The Free Trade Conundrum:
Balancing Worker Wages and Consumer Prices
Comparing the 19th and 21st Centuries
by Tara L. Dirst
We would like to thank The Dirksen Congressional Center for their generous support in the creation of this lesson plan.
- Students will explore the concepts of free trade and protectionism
- Students will compare and contrast 19th and 21st century arguments for and against the tariff
Excerpts from 19th century congressional debates on the tariff:
Students should read the appropriate textbook section that deals with the McKinley tariff of 1890, or the fights over tariff protection during the late 19th century.
Danzer, Gerald, et al. The Americans. "Politics in the Gilded Age." Evanston, IL: McDougal Littell, 2003. 473-477.
The day prior to this lesson, give half the students the Republican pro-tariff congressional debate excerpts and give the other half the Democratic pro-free trade congressional debate excerpts sheet. Have them read it at home (after reading the appropriate textbook section that deals with the tariff) and take notes summarizing the arguments for their stance and against their opponents. This summary will need to be turned in after the discussion/debate the next day.
Initiate a discussion on the concept of "free trade" contemporaneously. Ask leading questions to get the students involved (some possible answers are italicized in brackets):
What does free trade mean? [Free trade implies that government remove barriers to trade, i.e., tariffs on imported goods, subsidies for domestically-produced goods].
What arguments are used to support free trade policy? [Competition helps keep costs to the consumers low. Market expansion is necessary for capitalist success. "Free trade" equals "Freedom" thus free trade is linked in the public mindset to democracy and freedom.]
What is protectionism? [In economic terms, protection involves government policies that promote home industry and limit importation of goods.]
What arguments are used to support protectionist trade policy? [Protection keeps wages high and helps keep people employed. It also keeps the economy more stable.]
Has anyone heard of the World Trade Organization (WTO)? What does the WTO do? What stance does it take on trade policy: free trade oriented or protectionist? [The WTO is an international economic policy organ for member states. It is
an evolution of the earlier General Agreement on Tariffs and Trade, wherein member countries make agreements on trade policy, including tariffs. It is a free trade organization.]
Tell the students that you will now turn to the debate on free trade that happened during the late 19th century.
Summary of Discussion/Debate:
Break the students into two groups, one representing the Republican arguments and the other representing the Democratic arguments (from the excerpts they read the previous evening.) Have the two sides face their desks toward each other.
Initiate a discussion/debate. Encourage students to express their opinions on whether the arguments are convincing and whether they apply to today's economic situation.
Suggested discussion questions (some possible answers are italicized in brackets):
- According to the pro-tariff argument, who benefits from protection? Why? [Everyone (but especially the worker)! Workers benefit from high wages and job stability.]
- What is interesting about the pro-tariff argument benefiting workers? Who were the main constituents of the pro-tariff Republican party? [The Republican party represented primarily pro-business, pro-industrialist interests.]
- Can the interests of the business owner and the lowest worker be the same and impacted positively by the same policy?
- What are the weakest arguments for the tariff? [This is completely opinion, but perhaps the argument based on tradition is weakest.]
- According to the pro-tariff argument, who benefits from free trade? [Other nations and other nations' workers.]
- According to the anti-tariff argument, who benefits from protection? [Special interests, wealthy industrialists]
- According to the anti-tariff argument, who is harmed by protection? [The consumer, because s/he is forced to pay more for goods.]
- According to the Democrats, what are the benefits of free trade? [Lower costs on goods.]
- How do farmers fit into this issue? [Farmers were largely for free trade because they wanted cheaper manufactured goods. The Republican argument, however, states that farmers benefited from a tariff which kept others employed, thereby allowing a home market for the farmers' goods.]
- Are there other reasons you can think of to be in support of protectionism or free trade?
- Which argument is most persuasive to you? Why?
After the debate, bring the students back together and summarize the information expressed during the discussion. Make two columns on the board, one for the Republican perspective, and the other for the Democratic side.
Go to the library and find one recent (within the last two years) multi-paragraph article from a newspaper or magazine that represents a contemporary opinion on the free trade debate. Read the article and write one paragraph summarizing its main points. Students must turn in a photocopy of the article and their summary for credit.
Keywords to use when searching databases (use combinations): tariff, WTO (World Trade Organization), IMF (International Monetary Fund), protests
Initiate a discussion on what the students found in their articles regarding current opinions on the tariff issue.
- Have you found out anything about current political party opinions regarding free trade? [Generally, Republicans favor free trade, while Democrats favor restrictions on free trade in order to protect American jobs. This is definitely a generalization, though, as can be seen with the recent steel tariff that was enacted by the Bush administration although this was rescinded at the behest of the WTO. The steel tariffs were also opposed by U.S. industries that use steel in their own businesses because higher steel costs would increase their manufacturing costs, but in order to remain competitive with international products manufactured with cheaper steel, the U.S. industries would be unable to raise their prices too much.]
- Did anyone find out anything about developing nations' opinions about WTO and IMF regulations on tariffs? [At many protests, farmers from other nations protest the agricultural subsidies given in the industrialized world as being anti-competitive. They see other rules and regulations as denying their own ability to create industries to manufacture goods that are already imported from other industrialized nations.]
- Think about why American businesses wanted tariffs in the 19th century and why they do not want them now. How does this compare to developing nations' interests in tariff regulations? [American business interests in the 19th century said they needed tariffs in order to help fledgling industries. Now that they are established and can benefit from cheaper labor abroad, they want developing nations to quash their internal support for their fledgling industries.]
- Did anyone come across an argument for "fair trade" not "free trade"? What does this mean? [Many people disagree with free trade because other countries may not abide by rules and regulations that Americans see as important (re: environmental protections, rules against child labor, labor protections, democracy). They would rather have competition between equivalent states. Do bring up the fact that there has been somewhat of a change within the last few years, where people from both parties are starting to question unregulated free trade.]
Summary of Discussions:
Write the columns representing Democratic and Republican opinions from the previous day's discussion on the board (19th century). Create two new columns to represent contemporary Democratic and Republican opinion. Although the issue today is not quite as partisan as it was in the 19th century, it is still interesting to notice the shift of the Republicans, who are still primarily the party of business interests, to the pro-free trade side of things, and the Democrats leaning slightly toward the protectionist viewpoint. Ask the students if they can think of reasons for this shift. [It largely has to do with the changes in the global economy and competition with lower-wage countries like China. U.S. companies have opportunities to reap economic benefits by manufacturing goods in those cheaper-wage countries and exporting those goods worldwide. Within the United States, labor unions have seen their influence drop, factories pack up and move overseas for cheaper labor, and wages and benefits decrease. Democrats are somewhat conflicted over the issue, but at times have advocated more limited global competition in order to protect American jobs.]
Grade the students on their summaries of the Republican and Democratic congressional debate excerpts, their class participation in the discussions, and their one-paragraph summary of the contemporary tariff issue.
State Standards Addressed:
If enough time is not available, this lesson can conclude after first day. Optionally, instead of a classroom discussion over the contemporary free trade argument, have the students do the library research outside of class time and write an essay.
Keep the column listing from Day 1's summary on the board, or re-write it the following day.
Day 2's discussion will probably not take up the entire period, so total time for this lesson should be about 1 1/2 50 minute class periods.
The complete text of the day's debates over the tariff issue is available: 'The Revenue Bill: Speech of Hon. Shelby M. Cullom, of Illinois, in the Senate of the United States, Friday, June 8, 1894' in 'The Congressional Record: Containing the Proceedings and Debates of the Fifty-Third Congress, Second Session'
15.D.5b Analyze why trade barriers and exchange rates affect the flow of goods and services among nations.
15.E.4aExplain why government may intervene in a market economy.
16.B.5a (US) Describe how modern political positions are affected by differences in ideologies and viewpoints that have developed over time (e.g., political parties' positions on government intervention in the economy).
- A map of the Congressional vote on the McKinley Tariff of 1890 is available online. This could be used as a way to analyze geographic influences on party alignment and support for the tariff, as well as party voting trends.
Eckes, Alfred, Jr. Opening America's Market: U.S. Foreign Trade Policy Since 1776. Chapel Hill: The University of North Carolina Press, 1995.
Lovett, William A., Alfred E. Eckes, Jr., and Richard L. Brinkman. U.S. Trade Policy: History, Theory, and the WTO. Armonk, NY: M. E. Sharpe, 1999.
Taussig, F. W. The Tariff History of the United States. Eighth ed. New York: G. P. Putnam's Sons, 1932.
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