642 REPORT—1904. 
(b) free importation of raw materials for the use of industries ; 
(c) protective duties upon the importation of articles manufactured and partly 
manufactured. 
Solidarity of the protected national interests was prociaimed. Iffective protec- 
tion of national industries, however, cannot be granted but at the expense of other 
national interests. Leaving on one side the questions of the effect on consumers, 
and whether all agriculturists have got an advantage by the protectionist system, 
the author deals with the effect of German Customs duties, railroad rates, and 
export bounties, 7.e., of the whole system of ‘ new mercantilism,’ on German indus- 
trial classes. Statistics show that production and exportation have increased ; but, 
nevertheless, experience and recently the evidence taken by the Imperial Cartell- 
Committee prove that some very important branches of German industries suffer 
seriously from the protection accorded to others. 
Raw materials are universally regarded as unfit subjects of Protection. 
Increased cost of raw materials would prevent the manufacturer from exportation. 
But free trade in materials gave a special advantage only (a) to those producers who 
sell in a protected market articles partly manufactured, as pig-iron, steel, cotton 
‘yarns,’ &e. ; (b) to combined or mixed concerns which own coals, iron ores, furnaces, 
&e., and produce finished articles from their own or from imported raw materials. 
As far as the mine-owners and the producers of articles partly manufactured 
have formed syndicates, they endeavour to foree upon their German customers 
higher prices than Free Trade would permit. As far as they practised ‘ dumping’ 
goods on foreign markets, they sold German unfinished articles at preference prices 
to the foreign competitors of the German producers of finished articles. 
Therefore, those German producers of finished articles, e.g., machines, shoes, 
needles, glassware, hosiery, who must buy the articles partly manufactured from 
German monopolists, or from abroad as dutiable commodities, get no advantage 
from the free importation of raw materials. Having developed to astage in which 
they cannot exist without exportation, they would not be endangered by absolute 
Free Trade. Unable to form such powerful syndicates and draw so much profit 
from the internal market as the protected monopolists, whose customers they are, 
the manufacturers of finished articles cannot practise ‘dumping’ in a great style. 
On the contrary, their regular exportation is endangered (a) by dumping done 
abroad in their materials ; (0) by the internal and external competition of combined 
concerns which do not buy any protected articles, but produce all materials them- 
selves ; (c) by the effect of duties on food upon the cost of living of their operatives ; 
(d) by the general check to exports resulting from protective policy. 
Some producers of finished manufactures enjoy special privileges by which the 
pernicious effect of higher national prices of unfinished articles is diminished. 
Shipbuilders are by special clauses entitled to get what they need at Free Trade 
prices; some industries of manufactured iron get from the coal, iron, and steel 
syndicates private exportation bounties which, however, are never higher than the 
enhancement of price due to Protection and syndicates, Some industries get Govern- 
ment drawhaclis ; but even these are not better off than under Free Trade, and the 
other producers of finished articles who do not produce their own materials are 
the more injured the more Protection and syndicates favoured by it make 
progress. 
The specialisation of industries cannot be developed so intensively as under Free 
Trade. The chief effect of Protection in the present stage of development is 
as follows: countries of old civilisation can never in the long run compete 
successfully with the new world, by protecting industries mainly dependent on 
natural facilities at the expense of industries whose success depends on the intelli- 
gence, skill, and training of workmen. By favouring agriculturists and the 
producers of bulky industrial articles partly manufactured, the countries of old 
civilisation deprive their best champions, the manufacturers of finished articles 
which would flourish under Free Trade, of the indispensable advantage of buying 
in the cheapest market. 
Considered from an evolutionist point, the present state of Protection of bulky 
