stitution of the proportion of the American building and loan associations exists in any European country. . . The European working classes neither hire servants nor buy articles of luxury except in rare cases. The struggle for a barely decent living is ever before them. . . . Mentally contemplating the many cities I visited, and having in mind the conversations I had with workingmen who had lived both in Europe and America, I believe I may assert that whether the cost of living in Europe or America is greater, the workingman depends entirely on the standard of living he adopts while in America. If he voluntarily lives the life of self-denial in this country that he compulsorily lives in the native land, his outlay of money will remain about the same. Even then he will hardly be able to escape gaining something from the superior supply of the good things of life in America. Living is cheap to the wage worker in Europe only because he does without what in America soon becomes a necessity to him-food in good quantity and quality, presentable clothes among his aspiring fellow workmen and their families, and a comfortably furnished home in quarters responding to his awakened desires for equality with the American neighbors, and in general a larger and freer life."

Possibly the greatest advantage of a protective tariff in a country like the United States, as Dean John R. Turner of New York University has so admirably pointed out, lies in the fact that its primary benefit redounds to the most thrifty element of the population. Vigorously as they are denounced by agitators for their faults-and they of course, being human like the rest of us, have many faults the so-called "enterprising class," or entrepreneurs, those who undertake new enterprises and bear the risks of business management, are considered by econ

omists and the best observers of social conditions to be more thrifty as a class than are the professional or agricultural or laboring classes. It is these enterprising managers of business who play the chief rôle in building up new capital in the country, and justly as we may at times criticize the acts of certain capitalists, it is upon the growth of new capital that real economic progress, including primarily, of course, that of the wage-earners, is founded. Let us note, too, as a general fact with many individual exceptions, that it is the most successful business manager whose establishment pays the highest dividends which are mostly reinvested in productive business, thus building capital, who pays the highest wages and gives his workmen the best working conditions with the most continuous employment.

Now a protective tariff in the first instance favors this class of enterprisers. The other less thrifty classes for a time pay somewhat higher prices for their goods than might otherwise be necessary and a portion of these higher prices are passed back in the form of profits to the managers of the enterprise who, as said, usually reinvest most of it in the plant or in other supplementary establishments. In other words, the tariff thus becomes a primary agency in the creation of new capital.

The tariff thus is an element in the distribution of incomes which causes the expenditures of the less thrifty to take the form of new capital in the hands of the more enterprising element of the population. In the end, this benefit of thrift and industrial enterprise spreads throughout all classes, for increased wages and lower prices and added power to pay for professional services must all come finally from an increased production of goods or a lower cost of production or both; and these improvements

usually, practically always, come under the direction and in the establishments of these industrial leaders.

Bearing in mind the sound principles of economics and government, it seems clear that under present conditions material changes should be promptly made in this tariff: To protect and preserve the new industries which were developed during the Great War and which are necessary if we are to be reasonably self-sufficient in case of future war or national stress of any kind; to prevent the serious derangement of our industries and the probable ruin of many establishments through the dumping of European goods on our markets at abnormally low rates; and to maintain the standards of living and working of our people which would be seriously endangered unless such protective measures are taken. It is evident that these changes in our laws can be most wisely worked out, as recommendations to be submitted to Congress, by a permanent Tariff Commission whose interests will be entirely non-partisan while soundly patriotic.

XIV

FOREIGN TRADE

THERE is a distinct tendency on the part of some wellmeaning enthusiasts to believe that the future happiness and prosperity of the nation depend upon the development of its foreign trade. In a measure this is no doubt true; but it is easy to exaggerate the importance of foreign trade. Alluring dreams of future greatness will not bring understanding; that can come only from looking the facts squarely in the face. It is one thing to recognize the importance of foreign trade and quite another to assume that its development should be the exclusive or even the chief aim of national policy.

Our problems are not like those of Europe, Asia, Africa or South America. We cannot follow the example of any other nation. If we would succeed, we must lead. Our economic position is as unique as is our geographic position. The war has given us an unprecedented handicap over every other nation of the world. Our foreign commerce has advanced by leaps and bounds until in many lines we have almost monopolized world trade. This advantage came to us through the temporary weakness of our competitors, not through our own efforts alone, and it is unreasonable to assume that we shall hold all the markets we now control.

Irrespective of the renewed efforts of our competitors, now released from the inexorable demands of war, it is possible for us to command all the foreign markets that

we require and all that we can develop in a healthy way. But to do this we must capitalize our inherent potentialities. No matter what efforts our competitors may make, we can meet them and beat them if we will but protect our incomparable home market, while developing on sound principles those foreign markets which offer natural and permanent outlets for our surplus.

The ideal foreign policy for America would at once give us the highest possible commercial independence and as far as possible make the rest of the world depend on us. As a great producing nation, we should develop foreign trade as part and parcel of a policy of strengthening home markets. And we should do this by stabilizing our financial mechanism, conserving our natural resources and raising our labor to the highest possible level of wellbeing and efficiency. These are the fundamentals of a permanently successful policy-a policy that will give us an unassailable commercial position.

America is the only country in the world which possesses, and has developed to the point of availability, the greater part of the raw materials essential to her industries. These resources thus developed are the cornerstone of our great industrial structure, the basis of our economic independence, and they must be protected. There must be no internationalism in this phase of our economic policy! According to the Director of the Geological Survey, the United States in 1913 contributed to the world's total more than 64 per cent of its phosphate; 42 per cent of sulphur; 38 per cent of coal; 37 per cent of zinc; 35 per cent of iron; 34 per cent of lead; 30 per cent of silver; 19 per cent of gold and 20 per cent of salt. We have timber in abundance, though it is rapidly diminishing, and an agriculture adequate to make us in a great measure independent. With respect to