great a money value as before. It may diminish it in such a ratio, that
the money value of the quantity consumed will be exactly the same as
before. Or it may not diminish it at all, or so little, that, in
consequence of the higher price, a greater money value will be purchased
than before. In this last case, England will gain, at the expense of
Germany, not only the whole amount of the duty, but more. For the money
value of her exports to Germany being increased, while her imports
remain the same, money will flow into England from Germany. The price of
cloth will rise in England, and consequently in Germany; but the price
of linen will fall in Germany, and consequently in England, We shall
export less cloth, and import more linen, till the equilibrium is
restored. It thus appears, what is at first sight somewhat remarkable,
that, by taxing her exports, England would, under some conceivable
circumstances, not only gain from her foreign customers the whole amount
of the tax, but would also get her imports cheaper. She would get them
cheaper in two ways,--for she would obtain them for less money, and
would have more money to purchase them with. Germany, on the other hand,
would suffer doubly: she would have to pay for her cloth a price
increased not only by the duty, but by the influx of money into England,
while the same change in the distribution of the circulating medium
would leave her less money to purchase it with.

This, however, is only one of three possible cases. If, after the
imposition of the duty, Germany requires so diminished a quantity of
cloth, that its total money value is exactly the same as before, the
balance of trade will be undisturbed; England will gain the duty,
Germany will lose it, and nothing more. If, again, the imposition of the
duty occasions such a falling off in the demand, that Germany requires a
less pecuniary value than before, our exports will no longer pay for our
imports, money must pass from England into Germany, and Germany's share