R2

INTERNATIONAL TRADE

likely to be suited to profitable operation and what is not. It is
true that accident, inheritance, early misjudgment, may start him
in an industry which fails to give full scope to his abilities; and
there are plenty of cases in which capable men, once started the
wrong way, remain in the industry of first choice. But in the main
it is otherwise. The business man of higher grade turns to
operations that afford full scope to his abilities; and the more
outstanding are those abilities, the less likely are they to be misapplied
 to unfruitful industries.
An excellent illustration of the consequences of this transferability,
 and of the general theorem here advanced, is found in the
working of protective duties. Suppose an industry to be fostered
by protection; for example, the linen industry in the United
States operating under conditions of comparative disadvantage
such as are shown in our figures. Suppose then that the protective
duties are abolished; will the linen industry disappear from the
country? It is entirely possible that an examination of the
expenses of production of the several linen-making establishments
will show them to be producing at varying money costs. Some
among them will be found to be producing so cheaply that they
can hold their own, and continue to make ordinary profits, even
under free trade. But these will be the superior establishments,
managed with superior ability ; and their managers, even tho they
meet their expenses of production and eke out a profit, will be getting
 a return less than in proportion to their powers. Sooner or
later they will shift. The transfer to other industries will not take
place easily or quickly, but in the end it will come. There may be
in such a protected industry older men who, while capable, yet are
too advanced in years for a complete change of base; and these
will very probably remain where they are. But younger men of
the same stamp will not be drawn to it; the industry will languish
and in time will disappear.

Still another aspect of manufacturing industries must be considered.
 They are often said to present the conditions not of
diminishing but of increasing returns. Is not our reasoning in