has obtained in his struggle against the smuggler. He has gained by general improvements in morale and education; by more scientific and thorough departmental organisation; by submarine and other telegraphs; and above all by the compression of nearly all bonâ fide international trade within the limits of a few great ports and a few railway stations. It may therefore be expected that Preferential Duties within the Empire could now be worked with less than a quarter of the abuses which would have arisen if an equally large and complex trade had been subject to them, while the Revenue officer had no greater resources at his command than he had early in last century. But the abuses which caused the abandonment of differential duties by England were so great, and infused so much moral poison into many branches of business, that abuses much less than they might yet count for a good deal in the balance between our present system and one which proposes to cement the Empire by such means. So far as these difficulties are concerned the positions of England and her Colonies seem to be similar.

But in regard to the main issue their positions are far apart. Protective policies come naturally if not necessarily to young countries, which believe that many of their young industries may have a great future, if protected from the competition of powerful rivals in older countries, where capital is abundant and industrial organisation is highly developed. There may be—and in my opinion there arebetter methods of bringing public funds to the aid of those who are starting new industrial ventures, the chief fruits of which are likely to be reaped in a later generation and by people who have not borne the main strains and risks of pioneer work. But a protective tariff is the path of least resistance to this end. It is that which is in fact being universally trodden; and a new movement which tempts the Colonies to move a little further on this path, whether wise or not, cannot be a great disaster to them, at all events from the purely economic point of view. But the history of all countries and all ages is repeating itself in the Colonies. Even honourable men there are being drawn into slippery paths. They advocate preferential arrangements effected by raising the tariff against foreign goods without lowering it in favour of British goods; and they put into the forefront their zeal for the high ideal of Imperial unity. They look as little as possible at the private gain which may accrue to them

from the particular method of promoting that ideal which they advocate.

England, on the other hand, is the oldest of all industrial countries. She has no industries which need protection on the ground of youth. But she has a few which have needed a stimulus because they have been sleepy. Under the stimulus given to them by the sale of highclass imported products in their own market, the greater part of these few have been markedly aroused during the last few years; and she might indeed have been seven hundred million pounds the poorer if that stimulus had been shut out by a tariff. Her industries do not need defence against the cheaper capital of any other country. For good and for evil-in my opinion for good on the balanceshe has indeed abstained from as rapid a concentration of this capital into such huge masses as has prevailed in America, and even in Germany; but if she thought such concentration good, she could effect it more quickly than any other country except the United States, and perhaps more solidly than any other. In her case, therefore, import duties, levied otherwise than with a direct view to revenue, seem to me to have no economic justification. They cannot, I have argued, cause foreigners to contribute appreciably to her public burdens. Though they may cause new employment to appear in certain directions, they will necessarily lessen the National Dividend; and therefore they will necessarily lessen the amount of employment at good wages.

I believe that they have this effect in every old country, but that there is none other to which they could do injury at all comparable to that which they would do to England. She still has advantages in competition with other advanced countries due to her cheap capital; to her cheap coal; and to her climate, which is conducive to steady work, and is specially favourable to the finer cotton industries. But her chief remaining advantage lies in that unapproached freedom of movement, that viability that gives her much of the strength, without the cumbrousness and want of elasticity, of a single huge firm extending over the whole land. In the phase which the twentieth century seems to be opening out for her, viability for all things great and small, that may be needed directly or indirectly for the production of fine and complex goods, is essential to her. Unless she can produce these with less labour than any other country can,

it is in my opinion impossible that she can continue to pay, as she does at present, higher rates of real wages than prevail in any other old country for almost every kind of labour: the real wages of her people must fall to the German level. They might even fall below that; for Germany has advantages of her own. Railways are increasing the economic advantages of her situation in the centre of Europe very fast. Her people had learnt to use their low wages and professional incomes thriftily and wisely, before they came under the temptation to imitate English carelessness in domestic economy; and in this matter as well as in the technical economies of business, they have attained a high scientific perfection from which English men and women are yet far.

The suggestion, then, that England should abandon that viability, which is her chief source of strength in comparison with competitors in the Old and the New World, seems to me a radically bad way towards attaining a good end. In particular there is danger in the fact that in these schemes the gain which either side is invited to expect is greater than the loss which she is to incur; and yet, as the scheme includes differential duties which are essentially wasteful, the aggregate material gain must in my belief be less than the aggregate material loss. The schemes would be less dangerous if they started with the frank statement: "Imperial unity is an ideal worth much material loss; let us consider how best to share this loss among us." As it is, the schemes appear to me likely to breed more of disappointment and friction between England and her Colonies than of goodwill and the true spirit of Imperial unity. And, if approached in a spirit of greed, rather than of self-sacrifice, they are likely to rouse animosity in other lands, and to postpone the day at which it may be possible to work towards a federated Anglo-Saxondom, which seems to be an even higher ideal than Imperial unity.

*

PART III

THE PROTECTIVE CONTROVERSY IN THE

UNITED STATES

XVII

HAMILTON: REPORT ON MANUFACTURES1

*

T IS now proper to proceed a step further,2 and to enumerate

manufacturing establishments not only occasion a positive augmentation of the produce and revenue of the society, but that they contribute essentially to rendering them greater than they could possibly be without such establishments. These circumstances are:

1. The division of labor.

2. An extension of the use of machinery.

3. Additional employment to classes of the community not ordinarily engaged in the business.

4. The promoting of emigration from foreign countries.

5. The furnishing greater scope for the diversity of talents and dispositions which discriminate men from each other.

6. The affording a more ample and various field for enterprise. 7. The creating in some instances a new, and securing in all a more certain and steady demand for the surplus produce of the soil.

Each of these circumstances has a considerable influence upon the total mass of industrious effort in a community; together they add to it a degree of energy and effect which are not easily conceived. Some comments upon each of them, in the order in which they have been stated, may serve to explain their importance.

1 Alexander Hamilton (1757-1804), Report on Manufactures (1791). This was a report to Congress by Hamilton as Secretary of the Treasury, in response to a resolution passed in the House in January, 1790.

2 The preceding sections contain a refutation of the Physiocratic doctrine concerning the superior productivity of agriculture. (Ed.)

1. As to the division of labor.

It has justly been observed, that there is scarcely anything of greater moment in the economy of a nation than the proper division of labor. The separation of occupations causes each to be carried to a much greater perfection than it could possibly acquire if they were blended. This arises principally from three circumstances.

Ist. The greater skill and dexterity naturally resulting from a constant and undivided application to a single object. It is evident that these properties must increase in proportion to the separation and simplification of objects, and the steadiness of the attention devoted to each, and must be less in proportion to the complication of objects and the number among which the attention is distracted.

2d. The economy of time, by avoiding the loss of it, incident to a frequent transition from one operation to another of a different nature. This depends on various circumstances, the transition itself, the orderly disposition of the implements, machines, and materials employed in the operation to be relinquished, the preparatory steps to the commencement of a new one, the interruption of the impulse which the mind of the workman acquires from being engaged in a particular operation, the distractions, hesitations, and reluctances which attend the passage from one kind of business to another.

3d. An extension of the use of machinery. A man occupied on a single object will have it more in his power, and will be more naturally led to exert his imagination in devising methods to facilitate and abridge labor than if he were perplexed by a variety of independent and dissimilar operations. Besides this, the fabrication of machines in numerous instances becoming itself a distinct trade, the artist who follows it has all the advantages which have been enumerated for improvement in his particular art, and, in both ways, the invention and application of machinery are extended.

And from these causes united, the mere separation of the occupation of the cultivator from that of the artificer has the effect of augmenting the productive powers of labor, and with them the total mass of the produce or revenue of a country. In this single view of the subject, therefore, the utility of artificers or manufacturers towards promoting an increase of productive industry is apparent.