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J.A. La Nauze, Alfred Deakin: A Biography (1965)

Much like its recent turn towards geopolitical isolationism, America’s sudden embrace of tariff protectionism should be viewed as a return to a historical norm, that was considered one of the nation’s defining characteristics before World War II. Indeed, when Australia experienced its own fierce debate over the economic effects of tariffs, which formed the central dividing line of politics in the late 19th century and first years after federation, the United States was often upheld by Australian Protectionists as a shining example of the supposed benefits of clamping down on outside competition. Particularly for a relatively ‘young’ country with an underdeveloped manufacturing industry.

In one of the earliest debates within the new federal parliament when it first sat in 1901, future Liberal Prime Ministers Alfred Deakin and Joseph Cook, engaged in a sparring match over whether there was more poverty in Protectionist America, or Britain, which under the direction of William Gladstone had become the world’s foremost proponent of Free Trade. In language remarkably similar to modern debates on inequality, Cook was arguing that 75% of the wealth of America was in the hands of 1% of the population, only to be met by several interjections from Deakin, who claimed that there were 2,000,000 paupers in England.

Deakin’s outspoken views are notable for a couple of reasons. Firstly, because he was so open to criticising Britain at a time when Australians considered themselves to be resolutely British and held the ‘mother country’ in great affection. Secondly, because this self-styled liberal was rejecting one of the defining aspects of what liberalism meant in Britain at the time.

We should not fall into the trap of thinking that detailed economic arguments in favour of Free Trade are a product of the post-war world and particularly the economic liberalism of the 1980s. Because the core arguments revealing the benefits of Free Trade, are still ultimately those made by Adam Smith in his The Wealth of Nations, published in 1776. In the 19th century, admirers of Smith were already making very similar arguments to those that would once again become dominant in the 1990s. Namely that Free Trade not only meant nations leaning on their comparative advantages to make everyone better off, but also a free flow of goods that would greatly reduce the likelihood of global conflict and usher in an era of world peace.

While in both eras this proved to be over-optimistic, people willfully ignoring the sound economic logic underpinning Free Trade are not a new phenomenon of the 2020s. Indeed, as documented in La Nauze’s biography, Alfred Deakin himself was initially a supporter of Free Trade, before conveniently converting to Protectionism at the behest of the powerful editor of The Age David Syme. While there are many historical and contextual factors that led to Protectionism winning out over Free Trade in the first decade after federation, including the fact that every state barring New South Wales relied on tariffs as their primary source of government revenue, it is equally the case that Protectionism has always had a strong populist, and therefore politically advantageous, appeal across a significant proportion of the electorate.

Although the great irony is that when as Prime Minister Deakin introduced our comprehensive tariff walls, it came after a near electoral wipeout of the Protectionist Party at the 1906 election, which left him entirely reliant on the support of a much bigger ALP. Once the tariff issue was settled, the Protectionists and Free Traders would merge into a ‘Fusion’ Liberal Party, that Deakin again led to an electoral disaster in 1910. Hence, it was the more Gladstonian Joseph Cook who would secure the first outright Liberal election victory in 1913.