Protection

The justification of protection is to be found not in its con formity or its departure from an abstract theory, but in the condi tions which govern the development of actual states and the laws o; their development. It does not really belong to the domain of abstract economics, but to statecraft and practical organisation. The range of philosophical and other assumptions underlying the pure theory of economics is neither wide nor accurate enough to cover the varied motives and activities of an organic com munity, and men may at the same time accept and make use of the theory of economics so far as it goes, and yet be strong pro tectionists in action. In the article on ECONOMICS it has been shown how to use economic theory in investigation in opening up the relations between different series of economic facts and in suggesting approximations for the solution of practical problems. But the world we live in is a world of realities and of varying policies. We are dealing with nations, communities, human beings and concrete things, and it can never be assumed that the world does or ought to conform to the requirements of a purely theo retical system. The objections to protection in a hypothetical world where there is complete mobility of labour and capital, and time is an abstraction, are not relevant when we have to consider the great industries and the lines of commerce of the actual world, the tangled relations of the groups of human beings, their different histories and environment, and the divergent interests with which statesmen have to deal. If we keep in view the wide gulf between the world of pure theory and the conditions of actual life, we shall not hastily come to the conclusion that the states which have practised a protective policy have achieved success in spite of the measures they have adopted to secure it.

The Fall of the Old Policy.

In the middle ages the source of England's wealth was the exportation of raw materials, with which she purchased the manufactures and the luxuries of other countries. In those ages many of the regulations adopted were not, as they have been regarded by free trade writers, restraints upon liberty, but the conditions of its exercise. Freedom is only possible where there is security. Before the close of the middle ages manufactures were greatly extended as a result of encouragement, by the native aptitude of the people, and by the immigration of skilled artisans. Movements analogous to those of modern times took place on a small scale, and there were signs of a growing nationalism long before the close of the middle ages. Action taken by the trading companies, especially the great Merchant Adven turers Company, encouraged foreign trade, and we can trace in numerous statutes the foundations of what was subsequently called the mercantilist system. Then took place a development not dissimilar to that in continental countries in modern times. In ternal barriers were removed. England and Scotland were united.

Great Britain and Ireland became one economic area. By that time the United kingdom, under the policy which was so widely condemned later on by economists, achieved economic supremacy. With apparently illimitable supplies of coal and other requisites of production, her industries growing by leaps and bounds from the use of new inventions, the whole organisation and structure of great industries rapidly changing, the old laws and methods of regulation became obsolete, and the tariffs worked out to suit the more primitive stages of industrial development were simply embarrassing or irrelevant in the new conditions. Attempts to adapt them failed and the old duties were swept away, not so much in obedience to a theory but because the necessary adapta tions could not be made. It might have been more statesmanlike and prudent to keep at least the framework of the old system, but with wealth as the supreme end in life and with the opportu nities which the new industrialism gave, this was the accepted course of contemporary statesmen. By 186o free importation was the established policy of the country and the methods by which English statesmen had built up the economic power of the country were remembered simply as the economic fallacies of a former generation.

The Mercantile System in England.

In order to bring out the character of protection in its modern form we must make some further historical contrasts in British policy. The older policy was not protection in the narrow sense in which the word has been used in modern controversy. The idea of building up a great industrial commercial state by that policy ran through most of the economic measures which were adopted, affecting agricul ture, trade and commerce, commercial treaties, finance, labour legislation, the poor laws, and colonial policy for several genera tions, and discriminating duties were imposed not from logical necessity or through loyalty to some theoretical system, but as practical expedients like any other form of regulation to deal with problems as they were at the time understood. Whole trades and branches of trades were left free. The mercantilism of England was always different in important respects from the Colbertism of France, and the tariff systems, generally, of continental states. Adam Smith comments on the "liberality" of English policy as contrasted with that of other states. It was a "free trade" system in (I) its extension of the powers of the central government over the trade and industry of the country at the expense of local and sectional bodies, close corporations, etc.: (2) the consequent equalising of opportunities and development of free enterprise, (3) the "nationalising" of great trades such as the East India trade, the trade of the Levant, etc., (4) the removal of internal restrictions, such, for example, as those on the corn trade, (5) the introduction of free trade first between England and Scotland and then between Great Britain and Ireland.