INTERNATIONAL TRADE 301 



sided, one country gaining at the expense of 

 another. In other cases the advantages are 

 mutual and increase the total resources of the 

 world. Generally, international trade has this 

 result. The merchants who conduct it make 

 their profits by appropriating wealth from which- 

 ever country is most in need of the exchange. 

 But, profits apart, the effect of both exporting 

 and importing is to increase the effectiveness of 

 industry. The export trade brings new markets 

 within reach and expands the demand : the 

 import trade assists manufacture by introducing 

 supplies of raw material, and lowers prices by 

 bringing goods and food upon the market more 

 cheaply than they could be produced at home. 

 Since a fall in prices stimulates production and 

 increases wealth, proposals to check importation 

 by the imposition of a protective tariff must jus- 

 tify themselves by their effect either in enabling 

 the country to enrich itself at the expense of 

 others, or in promoting developments which have 

 a social or political as opposed to an economic 

 effect. A protective tariff which raises prices, may 

 check the stream of foreign investment by increas- 

 ing the profits of some home factories; and it may 

 be that, by inducing capitalists to invest at home, 

 the wealth-stream would be swelled more abun- 

 dantly than by the expenditure of the interest 

 which foreign investments would yield. It may 

 be desirable for social reasons to encourage manu- 

 facture as opposed to agriculture ; or it may seem 

 politic to foster agriculture at the expense of 

 manufacture in order to secure that the country 

 should not become entirely dependent upon 

 others for its food supply. Or, stress may be laid 

 upon the advantage which results from the 

 power of retaliation in penal tariffs in compelling 

 other nations to moderate their customs demands. 



