1. Protection makes possible a number of industries which without it could not prosper. The silk industry is a case in point. Silk goods coming into the United States are heavily taxed by the tariff. Without such tax the domestic silk industry could not exist. Yet the extent of the industry is very great. In 1905, the value of the silk product amounted to $133,288,072. The industry employed 79,601 laborers, had an invested capital of $109,556,621, and expended $26,767,943 in wages..

Were the tariff taken off and silk goods allowed free entrance from France, Switzerland, and Japan, which countries, on account of cheap labor and greater natural facilities, can produce silk goods more cheaply than the United States, the silk goods industries of the United States would cease.

So it is of a great many other industries in the United States. If protection were to cease, the labor and the capital would have to seek other industries. They would have to seek out our selfsupporting industries, such industries as enjoy natural facilities to a greater degree than other countries. But these industries in the United States, such as farming, cattle raising, and cotton growing, are few, and if all the capital and labor had to be invested in them, very little profit could be gained from any one of them. There would be a glut of capital and an oversupply of labor in the country. They would have to seek other countries.

2. If a nation should be forced to apply itself only to occupations for which the country offers special facilities, it would become stunted in its growth. We saw the disadvantage resulting to the laborer from the division of labor. Specialization in one kind of work in a factory hurts the individual by limiting the scope of his activity, by preventing his mental development, by reducing him to the nature of a machine. A similar effect will be produced, although on broader lines, on the whole nation, the activity of which is cramped by foreign competition, and the energy of which must be confined to a very limited number of industrial enterprises. The physical, mental, and moral development of the people will be retarded, and civilization will advance

with halting step. This is called the "variegated production argument.

3. Importation of foreign products, when not counterbalanced by exportation of home goods, drains the country of its money and makes it a debtor country. Moreover, when it has no more money to send out in payment for its imports, it must borrow money from abroad in the shape of loans, and thus further plunge into debt and hasten the moment of bankruptcy. Such has been the experience of Portugal and Turkey. Even though the effect of the outgoing of money from a country is to cause exports to increase, yet this cannot be effected without a general lowering of prices, which is in itself an evil for the country. This is called the "balance of trade" argument.

4. Customs duties are the best kind of taxes, because paid by foreign countries. They save the imposition of internal taxes, and the burden falls on the foreign merchant. This is known as the taxation" argument.

5. Protection is advantageous to the farmer no less than to the manufacturers. This is called the "home market" argument. The reasons advanced to show that it is advantageous to the farmer are two:

First, because the farmer can find a market near by for his product in the industrial centers which grow up in his immediate vicinity. The establishment of these industrial centers is made possible by protection. The farmer is thus saved the expense of the transportation of his bulky products to distant. markets. Moreover, he procures in the industrial centers a neighboring market for the more perishable products of his farm, which would be injured by distant transportation.

Second, because the farmer, by reason of the neighboring markets, can vary his cultivation and produce a number of products, instead of devoting all his land to one product. He is thus saved from the danger of impoverishing his soil. He is not so much exposed to complete failure, for, if one crop fails, others may succeed.

6. Competition among home producers tends to lower the

price of the commodities produced. It is possible that trusts may be formed, which, by buying off all competitors and by absorbing all rivals, may secure an undisputed field and fix the prices at any figure they please. The laws, however, seek to prevent combinations made in restraint of trade and with the purpose of controlling prices.

7. The greater the field that is opened for the labor of the country, the better will it be for the country. For labor is the source of wealth, and the more laborers there are actually employed, the greater the production and the more the goods, the sale of which increases the wealth of the country. Now, under protective duties, many more industries are possible than under free trade. Protection creates industries, it fosters weak industries, it hastens the establishment of industries, it keeps in existence a large number of industries. Hence, protection increases the labor of the country.

8. The aptitude for the mechanical arts, and the inventiveness displayed in the ingenious devices contrived for the easy production of great results, form a striking feature of the American character, which would find but little development were restriction placed on manufacturing industries in the United States. 9. It is better to employ American capital in the production of commodities which are needed by our own consumers, than to expend money abroad for the importation of the same commodities. In the former case, home capitalists are benefited by the returns made on their investments; home labor is employed, and the profits are kept within the country. In the latter case, foreign capital and labor are benefited, and much money goes abroad.

This is the "double profit " argument. It may be put as follows: The tariff keeps two profits at home in domestic trade, the buyer and the seller, who each reap a profit, being United States citizens. Foreign trade gives but one profit, that of either the buyer or the seller, the other party being a foreigner.

10. Protection, even though uneconomic, is justified for military and political reasons. It is a means of securing concessions

from other nations. It encourages the building of ships, arsenals, and factories for munitions.

11. The tariff may keep some of the natural resources of a new country from becoming quickly exhausted.

12. There is no one theory of Political Economy that holds for every civilization. The same forces, no doubt, may be at work everywhere, but their relative importance will differ with each country. Now the United States, a great continental nation as it is, differs from all other nations. It is still a young country, endowed with endless internal resources. It is still in a dynamic state, differing from other countries, which have reached a static condition. The aim of such a country should be to develop as much as possible its natural resources. But this can be done only by the means hitherto adopted by the United States, viz., protection. (Cf. S. N. Patten, The Economic Basis of Protection, 1890.)

13. To the objection made by the advocates of free trade, that owing to the tariff, articles are sold cheaper abroad than at home, the protectionists answer that the practice of selling abroad cheaper than at home is carried on by all nations. This practice is not due to the tariff, they say, but to one or several of the following reasons:

Cash payments and large purchases in the foreign trade, whereas the domestic trade is based on credits and small purchases.

The drawback or rebate of the tariff on imported raw material of goods manufactured for export.

To overcome the tariffs of other countries.

To secure new markets.

To hold a market against new competitors.

To clear out surplus stock or to prevent a shutdown or increased cost of production by keeping mills running and men employed.

To get rid of samples and out-of-date goods.

Because the expense of selling and advertising is less abroad than at home.

Even though the cheaper foreign price were due to the tariff, the amount sold at lower prices abroad is not five per cent of the total exports of manufactures.

IV. ARGUMENTS FOR FREE TRADE

The advocates of free trade answer the main arguments of the protectionists (1-6, following) and then present specific arguments for free trade (7-20, following).

1. The “infant industry" argument strenuously advocated at one time by protectionists is now invalidated because protection was not withdrawn after the infant industries had attained their maturity. On the contrary, protection is still defended; but, whereas formerly protection was declared to be needed because this new and young country had to repel the competition of foreign lands and prevent itself from being crippled by wealthy nations, now, when the United States has grown wealthy, it is declared that protection is needed against the cheap labor and the cheap products of foreign lands.

Again, European nations declare that they need protection because they are old and must compete with new countries. An argument that can be so twisted about and be made to serve in both cases can have very little intrinsic worth.

2. The argument that protection diversifies the industries of a country may be admitted, but this same result would follow spontaneously and with less attendant hardships under free trade. Labor is scarce in a new country and industries are necessarily circumscribed, but gradually the population increases, laborers become more numerous, industries grow in numbers and diversity. Protection brings about this result, but effects it at the price of very onerous conditions; capital and labor are deflected to less profitable industries; there is a general rise of prices which must be paid by the home consumers; the cost of production is increased.

It is impossible to believe that, with resources so abundant, with so favorable a geographical position, with a people so in