goods are made than the American market can consume. Prices go down
to some extent through the competition, but rarely under the cost
of production, increased, as we have seen, by the enhanced price of
material required. The losses threatened by such competition are sought
to be averted by the diminution of production. Combinations of those
interested are formed to stop work or reduce it until the stock on hand
has been consumed. Production then begins again and continues until
the same necessity calls again for the same remedy. But this remedy is
arbitrary, capricious, and unsatisfactory. Some will not enter into the
combination at all. Others will secretly violate the agreement from the
beginning. Others still, when their surplus stock has been sold, and
before the general price has risen, will begin to manufacture again.
There is no power to enforce any bargain they have made, and they find
the plan only imperfectly curing the difficulty. They remain uncertain
what to do, embarrassed and doubtful as to the future. They have through
protection violated the natural laws of supply and demand, and human
regulations are powerless to relieve them from the penalty.

Take, as an illustration of the operation of the system, the article of
paper. One of the first effects of the general tariff was to increase
the price of nearly every thing the manufacturer required to make the
paper. Fifteen mil-lions of dollars a year through the protection are
taken from the consumer. The manufacturer himself is able to retain
but a small part of it, as he is obliged to pay to some other protected
industry for its products, they in turn to some others who furnished
them with protected articles for their use, and so on to the end. The
result is that nominal prices are raised all around; the consumers pay
the fifteen millions, while nobody receives any substantial benefit,
because what one makes in the increased price of his product he loses
in the increased price he is obliged to pay for the required products
of others. The consumer is the loser, and though competition may
occasionally reduce prices for him to a reasonable rate, it never to any
appreciable extent compensates him for the losses he sustains through
the enhanced price which the protective system inevitably causes.

It is not to be disputed that many of the protected manufacturers have
grown rich. In very many cases I think it can be demonstrated that their
wealth has resulted fr