chapter  II
14 Pages

The Economic Background

ByE. B. Mcguire

THE disturbances caused to the country's economic life by tariff changes are so widespread and diffused, that it becomes impossible to do more than examine major effects. This chapter aims to arm the reader unacquainted with the modern method of economic analysis. The study of economic phenomena direct under such conditions would be too difficult, so abstraction is made of specific relationships, disturbing elements are then introduced one by one. The usual approach is to imagine a static condition, and determine the equilibrium position; that is, the resultant of the forces considered. Readjustments in trade have to work themselves out, but before tranquillity is established, further changes in one or other of the duties may occur which will set up new stresses in the economic machine. In other cases such as railways, the optimal size of the unit will be great, so much so that monopoly conditions will protrude even in a competitive economy.