It was not the desire of the advocates of protection to erect a barrier about the United States, nor did the policy of protection have any such result. The schedules of the various tariffs were not arranged on a prohibitory basis as is well attested by the fact that they did not operate to exclude such foreign productions as we needed. It is noteworthy that many years after a heavy protective duty was placed on rails the United States remained the best customer of the iron masters of Great Britain, our imports of that article in one year exceeding half a milion tons and aggregating nearly 3,000,000 tons between 1868 and 1884, when we practically ceased importing rails. It was not the tariff which caused the subsequent exclusion of foreign rails from our markets; it was the enormous output of American mills that did the business. Domestic production which was wholly inadequate to meet the needs of the country in 1868 was fully abreast of the demand in 1884.

Our experience with rails presents no isolated instance of the operation of the protective tariff. In tracing the growth of imports between 1880 and 1908 we discover great changes in the details that make up the annual totals, but nowhere can evidence be found that the tariff acted as a barrier to exclude from the country articles demanded by the American consumer. If this imaginary barrier had really existed it would have made its effects visible in a prompt diminution of the consumption of protected articles, but nothing of the kind occurred, and no free trader ever assumed that such was the case. The most he could urge against the operation of the system was that it imposed an unnecessary additional cost on the consumer; it was not until after production under the stimulus of protection had reached the stage of supplying the domestic demand that the charge was made that the policy erected a barrier against the introduction of foreign goods.

Growth in Imports.

In 1870 our imports of foreign goods aggregated $435,958,408, or $11.60 per

capita; in 1907 the amount had increased to $1,434,421,425, or $16.55 per capita. In the first-named year the free list was only $20,140,786; in 1907 it was $644,029,761. In 1870 the free list was less than 5 per cent. of the total; in 1907 it was only a little less than 45 per cent. and the latter relation had been sustained during nearly 20 years. A record such as this effectually disposes of the barrier charge, and it also discloses that there is no real ground for the assumption that American external trade has not expanded as rapidly as that of other nations. In 1906 only one nation exceeded us in volume of imports, and we took the lead in exports, a lead we should probably have maintained had not a universal depression impaired the ability of former customers to successfully compete with us for our own products.

It seems impossible for many who have given the subject of our trade relations attention to realize that the greatest impediment to as rapid an extension of our external commerce as the growth of domestic production would seem to warrant is the inability of the foreigner to compete with us for what we produce. There has never been any criticism suggesting that we have lacked energy in the development of our resources; to the contrary, our phenomenal strides in every line of industry have for nearly a quarter of a century been the marvel of the people of other nations. It is only when the careless student of statistics has borne in upon him that there is one other nation the aggregate of whose external trade exceeds that of the United States that the country and the protective policy is arraigned for an alleged defect.

But the defect is only apparent. The primary purpose of production is to supply the wants of nearby consumers, and until their demand is effectually satisfied there can be no real profit in shipping goods to a distance. There are exceptions to this rule, but not many. It is possible that profit may be derived by middlemen in shipping wheat out of a country in which the standard of living is so low that only black bread is demanded by the consumer, but there is no real benefit derived by the producer and the people generally refrain from pursuing such a course. lack of capital and an insufficient population. The resources existed as they do now, but it required the artificial stimulus and the population, which the protective tariff supplied, to enable us to develop them.

Our Case Different from Britain's.

The problem presented to the United States differed vastly from that which England had to deal with when she began her great industrial expansion in the closing years of the first half of the nineteenth century. When Cobden started his agitation for free trade his country had already reached the stage of surplus production, and his movement was devised for the purpose of getting rid of an excessive output and to further increase the excess if possible. In this country the opposite condition existed. With the exception of staple raw materials and foodstuffs the domestic production was unequal to the demand. We were dependent upon foreigners for nearly all the manufactured articles we consumed, but the extent of our deficiency could not be measured by the volume of our imports, for we were too poor to buy on a great scale, and many of our wants remained unsatisfied.

Despite this condition of affairs the discussion of the national economic question in the schools and sometimes in the halls of Congress was made to revolve about the question of trade, and the importance of production was often obscured. In the sequel, however, it will be seen that the good sense of the Nation prevailed, and that the course adopted was really the only one which could have attained the result desired by those who were loudest in their advocacy of unrestricted trade. By the systematic development of our manifold resources we have created an internal commerce which by comparison dwarfs the combined external dealings of all the nations of the world, and concurrently we have built up a foreign trade which eventually will surpass in magnitude that of any other nation.

In dealing with the extension of foreign trade in its local aspects we find that California is undergoing the same experience that the Nation had to pass through, and from which it has not completely emerged. The analogy may not be perfect, but it is close enough to

permit us to assert that we are contending with the same difficulties, and that we can only hope to overcome them in the same fashion that the Nation did, and that is by increasing our production of the things which foreigners are able and willing to buy from us, and by putting ourselves in the financial position which will enable us to give the same accommodations to prospective customers as others who are ready to compete with us.

Great Domestic Development. Taking 1870, the date already used as a point of departure, we find that the value of the domestic products of the United States aggregated as follows:

Manufactured products ... $4,232,325,442
Products of farms
Mineral products

Total

1,958,030,927 364,928,298

$6,555,284,667

We may safely assume that the tremendous production of the United States, which with the fisheries output added now aggregate more than a round $25,000,000,000 annually, would never have been attained had the country accepted the doctrines of the Manchester school, which inculcated the idea that a country adapted to agriculture can profit most by confining itself to that pursuit, the assumption being that the nation in which the manufacturing industries were already established could produce manufactured articles more cheaply than we could ever hope to because of our lack of capital and skill. But the protective policy remedied both of these defects. It compelled us to gain the latter in the same fashion that the skill of British artisans was gained -that is by experience; and the application of our acquired mechanical accomplishments to the development of the national resources soon provided the required capital.

Population the Great Factor.

It is obvious, however, that the rapid growth of population was the most important factor in the expansion of our productivity. The addition of over 48,000,000 inhabitants between 1870 and 1908 not only provided the additional bone and sinew and the intelligence necessary to make the best of our natural resources; they also created the greatest market in the world for our productions. The 88,000,000 people who inhabit the continental area of the United States is the greatest body of consumers ever called into existence. They actually require for their annual maintenance $25,000,000,000 of products, for what we sell of our own annual output is nearly balanced by what we buy from foreigners.

In this enormous consuming ability of the American people we discern the secret of the comparative leanness of the expansion of our export trade. The

ability of our own people to buy and the relative inability of foreigners to compete for our products, create a condition difficult to deal with, and one which appears to be viewed with great displeasure by our Consuls abroad, who are constantly suggesting that it is not the part of wisdom to sell at a profit to the home consumer when goods might be shipped to foreigners at a loss. This sounds like a joke, but the evidence can be produced to prove that the officials we have stationed in foreign countries to spy out the land are in the habit of reproaching American manufacturers for not hunting for unprofitable markets abroad when they can with difficulty supply the domestic demand. The argument advanced to support this advice is that the creation of a foreign market would stand us in good stead when the domestic consumer found himself unable to absorb our products, but experience has demonstrated that this is a broken reed to lean upon, for when the American consumer is unable to buy the chances are ten to one that the foreigner will be in a still worse fix.

Foreign Needs Not Understood. There are other reasons ascribed for our failure to surpass the exports of other nations in particular classes of products, some of which merit attention and others which are foolish because they disregard conditions which we are unable to control, and which while they exist must prove an obstacle to the expansion of our export trade. Among the former is the alleged propensity of Americans who desire to build up a foreign trade in their line, neglecting to carefully study the needs of the people to whom they wish to sell, and their failure to properly pack the goods they ship abroad when they happen to get customers. These latter are errors likely to be made so long as our foreign trade merely represents the disposal of surplus products and will be corrected when the condition is reached in which manufacturers will find it more profitable to devote themselves to foreign rather than to the domestic trade.

There is another impediment to the extension of our trade in some countries which will be remedied when our capital is sufficiently increased to enable us to spare some for investment in foreign lands, and when it is abundant enough to tempt us to break through the rather stringent system of exacting prompt payment from customers who have been accustomed to leniency in the matter of credits. When the time arrives that we can make loans to undeveloped countries, our exports of domestic products will increase, because investments of that character are usually made in the form of goods. Indeed there is often a stipulation that a portion of the loan shall take that shape, as was the case recently when the French provided the means for constructing certain public works in Argentina. And when our energies are less taxed to meet the domestic demand we shall probably be able to emulate the example of the Germans, who maintain running accounts with their customers in Latin America and other countries, and do not discourage them with thirty, sixty and ninety day propositions.

The Home Food Supply.

One other obstacle we have to deal with is not sufficiently taken into account, and that is our practical exemption from the necessity of depending on outsiders for our foodstuffs and a large part of the raw materials which are used by our manufacturers. The author of the paper "On Some Conditions of Pacific Coast Commerce," speaking of the Nation, said: "We import little or nothing, except a few of the articles on our limited free list, for later exportation." Passing over the inexactness of the term "limited" when applied to so large a quantity of goods as a free list of $644,029,761, the amount imported in 1907, implies, it may be well to direct attention to the fact that if we were dependent on the outside world as Great Britain is for foodstuffs and raw materials we should have to increase our importations to a figure vastly exceeding that of the imports of the United Kingdom.

It is hardly conceivable that if the resources we make such good use of were non-existent that we should be producing on a scale as great as that of the present, but consideration of the

changes which would be effected if the conditions were the same as those which Europe has to deal with may prove instructive. If, for illustration, we had to go to Africa or some other place for our supplies of raw cotton, or to Spain for our iron ores, as England does at present, we should probably find it profitable to engage in that sort of round-about foreign trade which calls for the use of shipping, whose performances appear in the tables of imports and exports. As it is we transport our 25,000,000 or 30,000,000 tons of iron ore in freight cars or in coast-wise ships which are regarded with contempt, because they are not in the ocean carrying trade.

Large Import of Materials.

The quantity of raw materials and foodstuffs imported by us at present is by no means as insignificant as Professor Moses implied, when he spoke of "our limited free list." In a total of imports aggregating $1,434,421,425 in 1907, we find that the volume of foodstuffs in crude condition and food animals was $149,747,693; that of foodstuffs partly or wholly manufactured, $158,666,263; crude materials for use in manufacturing, $477,027,174; manufactures for further use in manufacturing, $274,096,464; a total of $1,059,537,594.

It is impossible to determine what proportion of these imports appear in our table of exports in some new form, but the quantity is probably not very great, for it is true that we have not yet succeeded in establishing a re-exportation of any consequence, and it is not likely that we shall succeed in doing so until the development of our coal industry reaches the stage that it has attained in the United Kingdom, which, although producing a much smaller quantity of mineral fuel than the United States, finds it possible to spare nearly a fourth of its output to foreigners.

Britain's Irreplaceable Waste.

In 1907 the output of coal in Great Britain was 267,830,962 tons, of which 66,063,258 tons were exported. In the same year 25,123,759 tons of iron ore were smelted, 15,731,604 tons being domestically produced. This indicates an importation in excess of the quantity

given in the Statesman Year Book for that year, which was only 7,641,934 tons, whereas the difference between the total smelted on the quantity credited as domestic product aggregated 9,392,155 tons. There was also shipped out of the United Kingdom in that year 1,942,335 tons of pig iron. The significance of these figures is made apparent when we consider the important part played by these tremendous shipments in the promotion of an ocean carrying trade. We have no recent estimates of the proportions these shipments of coal bear to the whole, but in 1896, when the quantity of coal exported by Great Britain was only 44,200,000 tons, it constituted 84.7 per cent, of the entire volume of British exports, and the shipping which carried it away represented over 50 per cent. of the tonnage cleared from the United Kingdom in that year. The increase of nearly 22,000,000 tons of coal and the pig iron exports of 2,000,000 will probably bring the percentage of volume up to 93, and the combined coal and pig iron exports of the United Kingdom doubtless now engage at least 60 per cent of the tonnage cleared from the United Kingdom.

Obviously if, as many insist, a great shipping industry such as that which Great Britain possesses is a prerequisite to the successful carrying on of a trade of the kind that has undoubtedly proved so profitable to that country, it will be necessary for us to obtain it by some such means as those by which the United Kingdom has succeeded in making her flag so familiar a sight in all parts of the world. At one time the prospects of something of the kind happening seemed imminent, but the phenomenal development of the domestic demand for coal and pig iron in the United States frustrated the expectation.

Our Home Consumption.

Ten years ago there was an active discussion of the question whether the United States was not approaching the stage when the export of coal on a large scale would take place. We were then producing somewhere in the neighborhood of 200,000,000 tons annually, and had just passed the British record mark,

a fact which probably directed attention to the subject. Then the unexpected happened. Our output,, which was 172,000,000 tons in 1895 and had increased to 240,000,000 tons in 1900, expanded with enormous rapidity, reaching 350,000,000 tons in 1905, 369,783,000 tons in 1906 and 428,895,000 tons in 1907. But what we produced was consumed at home. Our increased output was almost wholly absorbed by our own people. In 1900 our exports were 5,411,329 tons; in 1908 they had increased to 9,884,957 tons, while our imports in the latter year were 1,975,625 tons. The same story may be told of pig iron. In 1899, when our product was 11,773,934 tons, our exports were 299,641 tons; but in 1907, when our output had increased to 25,307,191 tons, our exports were only 85,000 tons. Instead of being able to spare any pig iron, we actually were compelled to import 564,846 tons in the latter year.

If there has been much serious talk during very recent years of our profiting through an extension of our shipping industry through the development of a coal and iron export trade, it has not been of a public character, but there has been inaugurated a movement which may gain enough force to prove an insuperable obstacle to extension along those lines. Professor Moses voices it when he says: "At present there is a market in the Spanish-American states of the Pacific for the lumber of California, Oregon and Washington, but devastating our forests and exhausting this branch of our national resources for a percentage of present gain, thus enabling other nations to preserve their forests till the coming time of scarcity, is like committing suicide in order to let our neighbors have an advantage over our posterity." The objections to getting rid of our timber apply with much greater force to parting with an irreplaceable product like coal or iron. Lands may be reforested, but coal once consumed is gone forever. It is not improbable that the conservation idea may take such hold of the people that they may think the preservation of the national resources may be a matter of greater consequence than the comparatively small percentage of present gain