Nelson Evening Mail. THURSDAY, FEBRUARY 13, 1913. STUDIES IN ECONOMICS.

Nelson Evening Mail, Volume XLVIII, Issue XLVIII, 13 February 1913, Page 4

Nelson Evening Mail. THURSDAY, FEBRUARY 13, 1913. STUDIES IN ECONOMICS.

<» A GOOD deal of interest has been taken in the appearance of the second and final volume of Mr A. A. Wotzel's English translation of the great Dutch economist, Pierson's "Principles of Economics." Dr Pierson was one of the greatest- of modern economists, and the value of this standard work is enhanced by his eminently practical treatment of the great subject. The first volume dealt "Value in Exchange" and "Money," while the new volume treats with "Production" and "The Revenues o+' the State." According to Che reviewers one of the best sections of the volume is that in which Dr Pierson examines the effects of protectionism. As an illustration may be exuoted a portion of his criticism of the contention that high import duties fall, not on the home consumer, but on the foreign producer, that they do not malw the goods any dearer, but are a means of shifting some of the burden of taxation on to the foreigner, "if it he. true tha' import duties: are

paid by the foreigner, in other words, that foreign prices decline to the full extent of the duties, t' en those duties afford no protection. The dutiable goods continue to be imported as before. A protectionist would then have to say that they had failed in their object. People will still continue to oMer them from abroad, and native industry will be in no way benefited. The advocates of protection must therefore either incur the charge ot* merely advocating measures which do nothing whatever towards promoting the application of their system, or eke they must drop the contention that the burden of the import duties is borne exclusively by the foreigner. That contention itself, moreover, cannot be persisted in. We certainly admit that import duties, if they are levied by a very large country, and on an extensive scale, do depress foreign prices. If England were to put a very high duty on butter, butter prices outside England would decline. But this' decline would not be equal to the duty; it would amount to less, because the English demand, however important it may be, is only a small portion, of the demand for that article, and also because the decline in the price would lead to a decline in production, which, in its turn, would act as a check on the decline in price. It is true that duties on imports are a means of replenishing the national exchequer, at the expense of the foreigner; but the sums which are made to flow into the national exchequer, at the foreigner's expense, never amount to the whole; they always amount to a part only of those duties; and where the duties are levied by a small country, that part is so small as to be scarcely worth considering. This is the very reason why, in a small country, the effects of protection are doubly injurious. In a large country the harm resulting from high import duties is. to a certain extent, mitigated by the effect of those duties on foreign prices, and in so far as the duties have an effect on foreign prices, they are not protective. But in a small country tnlfe advantage is almost entirely lacking, because the demand of such a country is too small to exercise any appreciable influence on prices abroad." "Gold and Riches," by W. J. Ashley, professor of commerce in the University of Birmingham, is an interesting" contribution to the discussion on the rise in the cost of living. It is based on a series of articles which appeared in the "Pall Mall Gazette" last year. In a previous publication Professor Ashley made a popular survey of the facts which go to prove the remarkable rise in prices during recent years, and indicated that the underlying cause was to bs found in the vastly increased supply of gold. In the present case he seeks to explain the modus operandi of the problem, how, under existing conditions of trade, the taking of gold out of the earth does, in fact, touch prices. It is worth noting that he takes a very different view of the future outlook from that put forward by Mr Irving Fisher, the American economist, in the December number of the "North American Review." particulars of which it will be remembered were given in these columns on Feb. 4th last. Mr Fisher thinks that the upward trend of prices must continue for a long time, owing to the increased use- of cheques and other such causes, even if the output of gold remains stationary or begins to decline. Professor Ashley, on the contrary, holds that while the world's production seems not unlikely to slacken, there are going to be larger demands upon it for currency purposes, and, that we may, therefore, expect the present upward movement to come to an end scon, prices, as in previous instances, first keeping for a time on the same level, and then resuming the downward march, which was normal until about 1896, in spite qf. occasional short periods of rising prices, as in the early fifties, and again in the early seventies of the last century.