Manifest Destiny
the cold, hard truth
Our politicians, academics, and the media say that the economy is great, that Americans have never been richer.
They are lying.
The truth is that global free trade helps the elites, and hurts everyone else. In their greed, the elites abandoned the middle class and left the working man for dead. They threw our companies to the wolves. I am no conspiracy theorist: I am an independent intellectual, an empirical historian, and a practical economist who has had enough. It is time we fixed America’s economy so that it works for everyone. To do this, we must open our eyes.
I began this book by quoting some of my favorite founding fathers and presidents, including every face on Mt. Rushmore, from George to Teddy. Although separated by centuries, what unites them all is that they put Americans, and America’s economy first. They all understood that for America to survive, she must be self-sufficient. If she cannot make weapons, she cannot defend herself. If she does not grow food, she cannot feed herself. If America depends upon foreign goods, then she is beholden to foreigners. Dependency enslaves America.
They also understood that America grew fastest when she invested in herself. Lincoln said it best:
I do not know much… but I know this… when we buy manufactured 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. [1]
Of course, we get more than goods and money. We get infrastructure, capital equipment (like machines and buildings), and skills and business knowledge that help grow the economy in the future. Our founding fathers disagreed on many things, but they all knew that American industry should be protected and diversified. Why? It worked.
what your teacher forgot to mention
In school we learned that America was always a free-trading nation, an open port in a sea full of mercantilist pirates. This is completely and utterly wrong. The first shots fired at Lexington in 1775 were, in part, fired over America’s desire to industrialize and end their trade deficit. How so?
In the years leading up to the Revolution, the British became increasingly interested in preserving their economic hold on the colonies (mostly by enforcing existing, but often ignored, laws). They had a good thing going: the colonies bought British manufactured goods, which supported Britain’s growing industries, in exchange for exotic products, like tobacco. This trade pattern (supporting industry by exporting manufactured products and importing raw materials) is called mercantilism. Mercantilism was great for Britain, because the colonies fueled her industrial and economic growth. Need proof?
During the eighteenth century, Britain’s economy grew increasingly industrialized: by the 1770s, nearly one in five British men worked in manufacturing, which was exceptionally high for the time. [2] This growth was mostly spurred by colonial expansion. For example, between 1700 and 1773, manufactured goods, as a percent of British exports, grew from 8.4% to 27.4%. [3] In other words, Britain started exporting more valuable stuff. In turn, this increased Britain’s trade surplus with her colonies. In fact, the surplus grew from £67,000 (1721-30) to £739,000 (1761-70)—in a few decades it was eleven times as big.[4]
Remember, if Britain ran a surplus, the colonies ran a deficit, which meant that a massive, ever-increasing, amount of wealth flowed from America to Britain. Eventually, the colonists realized that they would be better off building their own stuff, rather than buying it. This was bad news for Britain, who cracked down on colonial industry. In the 1750s they banned the construction of new iron-slitting mills, [5] and in 1775 they outlawed the production of steel products and certain industrial equipment.[6] They even went so far as to ban the export of textile (cloth) manufacturing technology to the colonies, by criminalizing the export of blueprints or equipment, and preventing specialists from leaving Britain.[7] They were determined to keep their monopoly.
Eventually, the colonists had enough. They revolted. It went badly at first: the would-be Americans had little industry, and were chronically short of war supplies like gunpowder, muskets, knives, even uniforms. In fact, it was not until European powers, like France, supplied the colonists with weapons that the tide began to turn.[8] The rest is history.
After Cornwallis’ surrender at Yorktown in 1781, the Americans were free, but vulnerable. Their independence was in their allies’ hands: no weapons, no freedom. To fix this, America needed to develop an industrial base that was capable of building everything she needed to defend herself. Fundamentally, America’s political independence required economic independence. This is why George Washington signed the Tariff Act of 1789.[9] Tariffs (taxes on imports) made British goods too expensive to buy, and this forced American producers to pick up the slack.
The policy was promising, but progress was slow. This changed after the War of 1812, when Britain’s naval blockade showed America how dependant on imports she still was. Congress took action, passing the Tariff Act of 1816, which unified America’s tariff policy, and doubled the average rates. [10] This further protected America’s industries from British competition, and set the stage for America’s industrial revolution. In fact, high tariffs were the norm until the 1970s (when everything started to unravel).
So there you have it: everything you learned in school was wrong.
Not only was America never a free-trading nation, but most of our founding fathers (and all the presidents on Mt. Rushmore) were economic protectionists.[11] They knew that political independence required economic independence, and they knew that high tariffs were the best, if not the only way to ensure this independence.
I hope you enjoyed your crash course in American economic history. Next, I will show you that we are not so different from the colonists. Like them, we depend upon foreign industries to supply us with life’s necessities, we are weighed down by a massive trade deficit, and most importantly, we have had enough.
[1] Curtiss, Industrial Development of Nations Vol 3, 6.
[2] Shafaeddin, “How did developed countries industrialize?” Table 3.1. The American colonies absorbed 72% of this increase.
[3] Ibid. 76.
[4] Shepherd and Walton, Shipping, Maritime Trade and the Economic Development of Colonial North America. 42.
[5] Shepherd & Walton, The Economics of Early America, 68.
[6] Ibid. 159.
[7] Tucker & Tucker, Industrializing Antebellum America, 95.
[8] Shepherd & Walton, The Economics of Early America, 197.
[9] United States Congress, United States Statutes At Large, Vol 1, 24. This was, in fact, America’s second ever piece of legislation.
[10] Northrup, The American Economy, 233.
[11] Some may protest, and claim that Thomas Jefferson was a free trader. He was, for a time. But following the War of 1812, he realized that some degree of economic protection was necessary to secure America’s independence. He also recognized that so long as Britain (and Europe) protected their economies, America was obliged to reciprocate. The man was no fool.