Corn Law League, Vol. I, pp. 49-77; HOLLAND, The Fall of Protection, 1840-1850.

SUGGESTIVE TOPICS AND QUESTIONS

1. What free-trade arguments were used by the following Englishmen? (a) Huskisson? CUNNINGHAM, Free Trade Movement, Ch. 2; (b) Peel? HANSARD, Vol. LXXXIII, pp. 239–284, 1003-1024, 10251043; LXXXIV, 450-456; THURSFIELD, PEEL, Ch. 10; CUNNINGHAM, Free Trade Movement, Ch. 2; (c) Cobden? CUNNINGHAM, Free Trade Movement, 169-189; COBDEN, Speeches on Questions of Public Policy; MORLEY, Life of Cobden; (d) Gladstone? North American Review, January, 1890, pp. 1 et seq.

2. Do economic conditions change in a country? Are we justified in changing our opinions on economic subjects when conditions change? Are we justified in changing such opinions when conditions have not changed? 3. Why did each of the following statesmen change his views in regard to the tariff? (a) Huskisson? See references question 1 (a); (b) Calhoun? Works of Calhoun, Vol. II, p. 163, Vol. VI, p. 1, Vol. IV, p. 171; (c) Webster? TAUSSIG, Selected Readings, 505-516; Works of Webster, Vol. III, pp. 94, 228, 528; CALLENDER, Readings in Economic History, 503-514; (d) Bismarck? OGG, Economic Development, 303-305; ASHLEY, Modern Tariff History; (e) Chamberlain? MACKINTOSH, Joseph Chamberlain, 387–392, 404-407; Gunton's Magazine, 26: 109117; Living Age, 239: 641.

4. How does Ricardo's view regarding the advantages of free trade compare with the view held by Adam Smith? (RICARDO, Ch. 35.) with that held by J. S. Mill? (MILL, Book V, Ch. 10.) 5. In what sense may free

protection?

trade in England be said to be negative

6. Might you believe in the theory of free trade and yet be a protectionist? Explain.

7. Summarize and explain American tariff sentiment and policy during the Revolutionary War. What factors changed these after the war? STANWOOD, American Tariff Controversies, Vol. I, Ch. 2; ELLIOTT, Tariff Controversy; HILL, First Stages of Tariff Policy.

8. What has the term "free trade" meant at different periods? BASTABLE, Theory of International Trade, 128; PALGRAVE, Dictionary; encyclopedias, e.g. New International, Britannica; Webster's Dictionary. 9. Just what was the attitude of the Physiocrats toward trade? How is this attitude to be explained? GIDE AND RIST, 27-33.

10. Under what circumstances would Adam Smith approve (a) import duties? (b) retaliatory duties? (c) export duties? (d) sudden transition to free trade? Did he expect his principles to be adopted in England? Wealth of Nations, Book IV, especially Ch. 2.

II. What were the Corn Laws? Aside from their repeal, what other tariff changes did the free-trade movement in England involve? Make a careful list of the factors in the English situation which explain the sweeping victory of free trade. Are there any parallel factors in the American situation to-day?

12. Make a careful summary of Gallatin's Free Trade Memorial. TAUSSIG, Selected Readings, 480-505; TAUSSIG, Tariff State Papers and Speeches.

CHAPTER IV

PROTECTION

General Character of Protection. - Protection is the policy of encouraging home industries usually by the imposition of customs duties or by bounties paid to domestic producers. It is therefore opposed to the principle of free trade. It is sometimes characterized as a return to Mercantilism. Under protection, however, export duties are largely done away with, while prohibitions, either on exports or on imports, are the exception and not the rule. The level of duties is lower than under Mercantilism, and discriminating navigation laws, bounties, and subsidies are less frequently employed. War, often resorted to under Mercantilism in order to promote or repress commerce, is now less often used for such purposes. More peaceful means are at hand. Great advances have been made in international law. Better means of transportation and communication, improved banking facilities, more reliable statistical information, more accurate knowledge regarding international, political, and economic conditions, and in general a wider and better understanding and appreciation of social and economic laws make Mercantilism an impossibility.

Causes of Growth of Protection. The growth of protection, almost universal during the past few decades, is explained on several grounds. In the first place it is due in part to a general reaction against the purely negative character of English political economy. This reactionary movement originated in Germany about the middle of the last

century, and its advocates became known as the "historical school." It differs from the "classical," or free-trade school, by interpreting the complex phenomena of industrial life in the light of history rather than by deductions based on isolated facts. It also regards the state as an ethical factor and as an organ for the promotion of all social aims which cannot be adequately realized by voluntary individual effort, rather than as an institution whose functions are merely to protect life and property. In other words, while the classical school stands for individualism and free trade, the historical school represents national and protective tendencies.

The second factor which helps to explain the development of protection is a number of costly wars during the 60's and 70's, especially the American Civil War and the FrancoPrussian conflict. Wars arouse the sentiment of nationality and are extremely costly, or, as one writer expressed it, "the exigencies of finance give support to the sentiment of protection.' In times of war all forms of taxes are submitted to with little opposition, but upon the return of peace when tariff reductions are demanded these are generally made along the lines of least resistance, that is, on "unprotected articles," or on such as are not produced at home.

Finally the growth of protection is due, in a large measure, to intense international competition caused by greatly improved means of transportation and communication coupled with the enormous industrial development, especially in Western Europe, and with an equally prominent agricultural development in the central part of the United States, in Eastern Europe, in Argentina, and in other parts of the world. Western Europe has been deluging the rest of the world with her manufactured goods, and many countries which were attempting to develop their own manufactures have been showing resentment in the form of high import duties, while the agricultural classes of Western Europe showed a similar

resentment against the influx of agricultural products from countries which are industrially less advanced.

Main Arguments for Protection. - England has been the classic land of free trade, not only because laissez-faire finds its most practical application in British politics of the first part of the nineteenth century, but also because British writers Smith, Ricardo, Mill, and others are among its best expositors. Similarly the United States is the classic land of protection because the policy has been tried in this country in all its phases, and its best exposition has perhaps been given by American writers-Hamilton, List, Carey, and Patten. The second named was, of course, a German and is mentioned here only because he spent several years of exile in the United States and received his inspiration in part from the writings of Hamilton and from the economic policy of the United States, for his residence in this country (1825-1830) was during the high-water mark of the early period of American protection.

Various arguments have been advanced from time to time in favor of protection. The national independence argument, based upon the idea that a variety of industries is desirable for a country in order to make a nation economically independent (a condition especially desirable in case of war) and to develop its spirit of nationality, was the keynote of Hamilton's argument. It was advanced at a time when the American federal government had hardly passed the experimental stage, and the development of a stronger central government was of the greatest necessity. Hamilton's argument was, therefore, more essentially political than economic.

American industries that had sprung up during the period of the Embargo, the Non-intercourse Act, and the War of 1812 were protected by the tariff of 1816 and by later tariffs largely on the ground that they were infant industries and needed the temporary fostering care of the government in order to