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 rapi