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be differently distributed, and this cannot be effected without suffering. The practical conclusion is that we should create no fresh legal monopolies by means of which workmen are settled where nature cannot yield them a large recompense, but that when such monopolies already exist the tariffs which maintain them must be reformed with prudence and circumspection.

§ 4. The System of Temporary Protection.

This system has never been better expounded than by the German economist, Friedrich List, the initiator of the Customs Union (Zollverein) out of which has sprung the political unity of Germany. The final object, says List, is the establishment of universal free trade, but in order that this may bring the maximum of advantage to individual states, and consequently to the world at large, each people must make the best use of its natural resources. Now a country that is exclusively agricultural is necessarily backward, witness the past history of Poland. Since, then, although it is undoubtedly bad for privileges to give rise to artificial industries, many industries well suited to the nature of a country will never develop there unless at first protected, the best road to arrive at free trade and obtain from it the maximum of advantage lies through a temporary adoption of protection.

Although both Adam Smith and J. S. Mill have expressed the same opinion as this of List's, I admit

neither its premises nor its conclusion. An agricultural country is not necessarily backward. If Poland was so in former days, it was because a frivolous aristocracy which had the disposition of the nett revenue employed it for its own amusement, without doing anything to promote the instruction either of its serfs or of itself. In no country has moral and intellectual cultivation, comfort and happiness been so general as they were in New England before protection developed there the great industries. It is a mistaken habit that measures the civilisation of a state by the amount of the products to which its industries give rise. Civilisation has never been more brilliant than at Athens, where literature and art attained the summit of perfection, but where industry remained quite undeveloped.

Temporary protection is no more needed to-day than it was in the times of Adam Smith. New discoveries and processes are immediately known all over the world, and capital and the spirit of enterprise are ceaselessly seeking to cultivate natural resources in whatever country they exist. Temporary protection. moreover, always tends to become permanent, since the interests created by privilege coalesce in opposing all reform.

§ 5. Reciprocity.

The upholders of this system argue, we are anxious for free trade, but for a free trade that shall be reciprocal and not on one side only. If the

foreigner opens his frontiers to us we open ours to him if he taxes our goods, we tax his. It is the lex talionis, the law of tit-for-tat applied to trade, just the same as the case of reprisals in war. In England at present this system is called "fair trade in opposition to the "free trade" of its adversaries.

These reply to the argument just cited, “ Foreigners inflict loss on you by taxing your products on their importation, but by taxing theirs, you inflict on yourselves a second loss, by obliging yourselves to pay more dearly for them. Because he injures you, you impose a fine on yourselves. Impoverished by him, you complete your own ruin."

The system of reciprocity can only be upheld as an instrument of warfare. In this character it forms the basis of all treaties of commerce. By taxing the products of the principal industries of any foreign country I obtain as my allies in his state all those who are engaged in them, since in order to induce me to lower my dues they will insist on counterconcessions being made to me. Reciprocity is thus the necessary introduction to free trade.

$ 6. Commercial Treaties.

Every state determines on a list of duties which must be paid on the importation of different kinds of goods. This list is called the general tariff. It then negotiates commercial treaties with other states, and grants reductions of the duties on certain goods, in exchange for similar reductions for its own products.

Each country endeavours to obtain the lowest scale of duties for the industries whose prosperity it most prizes. England bargains for its cottons and hardware, France for its wines and silks, Belgium for its coal and iron.

Often the states who are parties to the treaty stipulate that each of them shall enjoy the advantage of all reductions subsequently granted to any other country. This is called "the most favoured nation" clause.

Commercial treaties are useful in assuring to industry what is so essential to it, the fixity of foreign custom dues throughout the period embraced by the treaty. Nowadays commercial treaties are of more importance than political, for it is on commercial treaties that the progress of industry in each country in a great measure depends, and also what is no less important, the development of commercial relations and community of interest between different lands.

BOOK IV.

THE CONSUMPTION OF WEALTH.

CHAPTER I.

ON THE CONSUMPTION OF WEALTH.

1. What is Consumption?

By the successive labours of the farmer, the miller and the baker, a loaf has been produced. I eat it— matter remains; of this I cannot destroy a particle, but the property it possessed of nourishing me under the form of bread, i.e. its utility, has ceased to exist. There has been a consumption of wealth. Το consume, then, is to destroy, by using, the utility with which things have been invested by production.

Utility may be destroyed otherwise than in the service of man. A house is burnt down, an object no longer used, owing, as in the case of sedan-chairs and hour-glasses, to a change in the taste or in the manner of living or producing. When this happens, there is a loss or diminution of wealth, but not a consumption of it.

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