The Economics and Ideology of Free Trade

The Economics and Ideology of Free Trade

An Historical Review

Leonard Gomes

The Economics and Ideology of Free Trade makes an important contribution to the debate on globalization by providing much needed intellectual and historical perspective on the issue of Free Trade versus Protection.

Chapter 7: The British Tariff Reform Debate, 1903

Leonard Gomes

Subjects: economics and finance, economic psychology, history of economic thought, international economics

Extract

7. The British tariff reform debate, 1903 7.1 INTRODUCTION AND BACKGROUND In 1852 Queen Victoria remarked to her uncle, the King of the Belgians, ‘Protection is quite gone.’1 A generation later, however, a chorus of voices rose up in Britain against the continuance of the policy of free trade. At the time Victoria wrote, the British economy entered a period lasting twenty years of unparalleled prosperity. The way Britain prospered was by manufacturing goods for sale abroad, which her customers paid for in raw materials and food. Leading economists attributed the mid-Victorian boom to the enlightened policy of free trade which justified and supported that favourable international division of labour. In 1865 John Stuart Mill referred to the ‘flush of prosperity occasioned by free trade’ (Mill [1865] 1961, p. 384). William Stanley Jevons, in the same year, ascribed the buoyant economic conditions to ‘the unprecedented commercial reforms of the last twenty years’.2 The onset of the depression in agriculture (1874) and the milder general recession shattered confidence in the immutability of British industrial progress and triggered a reaction against free trade. It altered perceptions of Great Britain’s situation in the world economy. The combination of domestic distress and Britain’s relative decline as Germany and the United States rose in global economic stature produced in Britain a national malaise aptly described as ‘diminished giant’ syndrome – a condition that was to afflict the United States a century later as it confronted the rise of Japan and the ‘Tiger economies’...

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