favour the imposition of a discriminative tax upon incomes derived from foreign investments. But this attempt to keep capital at home, less productively and less profitably employed, would mean a reduction of the average yield of capital, and a consequent, though perhaps not proportionate, diminution of saving for investment. It is important to recognise that an integral and necessary part of a protective policy is this compulsory retention of capital in the protected area, and the consequent reduction of the rate of interest and of the creation of new capital.
Only by putting a sort of ring-fence round a country to stop its capital and labour from flowing abroad in search of more productive uses, as well as to stop foreign goods from entering its frontiers, could protectionism make the appearance of a case for safeguarding employment. Now it is one thing to restrain the export of capital and labour during a brief war emergency, when governmental work ensures full remunerative employment for all of both factors, quite another to erect these restraints into a normal policy, even for dealing with periods of cyclical depression. The conclusion of my argument is this. If it were the sole object of economic statecraft to cause the largest quantity of work to be done within the national area, irrespective of the quantity of wealth produced and the standard of living, a protective policy of this more rigorous order might, if it were confined to periods of general depression, achieve this result. In other words, it is theoretically possible to keep an artificially inflated amount of employment within a favoured area, were it practically feasible or otherwise desirable. A state, in other words, could make its working population ascripti glebæ, keeping them employed at home under a lower standard of production and consumption than they would attain under conditions of laissez faire laissez aller.
