s "two profits" at home, foreign trade gives but
one. The word "profits" is here used in the popular sense of gain from
a single transaction. Both parties are said to profit and both profits
are thought to be secured at home when two citizens are forced to
trade with each other. The view that there are "two profits" in a
trade is an advance upon the notion that "one man's gain is another's
loss,"[3] but there is an error in elementary arithmetic here, both as
to the number and as to the aggregate amount of profits. The purpose
of a protective tariff is to compel two of the citizens of a country
to trade with each other instead of trading with two citizens of a
foreign state; the number of profits made by each country is therefore
not increased by substituting domestic for foreign trade.

What, then, as to individual size and aggregate amount of the profits?
The gain is not the same in all trades; the trade is made if there
is a gain to each party, no matter how small it is; but the generous
"profit" on one transaction where the conditions of the two parties
are very different may be greater than the total of petty gains on a
dozen trades between two traders of evenly matched powers. Indeed,
the greater the difference in the conditions and the capacities of two
groups of traders, the greater is the sum of the profits which they
may secure through the members of each group trading with those of
the other, rather than by the members of each group trading only among
themselves. Can it safely be assumed that every trade with a foreigner
is less advantageous than one with a fellow-citizen? Diamond cuts
diamond, but two Yankees left to themselves surely should not be
worsted in bargains with the universe. If they could exchange to
better advantage with each other they probably would discover it as
soon as the interested manufacturers and political orators who can
prove so eloquently that they know the other man's business better
than he knows it himself. Forcing the home trade by making our
citizens trade with each other whether both wish to or not may be
to the advantage of one citizen, but it is not likely to be to the
advantage of both citizens.

Sec. 7. #The balance-of-trade argument.# At the foundation of nearly
all belief in the virtues of a protective tariff will be found the
"favorable balance-of-trade" notion. The ideal of the more thorogoing
upholders of a protective policy is to keep merchandise consistently
flowi