Tariff or No Tariff

by DAVID L. COHN

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THERE is a general impression among our people that this country will become a responsible member of, if not a leader in, a post-war world community. In my opinion, we are just as likely to revert into a sleepwalker’s isolationism.

It is apparent from our history that, while we may have learned much of the nature of war, we have learned little of the nature of peace; that we are abler warriors than peacemakers; that the aims which we profess before or during a war are abandoned when the war is won. The North defeated the South and preserved the Union. Then, although Mr. Lincoln had said that a nation could not exist half slave and half free, for fifteen years after the Civil War the conquerors so conducted themselves toward the conquered that this country did exist half whole and half crushed. We went imperialist into the Spanish War. Yet we sickened of imperialism almost before we had shattered the last remnants of the ancient Spanish Empire, clung to our island booty in inertia, and in the third decade of the twentieth century decreed the independence of the richest item of plunder — the Philippines — at the behest of domestic sugar and vegetableoil interests.

We fervently entered the First World War and even more fervently walked out on the world peace. Then came Warren G. Harding with his “normalcy,” or a perpetual place in the rut; and since that was what the nation most deeply desired — a well-upholstered, centrally heated rut — that is what it got. The people turned the job of keeping the peace over to Rotary International, begged Congress for God’s sake to stay at home and quit monkeying with business, and entered into the tinsel wonderland of the 1920’s all compact of bathtub gin and seats selling on the New York Stock Exchange for $500,000. Finally, as befits a nation often afflicted with spells of gigantism, we produced the most dazzling period of prosperity and the most dismal period of depression that had ever been known in modern times.

Prior to our entry into the First and the Second World War, we endured years of doubt and uncertainty; in both cases we tried to insulate ourselves from the conflict by oratory and statutes. But when we took the plunge in 1917 we took it with a deeprooted conviction. We would end all wars forever; we would make the world safe for democracy. These aspirations animated the people and were nobly voiced by Woodrow Wilson. We know the bitter and shameful end to which they came.

It is notable that we entered the present war without any convictions whatsoever. We are at war because we had to go to war. We made no attempt to will our destiny; whatever it may be, it was thrust upon us. Considering the state of public opinion in the autumn of 1941, there is no reason to assume that even now we should be actively in the war if the Japs had not attacked us. Yet, although we entered the First World War with definite convictions and then miserably failed to win the peace, the impression now prevails that even if we entered the Second World War with no convictions whatsoever we shall win the peace this time. This is to say that a people without strong convictions as to what ought to be will nonetheless exercise the prodigious effort that is necessary to bring it about.

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Mr. Willkie, after a hard tussle, has achieved the feat of getting the Republican Party to commit itself against post-war political and economic isolationism. The President, the Vice President, the Secretary of State, and the Under Secretary of State have all made pronouncements on the nature of the post-war world. From these it appeared that we would put an end to war; trade barriers would be leveled; all would have equal access to raw materials; colonial peoples would no longer be regarded as “natives” but as human beings; economic and political independence would become universal; colored men would be looked upon as equals of their former masters and oppressors. At the same time Mr. Thurman Arnold, looking forward to the day when monopolies and cartels would be one with the woolly elephant, saw a post-war era of cheap merchandise and booming domestic business.

All these gentlemen displayed a gratifying grandeur of vision, but even as they spoke there were disturbing factors present which cause one to doubt whether we shall enter easily into the promised land.

This is not a “popular” war. Its unpopularity arises from a complex of causes, but none more potent than that we did not enter the war to bring about the kind of world we believe men ought to live in, but were forced into it in order to preserve any kind of world in which we might be able to live at all. Furthermore, having gone to war for purposes of self-defense, and no other, we are eager only to discharge the purpose for which we were forced into it as quickly as possible so that we may return to our own affairs. In the third place, the mercurial temperament of a people who swing with dazzling rapidity from mood to mood causes one to doubt that we shall be sufficiently stubborn, tenacious, patient, and undogmatic to win the peace in the face of the jealousies, rivalries, hatreds, and unparalleled complexities that will confront those who aspire to make the peace and keep it.

We have never, during the lifetime of this Republic, made even an approach to solving our most complex and important problem: the problem of our spiritual and material relations to Europe and the rest of the world. We are whole-time isolationists by preference, and part-time internationalists only by compulsion. Time after time we have demonstrated this by our economic, political, and military policies; our actions during the period 1919-1942 bear it out. We have clung to the illusion that we are in the world but not of it; that the acts of other nations constantly disturb us while our acts disturb them not at all; that peace is indivisible and wars started anywhere may ultimately spread until they threaten the peace and prosperity of the United States, yet the peace of the world hinges in no wise upon the actions of the world’s mightiest power.

Against the weight of evidence, we have assumed that we are self-contained, and a quarter century of preaching to the contrary by scholars and economists did not even fracture the surface of our hard, glacial smugness. We built, for example, an instrument — the automobile — which depended for its mobility upon imported rubber, geared our national life to it, and assumed that we were self-sufficient. We lived on the shores of one-way oceans, tried to conduct one-way international trade, did not prepare for war and did nothing to preserve the peace, looked at the tortured, heaving, revolutionary world through eyes habituated to the spectacle of a rich, peaceful continent, and assumed that nobody would fight because “war would destroy civilization.” But this time, it is said, we shall have learned our lesson. We shall collaborate with our associates to make the peace and keep it. Shall we?

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If the war should be shorter than we suspect, then we are likely to turn our backs on the world. For this will have confirmed our fondest beliefs — namely, that we are the world’s most powerful people, the biggest manufacturers of the best weapons; that one American can lick twenty Japs; that when we get under full steam nothing can stop us, and therefore no one in the future will try to stop us. Consequently, we can settle down to what really concerns us — our own business.

But if the war proves to be long and hard, then it is even more likely that we shall withdraw from the world. As a people we are earnest but not impassioned; volatile but not tenacious; believing but with little faith; inquiring but escapist; quick to anger and quicker to cool off; long on action and short on memory. The Biblical story that the Lord made the earth in six days and rested on the seventh appeals to us. It is evidence of a big job well and quickly done. The fact that it took thirty million years for the Eohippus to evolve into the horse bores us. We are not interested in slow processes; our gods spring full-panoplied from the assembly line. If, however, we are to enter upon the gigantic and complex task of reorganizing the world and preserving the peace, we shall need precisely those qualities which we now lack.

Our returning soldiers will have seen much of the world and it is assumed in some quarters that this will give them a world outlook. But the effect of their travels may just as well be that they will acquire a distaste for the world and their allies; that they will be the more eager to stay at home physically and mentally. In any case, it is difficult to indoctrinate with a world outlook a people who have never had it, who have no potentially powerful neighbors, and who inhabit a continent which still seems remote from other countries despite the airplane. As for the airplane, we may argue that if we deny it to “dangerous” countries and keep a strong defense force of our own we shall be safe.

The returning soldiers will be tired and understandably anxious to take up the threads of their broken lives. There wall be waves and children to greet, whom they have not seen for a long time; women to marry; jobs to be resumed or to be sought. The civilian population wall also be tired and eager to relapse into the warm grooves they knew before the war. The car, the radio, the phonograph, the electric refrigerator, will have worn out; the house wall need repairs; there will be billions of dollars in banks to buy the myriad sensible and senseless things that we desire. Men will want all kinds of new things except new ideas and new adventures. These ideas will have to make their way against a great inertia, not only for the reasons stated but also for another reason. Men suffer a profound fatigue when the tasks in which they are engaged are unrelated to the spirit — when they proceed, so to speak, from the periphery of the eyelids outward. That is why our entry into this war without convictions may prove in the end to be catastrophic; and while we are prosecuting it grimly and courageously, the light in our eyes is dim.

Let us consider the facts of life with brutal frankness. This is no time for exquisite evasions. The inborn distaste of Americans for the world, as well as their belief that others are wicked while we are virtuous, may be increased by the inevitable post-war wranglings and conflicts of aim among the former allies. It was not design but necessity which brought so many diverse peoples together under the banner of the United Nations. Once the dread has been removed, each nation may well try to get all that it can for itself. If they do not, the millennium will have arrived.

These nations will observe that the United States came late into the war; that it is the richest and strongest nation in the world, its people well fed and clothed, its machinery intact and its productive capacity enormously increased, its techniques improved by the accelerations of war. They will be envious and, in some quarters, a little fearful; but nonetheless it will be expected of us, in the reconstitution of the world, that we shall take a role proportionate to our stature and assume burdens proportionate to our strength. It may then appear to Americans that we are being asked to make undue sacrifices, and out of a complex of motives, fears, jealousies, and misunderstandings compounded by our reluctance to assume a role which we have never wanted and for which we have never been prepared, there may be bitter quarrels among the former allies.

It is the history of wars fought by allies that men find it easier to die together than to live together. Consequently, when the war which brought them together has been won, they part company. Europeans have had long experience of this and are not dismayed by it, but it is dismaying and shocking to a people like ourselves, who are not only shiningly naïve and splendidly generous but who are likely to see themselves as rescuing angels — an attitude highly obnoxious to the rescued. Furthermore, we shall be faced abroad with staggering problems and questions of bewildering intricacy, while at home we shall confront other problems less staggering and intricate only by comparison with those of the world. In these circumstances, since we are an impatient and mercurial people, sometimes orgiastically evangelical and sometimes childishly petulant, we are just as likely to retreat from the whole mess as we are to remain and clean it up.

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There is little in our national experience to suggest that we shall undertake the task of reconstituting the world. It is true that from time to time rumors that plans for the post-war era are being formulated by our government drift down from on high to the underworld of the taxpayers. The government may think it injudicious to discuss peace plans now, or feel that the people who are fighting the “people’s war” are incompetent to discuss the people’s peace. Once the war has been won, however, it may be too late to talk about the peace, and especially one phase of it which, if it is not now determined upon at least in principle, may wreck all the plans that are being made on both sides of the Atlantic. This is the question of post-war trade. It is overwhelmingly important because America is (1) the world’s largest exporter of raw materials; (2) the world’s largest importer of raw materials; (3) one of the world’s largest exporters of manufactured goods; (4) the world’s richest and most compact market.

It will be our post-war purpose, says Washington, to assure a free flow of international commerce. But our past is not reassuring upon this question. No sooner was the First World War over than (1919) we passed an emergency tariff act. This was followed by the Fordney-McCumber Act (1922); and the rates rose to unparalleled heights in the Hawley-Smoot Act of 1930. Americans during this period were permitted to eat from free-list tin in cans; to gape at free-list Titians in museums; to worship at free-list altars; and to be hanged with freelist manila cordage. On nearly everything else they paid higher and higher duties. Imports were stifled and exports diminished while our efforts tended to drive the world toward autarchy and nationalism.

We countered by making loans and attending disarmament conferences, and paid no attention to the processes we had set in motion. These were: —

1. Our prohibitive tariffs fostered nationalism among other countries, and they set up equally prohibitive tariffs.

2. Our actions and their counter-actions bred economic depressions and created unemployment.

3. Rifles were put into the hands of the unemployed. Then they were in an army and unemployed no longer.

4. Idle factories were put to work turning out rifles for the former unemployed, while the unemployed making rifles were now employed and thus everybody was at work.

5. Since, however, these acts led to even greater economic depressions, the circle could be burst only by going to war. The goal was world domination at the maximum, or the domination of rich markets and rawmaterial areas at the minimum.

This is not to say that our 1919-1930 tariff policy was the proximate cause of the Second World War, or that war is simply the product of economic conflict. It is to say that violent international economic competition based on the short-term view drives nations in the long run toward nationalism, that it breeds depressions and unemployment, that these cause intolerance and hates, that this situation played into the hands of men who desired to regiment their people, that such people were easy to lead in the paths of war, that we did much to initiate this process and nothing to stop it.

It is true that the process was somewhat decelerated by Secretary Hull’s trade agreements, but the effort came too late and was too little effective. If we do not go much farther toward liberalizing world trade after this war, we shall make a continuing peace difficult if not impossible. The world can prosper only through trade; real wealth — goods and services — can reach impoverished peoples only through trade; and since we constitute so great a part of world trade, it is obvious that the future state of the nations will depend largely upon what we do or fail to do. This means that we shall have to buy as well as sell, and it is precisely this that we have stubbornly refused to do since 1919. We ought to retreat from our position, but shall we?

There is space here to consider only one or two of many factors. Organized labor, for example, has long believed that high tariffs and high wages are interrelated. It retains this belief although studies show that high-tariff industries tend to pay low wages, while low-tariff industries tend to pay high wages. The reason is clear. A high-tariff industry is frequently so incompetent that it must be artificially protected by high tariffs and artificially propped by low wages. But the low-tariff industry is competent, proves its competence by its ability not only to dominate the home market but also to export in competition with foreigners; it does not rely upon a tariff subsidy, and so pays high wages. The automobile industry is an example.

It is not apparent, however, that labor has shifted its position, while in the coming struggle its voice will be more potent than ever because it is stronger than ever before in the nation’s history. One may indeed expect that labor and powerful sections of industry will jointly oppose the liberalizing of international trade, and their principal argument will sound extremely convincing. It is this. Every country is now mechanized, or will soon be. The experience of this war has shown that so-called backward peoples soon learn to use machinery efficiently. Their standard of living is far below ours. If, therefore, Chinese getting twenty-five cents a day and using modern machines are permitted to ship goods here, American workmen receiving wages twenty times higher cannot compete with them. When such an argument is used, the exaltations of war give way to the peculations of peace. We shall then need the voices of earnest, impassioned men who are able to simplify one of the most complex questions in economics, while the whole subject will have to be hammered out at many a shop and crossroads assembly.

The task is to make men see that the American workman gets high wages solely because, as an efficient man operating efficient machines, the unit cost of the things he produces is low although his wages are high; that while he is a producer he is also a consumer and if, therefore, the things he buys are high in relation to the wages he receives, his real wages, as opposed to his nominal wages, are low. That millions of Americans in the services and professions, and all those with fixed incomes whether derived from investments or salaries, are ground down by high tariffs since they are unorganized and hence cannot demand and get greater fees or salaries or interest return while they are also denied the subsidies of tariffs or governmental handouts. That importing goods — provided international cartels are made inoperative — offers the quickest and surest way to break domestic monopolies and so force down the price of goods. That imports actually enrich a country because they not only offer a wide variety of merchandise otherwise denied the consumer but give employment to men in shipping, insurance, transportation, and distribution. That imports, moreover, while they may detrimentally affect a given industry, do not decrease the totality of industry in a country because, when commerce flows freely, every import automatically produces an export since goods are paid for in the long run not by gold but by other goods, and the creating of these goods gives employment to workers in export industries. That no one country can remain prosperous while all other countries remain poor; that nations live and can live only by trading with one another. That the object of international trade is not profit-making but to get from the other fellow something which you want and do not possess while he in turn takes something from you that he wants and does not possess. If each country had everything that it wanted within its borders, obviously there would be no international trade; but since no country is in this position, it follows that international trade is the only peaceful method by which nations may satisfy their desires for goods.

The task will be, further, to show that if a billion depressed Oriental people raise their standard of living through machinery, they will demand the specialties we create and so help us to maintain our standard of living. That by virtue of ingenuity, skills, techniques, experience, machinery, or patents, and raw materials, we make some things better and cheaper than foreigners, while by the same token they make other things cheaper and better than we do, and it is therefore common sense to exchange our products. That we cannot sell to others unless we buy from them, because goods are paid for with goods. That if high tariffs produced prosperity, we should never have descended into the depression of the 1930’s, while Sweden, for example, a low-tariff country, never suffered our woes. That a pound of trade is worth a ton of homilies in creating international good-will. That you cannot indulge in political internationalism without indulging in economic internationalism. That the world of yesterday was interdependent and the world of tomorrow will be more interdependent, while its functioning will depend upon the smooth meshing of all its parts. That men live by trade, but when they can’t live they will rebel and move toward war; and wars once started anywhere may spread until they threaten the peace of the United States. That our past political and economic policies have been catastrophic failures so great as to bring the nation to the brink of the grave, and all experience shows that the only truly self-contained communities in the world are the cemeteries.

This is the task and it is the more urgent because trade is vital to the nations and nothing more directly affects the average citizen. It would seem wise, then, for all concerned to meet now, to state their positions to the country, let them be debated by the people, and so have a great body of informed public opinion ready when the peace conference assembles. If this is the people’s war, there must be a people’s peace and it may be lost if, at the eleventh hour, the people are not informed and are misled by special pleaders.