what is needed by the producers themselves for their own immediate consumption.

(2) The amount which we import from foreign countries, after correcting for variations in the balance of trade, is an indication of the thrift and productiveness of labor at home.

There can be no doubt that the greater the amount of the products of labor in any one year, year by year, the greater will be the amount of domestic exchanges; that is, the greater will be the amount of purchases and sales of the people themselves, one with another. And so long as there are objects of foreign production which the people want, the greater the amount they may have left after purchasing the articles of domestic production which they must have, so much the greater will be the amount of those foreign products that will be in demand, to act as stimulus to the enterprise of the importers.

But an increase of imports, so long as there is an increasing balance of trade against us equal to the increase of imports, is no indication of thrift at home. With this caution, it seems to me that Mr. Carey's facts, and his inferences from them, are well made out and eminently worthy the attention of the statesmen and legislators of our country.

182.

What makes a tariff protective.

A tariff, to be protective to any particular form of industry, must, of course, always be equal to the difference between the rate, at which the commodity can be produced in the country of its production, and that at which it can be produced in the country of its consumption. Thus, if cotton cloth can be produced in England, and sold, after cost of transportation here, for ten cents per yard, and it cannot be produced here for less than twelve, two cents per yard would be a protective tariff, and anything below that could not operate as protection; above that, it would be, virtually, prohibition.

183. Effect of a tariff that is below protection.

A tariff that falls below the point at which it is protective, cannot fail to increase the price of the article to the consumer; for it would raise the price of the article by the amount of the tariff, without creating any competition among domestic producers, so as to reduce the price, by means of their competition, one with another.

Or again, a tariff upon articles, that for any reason a nation cannot produce, as for example, cotton in England, would only enhance the price to the extent of the tariff, and for the same reason, as a

"revenue tariff," as it is sometimes called, would raise prices there permanently. There are, or can be no domestic producers to reduce it by competition, (1) among themselves, or (2) with the foreign producers.

A tariff then, upon articles which we cannot produce, or a tariff that fails to be protective upon what we can produce, but does not, only increases the price of the article to the consumer.

And even a tariff for protection, if it be needed at all for that purpose, will raise the price of the imported article for the time being. But if it be an article which the laborers of that country can produce to advantage, the tariff will have the effect of creating an increased demand for labor, and thus, by raising the price of labor in all branches of industry, it will enable the people of the country generally to buy the article more easily than before, even at the advanced price.

184. Limits within which protection is possible.

And here, I think, we have a hint at the limits within which protection by way of tariff can be good statesmanship for any country. Protection for its own sake, and with a mere vague notion of doing good somehow, is but an idle fancy of a not very clear brain.

A protective tariff on what cannot be produced is almost a contradiction in terms. But a tariff with a view to protect what can be produced only at great disadvantage, will be an unnecessary tax upon the industry of the surrounding country; for the reason that it takes so much more labor to produce the article in the one country than in the other.

But the test is the amount of labor-not the wages, or the cost of the labor.

Thus, for example, I suppose we might in this country construct square miles of hot-houses, and raise all the coffee we have occasion to use. But it would be a very costly process. It would require a very high tariff to protect that kind of industry. And it would be very bad policy; for although it it would diversify industry and raise the wages of the laborer, it would nevertheless be an unremunerative tax upon the industry of the country. It would be, to a large extent, money thrown away. It would take, perhaps, ten times as much labor to build hot-houses and raise the coffee as it would to earn the money and pay for the article at the price at which it could be imported, and hence, if I am right in estimating the proportion, about nine-tenths of the labor of raising the coffee at home would be a total loss to the world; the men who were engaged in performing the work might as well have been idle nine-tenths of the time, or nine out of ten

of them idle all the time, as to have engaged in making the preparations for raising coffee under such great disadvantages of natural position.

185. List's Doctrine.

Mr. List, in his work on National Political Economy, has shown, as it seems to me, that there are three stages in a nation's history, in reference to the policy of protection. In the first stage, when the people are but few, capital scarce, and land plenty, protection cannot effect any good result. A tariff merely taxes the people to no purpose. But, as soon as the people become more numerous, and capital has begun to accumulate, they will need to diversify their industry, by the introduction of manufactures, and for this, most likely, some well adjusted scheme of protective duties will be necessary. This constitutes the second stage. The third occurs, when the nation has become so rich, so densely populated, that there remains no new form of industry to be domesticated, and no fear of evil from competition with other nations. In this stage, a protective tariff will be a mere dead letter. There will be but little importation of what the nation can produce, and there can be no importation that will lower the price of commodities, whether we regard those imported, or those of domestic production. In the