The free-traders maintain (7) that the argument of the protectionists that a protective policy benefits the laborer will not bear close analysis. For nearly two centuries before any protective tariff existed in what is now the United States, the high wages of American laborers had been repeatedly noted and explained. Land could be had for the asking, and laborers would not consent to work for hire unless they could receive a wage high enough to tempt them away from independent peasant proprietorship. The same condition has existed during the last century, and almost down to the present day. The whole question of the connection between the tariff and wages involves a discussion of many complex economic problems. It must be sufficient here to suggest a single important consideration bearing upon this question. Labor competes, not with commodities, but with labor. The laborer himself wants commodities and the more of them he can secure for his labor the better. In other words, it is not high money wages alone but high wages in connection with low prices that indicates national welfare and prosperity. If, then, labor is to be protected, a tax should be put on the importation of labor rather than upon the product of labor. Otherwise, the laborer may find his wages lowered by the competition of a multitude of imported laborers, while he finds the cost of living unduly raised by the protection which has been granted to the domestic entrepreneur.

General Considerations. Certain general considerations remain to be suggested. In the first place, the importance of this whole question has been much exaggerated. England prospers with free trade, the United States has prospered under protection. How far England's prosperity has been due to free trade, how far the prosperity of the United States has been in spite of protection, we cannot tell. The tariff system is one of real, but not of vital, importance. Moreover, the domestic trade of the United States is vastly greater and more important than her foreign trade. Indeed, the domestic trade of the Mississippi valley alone is far greater than our entire foreign commerce. Evidently, then, we can thrive as we have thriven, under protection, since by far the greater part of our trade is already free trade.

In the second place, statistics regarding national prosperity, as they are usually presented, throw little light upon the question one way or the other. The tariff policy of modern countries has undoubtedly been a minor factor in their industrial life. Inventions and discoveries, the spread of general and technical education, the hopeful ambition of all classes of our people, the growth of intelligence, have been chief among the forces that have made such astounding additions to the wealth of the world during the past century.

In the third place, the American tariff system, bad as it undoubtedly is in many respects, is a historical growth that has taken deep root. It conditions directly or indirectly a great part of our industrial life, and it cannot therefore be suddenly eradicated with impunity. Yet it is impossible to tolerate permanently a bad condition of things, and we are justified in demanding that there shall be progress in our tariff policy. Even selfish considerations are likely to lead to a demand for revision of our tariff schedules, now that other powerful nations are retaliating or threatening to retaliate for our unneighborly tariff treatment of them.


1.International trade, in its elements a trade among individuals for money, is in effect trade among nations of goods for goods.
2.The balance of trade is the chief element in determining the rate of exchange.
3.International values are influenced by the fact that labor and capital do not flow from country to country so readily as from section to section of the same country.
4.General prices and the national money supply are regulated by trade conditions.
5.Regulation of international commerce has been common among all civilized nations.
6.Protection is defended as promoting nationalism, the diversification of industry and industrial independence, saving costs of transportation, keeping up the soil, and maintaining high wages.
7.It is attacked as being unnecessary to the development of industry, as opposed to " natural rights," and as being unconstitutional. It is further claimed that it regularly and naturally diverts labor and capital from employment that would be more productive by nature to industries in which the employment of labor and capital is naturally less productive.
8.Protection often fosters and protects monopolies.
9.Our tariff system, as a historical growth, must be modified conservatively and carefully.


1.What are the advantages of international trade ?

2.How is the rate of exchange determined? What is the "specie point"?

3.What relation has international trade to the distribution of money among nations? To general prices in different countries?

4.What is protection? Discuss the arguments offered in its support. In opposition.

5.Why have American wages always been high ? What bearing has this on the protectionist argument?

6.What objections are there to a sudden change in the tariff system? How many laborers are affected by our tariff system?


In favor of protection: — Carey, H. C.: Manual of Social Science. List, F.: National System of Political Economy, Introduction, and Bk. II, Ch. XVI. Patten, S.: Economic Basis of Protection. Thompson, R. E.: Protection to Home Industry, and Social Science and National Economy. In favor of a revenue tariff: — Bastiat, F.: Sophisms of Protection. Perry, A. L.: Principles of Political Economy, Ch. VI. Sumner, W. G.: Protectionism.

Nearly all standard economic treatises on Economics arrive at a conclusion generally opposed to protectionism; but in England, on account of the efforts to draw parts of the empire more closely together by common interests, there has recently been a reaction against free trade which has strongly influenced a few English economists.