employed at their best, and in return only gets the feeble productive agency of the same labour and capital directed to objects for which they are less fitted, or under circumstances which tend to hamper their efforts.

The immense difference between the results respectively obtained by these two opposite modes of applying labour and capital has not, we think, been carefully considered or adequately appreciated. If it be for the benefit of man that the greatest possible abundance of the objects of human desire be created, and, as a consequence, distributed, it must be essential to inquire into the reality and the extent of the "immense difference" referred to. The difficulty is to assess that difference. It would be easy enough in isolated cases. For instance, a carpenter and a bookbinder are both earning five shillings a day: what would be the market value of their labour, supposing that a paternal Government were to enact that they should exchange occupations? Would that value be even one-fourth of what it is now? Under this supposition, the loss occasioned by the act of the "paternal Government" is obvious enough, and may be measured and computed. But the task is not so easy when it has for subject-matter all the complex conditions of an entire community. Let us make a rough and rude attempt.

Given that combined labour and capital, under present conditions, are earning an average remuneration both as to wages and profits, and are yielding an average volume of wealth-production, hat would then be the effect of Government pro

IMPORTS AND EXPORTS BOTH CHECKED. 23

hibiting the admission of some article hitherto imported from abroad, and thus seducing a certain portion of labour and capital from their present employment into the service, more lucrative for a short time, of a native monopoly for that article? What would follow ?

(a) There can be no export without a corresponding value of import. Whatever be the amount which you cease importing from abroad, in consequence of producing the prohibited article at home, to that same amount will your exports be diminished of other articles. This prohibition is, therefore, "a heavy blow and great discouragement" to your staple industries. To the extent of that diminution of your exports, it throws native labour out of employment and deprives capital of its remuneration. To that extent your foreign trade is cut off, and all the interests connected with it, whether it be working men, manufacturers, merchants, or ship-owners, are proportionately injured. It was probably the intention of the paternal Government to benefit its native industries; but a paternal Government sometimes make mistakes, and, in this instance, it has, by curtailing imports, curtailed to the same extent those sales to the foreigner by which native industries benefited, and has therefore inflicted on those industries positive and substantial injury. Now, what is there to set off against these evils? It is merely that the labour and capital thus thrown out of employment are gradually, more or less, absorbed in the new establishments created to supply the prohibited article. The new industry is not a field for the investment of fresh labour and

capital, but an inadequate refuge for the old labour and capital that have been displaced; and the conditions under which that displacement has been effected are these. You have diverted labour and capital from the production of commodities at so cheap a cost that foreigners bought them of you, to the production of an article at so dear a cost that a prohibitory law is necessary to prevent your people from buying it of the foreigner. Is there much to boast of in this result?

(b) The higher wages and larger profits which had lured labour and capital away from their old channels into the new monopoly, would prove very transitory and short-lived. For, by the inevitable operation of internal competition, they would rapidly subside into their normal and average scale, while the evils which the change had entailed would prove permanent and cumulative.

(c) Let us suppose that 40 per cent. be the rate of prohibitory import duty requisite to prevent imports from abroad of the article in question, and to give a monopoly of it to the native producers, then it follows, as a necessary consequence, that the consumers in that country will have to pay 40 per cent. more for that article than they paid before. Otherwise, why should a 40 per cent. duty be requisite to keep out the foreign goods? Note that this estimated percentage is decidedly below the average, for in numerous instances those duties reach 100 per cent. and more.

(d) This artificial dearness of even the single article in question banefully influences the cost of other productions. For instance, the dearness of

EFFECT ON THE WORLD'S WEALTH.

25

iron cripples and checks ship-building, and largely increases railway fares. The dearness of clothing either presses heavily on the working man, or if his wages are raised in exact proportion, he is no better off than before, while the increased cost of labour enhances the cost of every production in the country.

(e) To take a wider view of the subject, let us inquire what the result would be of such fiscal restrictions on the aggregate substantial wealth of the world. In respect to those articles in every country on which import duties are imposed for other than revenue purposes, whether those duties be prohibitory, or protective, or incidentally protective, such duties afford a fair measure of the extra price which the consumers pay for those articles beyond what they would pay if such duties did not exist. Assuming that 40 per cent. ad valorem be the average of such duties (and that percentage is certainly below the reality), it follows that consumers of the protected articles pay 140 pieces of money (whether £'s, or dollars, or francs, &c.) for the same quantity and quality as could be purchased elsewhere for 100. Under prohibitory duties, the whole of these additional 40 coins go to the native producers of these articles, and none to the revenue of the State. Under protective duties, some portion of the 40 coins goes, in the shape of customs' duties on imports, to the national revenue, and the rest to the native producers. When those duties are high, the State receives less, because the imports are smaller. The lower the duties, the larger is the portion which accrues to the State.

capital, but an inadequate refuge for the old labour and capital that have been displaced; and the conditions under which that displacement has been effected are these. You have diverted labour and capital from the production of commodities at so cheap a cost that foreigners bought them of you, to the production of an article at so dear a cost that a prohibitory law is necessary to prevent your people from buying it of the foreigner. Is there much to boast of in this result?

(b) The higher wages and larger profits which had lured labour and capital away from their old channels into the new monopoly, would prove very transitory and short-lived. For, by the inevitable operation of internal competition, they would rapidly subside into their normal and average scale, while the evils which the change had entailed would prove permanent and cumulative.

(c) Let us suppose that 40 per cent. be the rate of prohibitory import duty requisite to prevent imports from abroad of the article in question, and to give a monopoly of it to the native producers, then it follows, as a necessary consequence, that the consumers in that country will have to pay 40 per cent. more for that article than they paid before. Otherwise, why should a 40 per cent. duty be requisite to keep out the foreign goods? Note that this estimated percentage is decidedly below the average, for in numerous instances those duties reach 100 per cent. and more.

(d) This artificial dearness of even the single article in question banefully influences the cost of her productions. For instance, the dearness of