will be due from the United States to England: this sum will no longer be an equivalent for the sum due from England to the United States for corn, the balance therefore must be paid in money. Prices will fall in England and rise in the United States; iron will fall in the English market; corn will rise in the American. The English will pay a higher price for corn, [pg 579] and will have smaller money incomes to buy it with; while the Americans will obtain iron cheaper, that is, its price will exceed what it previously was by less than the amount of the duty, while their means of purchasing it will be increased by the increase of their money incomes.
“If the imposition of the tax does not diminish the demand, it will leave the trade exactly as it was before. We shall import as much, and export as much; the whole of the tax will be paid out of our own pockets.
“But the imposition of a tax on a commodity almost always diminishes the demand more or less; and it can never, or scarcely ever, increase the demand. It may, therefore, be laid down as a principle that a tax on imported commodities, when it really operates as a tax, and not as a prohibition either total or partial, almost always falls in part upon the foreigners who consume our goods; and that this is a mode in which a nation may appropriate to itself, at the expense of foreigners, a larger share than would otherwise belong to it of the increase in the general productiveness of the labor and capital of the world, which results from the interchange of commodities among nations.”
Those are, therefore, in the right who maintain that taxes on imports are partly paid by foreigners; but they are mistaken when they say that it is by the foreign producer. It is not on the