49^ 



NATURE 



[September i8, 1890 



at the beginning of this century were exceptional, some being 

 transitional, and others, even at the time, peculiar to England. 

 Their knowledge of facts was, on the average, probably quite as 

 thorough as that of the leading economists of England or Ger- 

 many to-day, though their range was narrow. Their thorough- 

 ness was their own, the narrowness of their range belonged to 

 their age ; and though each of them knew a great deal, their 

 aggregate knowledge was not much greater than that of any one 

 of them, because there were so few of them, and they were so 

 very well agreed. In these matters we economists of to-day have 

 the advantage over them. 



Their agreement with one another made them confident ; the 

 want of a strong opposition made them dogmatic ; the necessity 

 of making themselves intelligible to the multitude made them 

 suppress even such conditioning and qualifying clauses as they 

 had in their own minds : and thus, although their doctrines con- 

 tained more that was true, and new, and important than those 

 promulgated by almost any other set of men that have ever 

 lived— doctrines for which they will be gratefully remembered 

 as long as the history of our century retains any interest — yet, 

 still, these doctrines were so narrow and inelastic that, when 

 they were applied under conditions of time and place different 

 from those in which they had their origin, their faults became 

 obvious and created a reaction against them. 



Perhaps the greatest danger of our age is that this reaction 

 may be carried too far, and that the 'great truths which lie em- 

 bedded in these too large utterances may be neglected because 

 they are not new, and men are a little tired of them ; and because 

 they are associated with much that is not true, and which 

 has become, not altogether unjustly, repugnant to men's 

 sentiments. 



The most important instances of this kind are, perhaps, to be 

 found in connection with the relations between competition and 

 combination in trade and industry. But I will first refer briefly 

 to the relations between protection and free trade in foreign 

 commerce, because these have a longer andmore fully-developed 

 history. 



It is a constant source of wonder to Englishmen that protec- 

 tion survives and thrives, in spite of the complete refutations of 

 protectionist arguments with which English economists have 

 been ready to supply the rest of the world for the last fifty years 

 or more. I believe that these refutations failed chiefly because 

 some of them implicitly assumed that whatever was true as re- 

 gards England, was universally true ; and if they referred at all 

 to any of the points of difference between England and other 

 countries, it was only to put them impatiently aside, without a 

 real answer to the arguments based on them. And further, 

 because it was clearly to the interests of England that her 

 manufactures should be admitted free by other countries, there- 

 fore, any Englishman who attempted to point out that there was 

 some force in some of the arguments which were adduced in 

 favour of protection in other countries, was denounced as un- 

 patriotic. Public opinion in England acted like the savage 

 monarch who puts to death the messenger that comes running in 

 haste to tell him how his foes are advancing on him ; and when 

 John Stuart Mill ventured to tell the English people that some 

 arguments for protection in new countries were scientifically 

 valid, his friends spoke of it in anger — but more in sorrow than 

 in anger — as his one sad departure from the sound principles of 

 economic rectitude. But killing the messengers did not kill the 

 hostile troops of which the messengers brought record ; and the 

 arguments which the Englishmen refused to hear, and therefore 

 never properly refuted, were for that very reason those on which 

 protectionists relied for raising a prejudice in the minds of 

 intelligent and public-spirited Americans against the scientific 

 soundness and even the moral honesty of English economics. 



The first great difficulty which English economists had, in 

 addressing themselves to the problems of cosmopolitan economics, 

 arose from the fact that England was an old country— older than 

 America in every sense, and older than the other countries of 

 Europe in this sense, that she had accepted the ideas of the new 

 and coming industrial age more fully and earlier than they did. 

 In speaking of England, t herefore, they drifted into the habit of 

 using, as convertible, the two phrases — "the commodities which 

 a country can now produce most easily," and " the commodities 

 which a country has the greatest natural advantages for pro- 

 ducing," that is, will always be able to produce most easily. 

 But these two phrases were not approximately convertible when 

 applied to other countries ;* and when List and Carey tried to 

 call attention to this fact. Englishmen did little more than repeat 



NO. 1090, VOL. 42] 



old arguments, which implicitly assumed that New England's in- 

 ability to produce cheap calico had the same foundation in 

 natural laws as her inability to produce cheap oranges. They 

 refused fairly to meet the objection that arguments which prove 

 that nothing but good can come from a constant interchange of 

 goods between temperate and tropical regions, do not prove that 

 it is for the interest of the world that the artisans who are fed on 

 American grain and meat should continue always to work 

 up American cotton for American use three thousand miles- 

 away. Finding that their case was not fairly met, the protec- 

 tionists naturally thought it stronger than it was, and honestly 

 exaggerated it in every way. One of my most vivid recollections 

 of a visit I made in 1875, to study American protection on the ^ 

 spot, is that of Mr. Carey's splendid anger, as he exclaimed that 

 foreign commerce had made even the railways of America run 

 from east to west, rather than from north to south. 



England had passed through the stage of having to import 

 her teachers from other lands. But her genius for freedom had 

 attracted to her shores the pick of the skilled artisans of the 

 world ; she had received the best lessons from the best instruc- 

 tors, and seldom paid them any fee, beyond a safe harbour from 

 political and religious persecution. And modern Englishmen 

 could not realize, as Americans, and even Germans, could, fifty 

 years ago the difficulties of a manufacturer taking part in starting 

 a new industry, when he came to England to beg or steal a 

 knowledge of the trade, and to induce skilful artisans to come 

 back with him. He seldom got the very best ; for they were 

 sure of a comfortable life at home, and were perhaps not without 

 some ambition of rising to be masters themselves. He had to 

 pay their travelling expenses, and to promise them very high 

 wages ; and when all vvas done, they often left him to become 

 the owners of the 160 acres allotted to every free settler ; or, 

 the bitterest pill of all, they sold their skill to a neighbouring 

 employer who had been looking on at the experiment, and, as 

 soon as it showed signs of prosperity, stepped in, improved on 

 the first experiments, and reaped a full harvest on a soil that had 

 been made ready by others. 



Again, the pioneer manufacturer had to bring over specialized 

 machinery, and specialized skill to take care of it. If any part 

 went wrong, or was superseded, the change cost him ten times 

 as much as his English competitor. He had to be self-sufficing : 

 he could get no help from the multitude of subsidiary industries, 

 which in England would have lent him aid at every turn. He 

 had a hundred pitfalls on every side : if he failed, his failure 

 was full of lessons to those who came after ; if he succeeded, 

 the profits to himself would be trivial, as compared with those 

 to his country. "When he told the tale of his struggles, every 

 word went home to his hearers ; and when the English econo- 

 mist?, instead of setting themselves to discover the best method 

 by which his country might help him in his experiment, said 

 he was flying in the face of Nature, and called him a selfish 

 schemer for wanting any help at all, they put themselves out of 

 court. 



But the failure of English economists to allow for the special 

 circumstances of new countries did not end here. They saw 

 that protective taxes in England had raised the price of wheat 

 by their full amount (because the production of wheat obeys 

 the law of diminishing return ; and in an old country, such as 

 England, increased supplies could be raised only at a more than 

 proportionately increased cost of labour) ; that the high price of 

 bread had kept a large part of the population on insufficient 

 rations ; that it had enriched the rich at the expense of a much 

 greater loss to the rest of the nation ; and that this loss had 

 fallen upon those who were unable to lose material wealth with- 

 out also losing physical, and even mental and moral strength ; 

 and that even those miseries of the overworked factory women 

 and children, which some recent German writers have ascribed 

 exclusively to recklessness of manufacturing competition in its 

 ignorant youth, were really caused chiefly by the want of free- 

 dom for the entry of food. They were convinced, rightly, as I 

 believe, that the benefits claimed for protection in England were 

 based, without exception, on false reasoning ; and they fought 

 against it with the honest, but also rather blind, energy of a 

 religious zeal. 



Thus they overlooked the fact that many of those indirect 

 effects of protection which aggravated then, and would aggra- 

 vate now, its direct evils in England, worked in the opposite 

 direction in America. For, firstly, the more America exported 

 her raw produce in return for manufacture, the less the benefit 

 she got from the law of increasing return as regards those goods 



