CHAPTER 14

THE POLICY OF A PROTECTIVE TARIFF

REFERENCES.

_Bolen, G. L._, Plain facts as to the trusts and the tariff. 1902. Pt. II.

_Daniels, W. M._, The elements of public finance. Ed., 1911. Pt. II, ch. VII.

_Johnson, E. H._, The effect of a tariff on production. Q. J. E., 18: 135-137. 1903-1904.

_Patten, S. N._, The economic basis of protection. 1890.

*_Source Book_, 347-357, 358-360.

_Wallace, H. B._, A balanced tariff. A. E. Rev., 2: 568-575. 1912.

QUESTIONS.

1. Can it be of advantage to trade freely with one nation if general free trade is bad?

2. If there were no legal bar to a tariff between the states, would a tariff probably be imposed? If so, would it be a wise measure?

3. Discuss the contention that a protective tariff by helping to keep out imports of foreign goods tends to maintain a favorable balance of trade.

4. "The territorial distribution of money is both a determined and a determining factor in international trade."

Explain the meaning of this statement and show its relation to the "favorable balance of trade" argument for protection.

5. An Englishman gave this argument for protection: "If an Englishman buys a frying pan from a German for a shilling (24 cents), then England gets the frying pan and Germany gets the shilling, whereas if an Englishman buys the frying pan from an English manufacturer for 13 pence (26 cents), England gets both the frying pan and the 13 pence. The increase in price benefits England because the money remains within the country, instead of going abroad to increase the wealth of foreign nations." Give your opinion of this argument.

6. Discuss this statement: "The American people send abroad over $100,000,000 a year to pay for imported sugar. To meet this bill requires the wheat crop of over 7,100,000 acres. But all the sugar now imported could be grown on 1,700,000 acres in beets or cane. In other words we are throwing away the product of approximately 5,400,000 acres of land by not growing our own sugar."

7. A New York daily has contended that "Of course, we should be the gainers if every pound of it (raw cotton) were exported in manufactured form. Every process through which the raw material passes in its conversion into fabrics would mean employment for American wage-earners."

Discuss the proposition that the aggregate for the labor of American wage-earners is less if we export raw cotton than if we should manufacture the raw cotton in this country for export.

8. Assuming that an import duty on tea, if sufficiently high, would create a tea growing industry in the United States capable of supplying the whole domestic demand, trace the various economic effects of such a duty.

9. Who gained when Hawaiian sugar (before annexation) was admitted free of duty, while other sugar was taxed?

10. If the owners of marble quarries can show that their net income is 30 per cent. greater by reason of the protective tariff upon foreign marbles, does this show that the tariff increases the wealth of the protecting country?

11. State any proposition which you think that you can maintain about the relation between high or low wages and international competition. Maintain your proposition.

12. What do you say to the plan of so adjusting duties on imports as to equalize the "labor cost" of imported and domestic commodities, through the levy of duties which will just offset the higher wages paid by the American employer?

13. Is a high rate of money wages an obstacle to the successful conduct of industry in competition with countries where money wages are low?

14. What was the argument originally used as to the comparative wage levels here and abroad so far as the starting of certain industries in this country was concerned? Compare this argument with the current protectionist argument as to the relation between the tariff and the present general wage level in the United States.

15. What help should the law of wages give in explaining the present inequality as among the wage scales in Germany, France, England and the U. S.?

16. If it would pay us to admit goods free, may we be justified in taxing them to force concessions from the other country?

17. What conditions as to consumption and production at home and abroad would be most favorable to the shifting of an import duty on a manufactured article entirely to the consumer?

18. (a) A and B are two tropical islands inhabited by friendly peoples and producing the same commodities. The climate, soil and topography of A are such that all kinds of products can be produced there with less effort than they can be produced in B. Could there be any incentive for the people of A to trade with the people of B?

(b) Debarring all feelings of hostility and of sentimental attachment to home, is there any reason why the people of B should not all emigrate to A?

(c) Could B equalize conditions of production by enacting a protective tariff on the products of the two islands?

(d) Suppose A were discovered after a strong civilization had grown up on B. Might conditions be such that A could with advantage to itself exact a protective tariff?