With an increased consumption of sugar, the culture of the cane will occupy a far greater area of the belt in which it is already established. It is, however, limited by the interests of the manufacturers themselves, who limit production in order to keep up the price of sugar, and so obtain higher profits; sugar of native preparation being protected by laws which strike at the importation of foreign sugar.[65]
[Footnote 65: This is an interesting object-lesson in the working of a tariff. Foreign competition once abolished by the increased prices of foreign articles, the native manufacturer will always minimise, and even destroy, the protection afforded by the tariff, by increasing his own prices. If he cannot do so naturally he will do so by lessening his output; with the result that sooner or later the tariff will actually increase foreign imports and still further limit home production. Obviously the only circumstance under which it can permanently profit even the manufacturers is this: a tariff so high as to make importation ruinous; when the home producer will raise his prices until they are just below the line of unprofitable inflation; which, from the context, would seem to be the case in the Argentine. The consumer must suffer, and usually the _employé_.——[TRANS.]]
In 1907 2,498,000 lb. of foreign refined sugar were imported, their value being £181,755; but on the other hand 140,370 lb. were exported during the same year.
It is to be hoped that the price of sugar will not fall too low, as this might bring about the ruin of an industry which is worth encouraging and preserving: but it is essential, on the other hand, to oppose an excessive inflation, which would diminish the consumption of this valuable alimentary product, and would force the consumer to pay the exaggerated profits of a small number of manufacturers and planters. This is the inherent peril of excessive protection.
The law of 23rd January 1904 and the regulation of 25th October of the same year have provided for this condition. One must not forget that all commerce is conditioned by the law of supply and demand, and that to avoid overloading the market with produce, production must be limited, according to circumstances, and in proportion to actual requirements; and beyond the limit of absorption the productive energies of the country must be diverted to other cultures or industries, more remunerative and more certain as to results.[66]