state as was cut off from that margin by the tithe when first imposed. Accumulation is greatly accelerated, and, if population also increases, the price of corn immediately begins to recover itself and rent to rise, thus gradually transferring the benefit of the remission from the consumer to the landlord.

§ 5. We have hitherto inquired into the effects of taxes on commodities, on the assumption that they are levied impartially on every mode in which the commodity can be produced or brought to market. Another class of considerations is opened, if we suppose that this impartiality is not maintained, and that the tax is imposed, not on the commodity, but on some particular mode of obtaining it.

Suppose that a commodity is capable of being made by two different processes-as a manufactured commodity may be produced either by hand or by steam-power-sugar may be made either from the sugar-cane or from beet-root, cattle fattened either on hay and green crops or on oil-cake and the refuse of breweries. It is the interest of the community that, of the two methods, producers should adopt that which produces the best article at the lowest price. This being also the interest of the producers, unless protected against competition, and shielded from the penalties of indolence, the process most advantageous to the community is that which, if not interfered with by Government, they ultimately find it to their advantage to adopt. Suppose, however, that a tax is laid on one of the processes, and no tax at all, or one of smaller amount, on the other. If the taxed process is the one which the producers would not have adopted, the measure is simply nugatory. But if the tax falls, as it is of course intended to do, upon the one which they would have adopted, it creates an artificial motive for preferring the untaxed process, though the inferior of the two. If, therefore, it has any effect at all, it causes the commodity to be produced of worse quality, or at a greater expense of labor; it causes so much of the labor of the community to be wasted, and the capital employed in supporting and remunerating

that labor to be expended as uselessly as if it were spent in hiring men to dig holes and fill them up again. This waste of labor and capital constitutes an addition to the cost of production of the commodity, which raises its value and price in a corresponding ratio, and thus the owners of the capital are indemnified. The loss falls on the consumers; though the capital of the country is also eventually diminished, by the diminution of their means of saving, and, in some degree, of their inducements to save.

The kind of tax, therefore, which comes under the general denomination of a discriminating duty, transgresses the rule that taxes should take as little as possible from the taxpayer beyond what they bring into the treasury of the state. A discriminating duty makes the consumer pay two distinct taxes, only one of which is paid to the Government, and that frequently the less onerous of the two. If a tax were laid on sugar produced from the cane, leaving the sugar from beet-root untaxed, then in so far as cane-sugar continued to be used, the tax on it would be paid to the treasury, and might be as unobjectionable as most other taxes; but if canesugar, having previously been cheaper than beet-root sugar, was now dearer, and beet-root sugar was to any considerable amount substituted for it, and fields laid out and manufactories established in consequence, the Government would gain no revenue from the beet-root sugar, while the consumers of it would pay a real tax. They would pay for beet-root sugar more than they had previously paid for cane-sugar, and the difference would go to indemnify producers for a portion of the labor of the country actually thrown away, in producing by the labor of (say) three hundred men what could be obtained by the other process with the labor of two hundred.

An interesting illustration, in late years, of the operation of a discriminating duty is to be found in the case of different grades of sugar imported into the United States. Our tariff levied certain duties on different grades of sugar classified by color, on the theory that color was a test of saccharine strength. Cargoes were examined and compared with graded sugars hermetically sealed in glass bottles and distributed by the Dutch

authorities, whence came the name of "Dutch standard." Grades from No. 1 (melado) to No. 10 must go to the refiner before consumption; but the grades to No. 13, although some might have gone into immediate consumption, were usually sent to be manufactured into the highest grades of soft and hard sugars. So long as the sugar was secured by evaporation in open coppers, or by passing the molasses through a layer of clay, saccharine strength and color went fairly well together. But with the invention of the vacuum-pan and the centrifugal wheel, by which the sugar is reduced through a shorter and more effective process, sugar of a certain grade of color by the Dutch standard contained a much greater degree of sweetness than that produced by the old methods. Cuban planters, therefore, were permitted to send sugar into this country at a duty which was really levied on grades much inferior, and so paid a less duty than other sugars. The products of one country were discriminated against in favor of another. The difficulty was settled by using the polariscope, which gave an absolute chemical test of the sweetness, irrespective of color.

One of the commonest cases of discriminating duties is that of a tax on the importation of a commodity capable of being produced at home, unaccompanied by an equivalent tax on the home production. A commodity is never permanently imported, unless it can be obtained from abroad at a smaller cost of labor and capital, on the whole, than is necessary for producing it. If, therefore, by a duty on the importation, it is rendered cheaper to produce the article than to import it, an extra quantity of labor and capital is expended, without any extra result. The labor is useless, and the capital is spent in paying people for laboriously doing nothing. All custom duties which operate as an encouragement to the home production of the taxed article are thus an eminently wasteful mode of raising a revenue.

This character belongs in a peculiar degree to custom duties on the produce of land, unless countervailed by excise duties on the home production. Such taxes bring less into the public treasury, compared with what they take from the consumers, than any other imposts to which civilized nations are usually subject. If the wheat produced in a country is twenty millions of quarters, and the consumption twenty-one millions, a million being annually imported, and if on this

million a duty is laid which raises the price ten shillings per quarter, the price which is raised is not that of the million. only, but of the whole twenty-one millions. Taking the most favorable but extremely improbable supposition, that the importation is not at all checked, nor the home production enlarged, the state gains a revenue of only half a million, while the consumers are taxed ten millions and a half, the ten millions being a contribution to the home growers, who are forced by competition to resign it all to the landlords. The consumer thus pays to the owners of land an additional tax, equal to twenty times that which he pays to the state. Let us now suppose that the tax really checks importation. Suppose importation stopped altogether in ordinary years; it being found that the million of quarters can be obtained, by a more elaborate cultivation, or by breaking up inferior land, at a less advance than ten shillings upon the previous price—say, for instance, five shillings a quarter. The revenue now obtains nothing, except from the extraordinary imports which may happen to take place in a season of scarcity. But the consumers pay every year a tax of five shillings on the whole twenty-one millions of quarters, amounting to £5,250,000 sterling. Of this the odd £250,000 goes to compensate the growers of the last million of quarters for the labor and capital wasted under the compulsion of the law. The remaining £5,000,000 go to enrich the landlords as before.

Such is the operation of what are technically termed corn laws, when first laid on; and such continues to be their operation so long as they have any effect at all in raising the price of corn. The difference between a country without corn laws and a country which has long had corn laws is not so much that the last has a higher price or a larger rental, but that it has the same price and the same rental with a smaller aggregate capital and a smaller population. The imposition of corn laws raises rents, but retards that progress of accumulation which would in no long period have raised them fully as much. The repeal of corn laws tends to lower rents, but it unchains a force which, in a progressive state of

capital and population, restores and even increases the former amount.

What we have said of duties on importation generally is equally applicable to discriminating duties which favor importation from one place, or in one particular manner, in contradistinction to others; such as the preference given to the produce of a colony, or of a country with which there is a commercial treaty; or the higher duties formerly imposed by our navigation laws on goods imported in other than British shipping. Whatever else may be alleged in favor of such distinctions, whenever they are not nugatory, they are economically wasteful. They induce a resort to a more costly mode of obtaining a commodity in lieu of one less costly, and thus cause a portion of the labor which the country employs in providing itself with foreign commodities to be sacrificed without return.

6. There is one more point, relating to the operation of taxes on commodities conveyed from one country to another, which requires notice: the influences which they exert on international exchanges. Every tax on a commodity tends to raise its price, and consequently to lessen the demand for it in the market in which it is sold. All taxes on international trade tend, therefore, to produce a disturbance, and a readjustment of what we have termed the equation of international demand.

Taxes on foreign trade are of two kinds-taxes on imports and on exports. On the first aspect of the matter it would seem that both these taxes are paid by the consumers of the commodity; that taxes on exports consequently fall entirely on foreigners, taxes on imports wholly on the home consumer. The true state of the case, however, is much more complicated.

"By taxing exports we may, in certain circumstances, produce a division of the advantage of the trade more favorable to ourselves. In some cases we may draw into our coffers, at the expense of foreigners, not only the whole tax, but more than the tax; in other cases we should gain exactly