The record-union., 1894-03-12
NATIONAL EXCHANGE AND TARIFF.
Their Relations Treated and Explained
by Professor PIehn.
The Concluding Lecture Delivered by
Him of the University Ex-
tension Course.


the auspices of the University Extension
Association, his subject being: Inter
national Exchange and the Tariff
1t is in perfect accord, said the lecturer,
with the theory of the long predominant
English school to disregard in economics
those boundaries which nations draw be-
tween their lands, and to regard the
whole world as one great wealth-produc-
ing community. If we grant that prem
ises entirely, logic forces US to take
cosmopolitan standpoint in regard to ex-
change, and we cannot regard trade be-
tween nations in any other light than as
a phase of exchange in general. Then
for the world at large the benefits of ex-
change are greatest when 1t is so arranged
as to admit local advantages to I'LL the
whole field peculiar to them.
We must conclude from the premises
of exchange in general that commodities
should always be produced at that place
where they can be produced with the
greatest absolute advantage. While these
economists were logically correct in the
PRACTICAL DoGMAs OF FREE TRADE,
Which they deduced from their prem
ises for the attitude of Governments to-
ward international trade they were still
international exchange as presenting Pc
euliar problems and subject to peculiar
principles. They were forced to this per-
picking and illogical attitude by facts
which they could not fail to see, although
these facts were not in accord with their
premises. We are better situated, for as
we have seen we do not accept their
premises.
That obtrusive fact was the existence
of nations, each of which was social and
political growth, and each of which diff
fered from the other i'll laws, religious
spirit, habits and prosperity. That such
bodies do exist is TACT TO which we cam
not close our eyes. Indeed, we would
master, not overlook their existence. We
inculcate patriotism as high sentiment.
We make the interest of the nation
supreme over that OF the individual.
On the other hand, these writers also
erred when they recognized too close an
an analogy between nations trading with
one another and individuals under the
same circumstances. Yet the comparison
is helpful, in tnat it gives us some yalu-
able consideration. We shall, therefore,
try to avoid those.
TWO DANGEROUS EXTREMES.
We must, as good citizens, consider the
interest and well being of our own nation
as paramount to every other considera-
ton of the interest and well being of
every other part of the world. 1t is good
practical ethics, as our experience has
taught us, that although the individual
may not be too selfish, a nation not only
may but must be entirely SO. But at the
same time it must be acknowledged that
often the best interests OF nation are best
observed by considering the well beings
of other nations TO some extent.
1t strikes every student when ap-
preaching this field of thought for the
first time as novel and almost paradox
icai statement to say that in interna-
tional exchange it is not the absolute but
the relative cost of producing goods
hich determines whether or no they
will exchange. When two articles which
exchange are produced in the same
neis hborhood, one OF the most important
Ia1tors III fixing the values OF which they
will exchange is the absolute cost of pro-
duction. But when one of them is
brought from distance its value is not
determined in The same way but is
largely influenced by the relation be-
tween the cost of production of the same
thing, ii produced at home, as compared
with the thing for which IL is exchanged.
This was shown by number of illustra-
tiOns.
With the greater perfection of eX-
change, however, national boundaries
gradually lose their significance. Terri
certain commodities trade together on the
same principles as do nations. These ter
ritories may lie in such way as to bear
no reference to natural boundaries, or
there may be such territories in the same
country.
The German Empire was direct out
growth of the German Customs Union,
and the Customs Union was brought
about by a recognition Of the sameness of
economic interests OF territory at that
time divided into many nations.
NATIONAL COMMERCIAL POLICIES.
The lecturer then traced the history of
the doctrines held by different schools of
thinkers in regard to the commercial pol
icy of different nations. In concluding
this part of the discourse. he said: While
the doctrine of idiSSez-fdire, involving as
it did the practical dogma of free trade,
found wide acceptance in the theory OF
economics, the practical sense OF the COM
mercial world refused to recognize it.
Economic thinkers to-day stand on COM
mon ground in regard to the fundamental
principles. They differ solely as TO ques-
tions of fact-facts, too, that are hard TO
ascertain on account OF the amount of
personal interest which enters into every
statement. Too many men are unwilling
liars on these subjects.
That common ground held by all eco
nomic thinkers to-day is as follows: A
nation may with good results restrict by
duties or absolute prohibition any or all
foreign trade for the following objects:
First, to diversity our own industries;
second, to put the country in an inde-
pendent position in case of war; third, in
the way of commercial war-that is, in
revenge for hostile duties on home
products laiu by other nations-to crush
a trade monopoly or trust III another
country hostile to home industries;
fourth to compensate for internal taxes.
They are agreed further that revenue
tariffs are legitimate forms of taxation,
and, withal, as just and equable as any
tax can be; that when accidental circum-
stances hinder the establishment OF any
industry which might In the end be
protitably conducted, that industry may
be fostered; that often such restrictions
favor few men or localities, and the
power 10 use them may be abused; that
all sudden or violent changes in policy
are harmful; that just as internal trade is
best free. SO. when possible-that IS. with
out direct detriment to national interests
INTERN ATIoNAL FREE TRADE
Should be the ultimate aim. 1t may be
matter OF surprise TO you when | state
that all the better informed writers are
agreed on so many and so fundamental
points, for we are taught TO believe that
there are multitudinous differences.
When carefully scrutiniZed. however,
these differences will be seen TO be, not
on theoretical points, but solely on
points OF tacts-the existence or nom
existence OF the conditions in question.
These facts have never been ascertained
with sufficient accuracy to allow of the
formulation OF an absolute doctrine Tor
this country. / am inclined to believe,
however. that the time is yet far distant
when this country will or can safely enter
on policy of free trade.
THESE THEORETICAL QUESTIONS
Are not so difficult of settlement; but
when it comes to the details of the tariff
To be framed IN accordance with them we
...oo. NTH llnandinr difficulties The