THE INCIDENCE AND EFrECTS OF IMPOllT AND EXPORT DUTIES. 443 



ceivable that the rate of interest in general would be lowered — the capital 

 when turned to other industries having a lower ' final utility.' Similar 

 reasoning would apply to ordinary wages and to normal ' wages of super- 

 intendence,' but skilled labour would probably suffer, and so would the 

 ' employer's gain ' where it exceeds wages of superintendence and con- 

 forms to the law of rent. Wliere law materials and food are subjected 

 to duties which tend, by limiting demand, to lower price, the margin of 

 production will be raised and rent will fall. A further mode of loss to 

 the producing country may possibly exist, though its amount must in 

 any actual case be very small. The effect of import duties may, as Mill 

 has argued, be to cause a redistribution of the money- material, thus alter- 

 ing the scale of prices to the advantage of the country which levies the 

 duty. Here the community suffer as consumers of the products exported 

 fi'om the taxing country : and it may bo remarked in passing that the 

 modern oi-ganisation of credit enables this effect to be produced without 

 any, or with a very small, transfer of bullion. 



Where import duties really lower price they have a still further effect 

 in allowing consumers in other counti-ies to get the particular commodity 

 at a reduced rate. The exporter, in choosing a market, will naturally 

 select that which is free from duty, unless he obtains a price higher by 

 the amount of the duty in that which is subject to it ; therefore any 

 reduction of price must extend to all connected markets.' We have 

 probably an illustration in the effect of the French and German corn 

 duties (before referred to) on the price of corn in England. In the evi- 

 dence taken by the Royal Commission on Depression of Trade and Indus- 

 try the following statement is to be found : ' The first effect of the French 

 and Germans recently putting on an extra duty on wheat was a reduction 

 in the cost, freight, and insurance price of wheat destined to all the 

 Western European markets, and therefore the duty imposed by France 

 and Germany rather cheapened the price-of wheat in the United Kingdom 

 and Belgium, which still imports free ' [L. 9,740, W. J. Harris (' Third 

 Report,' p. 91, col. ff)]. It is equally true that the consumer in the pro- 

 ducing country gains by the lowered price — an advantage which may set 

 off the possible loss through a lowered scale of prices, and where the 

 commodity is auxiliary to other forms of production would act as a bounty 

 to the industries so using it. Thus it is conceivable that a sugar duty 

 in the United Kingdom which did not raise the price by the full amount 

 of the duty would be a premium to the jam makers and biscuit manufac- 

 turers of the Continent. An effectual protei;tive tax which undoubtedly 

 tends to injure the foreign producers by limiting their gains would be 

 particularly likely to have this partially compensating result. One thing, 

 at all events, is plain, viz., that the real and direct effects of an import 

 duty are not easily foreseen. The interests of many diverse classes of 

 producers and consumers in the producing, the taxing, and in other 

 nations may be variously affected. Indeed, it may be said that if explana- 

 tion is difficult, prediction is well-nigh impossible — a statement which 

 appears still more evident when wo remember the indirect effects on trade 

 in other articles that a tax on any import ia so very likely to produce. 



Before dwelling further on this point it may be well to consider the 

 action of export duties. Though at present in a subordinate position they 



' Unless the producer is able to evade the ' law of indifference.' In that case it 

 maj be for his interest to give a special low rate on imports to the taxing country. 



