products brought into Germany two or three times higher in some cases than the rates for the other treaty nations. The general tariff had a maximum and a minimum rate, and while the minimum rate was allowed to other countries, the maximum rate was imposed on the United States. The United States was excluded from the "most favored nation" clause. This tariff was to go into effect on March 1, 1906. Diplomatic negotiations and concessions on the part of the United States deferred the enforcement of the German tariff.

The loss to American trade resulting from such a tariff will become evident, when we consider that the trade of the United States with Germany ranks second among all the foreign countries. In 1902 United States exports to Germany amounted to $173,148,280. If the new German tariff had gone into effect, our exports to that country would have been considerably lessened, to the loss of our home industries.

9. Protection does not increase the General Rate of Wages in a Country. — It is true that wages are higher in the United States than in any other country. Yet the mere fact of higher nominal wages does not necessarily indicate a better status of the laborer.

Wages is a relative term. Wages bear an important relation to commodities for which they exchange. Wages are sought after, in order that when acquired they may be exchanged for all those things which make up the necessaries, the comforts, and the luxuries of life; in fine, the products of all the several systems of production.

If the high wages of the laborer will not procure for him more articles than lower wages would, his condition is not bettered by the higher wages. But the number of articles for sale in the country is reduced by protection in two ways: first, by the diminishing of imports, which will be the necessary consequence of the tariff duties; second, by the smaller output of the product from protected industries than from self-supporting industries. The supply of articles which can be procured by wages will thus be considerably lessened. The prices of things will rise because of the diminution of the supply. The prices will still further be

raised by the tariff duties. Hence, not only will there be absolutely fewer articles to exchange for the wages of the laborer, but there will be relatively fewer, because a certain fixed amount of wages will not, by reason of the increased prices, be able to obtain as many of the articles as before.

In the above illustration, the number of articles for sale are absolutely less under protection, as 4000 in comparison with 5000. The number of articles procurable for a certain sum are relatively less, in view of the increased price, as 22 in comparison with 333.

Certain industries carried on in this country have been extremely productive; an immense amount of product proceeds from a comparatively small amount of capital invested. Wages in these industries are inclined to be higher here than in other countries, and in agriculture particularly the wages of our farm laborers have always been higher than the wages of farm laborers in Europe.

These very productive industries, such as agriculture, are able to pay high wages because of the great profit on the abundant product. Other industries, in order to secure labor, must compete with those high-wage-paying industries; they must offer wages at least equal to those paid by farmers, or they could not attract labor from the farming industries.

Now, before the year 1789, when this country was on a practically free trade basis, wages in the various industries then carried on in this country were higher than in European countries.

Protection did not bring about that condition. The reason of it must exist elsewhere. Again, wages are higher in England, a free trade country, than in Germany or Russia, where protection obtains.

In 1880, of the total number of persons employed in agriculture, commerce, transportation, and professional services, there were about 15,400,000 who were not directly dependent for their employment on the tariff. About 1,990,000 were engaged in industries which were affected by the tariff rates, and even many of these industries could succeed though left to themselves. Now, it would be unreasonable to assert that the wages of these 1,990,000 laborers could so influence the wages of the 15,400,000 others, as to keep them permanently at a level fifty per cent higher than the wages paid abroad to foreign laborers..

It is claimed by many, therefore, that wages are independent of tariff policy, whether it be for free trade or for protection. The cause of the high wages existing in the United States is to be sought for in the immense natural resources of the country, and in the energy and activity, the skill and inventiveness, of the people. To quote from a prominent writer: "What is the reason why wages are high in the United States? It is simply because nature has lavished her gifts as never before upon an intelligent, enterprising, and industrious people. Labor and capital, when government does not force them into unnatural channels, yield a larger return than in Europe. If you invest a capital of, say, $1000 and an amount of labor equal to 1000 days' work in America, you will receive a greater product, more bushels of potatoes or wheat or pairs of shoes, than in a country like Germany. There is consequently more to be divided among all those who take part in production than in the Fatherland, and of this greater plenty labor receives a share in higher wages." (Ely, Problems of To-day, p. 83.)

While it cannot be said that the general scale of high wages in this country is due to protection, it must be admitted that in certain cases protective duties have enabled the industries helped by them to keep up their high standard of wages.

Protection has made these industries possible. The artificially raised price of their products enables them to obtain a profitable return in proportion to the capital and labor invested. This return is divided into profits for the capital invested and wages for the labor employed. The amount of profits and of wages will depend on the price of the product, and this price depends on the tariff. If the protection should be taken from these industries, profits and wages would disappear. In other words, the capital would have to seek other industries or other channels of investment, and the laborers would have to seek other kinds of employment.

If these industries were closed down by the withdrawal of protection, and especially if all the protected industries were obliged suddenly to retire from business, by a repeal of the tariff, much hardship would result and great disorder would ensue. Much of the capital would be lost, and ruin would fall upon many of the capitalists whose money had been invested. A great mass of laborers would be thrown out of employment, and would be forced to seek work in other industries for which they would be at first unadapted. This great increase of the supply of labor would cause the price of labor or wages to fall, and would unsettle all the industries in the country.

It is claimed, however, that if there were gradual diminution of protective duties, the forces, capital and labor, would little by little accommodate themselves to the change, and it would be found that the general wages of the country would not permanently or for any great length of time be affected.

III. ARGUMENTS FOR PROTECTION

General Argument. Just as there exists in a city a striving for existence and for a betterment of existence among the individuals who compose the city, so there is a striving for existence and for a betterment of existence among nations. The struggle for existence among the citizens of a city is carried on by each one's employing what faculties he has in whatever conditions surround him, in order to produce something of his own

which he may exchange for the things he desires. In society, each man gives out something of himself and receives from society something in return. He who gives, receives.

And there is a perpetual competition among individuals, many offering to give what is desired, and each one of the many seeking to have his own product accepted. Hence the individual efforts, the invention of means, the use made of all one's resources, mental, moral, and physical, the making the most of advantageous circumstances often merely accidental, the taking advantage of the inefficiency or the failure of others. Life is fitly called a battle, and each one is engaged in a warfare.

What goes on among individuals in a city, goes on in like manner among nations. Here again, each nation is giving something of itself in exchange for things possessed by other nations. Here again, there is a species of warfare, an invasion in which military strategy is replaced by commercial strategy, and the invading forces are not men, but products and articles of merchandise.

International trade is the means employed by nations in this great struggle for national existence and national supremacy. But international trade does not confer equal and reciprocal advantages upon all nations engaged in it. It may lead to the enrichment of the few and the ruin of the others.

"International commerce," says Gide (Principles of Political Economy, p. 320), "when left to take care of itself, is liable to ruin the industry of a nation, to restrict or even to stifle its productive forces, and indirectly to endanger its very existence."

To prevent the dangerous encroachments of other nations, to resist the monopoly of more advantageously placed rivals, a nation must make use of protection. Without restriction, a nation may be destroyed; with protection, a nation may guard itself against its rivals, may restrain the hurtful competition of other nations, may bring about a balance between the advantages of its own inhabitants and those of other lands.

More Specific Arguments. The more specific arguments in favor of protection are as follows: