CHAPTER XVI

FREE TRADE AND PROTECTION

TH examination of the way in which value is related to
cost and to utility respectively, in the case of commodities
 entering into international trade, showed that goods
were imported, either because they could not be produced at
home, or, if produced there, could not be profitably produced
for sale at prices as low as those for which the similar
imported goods could be had. With the qualifications
mentioned at the end of Chapter XIII. as to the influence of
prejudice and of custom, it may be taken as obvious that a
domestic production would be established, if it could be done
so as to give adequate profit at the prices for which the goods
could be sold. The adequacy of the profit must be judged
by the standard of profit prevailing in the country, and at
the time, considered. It is only contended that a sound
assumption is that capital and labour will be prevented from
turning to a particular industry only by the attraction of
greater or more certain profit in some other use. The words
“greater” and “more certain” may be taken to imply the
same thing. The probable profit is what must be considered,
and amount and certainty are combined in a proper estimate
of this “probable” profit. The fact that an industry does
not exist in a given country may, then, be taken to indicate
that entrepreneurs find other industries offer greater
probability of profitable employment to all the available
capital and labour, so that, when the more promising
openings have been exploited, the resources of the country
are all engaged. This seems the only generally satisfactory
explanation of the neglect to exploit unused opportunities,
and if we assume that facilities for the industry in question