626 
Proceedings of the Royal Society 
If the trade between two countries really consists in the exchange 
of goods, effected by the agency of money as a unit for expressing 
value, but not involving the actual transfer of coin, the above prin- 
ciples show’ the whole gain by the exchange to be the sum of two 
gains which each party would make by each trade if it alone 
existed. 
If by duties one portion of the trade be extinguished or much 
diminished, both parties lose, but if the other portion of the trade 
remain uninjured, then, although there may be no exchange of 
commodities other than of goods for actual money, nevertheless 
the full gain on that which is untaxed remains intact. Thus, 
although the French may tax our goods, and so inflict a loss on 
themselves and on us, this is no reason for our inflicting an addi- 
tional loss on the two communities by taxing the import of their 
goods. 
House Rent. 
I will next consider the effect of a tax on house rent. 
Landlords are here the sellers, and tenants the buyers of what 
may be termed a commodity ; not the house, but the loan of a 
house for a term of years — the tenant buys what might be called, 
by the extension of a suggestion of Professor Jevons, a house-year 
from his landlord. 
The difference between the house and other commodities such as 
food or dress is, that the house remains, wdiereas they are consumed. 
The house-year is consumed year by year, but it is reproduced year 
by year without material fresh expenditure on the part of the 
landlord. This permanency alters the incidence of taxation. 
If the demand falls off the landlord cannot remove his house — 
he cannot cease to produce his house-year, which therefore he 
must dispose of. Hence, in a stationary or declining community, 
where no new houses are being built, but where year after year a 
sensible proportion remains unoccupied, the landlord must sell his 
house-year unreservedly, and any tax imposed on house rent would 
fall on him alone; that is to say, he would receive a rent dimin- 
ished by the full amount of the tax, and the tenant would pay no 
more rent for a house of a given class than if no tax were imposed. 
The supply curve becomes a straight horizontal line, and is un- 
affected by the tax ; the demand curve is equally unaffected by 
