5 In ch. 15, § 8.
6 See ch. 2, * 8.
in the trade of England and New York with great gold-pro ducing districts, such as California, South Africa, and Alaska, gold is received in return for merchandise, for much of the gold in gold-producing districts is merely merchandise, and its export does not drain them of their due portion of money. There was a time when the states of Kansas, Ne braska, Iowa, and their neighbors were filled with resentment against the money-lenders of the eastern states. There was a widespread belief that hard times were due to an insuffi cient currency.? Attempted action took the form of the green back and free-silver movements, which were defeated by the opposition of the East ; but there can be little doubt that if the Federal Constitution had not forbidden it, the discon tented states would have established a protective tariff "to keep their money at home." Few advocates of protective tariffs are ready to admit that the monetary stock of the country is dependent on the general wealth of the country and on the methods of doing business, rather than on a pro tective tariff.
§ 8. The claim that protection raises wages. The most effective popular claim made for protection is that it raises, or maintains, the general scale of wages in the country. This argument takes two forms: first, when wages are low in a country it is claimed that a tariff is needed to raise them ; and, secondly, when wages are high it is argued that a tariff alone can preserve them. In Germany the fear was of the higher paid and more efficient labor of England. In America, where general wages at all times have been higher than in England, it was first argued (in the time of Henry Clay) that because of the greater cost of production, due to high wages, the tariff 7 That there is a certain measure of truth in this Jpinion is recognized in our discussion of the standard of deferred payments, ch. 5, § 9. But the relation of a world-wide appreciation of the standard money commodity with the burden that this change puts upon debtors has nothing to do with the question now before us, viz.: Does a protective tariff enable a country to keep and increase its proportion of the world's stock of gold; and if it could, would it be a general benefit? was needed to start certain industries; but after the tariff had long been established and the old argument had been for gotten (even since 1865), it has been urged that the tariff is the cause of high wages, and must be maintained to protect against the "pauper" labor of the older countries. The
higher wages in new countries where a tariff exists are always claimed to be the fruits of a protective policy.
The true cause of the high general scale of wages in America is the greater efficiency of industry under existing conditions" Labor is surrounded here with advantages in the forms of rich natural resources and of mechanical appliances such as never before were combined. Because of the scarcity of workers in particular protected industries, wages may be tem porarily higher in them than in some other industries ; but such workers form a small fraction of the population, and it is impossible to show that the general scale of wages in all occupations is raised by the tariff protecting this fraction.
There is, of course, no question that every tariff change af fects certain enterprises and classes of workmen. Enter prisers already acquainted with and engaged in a business always may hope to gain by the higher prices immediately following a rise in the tariff rates on their particular products. Though they are granted no enduring monopoly by the pro tection, they for a time enjoy the advantage of being on the ground, and may reap the first fruits of the favoring condi tions. The enterpriser usually profits when the price of his product suddenly rises. Usually skilled workmen are af fected slowly by competition when there is any considerable increase of prices in their special industries. The important question is, Who bears the burden of the higher prices that result from a tariff ? The burden is very soon distributed. A part of it may be for a short time borne by the retail mer chants, but ultimately nearly the whole of it must be borne by their customers, the unfortunate, less favored citizens. The weight falling on each is usually small, often unsuspected, • See Vol. I, especially p. 228, and elm 34 and 36.