"PROGRESS AND POVERTY." I. IN "Progress and Poverty" Mr. Henry George has given to the world a brilliant work, admirably written, full of eloquence, radiant with the noble aspiration of diminishing human suffering, and absolutely devoid of that too common cowardice which stops at each sentence to consider whether the words about to be written will be in harmony with opinions avowed upon the other side of the Atlantic. But the ability and earnestness of the author and the tremendous importance of his subject make it all the more necessary to examine with care every doubtful premise and every questionable deduction, and to collect what evidence we can as to the exactness or carelessness of his methods of reasoning. Of these we have some specimens in an article published by Mr. George in the Popular Science Monthly for March, 1880, entitled "The Study of Political Economy." In this he says: "The effect of a tariff is to increase the cost of bringing goods from abroad. Now if this benefits a country, then all difficulties, dangers, and impediments which increase the cost of bringing goods from abroad are likewise beneficial. If this theory be correct, then the city which is the hardest to get at has the most advantageous situation; pirates and shipwrecks contribute to national prosperity by raising the price of freight and insurance; and improvements in navigation, in railroads and steamships, are injurious. Manifestly, this is absurd." It is certainly absurd, but the absurdity must be looked for in Mr. George's reasoning. The true statement should be this: One of the effects of a tariff is to increase the cost of bringing certain kinds of goods from abroad. Nevertheless a tariff is said to be beneficial. If so, then everything which increases the cost of bringing from abroad not only those certain goods, but all goods, must likewise be beneficial. The obstacles he mentions not only raise the price of a particular kind or kinds of goods, but of all goods, and that of passage also, and they diminish the value of all exports. The railroad and the steamship facilitate every sort of exchange, but this does not prove that every sort of exchange is beneficial. Rum, opium, small-pox, and leprosy do not become desirable because distributed by rail and steamer! A tariff does not stop all exchanges, but only some. That would be a droll syllogism which ran : "If to stop some exchanges be beneficial, then to stop all exchanges would be beneficial." Mr. George continues thus: "And then I looked farther. The speaker had dwelt on the folly of a great country like the United States exporting raw material and importing manufactured goods which might as well be made at home, and I asked myself, What is the motive which causes a people to export raw materials and import manufactured goods? I found that it could be attributed to nothing else than the fact that they could in this way get the goods cheaper, that is, with less labor. I looked to transactions between individuals for parallels to this trade between nations, and found them in plenty the farmer selling his wheat and buying flour; the grazier sending his wool to a market and bringing back cloth and blankets; the tanner buying back leather in shoes, instead of making them himself. I saw, when I came to analyze them, that these exchanges between nations were precisely the same thing as exchanges between individuals; that they were in fact nothing but exchanges between individuals of different nations; that they were all prompted by the desire and led to the result of getting the greatest return for the least expenditure of labor; that the social condition in which such exchanges did not take place was the naked barbarism of the Terra del Fuegians; that just in proportion to the division of labor and the increase of trade were the increase of wealth and the progress of civilization. And so, following up, turning, analyzing, and testing all the protectionist arguments, I came to conclusions which I have ever since retained." The reader who is familiar with the Free-Trade and Protectionist controversy will need no one to point out the weakness of the above paragraph. To get goods cheaper is not the equivalent of getting them for less labor. To get the greatest return for the least expenditure of a small portion of its labor is not the proper aim of a nation, but to get the greatest Gross Annual Product obtainable by the whole of its available labor. This is a very different matter. That exchanges and division of employments find place in all but savage societies, does not prove that there must be division of employments between nations. It is not necessary that England should make up all our raw materials while we confine ourselves to agricultural pursuits. We are numerous enough to derive from the division of employments every possible advantage among ourselves. No man can be certain that the increase of wealth and the progress of civilization are "just in proportion" to the division of labor and the increase of trade, because these two last are not the only nor even the chief elements in civilization; but even if they were, we are not promoting the division of labor nor the increase of trade in the United States by confining ourselves to raising raw material. THE OBJECT OF INTERNATIONAL TRADE. The object aimed at in trading with a foreign nation is to get what is wanted cheaper in the sense of for less labor, certainly; but this object is attained only when the reciprocal desires balance. When they do not balance, the party whose needs are the greatest in amount must give up more and more of any advantages arising from the exchange, and may have to give up the whole, - yes, and a good deal more than the whole; for if he does not possess the skill and the fixed capital he cannot begin to manufacture (which is his only defence) until the other party has extorted from him twenty or thirty or more per cent over the rate at which he might manufacture for himself if he had the skill and fixed capital. And this is not the worst: B needs more of A's goods than A will take of his. He must pay in treasure while this lasts. He may produce, if you please, a hundred millions of treasure a year; but if he pay out two hundred, he will soon find the basis of his machinery of exchange gone, only to be recovered after years of loss and misery, and |