… is from an August 1894 letter from Pres. Grover Cleveland to Rep. T.C. Catchings (D-Mississippi) in which Cleveland gave his reasons for refusing to sign a tariff act; I discovered this quotation on page 292 of Douglas Irwin’s marvelous 2017 volume, Clashing Over Commerce:
When we give to our manufacturers free [that is, untariffed] raw materials we unshackle American enterprise and ingenuity, and these will open the doors of foreign markets to the reception of our wares and give opportunity for the continuous and remunerative employment of American labor. With materials cheapened by their freedom from tariff charges, the cost of their product must be correspondingly cheapened. Thereupon justice and fairness to the consumer would demand that the manufacturers be obliged to submit to such a readjustment and modification of the tariff upon their finished goods as would secure to the people the benefit of the reduced cost of their manufacture, and shield the consumer against the exaction of inordinate profits.
DBx: Cleveland here makes the case against the mercantilist fallacy that trade policy should encourage maximum domestic production and minimum domestic imports. Protectionists who subscribe to this fallacy often approve of low or even no tariffs on inputs used by domestic producers (especially domestic producers who produce for export markets) as a means of encouraging domestic production and exporting. But these protectionists demand high tariffs on consumer goods as a means both of preventing the outflow to foreign countries of money and – more importantly – of protecting domestic producers from competition. (Many modern American subscribers to this fallacy are under the absurd delusion that protecting American producers from foreign competition will make these producers “great again.”)
Protectionists are always looking out for the interest of a subset of existing domestic producers. Protectionists care nothing about consumers except insofar as consumption spending is a means of furthering the end of maximally and artificially inflating the revenues of the favored subset of existing domestic producers.
As. U.S. presidents go, Grover Cleveland is my all-time favorite. H.L. Mencken perceptively called him “a good man in a bad trade.”