that relation remains unaltered, the price will also remain unaltered. The only chance of buying that article cheaper would be to sensibly diminish your purchases of it from the foreigner. But to do so, and yet meet the consumptive demand, you must to the same extent increase the native production of that article. Now, at the price hitherto current, the native producer has produced all that he could produce at a profit, and he can be stimulated to increase his production only by being paid an increased price. But the proposition stipulates that the price to the consumer is to remain the same. How are these two incompatibilities to be adjusted? By what process is the native producer to get a higher price for his article A, and yet, at the same time, is the price of it to the consumer to remain the same? If the native producer does not get that higher price, he can produce no larger quantity than he did before; you will take from the foreigner the same quantity as you did before; in which case, as the relative supply and demand will remain unaltered, he will obtain from you the same price as he did before, and the I per cent. duty will, against your proposition, fall upon the consumer.

If the consumer does pay the I per cent. duty, it then becomes a common case of Protection to that extent. The native is enabled to produce a little more than he did; the foreigner will supply a little less than he did; your exportation of other articles will diminish a little; the consumer will have to pay a little more than he did; and, generally, the same effects will take place, though

ALL DUTIES PAID BY IMPORTERS.

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on a small scale, as though the import duty, instead of 1 per cent., were 10 per cent. or 40 per cent. In every case, import duties, whether they be small or whether they be large, will equally fall upon the consumers.

"You will, however, grant," says a Protectionist, "that if not the whole, at least some part of the import duty is paid by the foreigner." We regret that truth will not allow us to be so complaisant. The average profits made in a regular trade between two countries are, as a rule, kept down by competition to a certain level, below which the trade would not be continued. Under the additional burden of an import duty, that trade would first droop and soon die, unless prices rose in the importing country so as to cover the import duty. No merchant (unless for a short time and as a mere experiment) will go on employing his capital in a trade which does not yield him the average profits which capital earns in other channels. Now, if prices rise in the importing country so as to cover the duty, and thus allow the trade to continue, it clearly must be at the expense of the importing consumers, and not of the foreign traders.

But Free Trade is blamed not only for not taxing foreign industry, which we have shown to be impossible, but also for taxing native industry. This is a totally unfounded accusation. Not only it is false that Free Trade specially taxes native industry, but, on the contrary, Free Trade assists and promotes it in the most effective manner. Both these assertions we will in a few words make good. It is obvious that Free Trade imposes no special

tax on native industry. All members of a community, whether under Free Trade or Protection, are subject to the general taxation deemed necessary to defray the Government expenditure, and they are liable to exactly the same burdens under both systems. This we think clear and incontrovertible. Now, on the other hand, Free Trade greatly assists and fosters native industry by supplying it with all the foreign materials which it needs to work with, or to work upon, at the cheapest possible cost, and unburdened by any import duties whatever. It at the same time lessens the cost of living, and increases the comforts obtainable for the same expenditure.

It is hardly possible to over-estimate the enormous advantages which this cheapness confers on, or the strong stimulus which it affords to, native industries. The cheap products of such industries will, of course, find a vent in all neutral markets, since the dear products of protected countries cannot possibly compete with them. Where the materials on which productive industry is exercised are enhanced in cost by protective import duties, it is impossible that the product should not be enhanced in cost in the same proportion. But the cheapness arising from untaxed materials not only fosters a demand from abroad, but also lessens the cost to the native consumers, and the benefit is thus twofold. It is, therefore, abundantly clear that native industry is largely promoted and developed by having, as a consequence of Free Trade, cheap untaxed materials to work with and to work upon. If the United

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States had had cheap untaxed iron, they would not have lost their valuable share of the oceancarrying trade.

We must apologise for devoting so much time. to the refutation of a fallacy so easy to refute; but this we thought necessary from the frequency of the allegation, and from the number of honestminded men who, not having a ready answer, have been mystified by it. To sum up, the truth is that FREE TRADE TAXES NO INDUSTRY, WHETHER NATIVE OR FOREIGN ; BUT, AMONG OTHER ADVANTAGES, IT GREATLY FOSTERS NATIVE INDUSTRY, BY AFFORDING IT CHEAP, UNTAXED MATERIALS WHEREWITH AND WHEREON TO WORK, AND BY ALLOWING IT TO FLOW IN ITS NATURAL AND MOST PROFITABLE CHANNELS.

CHAPTER XVI.

8. Wages highest where most Wealth is Created. 9. Protection frustrates Division of Labour. 10. If Protected Nations prosper, it is in spite of, not because of, Protection.

8. If the labour-seller in protected countries pays more for what he consumes, on the other hand his wages are proportionately higher. It does not at all follow. The present average rate of wages in Free Trade England, now that everything is cheap, is at least 50 per cent. higher than it was formerly in protected England, when everything was dear. Indeed, if the statement that heads this paragraph be correct, how comes it that our Protectionist

friends so persistently warn us that we are being, or are going to be, undersold by our foreign competitors in consequence of the lower rate of wages and the longer hours of labour that prevail abroad? How is it that they so loudly call on Government to protect the British workman by import duties, to prevent him from being reduced to the low wages and long hours of his protected continental fellow-workmen? Here is surely a curious contradiction. Wages in protected countries cannot be at the same time higher and lower than they are here. If higher, what need is there to protect the British labour-seller against his higher-paid foreign competitor? If lower, then Protection in foreign countries, while it enhances the cost of living, does not enhance the rate of wages. How are these utter discordances to be resolved? This is how it is done. Division of labour is resorted to. One set of the Protectionist party uses statement No. I, and another set uses statement No. 2. There is the "higher wages abroad" division and the "lower wages abroad" division. If the one fails to convince you, you are handed over to the other, who proceeds on a diametrically opposite tack; and it will go hard if, between the two, you can help being, if not convinced, at least mystified.

The fact is that the money rate of wages does not depend (except when it is at the famine level) on the cost of living, but on the relative demand for, and supply of, labour. Wages are higher than with us in protected America, and lower than with us in the protected continental States of Europe.