know the truth are constantly dropping into expressions conformable only to a false theory; just as we all speak of a "favorable balance of trade," when we know the expression conveys a wrong idea.
In regard to allotment of specialties or industries the theory which finds readiest and commonest expressions, even among those who know better, is that each task should be done by the one most capable of doing it, each industry carried on by the class, community, or country by which it can be done with the least outlay of labor and capital. By most people this is regarded as an axiom, needing no proof because admitting of no denial. They are as sure of it as their ancestors were that the sun daily revolves around the earth.
In all the hot disputes with which the free-traders and protectionists have enlivened the politics and enlightened the minds of the populace, they have rarely if ever failed to agree on the axiomatic truth of this falsehood. One wants free trade because it will secure to each industry a development in the country whose natural resources are best adapted to it. The other is able to prove, in a particular case, that his own is that country, and that therefore the Government should step in and bring about the development which somehow fails to come of its own accord. The free-trader assumes that the natural laws of trade will bring about a certain state of things which the protectionist is able to prove that they do not, but is free to confess that they would, after a few years of governmental "encouragement."
Torrence found out the true theory as applied to international trade; Ricardo enlarged upon it, and for a time secured the credit of its invention; Mill made a complicated mathematical demonstration of it; and more recent writers have been content to briefly repeat their argument, and give it the same extremely limited application. The English economists discovered that under the system of free trade their country imported things which could have been made with less capital and labor at home. In order to silence the protectionists, who had made the same discovery, they set about to find some excuse for it. In the course of the search they discovered what they conceived to be a great mathematical principle; but they were careful to explain that it applied only to international specialization, and to give the reason why it should. Capital moves freely, they said, within national bounds, but it does not freely cross them. This argument has had a surprising longevity, considering that it is not the poor countries, but the rich ones, which import the things they could produce with little effort.
In our widening field of observation, which has the further merit of lying all about us within easy reach, we shall find many after-illustrations, and a sufficient number of more satisfactory explanations of this so-called economic paradox. It is not alone, nor chiefly, in foreign trade that we must and do leave to others tasks that we can do better than they. It is, in fact, a universal and striking feature of
