SECTION II.. Effect of Export Duties, Etc., on Raw Material.--Export Premiums.

EFFECT OF EXPORT DUTIES, etc., ON RAW MATERIAL.--EXPORT PREMIUMS.

B. Export duties on raw material, and prohibitions of the exportation of raw material, lower the price of such articles, by preventing the competition of foreign buyers.[A3-2-1] To this loss of the producers of raw material, there is, in the long run, no corresponding gain to the manufacturers. Rather will there be, when freedom of competition prevails at home, an increased flow of the forces of production to the favored branch, because of its rate of profit, which is greater than that usual in the country, and a corresponding flow from the injured branch, until such time as the level of profit usual in the country is restored.[A3-2-2] Hence here, also, the final result is only a change of the direction, not a direct increase of the productive forces.[A3-2-3]

C. In the case of export-premiums, it is necessary to distinguish between the mere refunding back of the taxes which have been paid on the assumption of a home consumption which has not taken place (drawbacks), and the actual making of donations because of the exportation of goods (bounties). The former produces no result except to maintain the possibility of a production which would otherwise have been prevented by the tax. The latter, on the contrary, compels all those who are subject to taxation to make a donation to one particular class of persons engaged in industry.[A3-2-4] Moreover, all consumers are compelled to pay a higher price for the commodity to the extent that the market price, inclusive of the premium to be obtained abroad, is higher than the home market price hitherto usual. But, as the cost of production has not increased, this profit of the producers, which is greater than that usual in the country, must induce other productive forces to enter into the favored branch; so that here, also, the lasting result is not a higher rate of profit of the individuals engaged in the industry, but an extension of the industry itself. Foreign countries chiefly reap the greatest advantage from this course, since they obtain the commodities at gift-prices.[A3-2-5] The premiums paid, not for exportation, but for the production of a commodity, have a meaning akin to this.[A3-2-6] Either the industry could not maintain itself without premiums, in which case the state encourages a losing production,--and the more there is produced the greater is the loss to the national economy;--or the industry might exist without the payment of premiums, and then the newly increased profit would lead to an extension of the industry. Exportation would follow, and all the effects of export-premiums appear.[A3-2-7]