kinds of labor, in different countries. Each country exchanges with others goods that cost it less labor than those that it receives would have cost it if produced at home. Each saves labor by the bargain, and therefore each derives benefit from the exchange, even though it might have produced the same articles at home for less labor than they cost the other. For even if it be as easy to make iron in Pennsylvania as in England, yet if it pay better to raise wheat for exportation because England's need of wheat compels her to give more iron for our wheat than the labor spent in raising wheat would have produced, we are gainers by the exchange. Each country, therefore, should manage its economy not on the lines indicated by its natural resources, but on those that are indicated by the exchangeable value of its products in the markets of the world. Every nation, therefore, Mill says, instead of adopting a national policy that looks to the development of any species of industry, should allow things to take their natural course, being assured that to do the things that are easiest, and to buy in the cheapest market and sell in the dearest, are the most remunerative ways of procedure.

§ 219. We have already given some reasons why commerce between distant points is an undesirable thing, as open to the exercise of tyrannizing power by traders and their combinations. The next chapter will be chiefly devoted to showing that while individuals may find it to their account to buy in the cheapest market and sell in the dearest of those that already exist, communities will frequently find it more to their account to create new markets by cherishing a varied industry at home. At this point, therefore, we shall only remark:

(1) That exchanges are not, as this theory assumes, effected on the basis of labor expended, but of money price, which is quite another matter. We might be able to produce iron at a far less expenditure of labor in Pennsylvania than in England, and yet not be able to sell it so cheaply in the world's markets as England does. Some of the manufactures of iron, such as cutlery, axes and saws, are actually so produced through the possession of better machinery, but they have not yet driven

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English wares of the same sort out of the market. A recent report to the British government asserts the same of many forms of American dry goods, yet they do not sell in Europe. "What makes the difference in money cost?" Many things,—the extent and the method of taxation, the cost of capital, the rate of wages, the difference in the purchasing power of money, and the like.

Now, in view of domestic commerce, these elements of difference have no existence. It makes no difference to a country what is paid for an article of home production, provided there is no waste of labor in producing it, and provided there is a fair exchange of labor for labor. If booter and hatter make an exchange of goods, whether they call the price a thousand dollars or one, is of no importance if only the values exchanged are equal. The standard of money payment, be it high or low, is the same for both.

§ 220. (2) The theory assumes that the chief end of national as of individual economy is to save labor, whereas the great problem is how to employ it productively. If buying in the cheapest market reduce the amount of employment, it will be for the nation that does it the dearest of all buying. A farmer who spends his idle hours in making a sled might have got one at the factory for the price of wheat that cost him less labor; but he may have been wiser in making than in buying, because those idle hours would otherwise have been wasted. The nation that spends its surplus labor, and every nation has a surplus of it,-in working up its raw material into goods is gaining by the business, even though it may employ that labor less effectively than another that has more experience and capital. The people of Denmark spend their long and bleak winters in spinning and weaving home-made goods that England would furnish them more cheaply than they make them. The nation says, with one consent, through its national government, "we will not buy of you what we can make ourselves, for if we did our time would be lost." England herself is an illustration of what we mean. "If every man and woman and child returned as a worker in

the census had full employment, at full wages, for forty-eight weeks out of the fifty-two, England would be a perfect Paradise for workingmen. We should be in the Millennium! Far other is the real state of affairs. Taking all the facts into account, I come to the conclusion that for loss of work from every cause, and for the non-effectives up to sixty-five years of age, who are included in the census, we ought to deduct fully twenty per cent. from the nominal full-time wages" of the lower classes as a whole.

See R. Dudley Baxter's National Income of the United Kingdom. (London 1868.)

The problem thus presented is not an insoluble one for any country. It is the problem of the due balance of the three great elements of the industrial state. England has missed its solution chiefly through the rending the people away from the land, the establishment of a system of agriculture that lacks aggressiveness and full productive power, and her consequent dependence upon foreign harvests. Millions of the English people who should be living by the land and owning it, sit prisoners in English workhouses, or crowd the lanes and back streets of her manufacturing towns. Our danger is in the other directionan undue development of agriculture and foreign trade to the neglect of varied industry.

§ 221. (3) In adopting, therefore, a purely passive policy, we should not be accepting the natural order of things, but accommodating ourselves to a thoroughly artificial order. The false position in which England finds herself compels her to wage war upon the industries of other countries; for us to sit idle and passive while she does so by means of the vast masses of capital concentrated in the hands of a few capitalists, would be as weak as to sit idle and passive while her fleet bombarded Boston or New York. The English ideal-forced upon them by their position-is that their country should be "the workshop of the world" and all other countries her dependencies. She is, in their view, "like a vast city to which the less peopled parts of the civilized world are an agricultural country, which is glad to send

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its overplus of provisions [of raw materials] in exchange for the luxuries and conveniences of a manufacturing region" (Thorold Rogers). "England's position is not that of a great landed proprietor, with an assured revenue, and only subject to occasional loss of crops or hostile depredations. It is that of a great merchant, who by immense skill and capital has gained the front rank and developed an enormous commerce, but has to support an ever-increasing host of dependants. He has to encounter the risks of trade and to face jealous rivals. . . . England is more favorably situated than any country, except the United States, for manufactures and commerce. The future rise

of the United States into a great manufacturing and naval power, appears the most probable and certain cause which will place a limit to our national increased prosperity" (Dudley Baxter). The United States and British colonies "are young and rising countries; industries, as yet nascent, are thoroughly suited to the natural capacity of the region and of the people, the latter being of the same stock as the mother country, whose manufactures they prohibit or discourage. There is no reason, apparently, except priority in the market, why the industry of the old country should not be transplanted to the new" (Thorold Rogers).

In other words, England having by a bad national economy destroyed the equilibrium of agriculture and manufactures at home, and thereby made herself dependent upon other peoples for the supply of food and a market for her wares, must now do her best to prevent these new countries from attaining that equilibrium. If they attain it, that will "place a limit to her increase and prosperity," and unless emigration surpass everything that the world has seen, will produce first wide-spread misery and then domestic chaos. She must, therefore, use all her powers of capital and persuasion to keep off the evil day. Although she professes to believe, and persuades herself that she believes, in the solidarity of interests, and exhorts men

From growing commerce loose the latest chain,

Till each man finds his own in all men's good,
And all men work in neble brotherhood;

yet she cannot but see in this national growth of the industry of these new peoples an injury to her own well-being. All English arguments and exhortations to passivity, however sincere, lie, therefore, under a just suspicion, as special pleadings. Facile homines credunt, id quod volunt.

§ 222. (4) The commerce proposed by this theory is the exchange of the raw materials of some countries for the manufactured productions of others. It is therefore an unfair exchange, [1] one side pays for the transportation of bulky and costly articles over great distances; the other pays for the transfer of goods of the same value but condensed in form. The burden of transportation, the chief tax upon production, falls therefore heavily upon the producer of raw material, lightly upon the manufacturer who exchanges with him. But as long as comparative cheapness is the one test by which an industry must stand or fall, the producer has no redress. He cannot say that he will sell to the nearer consumer and save the cost of transportation. His farming or planting may be a ruinous exhaustion of the land that does little or nothing to fill his purse, but there is nothing else for him, so long as the foreigner can undersell home-made goods, prevent the establishment of factories, and close those that have been established.

[2] The exchange is unfair through the unequal distribution of risks. The producer of raw materials depends upon a thousand contingencies for his success, of which other producers know nothing. A bad crop or harvest may leave planter or farmer with nothing to sell; a good one may overstock the market and pull wheat and cotton so low that the cost of transportation absorbs nearly the whole price. But the manufacturer can foresee demand and adjust the supply to it, running his mill over-time at one period, under-time at another. The English distribution of functions thus assigns all the certainties to one nation, all the risks to another.

§ 223. This contingency is the chief element in fixing the price of raw materials. Their supply vibrates between distant extremes of scarcity and plenty. Their producer finds a great loss in