Lesson 3: Trade and the Function of Money 

Please read Chapters 9-12 in Protection or Free Trade

1. What are some of the effects of protecting “infant industries”?   (Chp. 8) 

2. Why, according to George, is it not possible for protection to encourage all domestic industry?   (Chp. 8) 

3. A "favorable" balance of trade   (Chp. 9) 

a. goes hand-in-hand with a strong domestic currency.
b. results when a nation imports more goods that it exports.
c. is seldom enjoyed by indebted Third World nations.
d. helped the US recover from the Great Depression.
e. None of the above.

4. If a “favorable” balance of trade resulted in prosperity, when would a country be most prosperous?   (Chp. 9) 

5. If we were to stop imports entirely, what exports would continue to drain the national wealth?   (Chp. 9) 

6. George notes that modern trade involves “much unnecessary transportation, and that producer and consumer are in many cases needlessly separated.” Give some current examples of this.

7. What is the true cause of wasteful over-transportation of goods?   (Chp. 9) 

8. The transfer of wealth from country to city

a. happens between nations as well as within them.
b. is slowed by protective tariffs.
c. happens more rapidly in developing countries.
d. is a drag on industrial development.

9. Under the mercantile system, how did nations attempt to increase their national wealth?   (Chp. 10) 

10. What is the function of money?   (Chp. 10) 

11. Are the imports of a nation analogous to a merchant’s sales, or purchases? Explain.   (Chp. 10) 

12. What are some ways in which money plays a greater role in international trade today than in Henry George’s time?   Money... 

13 a. Describe how international currency markets can even out trade imbalances.   Money... 

b. What are three factors that can override this tendency?

14. What mistake in thought leads to the idea that protection is needed in order to maintain high wages?   (Chp. 11) 

15. Which tends to come first, a higher general rate of wages, or a higher overall level of productivity?   (Chp. 12)