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interests as a nation, it would be folly to attempt to distinguish between a cheapness which is the result respectively of "fair" and "unfair" competition, provided that cheapness is permanent. Unless, therefore, we are prepared to protect all British industries against all foreign competition, there can be no reason to put an import duty upon bounty-fed foreign goods where there is any reasonable security of a continuance of the bounty.

§ 9. It remains briefly to consider the economic efficacy of taxing dumped goods as a means of revenue. We have spoken of "dumped goods" as being sold "for whatever they would fetch." If this were strictly true, it follows that an import tax imposed on them would not cause a rise of price, but would be borne entirely by the producers. Such an ad valorem tax might conceivably take 80 per cent. of the selling value of the goods without causing the dumper to check his dumping. In such a case the British producer would be nowise "protected," but the British revenue would be a gainer.

This, however, is not what would happen. Though 'dumped goods" cannot be said to have any separate cost of production, the price at which they are dumped is not "any" price, but one calculated to dispose of such quantity of output as will, by keeping down the aggregate cost of production and raising the aggregate returns for sales, yield the greatest total profit. Any considerable ad valorem duty would disturb this

maximum profit by reducing the returns from the export trade. The effect of such an import duty will depend upon the relation of the former price of the dumped goods to the normal British price. It may have paid the dumper to dump a comparatively small amount which forced a market at a price just below the normal British price. Or the economy of large production might have made it more profitable to "dump" a larger quantity, so bringing down the selling price far below the normal British price. The effect of an ad valorem tax on dumped goods will differ in the two cases. In the former case, the tax will lie almost entirely on the dumper, if he continues to dump at all. For if he were to dump a smaller quantity, thus sacrificing something in economy of production by reducing the total output, he could not recoup himself by raising the prices for his dumped exports, because the former price was fixed just below the British competitive price. He must therefore either cease dumping, or pay the entire tax out of his pocket, continuing to dump as before. In the latter event the British Treasury has succeeded in taxing the monopoly profit of the protected American producers.

If, however, the dumping price has been fixed low, so as to take off a large surplus product, the effect of an import duty will be to reduce the quantity of dumping, a smaller quantity being sold at a higher price. This rise of price cannot be high enough to

compensate fully the loss to the "dumper" of reducing his output and so producing more expensively, but it will furnish some compensation. The incidence of the import duty will then be divided between the British consumer and the American producer; in what proportion it is impossible to predict, for it will depend upon the reaction of reduced output on cost of production and the reaction of reduced supply on demand, or more strictly speaking, upon the relation between these two reactions.

§ 10. In the case of "casual" dumping, then, protection by import duties would be virtually inefficacious; such duties would be too slow of operation and too uncertain of effect. In the case of "aggressive " dumping, in order to "steal" a market, it would only be possible to take effective action by import duties in cases where publicity attached to the invasion. In the case of the steady maintenance of a policy of low export prices, the gain to the consumer and to other trades in the country where such goods are "dumped" will normally outweigh the damage done by a temporary displacement of capital and labour in a single British trade. It might, however, be a sound revenue policy to impose an import duty which, levied on goods produced under conditions enabling them to assist in earning monopoly profits for a foreign "trust" or "combination," would fall entirely, or in large part, upon the producer.

Monopoly profits directly taxed cannot transfer

the tax; and even an import tax, the only way in which a foreigner can reach them, may sometimes succeed in lying on them sufficiently to make the experiment a profitable one for the revenue.

There is, however, no evidence of the practice of such a regular system of low-price exportation by trusts and other combinations as would render any such taxation deserving of present consideration. The dumping of goods by American trusts and German Kartels during recent years is proved to rest on no organised system of maintaining a cheap export trade, but is adopted merely as a temporary expedient for getting rid of a casual surplus. In a few instances cheap export prices have been adopted by enterprising foreign firms as an attempt to capture the British or other markets. Nowhere has there been developed a system of regular bounty-fed export trade under conditions which would enable us profitably to apply an import duty as a safe instru- . ment of revenue.

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ment and higher remuneration for capital and labour. The difficulty felt by many classes of investors in finding safe profitable uses for their money, by business managers in keeping plant and machinery fully occupied, by workmen in obtaining regular employment, is a constant and a serious trouble. The common explanation of the laissezfaire economist, imputing this unemployment of a "margin" of spare capital and labour as a sound necessary condition of the elasticity of modern industry, or as an equally necessary result of inherent irregularities of certain trades, does not convince. The quantity and character of the waste are too grave to warrant the acceptance of this fatalistic interpretation of "un"- and "under "-employment. Frequently recurring periods of bad trade exhibit the simultaneous waste of all the

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