The operation of a tax on articles im ported into a country seems to be this. The articles may either be articles of a kind which are not produced in the im porting country, or which are produced there. If a tax or duty is laid upon articles not produced in the importing country, the direct effect is to raise the price of such articles and to diminish the consumption of them. The indirect effect is to diminish the demand of the export infr country for the goods which it re ceives from the importing country. If a tax or duty is laid upon articles imported from abroad, which are also produced in the importing country, the effect is to raise the price of all such articles, both those imported and those produced at home ; and in this manner :—The pro ducer does not immediately supply the public. Between the producer and the buyer there are the wholesale dealer and the retail dealer. The wholesale dealer regulates his purchases by the demand which he expects; and if ho buys the foreign article, be pays for it the price which the importer demands and the duty which the state demands. The whole mass of articles in the merchant's hands, foreign and native, must now be viewed as the produce of the importing country. Any tax which the state may have raised, directly or indirectly, on the native produce, raises its price ; and the tax which it imposes on the imported article raises the price of that article and also the price of the native product. The average price, therefore, at which the merchant can furnish the articles of foreign and domestic produce, is raised ; and the consumer must pay this price. The state derives no benefit from the tax or duty on the imported article beyond the bare amount of the tax ; it may even be injured in other ways by the tax which the consumer is thus made to pay, for be could get the article cheaper if there were no tax, and his means of purchasing other things and paying other taxes are so far diminished. The effect on the pro ducer of the domestic article, which comes into the market in competition with the foreign article, appears to be this. The fact of the foreign article be ing introduced and sold to any consi derable amount while there is a domestic article, shows either that the foreign article is wanted to supply the deficiency of the home production, or that it is pre ferred to it. In either case the producer of the domestic article can ask a higher price for it than he could if there were no duty on the imported article. The duty, therefore, gives something to the native producer, which he would not be able to get if there were no duty. This explanation applies to all articles of native produce which are not subject to an excise duty, if there are any such; and, at least, it applies to grain. Now the additional price which the producer of grain is enabled to get because there is an import duty on foreign grain, does not ultimately go into his pocket. It goes to the owner of the land, whoever he may be, whether the occupier or another. For there is a competition among fanners for land to occupy ; and they will offer rent ap to that amount which will leave them the usual rate ofprofit. And if a man farms his own land, he will equally have the advantage of the tax ; for he can either profitably farm his land when there is no duty on imported grain, or the duty on imported grain enables him to cultivate land which otherwise he could not cultivate, because the duty raises the price. The state raises a tax on the imported corn, which the con sumer pays ; and this tax enables the pro ducer of grain to demand of the consumer another sum of money. which to the con sumer is just the same as a tax. All duties, therefore, on articles imported into a country, which are also the pro ducts of that country, and are not subject to an internal duty, are of the class called protection-duties, whatever their amount may be. It is not the object of this article to discuss how far such protection may be equitably given to any class of pro ducers or proprietors in a highly-taxed country. It is sufficient to show that all persons as consumers are injured by the tax, and that the only persons who re ceive any benefit from it are the owners of land. If the land is not so highly taxed in those countries in which there is a duty on imported grain as in other countries, the injustice of such a tax is the more flagrant.
There is another mode of viewing the operation of a fixed duty upon corn (Economist Newspaper, Dec. 5, 1843). It is urged by those who maintain that such a duty cannot be other than a protective duty, that no supply of foreign corn can be obtained in the importing country until the price of corn in such country has risen high enonFh to pay the price of corn in the exporting country. with all the costs of transport, and the fixed duty also. It is further maintained, that the price of all the corn in the importing country must be so raised before foreign corn will come in ; and, consequently, that in any season when there is a deficiency of corn in the importing country, it is not merely the duty on the foreign grain imported that must be paid by tht consumer, but he will have to pay an amount equal to the fixed duty on all the corn that is raised in the importing country for the con sumption of a given period, for instance, one year. Thus, if the consumption is 20,000,000 quarters, and the deficiency is 2,000,000 quarters, a fixed duty of 5a. per quarter on the 2,000,000 quarters will cause a rise of 5s. in the quarter on
the 18,000,000 quarters also. Accord ingly the state will get the duty on the 2,000,000 quarters, which the consumer will pay, and somebody else will get the 5a. per quarter on the 18,000,000 quar ters, which the consumer also will have to pay. The truth of this proposition may be questioned. The sum which the con sumer will have to pay will certainly be more than the duty on the 2,000,000 quarters, but perhaps somewhat less than the 5a. per quarter on the remaining 18,000,000 quarters. For something must be allowed for the fact that all the 18,000,000 are not in the market for sale at once. Under a fixed duty, some of the 2,000,000 quarters of imported corn would be sold when the market price has risen to (say) 47a. the quarter ; and an ad vance of a shilling or two in the price will induce other holders to sell their corn; but all holders may not have done so. The market price may then turn, and others will dispose of their warehoused grain while the market is falling. The home market may then become depressed for a considerable period ; and during this period it may be so low as to render it unprofitable to import foreign corn, even at a duty of two or three shillings. In this case then the consumers are not pay ing 5s. per quarter higher than they would have done if the trade were free. Something also must be allowed for the disposition of merchants to speculate ; and both they and the producers are liable to be acted upon by the apprehension of falling markets, when, as sometimes hap pens, a real panic takes place, and prices are unnaturally depressed. We should be disposed, therefore, to qualify the assertion of the Economist' by the conclusion that, in an importing country, with a fixed duty of 5.1., the average price of corn, in a series of years, will be somewhere about 5s. a quarter higher than it would have been if the trade had been free ; and perhaps this is all which the writer intended strictly to contend for. It may perchance turn out that the consumer will have to pay more than 5s. per quarter on the 18,000,000 quarters ; but it seems hardly safe to assert that he will have to pay exactly 5s., neither less nor more.
A chimerical difficulty is sometimes raised of this kind. If a country does not produce all the grain that it requires, or if it is dependent for any considerable amount on foreign trade, it may suffer from scarcity in some seasons, and in time of war might be in danger of famine. As to the scarcity, experience shows that no dependence can be placed on a regular foreign supply, unless there is a regular trade in corn, that is, a trade into which a man can enter as he would into any other well regulated trade. If a scarcity should ever happen in the im porting country, it will be remedied by the stores of grain on hand that are sup plied by a steady trade. If the trade is unsteady and uncertain, the scarcity may be supplied or it may not : but it must be supplied at a higher cost, and sometimes it may be difficult to get a supply at all. Rome, both under the republic and the empire, was in part supplied with foreign grain, but the supply was uncertain, for it was not all furnished in the way of regular trade, but sometimes called for as a forced contribution, sometimes ac cepted as a gift, and it was often pur chased by the state, for the purpose of distribution among the poor, either gratis or at a low price. All Italy imported grain largely under the early emperors. The scarcity with which Rome was some times threatened was not owing to the grain coming from foreign parts, but to the fact that there was not a steady trade founded on a regular demand by a body of persons able to pay for it. This sub ject requires further explanation. [CORN TRADE.] If a government shall regu late or attempt to regulate the foreign trade by scales of duties varying ac cording to any law that the wisdom of a legislature may select, the re sult will be the same, great irregu larity in price and sometimes scarcity. It makes little difference whether the state imports directly or regulates the importation of its subjects by a capricious rule. The direct importation of the state. if well managed, would obviously be the safer plan of the two. What is here said of the Roman system applies only to the importation of foreign grain into the city of Rome. The necessity which existed for the importation is a question that can only be discussed with the question of cultivation in ancient Italy, and the gra tuitous distributions of grain at Rome. Dureau de la Malle has some valuable remarks on this subject (Eccnomie Poli tique des Romains); but we do not assent to all his conclusions.
The fear that war might shut out the supplies of grain which are brought into a country under a regular corn trade cannot enter into the minds of those who view the question without prejudice. War does not and cannot destroy all trade ; it may impede it and render it difficult, but trade has existed in all wars. The supposition that a rich manufactur ing country which abounds in all the use ful products of industry cannot under any circumstances buy corn out of its super fluity, is a proposition which should be proved, not confuted. It belongs to those who maintain this proposition to give reasonable grounds for its truth.
For some remarks in this article the writer is indebted to Ganilh, Dictionnaire d'Economie Politique, art. Agriculture.