the equation of international demand.  A wide margin of advantage may go to one party and a narrow margin to the citizen of the more favored land.  To put it concretely:  America, having great natural resources for agriculture, might continue to trade food for manufactured goods even tho England reaped most of the benefits of the trade.  An American tariff on manufactures from England would, under such conditions, check the demand for English products and compel some Americans to leave farming.  This reduction of the American supply of wheat or corn and of the American demand for English manufactures compels a new ratio of trade (expressed in prices).  It is conceivable that trading fewer goods with a larger gain on each trade would give a larger total of gain to the favored nation.  Thus, foreigners may conceivably be compelled to pay a part of the tariff duties to enjoy the favored market.  This is but a special case of the monopoly principle; the government by law artificially limits the supply of goods offered by its citizens.

This argument is somewhat subtle, but probably is the soundest one in the theory of protection.  The supposed conditions seldom occur in a marked measure, but they may exist, and probably have existed in America.  When the great system of internal transportation was developed in the United States before that of the other new countries (say from 1840 to 1894), this country had such peculiar advantages for the production of food that the quantity was enormously increased and agricultural prices fell.[11] At such a time the tariff may have worked toward checking the fall and earlier reestablishing a more favorable ratio.  It did this by making prices of manufactured goods in this country artificially higher and thus tempting men from rural to urban callings.  But the limited application of the principle must be recognized.  The potential competition of undeveloped countries on all sides, seeking to develop their resources, and profiting by the higher prices of food in the world-market caused by our tariff, threatens the peculiar advantages of the favored land.  Russia, Argentina, and Australia have rapidly taken the place of America in supplying food to Western Europe, in part, no doubt, because we refused to take Europe’s goods in trade.  A great nation with its manifold interests is not eminently fitted to practise the gentle art of monopoly.

The period in America from about 1840 to 1890 shows certain absurd contradictions in economic policy.  By governmental action, national, state, and municipal, enormous grants of money and lands were made in aid of transportation.  Canals, roads, and railways were built into new agricultural territory far faster than was healthy and normal.  A prodigal land policy put a premium upon a wastefully rapid extension of the farming area.  These things were done to favor the agricultural states, but agricultural prices fell so greatly that our farmers for a long period