PR

RESIDENT CHAPIN of Beloit College, has well stated in his "First Principles of Political Economy," the arguments for and against Protection. I will give them in full.

The Theory of Protection distinctly stated is, that, in order to promote home industry, the importation of certain articles, from countries where they can be produced cheaper than at home, should be prohibited or restricted by heavy duties.

In direct opposition to this,

The Theory of Free Trade affirms that a nation's wealth and prosperity are best promoted by maintaining the utmost freedom for the exchange of all commodities among its ow people, and with the people of other countries.

The mere statement of the principles suggests two conflicting economic systems. In practical legislation two corresponding policies have been in conflict through all the history of our nation. There seems no place for compromise: truth and wisdom must lie on one side or the other. In the discussion of each department of our science, freedom appears as the natural law of industry and trade. But on the face of it the theory of protection involves an interference with freedom; an interference which affects all of the four departments,-production, consumption, distri

14

INTERNATIONAL TRADE.

bution, and exchange, though applied most directly to the last named. Is it not plain, then, that the presumption is against the theory that the burden of proof is laid over upon its advocates? What are the arguments urged to sustain it? We can notice only the three most important and plausible. It is said,

1. Protection is necessary to secure that variety of industry and that balance of different industries which are essential to a people's prosperity. This is the broad proposition which underlies and includes all arguments for the system. In form the argument is logical. It gives for a major premise the affirmation that a varied and balanced industry is essential to a people's prosperity. The minor premise is that protection is a necessary means to varied and balanced industry. If the premises are admitted, the conclusion is sound: a protective policy must favor a people's prosperity.

The truth of the major premise cannot be questioned. On the other hand, it is worthy to be presented in full force, resolved into several particulars, as a kind of summary of economic principles.

a. Every country has a great variety of resources, and the development of all its resources conduces to its greatest wealth.

b. Among the population of every country there is a corresponding diversity of native talent, and labor is most effective when every one has scope for doing that for which he is best fitted.

C. The actual wants of men are equally diverse, and the highest happiness of a people depends on the degree in which these varied wants are provided for.

d. A diversity of occupations makes a home market for all sorts of products, saving cost of transportation, favoring division of labor, and binding all classes together by ties of mutual helpfulness and common interests.

e. Varied industry favors the social and moral advance.

ment of a people, quickening and broadening minds, enlarg ing hearts, and impelling to noblest action in the lines of rectitude and benevolence.

These statements will be readily accepted by all candid As bearing on the question under consideration, they need but a single qualification. It does not follow that a people must hasten by all means to develop every source of wealth existing among them, or maintain at all hazards every possible form of industry. The people of Barbadoes. have ample facilities for raising table vegetables, but they have greater advantages for raising sugar. Hence it may be good policy for them to produce mainly sugar, and get the other provisions from other countries, where the cost of raising them is greater, perhaps, than it would be on their own soil. Many such cases do exist, but they are exceptions which prove the rule.

The real issue is joined on the second or minor premise,― protection is necessary to secure diversified industry. This proposition is met by a flat denial, and the positive affirmation that there is a better and surer way of reaching that result. Where no interference or obstruction is allowed, there comes a spontaneous development which is safe and constant, because it is in accordance with nature's law. This thought may be unfolded in a few distinct, yet connected, propositions.

a. There is a natural growth of human industry, the laws of which are as fixed and certain as those which pertain to the growth of a tree.

b. Free competition is the healthy stimulus to that growth.

C.

Under the natural law of development, industry will be applied to the several native resources of a country as fast as the increase of labor and capital will warrant.

d. Men's instinct for accumulation, following diverse individual capacities, tastes, and predilections, is the safest

guide to determine the order in which labor and capital shall be applied to those various resources. Under it, whatever promises a profit will be undertaken as soon as it can be without sacrificing a greater profit elsewhere.

e. The attempt to force labor and capital into certain employments before their time deranges the order of nature, and produces reactions which hinder the desired result.

f. At any stage of this development, if exchange is free, foreign products are purchased with the fruits of a people's most effective labor, that is, with those articles which they can then produce to the best advantage; which they can best afford to part with, because they are obtained at the least cost. By all such advantageous trade, capital, the prime element of varied industry, is increased, and labor is sustained.

g. When, by this natural progress, a people come to take up a new industry for which they have natural advantages and God-given capacity, no foreign competition can crush it; for, even in its infancy, it is charged with the nation's life and strength.

h. An industry which is not indigenous, which has no natural advantages, or which is prematurely set up and fostered by artificial means, can have only a sickly, uncertain life, and is supported at a wasteful expenditure of a nation's

resources.

The strong reason urged on the other side to prove that protection is necessary is thus presented:

"Foreign competition crushes out the home production of all but the rudest and coarsest articles of manufacture, and prevents the establishment of a varied industry, unless the government interfere, as the personification of the nation. and its co-ordinating power, to restore the equilibrium by discouraging imports."

If the question is raised, how foreign competition is able to do this, the answer must be that the foreign country has

either superior natural resources, or more abundant capital, or laborers in greater numbers, and better skilled for the work to be done, or possibly all these advantages combined. If this be so, it may be asked again, how can. government interference, discouraging imports, counterbalance these advantages? It is quite evident that protection cannot add to the natural resources of a country. It can never give to France the coal-fields of England, nor bring to the prairies of Illinois the water-powers of New England, nor secure to Germany the cotton-raising facilities of our Southern States.

(Obviously a protective tariff cannot create capital. ) Capital springs and grows only by industry and frugality. It is the

fruit of saving. (And certainly legislation has no power to create men, or endow them with skill) Population increases both by births and immigration, according to the abundance of the necessaries of life which are furnished; and a people grow in skill as they grow in intelligence, and bring their faculties into active exercise.

All that protection can do is to concentrate capital and labor on one employment, and for this it lays a special burden on all others for the benefit of the favored occupation. The advocates of this policy keep out of sight the fact that it can do nothing more than to change the direction of capital and labor, and that the duty is a tax laid upon the many for the benefit of a few. When articles of foreign production are imported, they are to be paid for by the products of home-labor, and capital; and the question of economy is Which is the cheapest? Which will bring the largest returns for a certain amount of labor, to make these articles ourselves, or to make something else with which to buy them? Left free from government interference, home labor and capital will lay hold of whatever natural resources a country possesses, and, with reference to both home wants and foreign wants, produce the things most feasible and desirable at the cheapest rates.

The surplus of these products will pay