established in all of New York, New Jersey, and New En-
gland; in 1815, 128 were started.” The Embargo Act of 1807 and the
War of 1812 proved to be among the most fortuitous events in
American economic history.
To British manufacturers, however, a newly industrialized
America was a mortal threat. Not only did they face the perma-
nent loss of their American market, they would now have to com-
pete with U.S. goods in other markets. To crush the American chal-
lenge, British manufacturers, merchants, and politicians plotted
to flood America with goods and drown the infant industries. The
future Lord Brougham was quite candid about the ends of British
policy: |
It was well worth while to incur a loss upon the first exportation, in
order by the glut, to stifle in the cradle, those rising manufactures in the
United States, which the war had forced into existence, contrary to the
natural course of things."
The British, writes trade historian William J. Gill, “openly
dumped their goods on the American market at a loss in order to
capture our commerce, much as the Japanese, Koreans, and even the
Europeans and English are doing today.” ”
The Great Betrayal 143
Rabbeno in his America Commercial Policy wrote that “The English man-
ufacturers . . . rushed as if to the attack of a fortress.” And like the walls
of Jericho, and all the great ports of the United States in recent times,
the walls came tumbling down. Imports, valued at less than $13 million
in 1814, soared to $147 million two years later.”
John Adams was stunned by the activity in Boston Harbor. As he
lamented in an 1819 letter to William E. Richmond, he felt that the
Republic had failed to learn the lesson he himself had learned:
I am old enough to remember the war of 1745, and its end; the war of
1755, and its close; the war of 1775, and its termination; the war of
1812, and its pacification. Every one of these wars has been followed by
a general distress; embarrassment on commerce, destruction of manu-
factures, fall of the price of produce and of lands, similar to those we feel
at the present day, and all produced by the same causes. I have wondered
that so much experience has not taught us more caution. The British
merchants and manufacturers, immediately after the peace, disgorged
upon us all their stores of merchandise and manufactures, not only
without profit, but at certain loss for a time, with the express purpose of
annihilating all our manufacturers, and ruining all our manufactories.”
But Madison, who had also had a youthful flirtation with free
trade, knew how to deal with the British invasion. As Speaker of the
House, he had steered to passage the Tariff Act of 1789, and he had
seen how tariffs had started the Republic on the road to economic
independence. To halt British dumping, Madison adopted the Fed-
eralist policy of economic nationalism, with a 25 percent tariff on
cotton and woolen goods, and a 30 percent tariff on iron products.
The Tariff Act of 1816 was America’s first purely protectionist tar-
iff. Led by Henry Clay, the House voted to approve, 88-54. Ironi-
cally, “no man labored harder and did more effective service in
securing its passage” than the South Carolinian who had come to
Congress with Clay as a twenty-nine-year-old war hawk, John C.
Calhoun. Our liberty and the union, declared Calhoun, depend on
144 Patrick J. BUCHANAN
the principle of protectionism. “Neither agriculture, manufactures,
nor commerce, taken separately, is the cause of wealth; it flows from
the three combined and cannot exist without each.”” Under Cal-
houn’s leadership, the South provided twenty-three “yes” votes for
the Tariff of 1816.
This final act of statesmanship by the father of the U.S. Consti-
tution stopped the British invasion cold. How effective was Madi-
son’s Tariff of 1816? How beneficial was it for America to be cut off
from Europe by Jefferson’s embargo and Madison’s war? Consider
how the production of cotton cloth grew and contracted in those
crucial years:
YEAR YARDS OF CLOTH PRODUCED
(IN THOUSANDS)
1805 46
1807 84
1810 648
1815 2,358
1816 840
1820 13,874
1830 141,616
1840 323,000
1860 857,225
Production rose almost 800 percent in the three years after the
Embargo Act of 1807 and nearly quadrupled again in the next five.
But note how Great Britain almost killed the U.S. industry after
peace was signed in December of 1814, by flooding the American
market. The need for, and effect of, Madison’s tariff is seen here dra-
matically. American production — cut two-thirds by British dump-
ing in 1816 — grew an astonishing 1,650 percent within four years
of Madison’s tariff becoming law.”
Clay and Calhoun were now the powers on Capitol Hill; and they
labored together with a common vision. As historians Samuel Eliot
Morison and Henry Steele Commager write:
The Great Betrayal 145
Henry Clay and John C. Calhoun were the nationalist leaders in Con-
gress at this period. Both feared the growing particularism of the sec-
tions. Like Hamilton, they could imagine no stronger binding force
than self-interest; and their policy was but a broader version of his re-
ports on public credit and manufactures. Their formula, which Clay
b)
christened the “American System,” was protection and internal im-
provements: a protective tariff for the manufacturers, a home market
and better transportation for the farmers. “We are greatly and
rapidly — I was about to say fearfully — growing,” said Calhoun in
1817. “This is our pride and our danger; our weakness and our strength.
... Let us, then, bind the Republic together with a perfect system of
roads and canals.” Protection “would make the parts adhere more
closely. . . . It would form a new and most powerful cement.” **
But the congressional giants now had a new rival. The hero of
New Orleans had come to understand that the preservation of
liberty required more than brave soldiers and brilliant captains.
Urging a protective tariff to secure the nation’s defense and inde-
pendence, Andrew Jackson declared that
the experience of the late war ought to teach us a lesson; and one never
to be forgotten. If our liberty and republican form of government, pro-
cured for us by our revolutionary fathers, are worth the blood and trea-
sure at which they were obtained, it surely is our duty to protect and
defend them.”
THe SOUTH DRIFTS APART
The “Era of Good Feelings” did not survive the presidency of James
Monroe. By 1824 the tariff question was back and boiling, no longer
the common ground it had been in 1816 but a cause of deepening
sectional conflict that would push the nation as close to breakup as
it would come before 1860. Clay, now America’s champion of eco-
nomic nationalism, declared:
146 PATRICK J. BUCHANAN
Poverty befalls any nation that neglects and abandons the care of its
own industry, leaving it exposed to the action of foreign powers — there
is a remedy and that consists in — adopting a Genuine American Sys-
tem accomplished by the establishment of a tariff — with the view of
promoting American industry — the cause is the cause of the country,
and it must and it will prevail.’
By now, however, the South had concluded that Clay’s “Genuine
American System” was the Genuine Northern System. Tariffs pro-
tected Northern manufacturers, who produced most of the nation’s
goods, and the U.S. government used the tariff revenue to build the
turnpikes and canals that carried Northern products south and west.
The South manufactured next to nothing. It grew cotton, tobacco,
and rice that were sold to Europe to buy British manufactures. Ris-
ing tariffs raised the price of those manufactures. The South had
begun to see itself in relation to the North as the colonies had in re-
lation to Great Britain, as dependencies whose interests were ig-
nored at the seat of power. Historian Burton J. Hendrick writes that
the truth is that the South was still economically part of the British em-
pire, not of the United States. The way in which the North was using
its power to pass tariff acts that forced Southern planters to purchase
manufactures from the Yankees, to whom they sold practically nothing,
instead of acquiring goods at much lower prices from the English, to
whom they sold the whole output of their plantations, seemed to South-
erners little less than tyranny.”
Calhoun had by now departed the nationalist camp. Historians
disagree as to when he left. He had once been a fervent nationalist,
describing the War of 1812 as a “second war for independence” and
“disunion” as a “new and terrible danger [that] . . . comprehends al-
most the sum of our political dangers.””* Hamilton’s son James
quotes Calhoun as confiding the following to him as late as 1824:
Sir, I have a clear conviction, after much reflection and an entire knowl-
edge and familiarity with the history of our country and the working of
The Great Betrayal 147
our government, that his [Hamilton’s] policy as developed by the mea-
sures of Washington’s administration, is the only true policy for the
country.”
But Calhoun’s public stand had radically changed. Clay might yet
speak of a high tariff as the “cause of the country [that] . . . must and
shall prevail”; Calhoun spoke now for the South. Detractors con-
tend that with the rise of Jackson, Calhoun knew that his presiden-
tial ambitions were dead and turned his bitterness and frustration on
America, “seeking to rend limb by limb the Union which had denied
him its greatest honor.” *°
This is too partisan and savage. Southern grievances over the tar-
iff were valid, and Calhoun had a duty to speak for his people. The
tragedy of these years was that men ceased to see themselves as
Americans and more and more saw themselves as belonging to dis-
tinct and separate civilizations. Not unlike our own time, beneath a
superficial prosperity, bonds of nationhood and brotherhood were
disintegrating.
Many Southerners also remained faithful to the agrarian tradi-
tion of the young Jefferson. They recoiled at industrializing Amer-
ica. Echoing poet William Blake (“And was Jerusalem builded here
/ Among those dark satanic mills?”), John Randolph pronounced
manufacturing an unfit calling for America, suited only for such as
the British Isles:
It is in such a climate only that the human animal can bear, without ex-
tirpation, the corrupted air, the noisome exhalations, the incessant labor
of these accursed manufactories. Yes, sir, accursed, for I say it is an ac-
cursed thing. We should have the yellow fever from June to January, and
January to June. The climate of this country alone, were there no other
natural obstacles to it, says aloud — You shall not manufacture.”!
Randolph is the beau ideal of numerous conservatives. Yet, in his
rhetoric one hears echoes of environmentalism, even of the Green
Parties of Europe. His is one conservative tradition, but there was
another — to be found in the passionate patriotism of Andrew Jack-
148 PATRICK J. BUCHANAN
son, a nationalist who believed with Washington that the Republic’s
survival called for economic independence. And it was to Old Hick-
ory, now emerging as a candidate for president, that the nation was
listening, not to Randolph. Declared Jackson,
we have been too long subject to the policy of the British merchants.
We need to become more Americanized, and instead of feeding the pau-
pers and laborers of Europe . . . feed our own, or in a short time . . . we
shall all be rendered paupers ourselves. It is my opinion . . . that a care-
ful and judicious tariff is much wanted.”
The nationalists prevailed, and the tariff bill of 1824 became law.
In the bitterly contested election that year, Jackson won a plurality
of popular and electoral votes but was denied the presidency when
Henry Clay threw his support in the House to John Quincy Adams.
Jackson was again a candidate in 1828, and tariffs were again
about to be raised. Calhoun now made one of the great blunders of
a career that contained too many. He sought to make the new tariff
bill intolerable to Northern manufacturers by raising tariffs on their
raw materials, expecting them to reject the entire measure. The
Northerners swallowed it whole. “Its enemies spiced it with what-
ever they thought would render it distasteful,” said Daniel Webster,
“its friends took it, drugged as it was.” ”
The Tariff Act of 1828 covered 92 percent of U.S. imports, with
an average tariff of 62 percent! America had seen nothing like it. To
its enemies it was the “Tariff of Abominations.” To South Carolina
it was a declaration of economic war. Said one South Carolina pam-
phleteer, “It is ume to calculate the value of the Union.” *
NULLIFICATION
Though defeated, Calhoun was not finished. In an essay he secretly
penned in 1828, the “South Carolina Exposition,” he breathed new
life into an old doctrine, the doctrine of “nullification” — the asser-
The Great Betrayal 149
tion of a state’s right to declare null and void an act of Congress that
imperiled that state’s vital interests. Calhoun’s case was compelling.
The thirteen states, he wrote, not the people, ratified the Constitu-
tion, creating the United States. Can a creation be greater than its
creators? And if the states were sovereign in 1789, were they not
sovereign in 1828? Sovereign states have a moral right to reject acts
that threaten their survival!
In asserting a state’s right to nullify federal law, Calhoun had in-
voked the Kentucky and Virginia Resolves. And who were their au-
thors? None other than Thomas Jefferson and James Madison, who
had written them to challenge the alien and sedition laws that Fed-
eralist judges were using to lock up Jeffersonian journalists criti-
cal of President John Adams. Writes Madison biographer Robert
Ruthland:
For years Jefferson’s tracks were so well covered it was not public
knowledge that he goaded Madison into writing the Virginia Resolu-
tions of 1798 and wrote the Kentucky version himself. In these resolu-
tions, the two Republican chieftains convinced followers that an
unconstitutional law could be upset by the collective action of the states.
The notion that a state legislature could declare an act of Congress un-
constitutional was original but loaded with political gunpowder.”
It was this gunpowder that Calhoun was now packing into the
cannons of nullification in South Carolina.
Jeffersonians for years had been reading the resolves at rallies as
the “true principles of the Democratic Party.” Now they were being
deployed by Calhoun against a tariff that had to be collected by
President Andrew Jackson. Madison was furious to find himself
charged with paternity of this “preposterous and anarchical preten-
sion” for which “there is not a shadow of countenance in the Con-
stitution.” * But one historian would not let the Sage of Montpelier
off so easily: “The father of the Constitution was also one of the men
who sowed the seeds of secession and civil war.” ”
150 PATRICK J. BUCHANAN
“Our UNTON — Ir Must BE PRESERVE
Calhoun, however, counseled South Carolinians not to invoke nul-
lification except as a last resort. The state’s hopes for tariff relief
were high. Calhoun had just been elected vice president under Jack-
son, himself a native son.
But tariff reform did not come. Though Jackson hated Clay for
casting his lot with Adams in the election of 1824, he agreed with
Clay that a protective tariff was critical. “A careful Tariff is much
wanted to pay our national debt, and afford us the means of that de-
fense within ourselves on which the safety and liberty of the country
depend,” he had concluded, with the War of 1812 fresh in his
mind.** And so the issue simmered.
On April 13, 1830, at the annual dinner in celebration of the birth
of Jefferson, it came to a climax. Smoldering through dozens of
Southern toasts hailing the Kentucky and Virginia Resolves, equat-
ing nullification with Jeffersonian orthodoxy, the president rose,
fixed his glare directly on his vice president, raised his glass, and de-
clared, “Our Federal Union — it must be preserved!” ” Calhoun was
stunned. “His hand trembling so that a little of the yellow wine
trickled down the side of the tumbler,” Calhoun rose and drank.”
Minutes passed. Other toasts were made. Then Calhoun rose,
turned to the president, raised his glass, and declared, “The
Union — next to our liberty, the most dear!”*' The battle was
joined.
At this explosive moment Jackson was sent a letter concerning his
vice president. Calhoun had insisted that he was Jackson’s strongest
defender in the Cabinet in 1818, when others were demanding Jack-
son’s scalp, after Old Hickory had rampaged through Spanish East
Florida and executed two British agents, Alexander Arbuthnot and
Robert Ambrister. The letter alleged that Calhoun, as secretary of
war, had been Jackson’s secret enemy and had pushed for his arrest
and trial. Jackson was sickened by the letter: “It smelled so much of
The Great Betrayal 151
deception that my hair stood on end for an hour.” Jackson sent the
letter with a note to his vice president, demanding an explanation.
Calhoun’s answer failed to satisfy. “This is full evidence of the du-
plicity and insincerity of the man,” said Jackson.” Vice President
Calhoun now found himself with a mortal enemy in the president of
the United States.
So long as South Carolina did not act to nullify the tariff law, no ac-
tion was required of Jackson. Meanwhile, the Treasury was filling up
with customs duties, the national debt was being paid off, a surplus
was about to appear. Tariff opponents had a fresh argument: all this
revenue was not needed. But Clay’s 1832 tariff bill, while eliminat-
ing duties on goods and raw materials America did not produce, kept
tariffs high on imports that competed with U.S. manufactures.
In South Carolina patience ran out. On November 24, 1832, a
convention called by the state legislature passed the Ordinance of
Nullification, declaring the tariff laws of 1828 and 1832 to be “unau-
thorized by the Constitution .. . null, void, and no law, nor binding
upon this State, its officers, or citizens.” * The state ordered federal
agents to cease collecting customs duties after February 1. Should
the U.S. government use force, the convention declared, South Car-
olina would immediately secede. Calhoun rode north to resign the
vice presidency.
It was one of the most dramatic moments in American history.
Jackson answered South Carolina’s declaration with one of his
own:
I consider, then, the power to annul a law of the United States, assumed
by one State, incompatible with the existence of the Union, contra-
dicted expressly by the letter of the Constitution, unauthorized by its
spirit, inconsistent with every principle on which it was founded, and
destructive of the great object for which it was formed.“
Beware of your leaders! Jackson warned the South Carolinians:
“Their object is disunion; be not deceived by names. Disunion by
152 PATRICK J. BUCHANAN
armed force is Treason.”* A right to secede, said Jackson, did not
exist: “To say that any State may at pleasure secede from the Union
is to say that the United States is not a nation.”* Jackson made a
final appeal to the “fellow citizens of my native State” to cease their
acts of disunion, or face the “dreadful consequences.” ** On Christ-
mas Day, he wrote to (now) Vice President-elect Martin Van Buren
that he would issue a proclamation to capture the
leaders for rebellion and treason .. . regardless of the force that sur-
rounds them, deliver them into the hands of the judicial authority of the
United States and let it decide whether they have committed rebellion
or treason against the U. States.”
The president ordered Forts Moultrie and Sumter reinforced
and sent Coast Guard cutters south to collect the duties. South Car-
olina put out a call for volunteers.
Orp Hicxory [THREATENS A HANGING
Andrew Jackson was deadly serious. Earlier he had given a South
Carolina congressman a warning to take home: “Tell [the Nullifiers]
from me that they can talk and write resolutions and print threats to
their hearts’ content. But if one drop of blood be shed there in defi-
ance of the laws of the United States, I will hang the first man of
them I can get my hands on to the first tree I can find!” ® Missouri’s
Thomas Hart Benton overheard South Carolina’s Robert Hayne ex-
press doubt that the president would go that far. Senator Benton
pulled his old colleague aside, saying,
“Well, before he invaded Florida on his own hook, few people could
have believed that he would hang Arbuthnot and shoot Ambrister —
also on his own authority — could they? I tell you, Hayne, when
Jackson begins to talk about hanging, they can begin to look out for
ropes!*!
—*
The Great Betrayal 153
Benton knew his man. In Nashville years earlier, Old Hickory
had come after Benton with a horsewhip, shouting, “Now, defend
yourself, you damned rascal!” Benton’s brother had shot Jackson
twice, nearly killing him. Yet, within weeks Jackson was back leading
his troops in battle against marauding Creek Indians.”
At this moment of confrontation and deadlock, Clay, who would
come to be known as the Great Compromiser, stepped in and urged
the chairman of the Committee on Ways and Means to write a new
bill lowering tariff rates. “I want harmony,” said Clay. “I wish to see
the restoration of those ties which have carried us triumphantly
through two wars. I delight not in this perpetual turmoil. Let us have
peace, and become once more united as a band of brothers.” * South
Carolina responded by suspending nullification of the tariff acts
until the new bill became law.
On March 2, 1833, Jackson signed two bills. The first lowered
tariff rates over a ten-year period until they reached 20 percent ad
valorem. Anything above 20 percent was thought to be protection-
ist. The second, the Force Act, gave the president authority to use
the army and navy to collect the customs duties. “Old Hickory
winced as he signed the tariff bill.” *
The South Carolinians then met to repeal the nullification of the
tariffs but voted to nullify the Force Act, which was now not needed.
The threat of secession and war had brushed by the nation and
passed on. Both sides declared victory, with Jackson telling friends
of his bitter disappointment that the confrontation had ended before
he had a chance to deal with the traitors: “I thought I would have to
hang some of them and I would have done it.” * Kentucky congress-
man Robert Letcher returned from a White House visit to report
that the president had been more specific, saying, “If one more step
was taken he would try Calhoun for treason and, if convicted, hang
him as high as Haman.” * Awakened in the dead of night to be told
of Jackson’s ruminations on his hanging, Calhoun listened intently,
“drinking in every word ... pale as death and. . . trembling like an
aspenleaf.””
America was ceasing to be Henry Clay’s “band of brothers.”
* * *
154 PATRICK J. BUCHANAN
Half a century after the battle over the Tariff of Abominations, Sen-
ator John Logan wrote in The Great Conspiracy of what he always be-
lieved was a monstrous plot to use free trade to destroy the Union:
After-events proved conclusively that the enactment of this Compro-
mise Tariff was a terrible blunder, if not a crime. Jackson had fully in-
tended to hang Calhoun and his nullifying coadjutors if they persisted
in their Treason. He knew that they had only seized upon the Tariff laws
as a pretext with which to justify Disunion, and prophecied that “the
next will be the Slavery or Negro question.” Jackson’s forecast was cor-
rect. Free Trade, Slavery and Secession were from that time forward
sworn allies; and the ruin wrought to our industries by the disasters of
1840, plainly traceable to that Compromise Tariff measure of 1833, was
only to be supplemented by much greater ruin and disasters caused by
the Free Trade Tariff of 1846 — and to be followed by the armed Re-
bellion of the Free Trade and Pro-Slavery States of the South in 1861,
in a mad attempt to destroy the Union.”
To Logan, free trade was the devil’s plan to murder the Union;
and free trade and slavery were twins. Such was the passion and in-
tensity with which men viewed a tariff issue that had brought the Re-
public to the precipice of dissolution and war. Nor would it die. For
America’s great economic nationalist, Henry Clay, who produced
the Compromise ‘Tariff of 1833, had found an admirer who thought
him the greatest man of the age.
The disciple’s name was Abraham Lincoln.
Looking back on this era, we can see lessons for our own time.
Washington and Hamilton after the Revolution, and Madison after
the War of 1812, confronted similar challenges and responded in
similar ways. Discerning British mercanulist plots to crush Amer-
ica’s infant industries, recapture control of her trade, and reestablish
a dependency on the mother country, they imposed tariffs — tem-
porary sacrifices on the part of consumers, for the long-term inde-
pendence of the nation. This was enlightened nationalism.
The Great Betrayal 155
Such enlightened nationalism is desperately needed today.
For just as Japan became a manufacturing power by denying us
fair access to its home market, while invading and capturing a huge
slice of our market, China and the nations of Asia and Latin Amer-
ica are planning similar assaults, as we shall see.
By the end of the Jacksonian era, however, new attitudes were
arising. The “America first” spirit of Washington and Madison —
and the spirit of compromise of Clay, who would yield on his
beloved tariff rather than see the nation come apart — was fading
away. Both the industrial North and agrarian free-trade South were
beginning to put regional interests ahead of the national interest. If
there is a lesson central to this book, it is this: The economy is not
the country; and the country comes first. When this principle has
been forgotten, America has torn itself apart, as it seems about to do
today, in the name of a free-trade ideology that has the leadership of
both parties in its grip.
Chapter 9
THE GREAT PROTECTIONIST
“AN OLD HEnry Cray TArirF WuHicG”
Abandonment of the protective policy by the
American Government must result in the
increase of both useless labour, and idleness;
and so, in pro[por]tion must produce want
and ruin among our people.’
— Abraham Lincoln, 1847
There are two potential causes of revolution
in the United States: slavery and the high
protective tariff.’
— Frédéric Bastiat, 1851
le 1845 there came the presidency of James K. Polk. The dark
horse of the Baltimore convention had won the endorsement of An-
drew Jackson and his party on one issue: immediate annexation of
Texas. This most underrated of presidents believed America’s des-
tiny was to become a continent-wide nation stretching to the Pa-
cific. In one term, Polk brought it about, enlarging the country by
as much territory as had Jefferson when he purchased Louisiana.
“Jimmy” Polk took the Southwest and California as war booty from
Mexico, compromised with Britain on the boundary of the Oregon
‘Territory, and, his mission complete, went home and was dead in
100 days. “Young Hickory” was the personification of Manifest Des-
tiny, and no public figure was more hostile than a rising young Whig
lawyer in Illinois.
The Great Betrayal IS
"Give Os A PROTECTIVE PARIFE
Abe Lincoln had been denied his party’s nomination for Congress in
1844, but his campaigning was the highlight of the Whig effort in
Illinois. Lincoln, as scholar Gabor S. Boritt explains, concentrated
his fire on a single issue: the tariff.
He had been a high tariffite from the beginning, but only the 1842 re-
peal of the Compromise ‘Tariff of 1833 opened a practical way for re-
newed discussion. In 1842 he may have composed and certainly signed
a petition that contained the gist of his party’s view on the matter. . . .
His 1843 statements argued that protection was an absolute necessity
“to the prosperity of the American people.” They also gave evidence
that he had studied the tariff problem at some length.’
By the spring of 1844, the tariff was the dominant issue in Illinois,
and an eyewitness describes how Lincoln “exerted himself power-
fully” on behalf of Henry Clay’s final try for the White House:
The contest of that year in Illinois was mainly on the question of the
tariff. ... Mr. Lincoln, in these elaborate speeches, evinced a thorough
mastery of the principles of political economy which underlie the tariff
question, and presented arguments in favor of the protective policy with
a power and conclusiveness rarely equalled, and at the same time in a
manner so lucid and familiar and so well interspersed with the happy il-
lustrations and apposite anecdotes as to seduce the delighted attention
of his auditory.*
Carrying his campaign into Indiana near his childhood home,
Lincoln, a kinsman remembered, gave an impassioned plea: “Give
us a protective tariff, and we will have the greatest country on
earthy.”
By mid-year Illinois Democrats were being soundly trounced.
They were sick of hearing of the tariff issue. But with the nomina-
158 Patrick J. BUCHANAN
tion of Polk, their fortunes were revived by a blazing new issue:
‘Texas!
In calling for a return to high tariffs, Lincoln had been playing
the nationalist card: higher tariffs would force British capitalists
to finance the U.S. government. But Lincoln’s nationalism was
“inward-oriented,” not the Manifest Destiny nationalism of the
Jacksonians. The Democrats’ shift threw him off balance. Lincoln
muttered that the Polk platform was “nothing but Texas”; to him,
this was a distraction from the real issues.
But with British diplomats maneuvering to prevent annexation
and create a permanent Texas republic to block America’s westward
expansion, Democrats turned the tables and denounced Abe Lin-
coln as the leader of “a British anti- Texas junto.” Lincoln’s strongest
jingoist argument, that Clay was the father of the American system
of protection while Democrats were pushing the British system of
free trade, was trumped.
Lincoln countered that the British were pouring money into the
country to defeat Whigs who would protect U.S. industry. All fall he
hammered the tariff issue; it “may have been a fatal mistake.” For
Texas and expansion were the issues of the hour, and Democrats
were running away with them. On Election Day, a full third of Polk’s
popular majority came from Illinois. Lincoln ruefully remarked,
“We got gloriously whipped.” °
A CoBDENITE IN THE CABINET
Some Polk Democrats, like Treasury Secretary Robert J. Walker,
disagreed with their old chief at the Hermitage. Walker was not op-
posed to tariffs, but he did object to protective tariffs in which rates
were set so high that foreign goods were priced out of the U.S. mar-
ket. Believing in his own version of the Laffer curve, Walker favored
a revenue tariff. If tarifts were set too low, the government would re-
ceive little revenue. But if tariffs were set too high, the government
would also get little revenue because few foreign products would
The Great Betrayal 159
enter the country. Robert Walker sought a golden mean, tariff rates
that averaged about 23 percent.
Walker also had an ideological motive in opposing protective tar-
iffs. He shared the belief of England’s Richard Cobden that free
trade was the panacea that would rescue mankind from the scourge
of war. Cobden and John Bright had triumphed in England with the
1846 repeal of the Corn Laws, which heavily taxed imported grain
to protect British agriculture.
While a belief in the redemptive power of trade had not captured
the party of Jackson, it was putting down roots. As early as 1856,
with the nomination of James Buchanan, the Democratic Party
would go beyond Polk and Walker to proclaim its new faith: “The
time has come for the people of the United States to declare them-
selves in favor of . . . progressive free trade throughout the world.”’
Yes TO CoFFEE, No Tro COTTON
Abe Lincoln believed none of this. He was no romantic but a hard-
headed realist and economic nationalist in the tradition of Hamilton
and Clay. As far back as 1832, he had laid his cards on the table. My
politics, he said, are “short and sweet, like the old woman’s dance. I
am in favor of a national bank. I am in favor of the internal im-
provement system and a high protective tariff. These are my senti-
ments and political principles.
Lincoln had been attracted to the Whig Party by the “Father of
the American System.” “Henry Clay is my beau ideal of a statesman,
the man for whom I fought all my humble life,” he confided late in
life.’ Lincoln had cast his first presidential vote in the Clay-Jackson
race of 1832 for the gallant “Harry of the West.”
Lincoln saw no intrinsic merit in trade. Trade should be main-
tained, he argued, “where it is necessary,” discontinued “where it is
not.” He said yes to imported coffee, which Americans did not pro-
duce, no to imported cotton." He also believed that tariffs were nec-
essary to protect the high wages of American workers. If a farmer
98
160 PATRICK J. BUCHANAN
was able to buy cheaper supplies in Europe than in America, he said,
it “would be owing to the fact that the price of labor is only one
quarter as high there as here.” As Gabor Boritt writes:
The roots of Lincoln’s protectionism were divergent and deep....
Whether the Westerner’s unionism drew him to economic nationalisin
or vice versa is a moot question. He gave his allegiance to the federalist
faction of the American political spectrum early in his life. And the tar-
iff “more than any other issue,” asserted James G. Blaine, represented
throughout the nineteenth century the “persistent line of division be-
tween... the party of State Rights and the party of National Su-
premacy.””
There was another reason Lincoln favored tariffs. To him, there
were two sources of revenue: tariffs and income taxes. Whereas an
income tax was a mandatory tax that all had to pay, a tariff was a dis-
cretionary tax. Those who did not buy foreign goods did not pay.
And a tariff was a less costly and intrusive method of raising revenue.
As Lincoln put it:
The tariff is the cheaper System. ... 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 luxu-
ries, and not the necessaries, of life. By this system the man who con-
tents himself to live upon the product of his own country pays nothing
arall.”
Here, Lincoln exaggerates. If a tariff is to provide the revenue to
run a government, even in the nineteenth century, it must apply to
more than “luxuries.” But doesn’t Lincoln’s phrase “the land covered
with assessors and collectors going forth like swarms of Egyptian lo-
custs” aptly describe our IRS, America’s monument to the income
ta?
The Great Betrayal 161
After the Whigs nominated Lincoln for Congress in 1846, his only
recorded campaign speech had the protective tariff as its “principal
subject, with which he showed himself to be thoroughly ac-
quainted.” * As one Illinois newspaper of the time wrote:
In a most Jogical, argumentative effort, [Lincoln] demonstrated the ne-
cessity of a discriminating tariff, and the excellence of that adopted by
the Whig Congress of 1842; and also that the consumer does not usu-
ally pay the tariff, but the manufacturer and importer."
After his victory and arrival in Congress, Lincoln went hard after
Polk on two fronts: the Mexican War and the tariff. Surviving notes
of Lincoln’s, which he probably hoped to use in House debate, em-
phasize a point he would make again and again:
But if duty amounting to full protection be levied upon an article which
can be produced here with as little labour, as elsewhere, as iron, that ar-
ticle will ultimately, and at no distant day, in consequence of such duty,
be sold to our people cheaper than before, at least by the amount of the
cost of carrying it from abroad.”
These notes, on eleven foolscap half sheets, survive as Lincoln’s
most extensive consideration of the tariff issue. To Lincoln, protect-
ing home manufactures, in the long run, produced lower prices. In
his time, shipping expenses added 25-50 percent to the price of
goods. Lincoln considered such costs “useless labour” if the articles
could be manufactured in “as good quality, and sufficient quantity,
with as little labour at the place of consumption.” Y” Nor was Lincoln
averse to populist rhetoric. In a campaign circular from his Whig
committee, he is quoted as follows:
Those whose pride, whose abundance of means, prompt them to spurn
the manufactures of our own country, and to strut in British cloaks, and
coats, and pantaloons, may have to pay a few cents more on the yard for
the cloth that makes them. A terrible evil, truly, to the Illinois farmer,
162 PATRICK J. BUCHANAN
who never wore, nor ever expects to wear, a single yard of British goods
in his whole life.'*
How high did Lincoln feel tariff rates should be? In Congress he
declared his support for the Tariff Act of 1842, which had taken rates
up to an average of 34.4 percent, but he opposed the Walker Tariff
Act of 1846, which reduced them to 22.5 percent.
Walker and Polk prevailed, and Lincoln and his Whig allies
failed to restore the 1842 rates. As Walker had predicted, imports
surged at the lower tariff rate. Revenue grew, and budget surpluses
appeared. The Whig position was fatally weakened. Why raise tar-
iffs when running a surplus? Yet, Lincoln never recanted. Cam-
paigning in 1848 for Zachary Taylor, he was disappointed that Old
Rough and Ready ducked the issue. In 1852 he campaigned for an-
other Mexican War hero, Winfield Scott. The Peoria Weekly Repub-
lican reported that on the tariff question, Lincoln favored the
“American side,” demanding to know why
instead of sending a distance of 4,000 miles for our railroad iron, the im-
mense iron beds of Missouri were not worked, affording a better article
than that of English manufacture, and giving employment to American
labor.'°
There was, however, a sharp difference between Lincoln and the
old Whigs. To Webster and Clay the tariff had been about indepen-
dence and the security of the Union. Lincoln argued the tariff case
almost exclusively on economic grounds. In those eleven foolscap
sheets, not once did Lincoln mention the national interest. He had
“developed a great propensity to see matters in terms of economic
ingredients or interests. ... This propensity came to loom large
when he turned his attention from economics, first to slavery, and
later to making war and peace with the South.”
By the 1850s the Whig Party was dying. Lincoln had moved on
to the new Republican Party, which was silent on the tariff. Yet,
reading more than two decades of Lincoln’s arguments for protec-
tionism, one finds in this self-educated man a richer, deeper under-
The Great Betrayal 163
standing of the economics of tariffs and trade than may be found in
almost any political leader today.
PENNSYLVANIA: A KEY TO THE WHITE HOUSE
In 1856 John C. Frémont, an abolitionist and the first Republican to
run for the presidency, lost to Buchanan in a narrow election. Saga-
cious Republicans realized that they must cut back on the abolition-
ist rhetoric and broaden their appeal. Editor Horace Greeley
suggested how to do so in 1859:
Now about the Presidency: I want to succeed this time, yet I know the
country is not Anti-Slavery. It will only swallow a little Anti-Slavery in
a great deal of sweetening. An Anti-Slavery man per se cannot be
elected; but a Tariff, River and Harbor, Pacific Railroad, Free Home-
stead man may succeed although he is Anti-Slavery.”
Greeley was advocating a Hamiltonian policy: raise tariff rates to
promote manufacturing, keep wages high, and pay for the roads,
bridges, canals, and railroads that knit the nation together. Joseph
Medill, editor of the Chicago Tribune, had found just the man to pull
together the disparate elements of that coalition. In 1859 he hailed
the failed Senate candidate Abe Lincoln as an “old Clay Whig [who]
is right on the tariff and he is exactly right on all other issues. Is there
any man who could suit Pennsylvania better?”” Medill’s last point
was crucial. Pennsylvania had the largest bloc of electoral votes after
New York; its loss had cost Frémont the White House.
What was the key to Pennsylvania? In 1858 Republicans had dis-
covered it. As Lincoln was losing to Stephen A. Douglas on the slav-
ery issue, the People’s Party of Pennsylvania inflicted a stunning
defeat on the Democrats by advocating a high tariff to protect Penn-
sylvania’s coal mines and steel mills. Republicans suddenly recalled
that their 1856 platform had no protectionist plank.
As Medill was writing his editorial launching him, Lincoln was
164 PATRICK J. BUCHANAN
carefully answering a letter from Edward Wallace, a Pennsylvania
physician and relative by marriage interested in endorsing him for
vice president. Wallace wanted to sound him out on the tariff. Lin-
coln’s reply told Wallace exactly what he wanted to hear:
My dear Sir: ... I was an Old Henry Clay tariff whig. In old times I
made more speeches on that subject, than on any other.
I have not since changed my views. I believe yet, if we could have a
moderate carefully adjusted protective tariff, so far acquiesced in, as not
to be a perpetual subject of political strife, squabbles, charges, and un-
certainties, it would be better for us.”
But Lincoln, his ambition “a little engine that knew no rest,” was
as savvy as Richard Nixon.” He knew that what the Pennsylvanians
desired, many Democrats who had crossed over to the new party de-
spised. Lincoln thus closed his letter carefully:
We, the old whigs, have been entirely beaten out on the tariff question;
and we shall not be able to re-establish the policy until the absence of it,
shall have demonstrated the necessity for it, in the minds of men hereto-
fore opposed to it. With this view, I should prefer, to not now, write a
public letter on the subject. I therefo[re] wish this to be considered con-
fidential.”
Between the lines Lincoln was saying, Politically, this is not the
time to push the tariff. We must wait for an economic crisis. But I
am with you. Put out the word in Pennsylvania that protectionism
has a friend in Old Abe — but keep this letter confidential!
Meanwhile, in Washington Republicans were pounding the issue.
The Panic of 1857 had followed by a few months a reduction in the
Walker Act tariffs. Republicans had opposed these reductions, if
only feebly. But when the depression hit, the party went all-out,
blaming the Democratic tariff cuts. The “Ajax of Protection,” polit-
ical economist Henry C. Carey, flooded the press with articles.” In
The Great Betrayal 165
August of 1859 Congressman Justin Morrill of Vermont boxed in
free-trade Democrats by introducing a bill to reraise the tariff rates
to “force the Democratic controlled Senate to accept or defeat it.””’
On May 10, 1860, the Morrill Tariff Act passed the House, and the
voting breakdown exposed the depth of national division. Only
fourteen “nay” votes came from free states; only eight “yea” votes
from slave states. The nation was as bitterly divided over tariffs as
over slavery.
The day Morrill’s bill passed the House, the Illinois Republican
Convention nominated Abraham Lincoln for president. He was
soon back in touch with his friend in Pennsylvania:
In the days of Henry Clay, I was a Henry-Clay-tariff-man, and my views
have undergone no material change upon that subject. I now think the
Tariff question ought not to be agitated in the Chicago convention, but
that all should be satisfied on that point, with a presidential candidate,
whose antecedents give assurance that he would neither seek to force a
tariff-law by Executive influence; nor yet to arrest a reasonable one by
a veto, or otherwise. Just such a candidate I desire shall be put in nom-
ination.”
Lincoln’s message: If you want a protective tariff, nominate a
high-tariff man at the Chicago convention without stirring up the
free traders. And I have in mind a fellow who fits the bill perfectly.
Taer Iwe_rtH PLANK CARRIES PENNSYLVANIA
At that June 1860 convention, the party’s wise men knew that anti-
slavery was not enough to defeat the Democrats. As the Harrisburg
correspondent of Greeley’s New York Herald wrote: “The opposition
[anti-Democratic] politicians here say you may cry [Negro, Negro]
as much as you please, only give us a chance to carry Pennsylvania
by crying tariff. Without this state you cannot elect your Presi-
dent”?
166 PATRICK J. BUCHANAN
But the platform writers had a dilemma. While they wanted to
accommodate the Pennsylvania protectionists, many Democrats
who had come over to the party were free traders. Was it possible to
hold them, and still deliver for Pennsylvania? The tariff plank finally
adopted, the famous twelfth plank, was as vague as they could make
it while still alluding to raising tariff rates:
While providing revenue for the support of the general government by
duties upon imports, sound policy requires such an adjustment of these
imports as to encourage the development of the industrial interests of
the country.”
The writers had finessed the issue beautifully. These moderate,
even anodyne, words ignited a convention explosion.
“The Pennsylvania and New Jersey delegations were terrific in their ap-
plause over the tariff resolution,” wrote one observer, “and their hilar-
ity was contagious, finally pervading the whole vast auditorium.”
Another eyewitness confided to his diary: “The scene this evening upon
the reading of the ‘Protection to Home Industries’ plank was beyond
precedent. One thousand tongues yelled, ten thousand hats, caps and
handkerchiefs waving with the wildest fervor. Frantic jubilation.” ”
Lincoln carried the Pennsylvania delegation and walked off with
the nomination. Michael McMorton, the publisher of Philadelphia’s
bible of protectionism, the North American, wrote: “Mr. Lincoln
was, throughout, well known for his firm and unwavering fidelity to
Henry Clay, and the great policy of protection to American indus-
try.” ? All fall Medill hammered home the theme in his Chicago Trib-
une: Lincoln is “safe on protection, homesteads, rivers and harbors,
and the Pacific railroad.” ”
The Great Betrayal 167
BATTLEGROUND STATE
As the campaign began, all eyes turned to Pennsylvania. For the
Quaker State was an “October state,” its governor chosen a month
before the presidential election. Both parties went all-out. Between
September 1 and October 11, the North American carried sixteen ed-
itorials on the tariff issue. The slavery issue would get only six the
entire fall.
From Springfield Lincoln fired off letter after letter to editors in
Pennsylvania, urging them to look at his old pro-tariff speeches but
to keep the letters confidential. “In 1844 I was on the Clay electoral
ticket in this State [i.e., Illinois], and, to the best of my ability, sus-
tained, together, the tariff of 1842 and the tariff plank of the Clay
platform,” he wrote on October 2, 1860.* To Simon Cameron he
sent the notes of his 1847 House debates, cautioning, “Nothing
about these must get into the news-papers.”*®
Republican orators and their Pennsylvania gubernatorial candi-
date, Andrew Curtin, made the tariff the altarpiece of the campaign.
It was working. Panicked Democrats implored their presidential
nominee Stephen Douglas: “The Republicans, in their speeches, say
nothing of the [Negro] question, but all is made to turn on the Tar-
iff.”** His hopes for the presidency slipping away, Douglas came to
Harrisburg in September, abandoned his low-tariff position, and
came out for protectionism. The deathbed conversion did not work.
Republicans denounced the Little Giant as a big fraud, and Curtin
triumphed in October. On the eve of the November election, the
final Republican manifesto carried this appeal: “Every voter in
Pennsylvania who desires to-day to emphasize his vote in favor of
protection to American industry and to the best interest of this
State, should give it to Abraham Lincoln.””
In November Lincoln carried Pennsylvania and the nation — with-
out a single Southern electoral vote. The crucial element of the vic-
tory, the one that started him on the road to immortality?
168 Patrick J. BUCHANAN
In achieving success for Lincoln in Pennsylvania and New Jersey, the
. . . promise of a protective tariff and the Democratic rupture were the
decisive factors. Pennsylvania’s twenty-seven electoral votes, given to
any other candidate, would have reduced Lincoln’s majority to three.
The additional loss of New Jersey’s four electoral votes would have
thrown the election into Congress with unpredictable results.”
Protectionism had made Lincoln president. Both James G.
Blaine and William McKinley believed that the twelfth plank at
Chicago had been the key to Pennsylvania and victory. Without that
protectionist plank, there might have been no President Abraham
Lincoln.”
SECESSION AND THE [ARIFF
Lincoln left Springfield early in 1861. Arriving in Pittsburgh in mid-
February, he began his speech by reading the twelfth plank and re-
calling the old arguments of the young congressman of the Polk era:
I have long thought that to produce any necessary article at home,
which can be made of as good quality, and with as little labor at home as
abroad, would be better made at home, at least by the difference of the
carrying from abroad. In such a case, the carrying is demonstrably a
dead loss of labor... . Labor being the true standard of value, is it not
plain, that if equal labor gets a bar of railroad iron out of a mine in En-
gland, and another out of a mine in Pennsylvania each can be laid down
in a track at home, cheaper than they could exchange countries, at least
by the cost of carriage.
The condition of the Treasury at this time would seem to render an
early revision of the tariff indispensable.”
The Pittsburgh speech was the last one Lincoln would ever de-
liver on the tariff. He concluded by saying that he would study the
matter thoroughly when he got to Washington,
The Great Betrayal 169
looking to all the varied interest of our common country, so that when
the time for action arrives adequate protection can be extended to the
coal and iron of Pennsylvania, the corn of Illinois, and the reapers of
Chicago . . . that all sections may share in the common benefits of a just
and equitable tariff.”
A rousing ovation followed. Why was Lincoln’s language a study
in moderation? With Republicans coming to power in Washington,
Southern states were seceding. Writes Boritt: “There was no need
for piling Yankee insult upon Southern injury by an articulate sup-
port of protectionism. Lincoln, therefore, was undeviatingly cir-
cumspect in his speech.””
Before Lincoln had slipped into Washington by night, the first of
the Morrill tariffs had passed Congress, on February 20, 1861 —
nine months after it had first passed the House. Many Democrats
who had fought the tariff were gone — back home to Deep South
states already in secession. Buchanan signed the Morrill Tariff Act
on March 2, two days before Lincoln took his oath of office. To
Henry Carey it was the “most important measure ever adopted by
Congress.”*” On August 5, 1861, Congress would pass another tar-
iff hike, which Lincoln would sign. The issue had helped him win
the presidency, and the “old Henry Clay tariff Whig” was being true
to his convictions and commitments. On July 14, 1862, another tar-
iff bill was passed by Congress and approved by Lincoln. Customs
duties, which had averaged 18 percent in 1860, were raised to an av-
erage of 37 percent. The free list established in Morrill’s 1861 tariff
was cut nearly in half. Upward and upward tariff rates went. In June
1864 duties were raised to 47 percent.* These measures would have
far-reaching consequences.
Above all, the habits engendered during this period of comprehensive
protection to almost everything led to a crystallization of the sentiment
in favor of national economic exclusion and isolation. For many decades
American commercial policy was molded by the feelings and habits
generated during Lincoln’s wartime administration.”
170 Patrick J]. BUCHANAN
The Great Emancipator was the Great Protectionist. During the
war Congress raised import duties ten times, and ten times Lincoln
affixed his name to the bill. Thus began six decades of protection-
ism, a Lincoln-Republican tradition that would endure until Eisen-
hower. What was in back of this economic nationalism? Again,
Lincoln scholar Gabor Boritt:
There were three major fountainheads of pressure that led to ever
higher tariff levels. The first of these was internal taxation, which fos-
tered the demand for “countervailing” duties on foreign goods. “If we
bleed the manufacturers,” declared Justin Morrill, “we must see to it
that the proper tonic is administered at the same time.” Another source
was plain old protectionist Whiggery, that descendant of Hamiltonian
economics that was to become an unshakable tenet of latter day Repub-
licanism. Finally, the new financial arrangement of the country was pre-
eminently in harmony with the growing nationalism in the North.*
Lincoln never spoke again of the importance of tariffs, and Carey
was bitterly disappointed that he never used the power of his
rhetoric to argue the case for protection. All the president talked of
now was the war that consumed him. In February 1865 Carey
vented his bitterness:
Protection made Mr. Lincoln president. Protection has given him all
the success he has achieved, yet has he never, so far as I can recollect,
bestowed upon her a single word of thanks. When he and she part com-
pany, he will go to the wall.”
There was reason for this neglect. With the First Battle of Bull
Run, Lincoln knew his place in history depended not on the tariff
issue but on the outcome of the great war.
The Great Betrayal i
Dip TARIFFS CAUSE THE WAR?
South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana,
and ‘Texas did not wait to see how Lincoln would govern. All seceded
before his inauguration. All knew what was coming. Even before
Lincoln took the oath, the first of the Morrill tariffs had been signed
by Buchanan.
Consider the situation of the South: Dixie purchased two-thirds
of the nation’s imports, and tariff revenue was the prime source of
U.S. tax revenue. Thus, the South was already carrying a dispropor-
tionate share of the national tax burden. By raising tariffs, Congress,
in Southern eyes, was looting the South. Southern imports would
cost more, while the new tariff revenue would be sent north to be
spent by Republicans who despised the South. The South’s alterna-
tive: buy Northern manufactures instead of British ones. Either way,
more of the South’s wealth was headed north. Dixie was unwilling to
quietly observe customs officers haul their fattened satchels of duty
revenue out of Southern ports, to be spent by a president who had
not won a single Southern state.
The Morrill Tariff... was Lincoln’s big victory. His supporters were
jubilant. He had fulfilled his campaign and IOUs to the Northern in-
dustrialists. By this act he had closed the door for any reconciliation
with the South. In his inaugural address he had also committed himself
to collect customs in the South even if there were a secession. With slav-
ery, he was conciliatory; with the import taxes he was threatening. Fort
Sumter was at the entrance to the Charleston Harbor, filled with fed-
eral troops to support U.S. Customs officers. It wasn’t too difficult for
angry South Carolinians to fire the first shot.*
Believing itself an exploited region in a country where newly em-
8 p 81 y
powered Republicans despised it, the Deep South decided to leave.
But the North could not let it go. For the free-trade Confederac
8 P
had written into its constitution a permanent prohibition against
protective tariffs: “nor shall any duties or taxes on importation from
172 Patrick J. BUCHANAN
foreign nations be laid to promote or foster any branch of indus-
try.”*” To Northern manufacturers this spelled ruin. Imports would
be massively diverted from Baltimore, New York, and Boston, where
they faced the Morrill Tariff, to Charleston, Savannah, and New Or-
leans, where they would enter duty-free. Western states would turn
to Southern free ports as places of entry for their goods from Eu-
rope. So would many Northerners. The Boston Transcript argued
that a free-trade Confederacy would be so mortal a threat to the in-
dustrial North that secession must be reversed, whatever the cost.
The difference is so great between the tariff of the Union and that of
the Confederated States, that the entire Northwest must find it to their
advantage to purchase their imported goods at New Orleans rather than
New York. In addition to this, the manufacturing interests of the coun-
try will suffer from the increased importations resulting from low du-
ties. The [government] would be false to all its obligations, if this state
of things were not provided against.”
Tax historian Charles Adams describes the situation the North
would have confronted:
This would compel the North to set up a chain of custom stations and
border patrols from the Atlantic Ocean to the Missouri River, and then
some. Northerners would clamor to buy duty-free goods from the
South. This would spell disaster for Northern industrialists. Secession
offered the South not only freedom from Northern tax bondage but
also an opportunity to turn from the oppressed into the oppressor. The
Yankees were going to squirm now!”!
Nor was Lincoln unaware of the dread prospect. In his inaugural
address, he had been conciliatory toward the South on slavery, of-
fering a constitutional amendment to make slavery untouchable in
the fifteen states where it existed, even offering a new federal law to
mandate the return of fugitive slaves. He had pledged to the South
“no bloodshed or violence” — with one glaring exception:
>: PP D ———
The Great Betrayal 173
The power confided in me, will be used to hold, occupy, and possess the
property, and places belonging to the government, and to collect the du-
ties and imposts; but beyond what may be necessary for these objects, there will
be no invasion — no using of force against, or among the people any-
where.” (Emphasis added.)
The message to the Confederacy: you may keep your slaves, but
you cannot keep your duty-free ports! British intellectuals like John
Stuart Mill might blithely declare, “Slavery [was] the one cause of
the Civil War,” but others in Great Britain put the cause elsewhere.”
In the British House of Commons in 1862, William Forster said he be-
lieved it was generally recognized that slavery was the cause of the U.S.
Civil War. He was answered from the House with cries, “No, no!” and
“The tariff!” It is quite probable the British commercial interests, which
dominated the House of Commons, were more in tune with the eco-
nomics of the Civil War than were the intellectuals and writers.
The tariff was “a prime cause of the Civil War,” writes John
Steele Gordon, scholar of American economic history.” Yet, Lincoln
never mentioned the tariff again. And given his devotion to the
Union, the cause to which he subordinated all others, it seems that
for him, as for Jackson, the tariff was but the means to a greater end:
the Union. One critic was not far off when he wrote that Lincoln
“made a god out of the Union.”* And he served that god as faith-
fully as any Old Testament prophet, and was martyred for that faith.
Chapter 10
FREE MARKETS Vs. FREE IRADE
The question of free trade is, next to the
Reformation, next to the question of free
religion, the most momentous that has ever
been submitted to human decision.'
— Nassau William Senior, 1828
Aon is truth in the bold assertion of Nassau Senior. Until 1861
only slavery so convulsed and divided the nation as did the question
of tariffs and trade. Why is this question so “momentous”? Because
free trade is about more than who gets what. It is about who we are,
what kind of country we shall be, whether the United States will en-
dure as an independent republic or be melded into the Global Econ-
omy of a new world order in which the nation-state is a relic of a
dead past.
Many today will laugh at such an assertion; but the men of yes-
terday understood it; and this generation will soon awaken to that
truth. And to understand the stakes, we need to explore the philo-
sophical, political, and religious roots of this great quarrel.
“Global free trade,” the regime imposed on us today, is neither
the American system of the Founding Fathers nor the free-market
The Great Betrayal 178
system of Adam Smith. It is rooted in an ideology that did not begin
to mature until twenty-five years after Smith’s death. Born of rebel-
lion against church and crown, free-trade ideology is a first cousin
to Marxism, i.e., a secularist faith embraced by intellectuals in rejec-
tion of the world they lived in, the world of empires and nation-
states.
With communism dead, the economic conflict of our time is be-
tween the free-market vision of the American nationalists and Adam
Smith and the free-trade doctrine advanced by Jeremy Bentham,
David Hume, David Ricardo, James Mill, John Stuart Mill, Richard
Cobden, Jean-Baptiste Say, Frédéric Bastiat, and the other scrib-
blers — none of whom was an American, almost all of whom were
possessed of a deep animus toward church, state, and empire. And
this struggle will determine the fate of the nation-state and the fu-
ture of the world.
ADAM SMITH LEADS ALL THE REST
As early as the time of the ancient Greeks and Persians, philosophers
clashed over the wisdom and morality of trade. The early Christian
fathers were skeptics. “Let Christians amend themselves; let them
not trade,” Saint Augustine admonished.’ The Bishop of Hippo was
echoed by the Angelic Doctor, Saint Thomas Aquinas, in his treatise
On the Governance of Rulers:
If the citizens themselves devote their lives to matters of trade, the way
will be open to many vices. . . . It is better, therefore, that the supplies
of food be furnished to the city from its own fields than that it be wholly
dependent on trade. ... The pursuit of trade is, also, entirely opposed
to military activity. For tradesmen, whilst they seek their leisure, do no
hard work, and whilst they enjoy all pleasures, grow soft in spirit and
their bodies are weakened and rendered unsuited to military labours.
... Consequently, the perfect city will make a moderate use of mer-
chants.’
176 Patrick J. BUCHANAN
In 1776 Adam Smith published An Inquiry into the Nature and
Causes of the Wealth of Nations. In this most famous of economic trea-
tises, the justification of a free-market economy was first set forth.
Ever since, Smith has been conscripted as lead witness in the prose-
cution’s case against protectionism. But contrary to conventional
wisdom, Adam Smith was no open-borders, free-trade aber alles lib-
ertarian.
The system described in The Wealth of Nations is a national free-
market system. Nations, said Smith, should sell abroad what was not
needed for home consumption and buy abroad what could not be
produced at home. Smith supported the Acts of Trade and Naviga-
tion under which British trade had to be carried in British ships
manned by British seamen, calling the laws the “wisest of all the
commercial regulations of England.” Said Smith, A nation’s “de-
fence is of much more importance than opulence.”*
Reclusive intellectual, friend of Voltaire and Turgot, Smith was
tutor to the stepson of Chancellor of the Exchequer Charles Town-
shend when he imposed the customs duties that ignited the Ameri-
can Revolution.’
SMITH’S “EXCEPTIONS” TO FREE [RADE
That Smith put national interests first is evident in the “exceptions”
he listed to a British policy of free trade. There are occasions, he
wrote, when it must be “advantageous to lay some burden upon for-
eign [imports], for the encouragement of domestic industry.”°
The first is, when some particular sort of industry is necessary for the
defence of the country. The defence of Great Britain, for example, de-
pends very much upon the number of its sailors and shipping. The act
of navigation, therefore, very properly endeavours to give the sailors
and shipping of Great Britain the monopoly of the trade of their own
country, in some cases, by absolute prohibitions, and in others by heavy
burdens upon the shipping of foreign countries.”
|
The Great Betrayal I7
Smith felt that Great Britain must maintain her monopoly of
trade, even if it meant keeping foreign ships out of British ports.
Smith’s conviction, shared by British statesmen, guaranteed trouble.
For independent colonists would surely one day seek to control their
own trade; then, the clash must come.
The second case, in which it will generally be advantageous to lay some
burden upon foreign [imports] for the encouragement of domestic in-
dustry, is, when some tax is imposed at home upon the produce of the
latter. In this case, it seems reasonable that an equal tax [i.e., tariff]
should be imposed upon the like produce of the former.’
Smith’s free-market system is thus perfectly consistent with Lin-
coln’s Morrill Tariff, which rose to 47 percent in 1864. Imposing tar-
iffs on imports, to offset taxes on domestic manufacturers, was the
argument Justin Morrill used to raise Civil War tariffs to Alpine
heights. As the Union imposed heavier and heavier direct taxes on
U.S. manufacturers, forcing prices up, their products could be un-
dercut by imports. Tariffs had to be raised to maintain the parity that
existed before Fort Sumter. For example, if the Union levied a 20
percent direct tax on U.S. builders of steel rails, forcing a markup in
price, an offsetting tariff had to be placed on imported British rails.
Otherwise, U.S. factories would lose their home market, and Mr.
Lincoln his anticipated revenue.
Smith listed two other occasions when the national interest
might require tariffs:
As there are two cases in which it will generally be advantageous to lay
some burdens upon foreign, for the encouragement of domestic indus-
try; so there are two others in which it may sometimes be a matter of
deliberation. ...
Some foreign nation [may restrain] by high duties or prohibitions
the importation of some of our manufactures into their country. Re-
venge in this case naturally dictates retaliation, and that we should im-
pose the like duties and prohibitions upon the importation of some or
all of their manufactures into ours...
178 PATRICK J. BUCHANAN
There may [also] be good policy in retaliations of this kind, when
there is a probability that they will procure the repeal of the high duties
or prohibitions complained of. The recovery of a great foreign market
will generally more than compensate the transitory inconveniency of
paying dearer during a short time for some sorts of goods.”
Tariffs as “revenge” on nations that closed markets to British
goods and for the “recovery of a great foreign market” is economic
nationalism. Using Smith’s rule of reciprocity, the United States
would today be imposing on China tariffs equal to the taxes and tar-
iffs China imposes on U.S. imports. Smith also believed that tariffs
should be reduced gradually, to prevent a surge of imports that
might throw thousands out of work:
Humanity may... require that the freedom of trade should be re-
stored only by slow gradations, and with a good deal of reserve and
circumspection. Were those high duties and prohibitions taken away
all at once, cheaper foreign goods of the same kind might be poured
so fast into the home market, as to deprive all at once many thou-
sands of our people of their ordinary employment and means of subsis-
tence."
When free-trade purists summon Adam Smith as lead witness,
they ignore his famous “exceptions.” But had we read Smith rightly,
the United States would have saved its TV-manufacturing industry.
Instead, we turned a deaf ear to pleas for temporary protection when
Japan began the massive dumping of high-quality Japanese TV sets
at prices below the cost of production. American-made televisions
were driven off department-store shelves, and the U.S. industry
drowned in a tidal wave of Sonys. Tens of thousands of high-paying
jobs were lost, as were all the future benefits of television manufac-
ture. In a premeditated strike, Japan destroyed America’s industry;
and in the name of free trade, our government passively observed
the industrial equivalent of Pearl Harbor. Smith would never have
tolerated such a blow to British national interests.
* * *
The Great Betrayal 179
Adam Smith, then, was no libertarian purist. He would keep foreign
ships out of British ports to maintain naval supremacy. He favored
tariffs as “revenge” on nations discriminating against British goods,
as levers to wrench open foreign markets, and as weapons to recap-
ture lost markets. He believed in tariffs on imported manufactures
to offset direct taxes on the home industry. Adam Smith believed in
“Britain first.” From 1778 until his death, he served as a commis-
sioner of customs, strictly enforcing Britain’s protectionist policy
against America’s trade. “To expect . . . that freedom of trade should
ever be entirely restored in Great Britain, is as absurd as to expect
that an Oceana or a Utopia should ever be established in it,” said
Commissioner Smith.”
Years after his death some of his self-professed heirs claimed to
see in Smith’s work ideas that would have repelled him. Despising
church and crown, these economists, philosophers, and polemicists
came to look on nations themselves as artificial and to long for a new
world in which the nation-state ceased to exist. To these men, par-
adise was not beyond the grave. It could be created here on earth,
reached by booking voyage on the only vessel that sailed to that
promised land: free trade.
Among these was David Hume, a militant atheist and intimate of
Smith who despised the British empire. All nations are but “acci-
dents of battles, negotiations and marriages,” said Hume.” Loving
things French, Hume opposed a tax increase to pay for the Seven
Years War that had driven the French out of North America and
made his country the world’s greatest empire. There “was nothing
ever equal in absurdity and wickedness as our present patriotism,”
said Hume.” Across the Channel the church-baiting Voltaire
echoed Hume, decrying policies that let nations “destroy each other
at the extremities of Asia and America.” Such policies make us “en-
emies of the human race.” Voltaire embraced free trade as the way
to world government. So, too, did German philosopher Immanuel
Kant, who saw a world government as mankind’s cure for the evils
endemic to the nation-state. In 1795 Kant wrote that
180 Patrick J. BucHANAN
for states, in their relation to one another, there can be . . . no other way
of advancing from that lawless condition which unceasing war implies,
than by giving up their savage lawless freedom, just as individual men
have done and yield to the coercion of public laws. Thus they can form
a state of nations (civitas gentium), one, too, which will be ever increas-
ing and could finally embrace all peoples of the earth.”
Defiantly antipatriotic, these alienated men and their philosoph-
ical offspring — not Adam Smith — propagated the idea that a new
world order was necessary and could be realized through global free
trade.
AMERICA GOES HER SEPARATE WAY
Fearing a French invasion in 1798, John Adams called Washington
back to lead the defense of his nation. The old hero agreed, asking
only that his protégé be commissioned next in command:
That Hamilton is ambitious I shall readily grant, but it is of that laud-
able kind which prompts a man to excel in whatever he takes in hand.
He is enterprising, quick in his perceptions, and his judgement is intu-
itively great.'®
This is a remarkable tribute from the man who was “first in war,
first in peace, and first in the hearts of his countrymen” and arguably
the greatest man of his age.
A hero of Yorktown, coauthor of the Federalist Papers, and, at
thirty-four, secretary of the treasury, Hamilton is entitled to a chap-
ter of his own in any history of political economy. He was the first
architect of the free-market system under which America rose from
a coastal agrarian country into the greatest industrial power on
earth; his Report on Manufactures, which guided American statesmen
for a century, remains a masterpiece of economic nationalism.
Hamilton’s great genius lay in his ability to apply the principles
The Great Betrayal 181
of the free market, elaborated by Smith in The Wealth of Nations, to
an infant republic of thirteen disputatious states.
Curiously enough, Hamilton, the first protectionist, was ...a student
of The Wealth of Nations. Numerous paraphrases of passages in that book
may be pointed out in the Report on Manufactures. . . . Indeed, the
whole cast of Hamilton’s argument seems to have been affected by the
study which he had made of The Wealth of Nations."
Historians have sought to create a conflict between Hamilton
and Smith. It does not exist. Both were patriots concerned with the
causes of the wealth of nations, not of the world. Both believed in
free markets. Both understood the pivotal role of capital in creating
wealth and employing the labor of a nation. And Hamilton had
seized upon the truth of Smith’s great insight, in his classic treatise,
that commerce inside a home market is twice as productive as foreign trade.
Wrote Smith:
Though the returns . . . of the foreign trade of consumption should be
as quick as those of the home-trade, the capital employed in it will give
but one-half the encouragement to the industry or productive labour of
Ene country... -
But a capital employed in the home trade, it has already been shown
. . . puts into motion a greater quantity of domestic industry, and gives
revenue and employment to a greater number of the inhabitants of the
country, than equal capital employed in the foreign trade of consump-
tion.”
Though capital expended in foreign trade would never give a na-
tion the same benefit as capital used in domestic investment, Smith
argued, the natural tendency of investors to employ their capital at
home would, as by an invisible hand, lead to the desired result. Here,
Hamilton parted company with Smith. He was not willing to entrust
his nation’s destiny to the blind forces of the market. Hamilton thus
created a system to steer America’s capital toward making the
United States a mighty manufacturing power, independent of for-
182 Patrick J. BUCHANAN
eign countries. In creating the American system, Hamilton inte-
grated Smith’s ideas with his own and those in the Declaration of
Independence and the Constitution.
Hamilton had read history. He knew that the technological su-
periority of the European powers had enabled them, with tiny num-
bers, to overwhelm the native peoples of the Western Hemisphere.
He had also lived history. He knew his country had almost lost its
revolution because it lacked the essentials of nationhood and the im-
plements of war that Great Britain produced in abundance. At York-
town French warships and muskets had been decisive. Thus, for
Hamilton issues of tariffs and trade were not an intellectual exercise;
they were matters of national survival.
Hamilton also disagreed with Smith on the latter’s belief in the
superior productivity of agriculture. Hamilton argued the superior
productivity of manufacturing. Smith wanted his nation, the world’s
most advanced, to export more; Hamilton believed that U.S. vital
interests first mandated national self-sufficiency. Before going out
into the world, America must become independent, and to be inde-
pendent, a nation “ought to endeavor to possess within itself all the
essentials of national supply . .. subsistence, habitation, clothing,
and defence.” ””
The master builder of a country far greater in territory than the
mother country and richer in resources than any in Europe save
Russia, Hamilton was painting on a colossal canvas. He could dream
dreams of self-sufficiency that no Europeans could. Where the small
and medium-sized countries of Europe had to trade with one an-
other out of necessity, Hamilton saw that America did not need any
other country.
Critics contend that Hamilton sought narrowly to favor U.S. in-
dustry at the expense of foreign manufacturers and to protect the
war industries that had sprouted in the Revolution. This does
Hamilton an injustice. He was no lobbyist; he was a statesman with
a vision. Hamilton’s
plea for protection, unlike that of many protectionists after the subse-
quent wars in which the country has been involved, is not based upon
The Great Betrayal 183
the need of nurturing “war babies.” The feature of “vested interests,”
indeed plays on the whole no significant role in Hamilton’s argument.
To be sure, he indicates a “most ardent” wish to “cherish and bring to
maturity this precious embryo” of the Hartford woolen factory, and
elsewhere shows keen interest in existing enterprises; but [his] whole
tone . . . is one of anticipating a glorious future for its own sake, and not
one of attempting by government intervention to provide shelter for
the accidents of the past.”
Hamilton laid the first layer of brick and mortar on America’s tar-
iff wall. Half a century before Europe’s political economists
broached the idea of “infant industries,” Hamilton had created a sys-
tem to nurture and protect them. A theoretical and practical genius,
he rejected the “static analysis of immediate advantage in favor of a
dynamic analysis of future development.” ” He was less interested in
today’s bargain than in tomorrow’s America. The Hamiltonian sys-
tem rested on several pillars: the centrality of manufacturing to na-
tional power and long-term prosperity. Tariffs to protect industry. A
strong central government — financed by excise taxes and customs
duties — capable of defending the nation. Federal assumption of
war debts to establish the public credit. “Internal improvements” —
dredging rivers, canals, post roads, turnpikes— to develop the
skeletal infrastructure of the nation and to tie Americans together by
domestic trade.
Washington and Hamilton were America’s first great economic
nationalists. To them it was inseparable from patriotism. And in the
manner of his death, Hamilton demonstrated the depth of his patri-
otism. While he and Jefferson had been the most bitter of rivals in
Washington’s cabinet (“If there is one man I ought to hate it is Jef-
ferson”), in the election of 1800 Hamilton had thrown his support
to his enemy rather than let the country fall into the hands of Aaron
Burr. With the electoral vote tied, and the House deadlocked for
thirty-five votes over who would become our third president,
Hamilton persuaded several Federalists to back Jefferson and aban-
don Burr, of whom Hamilton said, “This man has no principle, pub-
lic or private. ...I could scarcely name a discreet man of either
184 Patrick J. BUCHANAN
party in our state, who does not think Mr. Burr the most unfit man
in the U.S. for the office of president.” The “public good,” said
Hamilton, “must be paramount to every private consideration.” ”
His moral courage cost him his life. In 1804, in a duel with Vice
President Burr on the New Jersey shore of the Hudson, Hamilton
refused to fire to wound or kill his enemy. Burr, who had issued the
challenge, had no such qualms. Hamilton was mortally wounded.
His death robbed America of a great statesman and a bold and in-
novative thinker who helped make it the most prosperous, produc-
tive, and free nation in history. He was a man of words who was also
a man of action. No economist who follows him can make such a
claim. Wrote Arthur Vandenberg in 1921, “The Greatest American
gave himself to the Greatest Nation in the cycles of Time. ... We
need his immutable loyalty to the Constitution, his unswerving faith
in the Republic, his unhyphenated attachment to ‘America First.’ ”™
Even in our own time, Hamilton’s ideas continue to inspire. As one
historian wrote in 1950:
As soon as they achieved self government, Canada, Australia, and New
Zealand followed the example of the United States in adopting protec-
tive tariffs to foster their infant industries. Today, wherever the question
of economic development is raised... the arguments of Alexander
Hamilton and the United States are invoked.”
RICARDO AND COMPARATIVE ADVANTAGE
Not until a quarter of a century after the death of Adam Smith
would the ideology of global free trade be grafted onto the free-
market system of Hamilton and Smith.
David Ricardo is credited with discovering the law of compara-
tive advantage: all nations will prosper most if each produces what it
makes cheapest and best, and trades for what it does not. Ricardo’s
friend James Mill summed up the theory as follows:
The Great Betrayal 185
When a country can either import a commodity or produce it at home,
it compares the cost of producing at home with the cost of producing
from abroad; if the latter cost is less than the first, it imports. The cost
at which a country can import from abroad depends, not upon the cost
at which the foreign country produces the commodity, but upon what
the commodity costs which it sends in exchange, compared with the
cost which it must be at to produce the commodity in question, if it did
not import it.”
(This passage is what passes for clarity in economics.)
What Ricardo and Mill are saying is this: if Great Britain is more
efficient than Portugal at making cloth and at making wine, but Por-
tugal’s most efficient industry is wine, Britain should focus on its
most efficient industry, producing cloth, shut down its wineries, and
buy its wine from Portugal. Each nation should produce what it pro-
duces best and trade for what other nations produce best. Thus is the
production of both cloth and wine maximized. “It is this principle,”
Ricardo wrote in 1817, “which determines that wine shall be made
in France and Portugal, that corn shall be grown in America and
Poland, and that hardware and other goods shall be manufactured in
England.”” This principle is the justification for free trade and cre-
ation of a world economy. l
Ricardo’s theory, however, has foundered on the reef of national-
ism. Less-developed nations — America in the nineteenth century,
China today — have refused to cede permanent leadership in ad-
vanced technologies to rival powers. And investors and workers in
advanced countries eventually rebel at being sacrificed to an ab-
straction — just as they are rebelling today.
With the arrival on the scene of John Stuart Mill, son of James Mill,
and his 1848 Principles of Political Economy, the theory of comparative
advantage became defined dogma. Tutored in Greek at three, in
Latin and mathematics at eight, in logic at twelve and political econ-
omy at thirteen, John Stuart Mill, to the intelligentsia of his time,
186 PaTRIck J. BUCHANAN
was “a saint without God.” His following in Crimean War-era
Britain, with its “Charge of the Light Brigade” patriotism, was less
enthusiastic. For J. S. Mill was a socialist with a deep radical streak.
He believed that the traditional British family was “a school of
despotism,” embraced his father’s view that “the creed of Chris-
tianity” was the “ne plus ultra of wickedness,” and declared in 1852
that he would prefer “Communism, with all its chances” to British
society in the Victorian Age.”
Unlike his father and the early classical liberals, Mill was not a
free-trade purist. Indeed, he was the first European intellectual to
make a powerful case for protecting infant industries, though this
had been the practice in the United States since 1789. These indus-
tries, a nation’s hothouse flowers, argued Mill, needed time in the
nursery and shelter from an unexpected hailstorm of imports, to
take root and grow until they could survive in the elements and com-
pete in the world. As trade historian Douglas Irwin writes, “Mill’s
standing and reputation among economists gave intellectual credi-
bility to the infant industry argument for the first time.” ”?
Mill also acknowledged that there were losers from free trade and
proposed a “compensation principle.” Beneficiaries of free trade
should “compensate” victims. In the case of the repeal of Britain’s
Corn Laws, losers would be landowners who saw property values
collapse as foreign grain flooded Britain’s home market.
Free TRADE BECOMES RELIGIOUS DOGMA
Half a century after Smith wrote The Wealth of Nations, free trade
had begun to capture the hearts and minds of intellectuals and tran-
scend the realm of economics to become a new gospel of salvation.
Wrote Mill:
The economical advantages of commerce are surpassed in importance
by those of its effects which are intellectual and moral. It is hardly pos-
The Great Betrayal 1S7
sible to overrate the value, in the present low state of human improve-
ment, of placing human beings in contact with persons dissimilar to
themselves.?!
As early as 1836, classical liberal Henry Fairbairn had looked into
the future and seen free trade coming on the wings of angels:
Seeing then, that in the natural order of things the triumph of Free
Trade principles is now inevitable, magnificent indeed are the prospects
that are opening for mankind. Nations will become united in the golden
bands of peace; science, liberty and abundance will reign among the in-
habitants of the earth; nations will no longer be seen to descend and de-
cline, human life will become prolonged and refined; years will become
centuries in the development of the blessings of existence; and even now
the eye can reach to the age when one language, one religion, and one
nation alone will be existing in the world.”
Whose language, whose religion, Fairbairn does not say. Reading
this passage of vaulting human pride, one recalls the story from
Genesis:
And the whole earth was of one language, and of one speech... . And
they said one to another . . . let us build us a city and a tower, whose top
may reach unto heaven. . . . And the Lord came down to see the city and
the tower. ... And the Lord said, Behold. . . this they begin to do: and
now nothing will be restrained from them, which they have imagined
tido
So the Lord scattered them abroad from thence upon the face of all
the earth. .. . Therefore is the name of it called Babel; because the Lord
did there confound the language of all the earth.”
As Christianity lost its hold on the intelligentsia, free-trade ide-
ology took on the aspect of a messianic faith. Held to the heart, pur-
sued with perseverance, the doctrine must bring us to paradise.
Those who diluted doctrinal purity were not just behind the times,
188 PATRICK J. BUCHANAN
they were heretics to be burned at the stake. Mill’s reasoned argu-
ment that protection of infant industries might justify temporary
tariffs was now moral high treason.
I believe that the harm which Mill has done to the world by the passage
in his book on Political Economy in which he favors the principle of pro-
tection in young communities has outweighed all the good which may
have been caused by his other writings.”
So declared Richard Cobden on his deathbed.
And who was Richard Cobden?
THe GREAT EVANGELIST
Seven decades after Smith published The Wealth of Nations, Richard
Cobden became to free trade what Saint Paul is to Christianity: its
greatest evangelist, a man for whom free trade was the path to
salvation.
Commerce is the grand panacea, which, like a beneficent medical dis-
covery, will serve to inoculate with the healthy and saving taste for civ-
ilization all the nations of the world.”
As much as any man, this Quaker leader of the Anti-Corn
Law League persuaded Britain to lift all barriers to imported grain
and to embrace free trade. Cobden never denied that his agenda
was about much more than cheap grain for the poor. He was a ro-
mantic, a visionary, a master orator. When he rose at Free Trade
Hall in Manchester on January 15, 1846, the audience was so great
that seats in the hall had to be removed so more could be accom-
modated:
I believe that the physical gain will be the smallest gain to humanity
from the success of this principle. I look farther; I see in the Free Trade
The Great Betrayal 189
principle that which shall act on the moral world as the principle of
gravitation in the universe — drawing men together, thrusting aside the
antagonism of race, and creed, and language, and uniting us in the
bonds of eternal peace.”
Free trade, like God’s grace, had salvific power to persuade men
to cast aside hatred and greed and embrace one another in love.
Christians might believe in the millennium, the Second Coming of
Christ, and his earthly rule of a thousand years. Karl Marx might
prophesy the coming of communism, an end to the exploitation of
man by man, the withering away of the state, a world of universal
brotherhood.
But to Richard Cobden, free trade was the way, the truth, and the
light.
A new magazine was begun in 1843 “solely for the purpose of ad-
vocating these principles.” The Economist made an early profession of
faith: “We seriously believe that free trade, free intercourse, will do
more than any other visible agent to extend civilization and moral-
ity throughout the world.” ” To the editors and writers at The Econ-
omist, the voice thundering through Free Trade Hall was preaching
the new gospel:
I have looked even farther. I have speculated, and probably dreamt, in
the dim future — say, a thousand years hence . . . on what the effect of
the triumph of this principle may be. I believe that the effect will be to
change the face of the world, so as to introduce a system of government
entirely distinct from that which now prevails. I believe that the desire
and the motive for large and mighty empires; for gigantic armies and
great navies — for those materials which are used for the destruction of
life and the desolation of the rewards of labor — will die away; I believe
that such things will cease to be necessary, or to be used when man be-
comes one family, and freely exchanges the fruits of his labour with his
brother man... .I believe that the speculative philosopher of a thou-
sand years hence will date the greatest revolution that ever happened in
the world’s history from the triumph of the principle which we have met
here to advocate.*
190 Patrick J. BUCHANAN
Men emptied of an older faith were enthralled. Across the Chan-
nel, French economist Frédéric Bastiat wrote with the same mil-
lenarian fervor:
Let us banish from political economy all expressions borrowed from the
military vocabulary: to fight on equal terms, conquer, crush, choke off, be de-
feated, invasion, tribute. What do these terms signify? Squeeze them, and
nothing comes out. Or rather, what comes out is absurd errors and
harmful preconceptions. Such expressions are inimical to international
cooperation, hinder the formation of peaceful, ecumenical and indis-
soluble union of the peoples of the world, and retard the progress of
mankind.”
Cobden and Bastiat were one-worlders; they looked to free trade
to ring down the curtain on the theatrics of nations and bring about
the “ecumenical and indissoluble union of the peoples of the world.”
Like Hume and Ricardo, Cobden was a “Little Englander,” a paci-
fist who hated the empire and saw free trade and disarmament as in-
separable. “It would be well to engraft our free trade agitation upon
the peace movement,” he declared. “They are one and the same
cause.” ® Bastiat urged France to embrace unilateral disarmament,
proclaiming in 1849, “I shall not hesitate to vote for disarmament
... because I do not believe in invasions,” *! and instructed France on
how to deal with the problem of invading armies:
If the emperor Nicholas should venture to send 200,000 Muscovites, I
sincerely believe that the best thing we could do would be to receive
thein well, to give them a taste of the sweetness of our wines, to show
them our stores, our museums, the happiness of our people, the mild-
ness and equality of our penal laws, after which we should say to them:
Return as quickly as possible to your steppes and tell your brothers what
you have seen.”
Economic historian William Hawkins wryly observes: “Bastiat
did not bother to mention how he would get the Russians to return
to their steppes if they did not wish to go. Nor was this an academic
The Great Betrayal 19
question given France’s problems over the next century with ‘visit-
ing Germans.’ ”*
Reading Bastiat, one is reminded of Orwell’s observation: only an
intellectual could have made a statement like that; no ordinary man
could be such a fool. But Bastiat was unstoppable: “Free trade means
harmony of interests and peace between nations. . . . We place this
indirect and social effect a thousand times above the direct or purely
eoonomiceticen’*
Paradoxically, one may hear tough-minded U.S. conservatives
today, champions of “peace through strength,” cite as mentors
utopians and pacifists like Bastiat and Say, who declared, “Far from
protecting [the national security], a great military apparatus is what
most jeopardizes it.” “All nations,” added Say, “are friends in the na-
ture of things.” *
What is the common thread that runs from these classical liber-
als to modern conservatives? An intense hostility to statism, to the
idea of strong national governments. But in the nineteenth century
the bloated, intrusive welfare state that conservatives abhor did not
exist. National security was the business of cabinets and kings. It was
military preparedness, great power diplomacy, and empire building
that the classical liberals savaged in language to warm the heart of
any New Leftist.”
Bastiat’s one-worldism is anticonservative, antitraditionalist, and at
bottom, heretical. It holds out the promise that if we follow the
gospel of free trade, paradise can be created on earth. This one-
worldism is also deeply un-American. The “ecumenical and indis-
soluble union of the peoples of the world” that Bastiat and Cobden
dreamed of is the antithesis of what Jefferson declared to be the aim
of our Revolution, i.e., the severing of the “Political Bands which
have connected” us to England and for Americans to “assume
among the powers of the Earth the separate and equal station to
which the Laws of Nature and of Nature’s God entitle [us].”*’
Ultimately, global free trade means global interdependence. But
independence is why the Revolution was fought, independence is
192 PATRICK J. BUCHANAN
why the Founders came to Philadelphia, independence is why the
American system was invented. Invited on nis deathbed to make a
toast, John Adams uttered two words: “Independence, forever!”
That is the American heritage.
Utopian as the vision of Ricardo, Cobden, Bastiat, and Say was, it
caught fire in the minds of men and began to emerge in the rhetoric
of statesmen. Free trade, military disarmament, and world govern-
ment would become points three, four, and fourteen of the Fourteen
Points of Woodrow Wilson.
America went her own nationalist way, but in England Cobden
and the free traders triumphed. The Corn Laws were repealed.
Grain poured in. Britain threw her markets open to the goods of all
nations, some of which, like the United States, imposed ever steeper
tariffs on British imports. Ignoring Adam Smith’s advocation of tar-
iffs as “revenge” on nations that closed their markets to British
goods, Britain sailed on through the century, proclaiming the new
gospel of unfettered free trade.
Perceived imperial interest caused British statesmen to go along.
By free trade, wrote Lord Macaulay in 1842,
we might supply the whole world with manufactures, and have almost a
monopoly of the trade of the world. . . . whatever temporary distress we
might feel, we should be cheered by the reflection, that other nations
were raising abundant provisions for us on the banks of the Mississippi
and the Vistula.*
Victorian economist William Stanley Jevons was “even more
lyrical in his description of the entire planet as an agricultural hin-
terland of industrial Britain.” ? Jevons wrote in 1865 that
the plains of North America and Russia are our corn-fields; Chicago
and Odessa our granaries; Canada and the Baltic are our timber forests;
Australasia contains our sheep farms, and in Argentina and on the west-
ern prairies of North America, are our herds of oxen; Peru sends her sil-
The Great Betrayal 193
ver, and the gold of South Africa and Australia flows to London; the
Hindus and the Chinese grow tea for us, and our coffee, sugar, and spice
plantations are all in the Indies. Spain and France are our vineyards, and
the Mediterranean our fruit-garden; and our cotton-grounds, which for
long have occupied the Southern United States, are now being ex-
tended everywhere in the warm regions of the earth.”
Only it did not quite work out that way. While free trade brings
immediate visible benefits — in Britain’s case, cheap imported food
to feed the British working class — the debilitating effects are at first
hidden. But within decades of the Corn Laws being repealed, Britain
was so dependent on imported grain that it could no longer feed it-
self. With U.S. manufactures pouring in, it began to lose its indus-
trial supremacy. Soon, it would lose the capacity to defend the
sea-lanes on which it now depended. When the Great War came,
free-trade Britain had to rely on protectionist America to deliver the
food and weapons essential to British survival.
Free trade is not free.
A GERMANIC EcHo oF HAMILTONIAN NATIONALISM
Across the Atlantic, it was not Smith, Ricardo, or Cobden who car-
ried the day. Hamilton had won the argument and constructed the
system under which America had prospered for half a century. His
heirs were Henry Clay; Mathew Carey, the Irish-American pam-
phleteer; his son, Henry C. Carey; Hezekiah Niles and his Niles
Weekly Register — and Friedrich List.
A professor of political economy, List had fled to America in the
1820s to escape imprisonment for having criticized the government
of Wiirtemberg. He took up farming near Harrisburg and edited a
German-language newspaper. As he had arrived with letters of in-
troduction from the legendary Lafayette, List was able to develop
friendships with Jackson, Clay, and even the aging Madison. In the
battle over the 1828 Tariff of Abominations, List volunteered his
194 Patrick J. BUCHANAN
pen to the Union cause. In a series of letters to C. J. Ingersoll, pres-
ident of the Pennsylvania Society for the Promotion of Manufac-
tures, published in 1827 as Outlines of American Political Economy,
List made the intellectual case for the system devised by Hamilton
and perfected by Clay.
The Ricardian school had by then conscripted Adam Smith, and
List felt the sting of challenging the political correctness of his day:
The system of Adam Smith has assumed so great an authority, that
those who venture to oppose it, or even to question its infallibility, ex-
pose themselves to be called idiots. Mr. Say, throughout his whole work,
is in the habit of calling all objections to his sublime theory the opinion
of the rabble, vulgar views, etc. etc. . . . These infallible theorists assure
us, as gravely as modestly, that minds like those of Edward III, Eliza-
beth, Colbert, Turgot, Frederick II, Joseph II, Pitt, Fox, Napoleon
Bonaparte, Washington, Jefferson, Hamilton, a chart of the minds of
the most enlightened men of all ages, were not enlightened enough to
comprehend the true principles of political economy.”
An admirer of America, List became a citizen and returned in
1832 to Germany, appointed by Jackson as consul in Hamburg. The
Germans refused him. List eventually took up the consul post in
Leipzig, where he began urging the Germans to establish a federal
and constitutional nation modeled on the United States. But in
1846, at age fifty-seven, suffering a painful terminal illness, List
killed himself.
Five years before his death, List published The National System of
Political Economy, which for a time would attain a prominence to rival
The Wealth of Nations. Leaning heavily on Hamiltonian ideas and
America’s experience, List gave three basic arguments for protec-
tionism.
First, “infant industries” of developing nations had to be pro-
tected. Why should Britain dominate world manufacturing simply
because the British arrived first in the Industrial Age? List saw
Britain’s advocacy of free trade as naked self-interest. In a famous
The Great Betrayal 195
depiction, he described the doctrine as a “clever device that when
anyone has attained the summit of greatness, he kicks away the lad-
der by which he has climbed up, in order to deprive others of the
means of climbing up after him.” ”?
Second, though protectionism required short-term costs, such
costs should be imposed for long-term gain. Like Hamilton he took
the long view. A nation that does not make such sacrifices risks being
confined forever to producing raw materials and grain, which could
never give it the standard of living that manufacturing could. Also in
echo of Hamilton, List argued that manufacturing was superior to
agriculture.
To Ricardo’s argument that we should abandon the home indus-
try and rely on imports if a foreign nation could manufacture more
cheaply, List’s reply was withering: “Who would be consoled for the
loss of an arm by the knowing that he had nevertheless bought his
shirts forty percent cheaper?” ”
Third, as scholar and free-trade advocate Richard Ebeling writes,
List introduced Europe to the concept of “national interest.”
List accused Adam Smith and other free-trade economists of “cos-
mopolitanism.” Men were not a part of a global community, List ar-
gued, in which their interests harmonized in a network of international
commerce and division of labor. Between man and humanity was the
nation. ... Each nation had its own history, culture, stage of develop-
ment and position of power relative to other nations in the world. And
the economic prosperity of each man was tied up with the success or
failure of his own nation’s struggle for political and economic influence
and control in the global competition between nation-states. ... For
the nation’s prosperity and betterment, it was often necessary for the in-
dividual to sacrifice his private interest in the arena of trade and profit
opportunities for the national interest of the country to which he be-
longed.“
List had hit the Achilles’ heel of the Cobdenites. They celebrated
the benefit of free trade for mankind, not the nation. But to List,
196 Patrick J. BUCHANAN
mankind did not command one’s allegiance; the world had no hold
on the heart — it was nation and country that commanded love and
loyalty.
Between each individual and entire humanity . . . stands the Nation, with
its special language and literature... origin and history... manners
and customs, laws and institutions . . . with its separate territory; a soci-
ety, which, united by a thousand ties of mind and of interests, combines
itself into one independent whole.”
List savaged the “cosmopolitical school,” mocking that these
men wrote for a world in which nations cooperated, though such a
world did not exist. In the real world, said List, Europe’s nations
were rivals, antagonists with interests in conflict. Each was strug-
gling for a superior place in the sun. Moreover, they were at differ-
ent stages of development. When List wrote in 1841, neither
Germany nor Italy was a unified nation.
Whereas the classical economists argued that the choices of con-
sumers would determine what was best for the country, List dis-
sented furiously:
The foreign trade of a nation must not be estimated in the way in which
individual merchants judge it. . . . The nation is bound to keep steadily
in view all these conditions on which its present and future existence,
prosperity, and power depend.”
The classical liberals had declared, “Consumption is the sole end
and purpose of all production.” List retorted that only production
“renders consumption possible.” The “power of producing wealth,”
he wrote, “is therefore infinitely more important than wealth it-
eli,” ©’
The forces of production are the tree on which wealth grows....
The tree which bears the fruit is of itself of greater value than the
fruit itself... . The prosperity of a nation is not... greater in the pro-
The Great Betrayal 7
portion in which it has amassed more wealth (1.e., values of exchange),
but in the proportion in which it has more developed its powers of
production.”
List would be appalled to watch Americans get rich on the soar-
ing stock prices of companies whose profits were exploding because
they had moved factories overseas and exchanged American labor
for Asian labor.
List had an advantage over his contemporaries. Unlike the clas-
sical liberals who had a theory, List had a working model. His ideas
had been tested by Washington, Madison, and Jackson. The great
Americans were all economic nationalists; and it was evident to the
entire world that the United States was the economic marvel of
the age.
List had defined the theory by which the Founding Fathers had
been guiding the Republic since the Tariff Act of 1789. But in his
1841 book, List went far beyond the economic nationalism of
Hamilton. He began to lay the intellectual foundation for wholesale
government intervention and the state socialism of imperial Ger-
many. Bismarck would keep a copy of List’s work on his desk and
make it the standard text of college students. When he came to
power, the Iron Chancellor put many of List’s ideas into practice.
But Bismarck’s interventions in the German economy far exceeded
anything free-market Americans like Washington, Hamilton, and
Clay would have tolerated in a nation dedicated to freedom.
By now other voices were weighing in on the “momentous” ques-
tion. In the year John Stuart Mill wrote Principles of Political Economy,
Karl Marx produced his Communist Manifesto and delivered his
thoughts on free trade to the Democratic Association of Brussels on
January 9, 1848:
The Protective system . . . is conservative, while the Free Trade system
works destructively. It breaks up old nationalities and carries antago-
198 PATRICK J. BUCHANAN
nism of proletariat and bourgeoisie to the uttermost point. In a word,
the Free Trade system hastens the Social Revolution. In this revolu-
tionary sense alone, gentlemen, I am in favor of Free Trade.”
Marx was right: the protective system is “conservative.” And free
trade is raising the levels of antagonism in Europe and the United
States — between working families with falling standards of living
and national elites reveling in the Global Economy. Cobden agreed
with Marx about the destructive effects of free trade. Detesting the
empire, he believed free trade would kill it. For under free trade, he
said, the British colonies
will be at liberty to buy wherever they can buy cheapest, and to sell in
the dearest market. They must be placed in the same predicament as if
they were not part of His Majesty’s dominions. When, then, will be the
semblance of a plea for putting ourselves to the expense of governing
and defending such countries?
The insight of Marx and Cobden about free trade dissolving
bonds and pulling apart empires applies as well to huge and diverse
nations — like the United States.
PHILOSOPHICAL Roots OF FREE- [RADE [HEORY
The awesome success of the American system notwithstanding, free
traders converted most economists to the pure dogma: no state in-
terference with trade! To Adam Smith, who advocated tariffs as “re-
venge” on nations that closed their markets, Say bluntly responded:
Do not retaliate!
Undoubtedly, a nation that excludes you from all commercial inter-
course with her, does you an injury; — robs you, as far as in her lies, of
the benefits of external commerce. . . . But it must not be forgotten that
retaliation hurts yourself as well as your rival; that it operates, not de-
The Great Betrayal 199
fensively against her selfish measures, but offensively against yourself.
... The only point in question is this, what degree of vengeance you are
animated by, and how much will you consent to throw away upon its
gratification.”
Bastiat agreed: “A protective tariff duty is a tax directed against a
foreign product; but we must never forget that it falls back on the
home consumer.”®” Today’s libertarians have kept the faith. Milton
Friedman, the Nobel Prize winner, says America should be de-
lighted with foreign nations that subsidize exports to capture U.S.
markets:
Another source of “unfair competition” is said to be subsidies by foreign
governments to their producers that enable them to sell in the United
States below cost. Suppose a foreign government gives such subsidies,
as no doubt some do. Who is hurt and who benefits? To pay for the sub-
sidies the foreign government must tax its citizens. They are the ones
who pay for the subsidies. U.S. consumers benefit. They get cheap TV
sets or automobiles or whatever it is that is subsidized. Should we com-
plain about such a program of reverse foreign aid?”
Following Friedman, America allowed subsidized foreign com-
panies from Sony to Airbus to destroy U.S. manufacturers, from TV
and textile producers to builders of airplanes and autos. Yet, even
though Japan uses subsidies to take over our industries, and shuts us
out of its markets, we must not retaliate. After all, Japan is just send-
ing us “reverse foreign aid,” “U.S. consumers benefit,” and the con-
sumer is king.
“Engine Charley” Wilson was crucified for saying, “What’s good
for America is good for General Motors.” Dr. Friedman is ap-
plauded for declaring, “Whats good for consumers is good for
America.” Henry Clay carried such thinking to its logical end:
If the governing consideration were cheapness, if national indepen-
dence were to weigh nothing; if honor nothing; why not subsidize for-
eign powers to defend us; why not hire Swiss or Hessian armies to
200 Patrick J. BUCHANAN
protect us? Why not get our arms of all kinds, as we do, in part, the
blankets and clothing of our soldiers, from abroad?*
Nevertheless, as the nineteenth century unfolded, the idea that in
free trade men had found the Rosetta stone of world peace put down
roots and made converts. Intellectuals were enthralled by the doc-
trine. As the French liberal economist Frédéric Passy wrote in the
1860s:
Some day all barriers will fall; some day mankind, constantly united by
continuous transactions, will form just one workshop, one market, and
one family....And this is... the grandeur, the truth, the nobility, I
might say, the holiness of the free trade doctrine; by the prosaic but ef-
fective pressure of [economic] interest it tends to make justice and har-
mony prevail in the world.”
This utopian virus has been passed down through the genes of
generations of economists. In the midst of the horrific war with
Hitler’s Reich, with all the savagery of which nations are capable on
gaudy display, the great Austrian Ludwig von Mises succumbed to
this flight of fancy:
We need to imagine a world in which liberalism is supreme. . . . In this
liberal world... there are no trade barriers; men can live and work
where they want. Frontiers are drawn on the maps but they do not hin-
der the migrations of men and shipping of commodities. In such a world
it makes no difference where the frontiers of a country are drawn. No-
body has a special interest in enlarging the territory of the state in which
he lives; nobody suffers loss if a part of this area is separated from the
state... . There would be no more wars because there would be no in-
centive for aggression. War would not pay. Armies and navies would be
superfluous. Policemen would suffice for the fight against crime. In
such a world the state is not a metaphysical entity but simply the pro-
ducer of security and peace. ...
The reality in which we have to live differs very much from this per-
The Great Betrayal 201
fect world of ideal liberalism. But this is due only to the fact that men
have rejected liberalism for statism. They have burdened the state,
which could be a more or less efficient night-watchman, with a multi-
tude of other duties.”
At this passage statesmen can only shake their heads in disbelief.
As there is no historic replica of the mythical state of Mises’s rever-
ies, of what relevance is this utopian liberalism as a guide to national
policy?
When men cease to believe in God, said G. K. Chesterton, they
do not then believe in nothing; they believe in anything. Briefly, this
is the origin of free-trade theory. From the Greek Epicurus came
the principle that in this life that ends with death, the greatest plea-
sure is the greatest good. The Utilitarian Jeremy Bentham built on
Epicurus’s insight. “The greatest good for the greatest number” is
the only proper business of government. Came then Ricardo with
his iron law of comparative cost: worldwide free trade must produce
the greatest variety of goods at the cheapest price, thus the greatest
happiness for all mankind. Therefore, nations must embrace global
free trade if we are to achieve the best of all possible worlds. As
Bertrand Russell, godson of J. S. Mill, wrote, the ideas of Epicurus
were
brought to England by Bentham and his followers; this was done in
conscious opposition to Christianity, which these men regarded as hos-
tilely as Epicurus regarded the religions of his day.”
Free-trade ideology is thus a product of a shift in perspective,
from a God-centered universe to a man-centered one. It finds its in-
tellectual roots in the minds of men, most of whom were pacifists
and atheists and looked to the end of empires and nations in a brave
new world in which the buying and selling of earthly goods would
bring mankind as close to paradise as these utopians believed was
possible. It is remarkable that Godly men and women celebrate such
dogmas and such dogmatists!
* * *
202 Patrick J. BUCHANAN
As decades passed after repeal of the Corn Laws, the first doubts
began to arise in England about the secular faith they had em-
braced, especially as protectionist America and Germany seemed
to be eclipsing the empire. In a reflective essay, John Stuart Mill
wrote:
We give to our rivals a free market of 43,000,000 persons in the United
Kingdom to add to their own free market. Thus the United States pos-
sess an open market of 82,000,000 persons in the United States, plus an
open market of 43,000,000 persons in Great Britain, making, alto-
gether, 125,000,000. Similarly, Germany possesses an open market of
43,000,000 persons in Great Britain. As against this, we possess only
such residue of our open market of 43,000,000 as the unrestricted com-
petition of foreign nations leaves unimpaired.... We call ourselves
Free Traders, but we have never secured Free Trade for ourselves; we
have merely succeeded in enlarging the area within which our Protec-
tionist competitors enjoy Free Trade.®
THE GREAT APOSTATE
In the first half of the twentieth century, the world’s most influential
economist was John Maynard Keynes, who began his career as a
free-trade purist. As an undergraduate, Keynes had been secretary of
the Cambridge University Free Trade Association. In 1923 he wrote
of free trade in lyrics as inspired as those of Cobden and Say:
We must hold to free trade, in its widest interpretation, as an inflexible
dogma, to which no exception is admitted, wherever the decision rests
with us. We must hold to this even where we receive no reciprocity or
treatment and even in those rare cases where by infringing it we could
in fact obtain a direct economic advantage. We should hold to free trade
as a principle of international morals, and not merely as a doctrine of
economic advantage.”
The Great Betrayal 203
Few passages better reveal how free-trade dogma had moved
from the realm of economics to that of a religious faith. Keynes here
is a preacher, urging his congregation to stand by church doctrine
even if martyrdom calls. His 1923 position is comparable to that of
a Christian Scientist who refuses to let his child undergo surgery,
even though such refusal may mean the child’s death. One may ad-
mire such adherence to principle in an individual. In a nation such
ideological rigidity can be suicidal.
“If there is one thing that protection can not do,” Keynes de-
clared, “it is to cure unemployment.”
There are some arguments for protection, based upon its securing pos-
sible but improbable advantages, to which there is no simple answer.
But the claim to cure unemployment involves the protectionist fallacy
in its grossest and crudest form. ... The proposal to cure the present
unemployment by a tariff on manufactured goods... is a gigantic
fraud.”
As the Great Depression struck, deepened, and spread, how-
ever, the paragon of free traders, the most renowned economist of
his age, began to undergo a conversion. And suddenly Keynes
recanted.
In 1930 he informed the government that the best way to in-
crease employment was a tariff to cut imports into the British Isles!
The reaction among England’s elites was as though Pius XI had sud-
denly beatified Henry VIII. Late that same year, Keynes described
the benefits of a tariff as “simply enormous” and urged a 10 percent
tariff on all imports and a 10 percent bounty on exports to protect
British industry. Such a tariff, said Keynes, would have the benefit of
a 10 percent devaluation of the British pound.
In 1931 publication of Keynes's revised views “caused a sensa-
tion.” For Keynes was proposing “import duties of 15% on all man-
ufactured and semi-manufactured goods without exception, and of
5% on all foodstuffs and certain raw materials.” ” “In so far as it leads
to the substitution of home-produced goods for goods previously
204 Patrick J. BUCHANAN
imported,” Keynes argued, “it will increase employment in this
country.”” Like Jefferson, Keynes had come to see free trade as a be-
trayal of his country, to embrace economic nationalism, and to scoff
at the very arguments he once made. A shocked William Beveridge
of the London School of Economics denounced Keynes as an apos-
tate. Keynes fired back:
Defense of free trade theory is, I submit, the result of pure intellectual
error, due to a complete misunderstanding of the theory of equilibrium
in international trade — an error which it is worthwhile to extirpate if
one can, because it is shared, I fancy, by a multitude of less eminent free
traders. Does he [Beveridge] believe that it makes no difference to the
amount of employment in this country if I decide to buy a British car
instead of an American car? ”
Britain’s leading champion of free trade had became a disciple of
Hamilton: “I am no longer a free trader . . . to the extent of believ-
ing...in abandoning any industry which is unable for the time
being to hold its own.” In a now-famous article, “National Self-
Sufficiency,” the most honored economist of his age showed himself
a man of moral courage. Keynes renounced free trade. And after a
century of experimentation with the theory, his country followed. It
takes fortitude for a renowned man to concede that he has been
wrong, that his critics were right, and then to adopt a position —
protectionism — his contemporaries would decry as retarded if not
immoral. As Keynes wrote in his apologia:
I was brought up, like most Englishmen, to respect free trade not only
as an economic doctrine which a rational and instructed person could
not doubt but almost as a part of the moral law. I regarded departures
from it as being at the same time an imbecility and an outrage. I thought
England’s unshakeable free trade convictions, maintained for nearly a
hundred years, to be both the explanation before man and the justifica-
tion before heaven of her economic supremacy.
[Today] the orientation of my mind is changed.”
The Great Betrayal 205
Despite Keynes’s recantation, he and List remain exceptions to
the rule: famous economists are free traders. Yet, until our own time,
few leaders embraced the vision. Clay once wryly noted that free
trade is “everywhere proclaimed; but nowhere practiced. It is truth
in the books of European political economists. It is error in the prac-
tical code of every European state.” ” For centuries economists rue-
fully conceded it. “The Protectionist Creed arises like a weed in
every soil,” wailed the classical economist Walter Bagehot:” “The
doctrine of free trade, however widely rejected in the world of poli-
tics, holds its own in the sphere of the intellect,” observed Frank
Taussig, the first chairman of the U.S. Tariff Commission.” Wrote
Milton Friedman,
Ever since Adam Smith, there has been virtual unanimity among econ-
omists, whatever their ideological position on other issues, that inter-
national free trade is in the best interest of the trading countries and the
world. Yet, tariffs have been the rule.”
What causes those who control the destiny of nations to reject
free trade? Why is the faith so often abandoned under duress? Why
did Jefferson and Madison, free traders in younger days, become
economic nationalists? Why did Keynes, a purist from college days,
give up the faith and convert to protectionism? In each case experi-
ence tempered ideology and altered belief. For the abstract loveli-
ness of the theory dissipates in the hard reality of dying factories and
foreign danger. Moreover, leaders know that every great industrial
power has become so via economic nationalism: Britain before 1850;
Germany from 1870 to 1914; postwar Japan; China today; and most
especially and dramatically, the United States of America from 1865
to 1914 — as we shall now see.
Chapter 11
‘Tue [IME OF THE
PROTECTIONISTS
Free trade results in giving our money, our
manufactures, and our markets to other
nations... . [It] will bring widespread dis-
content. It will revolutionize values. It will
take away more than one half of the earning
capacity of brain and brawn.’
— William McKinley, 1892
E.. 1861 to 1913 Grover Cleveland was the only Democrat to
be elected president. His two terms (1885-89, 1893-97) spliced
fifty-two years of Republican rule. The other presidents between
Lincoln and Theodore Roosevelt — Andrew Johnson, U. S. Grant,
Rutherford B. Hayes, James Garfield, Chester Arthur, Benjamin
Harrison, and William McKinley — are not generously remem-
bered by history. Their era has been called the Gilded Age, the days
of the “robber barons” — of Jay Gould and Jim Fisk, Andrew
Carnegie and Cornelius Vanderbilt, John D. Rockefeller and J. P.
Morgan, E. H. Harriman and James J. Hill. Theirs, it was said, was
the time of the Great Barbecue, when American workers were ex-
ploited by the most rapacious and repulsive of all capitalists, when
government was bought and sold, when the common man was at the
mercy of a plutocracy faithful to its motto: The Public Be Damned!
The Great Betrayal 207
But that is not the whole story. Indeed, it is not the real story of
this era of American dynamism and progress unlike any the world
had ever seen. These were the Confident Years, an era of intense
American nationalism, when the nation continued to follow the wise
counsel of Washington and stayed out of Europe’s quarrels. The era
came to a thunderclap end in 1898, when William McKinley —
goaded by Assistant Secretary of the Navy Theodore Roosevelt,
Senator Henry Cabot Lodge, and fire-breathing child-publisher
William Randolph (“You furnish the pictures and Pll furnish the
war!”) Hearst — took America to war with Spain. After Admiral
George Dewey’s stunning victory at Manila Bay, the United States
paused, then brashly crashed the world’s most exclusive club: the
Western imperialists. McKinley came down after a long night of
prayer to tell a startled press that God himself had told him to take
the Philippines. For the first time in its history, America assumed
rule over an alien people it had no intention of letting become
American citizens. Tempted in our Eden, we had eaten the forbid-
den fruit of imperialism.
‘To pacify, police, and protect its new empire, America needed a
new army and world-class navy, which required even more revenue
than a bountiful tariff could provide. But we are getting ahead of
ourselves.
MORRILL GUARDS THE GATE
From Appomattox to century’s end, the recurring problem with the
tariff was one unfamiliar to our generation; the tariff produced too
much revenue. Every year from 1866 to 1893, the government ran a
surplus.
After Lee’s surrender, the army had been mustered out, the navy
was sold for scrap — and the government shrunk. Yet, the Morrill
‘Tariff remained, producing a rising stream of revenue. In 1883 a Re-
publican Congress created a tariff commission to recommend re-
forms. While President Arthur stacked it with protectionists, it did
208 Patrick J. BUCHANAN
its work and urged an average 25 percent reduction in tariff rates.
The reform bill, however, had the misfortune to be taken into cus-
tody by a Senate-House conference that tore up the commission’s
work, ignored the bills sent over from both chambers, and wrote a
new bill pushing tariffs even higher. Signed by Arthur, the law was
of such dubious paternity that it came to be known as the Mongrel
Tariff.
Until Grover Cleveland’s election in 1884, all tariff battles had been
resolved as decisively in favor of Republicans who adhered to the
Lincoln tradition of protectionism as had the war in favor of the
Union. And the watchdog of the tariff was the now-legendary Justin
Morrill.
Morrill had entered Congress in 1855 as a Whig and had affixed
his name to the tariff laws of 1861-65, which Henry Carey had
called the “most important legislation” ever enacted by Congress.
By 1885 the crusty Vermonter was chairman of the Senate Finance
Committee. Having arrived in Congress half a decade before Fort
Sumter, he would not leave until after Manila Bay. Like Cerebus,
Morrill guarded the gates against any weakening of the tariff that
protected his beloved country. Justin Morrill believed in “America
first.” In 1857 he had declared his allegiance: “I am for ruling Amer-
ica for the benefit, fist, of Americans, and for the ‘rest of mankind’
afterwards.”’ And in 1860 he had equated free trade with economic
treason:
There is a transcendental philosophy of free trade, with devotees as ar-
dent as any of those who preach the millennium. . . . Free trade abjures
patriotism and boasts of cosmopolitism. It regards the labor of our own
people with no more favor than that of the barbarian on the Danube or
the cooly on the Ganges.’
But Morrill’s new adversary was formidable. A reform Democrat
and governor who had stood up to Tammany Hall, Cleveland had
The Great Betrayal 209
bested the Republicans’ “plumed knight,” James G. Blaine. The
Cleveland-Blaine campaign was the most exciting race since the
Civil War. Blaine, who had seized his party’s nomination away from
President Arthur, was an economic nationalist who looked on tariffs
as the pillars of an “industrial policy under which the nation has
prospered so marvelously since the close of the war.”* Hugely pop-
ular with the party rank and file, Blaine was detested by reformers,
who believed he had prostituted the speakership of the House and
was no better than a common grafter. Still, Blaine had the election
won until, just days before the balloting, a dim-witted clergyman at
a New York rally for Blaine castigated Democrats as the party of
“rum, Romanism, and rebellion.” Insulted Irish Catholics moved at
once into Cleveland’s camp, giving him the Empire State by 1,149
votes out of more than a million cast — and the presidency.
Watching the surpluses pile up, from the Lincoln-Morrill tariff
rates, Cleveland decided that the U.S. tariff schedules were “vicious,
inequitable and illogical” and directed Congress to produce a tariff
“for revenue only.” Reformers, who had come to believe that pro-
tective tariffs protected the profits of the powerful industrialists cor-
rupting U.S. politics, hailed Cleveland’s courage. But in raising the
issue, Cleveland slipped; he used the word “free,” exposing himself
to the dreaded charge that he was a secret free trader. Republicans
pounced. “There’s one more President for us in Protection,” crowed
Blaine.’
Cleveland hastily backpedaled, accusing his opponents of
“bandying epithets.” é But he did not yield. His entire third message
to Congress in December of 1887 was a frontal assault on the tariff,
at the Republicans’ strongest point: protection. The great battles
fought in the time of Jackson and Calhoun, of Polk and Lincoln,
were resumed.
Congressman William McKinley emerged as the champion of
Republican orthodoxy. At the 1888 Republican convention, he sav-
aged Cleveland’s proposed tariff cuts as having been advanced “at
rai
w itid iG |
A ,
Grover Cleveland reaches for a third term,
but his “free trade” position is his vulnerability.
Special Collections Department, Alden Library, Obio University
the joint behest of the whiskey trust and the agents of foreign man-
ufacturers.”’ The charge was grossly unfair, but Republican car-
toonists piled on, mocking Cleveland as a supplicant of John Bull.
Once again, the tariff was a central issue in a presidential election.
Meanwhile, Cleveland was having a hellish time escaping the de-
tested label of free trader. “It is a condition which confronts us, not
a theory,” he angrily protested. But McKinley and Ohio’s senator
John Sherman would not let him wriggle off the hook.
Sherman dismissed the President’s attempts at redefinition as a “delu-
sion and a snare.” If Cleveland and the Democrats had their way, Sher-
man said, “It is the protective industrial policy built by the Republican
party that would break down.”°
The Great Betrayal lal
The Chicago Tribune thought McKinley’s hard tariff line a blun-
der that would cost Republicans the election. But late in the cam-
paign, the Republicans got a break to even the score for the “rum,
Romanism, and rebellion” gaffe of 1884. The Los Angeles Times
broke a story that British ambassador Sir Lionel Sackville-West
had written — in what he thought was a confidential letter to an
English-born naturalized American — that Grover Cleveland was
considered a good friend by the mother country.
Sackville-West had been had. His actual correspondent was one
George Osgoodby, who had used the phony British-sounding name
of Murchison. When the letter exploded in the press, Republicans
blistered Cleveland as a toady of free-trade Britain who had sold out
for British gold. THE BRITISH LION’S PAW THRUST INTO AMERICAN
POLITICS TO HELP CLEVELAND roared the headline of one New York
newspaper. BOUNCE HIM echoed the New York World.
Muttering bitterly about “the damned Englishman,” Cleveland
had Sackville-West sacked. The British were enraged at the diplo-
matic insult, but the Anglophobic Irish-Americans had heard
enough. If Cleveland was Mother England’s boy, Benjamin Harrison
was their man.”
Osgoodby’s trick worked beautifully. For not only was free trade
considered an alien idea, while protectionism was Americanism, free
trade was the policy that the detested British were attempting to fas-
ten on the world, it was believed, for their own selfish benefit.
Cleveland was now carrying too much weight in his saddlebags.
Harrison evicted him from the White House, and the Republicans
took over Congress.
Man of the hour: William McKinley.
THe McKINLEY TARIFF
As biographer Margaret Leech writes, McKinley was a man utterly
unlike the academic free-trade enthusiasts of his time:
212 Patrick J. BUCHANAN
All the circumstances of McKinley’s youth had favored his adherence to
the Republican principle of the protective tariff. The very village of his
birth had been named for Hezekiah Niles, an early protectionist. The
duty on foreign iron had not been an abstract idea to an ironfounder’s
son, but the source of bread and butter, and memories of want rang in
McKinley’s phrases when he spoke of the low-tariff years of his boy-
hood. ...He carried to Congress an emotional conviction that the
solution for all the country’s economic ills was to make the already high
tariff rates still higher."
The boy was a patriot. Within three months of Fort Sumter,
seventeen-year-old Bill McKinley had volunteered and was on
his way to the Shenandoah Valley with the Twenty-third Ohio to
face the army of Stonewall Jackson. On a bloody Maryland field
near Antietam Creek, where more Americans died than had been
killed in battle in all of America’s previous wars together, the
teenager rode a mule into the thick of the fighting, to carry hot
meat and coffee to the Union troops. The future president had
been witness to the bloodiest day in American history. The memory
of the dead and wounded on that Sharpsburg field would never
leave him.
In 1864, when he obtained a captaincy, he saw hot fighting in the Val-
ley, and had more than one horse shot [from] under him. He distin-
guished himself at the Union repulse at Kernstown by a daring gallop
under fire to give an unsupported regiment the signal to retreat.
(Colonel Rutherford B.] Hayes commented on his gallantry at Win-
chester. His conduct at Opequan was officially mentioned. After service
on the staffs of various generals, McKinley was mustered out in 1865,
with the brevet commission of major, signed “A. Lincoln,” for gallant
and meritorious service in the Shenandoah Valley.”
This was the man of whom Theodore Roosevelt said, “[he] has
no more backbone than a chocolate eclair!” Roosevelt was not the
first to misjudge the modest man from Canton who was never given
to egotism or boastfulness.
The Great Betrayal 23
On returning to Congress, McKinley exploited his new national
prestige to declare himself for Speaker of the House. He lost to the
greatest parliamentary leader of his day, Thomas B. Reed of Maine,
but as consolation prize, he was awarded the chairmanship of Ways
and Means. There, he would write the McKinley Tariff of 1890.
Had he defeated Reed, McKinley would later say, he would have
spent the rest of his life in Congress.
Officially titled “an act to reduce revenue,” the McKinley bill
proposed to cut $50-$60 million from the Treasury’s income by
ending tariffs on raw sugar and molasses. ‘Tariffs were maintained,
raised, or initiated, however, on every imported manufacture that
competed with a U.S.-made product. Its purpose: to cut revenue by
raising tariffs on imported manufactures so high that foreigners
would give up trying to break into the U.S. market. American work-
ers and manufacturers would be protected; at the same time tariff
revenue would fall, and the surpluses would fade away.
Battling alongside McKinley was Morrill. Both believed that the
tariff was about more than money. Both spoke of Americans as
members of a family with duties to one another. “Free trade in the
United States is founded upon a community of equalities and reci-
procities,” said McKinley. “It is like the... obligations of a fam-
ily.” '* But a foreign manufacturer had .
no right or claim to equality with our own. He is not amenable to our
laws.... He pays no taxes. He performs no civil duties... . He con-
tributes nothing to the support, the progress, and glory of the nation.
Free foreign trade... results in giving our money, our manufactures,
and our markets to other nations, to the injury of our labor, our trades-
people, and our farmers.”
McKinley and Morrill were conservatives of the heart. Theirs
was a rhetoric of passion and conviction, of concrete and colorful
phrases that moved men to action. To them the tariff was about jus-
tice and patriotism, about guaranteeing Americans the highest stan-
dard of living on earth, and about making America the greatest
nation on earth. These were not “progressive Republicans.”
214 Patrick J. BUCHANAN
Completed in the fall of 1890 and signed by President Harrison,
the McKinley Tariff was a “new concept in tariffs”:"°
No longer would the tariff be an instrument of revenue or even
an instrument of protection, but ... an instrument of exclusion, with
rates raised so high that cheap foreign goods made by cheap foreign
labor would be barred from the United States for good. McKinley hated
the word “cheap.” “Cheap is not,” he said, “a word of hope; it is not a
word of inspiration! It is the badge of poverty; it is the signal of
distress.” "’
Not every Republican was a McKinleyite. Blaine, now secretary
of state, wrote McKinley that his tariff was a “slap in the face to the
South Americans.” Testifying against it, Blaine became so agitated
that he raised his fist and smashed it on the table, crushing his top
hat. But McKinley had not written his tariff bill to prosper South
America. He was a nationalist. The world was not his concern;
America was. In their respective stands, McKinley and Blaine pre-
saged the conflict between Taft Republicans and Dewey Republi-
cans of the 1940s and 1950s and the deepening divide in the party
today.
When McKinley returned home in triumph, he got a rude shock:
envious Democrats had gerrymandered him into a district where
few of his constituents lived. The chairman of Ways and Means went
down to defeat in the year he had written one of America’s most
famous tariff laws. Yet, in defeat, McKinley became even more for-
midable. He was now a martyr to partisan politics, and Ohio news-
papers began denouncing the injustice of what petty Democrats had
done to an Ohio statesman who had achieved so greatly.
In December of 1890 McKinley ran into old friends Thomas H.
Carter of Montana and Joe Cannon of Illinois in a Chicago hotel.
They, too, had been defeated. McKinley told his friends that, over-
all, he was “really glad that it had happened that way.”
The Great Betrayal ZnS
“That is what I am saying to everyone,” Cannon nodded, “but,
boys, don’t let’s lie to one another.” "°
Carter dined out on the story for years. But in McKinley’s case,
he had been telling the truth.
PATRIOTISM, PROTECTION, AND PROSPERITY
In 1891 William McKinley was elected governor of Ohio by a mar-
gin of eighty-nine thousand votes, the greatest landslide since the
war. But in 1892, the year of the Homestead Strike, the most violent
in U.S. history, Cleveland recaptured the White House in a three-
way race with Harrison and Populist candidate James B. Weaver of
Iowa. McKinley had acted as the bayonet of his party during the
campaign, denouncing free trade as a rapacious enemy of the Amer-
ican worker:
This country will not and can not prosper under any system that does
not recognize the difference of conditions in Europe and America.
Open competition between high-paid American labor and poorly paid
European labor will either drive out of existence American industry or
lower American wages.”
McKinley believed that protection was the best friend working
America ever had; it “has made the lives of the masses of our coun-
trymen sweeter and brighter, and has entered the homes of America
carrying comfort and cheer and courage.””’ But when the Panic of
1893 struck, McKinley was fortunate not to be in Washington. For
a time, his tariff law was blamed. Luck, however, had always been an
ally. Not in four years of fighting in the Valley had he suffered a
scratch. Now, Cleveland came to his rescue by replacing the McKin-
ley ‘Tariff with a disastrous Democratic bill.
The Wilson-Gorman Tariff of 1894 was botched from the be-
ginning. Insurgents in the Senate first voted to raise tariff rates.
Then they voted to strip Cleveland of “reciprocity” power — the
216 PATRICK J. BUCHANAN
power to impose retaliatory tariffs on countries discriminating
against U.S. exports. While average tariff rates were marginally re-
duced, duties were restored on sugar in the middle of a scandal in-
volving sugar interests. The bill also called for a 2 percent flat tax on
incomes above $4,000, hitting 85,000 households out of 12 million.”
Free traders had found their substitute for the tariff.
Under Lincoln, a wartime tax of 3 percent had been imposed on
all incomes between $600 and $10,000, and of 5 percent on those
above $10,000, later raised to 10 percent. In 1867 the tax rate was
cut to 5 percent on all incomes over $1,000, and the tax was allowed
to expire in 1872.” But it was the lone Democrat to serve as presi-
dent in the half century after Fort Sumter who, in letting Wilson-
Gorman become law without his signature, gave America its first
peacetime income tax.
When the Supreme Court struck down the income tax, Cleve-
land got the worst of both worlds. He had enraged the capitalists by
letting the tax become law, and the populists were enraged when it
was overturned.
The Panic of 1893 was the worst depression in U.S. history be-
fore the 1930s. In its wake came the Puliman Strike, which paralyzed
the nation’s railroads. When Cleveland decided to break the strike,
Attorney General Richard Olney called out the troops and sent fed-
eral marshals to Chicago to run the trains. Eugene V. Debs and his
new American Railway Union were routed. Cleveland, mused
Henry Adams, is “perhaps the best President the Republican party
had put forward since Lincoln.”™
How TARIFFS CHANGED WorRLD HISTORY
The McKinley and Wilson-Gorman Acts demonstrate the impact
that tariffs can have on the course of history.
As noted, the McKinley Tariff was designed to reduce the revenue
that was creating an embarrassing stream of budget surpluses. ‘Thus,
among its provisions was an end to tariffs on foreign sugar, thereby
The Great Betrayal A7
opening the U.S. market, with a compensating bounty of two cents
per pound for U.S.-grown sugar. While lifting the sugar tariff was
hailed in the Caribbean, to the Hawaiian Islands the McKinley Act
spelled disaster.
Since 1875 the United States had had a reciprocal trade agree-
ment with the kingdom of Hawaii. Hawaiian sugar entered the
United States duty-free. ‘Io exploit the islands’ privileged position,
American planters had flocked there. But when McKinley’s tariff
cuts opened U.S. ports to Caribbean sugar, Hawaii’s privileged ac-
cess came to an end. Hawaiian sugar prices plummeted from $100 a
ton to $60, and the islands’ economy collapsed.
Already infuriated by the nativism of the new queen, Lili-
uokalani, a “Hawaii for the Hawaiians!” nationalist, the planters re-
belled, seized power, set up a republic, and sought annexation by the
United States. If the United States would accept the offer, Hawaiian
sugar would become U.S.-grown sugar, and every pound produced
would qualify for the two-cent bounty. In 1898, as president,
McKinley, whose tariff bill created the crisis that caused the Hawai-
ian revolution, annexed the islands.
In Cuba, however, the McKinley ‘Tariff was as popular as it was un-
popular in Hawaii. Cuban sugar, the island’s principal crop, could
now enter the United States duty-free. As Hawaii’s economy col-
lapsed, Cuba’s boomed. But three years after the McKinley Tariff
became law, Congress reversed course with the Wilson-Gorman
Act, which reimposed sugar tariffs.
Now Cuba’s economy collapsed. Cuban revolutionaries seized on
the crisis, exploited the discontent of the peasants, and renewed
their struggle for independence. This new insurrection, which burst
into flame in 1895, led to the Spanish-American War, the liberation
of Cuba, and America’s annexation of Puerto Rico, Hawaii, Guam,
and the Philippines. Had there been no Spanish-American War, the
United States would not have annexed the Philippines and so might
have avoided its future war with Japan. Thus did a juggling of sugar
tariffs between 1890 and 1893 change the course of world history.
218 PATRICK J. BUCHANAN
INDUSTRIAL PoLicy vs. PRAIRIE POPULISM
With the Panic of 1893 spreading, America wanted desperately to be
rid of Grover Cleveland, and the popular Ohio governor, cam-
paigning in the 1894 elections on “Protection, Patriotism, and Pros-
perity,” was hailed as the Republican messiah. All this Democratic
blather about open world markets, said McKinley, is a “great free-
trade shadow-dance.””°
In November Republicans swept all before them, and the future
opened up. Mark Hanna, the Ohio kingmaker with the “cash regis-
ter conscience,” retired from his iron-and-coal business to prepare
for a career in politics. His first assignment: make McKinley presi-
dent. Hanna reportedly raised more than $3 million for McKinley’s
campaign, with unofficial estimates running to five times that. One
commentator wrote, “In 1896 Hanna incorporated McKinley, and
every business house in the United States . . . subscribed for McKin-
ley stock.” *
The extraordinary confidence of the conservatives of that era
is captured in the 1895 History of the Republican Party: “No political
organization that has existed in this Republic ever made such a
brilliant record as has been made by the Republican Party””
is the opening sentence, and the work bristles with nationalistic
defiance:
Throughout its career the Republican party has had but one purpose,
the conserving of American interests, and on that account the party has
never been popular in Europe. . . . It is the party of protection. It real-
izes that our mills and factories cannot pay from fifty to seventy-five per
cent more wages than are paid in Europe for the same class of work, un-
less our products are protected against the products of cheap European
labor. It has insisted and still insists, therefore, that American labor shall
not be pauperized at the dictation of European greed, and is convinced
that when labor is prosperous, all classes are prosperous, it carries the
banner of protection defiantly.”
The Great Betrayal 219
The History denounces as “demagogic” the progressives’ charge
that tariffs, far from protecting the wages of workers and the na-
tional interest, protected the profits of the wealthy few, and asks a
relevant question: if Americans, rather than foreigners, pay the tar-
iff in higher prices, why is it always the foreigners who protest the
loudest?
If the consumer pays the tariff, as the opponents of protection assert,
what difference can it make to European manufacturers whether this
government imposes a tariff or not.... Why the universal rejoicing in
Europe when a Democratic congress passes and a Democratic Presi-
dent signs a bill lowering tariffs?”
Whenever America has protected a commodity — be it be nails,
iron, bunting, pearl buttons — asserts the History, the price had
fallen.
As nominee in 1896, McKinley ran on this oak-solid Republican
platform of high tariffs and money as good as gold. Adoring crowds
came to Canton. McKinley addressed them from his front porch.
Celebrated in his campaign literature as the “Advance Agent of
Prosperity,” McKinley told his admirers,
In the mind of every workingman is the thought that this great Ameri-
can doctrine of protection is associated with wages and work, and linked
with home, family, country and prosperity. . .. The people of this coun-
try want an industrial policy that is for America and Americans.”
McKinley’s family life became a feature of Hanna’s propaganda.
Though most of the women who came to Canton could not vote,
many came away charmed. One reporter wrote of McKinley that he
exuded a “matinée idol’s virility.” *
McKinley’s opponent was the thirty-six-year-old Boy Orator of
the Platte, William Jennings Bryan, who had electrified the Demo-
cratic convention with his “Cross of Gold” speech. His issue: free
coinage of silver. With silver pouring out of America’s mines, free
220 Patrick J. BUCHANAN
coinage meant no deflation of the dollar and plenty of money
around for farmers and borrowers to pay off debts without foreclo-
sure or bankruptcy. Rooted in biblical imagery and prairie populism,
Bryan’s words yet have magical power:
You come to us and tell us that the great cities are in favor of the gold
standard; we reply that the great cities rest upon our broad and fertile
prairies. Burn down your cities and leave our farms, and your cities will
spring up again as if by magic; but destroy our farms and the grass will
grow in the streets of every city in the country. .. .
Having behind us the producing masses of this nation and the world,
supported by the commercial interests, the laboring interests, and
the toilers everywhere, we will answer their demand for a gold stan-
dard by saying to them: You shall not press down upon the brow of labor
this crown of thorns, you shall not crucify mankind upon a cross of
gold.”
“Good money never made times hard!” was the cold retort of
hard-money Republicans.”
The nation was mesmerized by Bryan’s oratory. But as the
months wore on and the election drew near, Americans grew uneasy,
then fearful. Bryan’s speeches had become increasingly radical. An
alarmed middle class began moving away. Hanna’s millions and a
Republican press had done their work. By campaign’s end, mocking
Republicans were taunting Bryanites with the ditty:
Free trade and free silver, free whiskey, free lunch,
Free love and free speech is their cry,
But when all our products are free as they wish,
From whom will our customers buy?
On Election Day sound-money Democrats, gagging all the way
to the polls over his tariff policies, helped give McKinley the great-
est popular mandate since Ulysses S. Grant. Some Bryanites were
inconsolable. Cried the poet Vachel Lindsay, “Defeat of my boy-
hood, defeat of my dream.” *
The Great Betrayal 221
‘THE AMERICAN NATIONALISTS
Even before McKinley took the oath, the House passed the Dingley
Act, which raised tariff rates to an average close to the highest in his-
tory and restored the concept of reciprocity. To promote exports,
the president was authorized to enter agreements with foreign na-
tions for mutual tariff cuts. By laying heavy duties on raw sugar,
wool, and hides, the Dingley Act gave the government bargaining
chips to trade away to foreign governments in return for opening
their home markets to American manufactures.
The drafters and backers of the tariff laws of this era were hard-
headed men who always kept in mind the national interest of the
United States — men like Philadelphia’s William “Pig Iron” Keliey,
who preceded McKinley as chairman of Ways and Means. ‘To Kel-
ley, iron and steel were the “muscles of our more modern civiliza-
tion. ... A people who cannot supply their own demand for iron and
steel, but purchase it from foreigners beyond seas, are not indepen-
dent... they are politically dependent.”* So long as we rely on
England for ships, guns, and shells, said Kelley, America “must en-
dure contumely and outrage with unresisting humility.” *
Pennsylvania steel manufacturer Joseph Wharton saw his coun-
try in a mortal struggle. “Foreign legions,” he thundered, are at-
tacking us with “missiles launched from their far-distant mines,
mills, and factories. .. . Their attack has often devastated homes...
and broken up industries as effectually as if the conquest had been
effected by warlike weapons.” But America had a defense. A “tariff
can defeat the foreign plunderer . . . better than a fort.”*’
Free trade, to Wharton, was “a fungus . . . a source of infection
which healthy political organs can hardly afford to tolerate.”** In
National Self-Protection, Wharton argued that any price hikes due to
tariffs are only transitory. Imported steel rails from England had cost
$165 in gold per ton in 1864, he wrote; five years later, behind a pro-
tective tariff, a U.S. steel rail industry was producing all of America’s
needs for $80 per ton.” An implacable Anglophobe, Wharton
“raised a clenched fist against England”:
222 Patrick J. BUCHANAN
We shall take for ourselves, without asking her leave, the same privilege
of consulting our own interests and doing our own thinking. We shall
grow in strength and national completeness and independence, despite
the groans of the Cobden Club, after England shall have distinctly
failed at grasping at universal domination through trade. We decline to
be her victim or her imitator.”
For progressive Republicans, Wharton had only contempt. “The
Republican Party cannot afford to be anything but distinctly Pro-
tectionist,” he said. “Republicans who are shaky on protection are
shaky all over.” *!
‘THe FRUITS oF PROTECTIONISM
From Lincoln’s death to McKinley’s, there were four critical ele-
ments of the Republican economic agenda: (1) high tariffs to protect
the wages of workers and the home market of American manufac-
turers; (2) a balanced budget, or surplus, every year; (3) federal sup-
port for “internal improvements,” i.e., turnpikes, canals, and
especially railroads; and (4) sound money, “a dollar as good as gold.”
What did these policies deliver?
By 1880, the United States was second only to Great Britain in its share
of world manufacturing output, with 14.7 to 22.9 percent; by 1913, the
United States (32 percent) was far ahead of Germany (14.8 percent) and
a sinking Britain (13.6 percent). “We lead all nations in agriculture; we
lead all nations in mining; we lead all nations in manufacturing,”
McKinley declared. “These are the trophies we bring after twenty-nine
years of a protective tariff.” *
In the history texts American children study, the era from 1865
to 1900 is a time of greed, corruption, and wretched excess, when a
new plutocracy plundered the nation and public policy was bought
and sold — to the steel interests, the railroad interests, the timber
The Great Betrayal 223
interests, the oil interests, the sugar interests, the money trusts. Be-
fore being curbed by the power of law, it is said, the men of the
Gilded Age ran wild. “What do I care for the law?” railroad magnate
Cornelius Vanderbilt bellowed. “I got the power, ain’ I?”* Even
from the pulpits some began to preach a new “gospel of wealth.” “In
the long run,” said Bishop Lawrence of Massachusetts, “it is only to
the man of morality that wealth comes. ... Godliness is in league
with riches.” *
To check the power of industrialists, railroaders, and financiers
and to protect the rights of workers, labor unions formed. Brave
voices were raised against the concentration of wealth that put men
above the law. Toward the era’s end would come the muckrakers,
Lincoln Steffens, Ida Tarbell, Theodore Dreiser, and lesser imita-
tors, to expose the often dreadful conditions in which Americans had
to live and work. There was truth in what they wrote. But there is
also a truth about this era of nationalism and protectionism that is
rarely taught to America’s young. During this era
e From 1869 to 1900, the gross national product quadrupled.“
e The United States ran budget surpluses every year from 1866 to
1893.
e The national debt was reduced by two-thirds; by 1900 it was less
than 7 percent of the GNP.“
e Customs duties provided 58 percent of all federal revenue from
1869 to 1900.
e There was no income tax — save Lincoln’s wartime tax and
Cleveland’s brief 2 percent flat tax on the rich, which was de-
clared unconstitutional.
e Between 1870 and 1900, commodity prices fell 58 percent.”
e Real wages, despite a doubling of the U.S. population, rose 53
percent.*
e Annual growth of the U.S. economy averaged more than 4 percent
a year from 1870 to 1913.”
e From 1870 to 1913, U.S. industrial production rose 4.7 per-
cent a year, compared with 2.1 percent a year in the United
Kingdom.”
224 Patrick J. BUCHANAN
e American exports grew by almost 5 percent a year from 1870 to
1913, while free-trade Britain’s grew at less than 3 percent.”
e Protectionist America’s share of world exports rose from 7.9 per-
cent in 1870 to 12.9 percent in 1913 — while free-trade Britain’s
fell from 18.9 percent to 13.9 percent.”
e Between 1869 and 1910, merchandise imports fell from 8 percent
of the GNP to 4 percent.”
e The United States began the era with half of Britain’s production
and ended it with more than double Britain’s.
Henry Kissinger describes the astonishing expansion of Ameri-
can industrial power in the Republican-protectionist era, which
thrust the United States onto the world stage:
By 1885, the United States had surpassed Great Britain, then consid-
ered the world’s major industrial power, in manufacturing output. By
the turn of the century, it was consuming more energy than Germany,
France, Austria-Hungary, Russia, Japan, and Italy combined. Between
the Civil War and the turn of the century, American coal production
rose by 800 percent, steel rails by 523 percent, railway track mileage by
567 percent, and wheat production by 256 percent.*
Behind a tariff wall built by Washington, Hamilton, Clay, Lin-
coln, and the Republican presidents who followed, the United States
had gone from an agrarian coastal republic to become the greatest
industrial power the world had ever seen — ina single century. Such
was the success of the policy called protectionism that is so dispar-
aged today. Though there were still dreadful slums in the great cities
and disparities of wealth between the rich and the common people
were huge, America between 1865 and 1900 was pulling families out
of poverty into the middle class faster than any society had done in
history. Commodore Vanderbilt had his new mansion, J. P. Morgan
his new yacht, but workers saw their own lives and the prospects of
their children improve dramatically as well. America’s population
had doubled since the Civil War, to more than 70 million; the nation
was tied together by telegraph and railroads open to all; there was no
The Great Betrayal 225
income tax, no standing army, no war, a free and robust press, and
free public education for America’s children. When in 1888 James
Bryce finished his great survey of “The American Commonwealth,”
he declared that life was better for the common man in America than
anywhere else on the face of the earth.“ Historian Samuel Eliot
Morison describes the new world of the generation that reached ma-
turity at the time of the Civil War:
They had seen the frontier of log cabin and stumpy clearings, sod house
and unbroken prairie, replaced by frame houses and great barns, well-
tilled farms, and sleek cattle. The railroad, the telegraph, the sewing
machine, oil and gas lighting and a hundred new comforts and conve-
niences had come within reach of all but the poorest during their life-
time. Towns with banks, libraries, high schools, mansions and theaters
had sprung up where once as barefoot boys they had hunted the squir-
rel and wildcat.”
The Republican Party championed protectionism, celebrated the
rising standard of living it produced, and was repeatedly rewarded at
the ballot box. The Democratic nominee in 1900 was again Bryan,
who campaigned against imperialism and for liberation of the
Philippines. McKinley and his running mate Theodore Roosevelt
campaigned on the tariffs that guaranteed “the full dinner pail” for
the American family. Many had soured on the nasty guerrilla war
against Filipino insurgents, but everyone understood prosperity.
The president was reelected in a landslide that eclipsed his victory
of 1896.
McKinley’s first term had been a triumph. He had fought and
won a four-month war against Spain that made America a world
power, while reducing the national debt. He had presided over a 75
percent rise in the Dow-Jones industrial average, a near tripling of
union membership to 1.1 million, and a reduction in the unemploy-
ment rate from 14 percent to 4 percent. In McKinley’s first term, the
U.S. economy had grown by an average of 7 percent a year.”
The conservative press fairly gushed over the McKinley record.
Said the Washington Post: “Prosperity may be set down as the chief
226 Patrick J. BUCHANAN
cause of the Republican triumph. Never before in our history was it
the fortune of any party to go to the country with an appeal for a
vote of confidence with such a record of promises fulfilled.” ** The
New York Times was elated and relieved: “This second assault of
Bryan having been repulsed, the future lies fair before us... . The
currency is safe, the National honor is safe. We can now give our-
selves with contented minds and assured confidence to our honor-
able public and private concerns.” ”
ECLIPSE OF THE EMPIRE
Protectionism is said to lead inevitably to inflation and stagnation,
to a nation’s losing the dynamic of trade and falling behind its rivals.
But from 1865 to 1900 the reverse happened. How do free traders
explain this? We had the highest tariffs in history; imports fell by 50
percent as a share of the GNP. Yet, America enjoyed the greatest ex-
pansion in history. The U.S. standard of living became the envy of
the world. Prices fell. “The period in which America had its highest
tariff rates, and the smallest involvement with international trade,
was also the one in which the country had its greatest economic suc-
cess,” writes a student of the era.”
Because of the flamboyant.and flagrant abuses of power by ras-
cals and scoundrels who set the tone and style for the Gilded Age,
historians ignore America’s accomplishments. But the American ex-
perience in the nineteenth century was unique in world history, and
economists are coming to recognize it. Paul Bairoch, a professor at
the University of Geneva, in a pathbreaking book based on a review
of nineteenth-century statistics, has contrasted the real history of
the century with the prevailing theories of the liberal economists of
the day. His conclusion: “Liberalism in international trade had more
negative than positive consequences and . . . protectionist measures
had predominantly positive outcomes.”* Bairoch lists six unassail-
able “hard facts of nineteenth-century history”:
The Great Betrayal 22]
The first hard fact is that . . . the great European depression began dur-
ing the period 1869-1873, when trade policies in Europe had reached
an unprecedented degree of liberalism... .
The second hard fact is that not only was there a severe slowing
down of economic growth but also, and all the more paradoxical in the
period of the greatest liberalism, a decrease in [the rate of growth of] in-
ternational trade. ...
The third hard fact is that the United States, which did not take part
in the free trade movement (on the contrary, it increased its already
strong protectionism), during the period of the great European depres-
sion went through a phase of rapid growth. Indeed, this period can be
regarded among the most prosperous in the economic history of the
United States.
The fourth hard fact is that economic growth started to rise again
when Continental Europe resumed and intensified its protectionist
policies [after 1879]... .
The fifth hard fact is that . . . the major cause of the slowdown in the
economy was the decline in rural income due to a fall in agricultural
prices caused by the influx of imported cereals. . . .
Last but not least of the six hard facts is that, in the nineteenth cen-
tury, the liberal trade experience of the Third World was a complete
failure.”
Victorian radicals called free trade “God’s diplomacy.” But what
did it produce for Great Britain? “Bitter consequences,” writes Ju-
lian Amery in his biography of Joseph Chamberlain: “Ireland was
ruined... . British agriculture collapsed; the landed interest with-
ered away; and British industry thus lost a major sector of its home
market.”® Between 1846 and 1910 British imports of wheat grew
1,000 percent. On the eve of World War I, once self-sufficient
Britain could grow only enough wheat to feed a fourth of her popu-
lation.” As early as 1879 the editor of the Bristol Times and Mirror
was in despair over the American challenge:
Where is this American competition to end? The Yankees are threaten-
ing to take the leather trade out of our hands now. American locks are
228 Patrick J. BUCHANAN
superseding those of Staffordshire; American apples are taking the place
of those of Somersetshire and Devon in the dye-works. American fur-
niture is to be found in many forms in more houses than the inhabitants
themselves are aware of, and many English sideboards next Christmas
will probably groan under American barons of beef. You cannot go into
an ironmonger’s shop without finding his cases full of American no-
tions.... Even the English agriculturists themselves are cultivating
their fields, reaping and gathering their crops, when they can gather
them at all, with implements of American invention and American man-
ufacture.©
Chamberlain had been converted to economic nationalism by
what he saw happening to his country. A Tariff Reform League was
set up, and he took his battle to the nation, arguing that tariffs and
an imperial preference system would weld the empire together. But
in 1906, about to take over leadership of the Unionist Party in the
name of protection, he was felled by a stroke. The cause died. Look-
ing back at what free trade had done to his country, Chamberlain
dipped his pen in acid:
Free Trade is the negation of organisation, of settled and consistent pol-
icy. It is the triumph of chance, the disordered and selfish competition
of immediate individual interests without regard to the permanent wel-
fare of the whole.“
More ominous than America’s doubling the British rate of
growth was Germany’s outstripping Britain in every decade. Amer-
ica and Germany were protectionist; yet, both rapidly enlarged their
share of the world’s export trade at the expense of free-trade Britain.
In a speech to the Reichstag, May 2, 1879, Chancellor Bismarck
coldly stated his reasons for spurning the free-trade philosophy of
the British and for adopting the American system:
The dicta of abstract science do not influence me in the slightest. I base
my opinion on the practical experiences of the time in which we are liv-
The Great Betrayal 229
FOLLOW YOUR LEADER.
Seaway aw ol Doaa
Uncle Sam leads Prosperous Labor and the Kaiser’s Germany
to prosperity with protection,
as Joe Chamberlain urges John Bull to abandon free trade
and follow the world’s winners.
Special Collections Department, Alden Library, Obio University
ing. I see that those countries which possess protection are prospering,
and that those countries which possess free trade are decaying.”
“The greatest empire the world has ever known lasted a little
over a hundred years,” writes historian Otto Scott:
Its relatively brief period of glory was ended by two huge, complex er-
rors. The first was to assume that geography and governance was suffi-
cient to make it eternally successful... .
The second huge error was to substitute liberal sentimentality for
250 Patrick J. BUCHANAN
thought; to relax its international guard and its tariffs alike, to rely on
the goodwill of strangers, and to spend its riches (in the form of indus-
trial and financial loans) on other nations instead of its own.
The British today live, as has Spain, for so long, amid many me-
mentos of a glorious period, in the status of a regional power some-
where between the second and third level...of international
importance.“
The British substituted “liberal sentimentality for thought.”
Today, America trods the same path. Was Hegel right when he said
that the only thing we learn from history is that we do not learn from
history? Will the great republic follow the great empire down the
same staircase to the same end? Shorn of empire, dependent on
trade, her once-dominant navy now a tiny fraction of America’s fleet,
Britain today agonizes over whether to surrender its national sover-
eignty and disappear forever into the European Union. That is what
happens to nations that rely upon others for what they should do for
themselves. And it will be treason to the great Americans who sacri-
ficed for our own economic independence if we permit the fate of
Britain in the twentieth century to become our own in the twenty-
first. Io avert that end, we must relearn these lessons of our history.
“THE PERIOD OF EXCLUSIVENESS Is Past”
With the nation more prosperous than it had ever been, on Sep-
tember 5, 1901, the hugely popular president attended the Pan-
American Exposition in Buffalo. Before a crowd estimated at fifty
thousand, McKinley spoke of America’s “almost appalling” prosper-
ity, and outlined his future plans.
Distance, he reminded his hearers, had been effaced by the telegraph
and cable, by swift ships and fast trains. . . . “We must not repose in fan-
cied security that we can forever sell everything and buy little or noth-
ing.” Reciprocity treaties were in harmony with the spirit of the times;
The Great Betrayal 23a
measures of retaliation were not. In phrase after ringing, emphatic
phrase, the President pointed to the trend of the future. “Isolation is no
longer possible or desirable. ... God and man have linked the nations
together. No nation can longer be indifferent to any other. . . . The pe-
riod of exclusiveness is past.” °
Was the great protectionist reaching out to progressives? No one
will ever know. The following day, after a delightful side trip to Ni-
agara Falls, McKinley held a reception at the Exposition’s Temple of
Music. In line to meet him was Leon Czolgosz, twenty-eight, a self-
professed anarchist. With a small revolver wrapped in what ap-
peared to be a surgically dressed hand, Czolgosz approached,
brushed aside the president’s outstretched hand, and shot him twice.
The bullet that entered the president’s abdomen proved fatal. Eight
days later Theodore Roosevelt, forty-two, was president.
5 A
by M a
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Po CREASE
FOF THE WS.
4
erie te tne a Aeoteciene
At poker between Uncle Sam and John Bull, protection
is a “pat hand” that beats free trade every time.
Special Collections Department, Alden Library, Ohio University
Chapter 12
‘THE GREAT
SMooT-HawLey MYTH
We must recognize free trade as a basic
human right.’
— Richard Armey, 1997
Thank God I am not a free trader?
— Theodore Roosevelt, 1895
c
| A indulgence in the doctrine of free trade,” Roosevelt
had added in his 1895 letter, “seems inevitably to produce fatty de-
generation of the moral fibre.”’ As president, he would echo the
martyred McKinley:
These forty odd years have been the most prosperous years this nation
has ever seen; more prosperous years than any other nation has ever
seen. Every class of our people is benefited by the protective tariff.’
The hero of San Juan Hill had no use for academic free traders.
Experience had not shown “that we could afford . . . to follow those
professional counselors who have confined themselves to study in
the closet; for the actual working of the tariff has emphatically con-
tradicted their theories.” *
The Great Betrayal 233
But Roosevelt’s America had bitten into the apple of imperialism
and relished the taste. The “Republic That Never Retreats” had a
Pacific empire, and the claims of foreign policy began to take prece-
dence over the interests of American farmers, workers, manufactur-
ers. Cuba, Puerto Rico, and the Philippines were first to be offered
almost unrestricted access to U.S. markets, to fix them firmly in the
new American “sphere of influence.” While Roosevelt approved of
reciprocal trade treaties, he reminded Americans in 1904 not to for-
get whom it was the U.S. economy was to benefit first:
The one consideration which must never be omitted in a tariff change
is the imperative need of preserving the American standard of living for
the American workingman. .. . Our laws should in no event afford ad-
vantage to foreign industries over American industries.‘
Through the Roosevelt years, the Dingley Act of 1897 remained
the basic tariff law. And when he stood for election in his own right
in 1904, Roosevelt stood on McKinley’s platform:
Protection which guards and develops our industries is a cardinal pol-
icy of the Republican party. The measure of protection should al-
ways at least equal the difference in the cost of production at home and
abroad.’
Theodore’s admiring young cousin would echo him three
decades later when, in 1932, Franklin declared himself in favor of a
“competitive tariff,” which he defined as “one that equalizes the dif-
ference in the cost of production” between the United States and
low-wage countries.’
BATTLE FOR THE SOUL OF THE GOP
In the first decade of the twentieth century, a sea change was taking
place in politics. Goaded by a national uproar after the Panic of
234 PATRICK J. BUCHANAN
1907, progressive Republicans began to echo free-trade Democrats
and demand a cut in the tariff rates, which both now saw as benefit-
ing powerful industrialists at the expense of American consumers.
The muckrakers had done their work.
In 1909 William Howard ‘Taft was elected to succeed his friend and
patron Roosevelt, having pledged himself to tariff reform. On tak-
ing office, he called a special session of Congress. Hopes for reform
ran high but were dashed when Joe Cannon of Illinois was elected
Speaker and named his fellow protectionist Sereno Payne of New
York to chair the Committee on Ways and Means. Payne drew up a
compromise bill to please both the McKinleyites and the progres-
sives. It cut tariff rates on raw materials but raised them on certain
finished goods.
The Senate proceeded to eviscerate Payne’s bill. Under the guid-
ance of the chairman of the Senate Committee on Banking and Fi-
nance, Nelson Aldrich of Rhode Island, 847 amendments were
added. Virtually every one raised a tariff. The Payne-Aldrich bill
that came out of Congress only marginally reduced tariff rates from
the Alpine heights of the Dingley Act. It was sent to the White
House, where it was signed by ‘Taft.
Payne-Aldrich, however, armed the president with a new weapon
to fight the international trade wars: the “variable tariff.” If a nation
discriminated against U.S. exports, Taft had the authority to tack 25
percent onto the average duties on that country’s goods entering the
United States.
By now, however, a new issue dominated the debate. If the
United States intended to cut tariffs, how was the lost revenue to be
replaced? Free traders were settled on the substitute: a federal in-
come tax. “The focus of the battle in Congress,” writes trade histo-
rian William Gill, “became not so much the tariff per se as the
income tax which was to replace it.”°
In the second Cleveland administration, an income tax had been
tacked onto the Wilson-Gorman Tariff, only to have the Supreme
Court strike it down. Now, led by Tennessee congressman Cordell
The Great Betrayal 236
Hull, Congress was ready to defy the Court, by passing another in-
come tax. Taft, who loved and revered the Court, and would one day
sit as chief justice, was horrified at the prospect of a constitutional
confrontation. He urged Congress to let the states decide the issue
by passing a constitutional amendment allowing for an income tax.
Congress did, by 77-0 in the Senate — many of whose millionaires
voted for the amendment confident that the states would kill it —
and by 318-14 in the House.”
This was a crucial moment in economic history. From Taft’s ini-
tiative would come the Sixteenth Amendment and a permanent tax
on the income of all Americans. This revenue engine would quickly
replace tariffs as the prime source of federal income, and the im-
mense stream of cash it would generate would be used to finance
world wars and expand federal power into every walk of American
life. In one of the ironies of history, the federal income tax was the
legacy of a Republican named ‘Taft.
AMERICA’S First LIBERAL Hour
‘Taft’s presidency was not a happy affair. Republicans lost seats in
1910, and two years later Theodore Roosevelt walked out on the
GOP and accepted the nomination of the Progressive (“Bull
Moose”) Party, putting himself and Taft into a three-way race with
New Jersey governor Woodrow Wilson. The Republican split was
one of the great disasters to befall economic nationalists in U.S. his-
tory. For both Taft and TR were protectionists. As late as 1911 Roo-
sevelt had reasserted his allegiance:
I can put my position on the tariff in a nutshell. I believe in such mea-
sure of protection as will equalize the cost of production here and
abroad; that is, will equalize the cost of labor here and abroad. I believe
in such supervision of the workings of the law as to make it certain that
protection is given to the man we are most anxious to protect — the la-
boring man."
236 PATRICK J. BUCHANAN
As for Wilson, his views were pure Cobdenism: “I wish I might
hope that our grandchildren could indulge in free trade.” ”
In the election of 1912, the president of the United States ran
third. A divided GOP gave Wilson the White House and Demo-
crats both houses of Congress. America’s first Liberal Hour began.
In 1913
e the Federal Reserve Act was passed, creating a national bank to
replace the one it was Andrew Jackson’s proud claim to have
killed;
e the Sixteenth Amendment was adopted on February 3, 1913, au-
thorizing a federal income tax;
e the Underwood-Simmons Act, containing a national income tax
and cutting tariffs to the lowest level since before the Civil War,
was signed into law; and
e the Seventeenth Amendment, providing for direct election of
senators, was added to the Constitution.
Underwood-Simmons marked the first downward revision in
tariff rates in a generation, and the deepest since the Buchanan ad-
ministration. The average duty was cut from 40 percent to 27 per-
cent. To replace the lost revenue, Congress enacted a graduated
income tax. Initially, it applied only to corporations and the small
fraction of Americans earning more than $4,000. But a momentous
shift had begun. From a nineteenth-century base in public lands, al-
cohol taxes, and customs duties, the U.S. government was moving to
mine the mother lode of American prosperity. While the initial rates
ranged from | percent to 7 percent, within five years the top rate for
individuals would hit 70 percent and the bottom, 6 percent.
Free-trade Democrats like Cordell Hull were now in power.
With the classical liberals, Hull and Wilson believed that free trade
was about more than economics; it was its own reward. They did not
demand reciprocal foreign tariff cuts in return for U.S. rate reduc-
tions. They stood in the messianic tradition of the Virginia Demo-
crat John R. Tucker who, twenty-five years earlier, had equated free
The Great Betrayal %7
trade with the Christian gospels and the borderless economy with
the kingdom of heaven.
Free trade . . . will spread the banner of peace over the world and pro-
mote the glory of God, in “peace on earth and good will toward men.”
Free trade, the product of the divine doctrines of Christianity, would be
the peacemaker of the world!”
After he won reelection in 1916 on the slogan “He kept us out of
war!” Wilson led America into the great European bloodbath “to
make the world safe for democracy.” In his peace offer to Germany,
Wilson listed global free trade as third among his Fourteen Points:
“The removal, so far as possible, of all economic barriers and the es-
tablishment of an equality of trade conditions among all nations
consenting to the peace.”
“PROSPER AMERICA FIRST”
America’s present need is not heroics, but
healing; not nostrums, but normalcy;
not revolution, but restoration.
— Senator Warren G. Harding, 1920
World War I and the Versailles peace it produced proved a calamity
for Western civilization, and a disaster for Wilson; it brought Amer-
ica “debt, inflation, prohibition, influenza and ingratitude from
Allies whom [America] had strained herself to help.” The first
income tax of 1913 which had 7 percent as its highest rate by war’s
end stood at 63 percent. The national debt, $1.2 billion in 1916, had
passed $25 billion in 1919."
In 1918 Democrats lost both houses of Congress. Two years later
Warren Harding captured the White House in the greatest popular
238 PATRICK J. BUCHANAN
landslide in history — 16.1 million votes to 9.1 million for Gover-
nor James M. Cox of Ohio and thirty-eight-year-old Franklin D.
Roosevelt. “A return to normalcy” and a new tariff to stanch the flow
of imports from a recovering Europe were the GOP issues. On ask-
ing Congress for emergency tariff legislation, Harding declared, “I
believe in the protection of American industry . . . it is our purpose
to prosper America first.” '’ The Republicans were back!
Amid the horrors of the western front, free traders had suffered a
loss of faith. “When goods are not allowed to cross borders, soldiers
will,” Bastiat had said. But in August 1914 the nations of Europe
had been woven together by trade. Goods were crossing borders in
record volume. India alone excepted, the best customer for British
exports had been Germany; and, next to America, Germany was
Britain’s chief source of supply. Germany had been the principal
supplier of Russia and Belgium, yet invaded both. The warring par-
ties of Europe had been the trading partners of Europe. But when
war came, national interests triumphed over economic interests.
The Cobdenites had been wrong. The claim of J. B. Say that, as a
consequence of his law of markets, “all nations are friends in the na-
ture of things” rang hollow to the survivors of Passchendaele and the
Somme. It was Kipling’s words that echoed now:
Then the Gods of the Market tumbled, and their
smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and
began to believe it was true
That all is not Gold that Glitters, and Two and
Two Make Four —
And the Gods of the Copybook Headings limped
up to explain it once more."
Always a foe of liberalism, Kipling now had a personal reason to
damn its hollow doctrines. His only son had been killed on the west-
ern front.
The Great Betrayal 239
RETURN OF THE PROTECTIONISTS
World War I affected thinking in every capital. Industrial power had
proved to be the bedrock of military power, and behind industry
there had to be secure supplies of food and raw materials to feed man
and machine. Statesmen could no longer leave the fate of their na-
tions to Adam Smith’s “invisible hand.” A closer reading of Smith
would have taught them that. As Jefferson had converted to eco-
nomic nationalism after America’s sobering experience in the War of
1812, countless free traders of the Great War generation now un-
derwent similar conversions.
With free-trade dogma discredited, its acolytes demoralized by the
rout of Wilsonism, economic nationalists were pushing against an
open door. Harding and Treasury Secretary Andrew Mellon led
Congress in slashing Wilson’s wartime income tax rate all the way
back to 25 percent. ‘Io protect industry from an anticipated flood of
manufactures from low-wage Europe, Harding signed the Fordney-
McCumber ‘Tariff Act, which doubled average tariff rates, to 38 per-
cent, although two-thirds of all imports now entered the United
States duty-free.
Having pledged to “prosper America first,” Harding and Coolidge
were true to their word. America took off in her new Stutz Bearcat
on the wildest ride in history: the Roaring Twenties. The results
were startling. Unemployment, which stood at 12 percent when
Harding took office, was down to 3 percent when Coolidge went
home.
If anything roared in the “Roaring Twenties,” it was industry and com-
merce. America was in the midst of a productivity revolution, turning
out more goods with less labor. Manufacturing output rose 64 percent,
output per workhour 40 percent. Between 1922 and 1927 the economy
240 PATRICK J. BUCHANAN
grew by 7 percent a year — the largest peace time growth ever. (Emphasis
added.)
No president of the twentieth century did better at reducing the
“misery index” than the maligned Harding; and when Coolidge said
good-bye to Washington in 1929, the U.S. share of world manufac-
turing had reached a record-shattering 42.2 percent!” Harding,
Coolidge, and Mellon had proved another historic point: lower tax
rates need not reduce tax revenue. As the top income tax rate plum-
meted from 73 percent to 25 percent, income tax revenue grew in
five years from $690 million to $711 million.
Even more curious, the distribution of the tax burden became radically
more progressive, not less. In 1921 those earning less than $10,000 had
paid $155 million in taxes, 21 percent of personal income tax revenues.
In 1926 they paid only $33 million, or 5 percent. Mellon himself
boasted . . . that a bachelor with $4,000 income in 1920 — enough to
make him comfortably middle class — would have paid $120 in tax that
year, but in 1928 would owe only $5.63.
At the same time the very rich, those earning over $100,000, saw
their portion of income taxes rise from 29 percent to 51 percent, paying
$194 million in 1921 and $362 million in 1926.’!
In the Harding-Coolidge era, a doubling of tariff rates and a
halving of tax rates produced a record unequaled even by Ronald
Reagan.
‘THE CrasuH OF 729 AND SMOOT-HAWLEY
On October 29, 1929, with Winston Churchill looking down from
the gallery, the New York Stock Exchange suffered the greatest
single-day disaster in history. All day long stocks plummeted. At the
closing bell, the ticker showed that 10 percent of the value of the
The Great Betrayal rn
greatest corporations in the citadel of capitalism had vanished in
seven hours. The Roaring Twenties had come to a crashing close.
America’s Great Depression was on. Within six months 10 percent
of U.S. workers were unemployed, factories were shutting down,
banks were closing, savings were vanishing. America had entered a
decade-long decline.
Eight months after the crash, in June of 1930, Congress passed
and Herbert Hoover signed Smoot-Hawley, boosting tariff rates
from near 40 percent to 59 percent by 1932. As the United States
was running a trade surplus and U.S. manufacturers were protected
by the Fordney-McCumber ‘Tariff, why did the Republicans raise
tariff rates?
The president was honoring a campaign commitment to protect
American farmers from Canadian imports. Farmers had been devas-
tated by a worldwide glut caused by the overseas expansion of food
and fiber production after the war. But once the Smoot-Hawley
train began to roll through Congress, new tariffs were hoisted
aboard for import-sensitive industries. Then there was the usual
logrolling. But there was another reason for Smoot-Hawley — the
Republican conviction, rooted in party history and philosophy, that
protectionism was good for America. California senator Samuel
Shortridge spoke in debate for the Grand Old Party of his day:
What the American people want is a tariff that protects . . . American-
raised, American-mined, American-manufactured products and Amer-
ican men and women from competition with like foreign products
raised, mined, or manufactured by cheap foreign labor. ... The free-
trade theory has cursed America. The protective theory has blessed
America. If the free-trade theory were now put into operation, it would
bankrupt America.”
To many abroad, America seemed to have leaped into a lifeboat
yelling, “Every man for himself!” as Western capitalism was going
down. No one at that time, however, made the claim that Smoot-
Hawley had caused a market crash that occurred eight months be-
242 Patrick J. BUCHANAN
fore it was passed or that Smoot-Hawley triggered a depression that
was already underway before Hoover signed the bill. The myth-
makers would come later.
FDR ‘Takes Botu SIDES
As Republicans had done to them after the Panics of 1857 and 1893,
Democrats blamed Republican tariff policy for the hard times. But
the Democrats had a credibility problem. In their own 1928 plat-
form, in a bid for votes in the Northeast, Democrats had endorsed
tariffs to maintain “legitimate business and a high standard of wages
for American labor.” Indeed, the party was specific on how high tar-
iff rates should be:
Actual difference between the cost of production at home and abroad,
with adequate safeguard for the wage of the American laborer must be
the extreme measure of every tariff rate.”
William McKinley could have written that plank. Nevertheless,
in Seattle on September 20, the Democratic candidate, Franklin
Roosevelt, tore into Hoover over the “Hawley-Smoot, otherwise
known as the Grundy, Tariff”:
President Hoover probably should have known that this tariff would
raise havoc with any plans that he might have to stimulate foreign mar-
kets. But he did not, I am afraid, sufficiently understand how insistent
are the demands of certain types of Republicans for special high tariff
protection. When that tariff bill was passed, with its outrageous rates,
the President yielded to the demands of those leaders and started us
down the road to the place where we now find ourselves. It is the road
to ruin, if we keep on it.”
In Sioux City on September 29, FDR again ripped into “Smoot-
Hawley-Grundy,” claiming the tariff had destroyed the foreign mar-
The Great Betrayal 2S
kets of American farmers and brought retaliation on U.S. exports.
He pledged to eliminate the “outrageously excessive [tariff] rates”
and initiate a practice of bartering in “our Yankee tradition of good
old-fashioned trading.” ”
Who was this “Grundy” FDR was pummeling? A long-time lob-
byist for the woolen textile industry and benefactor of Republican
causes, Joseph R. Grundy of Pennsylvania had been appointed to the
Senate in 1929, and sat proudly amid the stalwarts in the Smoot-
Hawley debate. Roosevelt was now hammering Grundy’s name into
the history books.
Hoover, however, gladly accepted FDR’s challenge and seized on
the tariff issue. In his August 11 address accepting renomination, he
charged that Democrats would “place our farmers and our workers
in competition with peasant and sweated-labor products.” In Des
Moines on October 4, he accused Roosevelt’s crowd of planning to
“reduce farm tariffs if they come to power.”” On October 15 in
Cleveland, he warned that if the Democratic plans to replace pro-
tective tariffs with only revenue tariffs were implemented, U.S.
workers would be forced to
compete with laborers whose wages in their own money is only suffi-
cient to buy from one-eighth to one-third of the amount of bread and
butter that you can buy at the present rates of wages, and the present
price of commodities bad as they are.”
Economic nationalism still resonated in 1932. But this Roosevelt
believed with the late Senator Henry Ashurst that the clammy hand
of consistency should never rest for long on the shoulder of a states-
man. In the tariff confrontation of 1932, it was FDR who blinked
and backed down. In Boston on October 31, he became the echo of
Justin Morrill: “I favor continued protection for American agricul-
ture as well as American industry.” ”
Since those days, generations have been indoctrinated in the myth
that if Smoot-Hawley did not cause the Depression, it surely ex-
244 Patrick J. BUCHANAN
tended and deepened it. The myth has become part of our popular
culture. In the 1986 comedy film Ferris Bueller’s Day Off, Ben Stein,
actor-writer son of Herb Stein, who chaired Nixon’s Council of
Economic Advisers, played a history teacher instructing indolent
high school students:
In 1930, the Republican-controlled House of Representatives, in an ef-
fort to alleviate the effects of the — anyone? anyone? — the Great
Depression, passed the — anyone? anyone? — the tariff bill, the
Hawley-Smoot ‘Tariff Act which — anyone? raised or lowered? raised
tariffs — in an effort to collect more revenue for the federal govern-
ment. Did it work? Anyone? Anyone know the effects? It did not work,
and the United States sank deeper into the Great Depression.”
When Vice President Al Gore debated Ross Perot on NAFTA in
1993, his clinching argument was a photograph of Senator Reed
Smoot and Representative Willis Hawley, which he handed to
Perot, saying, “They raised tariffs and it was one of the principal
causes, many economists say, the principal cause, of the Great De-
pression in this country and around the world.” The Wall Street
Journal leaped for joy: “The famous tariff lives on in the annals of in-
vincible ignorance” and “represented a brand of dumb and reac-
tionary Republicanism that consigned the party to also-ran oblivion
from 1932 through Robert Taft.” ? Business Week excoriated Smoot-
Hawley for “triggering the Great Depression and paving the way for
World War II.”” Quite a load for one modest tariff bill to carry.
Consider the bill of particulars in the indictment.
Smoot-Hawley imposed the highest tariff rates in U.S. history;
triggered the stock market crash; provoked massive retaliation
against U.S. exports, thereby drying up world trade; lengthened and
deepened the Depression; brought a sad ruinous end to the careers
of Smoot and Hawley — a charge made even by Ronald Reagan —
and was a principal cause of the rise of Hitler and World War II.
Historian Alfred E. Eckes, Jr., chairman of the International
‘Trade Commission in the Reagan era, studied the evidence and pre-
sented it in his 1995 book Opening America’s Market: U.S. Foreign
The Great Betrayal 25
Trade Policy Since 1776. Not one of the charges against Smoot-
Hawley stands up.*
SMOOT-HAWLEY:
MYTH AND REALITY
While Smoot-Hawley did raise the average tariff rate to 53 percent
in 1930 and to 59 percent in 1932, the Tariff of Abominations of
1828 produced a rate of 62 percent in 1830. But Smoot-Hawley ap-
plied to only one-third of all U.S. imports. Compare that with the Tar-
iff of Abominations, which applied to 92 percent of imports, the
Morrill tariff (96 percent), the McKinley Tariff (48 percent), and the
Dingley Tariff (55 percent). The list of duty-free imports under Smoot-
Hawley was the longest in history.
Considering Smoot-Hawley duties as a percentage of a// imports,
it ranks, in impact on trade, below every single post—Civil War tar-
iff except the Underwood Tariff of 1913.
Moreover, Congress never imposed a 59 percent rate. The rate
hit 59 percent in 1932 only because the prices of so many goods col-
lapsed. (If a $2 tariff is imposed on a $10 toy, and the toy price falls
to $3, that $2 tariff has risen from 20 percent to 66.6 percent.) Had
1929 price levels endured, the Smoot-Hawley tariff rate would have
been 41 percent, not high by historical standards.
What of the second charge — that the anticipation of Smoot-
Hawley caused the stock market crash eight months before the act
became law? Yet, in the spring of 1930 — after Smoot-Hawley had
broken through its opposition on the Hill and was headed to certain
passage — the stock market was headed due north. Eckes shows the
market often rising as Smoot-Hawley’s prospects improve, and
falling when Smoot-Hawley appears on the ropes, i.e., no correla-
tion.
* * *
Patrick J. BUCHANAN
246
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Morrill
Tariffs
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Tariff Tariff (1932)
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Moreover, how much adverse effect could Smoot-Hawley have had
on the U.S. economy as a whole, when total imports in 1930 added up
to only 4 percent of the GNP and Smoot-Hawley applied to only a third of
that, or to 1.3 percent of the GNP? Is it conceivable that an increase in
tariffs on 1.3 percent of the GNP triggered the collapse of five thou-
sand banks, wiped out five-sixths of the stock market, caused a drop
of 46 percent in the GNP, and sent unemployment soaring to 25
percent? One economist who studied the consequences of Smoot-
Hawley writes that
from 1929 to 1933, America’s GNP fell from $104 billion to $56 billion,
a loss of $48 billion. However, net exports fell by only $700 million, and
domestic spending declined by $47.3 billion. In other words, net ex-
PaTRiIck J. BUCHANAN
S LV) © un = LV an) D
(LNIOX4d) LHDIGM
YEAR
Weight of Tariffs, 1860-1995
(Duties calculated as a share of free and dutiable imports)
Source: Historical Statistics of the United States and Statistical Abstract of the United States, 1996
The Great Betrayal 249
ports decreased by 1.5 percent of the fall in GNP, as domestic demand
fell by the remaining 98.5 percent! It is patently absurd to fuss over that
1.5 percent fall and overlook the other 98.5 percent.”
The reason the Great Depression endured can be found in a sin-
gle statistic. With the crash, the stampede for cash to meet margin
calls, the run on the banks, their collapse, and the wipeout of savings,
one-third of America’s money supply vanished. And the Federal Reserve
did nothing to stop the hemorrhaging or to replace the lost lifeblood
of the American economy. Thus, the economy went into shock and
almost expired.”
Hoover’s contribution to the Depression was not Smoot- Hawley.
It was the crippling 1932 hike in the income tax, raising the top rate
from 25 percent to 65 percent, and the bottom rate by a factor of
ten, from .4 percent to 4 percent. ‘To raise taxes in a recession is sui-
cidal. FDR compounded the felony by raising the top rate to 79 per-
cent! Anxious to convict Smoot-Hawley, economists have ignored
the critical role that the record tax hikes of the 1930s played in keep-
ing America mired in depression until World War II pulled us out.
The contention that Smoot-Hawley triggered a global stampede to
protectionism is another myth. The world was already far down that
road before Smoot-Hawley was even on the table. In France the
trend toward protectionism had begun in 1890; in 1918 Paris re-
nounced all treaties based on the most-favored-nation principle. Yu-
goslavia, Hungary, and Czechoslovakia had higher tariffs after
World War I than before. So, too, did Bulgaria and Romania. Italy,
Spain, Belgium, Holland — and Germany after 1925 — had all
raised tariffs above prewar levels.” Japan, India, Australia, and New
Zealand had also adopted policies to curtail imports to protect the
industries that had expanded during the war.
Even free-trade Britain was going protectionist. The 33!⁄ per-
cent duties levied on cars, motorcycles, and other manufactures by
the McKenna Act of 1915 were expanded in 1921, by the Safe-
guarding of Industries Act and the Dyestuffs Importation Act, to in-
250 Patrick J. BUCHANAN
dustries vital to national security. The thinking behind Britain’s re-
turn to protectionism:
The new industries since 1915 would need careful nurturing and pro-
tection if foreign competition were not again to reduce Britain to a
technological colony. All in all, although Britannia had been rescued
from liberalism by the Great War, it was possible that she might aban-
don the hard road of rehabilitation and return to her old life.”
There was one major exception to this protectionist trend. In
1927 the League of Nations called an International Economic Con-
ference, after which tariffs were lowered in almost all developed
countries in 1928 and 1929.” As these tariff cuts came just before the
1929 crash, it would be more logical (though no less wrong) to
blame worldwide tariff cuts, rather than Smoot-Hawley, for the
crash and the Depression.
In his memoirs Cordell Hull recalls that when he arrived at his of-
fice as FDR’s new secretary of state,
I found in the files no fewer than thirty-four formal and emphatic
diplomatic protests presented by as many nations following the passage
of the Smoot-Hawley high tariff Act nor had their protests been
confined to words. Goaded by what they regarded as almost an em-
bargo keeping out their exports to the United States, they retaliated in
kind.”
Eckes discovered this to be Hull hype. The real figure turns out
to be three or four diplomatic protests. A few nations did retaliate
but only against a few selected products, like autos.
In 1933 FDR and Hull began rolling back the Smoot-Hawley tariff
rates — to below the rates of Fordney-McCumber. Yet, recovery did
not come. By 1937 tariff rates had been slashed to some of the low-
The Great Betrayal 25
est levels of the twentieth century, but still prosperity did not come.
That year a second wave of the Depression struck with unemploy-
ment rising to 17 percent.
What caused that?
Like all economic activity, trade did contract in the Depression.
Import trade, however, contracted about the same for duty-free
as for dutiable commodities covered by Smoot-Hawley. Smoot-
Hawley thus had an imperceptible effect even on trade, let alone on
a national economy of which foreign trade was but a tiny fraction.
As for Smoot and Hawley being punished by an enraged elec-
torate, this, too, is bogus history. Willis Hawley, sixty-eight, lost in
a primary in Oregon to a popular fellow twenty years his junior. His
tariff had nothing to do with it. Hawley did not even go home to
campaign. Among his problems, Hawley was a “dry” on Prohibition,
while his rival was a “wet.”
Reed Smoot went down to defeat in Utah in the New Deal land-
slide. But few survived that Little Big Horn. Smoot, however, ran
ahead of both his governor and President Hoover. Like Hawley, he
lost to a man twenty years his junior. Among Smoot’s problems: at
seventy, he was an apostle of the Mormon Church, whose people
wanted him home. Both men went down to defeat without repudi-
ating their work or renouncing their faith. Smoot remained a proud
protectionist:
This Government should have no apology to make for reserving Amer-
ica for Americans. That has been our traditional policy ever since the
United States became a nation. We have refused to participate in the
political intrigues of Europe, and we will not compromise the indepen-
dence of this country for the privilege of serving as schoolmaster for the
world. In economics as in politics, the policy of this Government is
“America first.” The Republican Party will not stand by and see eco-
nomic experimenters fritter away our national heritage.”
Smoot left office, prestige intact, with the New York Times paying
him tribute. Senator Reed Smoot, said the Times, was “a statesman
of the highest type.”*” With his defeat, the bloodline going back to
252 PATRICK J. BUCHANAN
before the Civil War was broken. Justin Morrill had written Lin-
coln’s tariffs that financed the war that saved the Union. Morrill
moved over to the Senate Finance Committee in 1867, where he
took the chairman’s gavel from John Sherman in 1877, wielding it
until his death in December 1898. The gavel was then passed to
Morrill’s protégé, Nelson Aldrich, who held it until 1911. Aldrich’s
principal lieutenant was Reed Smoot, who succeeded to the Finance
Committee chair in 1923. With Smoot’ 1932 defeat, the great era
of protectionism, begun when Lincoln carried Pennsylvania and the
nation on the tariff issue, came to a close.
Was Smoot-Hawley responsible for the rise of fascism and Hitler?
The assertion is absurd. Hitler attempted his Munich Beer Hall
Putsch in 1923, seven years before Smoot-Hawley. Had Hitler’s
coup succeeded, would Fordney-McCumber have been responsible?
Did Mussolini march on Rome to protest U.S. tariff rates? Did any
war criminal ever attribute the turmoil in Germany, or the fascists’
anti-Western attitudes, to U.S. tariffs? No. Only Americans do that.
The charge that Smoot-Hawley was responsible for the rise of fas-
cism is an early and excellent example of the “blame America first”
syndrome.
For what purpose this malicious and mendacious charge? The
answer: moral extortion, to induce in Americans a sense of guilt, so
that we never again raise tariffs to protect our nation and so that we
shall assume our moral duty to make reparations to a world that suf-
fered terribly because of the greed and selfishness of Republicans of
the Roaring Twenties.
Smoot-Hawley was a “molehill, not a mountain,” writes Eckes.
Milton Friedman concurs with Dr. Eckes. In a December 1997 let-
ter to the author, he said of Smoot-Hawley, “It played no significant
role in either causing the depression or prolonging it.” Yet, genera-
tions are still being indoctrinated in the myth. The hidden agenda:
to ensure that no future generation ever again studies, learns, or em-
braces the ideas of those nationalist Republicans who, in the tradi-
The Great Betrayal 253
tion of Lincoln, McKinley, Teddy Roosevelt, and Calvin Coolidge,
put America first.
‘THe POLITICS oF PROTECTIONISM
The golden age of protection, from 1865 to 1913, which produced
the greatest economic expansion in history, and its silver age, the
Roaring Twenties, where annual growth rates reached 7 percent,
were history. Americans would soon forget what protectionism had
wrought and would come to believe the establishment line — that
it was all a dark and sordid past, best forgotten, that can teach us
nothing.
We have seen what economic nationalism did for the country.
What did it do for the GOP? From 1860 to 1932 Republicans car-
ried the White House in fourteen of eighteen elections. Eleven Re-
publicans won in their own right: Lincoln, Grant, Hayes, Garfield,
Harrison, McKinley, Roosevelt, Taft, Harding, Coolidge, Hoover.
But only two Democrats won the White House in those seventy-two
years: Cleveland and Wilson, both of whom won only because the
Republican Party had split. So potent was the tariff issue that in 1872
the Democrats, weakened by identification with the Confederacy,
pinned their hopes on a journalist! The high-tariff man: Horace
Greeley.
From Lincoln to Hoover, Republican presidents were economic
nationalists. These men made no apology for putting their country
first. Foreign manufacturers and workers had no claim to equal ac-
cess to U.S. markets, for they did not share the duties and burdens
of citizenship. This land was our land. America was for Americans.
‘Tariffs protected the home market, kept America first in industrial
power, and made U.S. wages the envy of the world. Isn’t that who
the economy was for?
Isn’t that what government was supposed to do?
In every GOP platform from 1884 to 1944, the party proclaimed
254 PATRICK J. BUCHANAN
its faith in protection. That U.S. citizens would be swarming over
Capitol Hill, at six-figure salaries, paid by Toyota or Toshiba, doing
the bidding of Japan, Mexico, or China, and that American busi-
nessmen would be pounding on executive desks for trade deals so
they could shutter U.S. factories and open plants in Asia — these old
Republicans would have regarded such as little short of treason. And
political correctness would not have inhibited them from saying
what they thought of this new breed.
Book Three
‘THE COUNTERREVOLUTION
AND THE
COMING OF A New POPULISM
Cir
Chapter 13
1933-93
The question . . . that is presented to every
American is whether the United States will
take the opportunity which is offered to shape
her own life in her own way and in accord
with her own ideals, or whether this oppor-
tunity will be thrust aside for an elusive and
delusive old-world concept of sordid interna-
tional shopkeeping.'
— Sam Crowther, 1933
a year 1933 marked the triumph of the free traders. In the
decades to follow, Smoot-Hawley would become an epithet, a syn-
onym for a selfish, crabbed conservatism, and a convenient stick to
beat any who would dare urge a revival of economic nationalism.
“What about Smoot-Hawley!” was the concluding crushing taunt in
any argument on tariffs and trade.
For twenty years liberals who dominated the nation’s politics,
popular culture, and intellectual discourse drove home the lesson:
Smoot-Hawley was a crime in the realm of economics as great as the
appeasement of Hitler at Munich had been in the realm of politics.
Tariffs were “beggar thy neighbor” economics in which the great re-
public that now led the Western democracies must never again in-
dulge.
With America’s victory in World War I, New Deal Democrats
258 Patrick J. BUCHANAN
resurrected the dream of Wilson and sought to create an Interna-
tional Trade Organization (ITO) with the power to enforce rules of
worldwide free trade, over which no nation would be granted veto
power. A postwar Republican resurgence killed the ITO, but free
traders made a historic breakthrough with the election of Dwight
Eisenhower. During the Eisenhower era, the Republican Party,
America’s bastion of economic nationalism, converted to free trade.
A soldier all his life, Dwight Eisenhower put Allied solidarity in the
Cold War before all else. By the end of his second term, Ike had “led
Republicans from protectionism to Cobdenism.”’ Pre-Ike, free-
trade presidents were the exception; post-Eisenhower, they were the
rule.
Just as important were the Young Turks of the New Conser-
vatism who would capture the Republican Party for Barry Goldwa-
ter in 1964 and for Ronald Reagan in 1980: free traders who read
Milton Friedman and mocked William McKinley with the relish of
a New Dealer. I know, because I was one of them.
Presidents Kennedy and Johnson came out of the FDR tradition
and shared Eisenhower’s conviction that opening America’s markets,
even if foreign governments refused to reciprocate, was essential to
bind allies and neutrals to America’s cause. Trade concessions were
to them instruments of diplomacy; any casualties caused to U.S. in-
dustry or labor must be borne manfully in the name of fighting and
winning the Cold War.
Presidents Nixon and Ford were in the Eisenhower tradition —
as were their national security advisers Henry Kissinger and Brent
Scowcroft. Foreign policy was what their presidencies were about;
all else was subordinated to the higher cause of prevailing in the
East-West conflict.
Ronald Reagan, however, was a man apart. Raised in a working-
class Democratic home, he had been a union leader and was as vis-
ceral a patriot as any man to occupy the Oval Office. Though he
made the case for free trade with the zeal of a convert, Reagan was
also a “conservative of the heart.” Convinced in the case of the
Harley hog that Japan was unfairly destroying an American icon, he
did not hesitate to take actions that horrified free traders. Reagan
The Great Betrayal 259
would go on to impose quotas on imported cars, steel, and machine
tools and force Japan to share 20 percent of its home market for
semiconductors with American producers.
His successor, George Bush, however, was an internationalist out
of the Eastern schools and a reflexive free trader. Though his father,
Prescott, had led the battle against JFK’s free-trade policies, George
Bush lacerated protectionism and isolationism with the relish of a
New Dealer.
And so for sixty years, the free traders had it all.
What caused the disintegration of their coalition? First came the
stunning collapse of the Soviet empire. With the Cold War’s end
came the breakup of the conservative-Republican coalition that had
come together to fight that war. Second came the dawning on Amer-
icans that while the Soviet Union had paid the ultimate price of im-
perial overstretch, America had also paid an immense price. We had
sacrificed our national interests in the cause of Allied solidarity,
while Western Europe and Japan had made no comparable contri-
butions and had prospered mightily at our expense.
At the end of sixty years of free-trade policies, America found it-
self as dependent on foreign imports, foreign markets, and foreign
capital as it had been in the infant days of the new republic. In a few
decades the globalists had reverse-engineered American history, in-
augurated a new era of American dependency, and thrown away the
gains of a century and a half of economic nationalism. The republic
that had grown out of thirteen colonies of the British Empire to be-
come the most self-sufficient nation in history was now a colony of
the world — with trade deficits at Colonial levels, wages well below
those of Japan, and a dependency on foreign manufactures greater
than before the Civil War. What Washington, Hamilton, Madison,
Jackson, Lincoln, and Republican presidents from the Civil War to
the New Deal had achieved at enormous cost, America’s elites had
sacrificed on the altar of the Global Economy of their dreams.
Thus, many Americans began to demand that America’s leaders start
looking out for their own country first. President Bush denounced
260 PATRICK J. BUCHANAN
the new spirit of nationalism. Triumphant in the Gulf War, he defi-
antly strode before the United Nations on October 1, 1991, to call
for a new world order of “open borders, open trade.” On December
7 at Pearl Harbor, he damned “isolationism” and “protectionism”
for a war begun at Pearl Harbor by the Japanese, to whom Mr. Bush
was magnanimous. It was clear that economic nationalism would get
no hearing in the presidential councils of George Bush. Message re-
ceived. We gave our answer in New Hampshire three days after that
Pearl Harbor speech. George Bush, I said
is a man of graciousness, honor and integrity, who has given a lifetime
to his nation’s service. But the differences between us are now too deep.
... He is a globalist and we are nationalists. He believes in some Pax
Universalis; we believe in the Old Republic. He would put America’s
wealth and power at the service of some vague New World Order; we
will put America first.
We did not prevail, but the breadth of the support we rallied in a
ten-week campaign against the president of the United States as-
tonished observers. Ross Perot would echo the theme of economic
nationalism in an independent campaign that would win 19 percent
of the national vote. In both parties now, economic nationalists were
at war with free traders, and the stage was set for the first great
political test of strength between them since the days of Smoot-
Hawley. This was to be the Battle of NAFTA.
Chapter 14
COUNTERREVOLUTION
Labor Secretary Robert Reich, Senator
Edward Kennedy, House Democratic leaders
Richard Gephardt and David Bonior, and
the labor movement all tried to raise the
issue of joks and wages. But the political es-
tablishment and the media didn’t pay atten-
tion until the conservative commentator
Patrick Buchanan started pounding podiums
about it in his insurgency campaign for the
Republican presidential nomination.'
— John J. Sweeney,
AFL-CIO PRESIDENT, 1996
\ \ ith manufacturing jobs disappearing, family incomes stag-
nant, and wages slipping, the counterrevolution took a long time in
coming. Such is the hold of ideology. After all, it took the commu-
nists decades after the failure of their idea was manifest for them to
give up on it. Some still have not. But by 1991 the social conse-
quences of America’s embrace of the Global Economy began to be
reflected in national politics. Economic nationalism powered our
challenge to President Bush, the Jerry Brown campaign, and that of
Ross Perot, who declared his candidacy for president the day after
news hit of our near upset of George Bush in New Hampshire. The
forces were in place for the first great collision between an estab-
lishment converted, whole and entire, to free trade and a new pop-
ulism: the Battle of NAFTA.
262 PATRICK J. BUCHANAN
ALL THE Kime s MEN
Like the Panama Canal controversy, the national debate over
the North American Free Trade Agreement (NAFTA) was a ro-
bust affair, democratic politics at its best. Our attack on NAFTA
was deliberately timed for late August, when the political and media
elites had left Washington and the reporters who stayed behind
would be casting about for a good story. Our press conference
attracted fifty reporters and got extraordinary coverage. There
was no answer from the administration. Throughout the summer,
daily attacks on NAFTA received endless hours of air time, while
its advocates seemed asleep. Like the rebels at Concord Bridge, the
adversaries of NAFTA had stunned a sleepy establishment with their
ferocity and number. Passage of trade deals had been routine. By
mid-September a poll by the Wall Street Journal found that 36
percent of Americans were opposed to NAFTA, 25 percent for it.’
Near panic took hold of both a media and political elite that had as-
sumed easy passage. There were predictions that the pact was going
down.
The lamentations began. NAFTA is George Bush’s “boldest legacy,”
wailed the Wall Street Journal. Can this child of so much love be lost?
Support for NAFTA, said Jack Kemp, is a “litmus test” for Republi-
cans. i
As despair spread, President Clinton, who had affected an almost
diffident stance toward his own treaty, shoved his poker chips into
the center of the table, assumed leadership of the campaign, and
went all-out. With that decision, he solidified his hold on the Amer-
ican establishment. In July Henry Kissinger had promised the new
president that if he took command in the NAFTA battle, a mighty
coalition would form behind him, and his tenure “would be per-
ceived as a seminal presidency whatever else transpires while he is in
office.”? It was an offer Clinton couldn’t refuse. The White House
bought in, and Kissinger delivered.
The Great Betrayal 263
On September 14, 1993, the president held a White House rally
for a NAFTA pact that had now been endorsed by all five ex-
presidents; three of them were in the East Room. Gerald Ford, a top
recruiter at Yale for the America First Committee, dragged out
Smoot-Hawley for another thrashing, warning against any repeti-
tion of that “stupid, serious mistake.”* George Bush denounced
“those demagogues who appeal to the worst instincts that our spe-
cial interest groups possess.” * But Jimmy Carter stole the show. The
assemblage rose as one in applause as Carter savaged Perot as a
“demagogue ...with unlimited financial resources ... who is ex-
tremely careless with the truth, who is preying on the fears and the
uncertainties of the American public.” ć
The establishment was united, with spirits buoyed by Clinton’s
rally. Leaving the White House, a pleased Senate minority leader
spoke for the congressional Republicans. “President Clinton hit it
out of the ballpark. We’re getting back on the offensive,” said Bob
Dole.’
Closing ranks behind Clinton were every ex-secretary of state, the
congressional leaders of both parties, the Heritage Foundation and
Brookings Institution, the Wall Street Journal and Washington Post,
the Council on Foreign Relations and the Trilateral Commission,
the New Republic and National Review: all the king’s horses and all the
king’s men. l
Mexico City poured, by one estimate, $30-$50 million into the
campaign for NAFTA, hiring an army of U.S. mercenaries — lob-
byists, lawyers, ex-trade officials, consultants, PR specialists. As the
essence of NAFTA was a fifteen-year phaseout of a puny 4 percent
U.S. tariff on Mexican goods, and a 10 percent Mexican tariff on
U.S. goods, why would both nations roll out their heavy artillery?
Because just as the Battle of Gettysburg was about more than who
controlled a small town in Pennsylvania, NAFTA was about more
than tariffs. It was to be the first step toward a free-trade zone that
would extend the U.S.-Canada common market to all of Latin
America — and eventually the world.
264 PATRICK J. BUCHANAN
KIssiInGER’S New WorLpb ORDER
VS.
“THE GAWUSE OF FvIL”
To opponents, NAFTA was always about more than jobs going
south; it was about American sovereignty going south. Under
NAFTA, foreigners would be given inspection rights in U.S. plants,
and transnational boards would be established to judge trade dis-
putes. Opponents saw in NAFTA the first step toward a merger of
the American and Mexican economies, a prelude to eventual merger
of the two countries. Indeed, Kissinger conceded that there was
larger game afoot; NAFTA, he wrote, represents the “architecture
of a new international system,” a great “step toward the new world
order.” ®
As both sides came to believe that America’s destiny might turn
on the vote, rancor and bitterness intensified. The feline ferocity of
NAFTA supporters was corroboration that something more was at
stake than a phaseout of inconsequential tariffs. Echoing Carter on
Perot, Wall Street Journal writer Paul Gigot accused me of “dema-
goguery,” lying, hypocrisy, “raw anu-Mexican bias,” and weaving a
“web of distortion and ignorance.” Buchanan belongs to the “Fear
& Loathing branch of conservatism,” Gigot wrote; his politics are
“too crabbed, fearful and tribal” to be acceptable to the cosmopoli-
tan Right.” The New Republic even sniffed out demonic roots in the
anti- NAFTA coalition. In a cover editorial, it declared, “It may not
be too great a flight of rhetoric to say that at this crossroads of
post-cold war history, Pat Buchanan and Ross Perot represent the
causeof evil.”
“Why the pro-NAFTA hysteria?” asked libertarian philosopher
Murray Rothbard." But Rothbard, a cherished friend of mine and
passionate foe of NAFTA, knew exactly what the hysteria was about.
For the first time in modern history, the U.S. foreign policy Estab-
lishment was heading for a humiliating repudiation. A populist-
The Great Betrayal 265
nationalist coalition was fixing to dynamite Henry Kissinger’s new
world order right off the rails.
By voting time in the House, November 17, 1993, a plurality of
Americans wanted NAFTA defeated. Clinton prevailed with one
of the most flagrant vote-buying sprees in history. Hours after
NAFTAS victory, I wrote an assessment I believe still stands up
today:
In the end they had to buy it. In the end they won the bidding war, not
the battle for hearts and minds. ... The presidents men won not by
giving their countrymen the vision of a better future, but by buying up
their representatives with deals on tomatoes, peanut butter, sugar, cit-
rus, trade centers, C-17s and development banks. .. . The remarkable
thing is not that the coalition of working men and women, populists and
conservatives, was defeated, but that they came so close to recapturing
the nation’s destiny.”
As the bitter debate over war in the Persian Gulf had exposed an
unsuspected rift in the Cold War consensus, NAFTA revealed that
Americans are not sold on free trade. The Middle American coali-
tion that propelled Richard Nixon to his forty-nine-state triumph in
1972, and Ronald Reagan to his forty-nine-state triumph in 1984, is
shattered. Within both parties, nationalists are now in rancorous
conflict with the globalists. And it is true not only of America. This
is the new conflict of the age that succeeds the Cold War.
“A ‘TRANSFORMATIONAL MOMENT”
One year after NAFTA came GATT.
All through 1993 the Uruguay Round of GATT negotiations, in
their seventh year, seemed barren of issue, about to wrap up without
agreement. But at the eleventh hour the Americans, as they had in
all previous GATT talks, capitulated and made the critical conces-
sions. When the pact was brought back, the United States had
266 Patrick J. BUCHANAN
agreed to the creation of the World Trade Organization (WTO),
which had the authority to determine when trade agreements were
violated and the power to decide when punishment might be im-
posed. In the WTO — for the first time in any global organization
— America was given neither veto power nor voting power compa-
rable to its contribution, size, and strength. The United States, in
the WTO, was the equal of Ecuador. That this new global supreme
court of world trade was a leap forward to world government was
conceded by Newt Gingrich:
We need to be honest about the fact that we are transferring from
the United States at a practical level significant authority to a new
organization. This is a transformational moment. I would feel better if
the people who favor this would just be honest about the scale of
change.
lagree .. . this is very close to Maastricht, and 20 years from now we
will look back on this as a very important defining moment.”
How transformational a moment?
Where Harry Truman and Dwight Eisenhower had failed, Bill
Clinton would succeed, with the collaboration of Republican lead-
ers. Indeed, as far back as the days of Woodrow Wilson, an interna-
tional trade court had been the dream of American globalists.
Woodrow Wilson’s 1918 plan for a World Trade Tribunal was part of
his League of Nations Covenant. Thanks to Henry Cabot Lodge...
and his allies, neither the League nor its Trade Tribunal were approved
by the U.S. Senate, in one of the most courageous acts in history."
Lodge’s defiant stand had bought the Republic seventy-five
years, before a Clinton-Gingrich-Dole coalition would agree to give
up a measure of that national sovereignty for which the Founding
Fathers had fought.
As in the NAFTA battle, pro-GATT forces charged opponents
with appealing to fear, and then appealed to fear themselves. Peter
The Great Betrayal 267
Sutherland, the general director of GATT, warned that a failure to
ratify the treaty would put us on a glide path to war!
If we had not cut the deal by December 15 [1993] the world overnight
would have become a much more dangerous place... . It would have
been carved up into spheres of influence, or regional trade blocs, which
ultimately would have proved self-destructive ... [and] would have
quickly escalated to military conflict."
Defeating the GATT deal was a harder sell than battling
NAFTA. Few Americans knew what the General Agreement on
Tariffs and Trade or the Uruguay Round was or that a new World
Trade Organization had been created or what the WTO was. Perot
did not believe that the GATT fight could be won. But once ex-
plained over radio and television, GATT was a loser for the admin-
istration. Grassroots support was nonexistent; the only enthusiasts
were executives and lobbyists whose corporate interests had been
protected at Geneva by Mickey Kantor. The longer Clinton delayed
in bringing his 23,000-page treaty to a vote, the more ground he
lost. ‘The most resolute and courageous opponent was Senator Fritz
Hollings of South Carolina. Confronted with Hollings’s determina-
tion to hold hearings, and wary of another brutal NAFTA-type bat-
tle so close to November, the White House put off a vote until after
the 1994 elections.
The elections proved an earthquake for Clinton, and a potential
disaster for GATT. For the freshman class of the new Congress was
full of young Republican trade hawks! If the White House and Gin-
grich and Dole did not want a crushing defeat, they had to get the
GATT approved before the 104th Congress convened. A lame-duck
session was called for the end of November. With the Republican
leadership collaborating with the White House, our one-party gov-
ernment passed GATT. Gingrich and Dole denied their own fresh-
men a chance to vote on the GATT treaty and gave Clinton a victory
that would start him back on the road to recovery and reelection.
Greater love than this hath no party. In gratitude to its corporate
268 Patrick J. BUCHANAN
contributors of soft money, the GOP gave Clinton a triumph that
enabled him to strike a posture as a national and world leader.
“Yes, We Have No Bananas”
What all the wise men promised has not
happened, and what all the damm fools said
would happen bas come to pass."
— Lord Melbourne,
BRITISH PRIME MINISTER
(ON A FAILED REFORM)
In getting the GATT vote behind it in late November, the White
House had been extraordinarily lucky. Had the president delayed a
few weeks, GATT would have gone down. In mid-December Mex-
ico City leaked word that it could not pay off its tesebonos, tens of bil-
lions of dollars of bonds due in 1995. Mexico’s currency reserves had
vanished. The peso collapsed, quickly losing half its value against the
dollar. For the third time in a year, the U.S. establishment found its
chestnuts blazing in the fire and populists howling, “Let ’em burn!”
With Kissinger’s new world order shaken to its foundation, Clin-
ton summoned Dole and Gingrich, who instantly agreed to rush
through a financial bailout of the Mexican government — to enable
Mexico to pay off the bonds held by now-panicked U.S. investors.
The stake of Goldman, Sachs in the bailout was huge, as was Robert
Rubin’s. The early-nineties star of Goldman, Sachs, Rubin had led
its clients into Mexico, had been the watch officer at the National
Economic Council who failed to see the Mexican crisis barreling up
the tracks, and was now the treasury secretary—designate, who would
have to preside over a collapse of the house of cards he had helped
erect.
The Great Betrayal 269
When Dole and Gingrich arrived back on Capitol Hill to report on
the bailout they had bought into, the GOP freshmen rioted. They
had not been elected, they said, to vote $25 billion for Mexico on the
say-so of Clinton and Rubin. Seeing that the bailout could not
pass — 80 percent of the nation opposed it — the GOP leaders
bailed out on the president. Clinton was forced to conduct a $20 bil-
lion raid on a ‘Treasury fund created to maintain the exchange rate
of the dollar. The White House then leaned on the IMF to lend
Mexico another $17 billion. Eventually, a $53 billion bailout was
wired together, even though Mexico did not use its full credit line.
Had the peso collapse occurred three weeks earlier, GATT
would have been defeated and the WTO stillborn. Had Congress
been told the truth in 1993 — that the tiny U.S. trade surplus with
Mexico was due to an overvalued peso — NAFTA never would have
passed.
La RECONQUISTA
‘Two years after NAFTA, the predictions of its opponents had all
come true. The U.S. trade surplus with Mexico had vanished; a trade
deficit of $15 billion had opened up. Trucks heading north out of
Mexico were hauling more and more manufactured goods, while
those coming south carried machinery and equipment for the new
factories going up, pointing to endless and deepening U.S. trade
deficits. By 1997, 3,300 maquiladora factories were operating, em-
ploying 800,000 Mexican workers in jobs that not long ago would
have gone to Americans.”
Only one-sixth of U.S. exports to Mexico are consumer goods;
one-third are factory components. Another huge slice of our exports
is parts sent south for assembly and reshipment back to the United
States. Such exports translate into lost American jobs. Consider au-
tomobiles. In 1996 we exported 46,652 cars to Mexico, and Mexico
exported 550,622 cars to the United States, “more cars than the U.S.
270 Patrick J. BUCHANAN
T T
CMAN TYAAC OSAd
DOLLARS (IN BILLIONS)
YEAR
U.S. Trade Balance with Mexico
Source: U.S. Department of Commerce
exports to the world.” ® For every truck we export to Mexico, Mexico
exports six to the United States.
Many American companies first went to Mexico to shed their
high-paid U.S. workforce. Others followed because they had no
choice if they wished to survive the low-wage competition. Realiz-
ing NAFTA had made Mexico a perfect launching pad into the
United States, Japanese and Korean companies began siting plants
south of the border. Along a seven-hundred-mile stretch from
Tijuana to Ciudad Juárez, dozens swooped in to exploit Mex-
ico’s special trade relationship with the United States. Consumer-
electronic giants Matsushita Electric Industrial, Mitsubishi Elec-
tric, Daewoo, and Sony have all built assembly plants there, trans-
forming the region into a Silicon Valley of TV manufacturing. In
1997 more than 10 million sets will have been produced in northern
Mexico."
The Great Betrayal Zee
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DOLLARS (IN BILLIONS)
Balance of Trade with Mexico in
Manufactures, 1991-95
Source: U.S. Deparunent of Commerce
During the NAFTA debate the Wall Street Journal had christened its
opponents — Ross Perot, Ralph Nader, Jesse Jackson, and this
writer — the “Halloween coalition.” But in two years NAFTA did
what the Halloween coalition predicted; it created a booming new
Sun Belt, a giant new U.S. enterprise zone — in Mexico.” But even
those new factories could not provide enough jobs for Mexico’s mil-
lions of unemployed. Thus, even as U.S. jobs went south, Mexico’s
jobless continued to come north. By early 1995 illegal aliens were
pouring across the U.S. border in record numbers to take jobs and
get welfare benefits now worth twice as many pesos as in pre-
272 PATRICK J. BUCHANAN
NAFTA days. The U.S. government estimates the number of illegal
aliens in this country at 5 million.
The biggest winners were the drug cartels. Anticipating NAFTA,
Mexico’s drug lords began buying up trucking companies on the
border and narcotics traffickers began shifting operations from
Colombia. The U.S. Drug Enforcement Agency knew that the car-
tels planned to use the companies to smuggle drugs. When the Clin-
ton administration was informed of this, the agency was told to shut
up, according to reured DEA intelligence chief Phil Jordan. Post-
NAFTA, Mexico became the port of entry for 70-80 percent of
America’s cocaine and marijuana. This crisis, said Teamsters presi-
dent Ron Carey, is “blowing the roof off claims that the NAFTA
trade deal is good for working families. ... NAFTA has created a
new pipeline of drugs into our schools and communities.” ?! Accord-
ing to the head of the DEA, by 1997 there was “not one single law
enforcement institution in Mexico with whom the DEA has an en-
tirely trusting relationship.”
Mexico is well on its way to succeeding Colombia as the leading
narco-democracy in the Americas. Carlos Salinas, Mexico’s presi-
dent from 1988 to 1994, who negotiated NAFTA, the man Clinton
had wanted to head the WTO, fled in 1995 and was sought for ques-
tioning in connection with his brother’s alleged theft of hundreds of
millions of dollars. It was the Salinas regime that Henry Kissinger
had personally vouched for in his call for support of NAFTA:
Salinas turned Mexico on its head. He... quelled corruption
and brought into office an extraordinary group of young, highly
trained technocrats. I know no government anywhere that is more
competent.”
Has the standard of living of Mexico’s workers risen? According
to Alan Tonelson of the U.S. Business and Industrial Council, real
hourly wages in Mexico, which fell 30 percent between 1980 and
1994, fell another 25 percent after devaluation.” Mexico’s workers
remain in a generation-long depression. In a sad little episode in
1995, Guillermo Lasso’s veterinary practice for Cuernavaca’s middle
The Great Betrayal 27s
class collapsed with the peso. “People were just letting their dogs
and cats die,” he said. By mid-1997 Mexico’s minimum wage had
slumped to three dollars a day — less than thirty-eight cents an
hour.’* Writes scholar Mark Falcoff:
1995 was probably Mexico’s worst [year] since the Great Depression,
with at least 1 million Mexicans losing their jobs. Unofficial estimates
hold that fully 18 million Mexicans, or almost half the economically ac-
tive population, are underemployed. These frightening statistics por-
tend a deep and profound social crisis. Urban crime has dramatically
increased, with even formerly “safe” areas of the capital now pervaded
by fear and trepidation.
Mexico is also experiencing a quiet but acute public health crisis.
Outbreaks of cholera and dengue fever increased tenfold between 1994
and 1995. ... According to UNICEF, some 30,000 Mexicans died of
malnutrition in 1995. If this is true, Mexico would be in the same cate-
gory as Ethiopia, Kenya and Nigeria.”
Ultimately, NAFTA and the peso devaluation were about lar-
ceny on a global scale. Mexico’s good people were robbed of half
the dollar-purchasing power of the pesos they had sweated for
and saved. American border towns lost loyal Mexican customers.
American workers saw factories and jobs go south. All so a Mexican
regime could run a $15 billion trade surplus with the United
States — and raise the cash to pay off its New York creditors. Mex-
ican and American workers lost, but the big banks were made whole,
and the wages the transnationals pay their Mexican labor were sliced
in half. No wonder America’s financial elite finds a lot to like in Bill
Clinton.
In early 1997 Clinton held a press conference to publicize Mex-
ico’s repayment, with interest, of the billions of dollars America had
lent it in the bailout of 1995. To raise the money, Mexico had floated
bonds with the Europeans, and Mexico City’s external debt was now
a larger share of the GDP than ever. And so the great global pyra-
mid scheme goes on.
274 PATRICK J. BUCHANAN
With one hundred thousand impoverished Mexicans pouring into
the United States every month, Californians sought to stem the in-
vasion by voting an end to welfare benefits for illegals. They were
castigated by the press and political elites as “racists” and “nativists”;
when Proposition 187 won in a landslide, the law was immediately
suspended by the courts.
Mexican consuls in the United States began calling for public
protests against any immigration controls, at demonstrations where
the Mexican flag was a common sight. Counterdemonstrations by
U.S. citizens demanding action to halt the invasion were broken up
by militants, rioters, and thugs.
“You’re Mexicans, Mexicans who live north of the border,” Pres-
ident Ernesto Zedillo told Mexican-American leaders in Dallas in
1996. Zedillo expressed hope that his new constitutional amend-
ment, providing for dual citizenship, would enable Mexicans living
in America to become a powerful force in shaping U.S. policy in
Mexico’s interests.
La Reconquista — the Spanish term for the recapture of Spain and
the expulsion of the Moors in 1492 — is the term one Mexican
diplomat used to describe his country’s designs on the American
Southwest. The vast majority of Mexican-Americans love this coun-
try and serve it honorably, especially in America’s armed forces. The
same is true of most who come here. But to the militant few whose
number is growing, America is the occupying power. And the U.S.
government shows little appreciation of the gravity of the situation,
or what it portends for America.
A New Issue: TAINTED Foop
Lately, a new concern has arisen from the explosion of imports, and
it has been exacerbated by the hysteria in Europe over “mad cow dis-
ease” discovered in cattle in the United Kingdom. That concern is
disease.
In the summer of 1996, 1,450 Americans came down with severe
The Great Betrayal 25
stomach disorders that were traced to Guatemalan raspberries that
had been irrigated or sprayed with water contaminated by cy-
clospora, a rare waterborne parasite. A few months later, 175 Michi-
gan children came down with hepatitis A, which was traced to
Mexican strawberries in school lunches, strawberries that had been
mislabeled as American-produced.
Public interest groups began to speak up. “Promoting interna-
tional trade is a worthy cause, but the health of the American people
has to come first,” said Bruce Silverglade, president of the Center
for Science in the Public Interest. Americans are becoming “a bunch
of guinea pigs, and there’s no possible way under current trade
agreements for these risks to be controlled,” added Rod Leonard,
executive director of the nonprofit Community Nutrition Insti-
tute.”
In mid-1997 at least 126 D.C.-area residents had become ill, in-
cluding thirty members of the Washington Symphony Orchestra,
with intestinal disease caused by cyclospora from basil and pesto out
of the upscale Sutton Gourmet.” The source was traced to a kitchen
and Salvadorean immigrants carrying the parasites in their systems.
Cyclospora was first identified in Papua, New Guinea, in 1979 and
has now become “a serious health problem,” said David Portesi, an
epidemiologist with the Maryland Department of Health. “We’re
not talking about some twenty-four-hour bug here, but something
that can disable you for thirty days or more with serious diarrhea and
dehydration.” ”
While more than nine thousand Americans die each year from
foodborne illnesses, few — if any — deaths have resulted from im-
ports. Yet, these episodes raise alarms. “The surge in global trade
and travel . . . is creating a huge health threat in the United States”
is how Reuters news service summarized a 1997 report of the Insti-
tute of Medicine of the U.S. Academy of Sciences. Among the germs
and medical threats listed, besides cyclospora, are new infections
such as the Ebola virus; mosquitoes capable of carrying dengue
fever, viral encephalitis, and yellow fever, introduced in tire imports
from Asia; and pesticides banned in the United States but discovered
on imported food.”
206 Patrick J. BUCHANAN
With foreign food flooding into the United States — 70 percent
of our winter fruits and vegetables now come from Mexico — these
episodes are certain to increase. Declares Nicholas Fox, author of
Spoiled:
We demand cheap food, we demand fresh fruits and vegetables all year
round. ... We have to understand that when we import fresh fruit and
vegetables we are importing the environment in which that food was
grown. We are consuming that environment, and the sanitation and
working conditions of that environment.”
“Greater reliance on food imported from countries that have less
stringent sanitary and pesticide regulations means a greater likeli-
hood of epidemics,” warns the New York Times’ Marian Burros.”
The free-trade Economist fears that the trend toward globalism could
be derailed: “Quarrels over food safety will blow a hole in free trade
unless governments put more trust in science, and in consumers.” ”
As Ms. Burros suggests, it cannot be long before some future
episode brings this issue to critical mass. Indeed, it seems almost re-
markable that in thousands of restaurants Americans are eating veg-
etables and salads whose ingredients come from countries where
American tourists are warned repeatedly not to drink the water. And
whether the risk we are taking is great or small, it must be placed on
the liability side of the ledger of NAFTA and GATT.
(OVER THE TOP
In the fall of 1997, President Clinton went to the Congress to ask for
renewal of “fast-track” authority, the presidential power to negoti-
ate trade treaties that are exempt from all congressional amendment.
His purpose was to win a free hand from Congress to extend
NAFTA to all of Latin America. Fast track was the highest priority
of the administration, and the president began the battle with the
leadership of both houses squarely behind him.
The Great Betrayal pied]
Like NAFTA and GATT, fast track was powerfully endorsed by
all the ex-presidents and secretaries of state, all major newspapers in
the New York—Washington corridor, all the major think tanks. The
bill was the top priority of the Business Roundtable, whose mem-
bership had lavished millions in “soft money” on both parties for
purposes such as this. Yet, as with NAFTA and GATT, the same
coalition of populists, environmentalists, union leaders, and conser-
vatives formed up to fight fast track to the last ditch. Now backing
the coalition, according to a Business Week poll, was a clear majority
of Americans, 54 percent of whom opposed extending NAFTA to
Latin America, with only 34 percent in favor. By equal margins,
Americans opposed renewing fast-track authority for the president.
The free traders had lost the country.
As Congress neared adjournment in early November, it became
clear that Mr. Clinton was coming up short, that fast track was about
to be derailed, that for the first time since the Eightieth Congress
killed the ITO, a major bill to expand global free trade was going
down. Panic set in; and the White House went all-out, using the tac-
tics that had prevailed in NAFTA. “The bazaar is open!” one con-
gressman chortled to this writer.
On Friday, November 7, a visibly unsettled president asked that
the vote be postponed for forty-eight hours; he was nowhere near
the numbers needed. All weekend, the House was in rancorous ses-
sion, with the GOP leadership threatening opponents with the loss
of committee assignments, as White House aides and cabinet offi-
cers cut any deal that could bring them closer to the magic 218
needed for passage. This is a “no-brainer,” an exasperated president
declared; members of Congress must not give in to intimidation.
The Clinton suggestion that a vote against fast track was a mark of
political retardation or cowardice infuriated those standing up to the
incessant pounding of the national establishment. Republican
House members called into a midnight conference by the speaker
had to pass through a gauntlet of corporate lobbyists demanding
that they support fast track.
278 PATRICK J. BUCHANAN
The lines held. In the early hours of Monday morning, Speaker
Newt Gingrich announced that the White House was “pulling” the
bill. The votes weren’t there. Fast track was dead! It was a stunning
defeat for global free traders, one that they did not even bother to
disguise. And it was the triumph of five years of labor by a coalition
that spans the political spectrum, from unionists and environmen-
talists to the Reform Party and conservatives like Congressmen
Duncan Hunter and Gerry Solomon.
Fast track was defeated for many reasons. But ultimately, it was
rejected by Congress because Mr. Clinton and the free traders had
lost the country. The special interests might try to punish congress-
men who voted against fast track, but it was clear by 1997 that the
people would not. Indeed, by now, calling one’s opponent a protec-
tionist, or invoking the Smoot-Hawley bogeyman was not enough.
Through years of persuasion, employing the evidence of the eyes,
the coalition had turned the American people into skeptics of glob-
alism. Mr. Clinton vowed to come back early in 1998, to renew the
battle for fast track, but in the Republican caucuses in the Senate and
House there seemed to be no stomach for the battle, and no confi-
dence it could be won.
Neither NAFTA nor GATT would pass today. Economic national-
ists are stronger and more evenly matched against free traders, just
as those who demand a new foreign policy, rooted in U.S. national
interests, are gaining ground on the globalists. The twentieth-cen-
tury triumphs of Wilson and FDR may not have been forever after
all. During the NAFTA debate, historian Arthur Schlesinger yielded
to a keening lament:
Can this reversion to isolationism be arrested? Or must we abandon the
Wilsonian dream, forget the hope of an international peace system and
return to the old sauve qui peut world? For the idea of a new world order
becomes meaningless if the most powerful nation on the planet is not
fully committed.”
The Great Betrayal 9
Schlesinger’s “Wilsonian dream . . . of an international peace sys-
tem,” however, was always only that — a dream. What he bemoans,
the “sauve qui peut world” of nations that see one another as rivals
and antagonists in an endless struggle for primacy, is the real world,
the only world we shall ever know. Leaders who have acted on that
truth have done far better by their people than dreamers who have
believed that with goodwill and hope, a utopian world can be created
this side of the grave. If the edifice we erect is constructed on the
gossamer stuff of dreams, not the hard rock of reality, it will come
down in ruins for us, as it did for Wilson.
PLowi1nc UP a FIELD OF DREAMS
In the summer of 1945, during a strike at the foundry where
he worked, Fred Ertl went down to the basement of his Dubuque
home and began to make toys. Using aluminum scrap from war
surplus pistons, he melted the metal in a potbelly furnace and cast
it into sand molds. With his four sons helping out, Fred bolted
the parts into toy tractors. His wife Gertrude painted the toys on
the kitchen table and kept the books. Fred’s two eldest boys — with
sixteen-year-old Fred, Jr., at the wheel of the family’s Olds — drove
all over Iowa delivering Ertl toys to hardware stores and retail
outlets.”
With the beginning of the baby boom, postwar America was wild
for toys. Ertl’s became almost as popular and collectible as Lionel
trains. “These are products that bring enjoyment to old and young
alike and that aren’t thrown away,” said a proud Fred Ertl, Jr., in
1992. “Our products from day one are still in existence in many
places.” *’
In 1959 Ertl Toy, with fifty employees, moved thirty miles west
to Dyersville. Its workforce rose to eleven hundred in a town of just
four thousand. The Farm Toy Museum, featuring Ertl miniatures of
John Deere tractors, opened. Dyersville declared itself the “Farm
280 Patrick J. BUCHANAN
Toy Capital of the World.” * The tiny Iowa town became the setting
for Kevin Costner’s Field of Dreams.
In 1967, however, Fred, Sr., who had suffered from colon cancer,
sold the family business to Victor Comptometer for retirement
money and to avoid inheritance taxes. If you die with a successful
family business in America, inheritance taxes can take half and kill it.
“You have to sell when you retire, or it’s sold when you die. You’ve
already paid taxes on that money and you have to pay again when
you die,” said Iowa state representative Joe Ertl.”
Victor Comptometer sold out to Kidde in 1977. Ten years later,
Kidde was bought by Hanson Industries, U.S. subsidiary of Hanson
PLC, the British conglomerate that had bought out Eveready,
Smith-Corona, Jacuzzi, and Kaiser Cement. Hanson PLC is run by
Lords James Hanson and James White. Having swallowed more
than it could digest, Hanson “demerged” thirty-four of its U.S.
companies in 1995 into U.S. Industries. The goal: squeeze the new
company’s profit-making enterprises to cover the debt-ridden ones.
A business journal defined the process as follows:
Hansonization . . . isa simple, although sometimes brutal process. After
buying overstuffed, poorly run businesses at a reasonable price, officials
whack away at the fat, impose stiff new budgets, retain able managers
and then let them run it. If they do a good job, they get good bonuses.
If they don’t, they get the axe.”
After buying out Smith-Corona in 1986 for $930 million, Lords
Hanson and White tore the company apart and spun off most of its
pieces for $960 million within a year.
The managers at Ertl Toy knew the meaning of Hansonization:
cut costs or get the axe. They decided to “whack away the fat” by
lopping off hundreds of nine-dollar-an-hour Iowa workers and
shifting production to a part-time Ertl plant in Tijuana, where Mex-
icans will assemble toys for $1.50 an hour. Ertl Toy, with more work-
ers in Dyersville than the next ten largest companies combined, shut
down one of its two plants and let three hundred people go. Chief
executive George Volanakis explained, “Due to high labor and ma-
The Great Betrayal 281
terial costs and competition, we were forced to move these jobs to
Mexico.”*' In shipping those three hundred jobs to Mexico,
Volanakis did well by the lords. Saving $7.50 an hour in wages per
worker adds up to $2,250 an hour saved, $90,000 less per week in
wages, $4.68 million in annual savings — from ditching Dyersville.
To mock their loss and hide their pain, the discharged workers
came to Ertl’s 1995 Halloween party — wearing sombreros. They
did not need a course in global economics to understand what
NAFTA had done to their families and their field of dreams.
Chapter 15
A New NATIONALISM
The true way to protect the poor is to protect
their labor. Give them work and protect
their earnings; that is the way to benefit the
poor. Our artisans . . . were the first to be
protected by the Constitution. ... The free
labor of the United States deserves to be pro-
tected, and, so far as any efforts of mine can
go, it shall be.
— Daniel Webster, 1828
The nationalist has to offer no arguments
except those which boil down to a love for his
native land to the exclusion of all others.
And this love somehow is supposed to be un-
worthy.’
— Samuel Crowther, 1933
~ in traffic on the way to the Republican National Conven-
tion in San Diego in 1996, I noticed a truck circling, with billboards
on either side. One read, “Don’t Forget Working Men and
Women!” The other, “America Needs a Pay Raise!” The signs pin-
point what has gone wrong: real wages are what they were during
the presidency of Lyndon Johnson; wages in retail are what our
grandparents used to earn. This wage stagnation has forced into the
job market millions of wives and mothers who would prefer to stay
at home, to have children or to raise their children, adding to the
stress and strain of middle-class life. In 1947, 30 percent of our pop-
ulation was employed, earning 44 percent of the GDP. Forty-four
The Great Betrayal 283
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YEAR
Wages as a Percent of GDP
Source: President’s Economic Report, 1995
percent is employed now, but wages are only 34 percent of the
GDP? As Affluent America takes stride after stride into prosperity,
Middle America remains on a treadmill.
In devising new policies, however, we cannot wrench America vi-
olently off the course on which she has been set. Traditionalists
don’t do that. We must build on what we inherit and proceed from
where we are. But those who say our course is forever set speak out
of timidity or self-interest. We are, after all, Americans. We can
change course. We can turn the ship a degree at a time so that, in a
few years, we are headed toward a safer, more secure harbor.
ty
ie 2)
4a
Patrick J. BUCHANAN
TowarRD ONE NATION. INDIVISIBLE
It is ume we looked at the world from a new perspective, a perspec-
uve of enlightened nationalism. Clichés about a “new” Global
Economy aside, there has always been an international economy —
ever since Columbus stumbled onto the Western Hemisphere while
seeking new trade routes to the East, in the hire of a nauion-state,
Spain. The Dutch East India Company was founded in 1602 to dis-
place the Portuguese in the lucrative Far Eastern trade, and the
Dutch West India Company in 1621 to capture the American trade.
The U.S. economy, however, is more than simply a part of the
internauonal economy, and its purpose is not to prosper mankind
— but Americans first: our workers, farmers, businessmen, manu-
facturers. And what is good for the Global Economy is not auto-
matically good for America, any more than what is good for our
transnauonal elite is necessarily good for the United States.
We need a new patriousm. In devising trade and tax policies for
the twenty-first century, the national interest. not the graufcation
of consumer demands, must be the paramount consideration.
Rather than global free wade, the United States should promote re-
gional trading zones. The United States—Canada is one such zone,
Fast Asia another, the European Union another; MERCOSUR, led
by Brazil and Argenuna, is another. Nations inside these blocs are
far more compauble than, say, America and China. They share com-
mon geography, comparable economic and social systems, a com-
mon history and culture. A regional trading bloc is more natural and
organic than a global regime, and nations within these zones are in
similar stages of development.
With so many forces — social. cultural, and ethnic — pulling us
apart, Americans constantly need to nurture the bonds of union.
One of the most powerful cements is peaceful commerce. “The fun-
damental bond that unites men into a society.” wrote von Mises, “is
the interpersonal exchange of goods and services.~* Why are we
The Great Betrayal 285
rapidly dissolving those bonds with our fellow Americans? Before
1965 foreign trade accounted for 10 percent of the GNP; by 1995,
23 percent; in a dozen years it will account for 36 percent! Why are
so many of our automobiles, IVs, VCRs, radios, shoes, cameras,
clothes, toys, and telephones made overseas when there is nothing
we Americans cannot make here? Comes the response: we buy from
abroad because it is cheaper. But when American workers lose high-
paying manufacturing jobs, the nation pays — in lost taxes those
workers would have paid, in unemployment benefits for our jobless,
in welfare and food stamps for those who quit looking for work.
When company towns become ghost towns, when wives with young
children are forced into the job market to make up the lost family in-
come, America pays. Broken homes, uprooted families, vanished
dreams, delinquency, vandalism, crime — these are the hidden costs
of free trade. And if not families and neighborhoods, what in
heaven’s name is it that we conservatives wish to conserve?
A tariff, satirist Ambrose Bierce once mocked, is a “scale of taxes
on imports designed to protect the domestic producer against the
greed of his consumer.”* Behind Bierce’s crack lies the notion that
citizens ought not care where their merchandise is produced. But
the jobs and families of our fellow Americans depend on our buying
U.S.-made goods, and every product MADE IN THE USA carries in its
price the cost of the taxes that fund Medicare and Social Security for
our elderly and provide for the defense of our freedom.
Wuat Is a NATION?
Although we cannot return to the days of McKinley and Morrill, we
can learn from American history. We can apply to our own situation
the guiding principles of Washington, Hamilton, Jefferson, Madi-
son, Jackson, and Lincoln. George Bush is not necessarily a wiser
man than Prescott Bush, and Bill Clinton’s globalism is not neces-
sarily a superior guide to the future than Theodore Roosevelt’s na-
tionalism.
286 PATRICK J. BUCHANAN
Nor are these ideas unique to America. All nations can benefit
from greater emphasis on what is best for their own people, rather
than sacrificing their unique character to the gods of globalism. If it
is Japan’s desire and tradition to be self-sufficient in rice, why insist
that Japan open its market to imported rice? If the French wish to
subsidize farmers to preserve their countryside, why shouldn’t they?
If Canada wishes to retain her cultural identity and restrict the flood
of U.S. magazines, TV shows, and films, why are Canadians wrong?
When the WTO ruled against Canada’s right to use a tariff to pro-
tect its magazines from being swamped by American publications,
Heritage Minister Sheila Copps declared, “We will not take this sit-
ting down!” She was right. ‘Traditionalists should have stood with
Ms. Copps and Canada. Who are these nameless, faceless global bu-
reaucrats of the WTO to tell Canada that it cannot act to preserve
its unique identity, culture, and heritage? What Canadians are told
to do today, we Americans will be told to do tomorrow.
What, after all, is a nation? French historian and philosopher
Ernest Renan described it a century ago:
A nation is [a] living soul, a spiritual principle. Two things, which in
truth are but one, constitute this soul, this spiritual principle. One is in
the past, the other in the present. One is the common possession of a
rich heritage of memories; the other is the actual consent, the desire to
live together, the will to preserve worthily the undivided inheritance
which has been handed down. Man does not improvise. The nation, like
the individual, is the outcome of a long past of efforts, and sacrifices,
and devotions. . . . To have common glories in the past, a common will
in the present; to have done great things together, to will to do the like
again, — such are the essential conditions for the making of a people.°
Enlightened nationalism is not some blind worship of the nation.
It is not a nationalism that wishes to denigrate or dominate others.
It is a passionate attachment to one’s own country: its history, he-
roes, literature, traditions, culture, language, and faith. It is the spirit
that enables a people to endure, as the Polish people endured, under
occupation and oppression, to rise again to live in the sunlight. In-
The Great Betrayal 287
tellectuals, writes Regis Debray, “forget that nations hibernate, but
empires grow old... that the American nation will outlast the At-
lantic empire as the Russian nation will outlast the Soviet Empire.”’
This community called a nation is more than any “division of
labor,” or “market” that may encompass it. Adds Renan:
Community of interests is assuredly a powerful bond between men. But
nevertheless can interests suffice to make a nation? I do not believe it.
Community of interests makes commercial treaties. There is a senti-
mental side to nationality; it is at once body and soul; a Zollverein is not
a fatherland.®
An economy is not a country. A nation’s economic system should re-
inforce the bonds of national unity, but the nation is of a higher
order than any imaginary construct of an economist. A nation is or-
ganic, alive; it has a beating heart. The people of a nation are a moral
community who must share values higher than economic interest, or
their nation will not endure. As scholar Christian Kopff asks, “What
doth it profit a man if he gain the whole world, and suffer the loss of
his country?”®
What is wrong with the Global Economy is what is wrong with
our politics; it is rooted in the myth of Economic Man. It elevates
economics above all else. But man does not live by bread alone. In a
true nation many things are placed on a higher altar than maximum
efficiency or a maximum variety of consumer goods. Once, conser-
vatives understood that.
A Humanet ECONOMY
Neither the national economy nor the free market is an end in itself.
They are means to an end. A national economy is not some wild
roaring river that must be allowed to find any course it will, to be ad-
mired for its raw power and beauty. It is to be tamed for the benefit
of the nation. The same holds true for the market. While an unfet-
288 Patrick J. BUCHANAN
tered free market is the most efficient mechanism to distribute the
goods of a nation, there are higher values than efficiency. To worship
the market is a form of idolatry no less than worshiping the state.
The market should be made to work for man, not the other way
around. “What is the market? It is the law of the jungle, the law of
nature. And what is civilization? It is the struggle against nature.” So
declared France’s Prime Minister Edouard Balladur at the close of
the GATT negotiations of 1993; he is right.”
In devising new policies, let us marry the patriotism of Theodore
Roosevelt to the humane vision of Wilhelm Roépke, the student of
von Mises and refugee from Hitler whose vision informed the post-
war miracle of Ludwig Erhard. Roépke “saw the market as but one
section of society . . . ‘whose existence is justifiable and possible only
because it is part of a larger whole which concerns not economics
but philosophy and theology.’ . . . There is more to the whole of life
... than maximizing GNP.”"!
The market is not everything. It must find its place in a higher order of
things which is not ruled by supply and demand, free prices, and com-
petition. It must be firmly contained within an all-embracing order of
society in which the imperfections and harshness of economic freedom
are corrected by law and in which man is not denied conditions of life
appropriate to his nature.”
What do we mean by “economic nationalism”? We mean tax
and trade policies that put America before the Global Economy,
and the well-being of our own people before what is best for
“mankind.” Trade is not an end in itself; it is the means to an end, to
a more just society and more self-reliant nation. Our trade and
tax policies should be designed to strengthen U.S. sovereignty and
independence and should manifest a bias toward domestic, rather
than foreign, commerce. For, as von Mises said, peaceful commerce
binds people together, and Americans should rely more on one
another.
The Great Betrayal 289
A humane economy will harness the mighty engine of a free mar-
ket for higher ends than maximum efficiency or maximum output.
Neither the goodness nor the greatness of a nation is measured by
its GDP. America was a good country before it became a great na-
tion. Efficiency does not come first. The good society, a decent in-
come for all our families, the good life for all our people, come first.
For what is man? As Roépke wrote:
My picture of man is fashioned by the spiritual heritage of classical and
Christian tradition. I see in man the likeness of God; I am profoundly
convinced that it is an appalling sin to reduce man to ends (even in the
name of high-sounding phrases) and that each man’s soul is something
unique, irreplaceable, priceless, in comparison with which all things are
as naught. I am attached to a humanism which is rooted in these con-
victions and which regards man as the child and image of God, but not
as God himself, to be idolized as he is by the hubris of a false and athe-
ist humanism.”
What are the goals of a new nationalism and humane economy?
1. Full employment, with our working people as well compensated
and rewarded as any on earth
2. A wider, deeper distribution of property and prosperity
3. A standard of living that rises each year, and a “family wage” that
enables a single parent to feed, clothe, house, and educate a large
family in decency
4. A tax system that leaves Americans with the largest share of the
fruits of their labor of any industrial democracy
5. Diminished dependence on foreign trade for the necessities of
national life, such as oil
6. Restoration of America’s lost sovereignty
7. Self-sufficiency in all areas of industry and technology vital to the
national security
8. Maximum freedom for citizens and private institutions — con-
sistent with a moral community and the common good
290 PATRICK J. BUCHANAN
1»
“Cast Down Your Bucker WHERE You ARE!
On September 18, 1895, Booker T. Washington delivered an ad-
dress to the Atlanta Cotton States and International Exposition.
The African-American founder of Tuskegee Institute began with a
story:
A ship lost at sea for many days suddenly sighted a friendly vessel. From
the mast of the unfortunate vessel was seen a signal, “Water, water; we
die of thirst!” The answer from the friendly vessel at once came back, ’
“Cast down your bucket where you are.” A second time the signal,
“Water, water; send us water!” ran up from the distressed vessel, and
was answered, “Cast down your bucket where you are.” And a third and
a fourth signal for water was answered, “Cast down your bucket where
you are.” The captain of the distressed vessel, at last heeding the in-
junction, cast down his bucket, and it came up full of fresh sparkling
water from the mouth of the Amazon river."
Washington then interpreted his imagery. In seeking workers for
your new factories, he pleaded with the industrialists, look to my
people! Look to the people who were loyal to you even in the days
of civil war and reconstruction: “Cast down your bucket where you
are!”
Cast it down among the eight millions of negroes whose habits you
know, whose fidelity and love you have tested in days when to have
proved treacherous meant the ruin of your firesides. Cast down your
bucket among these people who have, without strikes and labour wars,
tilled your fields, cleared your forests, [built] your railroads and cities,
and brought forth treasures from the bowels of the earth and helped
make possible this magnificent representation of the progress of the
South. Casting down your bucket... you will find that they will buy
your surplus land, make blossom the waste places in your fields, and run
your factories.”
The Great Betrayal 291
Do not wait, said Washington, for the arrival of “those of foreign
birth and strange tongue and habits.” Take my people first!
America did not listen. The millions of new jobs in burgeoning
industries went to immigrants who poured into the United States
between 1890 and 1920. These men and women enriched our coun-
try, true, but they also moved ahead of the black men and women
who had been here for generations. In 1924, however, under Calvin
Coolidge, the United States imposed a moratorium on immigration.
It would last four decades. And while it did, Booker T. Washington’s
prediction of 1895 came to pass. As Vernon Briggs, an expert on the
economic impact of immigration, wrote in 1992:
The rapid decline in the level of immigration from the late 1920s to the
late 1960s provided the opportunity for the nation to look internally to
unused and underused subgroups of the population to draw upon for
labor force needs.... With immigration levels sharply reduced...
women, minorities, disabled persons, youth and rural migrants did
enter occupations and industries as well as move to geographical areas
where they had not been present before.”
Then history repeated itself. No sooner had the Civil Rights Act
of 1964 been passed than America threw open its doors again —
with the Immigration Act of 1965. In thirty years, 30 million immi-
grants, legal and illegal, poured in. These immigrants do not, by and
large, compete with our professionals: lawyers, journalists, brokers,
doctors. These hardworking men and women compete with our
native-born for a shrinking number of industrial jobs. And this huge
and rapid increase in the supply of labor has cut the price of labor. If
workers’ wages are to take a sharp upward turn, America must re-
turn to normal growth in its labor force.
Editorial-page boosters of open borders refuse to recognize that
there is another America out there, of men and women who never
finished college or never went to college. An assembly line may
mean “dead-end” jobs in “dinosaur” industries to America’s elite,
but for millions of our people, they are the yellow brick road to the
American Dream. We can’t write off these Americans.
a92 Patrick J. BUCHANAN
—
On my way home from the Houston convention in 1992, I was hav-
ing my bags checked at the airport. I saw your speech, the black
porter said; / liked it. He told me he was a Christian and a grandfa-
ther. When I handed him a tip, he waved it off. “Just one thing,” he
said, “don’t forget the black folks!” He is right. We must put our
own people first — black and white, Hispanic and Asian, immigrant
and native-born. Because they belong to the American family, they
have first claim on our compassion and concern; and it is un-
American to force members of one’s own family into a global hiring
hall to compete against foreign workers who make five dollars a day.
To ease America’s social crisis and increase demand for blue-
collar workers, America must halt illegal immigration and impose
limits on legal immigration. Nor is there anything un-American
about a moratorium, or a “time-out,” on immigration. As we have
seen, after the Great Immigration of 1890-1920, the United States
imposed a moratorium under Presidents Coolidge, Roosevelt, Tru-
man, and Eisenhower. In 1953 Eisenhower directed the repatriation
of all aliens with no legal right to be here. There was nothing racist,
immoral, or xenophobic in this. Eisenhower was enforcing the law,
as he had taken an oath to do. The president knew that a country
that cannot control its borders isn’t really a country anymore.
By three-to-one, Americans support a moratorium. Who are the
strident opponents? Cultural, social, and economic elites who do
not compete with immigrant workers and benefit from an endless
supply of low-wage labor. Working Americans are betrayed by these
elites.
The Great Betrayal 298
TARIFFS — OR INCOME IAXES?
I don’t know much about the tariff. But I
know this much. When we buy manufac-
tured goods abroad, we get the goods and the
foreigner gets the money. When we buy the
manufactured goods at home, we get both the
goods and the money."
— Abraham Lincoln
In the last two hundred years there has not
been one credible intellectual argument for
protectionism anywhere in the world.”
— Senator Phil Gramm
Out of embarrassment of the party’s past, ignorance, or ideological
rigidity, many Republicans will not even discuss tariffs, as though to
do so were an occasion of sin. When he dropped out of the New
Hampshire primary in 1996, Senator Gramm declared, “Our party
can never follow the path of protectionism. It is a dagger in the heart
of everything we stand for around the world.”” There has always
been a “recessive gene in the American character that has found pro-
tectionism appealing,” he added, vowing to “fight it... until I am
lowered in the grave. ...I cannot and will not support someone
who’s a protectionist. . . . It’s a litmus-test issue for me.””!
Gramm’ line in the sand would have ruled out support for every
Republican president before Eisenhower, including Lincoln and
Theodore Roosevelt, both of whom had that “recessive gene” in
their DNA. Gramm calls all impediments or hindrances to trade
“immoral.” “They limit my freedom,” he says. “If I want to buy a
shirt in China, who has the right to tell me as a free person that I
can’t do it?”” The freedom that trade brings, says Gramm, “[is] the
99 23
greatest catalyst for human happiness and morality in history.
294 Patrick J. BUCHANAN
Quite a claim — one that would seem to accord an earlier gospel a
diminished place. Yet, Gramm speaks for the party elite. “Denying
trade is a violation of human rights, and a most reprehensible one,”
thunders rising GOP congressman David Dreier.” Dick Armey calls
free trade a “basic human right,” as does the libertarian scholar
Jacob Hornberger. Every person on earth, writes Hornberger, has a
God-given right... to enter into mutually beneficial exchanges with
others anywhere in the world.... They have the right to travel and
move without political restriction. It is the duty of government to pro-
tect, not regulate or destroy, these inherent fundamental rights.”
But if this right is “God-given,” the Founding Fathers trampled
all over it. The Constitution declares that Congress “shall have
Power” to lay “Duties” and “Imposts” and “regulate Commerce with
foreign nations.” The second bill that President Washington signed
was the Tariff Act of 1789. In 1807 Jefferson embargoed all trade
with Europe. Tariffs were the preferred taxes of Madison, Monroe,
Jackson, Lincoln, and Theodore Roosevelt. For Republican leaders
to declare free trade a “God-given” or “moral” right — i.e., one that
cannot be compromised — is not only a repudiation of America’s
legendary leaders, it imperils the future of the party when, accord-
ing to the Wall Street Journal, two-thirds of our people believe these
NAFTA and GATT trade deals are unfair to American workers.
Free-trade Republicanism not only departs from party tradition,
it denies us that form of taxation most consistent with the party phi-
losophy of limited government. Why cannot free-market econo-
mists see that?
“Protectionism is purely and highly socialistic,” railed the Amer-
ican economist Francis A. Walker in 1887. Walker is echoed by two
giants of twentieth-century free-market economics. In Free to
Choose, Milton Friedman titles his chapter on tariffs “The Tyranny
of Controls.” Von Mises equated protectionism with statism:
A nation’s policy forms an integral whole. Foreign policy and domestic
policy are closely linked together, they are but one system. Economic
The Great Betrayal 205
nationalism is the corollary of the present-day domestic policies of gov-
ernment interference with business and of national planning as free
trade was the complement of domestic economic freedom.... The
trend toward [protectionism] is... the outcome of the endeavors to
make the state paramount in economic matters.”
Intending no disrespect, this is nonsense. In the nineteenth cen-
tury, when tariffs ran as high as 50 percent, there was far greater eco-
nomic freedom than today, when tariff rates approach zero. For our
first fourteen decades, high tariffs and small government went hand
in hand. The most protectionist president of the twentieth century,
Coolidge, cut spending to 3 percent of the GNP. Wilson, our first
free-trade president, gave us the income tax, took us into World War
I, and left the nation with a national debt that has never been repaid;
the greatest free trader of all, FDR, was the godfather of Big Gov-
ernment. Do economists read history?
The libertarian retort: tariffs are taxes! Of course they are, but
every government imposes taxes, for every government needs rev-
enue. But are not tariffs a superior way to raise revenue than income
taxes? Lincoln thought so. He argued that having customs officers
collect duties at ports was a less expensive and intrusive way to raise
revenue than having citizens “perpetually haunted and harassed by
the tax-gatherer.”** Our federal income tax system requires more
than 100,000 IRS agents. Even a national sales tax would require
tens of thousands of IRS agents poring over the cash receipts of mil-
lions of businesses. Tariffs, however, can be collected by U.S. cus-
toms agents. And unlike an income tax, which is mandatory — you
pay, or go to jail —a tariff is a discretionary tax. As Lincoln said,
with a tariff, “the man who contents himself to live upon the prod-
ucts of his own country pays nothing at all.””
296 PATRICK J. BUCHANAN
Wuo Pays THE TARIFF?
Often, foreign regimes will swallow a tariff rather than risk losing
their U.S. market. Assume a pair of running shoes cost $5 to pro-
duce in China and is sold in the United States for $100. The manu-
facturer in China realizes a profit of $95 on each pair. A U.S. tariff
of $20 on each $100 pair of shoes would surely be swallowed by the
manufacturer. To try to pass the $20 cost of the tariff onto con-
sumers, by raising prices to $120 a pair, would risk losing market
share to $100 shoes made elsewhere. By paying the tariff, the man-
ufacturer in China lets its profit fall to $75 a pair, still a 1,500 per-
cent profit. But the U.S. Treasury would realize $20 on each pair of
shoes. China could thus help subsidize the U.S. Pacific fleet, while
U.S. consumers pay no more for their running shoes.
In his 1995 confrontation with Japan, Clinton threatened to im-
pose a 100 percent tariff on Lexus sedans. Japan publicly hinted that
it might absorb that huge tariff — just to retain Lexus’s share of the
U.S. market.
The cost of a tariff, it is said, falls on consumers. Often that is true.
But what tax ultimately does not fall on consumers? Where does
GM get the money to pay its corporate taxes, if not from the buyers
of GM cars?
A tariff discriminates against foreign goods, it is said. But every
tax discriminates against some economic activity. A sales tax dis-
criminates against consumption; a capital gains tax against invest-
ment, an income tax against work. What is so sacrosanct about
imports? And what is the alternative to tariffs? In 1913 it became a
federal income tax that invades the privacy of our people, consumes
our substance, and diminishes our freedom in ways never dreamed
of by the royal tyrant against whom Jefferson declaimed in America’s
Declaration of Independence.
Given the size of the U.S. government today, critics argue, tariffs
could never provide all the revenue needed. True, but tariffs could
The Great Betrayal 297
provide some. Why not transfer some of the cost of government off
the incomes of U.S. workers and onto the imports of foreign manu-
facturers? Why not shift part of the burden of taxation off U.S. com-
panies that stay home and onto U.S. companies that move overseas?
Why not put the full dinner pail for the American worker ahead of
the free lunch for the American consumer?
The old Republicans taxed work, savings, and investment at 0
percent, and foreign goods at 40 percent. We do the opposite. We
tax the return on savings and work at 40 percent, and foreign goods
at 0 percent. Thus are we starved for savings — and swamped with
foreign goods.
Are tariffs xenophobic? Only if it is xenophobic to put America first.
A tariff does not deny foreign merchants access to U.S. markets; it
merely imposes on them a price of admission into a lucrative mar-
ket, which was, after all, created for the benefit of Americans. Under
a fair tariff, foreign firms that manufacture here would be treated
like American companies. Toyotas made here would compete on an
equal basis with Fords made here, and ‘Toyotas made in Mexico
would compete with Fords made in Mexico. That is free and fair
competition. But to have a Toyota made in Mexico, where auto-
workers may earn six dollars an hour, compete against a Ford made
in Michigan, where autoworkers may make thirty-five dollars an
hour in pay and benefits, is unfair to American workers.
Under such a tariff system, U.S. companies that shifted factories
overseas would be treated as foreign companies. The only bias in
such a system is one in favor of products MADE IN THE USA, by peo-
ple who live in the U.S.A. That is not discrimination; it is patriotism.
In any poker game there is an ante. Before every hand, each
player throws the same number of chips into the pot. In America’s
free market, the pot is the greatest on earth, and the ante is the bur-
den of taxes and the cost of regulations. Every U.S. company pays
this ante; to allow foreign companies to enter the U.S. market with-
out paying this ante does violence to the Fourteenth Amendment
concept of equal justice under law. How can we impose an ante on
298 Patrick J. BUCHANAN
foreign firms and runaway factories to make them pay equally for
the privilege of competing in the U.S. market? Said Adam Smith:
The government should impose a tariff.
A REVENUE TARIFF
America should declare to the world in a way it will understand that
the present global regime must be revised, that we no longer intend
to make the world prosperous at the expense of our own country. A
15 percent revenue tariff on all imported manufactures and goods in
competition with U.S.-made goods would be a fitting way to declare
our economic independence.
As part of the “Nixon Shock” of August 15, 1991 — to jolt the
world into understanding that the United States could no longer
continue under the Bretton Woods agreement — a 10 percent tariff
was imposed on Japan. Thus, we need not go back to the Tariff of
1816 to find a precedent for unilateral American action in defense of
our economic security. Unlike Clinton’s threat of a 100 percent tar-
iff on Lexus cars, a 15 percent tariff would not destroy U.S. busi-
nesses set up in good faith. The tariff could be imposed in stages:
5 percent immediately, 5 percent in six months, the final 5 percent a
year later, giving merchants eighteen months to adjust. If Ronald
Reagan could impose a 50 percent tariff to save Harley-Davidson,
surely we can impose a 15 percent tariff to inaugurate a new indus-
trial age in the United States.
The revenue tariff should be high enough to generate a powerful
stream of revenue, but low enough not to destroy trade. With U.S.
merchandise imports now exceeding $700 billion a year, this 15 per-
cent tariff would yield a cornucopia of revenue while giving U.S.
products a marginal new advantage in their home market. Every dol-
lar in tariff revenue could be used to cut taxes on income, savings, and in-
vestment.
The Great Betrayal 299
A shift in taxation away from incomes, onto foreign goods, is how
Bismarck built the German nation. In a December 15, 1878, letter
to the Reichstag, the chancellor spoke of a crisis in the German mid-
dle class, similar to our own, and how he proposed to emulate the
Americans:
It is no accident that other great States — especially those in a very ad-
vanced stage of political and economic development — prefer to try to
cover their expenditures by the proceeds of duties and indirect taxes. . . .
In the greater part of Germany the direct taxes . . . have reached a level
which is oppressive and appears to be economically unjustifiable. Those
people who suffer most from these taxes are those members of the mid-
dle class... . Reform of the taxation . . . must begin with the revision of
the tariff on as broad a basis as possible so as to benefit this class of the
community. The more money that is raised from tariffs the greater can —
and must — be the relief in direct taxes. . . . (Emphasis added.)
It should be based on the principle of imposing import duties on all
goods which cross our frontiers.”
Bismarck’s idea: raise tariffs on goods entering Germany and use
the tariff revenue to cut direct taxes on the people. High tariffs
would also give Germany leverage in “fresh negotiations with for-
eign countries concerning new commercial treaties.” *
an apt pupil of the economic nationalists who made America the
world’s greatest industrial power. Under Bismarck’s policy, Ger-
many increased its share of world production from 8.5 percent in
1880 to 14.8 percent by 1913.
In 1880 Germany and the United States together had less than a
fourth of world output. By 1913 the two countries had nearly half,
while free-trade Britain’s share was sliced from one-fourth to one-
seventh.” The great unacknowledged truth of the second half of the
nineteenth century — and of the second half of the twentieth cen-
tury — is that the nations that followed the free-trade dogma of the
classical liberals lost ground to the nations that pursued the Hamil-
tonian policy of economic nationalism.
Bismarck was
300 Patrick J. BUCHANAN
RECIPROCITY WITH THE EUROPEAN UNION
Europe would howl, but even under the old GATT rules a nation
running a chronic trade deficit may use tariffs to end the hemor-
rhaging. And our response should satisfy Europe. Believing in fair-
ness, we accept full reciprocity: a 15 percent EU tariff on all
manufactured goods made in the United States.
Lincoln called the cost of ocean transport “useless labor.”
Much of this useless labor can be done away with if European com-
panies that wish to sell in America produce in America, and vice
versa. Ford and GM have always built cars there; Europeans forced
them to. When U.S. companies feared a protectionist Common
Market, they created European subsidiaries to avoid being frozen
out. Turnabout is fair play. Let BMW and Mercedes make their
parts and assemble their cars here in the United States if they wish
to sell here on equal terms. As for those who prefer the cachet of
European-made goods, they ought not be denied the freedom to
buy. But a 15 percent tariff does not amount to persecution of elites
who call 55 percent inheritance taxes “progressive.” That new
BMW can be built in South Carolina as easily as in Bavaria.
Americans may face a social crisis, a racial crisis, a crime crisis.
We do not face a crisis of consumer goods. There is nothing made
anywhere that we cannot make here. America-Canada and the EU
are huge and self-sufficient markets, with similar laws and regula-
tions. Their standards of living and wage rates are comparable. A
reciprocal trade agreement could strengthen and solidify both blocs.
Would reduced imports cost us our technological edge? History
proves otherwise. The telegraph, electric lightbulb, telephone,
“horseless carriage,” and airplane made societal impacts as dramatic
as the computer. Yet, Americans invented and exploited them as no
other nation, behind a tariff wall built by Justin Morrill, Bill McKin-
ley, and “Pig Iron” Kelley.
With the U.S. market alone almost as large as the European
The Great Betrayal 301
Union, we can support and sustain a diversity and level of produc-
tion no other country can match. The small and medium-sized na-
tions of Europe have no alternative but to create interdependencies.
Germany is, after all, smaller than Oregon and Washington; the
United Kingdom is smaller than Mississippi and Alabama; and Japan
is smaller than Montana and less endowed with natural resources.
The free-trade philosophy is a philosophy for small countries. When a
country lacks the resources within its borders to meet its people’s need,
it must trade extensively. ... The United States, however, has both a
plentiful supply of resources and a huge market within its own borders.
Its economic philosophy should be geared to its own size and needs. It
should buy from abroad what it needs, not items it can make at home.
It should sell abroad surplus products, not products in short supply
herer?
And there is a larger issue. If this greatest of nations is ensnared
in the Global Economy, and unable to break free, no nation will ever
escape. But if America can restore her national sovereignty and in-
dependence, nations all over the world will one day be able to do so.
Truly, we are deciding not only for ourselves alone- but for all
mankind.
AN EQUALIZATION [ARIFF
In many Asian and Latin American countries, wages are 10 percent
of what they are here. Many of these countries subsidize exports.
They have little or no regulation of their labor environment. Pro-
duction can be done at a fraction of our cost. While a 15 percent tar-
iff might give American products a marginal advantage over
European rivals, it would be brushed aside as an inconsequential
cost in Asia. Thus, the United States should apply to the imports of
low-wage countries the Roosevelt Rule, enunciated in TR’s Seventh
Annual Message to Congress, in 1907:
302 PATRICK J. BUCHANAN
There must always be as a minimum a tariff which will not only allow
for the collection of an ample revenue but which will at least make good
the difference in the cost of production here and abroad; that is, the dif-
ference in the labor cost here and abroad, for the well-being of the
wage-worker must ever be a cardinal point of American policy.”
This is sound Republican doctrine. Similar language may be
found in a dozen party platforms. Roosevelt’s first principle of trade
argues for a tariff on all imported manufactures from Asia, Africa,
and Latin America to protect the wages of American workers. In Eu-
rope and Canada, U.S. wage levels are competitive. They are not,
and ought not be, competitive with men and women forced to work
for ten dollars a day in Mexico or two dollars a day in Asia. The wage
differential between American workers and Asian, African, and
Latin American workers should serve as the basis for a protective
tariff on all products imported from the Third World that compete
with products made in America.
A Global Economy in which U.S. free labor in protected work-
places is forced into Darwinian competition with conscript labor,
working under hellish conditions, for statist regimes, is an abomina-
tion, a crime against American labor! We must stop turning a blind
eye to what we are subsidizing overseas and to what we are destroy-
ing at home. Let us junk an unjust system that has American women
earning six dollars an hour cutting T-shirts in Rayne, Louisiana,
competing with Honduran women making fifty cents an hour, and
replace it with a just system whereby North Americans compete
with North Americans, Europeans with Europeans, Asians with
Asians, Latin Americans with Latin Americans.
An equalization tariff would send a long-overdue message to our
transnational elites that would read thus:
We will not bind you to America. If you wish to shut down here, and go
to China — go to China! But your products will not re-enter the
United States duty-free. They will carry a tariff to make up the differ-
ence between the cost of the Chinese labor you hired, and the cost of
the American labor you left behind.
The Great Betrayal 303
Any windfall profits that transnationals derive from firing Amer-
icans and hiring low-wage foreign labor would be recaptured by the
tariff and returned to our own people in tax cuts. An equalization
tariff would make U.S. labor competitive in price with Asian labor
and put the profit back into patriotism. Transnationals would have
no incentive to take factories out of the United States but rather a
powerful incentive to bring them home.
The curtain would fall on the golden age of a transnational elite
that prides itself on being above community and country. No longer
would governors of American states have to go to foreign nations to
offer tax bribes to Germans to build in South Carolina, or to Japa-
nese to build in Tennessee. Representatives of these countries would
be showing up, hat in hand, in Columbia and Nashville. The rules
of international trade have been fixed in favor of the globalists for
too long. But America has the power to rewrite the rules — to re-
ward those who stay in America and to tax the products of those who
turn their back on America. Greed being their motivation, they will
hurry home again of their own accord.
Finally, the president must have authority, with the consent of
Congress, to raise tariffs on any country that devalues its currency to
seize unfair advantage over U.S. producers. To watch the value of
the dollar rise by 50 percent against the yen in the same period in
which Japan ran up $100 billion in trade surpluses at U.S. expense is
to appreciate that something other than market forces are at work
here. In coping with unfair trade practices, the president and Con-
gress need a full toolbox.
CANADA AND JAPAN
Should any country be exempt from the 15 percent tariff? Yes,
Canada — if Canada adopts the same external tariffs. In NAFTA,
Canada married her economy to ours, to the economic benefit of
Ottawa. The United States today takes 80 percent of Canadian ex-
304 Patrick J. BUCHANAN
ports, and Canada’s merchandise trade surplus with the United
States in 1996 was $23 billion.”
However, Canada would have to choose to remain inside the
U.S.-Canada free-trade zone and accept the U.S. tariffs, or go out-
side. If Canada chose to depart, the 15 percent tariff on all manu-
factured goods would be applied to Canadian goods as well. With
the United States far and away Canada’s biggest customer, and with
that surplus on the line, Canada would surely choose to remain in-
side a U.S. free-trade zone. But Canada would have to choose.
As the United States strengthens ties to Canada, we should put an
early end to our huge, chronic trade deficits with Japan.
The Japanese are a proud people. It is unseemly and destruc-
tive to be endlessly hectoring them to open their markets, buy our
rice, remove nontariff barriers, adopt free trade. Japan does not
practice free trade for a simple reason: Japan does not believe in free
trade. Japan puts its national interest in manufacturing and tech-
nology ahead of a free-trade ideology that has America in its grip.
Japan is different because it prefers to be different. We should re-
spect that. But while Japan’s economic structure is no business of the
United States, our trade deficits are our business. We should notify
Japan that if an end to these trade deficits cannot be achieved
through negotiation, it will be attained through unilateral U.S.
action. i
A horrendous imbalance in autos and auto parts is central to the
U.S. trade deficit with Japan. America should follow the Harley for-
mula and impose a special tariff on imported Japanese autos and auto
parts, on top of that 15 percent revenue tariff. The Japan Tariff
should lead to the rapid U.S. recapture of much of Japan’s present
30 percent of the U.S. auto market.
To avoid the tariffs, Japan could shift production of parts and the
assembly of autos to the United States, where MADE IN THE USA
Japanese cars would be treated exactly like Fords or Chevrolets
made in Michigan. Toyota, Nissan, BMW, and all foreign car mak-
ers would be welcome here, but to avoid tariffs they would have to
The Great Betrayal 305
produce here. The same would hold for GM, Chrysler, and Ford.
Fords made overseas would face the same tariff as Mazdas made
overseas. America would have the most competitive auto market on
earth, but every company, foreign-owned or U.S.-owned, would
play by the same rules, pay the same taxes, abide by the same laws,
employ the same high-wage, high-quality North American labor.
Jobs in the U.S. auto industry would explode.
Japan is a great nation, and its people have wrought a great miracle.
But the present unequal relationship cannot continue. Our sales to
Japan in 1995, $65 billion, were 1 percent of our GDP; Japan’s sales
to us, $125 billion, were 4 percent of its GDP. With an economy
twice as large as Japan’s, we still spend six times as much on defense.
We remit annually to Tokyo tens of billions of dollars in interest
payments on the hundreds of billions of dollars of Treasury debt
Tokyo now holds as a result of having run up decades of trade sur-
pluses at the expense of American workers. Historians will marvel
that America let this happen.
Even the American Chamber of Commerce in Japan (ACCJ) is
showing signs of despair. According to the ACC], only thirteen of
forty-five U.S.-Japan trade agreements since 1980 were successful in
helping U.S. businesses penetrate Japan’s market. Ten were total
failures. Said ACC) president Bill Beagles:
For many years, the American view was that a trade agreement with
Japan spoke for itself. ... However, the U.S. Government and Ameri-
can industry came to realize that this is not the case. An apparently suc-
cessful negotiation may not necessarily produce the expected market
result.*°
This is unhealthy. As a First World nation, Japan has much in
common with the United States. Our strategic interests are in har-
mony, and the possibility remains for a close relationship. But it is
not 1950 anymore. Reciprocity is required. If Japan can begin to
harmonize her trade policies with ours, open her markets to our
306 Patrick J. BUCHANAN
manufactures and agricultural products as we do for Japan’s, there is
no reason we cannot establish with Tokyo the same defense and
trade relationship we have with Europe. There is no reason we can-
not grow closer rather than drift farther apart, because of chronic
trade deficits most Americans see as due to unfair, and ungrateful,
Japanese practices.
Our CHINA PROBLEM
China is fast becoming America’s number one trade problem. In its
drive for dominance in Asia, Beijing has exploited slave labor, con-
sumed all the Western credit it could extort, stolen U.S. intellectual
property, and strong-armed American companies like Boeing and
McDonnell Douglas to manufacture in China as the price of a deal.
“Forced technology transfers” are a routine demand in dealing with
China. “When you invest in China,” says one auto company execu-
tive, “China assumes it owns all of your intellectual property.” ” The
Manufacturing Policy Project puts the piracy rate of U.S. intellec-
tual property in China at 98 percent. “Three days after Microsoft in-
troduced Windows 95 in the United States for $89.95, copies were
available throughout Asia for $4 or less.” *
Following the path to power laid out by Friedrich List, China
treats the United States, the world’s most advanced nation, like a
colony, a source of raw materials and a dumping ground for manu-
factures. China sends us up to 40 percent of its exports — much of
it high-tech manufactured goods — but buys less than 2 percent of
our exports. While China runs a trade surplus in manufactures with
the United States of more than $35 billion yearly, prominent among
U.S. exports to China are fertilizers, food residue and waste, ore slag
and ash, wood pulp, animal and vegetable fats, meats, live animals,
and cereals — the technology for which was given a while ago by
Squanto to the Pilgrims. The one high-tech export for which Amer-
ica runs a large trade surplus is aircraft; but once China masters the
The Great Betrayal 307
DOLLARS (IN BILLIONS)
Balance of Trades with China in
Manufactures, 1991-95
Source: U.S. Department of Commerce
U.S. technology it has extorted, Beijing will begin building its own
planes. For that is the way of economic nationalists.
From 1991 through 1996, China piled up $157 billion in sur-
pluses trading with the United States. Its 1996 surplus of $40 billion
was almost as large as the Pentagon procurement budget. In Octo-
ber of 1996 China invested $11.8 billion of its surplus in U.S. bonds,
making China the third-largest buyer of U.S. debt, after Japan and
Britain.” By September of 1997 China had amassed more than $130
billion in foreign currency reserves, the world’s largest hoard after
Japan’s.*
For a century Americans have been transfixed by the great
“China market”; it was one of the reasons business groups urged
Mckinley to annex the Philippines. But the China market proved a
mirage then, and it is a mirage now, a corporate illusion. If China
308 PATRICK J. BUCHANAN
DOLLARS (IN BILLIONS)
YEAR
U.S. Trade Deficit with China, 1989-96
Source: U.S. Department of Commerce
vanished, the U.S. economy would not feel a breeze. Our sales to
China in 1996 ($11.9 billion) were one-fifth of 1 percent of U.S.
GDP. We sold more to Singapore. But China’s sales to the United
States — $52 billion worth of toys, textiles, shoes, bikes, computers,
etc., in 1996 — were a crucial share of its entire economy and were
the primary source of China’s hard-currency reserves.
The United States has the whip hand in this relationship, and
it is time we used it. For China is not only a trade problem, it is a
national-security problem. China is using the hard currency from its
U.S. trade surpluses and international bank loans to buy submarines,
destroyers, antiship missiles, and fighter aircraft from Russia and to
build long-range missiles to reach the west coast of the United
States. Yet, America permits China to launch U.S. satellites on Long
March rockets, thus subsidizing the development of the Chinese
strategic missile force.
America is taking a terrible risk feeding a regime, the character of
The Great Betrayal 309
which may be seen in its treatment of dissidents, Tibetans, Chris-
tians, and women pregnant with any child conceived in violation of
China’s barbaric one-couple, one-child policy. While America
should seek no confrontation with China, we should treat Beijing as
the great power it has become.
We cannot practice true free trade with a nation that has no in-
dependent judiciary, where labor is conscripted, corruption is en-
demic, U.S. goods face a 17 percent value added tax and a 23 percent
tariff, and many of whose corporations are government fronts.*! The
United States should cancel China’s most-favored-nation status and
negotiate a reciprocal trade agreement that recognizes our different
societies and conflicting interests.
Wuat ABOUT Mexico?
Mexico is another special case. We share a two-thousand-mile bor-
der, 10 million Americans trace their ancestry to Mexico, and our
destinies are not separable. But NAFTA is not sustainable. NAFTA
puts U.S. blue-collar workers into competition for manufacturing
jobs with Mexican workers who earn 10 percent of their wages.
American farm labor, paid a minimum wage near five dollars an
hour, now competes with Mexican farm labor paid fifty cents an
hour. American employers now hang over the heads of their work-
ers this constant threat: accept reduced pay, or we go to Mexico!
What makes the threat credible is that hundreds of companies
have already done so. Under the maquiladora program, tax conces-
sions are offered to U.S. companies that site factories in Mexico to
ship products back to the United States. New plants are opening at
the rate of two a day. From San Diego to Brownsville, the Mexican
side of the border is littered with signs of Fortune 500 corporations.
Xerox, Zenith, Chrysler, GM, Ford, IBM, Rockwell, Samsonite, and
GE have all sited plants south of the Rio Grande.” By moving to
Mexico, they evade U.S. laws on child labor, worker safety, mini-
mum wages, and health and pollution standards, as well as U.S.
310 PATRICK J. BUCHANAN
taxes; their products come back to undercut those made in factories
that stayed in America and obeyed the laws of the United States.
The Japanese are also exploiting NAFTA. Matsushita, Hitachi,
Sony, and Sanyo have assembly plants in Tijuana. Toshiba’s is in
Ciudad Juárez. Japanese and Korean companies are also building
auto plants there. This Japanese investment in Mexico represents a
shift of capital away from the United States. The CEO of the Japan-
ese Chamber of Commerce in Mexico describes how it works:
“Japanese investments reaching Mexico do not come directly from
Japan. It is the United States [subsidiaries], the son, who is investing
in Mexico, the grandson of the main office.” *
President Clinton points with pride to the growth of U.S. exports
to Mexico. But prominent among those exports are parts for assem-
bly into products for shipment back to the United States and capital
equipment for factories being built in Mexico. Such exports destroy
American jobs.
NAFTA must be renegotiated, or America’s new Sun Belt will be
south of the Rio Grande, and the consequences will be social and
political as well as economic. Export the future of our working
young, and those whose dreams have been destroyed will be heard
from.
America’s merchandise trade deficit, an all-time record of $191 bil-
lion in 1996, is a cancer. Either we cut it out, or it will kill America.
History teaches that when a nation’s manufacturing sector has en-
tered a period of relative decline, that nation is in decline. Who
profits most from the record U.S. trade deficits?
The Great Betrayal Mil
U.S. Merchandise Trade Deficits
(By Country, 1996)
Japan $47 billion
China $40 billion
Canada $23 billion
Mexico $17 billion
European Union $14 billion
Taiwan $12 billion
Malaysia $ 9 billion
The policies outlined earlier can zero out these appalling num-
bers within a decade!
Our traditional industries are not in decline because manufactur-
ing is obsolete in a postindustrial society. Americans still use manu-
factured goods in record numbers. We simply no longer make them
all here. The United States has been deindustrializing as a producer, not
as a consumer. America now imports more than a third of the goods
it uses, worth more than $700 billion in 1996, triple their value in
1980. The world’s largest growth market for U.S. products is here at
home, a market that foreign interests control only by default. Auto-
mobiles, consumer electronics, industrial machinery, chemicals,
clothing, telecommunications equipment, computers — these are at
the core of America’s trade crisis.
The idea of a “postindustrial economy” is nonsense. When the
United States shifted from an agricultural to an industrial economy,
America did not stop producing food. The factory did not replace
the farm; it was built alongside it. Industry reinforced agriculture
with machinery, fertilizer, improved transportation. America be-
came the largest and most advanced industrial economy while re-
maining the largest and most advanced agricultural economy. Until
the 1970s America’s output of both farm and factory dominated the
world economy. American agriculture still dominates. Only industry
has lost ground — and not to some Third Wave service economy
but to other industrial economies.
A third of the U.S. market for manufactures has been captured by
312 Patrick J. BUCHANAN
foreigners. Let us take it back for Americans! A 15 percent tariff on
all manufactures from First World countries, plus an equalization
tariff on the products of low-wage nations, will erase these deficits
and reindustrialize America within a decade. The reward: millions
of high-paying manufacturing jobs for all our workers — immigrant
and native-born, black and white, Hispanic and Asian — an easing
of our social crisis, and trade and budget surpluses as America’s
workers find higher-paying jobs and contribute more to Social Se-
curity and Medicare, deficit reduction and tax reduction.
Free traders will cry, “But you are risking a trade war!” This is a fear
rooted in ignorance and timidity: even if we eliminate our trade
deficit, we will remain the world’s leading importer. What foreign
nation would offend its best customer? Our forefathers broke all ties
with the mother country and risked their lives to achieve the eco-
nomic independence we are piddling away. We need less of the
gauzy spirit of globalism and more of the patriotic spirit of old
George Meany:
Practically every country in the world . . . has some type of restriction,
some type of barrier, some type of subsidization for their own people,
that gives their own manufacturers and workers an unfair advantage
over the American worker. ... When have we ever retaliated against
the unfair barriers put up by these other countries which go back many,
many years? And if we are to have a trade war, if that’s the only answer,
I imagine if we had an all-out trade war we would do quite well for one
simple fact: We have the market. We have the greatest market in the
world right in this country.”
Amen. Let us emulate our greatest leaders and use our control of
that national market to achieve our national aims. After the Revolu-
tion, the War of 1812, the Civil War, and World War I, tariff rev-
enue helped erase America’s deficits and pay down America’s debt.
What is the alternative but more years of receding wages and rising
The Great Betrayal 313
tempers among American workers, until the social fabric is torn ir-
reparably, the bonds of patriotism no longer hold, our vitality van-
ishes, and our economic divisions manifest themselves in class
conflict between Industrial America and Third Wave America? We
have nothing to lose by trying — except those policies that have put
us on the slippery slope to national decline.
Wuat to Do witH THE WTO?
The World ‘Trade Organization was erected on ideas American pa-
triots must reject. It subordinates everything to the demands of
trade. It exercises a supranational authority in conflict with our fore-
fathers’ vision of an America forever sovereign and independent. Its
dispute-resolution procedures shift to Geneva decisions that ought
to be made in Washington. And if we refuse to abide by the WTO's
edicts, America can be chastised and fined.
Run by nameless, faceless, foreign bureaucrats, the WTO is the
embryonic trade ministry of a world government. There is no place
for such an institution in a world where free nations negotiate their
trade agreements in good faith and themselves oversee the execution
of those agreements. The WTO is a monument to the one-world vi-
sion of Wilson and FDR. Our withdrawal — after the required six
months’ notice — would be an unmistakable signal that America is
back and that this nation is again the independent self-reliant re-
public the Founding Fathers intended it to be.
KEEPING CAPITAL AT HOME
In a 1952 address to the University Club of Milwaukee, Ludwig von
Mises declared that the “essence of Keynesianism is its complete
failure to conceive the role that saving and capital accumulation play
314 Patrick J. BUCHANAN
in the improvement of economic conditions.”* He admonished
Americans to appreciate the role that capital had played in creating
their unrivaled prosperity:
The average standard of living is in this country higher than in any
other country of the world, not because the American statesmen and
politicians are superior to the foreign statesmen and politicians, but be-
cause the per-head quota of capital invested is in America higher than
in other countries. . . .
Do the American voters know that the unprecedented improve-
ments in their standard of living that the last hundred years brought was
the result of the steady rise in the per-head quota of capital invested? Do
they realize that every measure leading to capital decumulation jeopar-
dizes their prosperity?“
Von Mises, a tree-trade libertarian, is toasting a century in which
the United States was the most protectionist nation on earth.
Hamilton was right: protecuonism went hand in hand with record
capital accumulation. A primary reason that America’s growth rates
have been anemic in recent decades, and our recoveries not as robust
as they once were, is the $2 million in trade deficits this generation
has run up. Too much of the seed corn of the U.S. economy is now
being exported all over the world. As Sir James Goldsmith warned
in 1995,
Today, capital is being transferred to the developing world in massively
increasing amounts. In the period 1989-1992, the average capital wans-
ferred per vear to emerging countries was 116 billion dollars. In 1993,
the figure was 213 billion dollars and in 1994 it was an estimated 227
billion dollars. East Asia leads the field, with a nse in the annual rate of
direct invesunent between 1984 and 1994 of 1100 percent.”
How can the United States halt the hemorrhaging of capital?
First. consider how America’s capital goes abroad. There are several
primary vehicles for the “decumulation” of American capital:
The Great Betrayal 35
¢ Imports — $2 trillion in trade deficits in twenty years
e Foreign investments by corporations, pension funds, etc.
e Foreign aid, perhaps $1 trillion in the Cold War
e IMF, World Bank, and international bank loans
e U.S. private bank loans
e U.S. overseas defense expenditures
e Illicit trade (drugs)
e Illicit wealth transfers to evade taxes
Each of these problems can be dealt with by strong action.
Imports: A 15 percent tariff on all products that compete with
U.S.-produced goods and a wage-equalization tariff on manufac-
tures from low-wage countries would rapidly erase the U.S. mer-
chandise trade deficits. Instead of capital going abroad to build
plants for the assembly of goods to be sent back to the United States,
capital would come home to expand U.S. industries and create
American jobs. The deep tax cuts on investment and savings that the
new customs revenue would finance would make America the most
attractive investment site of all the industrial democracies.
FOREIGN INVESTMENT: Again, the tariffs, which would wipe out
the admission-free access that foreign countries now have to the
U.S. market, would have a chilling effect on the plans of transna-
tional corporations to invest abroad or to move factories abroad.
Comparative advantage would come home.
Foreign Arp: Annual wealth transfers to foreign regimes like
Egypt ($18 billion in cash reserves), Israel (a median income above
$16,000), Greece, Turkey, Russia, and Pakistan make little sense.
The Cold War is over; it’s time for relics like foreign aid to be en-
tombed. We cannot bribe nations to embrace free enterprise, and we
ought not pay nations not to fight one another.
INTERNATIONAL Banks: Far more serious is backdoor foreign
aid, the scores of billions of dollars funneled yearly to foreign
regimes through the IMF, World Bank, Asian Development Bank,
etc. These relics of our “Marshall Plan mentality” have become
global-socialist centers for the redistribution of American wealth.
316 Patrick J. BUCHANAN
Why should U.S. taxpayers guarantee loans to India or China, the
leading beneficiaries of the World Bank? If these governments have
worthwhile projects, let them finance the projects themselves. Did-
n’t we when we were a developing nation? American-taxpayer guar-
antees for World Bank and IMF loans reward nations whose policies
rarely merit such rewards.
PrivaTE Bank Loans: Although America cannot and ought not
impose controls on the foreign loans or investments of America’s big
banks, investment banks, mutual funds, and pension funds all should
be put on notice: the next time there is another default, another
Mexico, another meltdown in Asia, those who made the profits take
the loss. This is neither harsh nor punitive. Private banks and over-
seas investors must begin to realize that there is no global bank-
ruptcy court to bail them out. Once they know their investments are
no longer risk-free, the market will solve this problem.
OversEAS DEFENSE EXPENDITURES: John Foster Dulles once
said that a day was coming when the United States would have to
conduct an “agonizing reappraisal” of commitments to defend na-
tions that refused to bear their fair share of the cost of their own de-
fense. With the Cold War over, that reappraisal is long overdue.
NATO should not be expanded; new nations should not be added to
the roster of those we are already committed to defending. And Eu-
rope should begin to bear the full economic cost of its own defense.
While the United States retains a vital interest in preventing a hos-
tile regime — a Hitler or Stalin — from overrunning Europe, that
threat has never been more remote. England and France have nu-
clear deterrents; Germany is united and democratic; Russia is
smaller than it was in the days of Peter the Great. No threat to any
vital U.S. interest remotely exists in Europe. It is time to bring U.S.
troops home and revise NATO so that America is no longer com-
mitted to go to war because some ancient border has been breached
or because a forgotten trip wire has been activated in some forsaken
corner of the old continent. The proper role of America in Europe
is not to be a frontline fighting state but to be the “strategic reserve”
of the West, which has restored to itself full constitutional freedom
The Great Betrayal 317
to decide when, where, and whether to involve itself in Europe’s
twenty-first-century wars.
The new relationship of America with Europe should be mod-
eled on our military relationship with Israel. Where the Israelis pro-
vide the troops to maintain their own defense, the U.S. provides
access to its advanced weapons. Israel gives us no veto over what it
does in its own interests; and we give Israel no ironclad guarantee
that any war Israel decides to fight will be our war as well.
In Asia the great threat to stability and security is almost certain
to come from China. But Beijing is already contained — by geogra-
phy: Islam to the west; a nuclear-armed Russia to the north; India
and Vietnam to the south; Korea, Japan, and the U.S. fleet to the
east. Any Chinese military move would trigger an arms race across
East Asia. Here, again, the United States should play the role of ar-
senal of democracy and sell to the nations of Asia the modern
weapons they need to resist intimidation or defend against Beijing’s
encroachments — while they provide the troops themselves. No
more Koreas, no more Vietnams.
When the nations of Europe and Asia understand that they, not
we, are primarily responsible for their security, they will cease act-
ing like dependencies and begin acting like independent nations. It
is past time prosperous allies began paying the cost of their own de-
fense. Defense of the West can thus begin to enhance, rather than
drain, America’s vitality.
Itticir Drues: Seventy to eighty percent of the marijuana and
cocaine that enter the United States, to destroy the soul of America’s
young, pass through Mexico. To secure our southern border from
this deadly traffic, we should cancel that provision of NAFTA which
permits Mexican trucks on America’s highways. Second, we should
expand the U.S. Border Patrol. Third, we should lengthen the triple
fence already built at San Diego, which has begun to cut back illegal
immigration and complicate life for drug smugglers. Fourth, we
should demand of Mexico greater cooperation in running down nar-
cotics traffickers, and greater freedom and protection for U.S.
agents operating in Mexico. Finally, though the U.S. military does
318 Patrick J. BUCHANAN
not belong in a policing role, American troops brought home from
abroad should be moved to a southern border that is certain to be a
crisis area in the twenty-first century.
ILLıcır WEALTH TRANSFERS To EvapeE Taxes: The scores of
billions of dollars in tariff revenue should be used to virtually elimi-
nate taxes on savings, capital gains, and inheritances. With taxes
on capital at zero in the United States, departed capital would come
running home and new capital would come pouring in. Finally,
the Republican Party should heed the advice the Austrian champion
of free markets, Ludwig von Mises, gave in that Milwaukee address:
No party platform is to be considered as satisfactory that does not con-
tain the following point: As the prosperity of the nation and the height
of wage rates depend on a continual increase in the capital invested in
its plants, mines and farms, it is one of the foremost tasks of good gov-
ernment to remove all obstacles that hinder the accumulation and in-
vestment of new capital.*
STRATEGIC INDEPENDENCE
It is of importance that the kingdom should
depend as little as possible upon its neigh-
bours for the manufactures necessary for its
defense; and if these cannot be maintained at
home, it is reasonable that all other branches
of industry be taxed in order to support
them.”
— Adam Smith
At the end of World War II, the United States had a nearly autarkic
industrial base; we produced everything needed for our national de-
fense. That day is gone. In 1982 we began to run manufacturing
trade deficits; by 1986, deficits in the trade of high-technology
The Great Betrayal 319
50
45
40
35
30
PERCENT
25
20
15
10
1970975 1980 1985 1901095
YEAR
Manufactured Imports as a Share of U.S. Manufactures
Source: U.S. Department of Commerce
goods. American dependence on foreign sources for items critical to
our advanced weapons systems has created a vulnerability unknown
since American doughboys had to use French artillery and tanks,
British machine guns, and fighter planes built by our allies — even
though our own Wright brothers had invented the airplane. A
decade ago, Admiral James Lyons, commander of U.S. Pacific
forces, warned, “All of the critical components of our modern
weapons systems, which involve our F-16s and F/A 18s, our M-1
tanks, our military computers — and I could go on and on — come
from East Asian industries. ... Some day, we might view that with
concern and rightly so.”® Lyons was echoed five years later by
320 PATRICK J. BUCHANAN
former chairman of the Joint Chiefs of Staff Admiral William
Crowe, Jr:
The gulf war was unique because America enjoyed the unanimous sup-
port of all its allies. Even so, cooperation was difficult. . . . The U.S. de-
fense industrial base is already in danger of becoming too dependent
upon foreign sources for strategic supplies. What if the next time we are
called upon to respond, our allies decide it is in their best interest to sit
it out?”'
Former Commerce official Erik R. Pages writes of the difficulties
to which Crowe alluded:
The Bush Administration was forced to intervene with foreign govern-
ments on over thirty occasions to guarantee delivery of critical military
parts. As one high-level administration official commented: “If the for-
eign governments were neutral or were not disposed to help us out, we
could have run into some real problems. We were sweating bullets over
it and the military was sweating bullets too.” ”?
Peacetime America may ignore such concerns, but it is a danger-
ous vulnerability when technology is vital to national power, crucial
to military victory, and essential to saving the lives of Americans sent
into combat. We got a glimpse of what might happen during Viet-
nam, when Japan withheld the transfer of Sony TV cameras for mis-
sile guidance.
Foreigners today control the U.S. companies responsible for the
heat shield of the D-5 Trident missile and the flight controls of the
B-2 bomber, the F-117 Stealth, and the F-22, the backbone of
the twenty-first-century air force.”
Overseas factories are far more vulnerable to espionage, labor
problems, sabotage, political dictation — and attack by enemy or
terrorist forces. There is no guarantee that U.S. secrets are safe
abroad. A clear and present danger exists when corporations with al-
legiance to no country gain virtual monopolies over items critical to
U.S. security. During World War II, Stalin’s spies and our own
The Great Betrayal 32
homegrown traitors looted vital defense secrets, including those re-
lated to the atom bomb. Given this experience, for us to allow tech-
nology indispensable to our security to be kept outside the United
States, vulnerable to theft or denial, is perilous folly. The time to end
foreign military dependence is when new weapons systems are in the
design stage. America should guarantee that no foreign dependency
is built into any future generations of weapons. When it comes to
technology vital to national defense, “Buy American” and MADE IN
THE USA are the rules that should apply.
The world is a dynamic place. No nation can ground its security
in existing technological superiority. Superpowers that rest on their
laurels invite the fate of the first global powers of the modern era:
Holland and Spain. When ‘Treasury’s Richard Darman blurted,
“Why do we want a semiconductor industry? We don’t want some
kind of industrial policy in this country. If our guys can’t hack it, let
’em go,” his was the smug voice of the elites of numerous nations
that are no longer counted as great.‘
Unfortunately, President Clinton subscribes to the Darman view.
His administration is outsourcing to foreign producers more com-
ponents of U.S. weapons systems than ever before. This penny-wise,
pound-foolish policy strikes at the heart of America’s security and
independence and ignores a truth taught by Adam Smith: “The
great object of the political economy of every country is to increase
the wealth and the power of that country.” 5
322 Patrick J. BUCHANAN
A SIMPLER, FAIRER [Ax CODE
The ideal tax code must include five basic
principles: Be fair, be simple, get at the un-
derground economy, encourage savings and
investment, and help our balance of trade.**
— Congressman Bill Archer, Chairrnan,
House COMMITTEE ON Ways AND
Means, 1996
The tariffs recommended above would provide the Treasury with
perhaps hundreds of billions of dollars a year in revenue, to cut or to
eliminate taxes on income, savings, and investment.
Another idea that ought to be considered is replacing the U.S.
corporate income tax with a corporate revenue tax — to end the fla-
grant tax evasion of foreign companies operating in the United
States. Using a scheme called “transfer pricing,” foreign producers
overcharge their U.S. subsidiaries for parts, guaranteeing no U.S.
profit and no U.S. corporate tax. This gives foreign regimes an un-
just advantage over U.S. industry.
European companies operating here regularly report profits half those of
U.S. companies; Asian companies regularly report profits one-tenth those
of U.S. companies.” The United States is, to put it bluntly, being
swindled.
But transfer pricing can be defeated by a revenue tax. For exam-
ple, a 4 percent corporate revenue tax would net $4 million in taxes
from a Toyota assembly plant that sold $100 million worth of cars,
regardless of any games played with inventory or parts. Foreign
companies could no more avoid a revenue tax than a sales tax. Amer-
ican companies would be placed on an even footing with foreign
firms that use accounting tricks to give themselves the “comparative
advantage” of not paying U.S. income taxes.
In 1995 U.S. corporations paid $140 billion in taxes on $550 bil-
The Great Betrayal 323
lion in profits, with the profits determined by a tax code of thou-
sands of pages of exemptions, credits, deductions, and a depreciation
schedule that even IRS agents have difficulty deciphering. However,
the gross revenue of all U.S. corporations was $3.55 trillion. A 4 per-
cent corporate revenue tax would have yielded the same $140 billion
as the corporate income tax. ‘Io provide a break for small businesses,
which have created almost all of the 30 million new jobs since 1981,
the corporate revenue tax could be raised to 5 percent for large cor-
porations, but the first few millions of dollars of revenue could be
taxed at 0 percent, 1 percent, or 2 percent.
Converting to a corporate revenue tax would eliminate the jobs
of thousands of lobbyists engaged today in the glorified bribery of
our lords temporal with campaign contributions in return for “cor-
porate welfare.” By switching from a complex income tax to a sim-
ple revenue tax, tens of thousands of accountants, tax lawyers, and
IRS agents could be shifted to more productive work. American
businesses would save billions in accounting costs — another “com-
parative advantage.”
Then, in place of the personal income tax, the nation should look
to a flat tax, or a national sales tax (NST). What would an NST ac-
complish?
e End all federal taxation of salaries, wages, dividends, interest,
gifts, estates, and capital gains
e Save 5.4 billion work hours spent filling out tax forms
¢ Eliminate the IRS
e Eliminate the need for hundreds of thousands of accountants,
bookkeepers, tax lawyers, and trust lawyers, turning them loose
for more productive work
e Eliminate thousands of lobbyists now prowling the nation’s cap-
ital for special tax breaks
e Surface and tax the “underground economy” for the first time; all
current tax evaders, from illegal aliens to tourists to UN diplo-
mats and the D.C. diplomatic corps to organized crime, would
become taxpayers every time they spent a dollar
324 Patrick J. BUCHANAN
Foreign goods sold in the United States would carry the same
sales tax as American goods. And eliminating U.S. corporate and
personal income taxes from the sticker price of American-made
products would strengthen the competitive position of U.S. goods
in the world market.
The major argument against an NST has been that the poor and
the elderly on fixed incomes, who pay no income tax, would get a tax
hike, because all their income is spent, while the wealthiest Ameri-
cans would get a tax cut. But under a modified NST, food, clothing,
and shelter can be made exempt, and the poor and working poor
made whole with rebates.
The U.S. income tax code does not need reform; it needs to be
ripped out by the roots. No system will satisfy everyone, and none is
perfect, but the NST seems among the best options. It eliminates
the IRS. It ensures that everyone pays, but only when we consume,
not when we earn, save, or invest. Imports would carry the same
taxes as U.S.-made goods; exports would go untaxed. Everyone
would contribute to the defense of the nation and the necessary du-
ties of government, as all should. In a republic there should be no
free riders.
What about the flat tax? Any flat tax that excludes all dividends, in-
terest, and capital gains would allow Palm Beach trust fund babies,
who live off inherited wealth, to avoid taxation altogether. Neither
Congress nor the public would ever accept such a system. However,
a 16 percent flat tax on all salaries and wages, starting at $35,000,
yoked to a separate flat tax on all dividends, interest, and capital
gains above the first $35,000, might just pass muster. Investment and
savings would be encouraged and rewarded, but the rich living off
inherited wealth would not escape.
A mix of these tax, trade, and capital-accumulation policies would
shift much of the burden of taxation off work, savings, and invest-
ment and onto consumption of imported goods, the revenue of for-
eign corporations, and the incomes of the well-to-do. Ours would be
the most attractive market for investment in the world.
The Great Betrayal 325
None of these ideas is written in stone, but something is written
on the wind: either we walk away from a global system that is loot-
ing America of its industrial capacity, robbing our workers of their
best jobs, bleeding away our sovereignty, and corrupting our poli-
tics, or the nation will fail. Implement these or like ideas, and in half
a decade:
e U.S. trade deficits will have disappeared.
e U.S. vulnerability to global financial crises will end.
e Factories will be springing up, not shutting down.
e Millions of manufacturing jobs will have been created.
¢ Downward pressure on U.S. wages will be replaced by rising de-
mand for U.S. workers. America will get that pay raise!
e The tax burden on American families will be lighter.
e Americans will find themselves less dependent on foreign pro-
ducers and more reliant on one another.
The ultimate goal: greater security for America’s workers and
greater stability for America’s families. After all, who is an economy
for, if not the people? And what is an economy for, if not to serve so-
ciety?
As this book began, I wrote that, in traveling across America in the
campaign of 1995-96, I found that we seemed to be losing the coun-
try we grew up in. We are ceasing to be a “band of brothers.” We
need to heal the divisions, to come together again, as one nation and
one people. That is what the great Americans sought. As Christo-
pher Lasch wrote in the year before his death:
Whatever its faults, middle-class nationalism provided a common
ground, common standards, a common frame of reference without
which society dissolves into nothing more than contending factions, as
the Founding Fathers of America understood so well — a war of all
against all.”
326 Patrick J. BUCHANAN
The ideas in this book have to do with closing the divisions and
easing the tensions in society that emanate from the economic order.
They do not address the stresses rooted in the divisions of religion,
culture, and race. But re-creation of a just economic order is a pre-
requisite of the restoration of the moral order. When all members of
society prosper together, when property and wealth are more equi-
tably shared, when a man can raise a family again on the sweat of his
own labor, when Americans begin anew to put their own country
and countrymen first —as natural law teaches we must — those
tensions will ease as well.
There are many who say there is no turning back, that the Global
Economy is inevitable, that the death warrant of the nation-state has
been signed, and that there is to be no reprieve. I do not believe this.
It is vital that we not surrender this fortress of freedom, liberty, and
human dignity that our ancestors died creating. I do not want to live
in their brave new world; if it is coming, let us all stand our post. And
if indeed, as James Fitzjames Stephens wrote, “The waters are out
and no human force can turn them back .. . I do not see why as we
go with the stream we need sing Hallelujah to the river god.” ”
We can take our country back; and, God willing, we shall.
ACKNOWLEDGMENTS
The Great Betrayal owes much to many, and my gratitude goes to
them all: to Terry Jeffrey, a good friend and captain in the Buchanan
Brigades of ’92 and ’96, now editor of Human Events, for his ideas
and research on the Founding Fathers; to Brian Robertson, for his
preparation of the charts and graphs; to Bill Hawkins, who provided
insights and research and whose own writings are often cited; and to
John Meroney, who spent hundreds of hours in libraries, digging up
original citations and gathering new evidence for presentation to a
national jury.
Half a dozen friends volunteered to review drafts of the book; all
suggested surgeries, some of which were not minor, and a few of
which were done without anesthesia and under duress.
For editing, special thanks to my old friend from the White
House days of Nixon and Reagan, Lyndon K. “Mort” Allin; to Tom
Piatak of the American Cause, and George Csatary and Tom Green-
lee of The American Protectionist for their insights on the thought of
Hamilton and Adam Smith; to Alan Tonelson and Kevin Kearns of
U.S. Business and Industrial Council, a Washington pillar of eco-
nomic nationalism; to Al Eckes, former chairman of the Interna-
tional ‘Trade Commission, who saved Harley-Davidson with his
328 Acknowledgments
critical vote, a historian whose Opening America’s Market is cited
more often here than any other work; to Gabor Boritt of the Civil
War Institute at Gettysburg College, whose definitive writings on
the economic ideas of Lincoln are the primary source for my chap-
ter “The Great Protectionist”; to Gus Stelzer, friend and former
GM executive whose Nightmare of Camelot inspired my chapter on
the auto industry; to author Pat Choate, the Reform Party candidate
for vice president in 1996; and to one of our country’s great histori-
ans, Robert H. Ferrell, professor emeritus at Indiana, author of
dozens of books, whom I came to know after fortuitously stumbling
across his splendid American Diplomacy: A History in a Seattle book-
store during the campaign of 1996.
Others who reviewed early chapters are my friend, the syndicated
columnist Sam Francis; Peter Brimelow of National Review; Bernard
Way of Christendom College; Thomas DiLorenzo of Loyola; Steve
Sniegoski, writer and ex-student of historian Wayne Cole; and Dr.
Cole himself.
This book also owes a great debt to Fredrica Friedman. Fredi, the
brilliant editorial director at Little, Brown, edited my memoir Right
from the Beginning a decade ago, arranged for this new book to be
published, set the parameters, rearranged and refocused the argu-
ments, culled and cut the text, and chaperoned the final product to
publication.
Finally, my thanks to others who have defended the legacy
and kept alive the ideas of Hamilton and Clay in the halcyon days
of the free traders and from whose writings I have benefited: Bill
Gill, author of Trade Wars Against America; Jay Olnek, author of The
Invisible Hand; and Sir James Goldsmith, author of The Trap and
The Response, and founder of Great Britain’s Referendum Party. A
generous friend who passed away in 1997 and relished any fight
against entrenched power, “Jimmy” Goldsmith did more than
any man of his time to alert Britain and France to the terrible price
that absorption into the European Union means for those nations.
If the cause of enlightened nationalism prevails in the West, as it
shall, the tragedy will be that Jimmy is not there to host our victory
party.
NOTES
Book One
A TALE oF Iwo NATIONS
Chapter 1
“THE [wo AMERICAS”
. Hilaire Belloc, The Servile State (New York: Henry Holt and Co., 1946), pp.
XIX—XX.
. This story is from my own recollections and materials I read before visiting
Rayne. The quotations of the women at the Fruit of the Loom plant are from
a story by Anne Hull in the Houston Chronicle, Nov. 30, 1995. Statistics and
facts are from a March 19, 1995, article by Bobby Lamb in the Baton Rouge
Sunday Advocate, p. 1G; a Chicago Sun-Times story by Francis Knowles, Oct. 31,
1995, p. 43; a piece the same day by Randy McClain of the Baton Rouge Advo-
cate, p. 1C; and a July 31, 1996, piece by Joan McKinney, Washington bureau
chief of the Advocate, p. 13A.
. Robert J. Lampman, The Share of Top Wealth-Holders in National Wealth,
1922-1956 (Princeton, N.J.: Princeton University Press, 1962), p. 204; Steven
Sass, “Passing the Buck,” Federal Reserve Bank of Boston Regional Review, sam-
mer 1995, p. 16; James D. Smith and Stephen D. Franklin, “The Concentra-
tion of Personal Wealth, 1922-1969,” American Economic Review, May 1974,
pp. 162-67.
4. Irwin M. Stelzer, “Are CEOs Overpaid?” Public Interest, Winter 1997, p. 33.
. Table B-45, “Hours and Earnings in Private Nonagricultural Industries,
1959-94,” Economic Report of the President, February 1995 (Washington, D.C.:
Government Printing Office, 1995), p. 326.
. Charles J. Whalen, “The Anxious Society: A Middle Class Perspective,” Dur-
rell Journal of Money and Banking, spring 1996, p. 14.
26.
330 Notes
. Jeff Madrick, “In the Shadows of Prosperity,” New York Review of Books, Aug.
14, 1997, p. 41.
. Table B-34, “Civilian Employment and Unemployment by Sex and Age,
1947-94,” Economic Report of the President, February 1995, p. 314.
. News release, Bureau of Labor Statistics, U.S. Department of Labor, Dec. 17,
1996; “Prisoners in 1996,” bulletin, Bureau of Justice Statistics, U.S. Depart-
ment of Justice, June 1997.
. Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working
America 1996-1997 (Washington, D.C.: Economic Policy Institute, 1996),
pt2.
. Charles W. McMillion, “Wages Finally Gain on Inflation, But Stagnation Hits
Hyped Jobs,” Washington Times, Aug. 4, 1997, p. D4.
. Charles Murray, “Income Inequality and IQ,” AEI, American Enterprise In-
stitute for Public Policy Research, Aug. 1997.
. Pat Choate and Charles McMillion, The Mysterious US Trade Deficit (Wash-
ington, D.C.: Manufacturing Policy Project, 1997), pp. 6-7.
. John B. Judis, “Dollar Foolish,” New Republic, Dec. 9, 1996, p. 23.
. Charles W. McMillion, testimony to the U.S. Senate Committee on Com-
merce, Science, and Transportation, Subcommittee on Manufacturing and
Competitiveness, Apr. 13, 1997.
. Ibid.
. Table B-44, “Employees on Nonagricultural Payrolls, by Major Industry,
1946-94,” Economic Report of the President, February 1995, pp. 324-25.
. McMillion testimony.
. Donald L. Barlett and James B. Steele, “America: Who Stole the Dream?”
Indianapolis Star, Sept. 22, 1996 and Sept. 24, 1996.
. Peter Coy, “Why Foreign Capital Won’t Dry Up,” Business Wek, July 29,
1997 ape 7b.
. Ibid.
. Choate and McMillion, The Mysterious US Trade Deficit, p. 1.
. Mishel, Bernstein, and Schmitt, The State of Working America, p. 169.
. William Branigin, “Illegal Immigrant Population Grows to 5 Million,” Wash-
ington Post, Feb. 8, 1997, p. A3.
. Medea Benjamin, “Nike in Asia: Is This Prosperity?” Wall Street Journal,
June 4, 1997, p. A19; Bob Herbert, “Nike’s Pyramid Scheme,” New York Times,
June 10, 1996, p. A17.
John Maynard Keynes, The Economic Consequences of the Peace (New York:
Macmillan, 1920), p. 2.
Notes 334
Chapter 2
“TRIUMPH OF THE FREE [RADERS”
. Cordell Hull, The Memoirs of Cordell Hull, vol. 1 (New York: Macmillan, 1948),
p. 83.
. Ibid, p. 76.
3. Ibid, p. 81.
4. Ravi Batra, The Great American Deception: What Politicians Won't Tell You About
Our Economy and Your Future (New York: John Wiley & Sons, 1996), p. 80.
. Hull, Memoirs, p. 81.
. William Henry Chamberlin, America’s Second Crusade (Chicago: Henry Reg-
nery Co., 1950), p. 184.
Ibid.
. U.S. Senate Committee on Finance, Extending Authority to Negotiate Trade
Agreements: Hearings Before the Committee on Finance, United States Senate,
June 1-5, 1948 (Washington, D.C.: Government Printing Office, 1948), pp.
175-98.
. “Cotton & King,” Time, Aug. 17, 1936, p. 62.
. Steve Dryden, Trade Warriors: USTR and the American Crusade for World Trade
(New York: Oxford University Press, 1995), p. 10.
. Ibid, p. 13.
. Ibid, p. 11.
. Ibid., p. 14.
. Alfred E. Eckes, Jr., Opening America’s Market: U.S. Foreign Trade Policy Since
+
1776 (Chapel Hill: University of North Carolina Press, 1995), p. 157.
. A Trade and Tariff Policy in the National Interest (Washington, D.C.: Public
Advisory Board for Mutual Security, 1953) pp. 19-20.
. Eckes, Opening America’s Market, p. 167.
. Dwight D. Eisenhower, Public Papers of the Presidents of the United States:
Dwight D. Eisenhower, 1954 (Washington, D.C.: Government Printing Office,
1960), p. 587.
. Ibid.
. Robert H. Ferrell, ed., The Eisenhower Diaries (New York: W. W. Norton,
1981), p. 242.
. Eckes, Opening America’s Market, p. 237.
. Ibid., p. 238.
. Ibid., 168.
. Ibid.
. Ibid.
. Ibid.
332 Notes
. oid, p. 170.
. Tbh, p. #71.
» Wid, p. 172.
. bid.
aid.
. Jacob M. Schlesinger, Shadow Shoguns: The Rise and Fall of Japan’s Postwar Po-
litical Machine (New York: Simon & Schuster, 1997), p. 48.
. Eckes, Opening America’s Market, p. 172.
. William R. Hawkins, Director of the Economic Security Action Center, U.S.
Business and Industrial Council, “The World’s Best Educated Fast Food
Cooks,” Washington D.C., KRTN Forum.
. Eckes, Opening America’s Market, p. 175.
. Wid., p. 177.
. Geir Lundestad, The American “Empire” (New York: Oxford University Press,
1990), pp. 70-72.
. Wesley T. Wooley, Alternatives to Anarchy: American Supranationalism Since
World War II (Bloomington: Indiana University Press, 1988), p. 169.
. George W. Ball, The Past Has Another Pattern (New York: W. W. Norton,
1982), pp. 190-91.
. Ibid., prior
. Editorial, “Cold War Weapon,” St. Louis Globe-Democrat, Oct. 5, 1962.
. John F. Kennedy, Public Papers of the Presidents of the United States: John E
Kennedy, 1963 (Washington, D.C.: Government Printing Office, 1964), pp.
518-19.
. Eckes, Opening America’s Market, p. 193.
. TON.
Ibid.
. Ibid., p. 196.
. Ibid., p. 199.
. Ibid.
. Thomas W. Zeiler, American Trade and Power in the Sixties (New York: Colum-
bia University Press, 1992), p. 239.
. Ibid., p. 240.
. Tid.
. Eckes, Opening America’s Market, pp. 202-03.
. Milton Friedman, There’s No Such Thing as a Free Lunch (LaSalle, Ill.: Open
Court Publishing, 1975).
. Herbert Stein, Presidential Economics: The Making of Economic Policy from Roo-
sevelt to Reagan and Beyond (New York: Simon & Schuster, 1984), p. 167.
. Eckes, Opening America’s Market, p. 217.
. “No. 687. U.S. Membership in AFL-CIO Unions, by Selected Union: 1979 to
56.
Sd
58.
59.
60.
ól.
62.
63.
64.
65.
66.
67.
Notes 338
1991,” Statistical Abstract of the United States: 1993 (Washington, D.C.: Gov-
ernment Printing Office, 1993), p. 435.
Ronald Reagan, Public Papers of the Presidents of the United States: Ronald Rea-
gan, 1985, Book 2 (Washington, D.C.: Government Printing Office, 1988),
p 1015.
Eckes, Opening America’s Market, p. 247.
Sidney Hook, Out of Step: An Unquiet Life in the Twentieth Century (New York:
Harper & Row, 1987), pp. 598-99.
Ronald Reagan, Public Papers of the Presidents of the United States: Ronald Rea-
gan, 1987, Book 1 (Washington, D.C.: Government Printing Office, 1989),
p. 476.
Ibid., p. 478.
“U.S. Car Imports Number Nearly 5 Million,” Facts and Figures ’85, Motor
Vehicle Manufacturers Association of the United States, p. 31.
Alan Tonelson, “Beating Back Predatory Trade,” Foreign Affairs, July/Aug.
1999p. 125.
Eckes, Opening America’s Market, p. 260.
Clyde Prestowitz, “America Without Tools: Are We Turning Into a Nation
That Can’t Make Anything?” Washington Post, January 12, 1992, pp. C1-C2.
Patrick J. Buchanan, “Death of the American Heartland,” New York Post, Oct.
31, 1994; Denver Post, Nov. 3, 1994.
Newt Gingrich, Tò Renew America (New York: HarperCollins, 1995), p. 7.
Dani Rodrik, Has Globalization Gone Too Far? (Washington, D.C.: Institute for
International Economics, 1997), p. 7.
Chapter 3
“How FREE TRADE Is KILLING AMERICA”
. “Amalgamated Clothing and Textile Workers Union Press Conference Tran-
script,” News from the AFL-CIO, Oct. 31, 1977, pp. 1, 6.
. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New
York: Modern Library, 1937), p. 424.
. Milton and Rose Friedman, “The Tyranny of Controls,” Free to Choose: A Per-
sonal Statement (New York: Harcourt Brace Jovanovich, 1980), p. 38.
. Edward N. Luttwak, The Endangered American Dream: How to Stop the United
States from Becoming a Third-World Country and How to Win the Geo-Economic
Struggle for Industrial Supremacy (New York: Simon & Schuster, 1993), pp. 28,
3d:
. Terry Jeffrey, “Bye, Bye, Birdie,” Human Events, Nov. 8, 1996, p. 7.
6. William R. Hawkins, “The Anti-History of Free Trade Ideology,” America
20.
el:
22.
23.
334 Notes
Asleep: The Free Trade Syndrome and the Global Economic Challenge (Washington,
D.C.: United States Industrial Council Educational Foundation, 1991),
p. 68.
. Bill Gertz, “Seoul Spies Take Aim at U.S. High-Tech Secrets,” Washington
Times, Oct. 2, 1996, p. A7; Murray Weiss and Andy Geller, “New Breed of
Spies Target U.S. High-tech Firms,” New York Post, Apr. 7, 1997.
. Percy L. Greaves, Jr., Mises Made Easier: A Glossary for Ludwig von Mises’
Human Action (Dobbs Ferry, N.Y.: Free Market Books, 1974), p. 85.
. “Is Corruption an Asian Value?” Wall Street Journal, May 6, 1996, p. A14.
. Dani Rodrik, Has Globalization Gone Too Far (Washington, D.C.: Institute for
International Economics, 1997), p. 47.
. Smith, Wealth of Nations, p. 461.
. John C. Fitzpatrick, ed., The Writings of George Washington, vol. 30 (Washing-
ton, D.C.: Government Printing Office, 1939), pp. 491-92.
. Smith, Wealth of Nations, pp. 422-23.
. Piero Sraffa, ed., On the Principles of Political Economy and Taxation, vol. 1, The
Works and Correspondence of David Ricardo (Cambridge: University Press, 1951),
pp. 136-37.
. Arthur Hendrick Vandenberg, The Greatest American: Alexander Hamilton
(New York: G. P. Putnam’s Sons, 1921), p. 198.
. Julie Salamon, “To Some Bankers with Loans to Poland, Military Crackdown
Isn’t All Bad News,” Wall Street Journal, Dec. 21, 1981, p. 10.
. H. A. Washington, ed., The Writings of Thomas Jefferson, vol. 6 (New York:
Derby & Jackson, 1859), p. 334.
. T. R. Fehrenbach, Greatness to Spare (Princeton, N.J.: Van Nostrand, 1968),
p. 220.
. George Washington Parke Custis, Recollections and Private Memoirs of Washing-
ton (Washington, D.C.: W. H. Moore, 1859), pp. 336-37; Henry P. Johnston,
The Yorktown Campaign and the. Surrender of Cornwallis, 1781 (New York:
Harper & Brothers, 1881), pp. 139-40; Nell Moore Lee, Patriot Above Profit:
A Portrait of Thomas Nelson, fr., Who Supported the American Revolution with His
Purse and Sword (Nashville, Tenn.: Rutledge Hill Press, 1988), p. 474.
Lester C. Thurow, “Free Market Fallacies,” Foreign Policy 92 (Fall 1993),
p. 187; Michael Schrage, “Two Kinds of Chips, One Kind of Challenge,” Los
Angeles Times, Jan. 21, 1993, p. D1.
Ibid., pp. 23-24.
J. A. Hobson, Richard Cobden: The International Man (New York: Henry Holt
and Co., 1919), p. 37.
Jacob G. Hornberger, “What President Clinton Should Have Said to the
Japanese,” The Case for Open Immigration and Free Trade (Fairfax, Va.: Future of
Freedom Foundation, 1995), p. 60.
24.
23.
26.
Lie
28.
29.
30.
31.
32
33.
34.
35.
36.
37
38.
39.
40.
sell.
Notes 335
Cordell Hull, The Memoirs of Cordell Hull, vol. 1 (New York: Macmillan, 1948),
p. 81.
Joan Kennedy Taylor, ed., Free Trade: The Necessary Foundation for World Peace
(Irvington on Hudson, N.Y.: Foundation for Economic Education, 1986),
PARA
William Jefferson Clinton, “1997 State of the Union Address,” Vital Speeches of
the Day, Mar. 1, 1997, p. 294.
Speeches on Questions of Public Policy by Richard Cobden, M.P., ed. John Bright and
James E. Thorold Rogers (London, 1880), p. 40, cited in Western Liberalism: A
History in Documents from Locke to Croce, ed. E. K. Bramsted and K. J. Melhuish
(New York: Longman, 1978), p. 254.
Rodrik, Has Globalization Gone Too Far, p. 16.
Ludwig von Mises, Human Action: A Treatise on Economics, 3d rev. ed. (Chicago:
Contemporary Books, 1966), p. 164.
David Morris, “Free Trade: The Great Destroyer,” The Case Against the Global
Economy — And for a Turn to the Local, Jerry Mander and Edward Goldsmith,
eds. (San Francisco: Sierra Club Books, 1996), p. 222.
Louis Uchitelle, “More Work, Less Play Make Jack Look Better Off,” Week
in Review, New York Times, Oct. 5, 1997, p. 4.
Robert Gilpin, U.S. Power and the Multinational Corporation: The Political Econ-
omy of Foreign Direct Investment (New York: Basic Books, 1975), pp. 25-29.
Ibid., p. 34.
Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Mili-
tary Conflict from 1500 to 2000 (New York: Random House, 1987), p. xxii.
Alfred E. Eckes, Jr., Opening America’s Market: U.S. Foreign Trade Policy Since
1776 (Chapel Hill: University of North Carolina Press, 1995), p. 133.
“The International Monetary Fund: Outdated, Ineffective, and Unnecessary,”
Backgrounder, Heritage Foundation, May 6, 1996, p. 8.
George F. Will, “Buchanan’s Nonsense,” Washington Post, Nov. 5, 1995, p. C7.
Sir James Goldsmith, The Response (self-published, 1995), p. 96.
Samuel Crowther, America Self-Contained (Garden City, N.Y.: Doubleday,
Devon & Co., 1933), p. 9.
Lewis D. Eigen and Jonathan P. Siegel, eds., Macmillan Dictionary of Political
Quotations (New York: Macmillan, 1993), p. 238.
Ibid., pp. 240-41.
336 Notes
Chapter 4
“ANATOMY OF A MURDER”
George F. Will, “Capitalism’s Sublime Chaos,” Washington Post, Mar. 3, 1996,
pu.
David Halberstam, The Reckoning (New York: Morrow, 1986) p. 91.
V. Dennis Wrynn, Detroit Goes to War: The American Automobile Industry in
World War II (Osceola, Wisc.: Motorbooks International, 1993).
Gus Stelzer, The Nightmare of Camelot: An Expose of the Free Trade Trojan Horse
(Seattle, Wash.: PB Publishing, 1994), pp. 287-88.
Halberstam, The Reckoning, pp. 30, 50.
6. Maryann Keller, Collision: GM, Toyota, Volkswagen and the Race to Own the 21st
Bi.
22.
Phe
Century (New York: Currency, 1993), p. 106.
Ibid., p. 109.
Ibid.
Walter Henry Nelson, Small Wonder: The Amazing Story of the Volkswagen
(Boston: Little, Brown and Co., 1965), p. 52.
Ibid., p. 60.
. Keller, Collision, p. 110.
. Alan Cowell, “Volkswagen’s History: The Darker Side Is Revisited,” New York
Times, Nov. 7, 1996, p. A14.
. Halberstam, The Reckoning, p. 462.
. Ibid.
. Stelzer, Nightmare of Camelot, p. 290.
U.S. Department of Commerce, The U.S. Industrial Outlook for 1964, Industry
by Industry (Washington, D.C.: Government Printing Office, 1964), p. ER-39.
. Keller, Collision, p. 105.
. Michael A. Cusamano, The Japanese Auto Industry: And Management and Toyota,
published by the Council on East Asian Studies, Harvard University (Cam-
bridge: Harvard University Press, 1985), p. 4.
Stelzer, Nightmare of Camelot, p. 290
Lawrence Martin, The Presidents and the Prime Ministers, Washington and Ot-
tawa Face to Face: The Myth of Bilateral Bliss, 1867-1982 (Garden City, N.Y.:
Doubleday, 1982), p. 219.
Alfred E. Eckes, Jr., Opening America’s Market: U.S. Foreign Trade Policy Since
1776 (Chapel Hill: University of North Carolina Press, 1995), p. 193.
Mark Heinzl, “Made in Canada: Car Makers Head North: GM Stnke High-
lights Country’s Growing Role in Sector,” Wall Street Journal, Oct. 14, 1996,
p. A2.
Ibid., p. AS.
2q
25.
26.
27.
28.
29,
30.
Bile,
2.
33.
31
55.
Notes 357
Stelzer, Nightmare of Camelot, pp. 292-93.
Keith Bradsher, “GM to Regain American Market Share, Executives Say,” New
York Times, Jan. 9, 1997, p. D4.
Rebecca Blumenstein, “GM Is Building Plants in Developing Nations to Woo
New Markets,” Wall Street Journal, Aug. 4, 1997, p. 1.
Bradsher, “GM to Regain American Market Share,” p. D4.
“Trade Route,” Business Week, Dec. 9, 1996, p. 55.
Stelzer, Nightmare of Camelot, p. 295.
George Bush, Public Papers of the Presidents of the United States: George Bush,
Book 1 (Washington, D.C.: Government Printing Office, 1993), p. 53.
Halberstam, The Reckoning, p. 684.
American Automobile Manufacturers Association, “Economic Indicators: The
Motor Vehicle’s Role in the U.S. Economy,” Third Quarter 1996, p. 8.
“Car Crash Ahead,” Economist, May 10, 1997, p. 13.
Ibid.
Ernest F. Hollings, “Protectionist and Proud of It,” Washington Post, Mar. 17,
1996, p. C4.
Chapter 5
“MASTERS OF THE UNIVERSE”
. As quoted in Peter Brimelow, Alien Nation: Common Sense About America’s Im-
migration Disaster (New York: Harper Perennial, 1996), p. 293.
. Robert B. Reich, “Who Is Them?” Harvard Business Review, Mar.—Apr., 1991,
p. 78.
. Henry Ford in collaboration with Samuel Crowther, My Life and Work (Gar-
den City, N.Y.: Garden City Publishing, 1922), p. 123.
Sources for this section on the Milliken plant in La Grange include recollec-
tions from two visits to the plant; David Greising, “A Company That Knows
How to Put Out a Fire,” Business Week, Feb. 27, 1995, p. 50; Howard B. Stuss-
man, “A Bias for Action,” Engineering News-Record, Sept. 18, 1995, p. 28.
Greising, “A Company That Knows,” p. 50.
. Stussman, “A Bias for Action,” p. 28.
E. Michael Myers, “Textile Workers Embrace Hopeful; Buchanan Rails at
‘Country Club,’ ” Washington Times, Mar. 5, 1996, p. A6.
Michael Ryan, “They Call Their Boss a Hero,” Parade, Sept. 8, 1996, p. 4.
Ibid.
Ibid., p. 5.
. Ibid.
. David Morris, “Free Trade: The Great Destroyer,” The Case Against the Global
13.
4.
l5.
16.
I7
18.
19.
20.
2i.
22.
25.
a4.
25.
26.
rane
28.
29.
30.
31.
oe.
33.
34.
35.
36.
37.
338 Notes
Economy — And for a Turn to the Local, Jerry Mander and Edward Goldsmith,
eds. (San Francisco: Sierra Club Books, 1996), p. 221.
Reich, “Who Is Them?” p. 78.
Erle Norton, “Global Makeover: Ten years ago, Alcoa was a thoroughly Amer-
ican company. No longer,” Wall Street Journal, Sept. 26, 1996, p. R14.
Reich, “Who Is Them?” p. 77.
John B. Judis, “America the Divided,” Washington Post Book World, Jan. 15,
Toes, p. TY:
Anthony Harrigan, “The Corporate Citizen, National vs. Transnational Eco-
nomic Strategies,” Chronicles, Jan. 1990, p. 25.
Christopher Lasch, The Revolt of the Elites and the Betrayal of Democracy (New
York: W. W. Norton, 1995), pp. 34-35, 46.
William Greider, “The Ex-Im Files: How the Taxpayer-funded Export-Import
Bank Helps Shift Jobs Overseas,” Rolling Stone, Aug. 8, 1996, p. 70.
Harrigan, “The Corporate Citizen,” p. 25.
Greider, “The Ex-Im Files,” pp. 54, 70.
Ibid., p. 70.
Michael Skapinker, “Boeing Keen for New Joint Ventures with BAe,” Finan-
cial Times, Mar. 12, 1997, p. 18.
Michael Skapinker, “Flight Plan From Seattle,” Financial Times, Mar. 12, 1997,
pels:
Ibid.
Ibid.
“The Appease China Sweepstakes (Cont.),” Weekly Standard, Sept. 8, 1997,
pt
“Investment Pact,” Financial Times, Oct. 17, 1996, p. 13.
“U.S. Goods Trade: Imports & Exports by Related Parties, 1995,” U.S. De-
partment of Commerce, Sept. 10, 1996.
Helen V. Milner, Resisting Protectionism: Global Industries and the Politics of In-
ternational Trade (Princeton, N.J.: Princeton University Press, 1988), p. 249.
Ibid., p293.
Donald Bruce Johnson and Kirk H. Porter, compilers, National Party Platforms
1840-1972 (Urbana: University of Illinois Press, 1973), p. 859.
Jeff Gerten, “Business and Foreign Policy,” Foreign Affairs, May/June 1997,
pp. 70-71.
A. W. Clausen, “The International Corporation: An Executive View,” The An-
nals of the American Academy of Political and Social Science, Sept. 1972, p. 21.
Richard J. Barnet and Ronald E. Müller, Global Reach: The Power of the Multi-
national Corporations (New York: Simon & Schuster, 1974), pp. 18-19.
Ibid., p. 16.
Ibid.
Notes 339
. Zbigniew Brzezinski, Between Two Ages: America’s Role in the Technetronic Age
(New York: Viking, 1970), p. 58.
. Ibid., p. 59.
. Spid.
. Barnet and Müller, Global Reach, p. 14.
lbidPpr ss.
. Wesley T. Wooley, Alternatives to Anarchy: American Supranationalism Since
World War II (Bloomington: Indiana University Press, 1988), p. 169.
. Ibid, p. 168.
. Strobe Talbott, “The Birth of the Global Nation,” Time, July 20, 1992, p. 70.
" Wid p: 71.
. Richard N. Gardner, “The Hard Road to World Order” Foreign Affairs, Apr.
1974, p. 558.
. Walter Wriston, The Twilight of Sovereignty (New York: Scribner’s, 1992), p. 4.
. William R. Hawkins, “The Surrender of Political and Military Sovereignty,”
Chronicles, Oct. 1995, p. 19.
. E. Christian Kopff, “The Future Belongs to Us,” Chronicles, Oct. 1995, p. 34.
. Richard Cobden, “England, Ireland, and America,” Free Trade and Other Fun-
damental Doctrines of the Manchester School, ed. Francis W. Hurst (New York:
Augustus M. Kelly, 1958), p. 22.
Book Two
WHERE AND How WE LosT THE Way
Chapter 6
“WHat Our FATHERS BELIEVED”
. Japan Economic Journal, 1981, cited by Pat Choate, Agents of Influence (New
York: Knopf, 1990), p. vii.
Chapter 7
“THE RISE OF AMERICAN NATIONALISM”
. John A. Logan, The Great Conspiracy: Its Origin and History (New York: A. R.
Hart & Co., 1886), pp. 13-14.
. James Thomas Flexner, George Washington: The Forge of Experience (1732-
1775) (Boston: Little, Brown and Co., 1965), p. 277.
on NAN A u
340 Notes
_ Ibid, p. 278.
Ibid.
. Ibid., p. 282.
Ibid.
. Ibid., pp. 287-88.
. John C. Miller, Origins of the American Revolution (Boston: Little, Brown and
Co., 1943), p. 15.
. Jid., 275.
. lids, p. 274.
. Dbidayp: 8.
. William J. Gill, Trade Wars Against America: A History of United States Trade and
Monetary Policy (New York: Praeger, 1990), p. 13.
. Clarence Walworth Alvord, The Mississippi Valley in British Politics: A Study of
the Trade, Land Speculation, and Experiments in Imperialism Culminating in the
American Revolution (New York: Russell & Russell, 1959), pp. 50-51.
Thomas A. Bailey, A Diplomatic History of the American People, 7th ed. (New
York: Meredith Publishing Co., 1964), p. 26.
. Oscar Theodore Barck, Jr., and Hugh Talmage Lefler, Colonial America, 2d ed.
(New York: Macmillan, 1968), pp. 490-91.
. Richard M. Ketchum, ed., The American Heritage Book of the Revolution (New
York: American Heritage Publishing, 1971), p. 56.
. Barck and Lefler, Colonial America, p. 493.
. Michael Kraus, The United States to 1865 (Ann Arbor: University of Michigan
PHess,.1959), pl,
. Peter D. G. Thomas, The Townshend Duties Crisis: The Second Phase of the Amer-
ican Revolution 1767-1773 (Oxford: Clarendon Press, 1987), p. 3.
. Alvord, Mississippi Valley in British Politics, p. 51.
. William MacDonald, ed., Documentary Source Book of American History
1606-1926, 3d ed. (New York: Macmillan, 1926), p. 140.
. Sir Lewis Namier and John Brooke, Charles Townshend, (New York: St. Mar-
tin’s Press, 1964), p. 90.
. Samuel Eliot Morison and Henry Steele Commager, Growth of the American
Republic, 5th ed., vol. 1 (New York: Oxford University Press, 1962), p. 165.
. Robert H. Ferrell, American Diplomacy: A History (New York: W. W. Norton,
1959), p. 6.
. Peter Cunningham, ed., The Letters of Horace Walpole, Fourth Earl of Oxford,
vol. 5 (Edinburgh: John Grant, 1906), p. 64.
. Barck and Lefler, Colonial America, p. 520.
. Morison and Commager, Growth of the American Republic, p. 167.
. Kraus, United States to 1865, p. 202.
. Morison and Commager, Growth of the American Republic, p. 176.
30.
3
32.
33%
34.
3s
36.
Ta
38.
39.
40.
ae
22.
48.
49.
50.
Notes 341
Ketchum, Revolution, p. 71.
James Thomas Flexner, George Washington and the New Nation (1783-1793)
(Boston: Little, Brown and Co., 1970), p. 69.
Flexner, New Nation, p. 73.
John Z. Fitzpatrick, ed., The Writings of George Washington from the Original
Manuscript Sources 1745-1799, vol. 27 (Washington, D.C.: Government Print-
ing Office, 1938) p. 475.
Flexner, New Nation, p. 73.
Ibidp- 81.
Morison and Commager, Growth of the American Republic, p. 266.
Ibid., pp. 274-75.
William B. Willcox, ed., The Papers of Benjamin Franklin, vol. 21 (New Haven,
Conn.: Yale University Press, 1978), p. 175.
Merrill D. Peterson, Thomas Jefferson and the New Nation: A Biography (New
York: Oxford University Press, 1970), p. 290.
William Hawkins, “The Anti-History of Free Trade Ideology,” America Asleep:
The Free Trade Syndrome and the Global Economic Challenge (Washington, D.C.:
U.S. Industrial Council Education Foundation, 1991), p. 62.
Dumas Malone, Jefferson the Virginian: Jefferson and His Time (Boston, Little,
Brown and Co., 1948), p. 384.
The Constitution of the United States with Index and the Declaration of Independence
(Washington, D.C.: Commission on the Bicentennial of the United States
Constitution, 1991), p. 8.
. Documentary History of the Constitution of the United States of America, vol. 2
(Washington, D.C.: Department of State, 1894), p. 1.
. James Thomas Flexner, Washington, the Indispensable Man (Boston: Little,
Brown and Co., 1974), p. 387.
. Ibid., pp. 385-86.
. Charles F Hobson and Robert A. Rutland, eds., The Papers of James Madison,
vol. 12 (Charlottesville: University Press of Virginia, 1979), pp. 64-65.
. John M. Dobson, Two Centuries of Tariffs: The Background and Emergence of the
U.S. Trade Commission (Washington, D.C.: Government Printing Office,
1976), pp. 6-7.
W. W. Abbot and Dorothy Twohig, eds., The Papers of George Washington,
Presidential Series, vol. 4 (Charlottesville: University Press of Virginia, 1993),
p. 544.
John Steele Gordon, Hamilton’s Blessing: The Extraordinary Life and Times of
Our National Debt (New York: Walker and Co., 1997), pp. 18-19.
Morton J. Frisch, ed., Selected Writings and Speeches of Alexander Hamilton
(Washington, D.C.: American Enterprise Institute for Public Policy Research,
1985), pp. 313-14.
51.
342 Notes
Arthur Hendrick Vandenberg, The Greatest American (New York: G. P. Put-
nam’s Sons, 1921), p. 200.
. Douglas Southall Freeman, Patriot and President, vol. 6 of George Washington:
A Biography (New York: Charles Scribner’s Sons, 1954), p. 195; Stephen De-
catur, Jr., Private Affairs of George Washington (Boston: Houghton Mifflin,
1933), p. 7.
. Freeman, Patriot and President, p. 188.
. Decatur, Private Affairs of George Washington, pp. 10-11.
. Ibid., pp. 8-9. (The Wadsworth letter may be the first time the phrase “infant
Manufactures” was used.)
_ Ibid., p. 9.
. Ibid.
Chapter 8
“JEFFERSON TO JACKSON”
. Julian P. Boyd, ed., The Papers of Thomas Jefferson, vol. 8 (Princeton, N.J.:
Princeton University Press, 1953), p. 427.
. Edwin P. Whipple, ed., The Great Speeches and Orations of Daniel Webster
(Boston: Little, Brown and Co., 1879), p. 428.
. Thomas A. Bailey, A Diplomatic History of the American People, 7th ed. (New
‘ork: Meredith Publishing Co., 1964), p. 108.
. Samuel Eliot Morison and Henry Steele Commager, The Growth of the Amer-
ican Republic, vol. 1 (New York: Oxford University Press, 1962), pp. 377-78.
. Alexander De Conde, A History of American Foreign Policy (New York: Charles
Scribner’s Sons, 1963), p. 86.
. Dictionary of American History, rev. ed. vol. 2 (New York: Charles Scribner’s
Sons), p. 16.
. H. A. Washington, ed., The Writings of Thomas Jefferson: Being His Autobiogra-
phy, Correspondence, Reports, Messages, Addresses, and Other Writings, Official and
Private, vol. 5 (New York: Derby & Jackson, 1859), p. 127; De Conde, Ameri-
can Foreign Policy, p. 92; Bailey, Diplomatic History, p. 124.
. Paul Leicester Ford, ed., The Works of Thomas Jefferson, vol. 9 (New York: G. P.
Putmam’s Sons, 1905), p. 220.
. John Steele Gordon, Hamilton’s Blessing: The Extraordinary Life and Times of
Our National Debt (New York, Walker and Co., 1997), pp. 44-45.
. Ibid. p. 45.
id.
LZ.
Papers of Thomas Jefferson, vol. 8, p. 332
Robert J. Taylor, ed., Papers of John Adams, vol. § (Cambridge: Harvard Uni-
versity Press, 1983), p. 145.
8),
er
Ne,
16.
A
18.
19.
20.
zil
22:
25.
Uae.
25.
26.
27.
28.
29
30.
3
32.
39
r
35.
36:
37.
Notes 343
Writings of Thomas Jefferson, vol. 6, p. 431.
Works of Thomas Jefferson, vol. 11, pp. 502, 504-05.
Ibid., p. 505.
J. B. Condliffe, The Commerce of Nations (New York: W. W. Norton, 1950),
pee
Ravi Batra, The Great American Deception: What Politicians Won’t Tell You About
Our Economy and Your Future (New York: John Wiley & Sons, 1996), pp.
117-19.
Emory R. Johnson et. al., History of Domestic and Foreign Commerce of the United
States, vol. 2 (Washington, D.C.: Carnegie Institute of Washington, 1915),
p. 35; Jacob Viner, Dumping: A Problem in International Trade (New York: Au-
gustus M. Kelley, 1966), p. 42.
William J. Gill, Trade Wars Against America: A History of United States Trade and
Monetary Policy (New York: Praeger, 1991), p. 20.
Ibid.
Charles Francis Adams, The Works of fohn Adams, Second President of the United
States: With a Life of the Author, Notes and Illustrations, vol. X (New York: AMS
Press, 1971), p. 384.
John A. Logan, The Great Conspiracy: Its Origin and History (New York: Books
for Libraries Press, 1971), p. 16; Gill, Trade Wars Against America, p. 21.
Batra, Great American Deception, p. 119.
Morison and Commager, Growth of the American Republic, vol. 1, p. 439.
John Spencer Bassett, ed., Correspondence of Andrew Jackson, vol. 3 (Washing-
ton, D.C.: Carnegie Institute of Washington, 1928), pp. 249-50.
James F. Hopkins, ed., The Papers of Henry Clay, vol. 3 (Lexington: University
of Kentucky Press, 1963), p.
Burton J. Hendrick, Bulwark of the Republic: A Biography of the Constitution
(Boston: Little, Brown and Co., 1937), p. 221.
Ibid., pp. 217, 219.
James A. Hamilton, Reminiscences of James A. Hamilton; Of Men and Events, At
Home and Abroad, During Three Quarters of a Century (New York: Charles
Scribner & Co., 1869), p. 62.
Hendrick, Bulwark of the Republic, p. 220.
Papers of fohn Adams, vol. 5, p. 79.
Ibid.
Morison and Commager, Growth of the American Republic, vol. 1, p. 475.
Henrick, Bulwark of the Republic, p. 222.
Robert A. Rutland, James Madison and the Search for Nationhood (Washington,
D.C.: Library of Congress, 1981), p. 71.
Morison and Commager, Growth of the American Republic, vol. 1, p. 477.
Hendrick, Bulwark of the Republic, p. 138.
~~ A ve S
344 Notes
. Correspondence of Andrew Jackson, vol. 3, p. 250.
. Morison and Commager, Growth of the American Republic, vol. 1, pp. 480-81.
. Marquis James, Andrew Jackson: Portrait of a President (Indianapolis: Bobbs-
Merrill, 1940), p. 235
. Morison and Commager, Growth of the American Republic, vol. 1, pp. 480-81.
. Hendrick, Bulwark of the Republic, p. 251.
. Morison and Commager, Growth of the American Republic, vol. 1, p. 481.
. Ibid, p. 482; Logan, The Great Conspiracy, p. 25.
. Marquis James, The Life of Andrew Jackson (Indianapolis: Bobbs-Merrill, 1939),
pp. 611-12.
. Ibid p.612.
. Michael Kraus, The United States to 1865 (Ann Arbor: University of Michigan
Press, 1959), p. 360.
. Gill, Trade Wars Against America, p. 26.
. Correspondence of Andrew Jackson, vol. 4 (1929), p. 506.
. Augustus C. Buell, History of Andrew Jackson: Pioneer, Patriot, Soldier, Politician,
President, vol. 2 (New York: Charles Scribner’s Sons, 1904), p. 245.
. Ibid., p. 246.
. James, The Life of Andrew Jackson, p. 153.
. Calvin Colton, ed., The Works of Henry Clay: Comprising His Life, Correspondence
and Speeches, vol. 7 (New York: G. P. Putnam’s Sons, 1904), p. 543.
. James, The Life of Andrew Jackson, p. 621.
. Ibid.
. Abid, prer.
. Ibid.
. Logan, The Great Conspiracy, p. 30
Chapter 9
THE GREAT PROTECTIONIST
. Alfred E. Eckes, Jr., Opening America’s Market: U.S. Foreign Trade Policy Since
1776 (Chapel Hill: University of North Carolina Press, 1995), p. 28.
. W. Hayden Boyers and George B. deHuszar, trans. and ed., Economic Har-
monies by Frédéric Bastiat (Princeton, N.J.: Van Nostrand Co., 1964), p. 463.
. Gabor S. Boritt, Lincoln and the Economics of the American Dream (Chicago:
University of Illinois Press, 1994), p. 94.
. Ibid., p. 101.
. Ibid., p. 130.
. Ibid., p. 107.
. Eckes, Opening America’s Market, p. 25.
Notes 345
. William H. Herndon and Jesse W. Weik, Life of Lincoln (Cleveland: Word Pub-
lishing Co., 1949), p. 86.
. Roy P. Basler, The Collected Works of Abraham Lincoln, vol. 3 (New Brunswick,
N.J.: Rutgers University Press, 1953), p. 29.
. Gabor S. Boritt, “Old Wine Into New Bottles: Abraham Lincoln and the Tar-
iff Reconsidered,” The Historian 28 (1966), p. 299.
. Ibid., p. 300.
. Ibid., p. 294.
. Ibid. p. 617.
. Minois Gazette, July 25, 1846, cited in Roy P. Basler, ed., The Collected Works of
Abraham Lincoln, vol. 1 (New Brunswick, N.J.: Rutgers University Press,
1953), p. 382.
. Ibid.
. Boritt, “Old Wine Into New Bottles,” p. 298.
. Ibid, p299.
. Collected Works of Abraham Lincoln, vol. 1, p. 313.
. Collected Works of Abraham Lincoln, vol. 2, p. 158.
. Boritt, Lincoln and the Economics of the American Dream, p. 118.
. Reinhard H. Luthin, “Abraham Lincoln and the Tariff,” American Historical
Review 49, no. 4 (July 1944), p. 615.
. Ibid., p. 613.
. Collected Works of Abrabam Lincoln, vol. 3, pp. 486-87.
. Shelby Foote, The Civil War: A Narrative, vol. 1 (New York: Random House,
1958), p. 20.
. Collected Works of Abraham Lincoln, vol. 3, p. 487.
Luthin, “Lincoln and the Tariff,” p. 614.
Ibid., p. 612.
. Collected Works of Abraham Lincoln, vol. 4, p. 49.
. Luthin, “Lincoln and the Tariff,” p. 615.
. Boritt, “Old Wine Into New Bottles,” p. 309.
. Luthin, “Lincoln and the Tariff,” p. 617.
. Ibid., p. 618.
. Ibid., p. 614.
. Collected Works of Abraham Lincoln, vol. 4, p. 125.
. Boritt, “Old Wine Into New Bottles,” p. 310.
. Luthin, “Lincoln and the Tariff,” p. 621.
. Ibid., pp. 621-26.
. Ibid., pp. 623-24.
. Boritt, “Old Wine Into New Bottles,” p. 311n.
. Collected Works of Abraham Lincoln, vol. 4, p. 214.
. Tbid., p. 213.
346 Notes
. Boritt, “Old Wine Into New Bottles,” p. 313.
. Luthin, “Lincoln and the Tariff,” p. 626.
. Samuel Crowther, America Self-Contained (Garden City, N.Y.: Doubleday,
Doran & Co., 1933), p. 39.
. Luthin, “Lincoln and the Tariff,” pp. 628-29.
. Boritt, “Old Wine Into New Bottles,” p. 315.
. Luthin, “Lincoln and the Tariff,” p. 629.
. Charles Adams, For Good and Evil: The Impact of Taxes on the Course of Civiliza-
tion (Lanham, Md.: Madison Books, 1993), p. 330.
. Marshall L. DeRosa, The Confederate Constitution of 1861: An Inquiry
into American Constitutionalism (Columbia: University of Missouri Press),
p. 139.
. Kenneth M. Stamp, ed., The Causes of the Civil War, rev. ed. (Englewood Cliffs,
N.J.: Prentice-Hall, 1974), pp. 69-70.
. Adams, For Good and Evil, p. 332.
» Ibid: p. 334.
. Ibid., p.332.
. Ibid.
. John Steele Gordon, Hamutlton’s Blessing: The Extraordinary Life and Times of
Our National Debt (New York: Walker and Co., 1997), p. 56.
. Murray N. Rothbard, “Our Two Just Wars,” Southern Partisan, third quarter
1995, p. 23.
Chapter 10
“FREE MARKETS VS. FREE [RADE”
. Nassau William Senior, Three Lectures on the Transmission of the Precious Metals
from Country to Country and the Mercantile Theory of Wealth (London: John
Murray, 1828), p. 88. |
. Philip Schaff, ed., Saint Augustine: Exposition on the Book of Psalms, vol. 7 of A
Select Library of the Nicene and Post-Nicene Fathers of the Christian Church (New
York: Brown Brothers, 1888), p. 320.
. Saint Thomas Aquinas, trans. Gerald B. Phelan, On the Governance of
Rulers (De Regimine Principum), rev. ed. (London: Sheed & Ward, 1938), pp.
118-19.
. J. D. Condliffe, The Commerce of Nations (New York: W. W. Norton & Co.,
1950), p. 99; Norman McCord, Free Trade: Theory and Prac-tice from Adam
Smith to Keynes (New York: Barnes & Noble, 1970), p. 30.
. Jay I. Olnek, The Invisible Hand: How Free Trade Is Choking the Life Out of Amer-
ica (Greenwich, Conn.: North Stonington Press, 1982), pp. 72-73.
w.
Notes 347
. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New
York: Modern Library, 1937), p. 429.
. Ibid., pp. 429-30.
. Ibid., pp. 431-32.
. Ibid., pp. 433-35.
. Ibid., pp. 435-36.
. Ian Simpson Ross, The Life of Adam Smith (Oxford: Clarendon Press, 1995),
pp. 327-28, 320.
. William R. Hawkins, “The Anti-History of Free-Trade Ideology,” America
Asleep: The Free Trade Syndrome and the Global Economic Challenge (Washington,
D.C.: U.S. Industrial Council Education Foundation, 1991), p. 46.
. Ibid.
. Ibid.
. Immanuel Kant, Perpetual Peace: A Philosophical Essay, trans. M. Campbell
Smith (Bristol, England: Thoemmes Press, 1992), p. 136.
. John C. Fitzpatrick, ed., The Writings of George Washington from the Original
Manuscript Source 1745-1799, vol. 36 (Washington, D.C.: Government Print-
ing Office, 1941), pp. 460-61.
. Arthur Harrison Cole, Industrial and Commercial Correspondence of Alexander
Hamilton, Anticipating His Report on Manufactures (New York: Augustus M.
Kelley, 1968), p. 233.
. Smith, Wealth of Nations, p. 349.
. Morton J. Frisch, ed., Selected Writings and Speeches of Alexander Hamilton
(Washington, D.C.: American Enterprise Institute, 1985), p. 314.
. Commercial Correspondence of Alexander Hamilton, pp. 231-32..
. Condliffe, Commerce of Nations, p. 246.
. Writings of Alexander Hamilton, pp. 459-60.
. Ibid.
. Arthur Hendrick Vandenberg, The Greatest American (New York: G. P. Put-
nam’s Sons, 1921), p. 347.
. Condliffe, Commerce of Nations, p. 240.
. James Mill, Elements of Political Economy, 3d ed., rev. and corrected (New York:
Augustus M. Kelley, 1965), p. 123.
. David Ricardo, The Principles of Political Economy and Taxation (London: J. M.
Dent & Sons, 1960) p. 81.
. John Stuart Mill, The Subjection of Women (Cambridge: M.I.T. Press, 1970), pp.
22, 28-29, 36-37, 48; cited by Allan Carlson, The Family in America, vol. 11,
no. 13 (Rockford, Ill.: Howard Center for Family, Religion & Society, 1997),
(Oy oe
John Stuart Mill, The Philosophy of Jobn Stuart Mill: Ethical, Political and Reli-
gious (New York: Modern Library), pp. ix, xii, xx, xxxv—xxxvi.
30.
31.
3m.
33.
34.
Bi:
36.
48.
49.
a0.
m.
S2.
I
348 Notes
Dougias A. Irwin, Against the Tide: An Intellectual History of Free Trade (Prince-
ton, N.J.: Princeton University Press, 1996), p. 128.
John Stuart Mill, Principles of Political Economy with Some of Their Applications to
Social Philosophy (Fairfield, N.J.: Augustus M. Kelley, 1976), p. 581.
Richard Ebeling, “Free Trade, Managed ‘Trade, and the State,” The Case for
Free Trade and Open Immigration (Fairfax, Va.: Future of Freedom Foundation,
1995), pel.
Genesis II: 1-9, Authorized King James Version.
Irwin, Against the Tide, pp. 128-29.
Richard Cobden, as quoted in Alfred E. Eckes, Jr., Opening America’s Market:
U.S. Foreign Trade Policy Since 1776 (Chapel Hill: University of North Carolina
Press, 1995), p. 1.
John Bright and James E. Thorold Rogers, eds., Speeches on Questions of Public
Policy by Richard Cobden, M. P., in Two Volumes, vol. 1 (London: MacMillan and
Co., 1870), pp. 362-63.
. Eckes, Opening America’s Market, p. 24.
. Bright and Rogers, Speeches by Richard Cobden, p. 363.
. Arthur Goddard, trans. and ed., Economic Sophisms, by Frédéric Bastiat (Prince-
ton, NJ.: Van Nostrand Co., 1964), p. 271.
. Hawkins, “Anti-History of Free-Trade Ideology,” p. 57.
. Ibid.
. Ibid.
. Ibid.
. Ibid., p. 45.
. Ibid., pp. 55, 43.
. Ibid.
. The Constitution of the United States and the Declaration of Independence, 15th ed.
(Washington, D.C.: Commission on the Bicentennial of the United States
Constitution), p. 35.
Rt. Hon. Thomas Babington Macaulay, M.P., Speeches in Two Volumes, vol. 2
(New York: Redfield, 1853), p. 71.
Michael Lind, “The Op-Ed History of America,” National Interest, fall 1994,
pel?
W. Stanley Jevons, The Coal Question: An Inquiry Concerning the Progress of the
Nation, and the Probable Exhaustion of our Coal-Mines, 3d ed. rev. (New York:
Augustus M. Kelley, 1965), p. 411.
Samuel Crowther, America Self-Contained (Garden City, N.Y.: Doubleday,
Doran & Co., 1933), pp. 30-31.
Condliffe, Commerce of Nations, p. 276.
Friedrich List, The National System of Political Economy 1885 (New York: Au-
gustus M. Kelley, 1966), p. 147.
i
SE
35.
56.
Sih
58.
52:
60.
6l.
62.
63.
04
65.
66.
67.
68.
69.
70.
iy
ie
US
vas
73.
Notes 349
Richard Ebeling, “The Ghost of Protectionism Past,” The Case for Free Trade
and Open Immigration, op. cit., p. 73.
List, Political Economy 1885, pp. 174-75.
Ibid., p. 144.
Hawkins, “Anti-History of Free-Trade Ideology,” p. 54; List, Political Economy
1885, p. 133:
List, Political Economy 1885, p. 144
Karl Marx and Frederick Engels, Collected Works, vol. 6 (New York: Interna-
tional Publishers, 1976), p. 465.
Richard Cobden, “England, Ireland, and America,” Free Trade and Other Fun-
damental Doctrines of the Manchester School, ed. Francis W. Hurst (New York:
Augustus M. Kelly, 1958), p. 20.
Ebeling, “Free Trade, Managed Trade, and the State,” p. 24.
William L. Law, “A Capitalist Looks at Free Trade,” The Case for Free Trade
and Open Immigration, op. cit., p. 39.
Milton and Rose Friedman, Free to Choose: A Personal Statement (New York:
Harcourt Brace Jovanovich, 1980), p. 45.
James F. Hopkins, ed., The Papers of Henry Clay (Lexington: University of Ken-
tucky Press, 1961), vol. 2, pp. 826-47; cited by Alfred E. Eckes, “Reviving the
Grand Old Paradigm,” America Asleep: The Free Trade Syndrome and the Global
Economic Challenge (Washington, D.C.: U.S. Industrial Council Education
Foundation, 1991), p. 77.
Ebeling, “Free Trade, Managed Trade, and the State,” p. 9.
Ludwig von Mises, Omnipotent Government: The Rise of the Total State and Total
War (New York: Yale University Press, 1944), pp. 91-92.
Bertrand Russell, A History of Western Philosophy and Its Connections with Politi-
cal and Social Circumstances from the Earliest Times to the Present Day (New York:
Simon & Schuster, 1945), p. 251.
Lind, “The Op-Ed History of America,” p. 23.
Elizabeth John, ed., The Collected Writings of fohn Maynard Keynes, vol. 17
(London: MacMillan, 1977), p. 451.
Donald Moggridge, ed., The Collected Writings of John Maynard Keynes, vol. 19
(London: MacMillan, 1981), pp. 151-52, 156.
The Collected Writings of John Maynard Keynes, vol. 9 (London: MacMillan,
1972), p237.
Ibid.
Donald Moggridge, ed., The Collected Writings of John Maynard Keynes, vol. 20
(London: MacMillan, 1980), p. 508.
Ibid., p. 379.
Donald Moggridge, ed., The Collected Writings of fohn Maynard Keynes, vol. 21
(London: MacMillan, 1982), pp. 233-34.
way
~)
°
350 Notes
. Olnek, The Invisible Hand, p. 55.
. Herman St. John-Stevas, ed., The Collected Works of Walter Bagehot, vol. 11
(London: The Economist, 1978), p. 224.
Irwin, Against the Tide, p. 227.
Friedman, Free to Choose, p. 39.
Chapter 11
THE TIME OF THE PROTECTIONISTS”
. Alfred E. Eckes, Jr., Opening America’s Market: U.S. Foreign Trade Policy Since
1776 (Chapel Hill: University of North Carolina Press, 1995), p. 30.
The Congressional Globe: Containing Speeches, Important State Papers, Laws, Etc.,
of the Third Session, Thirty-Fourth Congress, Appendix (Washington, D.C.: John
C. Rives, 1857), p. 226.
The Congressional Globe: Containing Speeches, Important State Papers, Laws, Etc.,
of the First Session of the Thirty-Sixth Congress, Apr. 25, 1860, issue (Washing-
ton, D.C.: John C. Rives, 1860), p. 1832.
Charles W. Calhoun, “Political Economy in the Gilded Age: The Republi-
can Party’s Industrial Policy,” Journal of Political History 8, no. 3 (1996),
pe293.
Edmund Morris, The Rise of Theodore Roosevelt (New York: Coward, McCann
& Geoghegan, 1979), p. 386.
Calhoun, “Political Economy in the Gilded Age,” p. 295.
Margaret Leech, In the Days of McKinley (New York: Harper & Brothers,
1959), p. 40.
Calhoun, “Political Economy in the Gilded Age,” p. 295.
Ibid.
. Thomas A. Bailey, A Diplomatic History of the American People, 7th ed. (New
York: Meredith Publishing Co., 1964), p. 405.
. Leech, In the Days of McKimley, p. 36-37.
. Ibid., p. 7.
. Bailey, Diplomatic History, p. 460.
Eckes, Opening America’s Market, p. 31.
. id:
. Ralph K. Andrist, ed., The American Heritage History of the Confident Years (New
York: American Heritage Publishing Co., 1969), p. 252.
. Ibid: pp: 252-53.
. Ibid., p. 253.
Leech, In the Days of McKinley, p. 48.
Eckes, Opening America’s Market, p. 33.
4o.
Notes 351
. Alfred E. Eckes, Jr., “Cobden’s Pyhrric Victory,” Chronicles, Oct. 15, 1995,
p lo.
. John Steele Gordon, Hamilton’s Blessing: The Extraordinary Life and Times of
Our National Debt (New York: Walker and Co., 1997), p. 86.
. Ibid., pp. 76, 82.
. Andrist, The Confident Years, p. 251.
. Leech, In the Days of McKinley, p. 62.
. Foster Rhea Dulles, The United States Since 1865 (Ann Arbor: University of
Michigan Press, 1959), p. 152.
. David Ward Wood, History of the Republican Party and Biographies of Its
Supporters (Chicago: Lincoln Engraving and Publishing Company, 1895),
Calhoun, “Political Economy in the Gilded Age,” pp. 303-04.
. Leech, In the Days of McKinley, p. 89.
. Genevieve Forbes Herrick and John Origen Herrick, The Life of William Jen-
nings Bryan (Chicago: Buxton Publishing House, 1925), pp. 123-24.
. Leech, In the Days of McKinley, p. 92.
Dulles, United States Since 1865, p. 153.
. Eckes, Opening America’s Market, p. 34.
Ibid.
Ibid.
Ibid.
W. Ross Yates, Josepb Wharton: Quaker Industrial Pioneer (Bethlehem, Pa.:
Lehigh University Press, 1987), p. 182.
. Ibid.
abid p91.
. Michael Lind, “The Op-Ed History of America,” National Interest, fall 1994,
pp. 20-21.
. Dulles, United States Since 1865, p. 56.
Ibid., p. 64.
. Ravi Batra, The Myth of Free Trade: A Plan for America’s Economic Revival (New
York: Charles Scribner’s Sons, 1993), p. 136. (As source, Batra used the Histor-
ical Statistics of the United States, 1975.)
. Gordon, Hamilton’s Blessing, p. 90.
. Eckes, Opening America’s Market, p. 55.
. “Average Annual and Daily Earnings of Nonfarm Employees: 1860 to 1900,”
U.S. Census Bureau, Historical Statistics of the United States Bicentennial Edition,
p. 165.
Eckes, Opening America’s Market, p. 50.
67.
68.
69.
3972 Notes
r Tork, p.52.
. bid p. 51.
. Ibid., p. 55.
. Wid. p. 53.
. Henry Kissinger, Diplomacy (New York: Simon & Schuster, 1994), p. 37.
. Samuel Eliot Morison and Henry Steele Commager, The Growth of the Amer-
ican Republic, vol. 2 (New York: Oxford University Press, 1962), pp. 440-41.
Samuel Eliot Morison, The Oxford History of the American People (New York:
Oxford University Press, 1965), p. 789.
. Alfred E. Eckes, Jr., “William McKinley: A Leader for the Next Century,” An
Address to the McKinley Centennial Conference, Ohio Historical Society,
March 15, 1997.
Ibid. (Washington Post, Nov. 7, 1900, p. 6.)
Ibid. (New York Times, Nov. 7, 1900, p. 8.)
. Batra, Myth of Free Trade, p. 132.
. Paul Bairoch, Economics and World History: Myths and Paradoxes (Chicago: Uni-
versity of Chicago Press, 1993), p. 170.
. Ibid., pp. 170-71.
. Eckes, Opening America’s Market, p. 51.
. Peter Clarke, Hope and Glory: Britain 1900-1990 (London: Penguin Press,
1996), p. 9.
. Eckes, Opening America’s Market, pp. 59-60.
. Joseph Chamberlain, preface to The Case Against Free Trade, by John Murray
(London, 1911), cited by William Gill, Trade Wars Against America: A History
of United States Trade and Monetary Policy (New York: Praeger, 1991), p. vii.
Sidney Pollard and Colin Holmes, eds., National Power and Industrial Rivalry
1870-1914, vol. 2 of Documents of European Economic History (New York: St.
Martin’s Press, 1972), p. 196.
Otto Scott, Otto Scott's Compass 6, issue 69 (May 1, 1996), p. 11.
Charles S. Olcott, William McKinley, vol. 2 (Boston: Houghton Mifflin, 1916)
pp. 379-82.
Chapter 12
“THE GREAT SMOOT-HAWLEY MYTH”
. James Bennet, “In Denver for Economic Talks, Clinton Calls for Freer Trade,”
New York Times, June 20, 1997, p. A10.
. Elting E. Morison, ed., The Letters of Theodore Roosevelt, vol. 1 (Cambridge:
Harvard University Press, 1951), p. 504.
. Ibid.
Notes 353
4. Elting E. Morison, ed., The Letters of Theodore Roosevelt, vol. 14 (Cambridge:
Harvard University Press, 1951), p. 934.
S. bidi p- 932.
6. Ibid., p 933.
7. Thomas Hudson McKee, The National Conventions and Platforms of All Political
Parties, 1789-1905 (Baltimore, Md.: Friedenwald Co., 1906), p. 369.
8. The Public Papers and Addresses of Franklin D. Roosevelt, vol. 1 (New York: Ran-
dom House, 1938), p. 766.
9, William J. Gill, Trade Wars Against America: A History of United States Trade and
25.
26.
Monetary Policy (New York: Praeger, 1990), p. 48.
. John Steele Gordon, Hamilton’s Blessing: The Extraordinary Life and Times of
Our National Debt (New York: Walker and Co., 1997), pp. 96-98.
. Albert Bushnell Hart and Herbert Ronald Ferleger, eds., Theodore Roosevelt
Cyclopedia (Westport, Conn.: Meckler Corp., 1989), p. 599.
. Arthur S. Link, ed., The Papers of Woodrow Wilson, vol. 23 (Princeton, N.J.:
Princeton University Press, 1977), p. 649.
. Alfred E. Eckes, Jr., Opening America’s Market: U.S. Foreign Trade Policy Since
1776 (Chapel Hill: University of North Carolina Press, 1995), p. 35.
. John M. Dobson, Two Centuries of Tariffs: The Background and Emergence of the
U.S. International Trade Commission (Washington, D.C.: U.S. International
Trade Commission, 1976), p. 31.
. Thomas A. Bailey, A Diplomatic History of the American People, 7th ed. (New
York: Meredith Publishing Co., 1964), p. 615.
. Gordon, Hamilton’s Blessing, p. 103.
. Eckes, Opening America’s Market, p. 43.
. Rudyard Kipling, Rudyard Kipling’s Verse: Inclusive Edition 1885-1926 (Garden
City, N.Y.: Doubleday, Doran & Co., 1936), pp. 830-31.
. James West Davidson, William E. Gienapp, Christine Leigh Heyrman et al.,
Nation of Nations (New York: Knopf, 1991), p. 906.
. Derek Alderoft, From Versailles to Wall Street, 1919-1929 (Berkeley: University
of California Press, 1981), pp. 298-300.
. Gordon, Hamilton’s Blessing, p. 111.
. Eckes, Opening America’s Market, p. 31.
. Donald Bruce Johnson and Kirk H. Porter, compilers, National Party Plat-
forms, 1840-1972 (Urbana: University of Illinois Press, 1973), pp. 271-72.
. Samuel I. Rosenman, compiler, The Public Papers and Addresses of Franklin D.
Roosevelt, vol. 1 (New York: Random House, 1938), p. 724.
Papers of Franklin D. Roosevelt, vol. 1, p. 767.
Public Papers of the Presidents of the United States: Herbert Hoover, January 1,
1932-—March 4, 1933 (Washington, D.C.: Government Printing Office, 1977),
p. 366.
Va
28.
29.
30.
ri.
5B.
59.
34.
35 .
36.
87.
38.
35.
40.
4i.
ao.
354 Notes
Ibid., p. 476.
Ibid., p. 534.
Papers of Franklin D. Roosevelt, vol. 1, p. 853.
Ferris Bueller’s Day Off (Paramount Pictures, 1986).
“Excerpts From the Free Trade Debate Between Gore and Perot,” New York
Times, Nov. 10, 1993, p. B16.
“Al Gore’s Big Knockout,” Wall Street Journal, Nov. 11, 1993, p. A14.
“NAFTA: A Defining Moment for America,” Business Week, Nov. 22, 1993,
p. 146.
The following section is based almost entirely on the documentary evidence in
Eckes’s Chapter 4, pp. 100-39.
Ravi Batra, The Great American Deception: What Politicians Won't Tell You About
Our Economy and Your Future (New York: John Wiley & Sons, 1996), p. 76.
Gordon, Hamilton’s Blessing, pp. 116-17.
A. G. Kenwood and A. L. Lougheed, The Growth of the International Economy
1820-1960 (London: Allen and Unwin, 1971), p. 186.
Correli Barnett, The Collapse of British Power (New York: Morrow, 1971),
p. 120.
Paul Bairoch, Economics and World History: Myths and Paradoxes (Chicago: Uni-
versity of Chicago Press, 1993), p. 4.
Cordell Hull, The Memoirs of Cordell Hull, vol. 1 (New York: Macmillan, 1948),
p. 355:
Eckes, Opening America’s Market, p. 31.
Alfred E. Eckes, Jr., “Cobden’s Pyrrhic Victory,” Chronicles, May 1995, p. 16.
Book Three
‘THE COUNTERREVOLUTION AND THE
CoMING OF A NEw PoPULISM
Chapter 13
“1933-93”
. Sam Crowther, America Self-Contained (Garden City, N.Y.: Doubleday, Doran
& Co., 1933), pp. 45.
. Alfred E. Eckes, Jr., Opening America’s Market: U.S. Foreign Trade Policy Since
1776 (Chapel Hill: University of North Carolina Press, 1995), p. 177.
Notes 355
Chapter 14
(15 2
COUNTERREVOLUTION
. John J. Sweeney, America Needs a Raise (New York: Houghton Mifflin, 1996),
p 93.
. Kevin Goldman, “NAFTA Friends, Foes Blitz Public With Ads,” Wall Street
Journal, Sept. 16, 1992, p. B6.
. Henry A. Kissinger, “The Trade Route; NAFTA a Step Toward a Prosperous
World Order,” Cleveland Plain Dealer, July 18, 1993, p. 1C.
. Ronald A. Taylor, “Clinton Brings Out Big Trade Guns: Bush, Carter, Ford,
Turn Out at White House for NAFTA,” Washington Times, Sept. 15, 1993,
p. Al.
. Gwen Ifill, “Clinton Recruits 3 Presidents to Promote Trade Pact,” New York
Times, Sept. 15, 1993, pabil2.
6. Ibid.
15,
16.
17:
18.
. Ann Devroy, “Clinton Enlists Predecessors in Fight for Trade Agreement,”
Washington Post, Sept. 15, 1993, p. Al.
. Kissinger, “The Trade Route,” p. 1C.
. Paul Gigot, “GOP NAFTA Choice: Reagan or Smoot-Perot?” Wall Street
Journal, Sept. 17, 1993, p. A10.
. “For NAFTA,” New Republic, Oct. 11, 1993, p. 8.
. Patrick J. Buchanan, “Why Elites Show Teeth for NAFTA,” Washington Times,
gepte22,1093, p-A21.
. Patrick J. Buchanan, “Taste of Victory for an Unlikely Coalition, Washington
Times, Nov. 19, 1993, p. A20.
. “How Can Gingrich Support the WTO?” Human Events, Dec. 2, 1994, p. 3.
. Lew Rockwell, Free Market Letter (Auburn, Ala.: Ludwig von Mises Institute,
1994), quoted by Patrick J. Buchanan, “Bill Swipes a GOP Issue,” New York
Post, Feb. 19, 1994.
William Drozdiak, “Historic Trade Pact Signed, But Global Tensions Persist,”
Washington Post, Apr. 16, 1994, p. A12.
Peter Brimelow, Alien Nation: Common Sense About America’s Immigration Dis-
aster, with a New Afterword by the Author (New York: Harper Perennial, 1995),
prg.
Chris Whalen, Financial Times, Jan. 14, 1997, op-ed pg.
Pat Choate and Charles McMillion, The Mysterious US Trade Deficit, (Wash-
ington, D.C.: Manufacturing Policy Project, 1997), p. 7; Marcy Kaptur, testi-
mony before the House Committee on International Relations, Subcommittee
on the Western Hemisphere, Subcommittee on International Economic Pol-
icy and ‘Trade, March 5, 1997.
4h.
356 Notes
. Joel Millman, “Asian Investment Floods Into Mexican Border Region,” Wall
Street Journal, Sept. 6, 1996, p. A10.
. “Halloween for NAFTA,” Wall Street Journal, Sept. 9, 1993, p. A20.
. “ABC Nightline Reveals DEA Hid Information on Mexican Drug Smuggling
During 1993 NAFTA Debate,” News from the New Teamsters, May 8, 1997.
. Kissinger, “The Trade Route,” p. 1C.
. Alan Tonelson, “NAFTA Backers’ Flawed Excuses,” Washington Times, Mar.
28; 1997.
. Sam Dillon, “Peso Crisis Bites Into Mexico’s Long-Ruling Party,” New York
Times, July 4, 1997, p. A3.
. Mark Falcoff, “Mexico’s Midterm Elections: A Major Turning Point?” Ameri-
can Enterprise Institute, July-Aug. 1997, p. 1.
. Brimelow, Alien Nation, p. 282.
. Lorraine Woellert, “Tainted Strawberries Case Revives Battle over Free
Trade,” Washington Times, June 22, 1997, p. A5.
. Brooke A. Masters, “Food Poisoning Is Linked to Basil Products; 126 Fell Ill
After Eating Dishes from Sutton Place, Officials Say,” Washington Post, July 19,
1997, pp. B1, B6.
. Sandra G. Boodman, “Forbidding Fruit: How Safe Is Our Produce?” Wash-
ington Post, July 8, 1997, p. Z10.
. Reuters, Washington Post, June 22, 1977, p. A4.
. Wendy Lin, “How Safe Is Your Food?” Newsday, Aug. 13, 1997, p. B21.
. Marian Burros, “Safety in Numbers? Hardly; Debate Fires Up for Merger of
U.S. Food Inspection Agencies,” Pittsburgh Post-Gazette, Apr. 17, 1997, p. F1.
. “Fare Trade,” The Economist, May 17, 1997, p. 20.
. “Free Trade Gets an Unfriendly Reception,” Business Week, Sept. 29, 1997,
p. 34.
. Arthur Schlesinger, Jr., “Bye, Bye, Woodrow,” Wall Street Journal, Oct. 27,
1993, p. A16.
. Debora Wiley, “The Little Toy Firm That Could,” Gannett News Service,
Sept. 29, 1992.
. Tid
. “Ertl Named to Farm Toy Hall of Fame,” Playthings, Jan. 1993, p. 14.
. Steve Webber, “Lawmakers Say State Can Do Little to Help,” Dubuque Tele-
graph Herald, Oct. 11, 1995, p. A3.
. Jean T. Levine, “Two Lords Master the Art of Running Firms on Both Sides
of the Pond,” Business for Central New Jersey, Apr. 28, 1993, p. 5.
“Ertl to Lay Off 300 in Iowa,” Reuters Financial Service, Oct. 5, 1995.
Oo o N
21.
22
Notes 357
Chapter 15
“A New NATIONALISM”
. The Works of Daniel Webster, vol. 4 (Boston: Little and Brown, 1851),
p. 310.
. Samuel Crowther, America Self-Contained (Garden City, N.Y.: Doubleday,
Doran & Co., 1933), p. 16.
. The Economic Report of the President, 1995.
. Ludwig von Mises, Human Action: A Treatise on Economics (New Haven, Conn.:
Yale University Press, 1949), p. 195.
. Ambrose Bierce, The Devils Dictionary (New York: Sagamore Press, 1957),
p. 189.
. Ernest Renan, The Poetry of the Celtic Races, and Other Studies (Port Washing-
ton, N.Y.: Kennikat Press, 1970), pp. 80-81.
. E. Christian Kopff, “The Future Belongs to Us,” Chronicles, Oct. 1995, p. 33.
. Renan, Poetry of the Celtic Races, p. 79.
. Kopff, “The Future Belongs to Us,” p. 33.
. Andrew Gowers and David Buchan, “Balladur Calls for EU Action Against
‘Unfair’ Trade,” Financial Times, Dec. 31, 1993, p. 1.
. Will Carrington Heath, “Mises, Roépke and the Fact/Value Distinction,”
Roépke Review, winter/spring 1997, p. 13.
. Wilhelm Roépke, A Humane Economy: The Social Framework of the Free Market
(Chicago: Henry Regnery Co., 1960), p. 91.
Mbid. p. 12.
. Louis R. Harlan, ed., The Booker T: Washington Papers, vol. 1 (Urbana: Univer-
sity of Illinois Press, 1972), p. 331.
. Ibid., p. 332.
. Ibid.
. Vernon M. Briggs, Jr., Mass Immigration and the National Interest (Armonk,
N.Y.: M. E. Sharpe, 1992), pp. 91-92.
. James Fallows, “How the World Works,” Atlantic, Dec. 1993, p. 82.
. John P. Cregan, “Free Trade Syndrome and America’s Economic Disarma-
ment,” America Asleep: The Free Trade Syndrome and the Global Economic Chal-
lenge (Washington, D.C.: United States Industrial Council Educational
Foundation, 1991), p. 28.
. Greg McDonald, “White House Dream Is Over; Gramm Rips Buchanan,
etc.,” Houston Chronicle, Feb. 15, 1996, p. 1.
Lori Stahl, “Gramm Reflects on Presidential Bid, Says Louisiana Loss Marked
the End,” Dallas Morning News, Feb. 17, 1996, p. 35A.
Gerald F. Seib and John Harwood, “Disparate Groups on Right Join Forces to
358 Notes
Make Opposition to China’s Trade Status a Key Issue,” Wall Street Journal,
June 10, 1997, pxA20.
. Ibid.
. James A. Dorn, “Trade and Human Rights: The Case of China,” Freedom to
Trade: Refuting the New Protectionism (Washington, D.C.: Cato Institute, 1997),
py 70:
. Jacob G. Hornberger, preface to The Case for Free Trade and Open Immigration
(Fairfax, Va.: Future of Freedom Foundation, 1995), p. viii.
. Francis A. Walker, Political Economy (New York: Henry Holt and Co., 1888),
p. 520.
. Richard M. Ebeling, ed., Money, Method, and the Market Process: Essays by Lud-
wig von Mises (Norwell, Mass.: Kluwer Academic Publishers, 1990), p. 145.
. Roy P. Basler, ed., The Collected Works of Abraham Lincoln, vol. 1 (New
Brunswick, N.J.: Rutgers University Press, 1953), p. 312.
. Dbad.yp. 3 M-
. Sidney Pollard and Colin Holmes, eds., National Power and Industrial Rivalry
1870-1914, vol. 2 of Documents from European Economic History (New York: St.
Martin’s Press, 1972), pp. 191-92.
. Ibid., p. 194.
. Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Mili-
tary Conflict from 1500 to 2000 (New York: Random House, 1987), p. 202.
. Jay Olnek, The Invisible Hand: How Free Trade Is Choking the Life Out
of America, 2d ed. (Riverdale, N.Y.: North Stonington Press, 1984), p. 24.
. Herman Hagedorn, ed., The Works of Theodore Roosevelt, vol. 17 (New York:
Charles Scribner’s Sons, 1925), pp. 501-02.
. “Canada’s Trade Surplus Set Record in August,” Wall Street Journal, Oct. 21,
1996, p. A4.
. International Trade Reporter 14, January 15, 1997, p. 76.
. Greg Mastel, “The Art of the Steal,” Washington Post, Feb. 19, 1995, p. C3.
. Pat Choate and Charles McMillion, The Mysterious US Trade Deficit (Wash-
ington, D.C.: Manufacturing Policy Project, 1997), p. 10.
. Richard Holman, compiler, “World Wire: China Snaps Up U.S. Bonds,” Wall
Street Journal, Oct. 18, 1996, p. A14.
. David Wessel, “Rubin Presses China to Buy U.S. Goods, ‘Trim Reserves,” Wall
Street Journal, Sept. 29, 1997, p. A19.
. Choate and McMillion, Mysterious US Trade Deficit, p. 11.
. Ravi Batra, The Myth of Free Trade: A Plan for America’s Economic Revival (New
York: Charles Scribner’s Sons, 1993), p. 97.
. “Down, But Not Out: Japanese Investment in Mexico Plans to Stay,” Business
Mexico, Aug. 1995, p. 9.
. “Amalgamated Clothing and Textile Workers Union Press Conference Tran-
45.
46.
47.
48.
49.
50.
ol,
52.
53.
54.
Bole
56:
S
58.
59.
Notes 359
script,” News from the AFL-CIO (Washington, D.C.: AFL-CIO, October 31,
1977), p. 6.
Ludwig von Mises, Planning for Freedom, 4th ed. (South Holland, Tl.: Liber-
tarian Press, 1980), p. 207.
Ibid., pp. 196, 208.
Sir James Goldsmith, The Response (self-published, 1995), p. 19.
Von Mises, Planning for Freedom, p. 214.
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New
York: Modern Library, 1937), p. 485.
Erik R. Pages, Responding to Defense Dependence: Policy Ideas and the American
Defense Industrial Base (Westport, Conn.: Praeger, 1996), p. 11.
William J. Crowe, Jr., “Strategic Supplies Depend on U.S. Industries,” Wash-
ington Post, Dec. 19, 1991, p. A20.
Pages, Responding to Defense Dependence, p. 17.
“Defense Industrial Security: Weaknesses in U.S. Security Arrangements with
Foreign-owned Defense Contractors,” GAO/NSIAD (Washington, D.C.:
General Accounting Office, February 1996), p. 21.
Pages, Responding to Defense Dependence, p. 150.
Smith, Wealth of Nations, p. 352.
Bill Archer, “Would It Be a Good Idea to Replace the Income Tax with a Con-
sumption Tax?” Insight, Sept. 23, 1996, p. 26.
Choate and McMillion, Mysterious US Trade Deficit, p. 9.
Christopher Lasch, The Revolt of the Elites and the Betrayal of Democracy (New
York: W. W. Norton, 1995), pp. 48-49.
Jeffrey O. Nelson, “Missionary of Culture,” Intercollegiate Review, fall 1996,
p. 18.
INDEX
ACC] (American Chamber of Commerce
in Japan), 305
ACTPN (Advisory Committee for Trade
Policy and Negotiations), 102-03, 104
Acts of Trade and Navigation, 118, 176
Adams, Charles, 172
Adams, Henry, 216
Adams, John: Boston Massacre and, 122;
Boston Tea Party and, 123; free trade
and, 140; on imports, 143; independence
and, 192; Kentucky and Virginia Resolves
and, 149; on Sugar Act, 119; Washington
and, 134, 180
Adams, John Quincy, 148, 150
Adams, Samuel, 123
Advisory Committee for Trade Policy and
Negotiations (ACTPN), 102-03, 104
Affluent Society, The (Galbraith), 6
Africa, 33, 302
African Americans, 290-91
agriculture: European markets and, 35;
Great Britain and, 29, 159; Hamilton
and, 182; industry and, 311; Jefferson on,
128, 130, 147; List and, 195; prices in,
227; slavery and, 130; South and, 147;
tariffs and, 241
Airbus Industrie, 47, 199
aircraft industry, 46-48, 199
Alabama, 171
Alcoa, 98
Aldrich, Nelson, 234, 252
Alleman, Thelma, 4
Allied Signal, 65
allies: aircraft industry and, 47; Cold War
and, 26, 258, 259; trade concessions to,
15, 28, 29, 33; U.S. markets open to, 32,
258
Ambrister, Robert, 150, 152
America First Committee, 263
American Chamber of Commerce in Japan
(ACCJ), 305
American Commercial Policy (Rabbeno), 143
American Motors, 81
American Revenue Act of 1764, 119
American System, 145, 146
America’s elite: economic philosophy of,
16; Global Economy and, 14-15, 111,
259; NAFTA and, 273; U.S. decline and,
19; working class and, 291, 292. See also
transnational elite
Amery, Julian, 227
Annapolis Convention of 1786, 127
Anti-Corn Law League, 188
antifriction-bearings industry, 37
Arbuthnot, Alexander, 150, 152
Archer, Bill, 322
Argentina, 55, 86, 284
Arizona, 7
Armey, Richard, 232, 294
Arnold, Hap, 79
Arthur, Chester, 206, 207—08, 209
Articles of Confederation, 126, 129
Ashurst, Henry, 243
Asia: corporate income tax and, 322;
defense spending and, 317; financial crisis
in, 70; food safety and, 275; General
Motors in, 86; global hiring hall and,
61-62; manufacturing jobs and, 42, 254,
NAFTA and, 270; political corruption
and, 50, 113; prosperity of, 37; trade
concessions to, 33; U.S. markets and,
89-90, 155; wages in, 112, 301
Asian Development Bank, 315
AT&T, 100
Augustine, Saint, 175
Austin, Benjamin, 141
Australia, 184, 249
Austria, 52
362
Austria-Hungary, 224
automobile industry: Auto Pact of 1965
and, 83-86; decline of, 77-81, 199;
history of, 75-77; in Japan, 81-82;
Japanese imports’ effects on, 7-8, 82,
87-91, 304-05; Kennedy Round and, 37;
in Mexico, 86, 310; NAFTA and, 269-70
production in, 304-05; of South Korea,
90-91, 310; voluntary export restraint
and, 40
Auto Pact of 1965, 83-86
Bagehot, Walter, 205
Bairoch, Paul, 38, 226-27
Baldanzi, George, 35
Ball, George W., 32-33, 106
Balladur, Edouard, 288
Bartley, Robert, 74, 93, 106
Bastiat, Frédéric: free trade and, 175,
190-91, 192; on free trade and peace, 61,
191, 238; on protectionism, 156, 199
BCCI, 113
Beagles, Bill, 305
Belgium, 23, 75, 238, 249
Belloc, Hilaire, 3
Bentham, Jeremy, 175, 201
Benton, Thomas Hart, 152-53
Between Two Ages (Brzezinski), 105
Beveridge, William, 204
Biddle, Nicholas, 48
Bierce, Ambrose, 285
Bilderberg group, 32
Bismarck, 140, 197, 228, 300
Blaine, James G., 160, 168, 209, 214
Blake, William, 67, 147
BMW, 91-92, 300, 304
Boeing, 47—48, 65, 100-01, 306
Bolivia, 27
Bonior, David, 261
Border Patrol, U.S., 317
Boritt, Gabor S., 157, 160, 169, 170
Boston Massacre, 122
Boston Tea Party, 123
Brady, Nicholas, 87, 88
Brazil, 23, 38, 55, 70, 284
Breaux, Jonas, 5
Bretton Woods agreement, 23, 37, 298
Briggs, Vernon, 291
Bright, John, 159
British East India Company, 123
Brookings Institution, 263
Brougham, Lord, 142
Brown, Jerry, 261
Bryan, William Jennings, 219-20, 225
Bryce, James, 225
Brzezinski, Zbigniew, 105, 107
Buchanan, James, 159, 163, 169, 171, 236
Index
Buchanan, Patrick, 19, 260, 261, 264, 271
Buick, 76
Bulgaria, 249
Burke, Edmund, 123-24
Burr, Aaron, 183-84
Burros, Marian, 276
Bush, George: Buchanan's presidential
challenge to, 19, 260, 261; Prescott Bush
compared to, 285; exports and, 36; free
trade and, 259, 260; Gulf War and, 320;
industry and, 57-58; Japan and, 71,
87-88; NAFTA and, 262, 263;
nationalism and, 259-60
Bush, Prescott, 29, 33, 259, 285
Business Roundtable, 277
Calhoun, John C., 143-47, 148-51, 153,
209
California, 13, 156, 274
Camdessus, Michael, 69
Cameron, Simon, 167
Canada: agricultural imports from, 241;
Auto Pact of 1965 and, 83-86; ethnic
solidarity in, 113; free trade and, 108;
Great Britain arming Indians from, 139;
independence of, 73-74; merchandise
trade balance of, 311; NAFTA and, 263,
303-04; New England fishing industry
and, 28; protectionism in, 184, 286;
regional trading zone and, 284; tariffs
and, 23, 27, 286
Cannon, Joe, 214-15, 234
capital: decumulation of, 314; in Global
Economy, 54; illicit wealth transfers and,
318; in manufacturing versus shipping,
139; Mises on, 313-14, 318;
protectionism and, 314; Ricardo on,
53-54; Smith on, 52-53, 54, 181; tariffs
and, 158
capital gains tax, 296
capitalism, 3, 206
Carey, Henry C., 164, 169, 170, 193, 208
Carey, Mathew, 193
Carey, Ron, 272
Carnegie, Andrew, 206
Carter, Jimmy, 63, 263, 264
Carter, Thomas H., 214-15
Cary, Robert, 115-17
Cato Institute, 19
Center for Science in the Public Interest,
274
Chamberlain, Joseph, 227-28, 229
Chamber of Commerce, 25
Chesapeake, 138
Chesterton, Gilbert, 201
Chevrolet, 76, 304
Chile, 7
Index 363
China: comparative advantage and, 67;
defense spending and, 317; economic
nationalism of, 205, 306; free market
conditions and, 50; General Motors in,
86; manufacturing jobs and, 16, 43;
market access to, 307—08; merchandise
trade balance of, 311; protectionism of,
66; tariffs as retaliation, 178; trade and,
61, 65, 253, 306-09; U.S. markets and,
155, 296
Choate, Pat, 14
Chodorov, Frank, 58
Chrysler, 88, 305, 309
Churchill, Winston, 240
Citizens Committee for Reciprocal World
Trade, 24
Civil Rights Act of 1964, 291
Civil War: causes of, 173; Lincoln and,
170; manufacturing base and, 146;
McKinley and, 212; regional interests
and, 155; South’s secession, 169; tariffs
and, 147, 171-73, 177, 312
Clausen, A. W., 104
Clay, Henry: Adams and, 148; Calhoun
and, 14445; Compromise Tariff of 1833
and, 154, 155; economic nationalism of,
146, 159; free market and, 197; on free
trade, 205; Hamilton and, 193;
independence and, 164, 199-200; Jackson
and, 150; Lincoln and, 154, 157, 158,
159, 164, 166-67, 169; List and, 194;
South Carolina and, 153; tariffs and, 143,
151, 224; War of 1812 and, 139-40
Clayton, William L., 24-26
Cleburne, Patrick, 130
Cleveland, Grover: Blaine and, 208-10;
free trade and, 208, 210-11, 212; income
tax and, 215-16, 234; McKinley and,
209-10, 218; as president, 206, 215, 253;
Pullman Strike and, 216
Clinton, Bill: exports and, 36, 310; fast
track authority and, 276-78; free trade
and, 60, 108; GATT and, 26, 61, 266,
267-68; globalism of, 284; Japan and,
296, 298; Mexican government bailout
and, 269, 273; NAFTA and, 5, 262-63,
265, 273; weapon systems outsourcing
and, 321
Cobden, Richard: Eisenhower and, 258;
free trade and, 175, 188-93, 191, 222,
238; on free trade and peace, 58-61, 159,
190; Keynes compared to, 202; on Mill,
188; nation-states and, 108, 190, 195,
198; Wilson and, 236
Colbert, Jean-Baptiste, 50
Colden, Cadwallader, 120
Cold War: allies and, 26, 258, 259;
automobile industry and, 84-85; defense
spending and, 316; national security and,
29-30; New England fishing industry
and, 28; trade concessions and, 258
Colombia, 271-72
Commager, Henry Steele, 144
commerce, 284-85. See also trade
Common Market, 300
Communications Workers of America, 100
communism, 186, 189
Communist Manifesto (Marx), 197
Community Nutrition Institute, 275
comparative advantage, 67, 184-86
compensation principle, 186
Compromise ‘Tariff of 1833, 154, 155, 157
Comptometer, Victor, 280
computer chip industry, 41
Condit, Philip, 100-01
Confederacy, 171-72
conservatism: Bastiat and, 191; fast-track
authority and, 276, 277; free trade and,
18; New Conservatism, 258; Republican
Party and, 218; tariffs and, 213
Consumer Price Index, 64
consumers and consumption: free trade
and, 39; industrialists and, 234; liberalism
and, 196; preferences of, 51-52;
production and, 52, 68, 196-97;
protectionism and, 219; tariffs and, 296;
U.S. markets and, 199
Coolidge, Calvin, 239, 240, 252, 291, 292,
295
copper mines, 7
Copps, Sheila, 286
Corn Laws, 52, 159, 186, 192, 193, 202
Cornwallis, Lord, 56
corporate income tax, 322-23
corporate revenue tax, 323
cosmopolitanism, 195-96
Cotter, Bill, 96
Cotter, Nancy, 96
Council on Foreign Relations, 32, 263
Couzens, James, 76
Cox, James M., 238
Creek Indians, 153
Crowe, William, Jr., 320
Crowther, Samuel, 257, 281
Cuba, 23, 218-19, 233
currencies: Bretton Woods agreement and,
23; currency-exchange rates and, 24,
56-57; devaluation of, 303; gold and,
23-24, 37, 219-20; money supply and,
248; Republican Party and, 222;
sovereignty and, 72-73, 113
Currency Act, 119
Curtin, Andrew, 167
customs duties, 23, 169, 223
364 Index
cyclospora, 275
Czechoslovakia, 248
Czolgosz, Leon, 231
Daewoo, 270
Daimler-Benz, 78
Darman, Richard, 41, 321
Davis, Martin S., 97-98
Dawes, William, 124
Debray, Regis, 287
Debs, Eugene V., 216
Declaratory Act, 120-21
defense industries, 176, 320
defense spending, 137, 316-17
de Gaulle, Charles, 49
Democratic Association of Brussels, 197
Democratic Party: Bryan and, 225; free
trade and, 17, 23, 34, 159, 218; income
tax and, 215-16; International Trade
Organization and, 25; McKinley and,
214, 220; New Deal Democrats, 257-58;
nullification doctrine and, 149; People’s
Party and, 163; political corruption and,
113; presidency held by, 206, 209, 253;
tariffs and, 157-58, 164, 165, 167, 168,
169, 242-43; transnational corporations
and, 102
Dewey, George, 207
Dewey, Thomas, 25, 214
Dimare, Paul, 56
Dingley Act of 1897, 221, 233, 234, 245,
247
discretionary taxes, 160, 296
Dole, Robert J., 26, 91, 263, 266, 267, 269
Donahue, Thomas, 61
Doolittle, Jimmy, 76
Dorsey, Thomas, 95
Douglas, Stephen A., 163, 167
Dreier, David, 294
Dreiser, Theodore, 223
Drucker, Peter, 104
drug cartels, 272, 317-18
Drug Enforcement Agency, U.S., 272
Dulles, John Foster, 27, 316
Dutch East India Company, 284
Dutch West India Company, 284
Dyestuffs Importation Act, 249
East Asia, 16, 284, 319
Eastern Europe, 16, 70
Ebeling, Richard, 195
Eckes, Alfred E., Jr., 28, 35, 37-38,
244-45, 250, 252
economic determinism, 44
economic nationalism: American eras of,
52, 114; automobile industry and, 91;
Blaine and, 209; of China, 205, 306; Clay
and, 146, 159; definition of, 288; of Great
Britain, 25, 47, 205; Hamilton and, 159,
180, 183, 197, 299; Hull and, 21; of
Jackson, 114, 147-48, 197; of Japan, 88,
205; Jefferson and, 114, 141, 191, 204,
205, 239; Keynes and, 204; Lincoln and,
159, 170, 252; Madison and, 143, 197,
205; NAFTA and, 260, 261, 278; Reagan
and, 39; Republican Party and, 32, 253;
Franklin Roosevelt and, 243; Smith and,
178; Smoot-Hawley Tariff and, 257, 260
Economist, The, 67—68, 90-91, 91, 189, 276
Egypt, 314
Eisenhower, Dwight: free trade and, 258,
266; immigration and, 292; national
security and, 29-30; Organization for
Trade Cooperation and, 26; U.S. markets
and, 15, 27
electronics industry, 30
Elizabeth I (queen of England), 14
Embargo Act of 1807, 138, 142, 144, 296
employment. Coolidge administration and,
239; crash of 1929 and, 241; global hiring
hall, 61-62, 292; immigration and, 291;
Keynes on, 203-04; in Mexico, 272;
protectionism and, 28. See also labor
supply; wages
environmentalists, 276, 278
Epicurus, 201
Erhard, Ludwig, 288
Ertl, Fred, 279
Ertl Toy, 279-81
Ethiopia, 273
ethnic solidarity, 113
Europe: agriculture and, 35; aircraft
industry of, 47; automobile industry of,
81; Cold War and, 259; corporate income
tax and, 322; cosmopolitanism and,
195-96; defense spending and, 316-17;
depression in, 227; free trade and, 4, 72,
198; political corruption and, 50;
protectionism in, 226; sovereignty and,
72, 113; tariffs in, 37; U.S. defense of, 32,
81; U.S. markets and, 15, 26, 142; U.S.
role in, 316-17; world exports share, 34
European Coal and Steel Community, 72
European Community (EC), 72
European Economic Community, 72
European Union: aircraft industry and, 48;
Great Britain and, 72, 230; merchandise
trade balance of, 311; NAFTA compared
with, 74; reciprocal trade agreements
and, 300-01; regional trading zone and,
284; sovereignty and, 72, 113
Evans, Richard, 47
Eveready, 280
exports: Bush and, 36; Clinton and, 36,
Index 365
310; of Europe, 34; GATT and, 61;
manufacturing jobs as, 16; protectionism
and, 224; voluntary export restraint, 40.
See also imports
fascism, 252
Fairbairn, Henry, 187
Falcoff, Mark, 273
family: labor supply and, 16; median family
income, 10; nations compared to, 45; real
family income, 12; wage stagnation and,
62, 113, 261. See also women
Farm ‘Toy Museum, 279
fast-track authority, 276-78
Federal Constitutional Convention, 127
Federalist Papers (Hamilton), 132, 180
Federal Reserve Act, 236
Ferris Bueller’s Day Off, 244
Feuerstein, Aaron, 94, 96-97, 98
Financial Times, 100-01
Fisk, Jim, 206
flat tax, 323, 324
Florida, 171
food safety, 274-76
Force Act, 153
Ford, 76, 88, 98, 297, 300, 304-05, 309
Ford, Gerald, 35, 39, 258, 263
Ford, Henry, 76, 80, 93
Fordney-McCumber Tariff Act, 239, 241,
246, 249, 250, 252
foreign aid, 2, 315
Foreign Corrupt Practices Act of 1977, 50
foreign investment, 315
Forster, William, 173
Fort Moultrie, 152
Fort Sumter, 152
Fourteenth Amendment, 62, 297
Fox, Nicholas, 276
France: aircraft industry of, 47; colonial
trade and, 118; defense spending and,
316; European Union and, 72; free trade
and, 190; industrial espionage of, 49;
Jefferson and, 141; Napoleonic Wars
and, 137, 138; protectionism of, 249, 286;
Seven Years War and, 118; sovereignty
of, 113; U.S. energy consumption
compared with, 224
Franklin, Benjamin, 127-28, 129
Freeman, Douglas Southall, 134
free market: freedom and, 197; free trade
compared with, 49-51, 174-76; purpose
of, 287-89
free silver, 219-20
Free to Choose (Friedman), 297
free trade: Adams and, 140; Bush and, 259,
260; Chamberlain on, 227-28; Clay on,
205; Cleveland and, 208, 210-11, 212;
comparative advantage and, 185;
Democratic Party and, 17, 23, 34, 159,
217-18; dogma of, 18-19; Eisenhower
and, 258, 266; Europe and, 44, 72, 198;
France and, 190; free market compared
with, 49—51, 174-75; Great Britain and,
66, 108, 158, 194, 211, 227-28, 233, 300;
Hull and, 21-23, 26, 32, 236; ideology of,
155, 175, 186-93, 198-204; imports and,
53, 54; independence and, 17, 52, 174;
Jefferson and, 127-28, 140-41; Keynes
and, 202-03; liberalism and, 21-22, 191,
227-29; Logan on, 154; manufacturing
base and, 16; McKinley on, 206, 215;
Mill and, 175, 186-87, 202; Morrill on,
208; Morris on, 97-98; myths
concerning, 16-17, 44; nation-states and,
108, 175, 198; peace and, 25, 60-61, 159,
190, 191, 200, 237, 238; Reagan and,
38-43; Republican Party and, 17, 18, 32,
33, 258, 294; Ricardo and, 175, 190, 192;
Franklin Roosevelt and, 21, 23, 32, 278,
295; Theodore Roosevelt on, 232-33;
Say and, 175, 192, 194; slavery and,
130-31, 154; sovereignty and, 17, 4445,
71-72, 74; theory of, 20; Wharton on,
221; Wilson and, 21, 32, 114, 192, 236,
266, 278; working class and, 16, 39, 198,
215, 294, 295. See also trade
Free Trade Tariff of 1846, 154
Frémont, John C., 163
Friedman, Milton, 36, 45, 199, 205, 252,
258, 294
Fruit of the Loom plant, 3-5
Fulton, James, 25
Gage, Thomas, 123-24
Galbraith, John Kenneth, 6
Gardner, Richard N., 107
Garfield, James, 206, 253
GATT (General Agreement on Tariffs and
Trade): Advisory Committee for Trade
Policy and Negotiations and, 102; effects
of, 276, 294; international trade and, 24;
multinational corporations and, 61;
passage of, 265-67, 268, 269, 278, 288;
sovereignty and, 107, 266; tariffs and,
300; transnational corporations and, 104;
World Trade Organization and, 26,
265-66
GE, 65, 99, 100, 309
Gearhart, Bertrand, 25
General Agreement on Tariffs and Trade
(GATT). See GATT
General Motors: dealer networks and,
87; economic importance of, 77-78;
foreign factories of, 100, 300;
366 Index
General Motors (continued)
government regulations and, 85-86;
Japan and, 82; labor supply’s nationality,
99; Mexican factories of, 309; production
and, 305; rise of, 76; U.S. market share,
88. 90
George ITI (king of England), 120, 121,
122
Georgia, 171
Gephardt, Richard, 261
Germany: aircraft industry of, 47;
automobile industry of, 78-79; defense
spending and, 316; economic nationalism
of, 205; Great Britain and, 60, 238; List
and, 197; manufacturing base in, 222;
market size of, 301; production of, 299;
protectionism of, 66, 202, 228; Russia
and, 61; sovereignty of, 113; tariffs and,
249, 299; U.S. energy consumption
compared with, 224; Wilson and, 237
Gerstacker, Carl A., 105
Gerten, Jeff, 104
Gigot, Paul, 264
Gilded Age, 206, 223, 226
Gill, William J., 142, 234
Gilpin, Robert, 65
Gingrich, Newt, 26, 43, 266, 267, 269, 278
Global Economy: America’s elite and,
14-15, 111, 259; capital and, 54; GATT
and, 61; global free market and, 49;
independence and, 68, 301; middle class
and, 9-11; nation-states and, 174, 287,
326; patriousm and, 98, 106, 107;
sovereignty and, 107, 113, 301, 325;
Third Wave America and, 6-9; trade and,
12, 14-15; transnational elite and, 97,
284; United States’ economy and, 11-13;
utopianism and, 114; wages and, 302-03
global hiring hall, 61, 292
globalism, 285-86, 312
Goldman, Sachs, 268
Goldsmith, James, 69, 314
Goldwater, Barry, 33, 258
Gordon, John Steele, 173
Gore, Al, 244
Gould, Jay, 206
Gramm, Phil, 91, 293-94
Grant, U. S., 206, 220, 253
Great Britain: agriculture and, 29, 159;
aircraft industry of, 47; American
shipping interests and, 138; British
Parliament, 119-21, 140; Civil War and,
146, 171; Cleveland and, 211; colonial
empire of, 118-19, 123; Corn Laws and,
52, 159, 186, 192, 193, 202; defense
spending and, 316; dollar depreciation
and, 37; economic nationalism of, 25, 47,
205; ethnic solidarity in, 113; European
Union and, 72-73, 230; food safety and,
274; food supply of, 52; free trade and,
66, 108, 158, 194, 211, 227, 301;
Germany and, 60, 238; Great Lakes
control, 125; Jefferson and, 141;
manufacturing base in, 142, 222; market
size of, 301; Napoleon Bonaparte and,
136; Polk and, 156; protectionism in,
248-50; sovereignty of, 113, 230; steel
rail industry of, 221; U.S. industry
compared with, 223; U.S. markets and,
142, 144, 154, U.S. relations under
Madison, 139; War of 1812 and, 140
Great Conspiracy, The (Logan), 154
Great Depression, 203, 241, 247, 249
Greatest American, The (Vandenberg), 54,
133
Greece, 314
Greeley, Horace, 163, 165, 253
Green Parties, 147
Greider, William, 99-100
gross domestic product (GDP): imports as
share of, 53, 54, 70; trade as share of, 68;
wages as percent of, 287
gross national product (GNP): Global
Economy's effects on, 12; imports as
share of, 53, 70, 226; protectionism and,
223-24; Smoot-Hawley Tariff and, 247
Grundy, Joseph R., 243
Guam, 217
Guatemala, 27, 275
Gulf War, 260, 265, 320
Hai, 23
Halberstam, David, 88
Hall, Gus, 67
Hamilton, Alexander: background of,
132-33; Burr and, 183-84; Calhoun and,
144-45; on capital, 54, 181, 314; Clay
and, 14445, 193; consumers and, 51-52;
economic nationalism of, 159, 180, 183,
197, 300; free market and, 180-82, 197;
Greeley and, 163; guiding principles of,
285; Jefferson and, 141, 183; Keynes and,
204; List and, 194; manufacturing base
and, 131, 182; as nationalist, 127, 130,
154; as protecnonist, 114, 182-83, 193,
196, 259; as secretary of treasury, 131;
tariffs and, 136, 182, 183, 224
Hamilton, James, 146-47
Hanna, Mark, 218, 219-20
Hanson, James, 280
Hanson Industries, 280
Hanson PLC, 280
Harding, Warren G., 237-38, 239, 240,
253
Harley-Davidson, 40, 258-59, 298,
304
Harper, Charles (Mike), 98
Harriman, E. H., 206
Harris, Arthur, 79
Harrison, Benjamin, 206, 211, 214, 215,
253
Hartke, Vance, 34, 35
Havana conference, 25
Hawaiian Islands, 217
Hawkins, William, 190-91
Hawley, Willis, 244, 251
Hayes, Rutherford B., 206, 212, 253
Hayne, Robert, 152
Hearst, William Randolph, 207
Hegel, Georg, 230
Hendrick, Burton J., 146
Henry, Patrick, 123
Heritage Foundation, 263
Hewlett-Packard, 65
Hill, James J., 206
Hillel, 97
Hippo, Bishop of, 175
Hiss, Alger, 24
History of the Republican Party, 218-19
Hitachi, 41, 310
Hitler, Adolf, 61, 78-79, 114, 200, 244,
252257
Hodges, Luther H., 81
Hogan, Mark, 86
Holland, 74, 248, 321
Hollings, Ernest “Fritz,” 92, 267
Homestead Strike, 215
Honduras, 5—6
Honeywell, 65
Hong Kong, 37, 43, 70
Hook, Sidney, 39
Hoover, Herbert: income tax hike of, 249;
Republican Party and, 253; Smoot and,
251; Smoot-Hawley Tariff and, 241,
242; tariffs and, 243; U.S. markets and,
28
Hoover Institution, 39
Hornberger, Jacob, 294
Hornigk, Von, 65—66
Hudson, 76
Hughes, Louis, 86
Hull, Cordell: Citizens Committee for
Reciprocal World Trade and, 24; free
trade and, 21-23, 26, 32, 236; on free
trade and peace, 58; income tax and,
234-35; Smoot-Hawley Tariff and,
250
Human Action (Mises), 49
Hume, David, 175, 179, 190
Humphrey, George, 28
Hungary, 249
Index 367
Hunter, Duncan, 278
Hutchinson, Thomas, 120
IBM, 98, 99, 100, 106, 309
Iceland, 28
IMF (International Monetary Fund), 24,
70, 107, 269, 315
immigration: employment and, 291;
illegal immigrants and, 15-16, 271-72,
274, 291; working class wages and,
112
Immigration Act of 1965, 15, 291
imports: Canadian agricultural imports,
241; capital and, 315; food safety and,
274-76; free trade’s effects on, 53;
Japanese automobile imports, 7-8, 82,
87-91, 304; manufactured goods and, 12,
31, 103; merchandise imports, 60;
protectionism and, 224; Reagan’s quotas
on, 89; as share of GNP/GDP, 53, 70,
111, 143, 226; Smoot-Hawley Tariff and,
245; South’s diversion of, 172; tariff rate
and, 162; textile industry and, 94. See also
exports
income tax: authorization of, 236;
Cleveland and, 215-16, 234; corporate
income tax, 322-23; flat tax, 323;
Harding and, 239, 240; Hoover and, 249;
Hull’s initiation of, 22; Lincoln and, 160,
216, 295; percentage of family income
and, 10; protectionism and, 223; reform
of, 324; tariff reform and, 234; tariffs and,
235, 296-97, 299, 325; Wilson and, 292.
See also taxation
independence: as American heritage,
191-92; of Canada, 72-73; Clay and, 162,
199-200; dependence on foreign markets
and, 68-69, 70-71, 259; economic
nationalism and, 288; free trade’s effects
on, 17, 52, 174; Global Economy and,
68, 301; Hamilton and, 182;
protectionism and, 131-33; Smith on,
318, 321; tariffs and, 143
India, 238, 249, 317
Indonesia, 43, 70, 113
industrialists, 93, 206, 223, 224, 234
industry: agriculture and, 311; Bush and,
57; Clay and, 146; Cold War and, 30;
decline in, 37, 42; development of, 139,
142; foreign production as government-
subsidized, 46—47; in Great Britain, 227;
Hamilton and, 130, 182-83; industrial
disarmament of, 7, 42; industrial
espionage, 49; infant industry protection,
186, 188, 194; manufacturing’s
importance and, 58; protectionism and,
224; shrinking base of, 16; Smith on, 176;
368
industry (continued)
tariffs and, 298; trade concessions and,
26-27, 34; Washington and, 134; Whig
Party and, 158; World War I role of, 239.
See also manufacturing base; specific
industries
Ingersoll, C. J., 194
Institute of Medicine, 275
Intel, 100
intellectual property, 306
internal improvements, 133, 145, 146, 159,
183, 222
Internal Revenue Service, 160, 295, 323,
324
International Bank for Reconstruction
and Development, 24. See also World
Bank
international banks, 315-16
International Economic Conference, 250
International Monetary Fund (IMF), 24,
70, 107, 269, 316
International Trade Commission, 38, 49
International Trade Organization (ITO),
24, 25, 258, 277
Intolerable Acts, 123, 127
Ireland, 123, 227
Irish Catholics, 209
Irwin, Douglas, 186
Israel, 85, 315, 317
Italy, 39, 108, 113, 224, 249
ITO (International Trade Organization),
24, 25, 2585 277
Jackson, Andrew: on Biddle, 48; Calhoun
and, 147, 150-51, 209; Clay and, 150;
economic nationalism of, 114, 147-48,
197; guiding principles of, 285; List and,
193, 194; national bank issue and, 236;
nullification doctrine and, 149, 152, 153;
Polk and, 156; as protectionist, 145, 173, _
259; tariffs and, 294; War of 1812 victory,
140; West and, 124-25
Jackson, Jesse, 271
Jackson, Stonewall, 212
Jacuzzi, 280
Japan: automobile imports from, 7-8, 82,
87-91, 304; automobile industry in,
81-82; Bush and, 71, 87-88; China and,
317; Clayton and, 25; Cold War and,
259; computer chip industry and, 41;
currency devaluation and, 303; economic
growth of, 38; economic nationalism of,
88, 205; Eisenhower and, 27; financial
crisis in, 70; Harley-Davidson and,
39-40, 258-59; import curtailment, 249;
industrial espionage of, 49;
manufacturing jobs and, 43; market
Index
access to, 35, 37, 155, 199, 259, 286,
305-06; market size of, 301; merchandise
trade balance of, 311; NAFTA and, 84,
310; Philippines annexation and, 217;
political corruption and, 113; prosperity
of, 37; protectionism of, 30-31, 38, 66;
steel industry in, 46; tariffs and, 28, 298;
television-manufacturing industry and,
45—46, 102, 178; trade agreements with,
305-06; trade and war, 61; trade
concessions to, 29-32, 254; U.S. energy
consumption compared with, 224; U.S.
markets and, 15, 26, 89, 90, 142, 155,
296; U.S. trade deficits with, 304-05;
Vietnam War and, 320; voluntary export
restraint agreement, 40
Javits, Jacob, 25
Jefferson, Thomas: agriculture and, 128,
130, 147; dependence on British goods
and, 117; as economic nationalist, 114,
141, 191, 204, 205, 239; Embargo Act of
1807 and, 138-39, 142, 294; freedom
and, 296; free trade and, 127-28, 140-41;
guiding principles of, 285; Hamilton and,
141, 183; Kentucky and Virginia Resolves
and, 149, 150; Louisiana and, 136, 156;
on merchants, 55; as protectionist, 18,
136, 141; unilateral disarmament and,
137
Jenkinson, Charles, 119
Jevons, William Stanley, 192-93
Johnson, Andrew, 206
Johnson, Lyndon B., 35-36, 83-85, 258
Johnson, Samuel, 121
Jones & Laughlin mill, 7
Jordan, Phil, 272
Kaiser Cement, 280
Kaiser Motors, 80
Kallstrom, James, 49
Kant, Immanuel, 179-80
Kantor, Mickey, 104, 267
Kelley, William, 221, 300
Kemp, Jack, 262
Kennedy, Edward, 67, 261
Kennedy, John F., 17, 32, 258
Kennedy Round, 21, 34-38, 39, 246
Kentucky Resolves, 149, 150
Kenya, 273
Kerner Commission, 6
Keynes, John Maynard, 16, 202-5, 313
Kidde, 280
Kipling, Rudyard, 73, 238
Kissinger, Henry, 224, 258, 262, 264, 265,
268,27 2
Knight, Philip, 16
knowledge industry, 62, 68
Index 369
Kopff, Christian, 108, 287
Korean War, 32
Kourpias, George, 99
labor supply: concentration camp labor as,
79; illegal immigrants and, 15-16;
immigration and, 291; nationality of,
99-100; rise in, 15. See also employment;
wages; working class
labor unions, 38, 42, 87, 216, 223, 276, 278
Lafayette, Marquis de, 55, 134
Laffer curve, 158
La Grange, Georgia, 95
Lasch, Christopher, 99, 325
Lasso, Guillermo, 272
Latin America: American labor’s
competition with, 16; financial crises in,
69; General Motors in, 86; global hiring
hall and, 61-62; NAFTA and, 263,
276-77; protectionism in, 25; trade
concessions to, 33; U.S. markets and,
89-90, 155; wages in, 112, 302
Lawrence, Bishop, 223
League of Nations, 22, 250
Lee, Richard Henry, 117
Lee, Robert E., 207
Leech, Margaret, 211
Leonard, Rod, 275
Leopard, 138
Letcher, Robert, 153
Ley, Robert, 79
liberalism: consumers and, 196; free trade
and, 21-22, 191, 226-27; individual and,
65; Mises and, 200-01; Smoot-Hawley
Tariff and, 257; Wilson presidency and,
236
Liliuokalani, 217
Lincoln, Abraham: Civil War and, 170;
Clay and, 154, 157, 158, 159, 164,
166-67, 169; economic nationalism of,
159, 170, 252; guiding principles of, 285;
income tax and, 160, 216, 295;
nationalism of, 158; Polk and, 161, 209;
as protectionist, 18, 20, 114, 156, 159-63,
166-67, 169-70, 171, 259, 293;
Republican Party and, 162, 165, 206,
253; on shipping costs, 300; Smith
compared with, 177; tariffs and, 157,
160-62, 164, 168-69, 224, 252, 293, 294,
295; Whig party and, 157, 161-62
Lindsay, Vachel, 220
Lippogate, 113
List, Friedrich, 193-95, 205, 306
Lockheed, 47
Lockheed-Martin, 65
Lodge, Henry Cabot, 207, 266
Logan, George, 138
Logan, John, 115, 154
London Magazine, 118
Long, Russell, 34
Louisiana, 3—6, 136, 156, 171
Lundestad, Geir, 32
Lyons, James, 319
Macaulay, Lord, 192
machine-tool industry, 37, 40
Madison, James: economic nationalism
and, 143, 197, 205; guiding principles of,
285; Kentucky and Virginia Resolves and,
149; List and, 193; as nationalist, 127,
154, 155; as protectionist, 114, 259;
tariffs and, 52, 131, 143, 144, 294;
U.S.-British relations under, 139
Malaysia, 70, 311
Malden Mills, 96-97
manufactured goods: imports and, 12, 31,
103, 318-19; NAFTA and, 269; U.S.
market for, 311-12
manufacturing base: advanced weapon
systems and, 319-21; American
Revolution and, 124; Auto Pact of 1965
and, 83-84; in China, 307-08; Coolidge
administration and, 240; dependence on
British goods and, 117-18; during Civil
War, 146; free trade and, 16; government
regulations and, 86; in Great Britain,
142; Hamilton and, 131, 182, 183;
importance of, 58; import’s impact on,
70, 311; Jefferson on, 128, 141; Lincoln
and, 161; List and, 195; McKinley Tariff
of 1890 and, 213-14; Morrill and, 170;
Nonintercourse Act and, 139; Randolph
on, 147; shriveling of, 8, 13; Tariff Act of
1789 and, 131; tariffs and, 222;
Washington on, 51-52
manufacturing jobs: Asia and, 43, 254;
decline in, 42-43, 261, 285; earnings of,
10, 63; as exports, 16; Global Economy’s
effects on, 12, 325; immigration and, 292;
Kennedy Round and, 35; merchandise
trade deficit and, 36; percentage of
workers in, 13; retail jobs compared with,
14; tariffs and, 312; in television
manufacturing industry, 178
Manufacturing Policy Project, 306
maquiladora factories, 269, 309-10
market economy, 49-50
Martin, Joe, 24
Marxism, 44, 65, 175
Marx, Karl, 97, 189, 197-98
Matsushita Electric Industrial, 270, 310
McCarthy, J. P., 77
McDonnell Douglas, 47-48, 65, 306
McKenna Act of 1915, 249
370 Index
McKinley, William: assassination of, 231;
Civil War and, 212; Cleveland and,
209-10, 217; Democratic Party and, 215,
220; on free trade, 206, 215; as governor
of Ohio, 215; Hanna and, 218, 219-20;
Hawaiian Islands annexation, 217;
Philippines and, 307; Republican Party
and, 168, 206, 209, 218-19, 253, 258;
Roosevelt and, 232, 233; Spain and, 207;
tariffs and, 213-14, 225, 242, 253, 300
McKinley Tariff of 1890, 213-14, 215, 217,
245, 246
McMorton, Michael, 166
Meany, George, 44, 312
Medicare, 36, 283, 312
Medill, Joseph, 163, 166
Melbourne, Lord, 268
Mellon, Andrew, 239, 240
mercantile system, 118, 120, 132
Mercedes, 300
MERCOSUR, 284
Mexico: automobile industry in, 86, 310;
bailout of, 14, 269, 273; drug cartels and,
317-18; dual citizenship and, 274;
factories in, 16; food safety and, 275;
health and safety standards in, 63; loans
to, 55; manufacturing jobs and, 43;
merchandise trade balance of, 311;
NAFTA and, 74, 263, 269-73, 310; peso
devaluation in, 56, 69, 268, 273; political
corruption and, 113; Polk and, 156; tariff
concessions to, 27; trade deals with, 254;
United States plant closings and, 5—6,
280; U.S. trade balance with, 270, 271;
wages in, 5-6, 297, 309
middle-class: abandonment of, 8; coalition
of, 265; economic effects on, 9-11; free
trade’s effects on, 45; as Second Wave
America, 7; standard of living of, 16
Mihelick, Stanley J., 62
Mill, James, 175, 184-85
Mill, John Stuart: comparative advantage
and, 185; free trade and, 175, 186-87,
202; infant industry protection and, 186,
188; Marx and, 197; slavery and, 173
Miller, John C., 117
Milliken, Roger, 94-96, 97, 98
Milliken Industries, 94
Milner, Helen V., 102
mining interests, 27
Mises, Ludwig von: on capital, 313-14,
318; on commerce, 284, 288; market
economy conditions, 49-50; on
protectionism, 294-95; utopian
liberalism and, 200-01; wage rate
equalization, 62
Mississippi, 171
Mitsubishi Electric, 270
Molasses Act of 1733, 119
Mongrel Tariff, 208
Monnet, Jean, 32
monopolies, 22
Monroe, James, 145, 294
Morgan, J. P., 206, 224 í
Morison, Samuel Eliot, 144, 225
Morrill, Justin: manufacturing base and,
170, 213; Roosevelt and, 243; Smoot
compared with, 252; tariffs and, 165, 177,
208, 300
Morrill Tariff Act: Buchanan and, 169, 171;
imports and, 172, 177, 246; revenues
from, 207, 209; Smoot-Hawley Tariff
compared with, 245; tariff/slavery issue,
165; tariff weight and, 247
Morris, David, 62, 97-98
Morris, Robert, 132
Motion Picture Association of America,
103
Motorola, 100
muckrakers, 223, 234
Mulroney, Brian, 73
multinational corporations, 61, 100, 102.
See also transnational corporations
Mussolini, Benito, 252
Nader, Ralph, 271
NAFTA (North American Free Trade
Agreement): assessment of, 249, 265,
276; Bush and, 262, 263; Canada and,
263, 303-04; Clinton and, 5, 262-63,
265, 273; drug cartels and, 317; economic
nationalism and, 260, 261, 278; effects of,
269-73, 276, 280, 294; equal protection
and, 63; European Union compared with,
74; Gore-Perot debate on, 244; Japan
and, 84; job exports to Mexico and, 16;
Latin America and, 263, 276-77;
Mexican peso devaluation and, 56, 269;
sovereignty and, 107; United States plant
closings and, 5—6
Napoleon Bonaparte, 136-39, 140
Napoleonic Wars, 137-39, 142
Nash-Kelvinator, 76
national bank, 159
nationalism: Bush and, 259-60;
enlightened nationalism, 286-87; goals
of, 289; Hamilton and, 127, 130, 154;
Madison and, 127, 154, 155; NAFTA
and, 265; national economy and, 286-87;
Roosevelt and, 285; Washington and,
127, 130, 154, 155. See also patriotism
National Review, 263
national sales tax (NST), 295, 323-24
national security, 29-30
Index Sl
National System of Political Economy, The
(List), 194
nation-states: as adversaries, 66; Ball on,
106; Bartley on, 74; Bastiat and, 190;
Cobden and, 108, 190, 195, 198;
definitions of, 286-87; families compared
to, 45; free trade and, 108, 175, 198;
Global Economy and, 174, 287, 326;
Hume and, 179; Kant on, 179-80; List
on, 195-96; Smith and, 176, 179;
sovereignty and, 113; Talbott on, 106-7;
transnational corporations and, 107;
transnational elite and, 104, 105
NATO), 28, 316
Nazi Germany, 25
NCR, 98-99
Nelson, Thomas, 55-56
Netherlands, 23
New England, 28, 139
New Guinea, 275
New Hampshire, 19
New Jersey, 166, 168
New Republic, 263, 264
New York, 13
New York Stock Exchange, 240
New York Times, 25-26
New Zealand, 184, 249
Nigeria, 273
Niles, Hezekiah, 193, 212
Nissan, 304
Nixon, Richard, 37, 63, 85, 87, 164, 258,
265
Nixon Shock, 298
nomimportation agreements, 122-23
Nonintercourse Act, 139
North, Lord, 122, 123, 124
North American, 166, 167
North American Free Trade Agreement
(NAFTA). See NAFTA (North American
Free Trade Agreement)
Norway, 28
Notes on the State of Virginia Jefferson), 141
NST (national sales tax), 295, 323-24
nullification doctrine, 148-53
Observations on the Commerce of the
American States (Sheffield), 126
Ohio Valley, 139
oil embargo, 85
oil industry, 69, 85
Oldsmobile, 76
Olney, Richard, 216
On the Governance of Rulers (Thomas
Aquinas), 175
Opening America’s Market (Eckes), 24445
optical industry, 30
Orders in Council, 126
Oregon Territory, 156
Organization for Trade Cooperation, 26
Orwell, George, 191
Osgoodby, George, 211
Otabe, K., 30
Outlines of American Political Economy (List),
194
Packard, 76
Pages, Erik R., 320
Pakistan, 315
Panama Canal, 262
Pan-American Exposition, 230-31
Panic of 1857, 164, 242
Panic of 1893, 216, 218, 242
Panic of 1907, 233-34
Parker, John, 124
Passy, Frédéric, 200
patriotism: economic nationalism and, 183;
ethnic solidarity and, 113; Global
Economy and, 98, 106, 107; national
interest and, 284; of Nelson, 56; of
Roosevelt, 288. See also nationalism
Payne, Sereno, 234
Payne-Aldrich Tariff, 234, 247
peace: free trade and, 25, 58, 60, 159, 190,
191, 200, 237, 238; tariff’s effects on, 22;
Wilson and, 278
Pearson, Lester, 83
Pennsylvania, 163-68
pension funds, 8
People’s Party, 163
Perot, Ross, 244, 260, 261, 263, 264, 267,
2i
Penn, 27
Petitjean, Jim, 5
Philadelphia Convention of 1787, 127
Philippines, 70, 207, 217, 225, 233, 307
Pitt, William, 120, 121-22
Poland, 86
political corruption, 50, 113
Polk, James K., 156, 158, 161, 162, 209
Polo, Marco, 14
populism, 219, 276
Populist Party, 215
Porsche, Ferdinand, 78-79
Portesi, David, 275
Portugal, 284
Potomac Canal, 125-26
press: International Trade Organization
and, 25-26; McKinley and, 225-26;
NAFTA and, 262, 263, 270; Proposition
187 and, 273; Smoot-Hawley Tariff and,
244
Price, Harold, 5
Principles of Political Economy (Mill), 185,
188, 197
372 Index
production: in automobile industry,
304-05; consumption and, 52, 68,
196-97; cost of, 86, 302; during Roaring
Twenties, 239-40; protectionism and,
223-24; Tariff of 1816 and, 144; wages
and, 112, 302
Progressive (Bull Moose) Party, 235
Proposition 187, 274
protectionism: Bastiat on, 156, 199;
benefits of, 223-26; Calhoun and,
143; in Canada, 184, 286; capital and,
314; of China, 66-67; Clay and, 145;
Confederacy and, 171-72; in Germany,
66, 202, 228; Hamilton and, 114, 182-83,
193, 195, 259; Harding and, 238; Harley-
Davidson and, +0; independence and,
131-33; Jackson and, 145, 173, 259; in
Japan, 30-31, 38, 66; Keynes and, 204; in
Laun America, 25; Lincoln and, 18, 20,
114, 156, 159-63, 166-67, 169-70, 171,
259, 293; List and, 194-95; McKinley
and, 232; Mises on, 294-95;
multinational corporations and, 102; of
Reagan, 92, 258-59; Republican Party
and, 18, 28, 208-09, 218, 222, 225, 241,
259; Theodore Roosevelt and, 18, 233,
235, 252, 293; Smoot-Hawley Tariff and,
249; Tariff Act of 1789 and, 131;
television-manufacturing industry and,
178; Robert Walker and, 158-59; Francis
Walker on, 294
Public Advisory Board for Mutual Security,
26
Puerto Rico, 217, 233
Pullman Strike, 216
Rabbeno, 143
Radio-manufacturing industry, 37, 75
Railey, Jean, 95
Randolph, John, 137, 147-48
Rayne, Louisiana, 3-5
RCA, 102
Reagan, Ronald: Buchanan's affiliation
with, 18; election of, 265; foreign policy
and, 258; free trade and, 38-43; Harding-
Coolidge era compared with, 240; import
quotas of, 89, 259; protectionism of, 92,
258-59, 298; Republican Party and, 258;
Smoot-Hawley Tariff and, 24; on Soviet
Union, 49; textile industry and, 94
Reciprocal Trade Agreements Act, 21
Reed, Thomas B., 213
Reform Party, 278
Reich, Robert B., 93, 98, 261
Renan, Ernest, 286, 287
Report on Manufactures (Hamilton), 133,
180-81
Republican Party: Clayton and, 25;
Cleveland and, 216; economic agenda of,
222; economic nationalism and, 32, 253;
elections of 1920 and, 22; fast-track
authority and, 277-78; free trade and, 17,
18, 32, 33, 258, 294; GATT and, 266,
267; International Trade Organization
and, 24, 25; Lincoln and, 162, 165, 206,
253; McKinley and, 168, 206, 209, 218,
253, 258; Mexican government bailout
and, 268-69; NAFTA and, 262, 263;
New Conservatism and, 258; presidency
held by, 206, 211; protectionism and, 18,
28, 208-09, 218, 222, 225, 241, 259;
Republican Natonal Convention of
1976, 17; slavery and, 163; South’s
secession and, 169; tariff commission
and, 207-08; tariffs and, 164, 166, 168,
213-14, 233-34, 293; transnational
corporations and, 102, 103
Restraining Acts, 123
Revolutionary War, 124, 314
Ricardo, David: on capital, 33-54; on
comparative advantage, 66-67, 184-86,
201; free trade and, 175, 190, 192; List
and, 195; Smith and, 194
Richard, Carolyn, 3-4
Richard, Connie, 4
Richmond, William E., 143
Riedl, Erich, 47
Ritchie, Charles, 83
Roaring Twenties, 239-40
Robert Cary & Co., 115-17
Rockefeller, David, 105
Rockefeller, John D., 93, 206
Rockwell International, 65, 309
Rodrik, Dani, 43
Roépke, Wilhelm, 288, 289
Romania, 248
Roosevelt, Franklin D.: free trade and, 21,
23, 32, 278, 295; Harding and, 238;
income tax and, 249; Smoot-Hawley
Tariff and, 242-43, 250; tariffs and, 233,
243; World Trade Organization and, 313
Roosevelt, Theodore: on free trade,
232-33; immigration and, 292; on
McKinley, 212; nationalism of, 285; as
navy secretary, 207; patriotism of, 288; as
president, 231; Progressive Party and,
235; as protectionist, 18, 233, 235, 252,
293; Republican Party and, 206, 253; on
sovereignty, 74; tariffs and, 225, 294;
wages and, 302
Roosevelt Rule, 301
Rothbard, Murray, 264
Roth, Bill, 34
Rowen, Hobart, 99
Index 373
Rubin, Robert, 268-69
Rusk, Dean, 83
Russell, Bertrand, 201
Russia, 16, 61, 70, 224, 238, 315, 316, 317
Rutland, Robert, 149
Sackville-West, Lionel, 211
Safeguarding of Industries Act, 249
Saint Lawrence River, 125
sales tax, 297
Salinas, Carlos, 272
Samsonite, 309
Sanchez, Agnes, 5
Sanyo, 309
Say, Jean-Baptiste: free trade and, 175, 192,
194; free trade and peace, 191, 238;
Jefferson and, 141; Keynes compared
with, 202; on retaliatory tariffs, 198-99
Schlesinger, Arthur, 278-79
Scott, Loren, 6
Scott, Otto, 229
Scott, Winfield, 162
Scowcroft, Brent, 39, 258
Second Wave America, 7
semiconductor industry, 41, 259, 321
Senior, Nassau William, 174
service industries, 58
Seventeenth Amendment, 236
Seven Years War, 118, 179
Sheffield, Lord, 126
Sherman, John, 210, 252
shipping: Great Britain’s markets and,
138; manufacturing and, 139, 161;
Orders in Council and, 126; Tonnage Act
and, 132
shoe industry, 38-39, 75
Shortridge, Samuel, 241
Silverglade, Bruce, 274
Singapore, 37, 52
Sixteenth Amendment, 235, 236
slavery: as Civil War cause, 173, 174; free
trade and, 130-31, 154; Lincoln and, 162,
171, 172; Republican Party and, 163;
tariffs and, 165, 167, 173
Smathers, George, 34
Smith, Adam: on capital, 52-53, 54, 181;
on consumers, 51; family/nation
comparison of, 45, 51; on foreign trade
capital, 36; free market and, 174-75, 176,
181; on independence, 72, 317, 321; on
“invisible hand,” 53, 181, 239; Lincoln
compared with, 177; List and, 195;
Ricardo and, 194; tariffs and, 176-79,
192, 298; Townshend and, 122
Smith-Corona, 280
Smith, John F, Jr., 88
Smoot, Reed, 244, 252
Smoot-Hawley Tariff: Buchanan’s previous
attitude toward, 18; crash of 1929 and,
241-42; economic nationalism and, 257,
260; fascism and, 252; as Great
Depression’s cause, 114, 242, 243-44;
Hull and, 250; NAFTA and, 263;
protectionism and, 249; Reagan’s attitude
toward, 38; tariff rates and, 241, 246;
tariff weight and, 247; Woll and, 68
social class, 6-7, 4445, 65, 313
socialism, 44, 186
Social Security, 36, 285, 312
social stability, 43, 325
Solomon, Gerry, 278
Sons of Liberty, 123
Sony, 45—46, 199, 270, 310
South Africa, 70
South America, 214
South Carolina, 148-53, 171
South Korea: automobile industry of,
90-91, 310; China and, 317; economic
growth of, 38; financial crisis in, 70;
industrial espionage of, 49;
manufacturing jobs and, 43; prosperity
of, 37; U.S. markets and, 142
sovereignty: economic nationalism and,
288; European Union and, 72, 113; free
trade’s effects on, 17, 4445, 72, 74;
GATT and, 107, 267; Global Economy
and, 107, 113, 301, 325; of Great Britain,
113, 230; International Trade
Organization and, 25; NAFTA and, 264;
of states, 129; Urquhart on, 107-08;
World Trade Organization and, 107, 313
Soviet Union, 49, 63, 259
Spain: aircraft industry of, 47; colonial
trade and, 118; decline in global power
of, 321; McKinley and, 207; Mississippi
River control, 125; Napoleon Bonaparte
and, 139; tariffs and, 249; West Florida
and, 139
Spanish-American War, 217
Spencer, William I., 104
Spoiled (Fox), 276
Stamp Act of 1765, 119-20
steel industry, 46, 221
Steffens, Lincoln, 223
Stein, Ben, 244
Stein, Herb, 244
Stelzer, Gus, 78, 85, 87
Stephens, James Fitzjames, 326
Stettinius, Edward, 23
Stevens, Robert, 31-34
Stevenson, Adlai, 32
Stock market: of Asian countries, 70; crash
of 1929, 240-41, 245; doubling in value
of, 8
374 Index
Strackbein, O. R., 35
Studebaker, 76, 80-81
Sugar Act, 119
Sun Belt, 42, 310
Sutherland, Peter, 266-67
Sweden, 23
Sweeney, John J., 261
Taft, Robert, 24, 244
Taft, William Howard, 234, 235, 253
Taiwan, 37, 38, 42, 70, 113, 311
Talbott, Strobe, 106-7, 108
Tarbell, Ida, 223
Tariff Act of 1789, 131, 136, 143, 197, 294
Tariff Act of 1816, 143—4, 298
Tariff Act of 1824. 149
Tariff Act of 1828, 149
Tariff Act of 1832, 151
Tariff Act of 1842, 162
Tariff Commission, U.S., 27-28
Tariff of Abominations, 149, 154, 193, 245,
246, 247
Tariff Reform League, 228
tariffs: agriculture and, 241; Bierce on, 285;
Canada and, 23, 27, 283; capital and, 158;
Civil War and, 171-73; Clay and, 143,
151, 224; Cleveland and, 209-10; cuts in,
23, 236; Democratic Party and, 157-58,
164, 165, 167, 168, 169, 242-43;
Embargo Act of 1807 and, 139;
equalization tariff, 301-03, 312; factory
relocations and, 37; Harding-Coolidge
era and, 240; Hull and, 22; impact of.
216-17; imports and, 162; income tax
and, 235, 296-97, 299, 322;
independence and, 143; Keynes and, 203;
Lincoln and, 157, 160-62, 164, 168-69,
224, 251, 293, 294, 295; Madison and,
52, 131, 143, 144, 294; McKinley and,
212-14, 225, 242, 250, 301; Morrill and,
165, 177, 208, 301; nullification doctrine
and, 150; People’s Party and, 163;
Republican Party and, 164, 166, 168,
214, 233-34, 293; as retaliation, 177-78,
192, 198-99, 215-16; revenue produced
by, 207, 295; revenue tariffs, 158, 243,
292-99; sectional conflict and, 145;
slavery and, 165, 167, 173; Smith and,
176-79, 192, 298; tariff commission,
207-08; tariff reform, 234; U.S. markets
and, 177, 222, 253, 296, 297; U.S. tariff
rates, 246; variable tariffs, 234; wages
and, 159, 224; Washington and, 133, 136,
224, 294; weight of, 247, 248. See also
specific tariffs
Taussig, Frank, 205
taxation: capital gains tax, 296; corporate
revenue tax, 322-23; discretionary taxes,
160, 295; fairness in, 322-24; flat tax,
323, 324; free trade versus protectionism
and, 22, 299; industrial decline and, 42;
national sales tax, 293, 324-25; sales tax,
296; Stamp Act and, 120. See also income
tax; tariffs
Taylor, Zachary, 162
Tea Act, 122-23, 127
technology theft, +9, 101
television-manufacturing industry, 37,
45—46, 75, 102, 178, 199, 270
Texas, 13, 156, 158, 171
textile industry, 32-33, 66-67, 75, 94-97,
199
Thailand, 69
Theobald, Thomas, 55, 56
Third Wave America, 6-9
Third Wave Information Age, 43
Third World, 33-34, 227
Thomas Aquinas, Saint, 175
Tokyo Round, 246
Tonelson, Alan, 272
Tonnage Act, 132
Toshiba, 18, 63, 310
Townshend, Charles, 121, 176
Townshend Acts, 121, 126
Toyota, 297, 304
trade: adversarial relationship in, 48—49;
allies and, 15, 28, 29, 33; China and, 60,
63, 254, 306-09; Cold War trade
concessions, 26; colonial trade, 118, 123,
124; deficits in, 36, 37; executive branch’s
control of, 23, 103; fast-track authority, |
276-78; Global Economy” effects on, 12,
14-15; Great Depression and, 251; Hull’s
influence on, 21-23; with Japan, 8;
Lincoln on, 159; merchandise trade
balance, 36, 59, 60, 310-1 1; national
security and, 29; philosophical
approaches to, 175-76; purpose of, 288;
reciprocal trade treaties, 233, 300-01,
309; regional trading zones, 284; related
party trade, 101; trade war, 312-13; US.
Constitution and, 129; U.S. dependence
on, 17; War of 1812 and, 140; World
War I bilateral trade agreements, 23. See
also free trade
Trade Act of 1974, 102
Trade-Agreements Act of 1934, 246
‘Trade Expansion Act (TEA) of 1962, 17,
33
traditionalism, 65, 284
transfer pricing, 322
transnational corporations: Advisory |
Committee for Trade Policy and
Negotiations and, 102-3, 104; capital
and, 54-55, 57, 315; General Motors as,
86; nation-states and, 107; wages and,
N2, 273
transnational elite: equalization tariff and,
302; Global Economy and, 97, 284;
identification of, 104-05; industrial
policy and, 321; lack of patriotism in, 99
Treason Act of Henry VIII, 121
Trilateral Commission, 105, 263
Trowbridge, Alexander, 35
Truman, Harry, 15, 25-26, 26, 266, 292
trusts, 22
TRW, 65
Tucker, John R., 236-37
Turgot, Anne-Robert-Jacques, 176
‘Turkey, 315
Turner, John N., 73-74
Underwood-Simmons Act, 236
Underwood Tariff of 1913, 22, 245, 247
unilateral disarmament, 137, 190
Unionist Party, 228
United Nations, 23-24, 107
United States: British Parliament’s acts
against, 118-23; commerce of, 124-28;
dependence on British goods, 116-18;
economic nationalism of, 205; free trade
and, 198; Great Britain relations under
Madison, 139; imperialism of, 207, 225,
233; interstate commerce, 127;
Napoleonic Wars and, 137;
nonimportation agreements and,
122-123; regional trading zone and, 284;
Revolutionary War of, 124; sectional
conflict of, 145; War of 1812 and, 140
U.S. Congress, 23, 103, 129, 149, 235
U.S. Constitution: Fourteenth
Amendment, 62, 298; ratification of, 129,
131; Seventeenth Amendment, 236;
Sixteenth Amendment, 235, 236
U.S. markets: allies and, 32, 258; Asia and,
89-90, 155; China and, 155, 296;
consumers and, 199; Eisenhower and, 15,
27; Europe and, 15, 26, 142; European
Union compared with, 300-01; foreign
access to, 315; General Motor’s share of,
88, 90; Great Britain and, 142, 144, 154;
imperialism and, 233; internal
improvements and, 133; Japan and, 15,
26, 89, 90, 142, 155, 296; Latin America
and, 89-90, 155; McKinley Tariff of 1890
and, 212, 216; tariffs and, 177, 222, 253,
296, 297
U.S. Navy, 137, 138
U.S. Supreme Court, 216, 234-35
United Technologies, 65
Urquhart, Brian, 107-08
Index
35
Uruguay Round, 265, 267
utopianism, 44, 114, 192, 200-01, 278
Valenti, Jack, 103
Van Buren, Martin, 152
Vandenberg, Arthur, 54, 133, 184
Vanderbilt, Cornelius, 93, 206, 223, 224
Vietnam, 317
Vietnam War, 84, 320
Virginia Resolve, 149, 150
Volanakis, George, 280-81
Volkswagen Beetle, 78
Voltaire, Francois-Marie Arouet, 104, 176,
179
Voluntary export restraint (VER)
agreement, 40
Wadsworth, Jeremiah, 134
wages: in Asia, 112, 302; in automobile
industry, 80; drop in, 14, 261;
equalization of, 62; global hiring hall and,
61; gross domestic product and, 282;
immigration and, 292; in Japan, 259; in
Latin America, 112, 302; of Mexican and
Honduran women, 5-6; in Mexico, 5—6,
297, 309; NAFTA and, 269-70, 273;
protectionism and, 223; stagnation in,
281-82; tariffs and, 159, 222; of working
class, 9, 10, 62-63, 111-12, 291, 292,
302-03
Walker, Francis A., 294
Walker, Robert J., 158-59, 162
Walker Tariff Act of 1846, 162, 164, 246
Wallace, Edward, 164
Wall Street Journal, 263, 271
Walpole, Horace, 118-19, 122
War of 1812, 139-40, 142, 146, 150, 239,
312
Washington, Booker T., 290-91
Washington, George: Adams and, 134,
180; Constitution and, 129; dependence
on British goods and, 116-18; economic
nationalism and, 183, 197; Europe and,
207; free market and, 197; guiding
principles of, 285; on manufacturing,
51-52; as nationalist, 127, 130, 154, 155;
Potomac Canal and, 125-26; as
president, 131, 134-35; as protectionist,
18, 114, 259; slavery and, 130; tariffs and,
133, 136, 224, 294; tobacco crop of,
115-16; western commerce and, 124-25
Washington Post, 263
Washington Symphony Orchestra, 275
wealth distribution, 8, 10, 223
Wealth of Nations, The (Smith), 176, 181,
194
Weaver, James B., 215
376 Index
Webster, Daniel, 136, 148, 162, 281
Wellington, Duke of, 140
West Florida, 139
West Indies, 118, 123
Wharton, Joseph, 221
Whig Party, 157, 158, 159, 161-62, 208
White, C. Thayer, 30
White, Harry Dexter, 23
White, James, 280
Will, George F., 69, 75
Williamson, Gilbert, 98-99
Willys-Overland, 76
Wilson, Charles E., 78, 85, 199
Wilson, Woodrow: Democratic Party and,
253, 258; free trade and, 21, 32, 114, 192,
236, 266, 278; income tax and, 295;
presidential race of, 235; World Trade
Organization and, 313; World War I and,
22,237 295
Wilson-Gorman Tariff of 1894, 215-16,
217, 234, 247
Woll, Matthew, 68
women: with children under six in
workforce, 9, 11, 62, 94, 112-13;
contributions to family income, 4-5, 7,
112-13, 281, 285; factory work of, 3-5.
See also family
working class: free trade’s effects on, 16,
39, 198, 215, 294, 297; Gilded Age and,
206; protectionism and, 224; wages of, 9,
10, 62-63, 111-12, 291, 292, 302
World Bank, 7, 107, 315
World Trade Corporation, 106
World Trade Organization (WTO), 26,
102, 107, 266, 286, 313
World War I, 22, 237, 239, 295, 312
World War II, 23, 114, 244, 248,
320-21
Wriston, Walter, 107
Xerox, 309
Yamamoto, Usoroku, 41—42
Yamamura, Kozo, 31
Yom Kippur War, 85
Youngstown, Ohio, 7
Yugoslavia, 249
Zedillo, Ernesto, 274
Zenith, 46, 309
OO r o o R
dream and profitis: . » »\ the exploitation
of sweatshop laboi. ` cas doned by their
government, Amer: “ys kers are being
forced to compete with cheap Third
World labor and, inevitably, are losing out.
Basing his arguments on the principles of
our Founding Fathers and using real-life
stories to illustrate the plight of the work-
ing class, Buchanan raises an impassioned
call to arms. He offers a “new economic
nationalism” and invites a battle for the
heart and soul of the Republican Party in
2000 on the issues of national sovereignty
and social justice. Republicans, neocon-
servatives, and Democrats cannot let his
charges go unanswered.
PATRICK J. BUCHANAN was twice a can-
didate for the Republican presidential
nomination and was a senior adviser to
Presidents Nixon and Reagan. He appears
daily on Crossfire and weekly on The
McLaughlin Group, writes a twice-weekly
nationally syndicated column, and has '
authored three books, including Right from
the Beginning. He lives in McLean, Virginia.
Jacket photograph bs») 9) 311/Sygma
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