immediately figure to ourselves what the article would cost, calculating his labor at what he earns during his four occupied days; but what he makes while he would otherwise be idle costs him nothing; and what a nation makes with labor otherwise idle and with capital which would otherwise be lying unemployed, or which perhaps would never have come into existence, costs the nation nothing. By producing the article it would otherwise import, it adds to the national revenue the total gross value of the article produced, or rather the total value of what would have otherwise been exported. The argument that industry will not be diminished because it is always in proportion to capital, would be good if true, but is good for nothing after we have found out that industry is held in check, not by the want of capital, but by the want of a field of employment sufficiently profitable to attract capital.

Adam Smith continues:

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Though for the want of such (protective) regulations the society should never acquire the proposed manufacture, it would not, on that account, necessarily be the poorer in any period of its duration. In every period of its duration its whole capital and industry might still have been employed, though upon different objects, in the manner that was most advantageous at the time. In every period its revenue might have been the greatest which its capital could afford, and both capital and revenue have been augmented with the greatest possible rapidity."

This would be correct, were the facts as to capital such as he imagined. He knew nothing of the normal existence of unemployed capital; nothing of the rapidity with which new capital can be taken from income; nothing of the impetuosity with which the savers rush upon and occupy every field of. employment which promises a profit.

But the world has learned something in a hundred years; and in the light of the newly observed facts, we know that in consequence of such regulations the nation will in every period of its duration enjoy a larger revenue and acquire a larger capital.

We come now to the anti-protectionist argument of Mr. John Stuart Mill.

He

says:

"There can be no more industry than is supplied with materials to work up and food to eat. Self-evident as the thing is, it is often forgotten that the people of a country are maintained and have their wants supplied, not by the produce of present labor, but of past. They consume what has been produced, not what is about to be produced. Now, of what has been produced, a part only is allotted to the support of productive labor; and there will not and cannot be more of that labor than the portion so allotted (which is the capital of the country) can feed and provide with the materials of production.

"Yet, in disregard of a fact so evident, it long continued to be believed that laws and government, without creating capital, could create industry."

This is Adam Smith's argument over again, and is, in brief:

1st. Industry cannot exceed what capital can maintain. 2d. Industry, therefore, cannot increase until new capital has been created.

3d. Laws and governments cannot create capital.

4th. Therefore laws and governments have no power to increase industry.

But to make the later propositions flow from the first, a vast gap has to be filled up: it requires to be proved that in a normal condition of things there is no unemployed capital, and no funds, which, although intended for unproductive consumption, are capable of being instantly turned to the support of production the moment that a new industry, intrenched by a protective law, presents a profitable field of employment.

This is a question of fact; and the moment we inquire into the facts, we find that the unemployed capital in the United States is vast, probably much exceeding $1,000,000,000; and that the ability to reinforce this out of the funds intended for unproductive consumption within the year is also vast, probably a good deal over $700,000,000. Before these facts the whole argument falls to pieces.

Mr. Mill continues as follows:

"Not by making the people more laborious, or increasing the efficiency of their labor: these are objects to which the government can in some degree contribute. But, when the people already worked as hard and as skilfully as they could be made to do, it was still thought that the government, without providing additional funds, could create additional employment."

These are wonderful words, as showing how far the most conscientious man may be led in misrepresenting his opponent's positions. The protectionist does not maintain that the government can increase the industry of a people who already work as hard and as skilfully as they can be made to; but that of a people who do not already work as hard and as skilfully as they can be made to. Indeed, to suppose that they who already did all they could might still be made to do more (whether the government provided additional funds or not), seems to be one of those blunders or bulls which one would hardly expect to find in the deliberate composition of one who has written so admirably upon logic.

Mr. Mill continues:

"A government would, by prohibitory laws, put a stop to the importation of some commodity; and when by this it had caused the commodity to be produced at home, it would plume itself upon having enriched the country with a new branch of industry, would parade in statistical tables the amount of produce yielded and labor employed in the production, and take credit for the whole of this, as a gain to the country, obtained through the prohibitory law. Although this sort of political arithmetic has fallen a little into discredit in England, it flourishes still in the nations of continental Europe. Had legislators been aware that industry is limited by capital, they would have seen that, the aggregate capital of the country not having been increased, any portion of it which they by their laws had caused to be embarked in the newly acquired branch of industry must have been withdrawn or withheld from some other, in which it gave, or would have given, employment to probably about the same quantity of labor which it employs in its new occupation."

Here the cat jumps out of the bag, and we see how Mr. Mill made out his proposition, which he called invulnerable. He translates his original proposition that industry cannot exceed

what capital can maintain, into the words, "industry is limited by capital," which are ambiguous. In one sense they are identical with his original and fundamental proposition; but his conclusions, as we have seen, cannot be deduced from this. In the other sense they mean that, in point of fact, industry does not increase because there is not any unemployed capital nor any other funds which can be at once turned into capital. His conclusions would logically follow from this proposition; but this proposition, as we have seen, is not true. But, by converting his first and fundamental proposition into an ambiguous form, he misled himself and his readers, and seemed to prove that, when millions of practical men believed they had been enriched by a protective law, they were only as many millions of idiots for thinking so. In doing this, he committed precisely the error which he denounced in his "Logic," chap. vi. sec. 4, where he says:

"The commonest and certainly the most dangerous fallacies of this class, are those which do not lie in a single syllogism, but slip in between one syllogism and another in a chain of argument, and are committed by changing the premises. A proposition is proved, or an acknowledged truth laid down, in the first part of an argumentation; and in the second a farther argument is founded, not on the same proposition, but on some other resembling it sufficiently to be mistaken for it. Instances of this fallacy will be found in almost all the argumentative discourses of unprecise thinkers," &c.

But here an instance is found in his own argument: a great logician, when closely examined, is seen committing a capital error in logic, and thereby teaching us how signally unreliable is the purely abstract system of reasoning, and how constantly it requires to be checked and verified by comparison with facts.

The absurdities into which abstract reasoning may run by overlooking important economical facts is curiously shown by another doctrine, enforced at great length by Mr. J. S. Mill. This is the doctrine that a demand for commodities "does not and cannot create any employment, except at the expense of other employment which existed before." This flies in the

face of two economical facts. First, that people are constantly striving to save; and, second, that there always, in a normal condition of society, exists a stock of unsold goods or of materials awaiting transformation, —in short, a vast aggregate of unemployed capital. He argues thus:

“A consumer may expend his income either in buying services or commodities; he may employ part of it in hiring journeymen bricklayers to build a house, or excavators to dig artificial lakes, or laborers to make plantations and lay out pleasure-grounds; or, instead of this, he may expend the same value in buying velvet and lace."

If he does the latter, Mr. Mill concludes that the additional quantity of velvet which his demand causes to be produced could not be produced at all were it not that the bricklayers, &c., being now without work, their demand for necessaries, &c., ceases, and hence the production of those necessaries, &c., ceases; and hence the precise amount of capital necessary for a larger production of velvet is set free. "There was," he capital in existence to do one of two things, make the velvet or produce necessaries for the bricklayers, — but not to do both!"

says,

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to

Imagine the case of a young man, who, being imbued with these doctrines, is thrown into practical life in the United States, and obliged to consider business problems into which enters as a factor the probable amount of the capital unemployed at the moment, he being utterly ignorant of the fact that the aggregate is generally very large and sometimes enormous. What grave blunders he would make, and at how fearful an expense would he unlearn what he had been taught at school or college! If we take Mr. Mill's consumer as merely the embodiment of the totality of consumers, we know that in one phase of the revolving phenomena of society he may have been saving until the general glut of commodities has reduced all profits so low that there is no longer a sufficient inducement to save. If, then, he sets his bricklayers at work and buys his velvet. his purchases will relieve the velvet maker of a portion of the stock of goods which held his industry in check, and will enable him to make more velvet;