little work showing that diminution in the rate of duty often occasions comparatively little decrease in its productiveness, while it is sometimes followed by an absolute increase.
It is manifest, however, that that which produces the increase of consumption is a decrease not in duty, but in price. It is of no practical importance to the consumer how this price is made up, and it is only in its tendency to lower the price, or, what is the same thing, to improve the quality, or increase the facility of purchase, that the diminution in duty concerns him.
As in all taxed articles, the price is made up of cost and duty, it is manifest that the lowering of the duty cannot in the same ratio lower the price. Thus, on a reduction of one-half in the duty on coffee, the price fell by only one-fourth. In the change here contemplated, on the other hand, our dealings are at once with price. We do not propose to lower the duty on the transmission of letters in the hope of obtaining a reduction in postage, but at once to reduce postage itself. In considering the effects of this change, therefore, we have nothing directly to do with the diminution of duty, but only with a decrease in price. And this circumstance, fortunately, saves us much laborious investigation, as decrease in price is often the compound result of diminution in duty and increase in facility of production. Taking, therefore, one or two articles of which, from whatever cause, the price has fallen, we will observe how far that reduction has resulted in increased consumption.
The price of soap, for instance, has recently fallen by about one-eighth; the consumption in the same time has increased by one-third. Tea, again, the price of which, since the opening of the China trade, has fallen by about one-sixth, has increased in consumption by almost a half. The consumption of silk goods, which, subsequently to the year 1823, have fallen in price by about one-fifth, has more than doubled. The consumption of coffee, the price of which, subsequently to 1823, has fallen about one-fourth, has more than tripled. And the consumption of cotton goods, the price of which, during the last twenty years, has fallen by nearly one-half, has in the same time been fourfolded.
