Page:The Economics of Unemployment.djvu/155

The reason why a general trade depression is so dangerous to free trade is that under this condition the ordinary simple refutation of the case for a protective tariff in the immediate interests, not merely of a particular trade but of a particular nation, will not work.

Let us test it by an illustration. At a time of general unemployment in most of the staple industries here and on the Continent, a British railway is considering two tenders for the supply of rails, one from Belgium, one from Glasgow—the former being at a slightly lower price. Now the free trade judgment is absolute in favour of the Belgian rails, as against the protectionist plea for the employment of the idle capital and labour at Glasgow. The free trader argues, not only that it is advantageous to the railway to buy the cheaper foreign goods, but that this course will not reduce the total volume of employment in this country. For, he contends, the purchase of the Belgian rails by English money must, operating through the usual channels of exchange, cause a demand for British export goods which would not otherwise have taken place. There will, he contends, be extra work for otherwise unemployed workers in Northampton, Leicester, Birmingham, etc., to make the goods which go out to pay for the Belgian rails. And it is clear that more employment in the export trades of this country will result from buying the Belgian rails. But does this mean that the total volume of employment in this country will be greater? The protectionist may reply: If the rails are bought from Glasgow instead of Belgium, the same goods which would have gone to Belgium (or their equivalent in other goods) will have to go to Glasgow to pay for the rails made there. The export