THE FAKMKK AND AX KXl'OUT BOUNTY. 317 



the United States, is that it will not accomplish what its 

 advocates expect. The reason of this is that the bounty so 

 stimuhites production that the commodity soon falls in value 

 by the full amount of the bounty paid. This does not ha|)pen 

 at once. On the contrary, tlio first effect is to raise the price of 

 the commodity precisely as anticipated by its advocates. The 

 foreign price is not changeil, as of course it could not be by 

 such means, but the domestic price is raised. If wheat, 

 without bounty, is worth $1.00 per bushel for export, and 

 a bounty of 10 cents per bushel is paid on exported wheat, the 

 exporter will receive $1.10, and will therefore pay to the 

 farmer 10 cents, or nearly that, more than be would otherwise 

 pay him. So long as there is an export demand the farmer 

 will refuse to sell at a less price for domestic use. The 

 domestic consumer will therefore pay an extra 10 cents a 

 bushel for all wheat consumed at home, and the government 

 will pay the farmer the same amount on all sold for consump- 

 tion by foreigners. 



This, however, in a country like ours, where wheat produc- 

 tion can be largely increased, will at once stimulate i)roduction, 

 and within a year or two the foreign price will tend to fall by 

 reason of the increased supply. Oats and corn and linseed — 

 for all products largely exported would certainly claim the 

 bounty — would be still more easily affected. It is still possible, 

 however, that for some years at least there would still remain 

 an appreciable advantage to the farmer if competing export- 

 ing nations would pay no attention to what is going on. They 

 would not and indeed could not do this, however, for this is 

 what would happen: The grain being made by tiie bounty 

 worth more for export than for feeding,* the tendency would 

 be to increase our exports of feeding grains: and so of all 

 other aided connnodities. The tendency would be to push the 

 profitable export market to the utmost, and in the effort to get 

 all the trade possible, such reduction as might be required to 

 gain a larger share of the trade would certainh' be made; 



* Because before the bounty all that could be profitably fed to animals 

 would be used in that way. 



