8. If the labour-seller in protected countries pays more for what he consumes, on the other hand his wages are proportionately higher.

It does not at all follow. The present average rate of wages in Free Trade England, now that everything is cheap, is at least 50 per cent, higher than it was formerly in protected England, when everything was dear. Indeed, if the statement that heads this paragraph be correct, how comes it that our Protectionist friends so persistently warn us that we are being, or are going to be, undersold by our foreign competitors in consequence of the lower rate of wages and the longer hours of labour that prevail abroad? How is it that they so loudly call on Government to protect the British workman by import duties, to prevent him from being page 29 reduced to the low wages and long hours of his protected continental fellow-workmen? Here is surely a curious contradiction. Wages in protected countries cannot be at the same time higher and lower than they are here. If higher, what need is there to protect the British labour-seller against his higher-paid foreign competitor? If lower, then Protection in foreign countries, while it enhances the cost of living, does not enhance the rate of wages. How are these utter discordances to be resolved? This is how it is done. Division of labour is resorted to. One set of the Protectionist party uses statement No. 1, and another set uses statement No. 2. There is the "higher wages abroad" division and the "lower wages abroad" division. If the one fails to convince you, you are handed over to the other, who proceeds on a diametrically opposite tack; and it will go hard if, between the two, you can help being, if not convinced, at least mystified.

The fact is that the money rate of wages does not depend (except when it is at the famine level) on the cost of living, but on the relative demand for, and supply of, labour. Wages are higher than with us in protected America, and lower than with us in the protected continental States of Europe. It is where there is abundance of cheap capital, as in England, or abundance of cheap land, as in America, that there will be the greatest demand, and consequently the greatest remuneration, for labour. Capital is the fund out of which the wages of labour are paid, and the larger that fund, compared with the number of labour-sellers, the higher will be the rate of wages. The increase of that fund depends on increased production, and there are no more powerful agencies in the production of wealth than free commercial intercourse, general and international division of labour, and such an application of capital and labour as will produce a maximum result. To sum up, the truth is that Wages are not Regulated (Except at Starvation Point) by the Cost of Living, but by the Greater or Lesser Demand for Labour, which is Greatest where Wealth is most Rapidly Created.