Principles of Political Economy by Simon Newcomb

Author:Simon Newcomb
Language: eng
Format: epub
Publisher: Harper
Published: 1885-03-25T05:00:00+00:00

68. A yet further difference in the two cases arises from the fact that the British producer has other nations to whom he can sell, and who perhaps do not levy the same tariff that the United States does. To show how these two differences modify the result, let us take the case of writing-paper. Suppose that under free trade a certain amount Q of writing-paper would be annually imported from abroad and a certain other quantity 11 produced at home. Let a duty then be levied upon the foreign paper. We may suppose that the foreign manufacturer would at first endeavor to throw the payment of the entire duty upon the American consumer. The latter would then be charged a higher price for his paper. The result would be an attempt on his part to economize in the use of paper and to prefer the domestic product. The immediate result would therefore be an increased demand upon the American manu-

facturer for paper. This would lead to a rise in the price of the home prodact. The efiect of this upon home production would depend upon the extent to which monopolized elements enter into the manufacture of paper, the effect being determined by the laws already laid down in ti*eatiug of monopolies.

If no monopoly either in skill or material existed, so that large numbers of men could make paper as advantageously as the most experienced makers, then this higher price would stimulate the manufacture of paper. The rise in the price would be checked, and the American consumer, getting his supplies at home, would greatly diminish bis demand for the foreign prodact.

We must now trace the reaction of this diminished demand upon the foreign producer. If no monopolized elements enter into the foreign product, then the foreign producer, making no more than the regular profit, could not afford to lower his price in order to stimulate the declining demand. If he had no demand except what came from America, those who were least ;ab]e would have to go out of business, as in the case of home taxation. Just here, however, the difference arises. The English manufacturer has not only America, but his own country and the rest of the world, as possible buyci*s of his product. JSence by lowering the price in a degree very slight compared "with the duty, he may recover from other sources of demand ^vbat he has lost in the American demand. He will not therefore be obliged to bear any considerable portion of the tax levied by America. This conclusion may be generalized as ioUows:

If the greater part of the supply of some special co^nmodity produced in one country is consumed in another country, then €t duty levied hy the consuming counti^y may have to he partly iorne by the producer. But in the more common case in which there are many home and foreign consumers of the commodity, then either a duty levied must he paid entirely hy the consumers of the country which levies the duty, or the importation of the commodity must ceasa.

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