starvation of the laboring people, was the importers and middlemen. So they plead for their private taxation of the commodities of this nation, when they plead for a free-trade tariff.' It will follow from the above definition of protection, that there is always a broad field of discussion, within its limits, as to whether our capacity, or the conditions regulating our production of a given commodity, will produce the control of the home market by this domestic production, which is the ultimate aim of true protection, as set forth in that definition. Thus, suppose a certain kind of wool can only be produced in foreign countries, and our domestic production can not regulate its price on account of our national incapacity to produce it in the proper economy and quantity. Then, that fact being presumptively established, and it being shown that this grade of wool does not displace a grade of wool as economical, quality considered, as that we are so capable of producing, true protection would require that a duty be not levied upon it. But if it be presumptively shown that in future, by adequate encouragement, we can produce this particular grade of wool, or another equivalent one, so as to permanently regulate, or, in other words, reduce our market prices, then true protection would require that an adequate duty be levied upon it. This it does because it is of national importance to render the crude resources of nature profitable, including those which lie dormant in vast tracts of land suitable only for sheep raising, which would otherwise remain useless. This it also does because a permanent reduction in its market price makes the benefit of the protection national in character. It will thus be seen that the protective system takes into account the omnipresent commercial desire in mankind to take advantage of any market, to extort the highest possible price for any commodity; that it recognizes that, in obedience to man's commercial instinct, the foreign importer always charges this highest price when he controls our market; and lastly, that it seeks, for the general good, to restrain this instinct in him, by building up a domestic production which shall compel him to sell at the prices we establish, instead of at those he 1 Final Rep. Royal Commission, p. 43, par. 27 e. Atkinson, Prog. of Nation, pp. 229-30. Rep. Operative Bricklayers' Society, Luton, England, Nov., 1885, says: "Thousands of people who would work if they could get any to do, have to live in a sort of semi-starvation." [Second Rep. Royal Commission, Appx., part 2, p. 44.] 2 Jefferson says: "My idea is that we should encourage home manufactures to the extent of our own consumption of everything of which we raise the raw material." [Letter to Humphreys, Jan. 20th, 1809.] does and would establish if unrestrained by it. Thus limited and understood, protection becomes national and not sectional.' In defining protection an additional consideration is necessary. This is, that the duties imposed in the name of protection shall be high enough to subserve the purpose for which they are professedly imposed. He who admits that some protection of domestic industry is necessary cannot, except hypocritically, refuse to make it effective. Another consideration is, that protective duties must be reasonable. A truly protective system is conservative. It is founded upon the truth that some nations have natural capacities in the shape of the natural crude agents and materials of production, and in the industrial power necessary to convert these into commercial commodities, which it will be to the advantage of those nations to convert into those commodities. It is founded upon the further truth that great capital and technical skill in labor and management must, under modern conditions, be brought to bear upon these agencies and crude materials to economically convert them into commercial commodities, and that it is a matter of time and experience in the actual production of these commodities to gather and organize the capital, and confer the technical skill upon the laborers and managers of the establishments requisite to economically produce these commodities, with fair wages to labor and a profit to the capital. And, lastly, it is founded upon the final truth that, in most branches of modern production, so much of a human lifetime is required to secure this organization of capital, and the acquiring of the necessary technical skill by the corps of laborers and the managers of such vast new producing enterprises, that unless some guarantee is afforded that the permanent continuance of the new business shall be beyond the reach of the weapons of commercial warfare, which modern science and progress have placed in the hands of already established competing producers in other countries, the new domestic business will never be established, or perpetuated.* 1 Prof. Sidgwick of Cambridge, England, says that protection, when the duties are not high enough to exclude the foreign product, "will have the effect of levying a tribute upon foreign producers, the amount and duration of which may, in certain cases, be considerable." [Prin. of Polit. Economy, p. 491.] Again, he says that protection may, under certain probable circumstances, "yield a direct economic gain to the protecting country." [Ibid., 485.] The exportation of lumber from the United States amounts to about $28,000,000 per annum, and therefore our home supply exceeds our demand by about one-twentieth of our total product. Hence, Canadian lumber seeking our market must be sold here at the price fixed by our domestic supply, and the Canadian importer must pay the duty out of his own pocket. How an inadequate duty can permit the ruin of an industry already established among This guarantee of permanent continuance of the new business, in any country, can usually only be afforded by its government, by a protective system. Such a system is established to reserve the market of the nation adopting it to competing domestic producers of a given commodity, by placing these latter upon an equality with competing foreign producers, so far as the latter may have an advantage in the artificial adjuncts already in operation, by which they convert their natural crude materials into finished products and sell them, such as capital, skill, cheap wages, possession of the domestic market, trusts to suppress foreign competition, etc. A true protective system has its maximum and its minimum limits, by which to measure the duties it proposes. Its maximum limit is that rate of duty which, under such future contingencies as can be foreseen, shall place domestic producers of a given commodity on a complete equality with foreign producers now and hereafter, while maintaining wages, thus guaranteeing the home market for the future as well as the present to the competition of the domestic producers. Higher than this protective duties should not go, because, by so doing, they overstep the maximum boundary of protection and become prohibitive, and protection is not prohibition by law. It may become prohibition by the cheap domestic competition it creates, but that is a different matter. The minimum limit of a true protective system is that rate of duty which, considering the present only, is necessary to place domestic producers on such an equality with foreign producers that the home producers may maintain the rate of wages to their workmen and make some slight profit on their business. Lower than this protective duties cannot go, because they cease to be protective and become mere tariff-for-revenue duties the moment they drop below the line necessary to protect the continuance of the superior wages of the domestic industry against the commercial weapons of foreign us is shown by the importations of pocket cutlery and home production of same in recent years: 1889 ... IMPORTATION. $975,000 00 1,200,000 00 HOME MANUFACTURE. $1,320,000 00 795,000 00 730,000 00 [Speech, Senator Hiscock, Cong. Rec., Aug. 21, 1890.] Of fifty-three cutlery firms in this country, thirty have been completely wiped out, nine have sunk their original investment, and reorganized with new capital, and most of the remaining fourteen have other branches of business to rely on to tide them over in this branch. Speech, Senator Platt, Cong. Rec., 1890, p. 9648.] competition. When a duty is so low that its result is merely to augment the revenue, it is not protection, for it protects nothing. To sum up this branch of the subject, we conclude: That protection demands neither a high tariff nor a low tariff, but a WAGES TARIFF, i. e., such a rate of duty as shall be adequate to maintain, in prosperity, the domestic industry, by which and from which those wages are derived, in the production of the commodity which is the subject of the duty. CHAPTER III. THE TWO TARIFF SYSTEMS CONTRASTED. "Now look on this side, and now on that." IT will be observed that as "free trade" is a system of tariff taxation, and as protection is also a system of tariff taxation, the question we really have before us is, which of these two systems of taxation we shall choose. By "free trade" is, of course, meant, as is explained in Chapter I., the only economic system which has ever had an international operation under that name. We have seen that protection is that economic system which requires that its sufficient and reasonable duties shall only be levied upon such commodities (luxuries excepted) as we are capable of producing in economy and quantity, to regulate prices in the home market. Free trade, on the contrary, is that system of tariff taxation which requires that its duties shall only be levied upon those commodities which we are not capable of producing to substantially affect the home market, or on which, in other words, the duty shall be substantially a revenue duty only. As a correlative of this definition, whenever, under "free trade," the government is compelled to impose duties on articles which can be produced by home industry, because the duties cannot be raised otherwise, either the duties must be placed so low as not to protect the establishment of those domestic industries, or else those domestic industries must be made to pay an internal revenue tax on their products fully equal to the customs duties imposed. The free-trade tariff system also deals with another class of cases, in which it imposes duties upon a commodity which can be produced by domestic agencies, wherein an internal revenue does not appear to be applicable so as to reach all of the domestic product produced, and in such cases free trade requires that the domestic production of the tariff-taxed article shall be absolutely prohibited by law, as, for |