derive the greatest advantage from the monopoly of the home market.

It must be repeated that the guide to the employment of capital is always profit. If, then, a foreign import cuts away profit, the home industry is checked or stopped, and what becomes of the capital displaced depends on the profit to be obtained in other things. It is quite possible that with an old country the natural opening would be found in some other place. And that is, from Adam Smith's point of view, a most important consideration. As well as a something else" there is always a "somewhere else." And for the nation the place is of vital importance.

§ 9. Appeal to Experience necessary.

Adam Smith, looking always to facts, makes it an essential condition for the retention of capital in the home country that it should obtain equal, or very nearly equal, profits as compared with employment elsewhere. It might, no doubt, be an advantage to the country if it were retained, and merely continued its own existence (as is the case with a good deal of the capital sunk in landed estates). But in the normal case, apart from social considerations, it is commercial considerations, measured in terms of profit, which determine the retention or migration of capital.

If, then, by a small duty the home market can be retained for our own workmen,-if the small duty gives enough profit to retain the capital-the duty would, on his principles, be an advantage, unless it

I

can be shown that the capital, if displaced, would find at least equally advantageous employment at home in something else.

And here the important point to observe is that we cannot escape from the appeal to experience. We must look for confirmation of the general principle to the actual history of the development of home industries in competition with foreign imports; and for the support of our present policy we must appeal to present facts. If official statistics do not suffice, a special Royal Commission should be appointed.

If by such an appeal to present experience we should find that, as the result of foreign competition, our home industries were decaying and capital being exported, or that the higher forms of industry were being displaced by the lower, or that industries necessary to social welfare or to national power were discouraged, whilst those which ultimately would prove detrimental were stimulated; in these and similar circumstances, according to the principles of Adam Smith, it might be the duty of the state to "direct private people how they should employ their capitals," and to that end to interfere, by means of protective duties, or bounties, or other aids and restraints. But before such intervention could be approved on his principles we should have to show that the state could by the means suggested remedy the evils complained of without bringing in greater evils. And this consideration brings into view the strength of the negative argument for natural liberty.

And it is evident that Adam Smith laid quite as much stress on the weakness of state control as on the benefits of individual freedom (see Chapter X.).

In the meantime, however, the relation of the consumer to the producer is of so much importance that a somewhat more elaborate treatment seems desirable than was possible in the general survey undertaken in the present chapter (see next chapter).

CHAPTER IX

THE PRODUCER AND THE CONSUMER

§ 1. That Cheapness is a Benefit and Employment a Necessity to the Consumer: both Truisms.

To those who accept the popular dogma that under all conditions it is advantageous for a nation to buy in the cheapest market, whether that market be in the home country or elsewhere, Adam Smith's treatment of protection to native industries will seem needlessly elaborate. And to the same people an appeal to experience in the form of economic history and statistics (or the Report of a Royal Commission) will also appear to be as superfluous as in the case of a proposition of Euclid.

It is, indeed, a truism that if any number of people have a certain definite amount of money to spend they will get more commodities exactly in proportion to their cheapness; but it is equally a truism that if they have no money they will get no things at all except in the way of charity. And as Adam Smith observed: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

We address ourselves, not to their humanity, but to their self-love; and never talk to them of our own necessities, but of their advantages." But to get anything by way of exchange something must be given, and in any modern society that something is money (metallic or representative); and the money can only be obtained in the ordinary case by some form of employment. Employment, then, is a pre-requisite of consumption. He that will not work neither shall he eat, said the apostle of charity; and he that has no work shall have no meat, is the variant of our modern man of business.

Accordingly, the dogmatic popular argument of cheapness is countered by the protectionist argument of employment. The one is as much a truism as the other; and as every one knows general truisms, like the axioms and postulates of Euclid or the common law, are quite useless until they are combined with particulars; and in the combination lies the practical difficulty.

Adam Smith looks at the problems of foreign trade from the point of view of the producer as well as from that of the consumer, and applies equally the test of employment and the test of cheapness.

There are, indeed, certain passages in the Wealth of Nations which have often been quoted to show that, in his opinion, it was only requisite to look to the interests of the consumer. A passage very frequently extracted and interpreted without reference

1 Book 1. chap. ii.