dustries.1 Nor is this peculiar to the United States. The development of tariff legislation in European countries, irrespective of this form of government, illustrates the same inherent tendency. In "scientific" Germany and in "theoretic" France there is almost as little regard shown to principles in the making of tariffs as in the United States.

The attitude habitually and everywhere adopted by organised industries and by individual business men towards government wherever its functions affect business life is utterly opposed to the idea of a dispassionate scientific fiscal policy. There is no

1 The following passage from the work of an American protectionist writer, Mr. A. S. Bolles, describes the process of making the 1883 tariff:

"The history of tariff-making is not particularly honourable in all its details to any party or interest. It has too often partaken of a personal fight by manufacturers against the public and each other. The struggle on this occasion before Congress lasted nearly the whole session. The iron ore producers desired a tariff of 85 cents a ton on ore; the steel rail makers were opposed to the granting of more than 50; the manufacturers of fence wire were opposed to an increase of duty on wire rods used for making wire, and favoured a reduction ; the manufacturers of rods in this country were desirous of getting an increase; the manufacturers of floor oilcloths desired a reduction or abolition of the duty on the articles used by them; the soap manufacturers desired the putting of caustic soda on the free list, which the American manufacturers of it opposed; some of the woollen manufacturers were desirous that protection should be granted to the manufacturers of dyestuffs, and some were not; the manufacturers of tanned foreign goat and sheep skins desired the removal of the tariff on such skins; those who tanned them, and who were much less numerous, were equally tenacious in maintaining the tariff on the raw skins; and the same conflict arose between other interests.”—Financial History of the United States (1861-85), pp. 479-80.

trade and but few men who would refrain from bringing influence to bear on government in order to secure a public contract, to evade the pressure of a proposed tax, or to obtain an import duty on their own article of manufacture. While this remains true, it would be wanton folly to entrust a government with the formation and administration of a tariff professedly confined to the attainment of a few special, delicate, theoretically valid defences of British trade. The certain harm would greatly outweigh the possible gain.

§ 8. Moreover, reverting to economic theory, protection, regarded as a remedy for unemployment, is the substitution of a bad palliative for a cure. A palliative is good if it is a stop-gap which does not impede the operation of genuinely curative forces; it is bad if it does impede them. Now we have seen that the industrial disease termed " unemployment" arises directly from under-consumption, and that under-consumption is traceable to undesirable inequality in the distribution of wealth. Therefore the only really "scientific" remedy is one which will raise the standard of consumption, thus expanding naturally the volume of employment of capital and labour. Protection is a bad palliative, because it does not increase the capacity of consumption to keep pace with production. Even could protection be rigorously restricted to the narrow limits where it has been found to be theoretically defensible, it

would do nothing to redress the balance of distribution in favour of expenditure as against over-saving. The slight increase of the aggregate of consumption it secured would be attended by a more than proportionate increase of production, if we assume that the proportions of rents, profits, and wages are the same in the protected trades as in other trades. In point of fact, it would be easy to show that such protection, like all protection, will profit landowners and capitalists more than labourers, and thus make for an increased maldistribution of the general income, which will cause increased over-saving, overproduction, depression, and unemployment. would happen under a really scientific tariff confined to objects theoretically defensible. But if we take the net results of any actual tariff adopted to "protect" the business interests of Great Britain or the British Empire, the injury would be far graver and more far-reaching.

This

That a protective tariff, however devised, furnishes no effective remedy for unemployment is proved in practice by the fact that the high-tariff countries are liable to depressions of trade at least as frequent and as wasteful of capital and labour as the free-import countries.

§ 9. Indeed, it is not difficult to perceive how a general system of protection, designed to safeguard the national industry against the competition of imports, must aggravate the conditions which are

responsible for unemployment. Every fresh barrier against freedom of exchange, rendering less effective the division of labour among nations, causes the capital and labour in the country which imposes it to be less productively employed than it would otherwise have been. Thus the aggregate of actual wealth produced in the country is diminished. This reduction of real income will not be borne equally or proportionately by the various classes that contribute to production. A duty upon imported agricultural produce, raising the price of food and stimulating British agriculture, will give a larger rent to the landowners. Land which was formerly below the margin of cultivation will now yield a rent, and the rent of each acre of land which formerly paid rent will be raised. Taking wheat land for our example, we may conclude that a larger proportion of the increased aggregate of wheat grown will be paid as rent, and that the exchange value of each quarter of this wheat as compared with commodities and services not equally protected will rise. Hence the landowners. reap a double gain, taking not merely a larger proportion of the national income than before, but an absolute increase of wealth out of a diminished aggregate. Thus a smaller proportion of the diminished national income remains for the remuneration of capital and labour. Is it reasonable to suppose that this loss will fall most heavily on capital? When we remember that one of the inevitable con

sequences of protection is to facilitate combinations of capital in the form of syndicates and trusts, and that these powerful corporations will be able to exercise influence in the moulding of tariffs, it becomes evident that the capitalist industries which are largest, best-equipped, and most profitably worked will use the tariff to secure for themselves further advantages. In a country which protects agriculture and manufactures, the landowners and the great capitalists must gain by the tariff. Experience shows that they are the only gainers. Capital embarked on smaller, feebler industries does not get its share of protection, nor can it make such effective use of what it possesses to secure monopoly ; the other great industries, not exposed to foreign competition, and so not "protected," suffer in the exchange value of their commodities as compared with the artificially raised values of the protected commodities; the internal transport trades, the distributing classes, the professions, and last and most, the wage-earning members of the nation, are losers. Labour loses trebly: first, through the diminution of the average of its productivity due to the impaired division of labour; next, through its reduced capacity for bargaining with capital, now more strongly organised in trusts and combines; and finally, through the enhanced prices of commodities, which tell more heavily on the workers than upon the wealthier classes, because their expenditure upon