It is argued that the wealth produced in any country is divided it. io wages. profits. and rent, and that the amount of the last share depends upon the poorness of the marginal land end other natural resources to which resort is made. Pro tection. as applied in the United States. diverts labor and capital from farming and extractive industries to manufacturing. In consequence, it is claimed, the margin of cultivation to which resort is made is somewhat higher under a pro tectionist than it would be under a free-trade polio• and rents are lower, while wages and profits together are proportionately higher. Hence. it is concluded, protection raises wages at the expense of rent and 'other monopoly in comes.' In answer to this argument it need only be pointed out that the reasoning.. if valid. proves merely that protection secures for labor a larger rcla lire share of the total product. If, in so doing. it divert- labor and capital from invest ments in which they would atTord larger returns, as advocates of free trade maintain, it may very well be that labor's larger share of the smaller product obtained under the regime of protection is actually less than would be labor's smaller share of the largrr product that would be secured under the regime of free trade.
Present-day advocates of protection in the United States may be divided into two classes— those who defend it as a temporary and those who defend it as a permanent policy. Among the former it is beginning to be actively discussed whether protection has not done its greatest pos sible service for the country and whether a grad ,nal transition to a free-trade policy would not be desirable. Writers answering these questions in the affirmative advocate the abolition of the protective duties on raw materials, trust-made manufactures, etc.. and emphasize the importance of allowing fo•eignn goods to enter the country more freely in order that American industries capable of developing an export trade may find larger foreign markets for their products. Advo cates of protection as a permanent policy urge it not only on economic grounds, but as a means of fostering the sentiment of nationality and of perpetuating, those characteristics which distin guish the United States from other countries. Free trade is characterized by them as a cosmo politan policy. which appeals to the 'foreign hearted,' while protection is extolled as the na tional system to the support of which all true lovers of country must rally. Strong as is the appeal which these 'higher considerations' make to the patriotic citizen, there is a certain vague ness about their application to tariff problems which makes the shaping of a law by reference to them difficult. Appeals to patriotism in con
nection with protection are significant chiefly because they introduce a moral earnestness into discussions which would otherwise be narrowly commercial, Since Great Britain adopted a free-trade policy in 18-16, the leading protectionist country of the world, next to the United States, has been Ger many. There also the application of protection has been coincident with a remarkable develop ment of manufacturing industries, which has seemed to justify fully the expectations of advo cates of the policy. Germany's success in domes ticating manufacturing industries has led France. Austria-Hungary. and, mme recently. Russia, to emulate her example. Europe is thus engaged in a war of hostile tariffs. in which each important country is trying to build up its own industries by discouraging importations from its neighbors. In each country there is vigorous opposition to the protectionist policy, just as there is in the United States, hut it is doubtful whether this opposition is making much real headway. There are, however. indications that as time goes on the area, embraced within protectionist barriers in different parts of the world will be enlarged. In Europe there is already agitation for a federa tion of important States for the purpose of erect ing an unbroken tariff bulwark against the `American invasion.' In Great Britain an im perial federation to include all of the depen dencies of the country in a commercial alliance against the rest of the world is beginning to be advocated. Finally. the policy of expansion upon which the United States scents to be embarked must have as one of its incidents the admission of new area within the American tariff wall. As protectionist grow, the difficulty of har monizing divergent interests by means of pro tective tariffs is bound to increase. and this affords perhaps the surest ground for a belief in the eventual triumph of free trade.
BIBLIOGRAPHY. Hamilton, Report on the SubBibliography. Hamilton, Report on the Sub- ject of Manufactures (17901. reprinted in Taus sig. State Papers and Speeches on the Tariff (Cambridge. 1892) ; List, Outlines of American Political Economy (Philadelphia. 1827) ; Des rationale System der politischen Oekonomie 11841: trans., National System of Political Econ omy, Philadelphia, 1856) ; Carey. Harmony of Interests (2(.1 ed.. New York. 15.56) ; id.. Princi ples of Social Science (3 vols., Philadelphia; 1858-59) ; Phillips, Propositions Respecting Pro tection and Free Trade (Bustin, 18501: Thomp son, Protection of Home Industry (New York, 1885) ; Patten, The Economic Basis of Protection (Philadelphia, 1890).