Custom dues on foreign goods impede them. Yet the same men at the same time support two policies, the results of which are thus completely diverse. That Frenchmen and Italians, after spending nearly two millions sterling in boring a tunnel through the Alps, can place their custom-house officers at each end to destroy in a great measure by the dues they exact the usefulness of this marvel of engineering, is an inexplicable contradiction.

To be consistent, a protectionist should demand the destruction of machines, for machines and free trade have as their common result the diminution of the labor necessary to obtain an object. Thanks to machinery I obtain my coal at less expense; thanks to the stranger I again obtain it cheaper; the result is identically the same. If we exclude the foreigner we should also break our machines; and thus increase in both ways the amount of labor requisite to obtain a given quantity of coal.

Capital turns spontaneously to the most lucrative field of employment. Protection diverts it from these to the less lucrative, compensating it for the difference by a tax levied on consumers, by the amount of which tax production is again diminished.

As their last argument protectionists maintain that for objects of the first necessity, such as corn and iron, a country should be independent of foreigners, lest, in case of war, it should find itself without the means of nourishment or defense. There is no example, however, of a people having lacked necessaries in war time, and to-day there is even less cause for fear than formerly. In the first place railways facilitate revictualling; in the second, since the Treaty of Paris, in 1856, the ships of neutrals may continue to transport the goods of belligerents. The complete blockade of a state is thus more impossible than ever; and it is the height of folly to inflict a permanent and certain harm in order to avoid a distant and more than improbable one.

CHAPTER XXX.

TARIFF AND WAGES.*

BY F. W. TAUSSIG,

Instructor in Political Economy in Harvard College.

THE

HE general question of free trade and protection has been treated in a previous chapter (Book III, Chapter VI). One argument for protection was not mentioned there, which is much urged by protectionists in the United States -the argument that protection is necessary to maintain the high wages paid in this country. It is said by the advocates of protection that the competition of articles made by ill-paid laborers in Europe would reduce, if free trade were established, the prices of articles made in this country, and that wages must fall correspondingly. Professor Laveleye does. not mention this argument, because it is not advanced by protectionists in Europe. On the contrary, in Germany and France high duties are demanded in order to protect the ill-paid laborers of those countries from the competition of the better-paid laborers of England. This fact shows. sufficiently that low wages in themselves do not enable a country to compete in another country, and that high wages do not prevent it from competing; otherwise England could not compete on the continent of Europe. The truth of the matter in this country is, that in those branches of industry to which we can most advantageously direct our labor and capital, the laborers produce a large product, and employers

· Supplementary Chapter in Laveleye's Political Economy.

can afford to pay them high wages. If in a given branch of industry, these high wages cannot be afforded, this industry is one which it is not advantageous for our country to undertake. Agricultural laborers in the United States are paid much higher wages than such laborers receive in any European country. Yet nobody believes that the wheat and grain produced by the ill-paid laborers of Europe can be imported hither in competition with our own wheat and grain; everybody knows that, on the contrary, we export these products to Europe. The reason is that the United States have great advantages for raising agricultural products; hence high wages are and can be paid to the laborers producing them. The general high rate of wages with us is due fundamentally to the great general productiveness of labor, which, again, is due in part to the energy and effi ciency of our laborers, in part to the extended use of machinery, and in a very large part to our great natural resources. It is in no sense due to the protective policy. If in making particular commodities, for instance, silk goods, such high wages cannot be paid to laborers under a system of free trade, it is a proof that it is not worth while for us to make silks. We can get laborers in Europe to make silks for us at the low rates of pay which prevail there. We can employ our own laborers, who are now making silks, in producing other commodities-for instance, grain or cotton goods. In producing the grain or cottons our laborers are advantageously employed; and in exchange for these commodities we can get from the foreign laborers more silks than our domestic laborers can produce at home.

CHAPTER XXXI.

FREE TRADE SHOULD BE THE ULTIMATE END AND AIM OF TARIFF LEGISLATION.*

BY EX-PRESIDENT JAMES A. GARFIELD.

I

STAND now where I have always stood since I have been a member of this House. I take the liberty of quoting, from the Congressional Globe of 1866, the following remarks which I then made on the subject of the tariff:

"We have seen that one extreme school of economists would place the price of all manufactured articles in the hands of foreign producers by rendering it impossible for our manufacturers to compete with them; while the other extreme school, by making it impossible for the foreigner to sell his competing wares in our market, would give the people no immediate check upon the prices which our manufacturers might fix for their products. I disagree with both these extremes. I hold that a properly adjusted competition between home and foreign products is the best gauge by which to regulate international trade. Duties should be so high that our manufacturers can fairly compete with the foreign product, but not so high as to enable them to drive out the foreign article, enjoy a monopoly of the trade, and regulate the price as they please. This is my doctrine of protection. If Congress pursues this line of policy steadily, we shall, year by year, approach more nearly to the basis of free trade, because we shall be more nearly able to compete

* U. S. House of Representatives, April 1, 1870.

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I am for a protection I am for that free trade

with other nations on equal terms. which leads to ultimate free trade. which can only be achieved through a reasonable protection." Mr. Chairman, examining thus the possibilities of the situation, I believe that the true course for the friends of protection to pursue is to reduce the rates on imports wherever we can justly and safely do so, and, accepting neither of the extreme doctrines urged on this floor, endeavor to establish a stable policy that will commend itself to all patriotic and thoughtful people.

Modern scholarship is on the side of free trade.