THE INCIDENCE AND EFFECTS OF IMPORT AND EXrORT DUTIES. 445 



result becomes superabundantly clear wlTen we note that tbey may cause- 

 additional adjustments and alterations ; e.g., an export duty may encou- 

 ragfc the emigration of capital wliich would otherwise have been profitably 

 employed, or may prevent its immigration. The small export dnty oa 

 Chinese tea is thought by some to have an injurious effect on the trade, 

 and if China were freely open to European enterprise there can be no 

 doubt tliat this charge would be an inducement to the intending tea 

 planter to settle by preference in India. Again, protective import duties, 

 though they may possibly encourage the investment of capital in the 

 ' protected ' industries, undoubtedly, by their effect on the scale of prices, 

 discourage both labourers and em{)loyers from engaging in those whick 

 are not favoured and in which the cost of living is enhanced. Especially in 

 regard to industries which produce for export does this effect appear. No 

 one can question that, ccp.teris paribus, England is in a better position for 

 producing for a neutral market than the United States. She has faci- 

 lities for obtaining raw materials and auxiliaries of production at the 

 lowest terms ; the freedom from duty of most articles of consumption 

 makes fairly high real wages possible along with a low cost of labour 

 to the employer, giving so far a decided advantage over protectionist 

 competitors. 



Far more important than the special losses and gains which arise under 

 the complex conditions of international trade is the broad general fact of 

 the loss to the world by the hindrances imposed on exchange. Taxes on 

 imports and on exports all imply this result. To take one of the most 

 justifiable — the English tea duty in some degree limits the demand for 

 that particular Eastern product. It may perhaps make tea slightly cheaper 

 outside of England, and the British consumer might not gain the whole 

 duty if it were remitted; but then it also checks the demand of India and 

 China for English goods, and, so for as it falls on the Indian producer, it 

 injures one class of British subjects. On the other hand, the Chinese 

 export duty may give India a greater proportion of the total demand. It 

 tends to alter the natural distribution of demand. It impedes production 

 under what would be the most advantageous circumstances, and it may 

 possibly slightly raise the price of tea to the consumer. 



An examination of each separate import and export duty by persons 

 conversant with the special industries affected, would show similar evils 

 in nearly everj' case, though the process of tracing them out would be 

 difficult and hard to render certain to demonsti-ation ; reasoning from 

 general principles, supported ty a large mass of evidence, quite suffices 

 to establish the conclusion that the trade of the world is seriously ham- 

 pered by the action of these taxes. We are all familiar with the gains to 

 society from the development of the modern transport system, with the 

 accompanying reduction in cost of carriage, but many hesitate to regard 

 taxes on trade as being — what they really are — obstacles to the move- 

 ment of commodities, and therefore hindrances to the best organisation of 

 industrial forces. The discussion of the losses and gains which may result 

 by the imposition or abolition of a particular dnty is interesting, and such 

 points deserve the attention of the academic economist ; but these detailed 

 and obscure questions are absolutely insignificant in their practical aspect 

 when compared with the sacrifice which must follow from limitations on e.x- 

 change. When it is urged that a nation may gain, to it^ neighbours' loss, by 

 a series of dexterously arranged import and export dues, those who have no 

 faith in such a policy are perhaps, wise in taking the contention on 'it* 



