Removing Our Trade Barriers; W. M. Curtiss

I believe you will agree that this method of calcula tion leaves something to be desired. For example, our tariff structure might be applied only to a few items and at so high a level that none would be imported; using this formula, then, we would conclude that our "average tariff level" is zero. The important thing, to me, is not our lOW average Dr. Curtiss is a member of the staff of the Foundation for Eco nomic Education. This essay· was prepared to answer an inquiry about tariffs. [137 ] level" but the fact that in 1951, forty-one rates were 100 per cent or more and over 900 rates were 40 per cent or more. The ATL makes such a strong point of our low tariffs that I am tempted to say: I:I:If that's so good, then why not still lower?" Unless we stay with basic prin ciples, we are likely to be drawn offside in arguing about what the level of tariffs should be, or the degree by which we have reduced them.

You've also suggested that I:l:tradehas caused more wars than any other single factor." With this I must disagree, if by trade you mean free, private trade. If trade could be carried on between nations by private individuals or corporations, I am convinced there would be little inter national conflict as a result. It is when governments inject themselves into the picture that trouble arises. For example, if your firm, as a private corporation, makes an unfortunate deal with a German corporation, it will be difficult for you to get Congress excited enough to do something about it. But when government steps in and tells you the conditions under which you can trade with Germany, or Russia, or Red China, that can become the subject of an international debate in the U. N. You suggest that a free nation cannot trade to advan tage with a socialistic nation unless it adopts the social istic restrictions of the latter. You suggest that the reason free trade has worked between our states is because we all believe in free competitive enterprise. Granted, much of our progress in this country has resulted from almost universal acceptance of relatively free enterprise. But I don't follow the argument from there. If Iowa were a [138 ] "free enterprise state" completely surrounded by social istic states, I think it would be to her advantage to re move her own restrictions to trade and do the best she could with her neighbors.

We Can Remove Our Restrictions Free trade, as I would define· it, can only exist when there are no restrictions on either side. Therefore, it is absurd to think of its existing in the world today with practically all countries operating under some degree of socialism. But, I would argue that it is to our own ad vantage to remove our restrictions, then trade as best we can under the restrictions imposed by other nations. It would be far from ideal, but their restrictions are basi cally their responsibility and not ours. My entire argu ment is based on what I think would be best for our own citizens, as producers and consumers, and I am not too much concerned with policies of other nations, however foolish I may think they are. Perhaps I should say I am concerned, but it is not within my province to try to force their reform. You raise the question of low wages in foreign coun tries. It is sometimes argued that we should postpone free trade until all countries have achieved our wage levels.

This is a subject to which I devoted considerable space in the booklet, The Tariff Idea.1 It seems to me it is a completely fallacious idea and counteracts the whole 1 Curtiss, W. M. The Tariff Idea. Irvington-on-Hudson, New York: Foundation for Economic Education. [139 ] idea of the advantages of trading. Any time two people can trade to the advantage of both, they should be per mitted to do it. Under freedom, they won't trade unless they do see an advantage. I believe that the principle most commonly lost sight of in our discussions of trade is that consumption is the sole purpose of production. We sometimes tend to think that the preservation of an industry or a particular firm or a man's job is the important thing to preserve. This leads to all sorts of uneconomic measures which adversely affect the consumer-the king. Freedom Admits Strange Company Your last point refers to the concept of free trade as ~(phony liberalism." Pursuing and trying to explain the freedom philosophy places one in very strange company at times. For instance, among the advocates of free trade are various individuals with quite some reputation as world planners and international meddlers. This is an important reason why we have always tried to stick pretty close to ideas and leave personalities out. We may find ourselves on the side of the "phony liberals" when we discuss loyalty oaths, academic freedom, segregation, and a host of other problems. If one has his principles firmly fixed, his company need not bother him greatly.

As an example of this, I could cite the recent discus sions involving the General Agreement on Tariffs and Trade (GATT) and the Organization for Trade Cooper ation (OTe) as promoted in H.R. 5550. One might expect [140 ] our position to be favorable toward GATT, simply be cause we believe in free trade. But such is far from the case. The advocates of GATT are not, as I see it, merely advocating free trade, but are promoting a world-wide control of trade, dividing the markets, regulating prices, and the like. A well-known business leader recently exploited that idea to the utmost, implying that one must either be for tariffs or for socialism. This is certainly a "guilt by asso ciation" idea, and just because some of the world's lead ing socialists seem to favor free trade, does not mean that free trade is a socialist idea. vVe have sometimes been charged with pointing a finger at tariffs when they are really a minor restriction to trade. With this I would have to agree. I believe exchange controls, quotas, subsidies, bilateral and multi lateral agreements, bulk buying and selling by nations, and other restrictions are· perhaps materially more dam aging than tariffs. Nevertheless, I believe the same prin ciples apply to all and it may be easier to get the lesson across by using the relatively simple example of tariffs.

[141 ] WHEAT AND WORLD TRADE THOUGH agriculture is the very foundation of all human activity, it constitutes only one part of man:ls economic life. It should therefore be brought into conformity with the general economic system. The question is whether this system should be based on the free decisions of private property owners, engaged in competitive enter prise, or on public ownership of the means of production and distribution and in consequence, on central plan ning and price-fixing. The American farm policy, with its parity prices, its legally enforced restriction of acreage, and, as it is now proposed, its payment for crops not grown-that is, for acreage left fallow-does not provide a true solution. The evil results of this unprincipled policy are already mani fest. Though the farmers of Europe and of the United States are heavily subsidized, yet they bitterly complain that their incomes are steadily diminishing. Meanwhile, food prices are everywhere rising. Small wonder that the taxMr. Paul de Hevesy, economist and former member of the Wheat Advisory Committee, London, is the author of World Wheat Planning, Oxford University Press, 1940.