Economic Superstitions

Stephen Bell

[An address delivered at the Henry George School dinner, 11 June, 1936. Reprinted from Land and Freedom, July-August 1936]

We are again at the beginning of one of our quadrennial silly seasons when we select a President, Vice-President and some hundreds of Congressmen. Listening to the speeches, wise and otherwise, which have come over the air from Cleveland, it has been easy to recognize old superstitions, even when dressed up in new clothes, and I thought as I heard Senator Steiwer, the "Keynoter," denounce the New Deal and all its works, how much more forceful his speech might have been if he and most of his Republican colleagues in Congress had not voted for the measures they now condemn. But I was heartened at the faint applause he evoked when he tried to say a good word for high protection. It seemed as if, while the convention was pleased with his reference to the three long years we have waited for the New Deal to put us on Easy Street again, there was some remembrance of the six long years we have waited for the Smoot-Hawley tariff law to do the same, which we were promised it would do in sixty days.

And I was pleased also with the way the convention rose to acclaim former President Hoover after his speech in behalf of Liberty, though he hadn't said a word about the tariff.

But though the G. O. P. elephant no longer seems to know if all, but to be rather dubious as to the merits of some of his old specifics, while the Democratic donkey has assumed the attributes of the All-Wise, there is ample evidence that both are still lost in a wilderness of economic superstitions.

Still, there is hope that the G. O. P. in its chastened mood may be prepared to learn something that may make it again the Grand Old Party devoted to human liberty.

As religion has its wrappage of superstitions which often conceal its true worth and beauty, so has political economy, and I would urge upon you the importance of dissipating what perhaps is the greatest of these superstitions the belief that industry and business can be encouraged, wages raised and standards of living improved by restricting the trade on which industry and business depend the trade that is truly the lifeblood of civilization, since without trade none of the vast cooperations which make up our civilization could exist and none of us could have anything which our own individual hands had not made, unaided by others.

In the present weakened faith in the effectiveness of high protection to maintain prosperity or induce its return we have a rare opportunity to educate the public to the merits of commercial freedom its advantages over commercial restraint and strangulation. Unfortunately, too many of us seem to regard Free Trade as a matter of subordinate importance. The truth is that Protectionism is one of the silliest yet most mischievous superstitions that has ever befuddled the human mind. I challenge any one to name an industry which has been really benefited by it. Can any one say truly that the "protected" industries are stronger or more profitable than the others?

On the contrary, have not all been sunk together in this terrible depression, and are not most of the "protected" industries rather worse off, if anything, than the others?

It would seem that "Protectionism" swindles both its victims and its supposed beneficiaries with beautiful impartiality.

Its mischievous effects are even worse in the international than in the domestic field, if that be possible. It causes nations to look abroad for the source of their troubles, and it teaches them the blasphemous lie that God has made the world on the diabolical plan of an opposition or antagonism of national interests.

Well do we older ones remember how in 1914 Germany, a great nation in the very forefront of civilization, struck out by the might of her arms for that "place in the sun" from which she and all other nations are excluded by this superstition. Since then Japan and Italy have done the same, with more success, though their success is illusory, for there is nothing to be gained by war or conquest that cannot be gained in larger, richer measure without war through the channels of mutually profitable trade.

As a result of the World War, the great Austria-Hungarian empire, an economic unit, was broken into seven economic units or parts of units, each of which quickly erected a new set of trade barriers. New nations were carved out of territories that were parts of Russia, Austria-Hungary and Germany, each with a new set of trade barriers. Germany was cut in twain to give the newly erected Poland a window on the sea. Italy's boundary was pushed northward and eastward until it took in Trieste and Fiume, the old seaports of Austria-Hungary. The trade and industry of all these regions was disrupted and confined at the behest of this silly superstition that restraint of trade can encourage industry. Some years ago we published photographs of scenes in Fiume showing a goodly crop of hay growing in her streets and of children picking flowers on her wharves. The shifting of boundaries with their trade barriers has cut these seaports off from the trade of their hinterland.

For twenty years everything that has gone wrong here and abroad has been blamed on the World War. We have blamed it for our depression. It has been blamed for the threatening politico-economic situation in Europe. Let me tell you that the war itself was a consequence and not a cause of the worlds unbalanced economy, that our depression and Europe's distressed situation are consequences of that unbalanced economy, and that the next World War itself that looms so threateningly in the offing, if and when it comes, will be another and perhaps final consequence of the same thing. Richard Cobden was everlastingly right when he declared Free Trade to be "the international law of the Almighty."

Tell me not that Henry George himself regarded Free Trade as a minor or subordinate part of his philosophy. I have studied well his chapter on "The Inadequacy of Free Trade," and I think I could match it with another on "The Inadequacy of Land Value Taxation" if trade barriers are maintained. Production and trade are only separable parts of the industry by which the world makes its living, and freedom of either while the other is restrained is incomplete freedom, a mockery, a counterfeit of full economic liberty.

Henry George showed most emphatically his high opinion of Free Trade as an avenue of attack on the main citadel of economic oppression and exploitation when he broke with his friend Dr. Edward McGlynn, whom he valued perhaps more than any other man, on this very question of attack during a national political campaign and my earnest advice to the School is:

Do not on any account permit the teaching of the full truth about Free Trade to be relegated to a subordinate position as compared with industrial freedom.

In conclusion, and to give projective force to the recommendation, let me quote the greatest European economist of whom I have knowledge, the late Henri Lambert of Belgium, who, like our Prophet of San Francisco, has not yet found acceptance in his own country:

"The land question is fundamental, but it is for that very reason that the peoples of the nations, never profound, will not seriously consider it while the fear of war hangs over the world a fear which only economic peace can allay."