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Chapter 8
8
of Taxation
APPLICATION: THE COSTS OF

TAXATION
WHAT’S NEW IN THE SEVENTH EDITION:
A new In the News box on “The Tax Debate” has been added.
LEARNING OBJECTIVES:
By the end of this chapter, students should understand:
➢ how taxes reduce consumer and producer surplus.
➢ the meaning and causes of the deadweight loss from a tax.
➢ why some taxes have larger deadweight losses than others.
➢ how tax revenue and deadweight loss vary with the size of a tax.
CONTEXT AND PURPOSE:
Chapter 8 is the second chapter in a three-chapter sequence dealing with welfare economics. In the
previous section on supply and demand, Chapter 6 introduced taxes and demonstrated how a tax affects
the price and quantity sold in a market. Chapter 6 also described the factors that determine how the
burden of the tax is divided between the buyers and sellers in a market. Chapter 7 developed welfare
economics—the study of how the allocation of resources affects economic well-being. Chapter 8
combines the lessons learned in Chapters 6 and 7 and addresses the effects of taxation on welfare.
Chapter 9 will address the effects of trade restrictions on welfare.
The purpose of Chapter 8 is to apply the lessons learned about welfare economics in Chapter 7 to the
issue of taxation that was addressed in Chapter 6. Students will learn that the cost of a tax to buyers and
sellers in a market exceeds the revenue collected by the government. Students will also learn about the
factors that determine the degree by which the cost of a tax exceeds the revenue collected by the
government.
144
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 8 /Application: The Costs of Taxation ❖ 145
KEY POINTS:
• A tax on a good reduces the welfare of buyers and sellers of the good, and the reduction in
consumer and producer surplus usually exceeds the revenue raised by the government. The fall in
total surplus—the sum of consumer surplus, producer surplus, and tax revenue—is called the
deadweight loss of the tax.
• Taxes have deadweight losses because they cause buyers to consume less and sellers to produce
less, and these changes in behavior shrink the size of the market below the level that maximizes total
surplus. Because the elasticities of supply and demand measure how much market participants
respond to market conditions, larger elasticities imply larger deadweight losses.
• As a tax grows larger, it distorts incentives more, and its deadweight loss grows larger. Because a tax
reduces the size of a market, however, tax revenue does not continually increase. It first rises with
the size of a tax, but if the tax gets large enough, tax revenue starts to fall.
CHAPTER OUTLINE:
I. The Deadweight Loss of Taxation
A. Remember that it does not matter who a tax is levied on; buyers and sellers will likely share in
the burden of the tax.
B. If there is a tax on a product, the price that a buyer pays will be greater than the price the seller
receives. Thus, there is a tax wedge between the two prices and the quantity sold will be smaller
if there was no tax.
Figure 1
146 ❖ Chapter 8 /Application: The Costs of Taxation
C. How a Tax Affects Market Participants
1. We can measure the effects of a tax on consumers by examining the change in consumer
surplus. Similarly, we can measure the effects of the tax on producers by looking at the
change in producer surplus.
2. However, there is a third party that is affected by the tax—the government, which gets total
tax revenue of T × Q. If the tax revenue is used to provide goods and services to the public,
then the benefit from the tax revenue must not be ignored.
If you spent enough time covering consumer and producer surplus in Chapter 7,
students should have an easy time with this concept.
Figure 2
3. Welfare without a Tax
Figure 3
a. Consumer surplus is equal to: A + B + C.
b. Producer surplus is equal to: D + E + F.
c. Total surplus is equal to: A + B + C + D + E + F.
4. Welfare with a Tax
a. Consumer surplus is equal to: A.
b. Producer surplus is equal to: F.
c. Tax revenue is equal to: B + D.
d. Total surplus is equal to: A + B + D + F.
5. Changes in Welfare
a. Consumer surplus changes by: –(B + C).
b. Producer surplus changes by: –(D + E).
c. Tax revenue changes by: +(B + D).
d. Total surplus changes by: –(C + E).
6. Definition of deadweight loss: the fall in total surplus that results from a market
distortion, such as a tax.
D. Deadweight Losses and the Gains from Trade
Figure 4
1. Taxes cause deadweight losses because they prevent buyers and sellers from benefiting from
trade.
2. This occurs because the quantity of output declines; trades that would be beneficial to both
the buyer and seller will not take place because of the tax.
Show the students that the nature of this deadweight loss stems from the reduction
in the quantity of the output exchanged. Stress the idea that goods that are not
produced, consumed, or taxed do not generate benefits for anyone.
3. The deadweight loss is equal to areas C and E (the drop in total surplus).
4. Note that output levels between the equilibrium quantity without the tax and the quantity
with the tax will not be produced, yet the value of these units to consumers (represented by
the demand curve) is larger than the cost of these units to producers (represented by the
supply curve).
II. The Determinants of the Deadweight Loss
Figure 5
A. The price elasticities of supply and demand will determine the size of the deadweight loss that
occurs from a tax.
1. Given a stable demand curve, the deadweight loss is larger when supply is relatively elastic.
2. Given a stable supply curve, the deadweight loss is larger when demand is relatively elastic.
B. Case Study: The Deadweight Loss Debate
1. Social Security tax and federal income tax are taxes on labor earnings. A labor tax places a
tax wedge between the wage the firm pays and the wage that workers receive.
2. There is considerable debate among economists concerning the size of the deadweight loss
from this wage tax.
3. The size of the deadweight loss depends on the elasticity of labor supply and demand, and
there is disagreement about the magnitude of the elasticity of supply.
a. Economists who argue that labor taxes do not greatly distort market outcomes believe
that labor supply is fairly inelastic.
b. Economists who argue that labor taxes lead to large deadweight losses believe that labor
supply is more elastic.
Activity 1—Labor Taxes
Type: In-class discussion

Topics: Deadweight loss, taxation
Materials needed: None
Time: 10 minutes
Class limitations: Works in any size class
Purpose
Most students have not spent a great deal of time considering the effects of taxation on labor
supply. This in-class exercise gives them the opportunity to consider the effects of proposed
tax rates on their own willingness to supply labor.
Instructions
Ask students to assume that they are full-time workers earning $10 per hour, $80 per day,
$400 per week, $20,000 per year.
Ask them if they would quit their jobs or keep working if the tax rate was 10%, 20%, 30%,
… (up to 100%).
Keep a tally as they show hands indicating that they are leaving the labor force.
Ask students what they think the “best” tax rate is.
Points for Discussion

Many students have no idea that current marginal tax rates are greater than 30% for many
taxpayers.
Students will likely say that a tax rate of zero would be best, but remind them that there
would be no roads, libraries, parks, or national defense without at least some revenue raised
by the government.
III. Deadweight Loss and Tax Revenue as Taxes Vary
Figure 6
A. As taxes increase, the deadweight loss from the tax increases.
B. In fact, as taxes increase, the deadweight loss rises more quickly than the size of the tax.
1. The deadweight loss is the area of a triangle and the area of a triangle depends on the
square of its size.
2. If we double the size of a tax, the base and height of the triangle both double so the area of
the triangle (the deadweight loss) rises by a factor of four.
C. As the tax increases, the level of tax revenue will eventually fall.
D. Case Study: The Laffer Curve and Supply-Side Economics
1. The relationship between the size of a tax and the level of tax revenues is called a Laffer
curve.
2. Supply-side economists in the 1980s used the Laffer curve to support their belief that a drop
in tax rates could lead to an increase in tax revenue for the government.
3. Economists continue to debate Laffer’s argument.
a. Many believe that the 1980s refuted Laffer’s theory.
b. Others believe that the events of the 1980s tell a more favorable supply-side story.
c. Some economists believe that, while an overall cut in taxes normally decreases revenue,
some taxpayers may find themselves on the wrong side of the Laffer curve.
ALTERNATIVE CLASSROOM EXAMPLE:

Draw a graph showing the demand and supply of paper clips. (Draw each curve as a 45-
degree line so that buyers and sellers will share any tax equally.) Mark the equilibrium price
as $0.50 (per box) and the equilibrium quantity as 1,000 boxes. Show students the areas of
producer and consumer surplus.
Impose a $0.20 tax on each box. Assume that sellers are required to “pay” the tax to the
government. Show students that:
▪ the price buyers pay will rise to $0.60.

▪ the price sellers receive will fall to $0.40.
▪ the quantity of paper clips purchased will fall (assume to 800 units).
▪ tax revenue would be equal to $160 ($0.20  800).
Have students calculate the area of deadweight loss. (You may have to remind students how
to calculate the area of a triangle.)
Show students that as the tax increases (to $0.40, $0.60, and $0.80), tax revenue rises and
then falls, and the deadweight loss increases.
E. In the News: The Tax Debate
1. Recently, policymakers have debated the effects of increasing the tax rate, particularly on
higher-income taxpayers.
2. These two opinion pieces from The Wall Street Journal present both sides of the issue.
Activity 2—Tax Alternatives
Type: In-class assignment

Topics: Taxes and deadweight loss
Materials needed: None
Time: 20 minutes
Class limitations: Works in any size class
Purpose
The market impact of taxes can be a new concept to many students. This exercise helps them
think about the effects of taxes on different goods. Taxes that may be appealing for equity
reasons can be distortionary from a market perspective.
Instructions
Tell the class, “The state has decided to increase funding for public education. They are
considering four alternative taxes to finance these expenditures. All four taxes would raise the
same amount of revenue.” List these options on the board:
1. A sales tax on food.
2. A tax on families with school-age children.
3. A property tax on vacation homes.
4. A sales tax on jewelry.
Ask the students to answer the following questions. Give them time to write an answer, and
then discuss their answers before moving to the next question:
A. Taxes change incentives. How might individuals change their behavior because of
each of these taxes?
B. Rank these taxes from smallest deadweight loss to largest deadweight loss. Explain.
C. Is deadweight loss the only thing to consider when designing a tax system?
Common Answers and Points for Discussion

A. Taxes change incentives. How might individuals change their behavior because of
each of these taxes?
1. A sales tax on food: At the margin, some consumers will purchase less food.
Overall food purchases will not decrease substantially because the tax will be
spread over a large number of consumers and demand is relatively inelastic.
2. A tax on families with school-age children: No families would put their children up
for adoption to avoid taxes. A large tax could have implications for family
planning; couples may choose not to have children, or to have fewer children,
over time. A more realistic concern would be relocation to other states by mobile
families to avoid the tax.
3. A property tax on vacation homes: This tax would be concentrated on fewer
households. A large tax would discourage people from buying vacation homes.
Developers would build fewer vacation homes in the long run. In many areas,
people could choose an out-of-state vacation home to avoid the tax.
4. A sales tax on jewelry: This tax would also be relatively concentrated. People
would buy less jewelry, or they would buy jewelry in other states with lower
taxes.
B. Rank these taxes from smallest deadweight loss to largest deadweight loss.
Lowest deadweight loss—tax on children, very inelastic
Then—tax on food. Demand is inelastic; supply is elastic.
Third—tax on vacation homes Demand is elastic; short-run supply is inelastic.
Most deadweight loss—tax on jewelryDemand is elastic; supply is elastic.
C. Is deadweight loss the only thing to consider when designing a tax system?
No. This can generate a lively discussion. There are a variety of equity or fairness
concerns. The taxes on children and on food would be regressive. Each of the taxes
would tax certain households at much higher rates than other households with similar
incomes.
SOLUTIONS TO TEXT PROBLEMS:
Quick Quizzes
1. Figure 1 shows the supply and demand curves for cookies, with equilibrium quantity Q1 and
equilibrium price P1. When the government imposes a tax on cookies, the price to buyers
rises to PB, the price received by sellers declines to PS, and the equilibrium quantity falls to
Q2. The deadweight loss is the triangular area below the demand curve and above the supply
curve between quantities Q1 and Q2. The deadweight loss shows the fall in total surplus that
results from the tax.
Figure 1
2. The deadweight loss of a tax is greater the greater is the elasticity of demand. Therefore, a
tax on beer would have a larger deadweight loss than a tax on milk because the demand for
beer is more elastic than the demand for milk.
3. If the government doubles the tax on gasoline, the revenue from the gasoline tax could rise
or fall depending on whether the size of the tax is on the upward or downward sloping
portion of the Laffer curve. However, if the government doubles the tax on gasoline, you can
be sure that the deadweight loss of the tax rises because deadweight loss always rises as the
tax rate rises.
Questions for Review
1. When the sale of a good is taxed, both consumer surplus and producer surplus decline. The
decline in consumer surplus and producer surplus exceeds the amount of government
revenue that is raised, so society's total surplus declines. The tax distorts the incentives of
both buyers and sellers, so resources are allocated inefficiently.
2. Figure 2 illustrates the deadweight loss and tax revenue from a tax on the sale of a good.
Without a tax, the equilibrium quantity would be Q1, the equilibrium price would be P1,
consumer surplus would be A + B + C, and producer surplus would be D + E + F. The
imposition of a tax places a wedge between the price buyers pay, PB, and the price sellers
receive, PS, where PB = PS + tax. The quantity sold declines to Q2. Now consumer surplus is
A, producer surplus is F, and government revenue is B + D. The deadweight loss of the tax is
C+E, because that area is lost due to the decline in quantity from Q1 to Q2.
Figure 2
3. The greater the elasticities of demand and supply, the greater the deadweight loss of a tax.
Because elasticity measures the responsiveness of buyers and sellers to a change in price,
higher elasticity means the tax induces a greater reduction in quantity, and therefore, a
greater distortion to the market.
4. Experts disagree about whether labor taxes have small or large deadweight losses because
they have different views about the elasticity of labor supply. Some believe that labor supply
is inelastic, so a tax on labor has a small deadweight loss. But others think that workers can
adjust their hours worked in various ways, so labor supply is elastic, and thus a tax on labor
has a large deadweight loss.
5. The deadweight loss of a tax rises more than proportionally as the tax rises. Tax revenue,
however, may increase initially as a tax rises, but as the tax rises further, revenue eventually
declines.
Quick Check Multiple Choice

1. a
2. b
3. c
4. a
5. b
6. a
Problems and Applications
1. a. Figure 3 illustrates the market for pizza. The equilibrium price is P1, the equilibrium
quantity is Q1, consumer surplus is area A + B + C, and producer surplus is area D + E +
F. There is no deadweight loss, as all the potential gains from trade are realized; total
surplus is the entire area between the demand and supply curves: A + B + C + D + E +
F.
Figure 3
b. With a $1 tax on each pizza sold, the price paid by buyers, PB, is now higher than the
price received by sellers, PS, where PB = PS + $1. The quantity declines to Q2, consumer
surplus is area A, producer surplus is area F, government revenue is area B + D, and
deadweight loss is area C + E. Consumer surplus declines by B + C, producer surplus
declines by D + E, government revenue increases by B + D, and deadweight loss
increases by C + E.
c. If the tax were removed and consumers and producers voluntarily transferred B + D to
the government to make up for the lost tax revenue, then everyone would be better off
than without the tax. The equilibrium quantity would be Q1, as in the case without the
tax, and the equilibrium price would be P1. Consumer surplus would be A + C, because
consumers get surplus of A + B + C, then voluntarily transfer B to the government.
Producer surplus would be E + F, because producers get surplus of D + E + F, then

voluntarily transfer D to the government. Both consumers and producers are better off
than the case when the tax was imposed. If consumers and producers gave a little bit
more than B + D to the government, then all three parties, including the government,
would be better off. This illustrates the inefficiency of taxation.
2. a. The statement, "A tax that has no deadweight loss cannot raise any revenue for the
government," is incorrect. An example is the case of a tax when either supply or demand
is perfectly inelastic. The tax has neither an effect on quantity nor any deadweight loss,
but it does raise revenue.
b. The statement, "A tax that raises no revenue for the government cannot have any
deadweight loss," is incorrect. An example is the case of a 100% tax imposed on sellers.
With a 100% tax on their sales of the good, sellers will not supply any of the good, so
the tax will raise no revenue. Yet the tax has a large deadweight loss, because it reduces
the quantity sold to zero.
3. a. With very elastic supply and very inelastic demand, the burden of the tax on rubber
bands will be borne largely by buyers. As Figure 4 shows, consumer surplus declines
considerably, by area A + B, but producer surplus decreases only by area C+D..
Figure 4 Figure 5
b. With very inelastic supply and very elastic demand, the burden of the tax on rubber
bands will be borne largely by sellers. As Figure 5 shows, consumer surplus does not
decline much, just by area A + B, while producer surplus falls substantially, by area C +
D. Compared to part (a), producers bear much more of the burden of the tax, and
consumers bear much less.
4. a. The deadweight loss from a tax on heating oil is likely to be greater in the fifth year after
it is imposed rather than the first year. In the first year, the demand for heating oil is
relatively inelastic, as people who own oil heaters are not likely to get rid of them right
away. But over time they may switch to other energy sources and people buying new
heaters for their homes will more likely choose gas or electric, so the tax will have a
greater impact on quantity. Thus, the deadweight loss of the tax will get larger over
time.
b. The tax revenue is likely to be higher in the first year after it is imposed than in the fifth
year. In the first year, demand is more inelastic, so the quantity does not decline as
much and tax revenue is relatively high. As time passes and more people substitute away
from oil, the quantity sold declines, as does tax revenue.
5. Because the demand for food is inelastic, a tax on food is a good way to raise revenue
because it leads to a small deadweight loss; thus taxing food is less inefficient than taxing
other things. But it is not a good way to raise revenue from an equity point of view, because
poorer people spend a higher proportion of their income on food. The tax would affect them
more than it would affect wealthier people.
6. a. This tax has such a high rate that it is not likely to raise much revenue. Because of the
high tax rate, the equilibrium quantity in the market is likely to be at or near zero.
b. Senator Moynihan's goal was probably to ban the use of hollow-tipped bullets. In this
case, the tax could be as effective as an outright ban.
7. a. Figure 6 illustrates the market for socks and the effects of the tax. Without a tax, the
equilibrium quantity would be Q1, the equilibrium price would be P1, total spending by
consumers equals total revenue for producers, which is P1 x Q1, which equals area B + C
+ D + E + F, and government revenue is zero. The imposition of a tax places a wedge
between the price buyers pay, PB, and the price sellers receive, PS, where PB = PS + tax.
The quantity sold declines to Q2. Now total spending by consumers is PB x Q2, which
equals area A + B + C + D, total revenue for producers is PS x Q2, which is area C + D,
and government tax revenue is Q2 x tax, which is area A + B.
b. Unless supply is perfectly elastic or demand is perfectly inelastic, the price received by
producers falls because of the tax. Total receipts for producers fall, because producers
lose revenue equal to area B + E + F.
Figure 6
c. The price paid by consumers rises, unless demand is perfectly elastic or supply is
perfectly inelastic. Whether total spending by consumers rises or falls depends on the
price elasticity of demand. If demand is elastic, the percentage decline in quantity
exceeds the percentage increase in price, so total spending declines. If demand is
inelastic, the percentage decline in quantity is less than the percentage increase in price,
so total spending rises. Whether total consumer spending falls or rises, consumer surplus
declines because of the increase in price and reduction in quantity.
8. Figure 7 illustrates the effects of the $2 subsidy on a good. Without the subsidy, the
equilibrium price is P1 and the equilibrium quantity is Q1. With the subsidy, buyers pay price
PB, producers receive price PS (where PS = PB + $2), and the quantity sold is Q2. The
following table illustrates the effect of the subsidy on consumer surplus, producer surplus,
government revenue, and total surplus. Because total surplus declines by area D + H, the
subsidy leads to a deadweight loss in that amount.
Before After Subsidy Change

Subsidy
Consumer
Surplus A+B A+B+E+F+G +(E + F + G)
Producer
Surplus E+I B+C+E+I +(B + C)
Government
Revenue 0 –(B + C + D + E + F + G + H) –(B + C + D + E + F + G + H)
Total Surplus A+B+E+I A+B–D+E–H+I –(D + H)
Figure 7
9. a. Figure 8 shows the effect of a $10 tax on hotel rooms. The tax revenue is represented by
areas A + B, which are equal to ($10)(900) = $9,000. The deadweight loss from the tax
is represented by areas C + D, which are equal to (0.5)($10)(100) = $500.
Figure 8 Figure 9
b. Figure 9 shows the effect of a $20 tax on hotel rooms. The tax revenue is represented by
areas A + B, which are equal to ($20)(800) = $16,000. The deadweight loss from the tax
is represented by areas C + D, which are equal to (0.5)($20)(200) = $2,000.
When the tax is doubled, the tax revenue rises by less than double, while the deadweight
loss rises by more than double. The higher tax creates a greater distortion to the market.
10. a. Setting quantity supplied equal to quantity demanded gives 2P = 300 – P. Adding P to
both sides of the equation gives 3P = 300. Dividing both sides by 3 gives P = 100.
Substituting P = 100 back into either equation for quantity demanded or supplied gives Q
= 200.
b. Now P is the price received by sellers and P +T is the price paid by buyers. Equating
quantity demanded to quantity supplied gives 2P = 300 − (P+T). Adding P to both sides
of the equation gives 3P = 300 – T. Dividing both sides by 3 gives P = 100 –T/3. This is
the price received by sellers. The buyers pay a price equal to the price received by sellers
plus the tax (P +T = 100 + 2T/3). The quantity sold is now Q = 2P = 200 – 2T/3.
c. Because tax revenue is equal to T x Q and Q = 200 – 2T/3, tax revenue equals 200T −
2T 2 /3. Figure 10 (on the next page) shows a graph of this relationship. Tax revenue is
zero at T = 0 and at T = 300.
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under the terms of the Project Gutenberg License included with this
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Title: Code
Author: L. Paul
Release date: April 26, 2024 [eBook #73468]
Language: English
Original publication: New York, NY: The Butterick Publishing

Company, 1927
Credits: Roger Frank and Sue Clark
*** START OF THE PROJECT GUTENBERG EBOOK CODE ***

The story of a criminal ship and a warning in
CODE
By L. Paul
THERE was a queer feeling about the ship. “Hush,” thought the man
who stood by the gangway. That was the apt word. A battered ship,
a dirty craft, small, obscene, unseaworthy, of foreign register. And
silent—hush! Grim faced men going about their business, sparing no
word for him, though they might have talked, he guessed, had they
cared to.
This man who watched wore soiled dungarees. There was a day’s
stubble of beard on his thin face. His expression, when a passing
man darted a look at him, was blank. His eyes fell when other eyes
probed him. He looked over his shoulder at times, at the rotting dock
in the small British port of Beverstock near Liverpool, where this
ship, the Cora, lay. He had come aboard, nobody knew how. One
moment, and the ship end of the gangway, creaking as the current
swayed the little tramp, was empty. The next moment he was there.
Nor did these others think it strange. They looked as if this sudden
yet stealthy approach was usual, an accustomed thing, an item,
strange perhaps to some, yet of little moment in their full lives.
The man in dungarees stood there till the first cheerful man he
had seen aboard rolled up, the stout chief engineer.
“That’s him,” said the chief, and tapped him on the shoulder.
The man winced, turned, and saw, climbing the steep gangway, a
man.
“That’s him,” repeated the stout chief. “Captain Bain.”
The man in dungarees saw a tall, glum seafarer, with graying
hair, his frowsy shore going linen peeping from sleeves of shiny
serge, his lapels greasy; his boots polished long after polish had
become a mockery; and, topping all, a master’s cap.
This was Captain Bain, right enough. He stopped, stared at the
man in dungarees and said briefly—
“Where from?”
“American Bar,” the man in dungarees replied.
“Come this way,” said the captain. “My name’s Bain. This is my
cabin. We can talk here. Out on deck talk’s barred in port. Who sent
you?”
He fell silent, not because he waited for the answer, but more as
if he had run down, as if this long speech had been an effort, a
breaking down of his accustomed reserve. The man in dungarees
waited, as if expecting him to say more, then at last replied:
“Who sent me? Dip Laplace.”
He fumbled in the pocket of his dungarees and found a wad of
crumpled paper.
“He sent this, too.”
The captain of the Cora took the paper, opened it, held it up to
the beam of light that stole through the grimy port. The man in
dungarees sat down on a locker.
“My name’s Drake,” he remarked.
His eyes were fixed on the captain. He saw a wave of color
sweep up over old Bain’s weatherbeaten neck, into his cheeks, then
recede again.
What the captain read, spelling out large printed words, was this:
Sparklers—they’re wise—watch.
The captain of the Cora crumpled the paper in his hand.
“You read this, of course?”
“I’m no liar. I did, of course,” the man in dungarees mimicked
him. “As I said, my name’s Drake—”
“And this paper?”
“I’ve forgotten what was on it,” Drake told him.
“Dip gave it to you. Dip grows jocular,” the captain laughed
harshly. “Are you another of his jokes?”
“I am a passenger.”
“I don’t carry passengers.”
“My kind? Dip sent me, remember.”
“You know then; you have money?”
Drake spread five fifty-pound notes out on his knee.
“As bad as that?” The captain whistled. “You could swank aboard
a liner for that.”
“And swank off across the pond?”
The captain stroked his long jaw reflectively. His eyes wandered
over Drake’s face, stopped for a moment on the wall clock above his
head, dropped to the pile of treasury notes and dwelt there.
“As bad as that?” said the captain of the Cora. “Not murder?”
“No, Dip sent me. He knows. Need you?”
“Need I? God forbid. Can you swim?”
“Yes, why?”
“You’ll have to. I see you don’t know the game we play. Better
learn before I take your money. You find it—convenient—to travel
informally, to land on the other side incognito— No, your name may
be Drake, and I don’t care if it is or not. Names don’t count here.
But you wish to land as Drake, unknown to anyone. We arrange
that. No immigration folk to pester you. No police. We sail for
Montreal. Below that city fifty miles or so are islands. Sometimes we
go slowly through them, close to land. An active swimmer, dropping
overside—you have more money, have you not?”
“Yes, Captain, a little.”
“There’s a man on one island, there. He has a boat. If you give
him more than five pounds, he’s robbing you. After that your
movements are not my concern.”
Again, as the captain paused, Drake had that strange feeling that
here was a man talking overmuch—a man more fond of silence.
“And that’s all?” Drake asked. “Simple, isn’t it?”
“Why do you say that?”
“I feared I’d have to work my passage, and I’m lazy.”
The captain of the Cora reached for the little pile of notes.
“A man must live,” he growled, as if apologizing for his
delinquencies. “A man must live, and there’s no money in tramp
shipping. You’ll find a small cabin on the port side—the empty one.
It’s yours. We sail with the tide. If you come on deck before that and
are nabbed—” he patted his pocket where he had stowed those
notes—“that’s your lookout, Drake.”
Drake rose and crossed the little cabin. At the threshold he
paused.
“Those other cabins—”
“You are three. The others, you won’t meet till we are at sea.”
Drake stepped out, dropped down a steep iron stair to the deck,
slid into the port alley, where tiny doors formed a row, tried first
one, then another, till he found one unlocked, entered, and found
himself in a cabin so small that it could scarcely contain a bunk and
its occupant at the same time.
Men had watched him—shadowy figures, heads out of the galley,
the engine-room, the firehold. They had said nothing, betrayed no
surprise at his coming. They were silent men.
“Hush!”
THE SALT wind drifted across the deck of the Cora. She was
wallowing in the Atlantic.
Drake and the fat chief sat in the lee of the funnel. They had
struck up an acquaintance during the first half of the voyage. Drake
had traveled; he knew things. The fat chief, a jovial rascal, had the
curiosity of a child and a stout man’s zest for effortless, vicarious
adventure.
The two other passengers had kept apart. There was Quayle, as
yet sticking close to his cabin, save at mealtimes when he joined
Drake at the captain’s table. He had given that name, Quayle,
casually, as if it had just occurred to him, as if names were matters
of only passing importance.
He was a tall, silent man, middle-aged.
The third passenger messed with the crew. He was a small
Liverpool dock rat. He claimed that he had not killed his wife, but
had only beaten her. The captain, after discreetly calling up a
hospital, found that this was true. Because he had but twenty
pounds they had taken him for that. He never came up on the boat
deck; he viewed the ocean with ignorant terror and kept behind the
high steel bulwarks of the well deck, when he came out for air.
The chief, having a romantic mind, decided that the Liverpool
man’s wife would probably take a turn for the worse and die. He
held that the other passenger, Quayle, was a Bolshevik.
The chief and Drake sat there and yarned through the long sea
morning.
“A rum ship,” Drake hazarded.
“We are that,” the chief grinned, “at home to rum company.”
“True, but you know each other; we don’t, we passengers.”
“Five new faces in the ship’s company,” the chief laughed. “Ye
see, we can’t keep ’em. We ship so many passengers that it has
made their pile easy, or on the way to make it easy. It corrupts the
lads. Five new faces—five old ’uns gone to do likewise—on the trail
o’ easy money. Man, dear, ’tis restless labor is getting to be—”
“Eight of us, new chums, not knowing each other—for five and
three is eight.”
Drake stared out to sea.
“Eight souls,” sighed the chief. “Where they comes from. Gawd
only knows. Where they’re bound, Gawd don’t care; speakin’ more
exact, nine. For I’d forgot Sparks.”
Drake glanced forward. The tall radio man was in his hencoop, a
scant twenty feet away. The door was open.
“Why him?”
“Another bird o’ passage. D’ye notice his duds?”
“New and fancy.”
“Know what the pay is? Man, dear, if he bought them out of
wages, he’s never had smoke nor drink in years. Ever see a tramp’s
wireless wonder before? No. Know what I think? He’s an absconding
Scot. He figured we’d soak him hard for an unconventional passage.
You know what you paid, so—”
The chief closed his eyes and gave the details of his imaginative
romance in a few low words:
“Sparks gets him a uniform. Eighty bob, mebbe; or steals one. He
finds out we’re gettin’ a new radio man this voyage. An’ then, back
in port some poor dub brass pounder is wakin’ up, mebbe in
hospital. And this sport—well, he’s on the papers as Sparks, but we
lose our dividend on his passage thereby.”
“So you figure him, as you might say, a jailbird of passage.”
Drake had raised his voice. The chief clutched his arm.
“Don’t ye now; don’t rile that one. Man, dear, every time that
devilish contraption spits sparks I shudder. Think o’ the slander yon
lad could spread and nobody knowin’.”
“Slander?”
“Slander ’bout—you—or me, M’Ginley. Oh, aye, there’s tales he
could tell, even if he’s new. Would ye believe it?” The old chief rose.
“Ye might not; but some o’ the lads aboard here has loose tongues.
A thing I abhor, personal.” And off the old man waddled.
Drake sat there a moment. He was thinking:
“I wonder. Another little swimmer when we come to that island?
Will there be four of us in the water? Will the fourth be Sparks? If so
—best watch him.”
Rising, he added a codicil to this conclusion.
“There’s nine aboard, counting myself,” he thought, “nine that
may be, well, anything. Best start figuring this one out. That’ll leave
eight. And one of the eight is me, Drake. Wonder what I’ll be, when
we come to the end of the voyage?”
He glanced aft. The stout chief engineer was there, where he had
paused on the stair that led below.
“Them that don’t talk here,” said M’Ginley, “them that don’t talk
on this ship—they guesses.”
DRAKE slipped forward till he stood by the open door of the wireless
coop. The new Sparks looked up.
“Want anything?” he asked.
“Just loafing round.” Drake rolled a cigarette slowly, clumsily.
“Smoke?”
“Yes.”
The wireless man reached for pouch and papers, twisted with
swift fingers, struck a match and was exhaling smoke, almost before
Drake himself had lighted up.
“You’ve been in the States?” Drake asked. “Learned to make a
gasper there, didn’t you?”
“And you’re from the old country, calling a cig that?”
“A good country to come from—and the faster the coming the
better,” Drake drawled. “Old country’s not—healthy.”
“For some.”
The wireless man bent over his complicated machinery, as it
became alive. Drake looked on, wonder in his eyes, almost a childish
wonder.
“But that’s marvelous,” said he. “Words coming out of the air.”
“Dot dash dot dash,” said the wireless man. “See that smoke
yonder? The Paladin. She’s asking the Caradoc if they’ve met ice.
Bergs drifting now, you know.”
Drake glanced at the wall clock, then drifted toward the door.
It was eleven o’clock. It was Wednesday—five days since they
had left port. This old ruin of a ship was traveling with speed.
The voice of the wireless man followed him.
“I’m Cray; come again,” he called. “This packet doesn’t run to
rules.”
Drake turned. He seemed uneasy.
“If—” he began.
“If what?” Cray waited.
“If you hear something with that gadget about a man named
Drake, the fewer know—the better. Get me?”
“Don’t slip me money.” Cray’s hand met his, thrust it back. “You’ll
need all you got. A rum lot, on a rum ship.”
“And you as rum as they come,” thought Drake, as he walked
away.
Cray watched him go.
“Wonder if he knew what was on the air just now,” he scowled.
“If I shove it to the Old Man will he—well, this time I’m a wireless
man. Next time we’ll see.”
To him, too, this strange ship was saying, “Hush!” Yet his pencil
slid over flimsy paper. He rose with a message, took it to the captain
on the bridge.
“Rum lot aboard, sir.” He handed the message over, winked.
The captain started, backed away into a wing of the bridge,
scanned that message.
“You are right,” he replied. “This came in code, I presume?”
“Yes, sir.”
“Then why not leave it in code. We don’t want the world
knowing.”
“Nobody’s seen it, sir, but me.”
“Damn you! That’s an order. Anything else comes, leave it in
code.”
Cray went white and was about to speak. Then he checked
himself. He walked away; he was thinking.
“Him, too—the Old Man. Wonder what he knows that the world
don’t, that he’s afraid of the world learning? I’ll, maybe, find out. I’ll
see. Tonight, maybe. He might work in. Who knows?”
The captain, staring at the retreating back was staring at words
that floated before his eyes.
For that message had read:
All ships. All ships. All ships.
Varnavosk necklace stolen. Suspect at sea.
Watch passengers. Stand by for more.
—Scotland Yard.
The urgency of the thrice repeated “All ships”—that stabbed him,

made him wince. Trouble, trouble in large consignments, coming out
of the air. Other messages, and the field of search might narrow,
perhaps, till it centered on an old tramp wallowing across the
Western Ocean; till some swift offshore craft might draw alongside,
and some officious jackanapes would climb up the ladder and ask
fool questions about eight new faces aboard the Cora.
There was trouble on the ship that said, “Hush.”
The captain walked stiffly across the bridge and down to his
cabin. Cray, on the boat deck, watched him go.
“Yes, we’ll use you, my bucko,” said Cray. “Now I wonder—” and
he stared down on the well deck, forward, where the little Liverpool
passenger sprawled on a hatch cover.
“You’ve got a shiner on your eye, my lad,” thought Cray, “and you
mess with the crew. They’ll be eating any moment now. I think we’d
better not wait. We’ll begin with you.”
He followed the old captain of the Cora to his cabin.
When the passengers who messed with the skipper came in to
lunch, that worthy’s chair was vacant. Cray it was who greeted
them, smiling at Drake, bowing stiffly to tall Quayle.
“Old Man’s busy,” said Cray. “Don’t wait for him, gentlemen.”
THAT was Wednesday. On Thursday the fat engineer M’Ginley

sought the warm lee of the funnel once more. Drake was there,
waiting.
“I made my peace with Cray. If he was mad about what I said,
he didn’t show it.”
“A bad case,” the fat old chief growled. “There’s more in this ship
than ballast. There’s a mystery.”
“Eight little mysteries,” Drake jeered, “of which one is my humble
self. Maybe nine, counting Cray. Or ten—”
“What you alludin’ to now?”
“You, honest old M’Ginley.”
“Me? Man could see clean through me.” The chief winked at him.
“But look at this code; and all that pencilin’ under it is writ by the
most talented engineer on the Western Ocean.”
Drake glanced down at the flimsy bit of paper. He saw first a
jumble of phrases and part words. But below that a penciled legend
made sense.
All ships.
Varnavosk dying. Look for strong man capable killing bare-
handed.
No signature this time.

“Where’d you get this?”
Drake stiffened. He glanced forward uneasily; but Cray’s blind
was drawn on the little window of his cabin. Cray’s door was shut.
“Where’d you think? Notice the Old Man yesterday and today?”
the old chief asked. “Well, he’s fair wild. He come down this mornin’
an’ asks me to trot along, confidential. We goes to that wife beatin’
runt’s cabin. The runt is out on deck. Old Man and me, we rip up the
floorboards, we pry apart the bunk.”
“Looking for what?”
“He wouldn’t tell at first. Then, when we found nothin’, he begun
to rave about jewelry. Him, that’s carried such downan’-outs before,
lookin’ for jewelry in that cabin. Told me to shut up. Left me standin’
on air, like. So I mooched. Half an hour ago Cray comes down with
this. Old Man looks her over, puzzles her out. He was standin’ by his
cabin. Next he dives in, grabs somethin’, pockets it—an’ comes out
again. Know what he grabbed?”
“No.”
“His gun. Me, I grabs somethin’ else. This. Now you know as
much as I do, unless you know more.”
Drake stared at him, then dropped his eyes.
“And if I do?”
“Cray and the Old Man know a heap. My guess is there’s been
robbery; and now it looks like murder. Like as not the search’ll narrer
down. Scotland Yard ain’t manned by fools. Like as not there’ll be
other messages. Liverpool runt’s been cleared. He don’t pack no
valuables. There’s seven new faces aboard beside him, leavin’ Cray
out. If things gets hot and they start to search the lot—well—him
that has them jewels is like to swing.”
“Unless—” Drake seemed to be master of himself now—“unless!”
“Unless the lad slipped ’em to a good natur’d old fool of an
engineer. There’s places below.” Old M’Ginley winked. “Well, if you
meet the man aboard here, you tell him.”
“Thanks, I will. Cray’s blind’s gone up.” Drake rose. “I’m going to
have a chin with him.”
“If there’s one thing more’n another has hanged fool men, it’s
words,” M’Ginley warned, and left him.
CRAY grinned as Drake opened the door.

“You—you heard anything?” Drake asked, nervously.
“Nothing.”
“Thought, maybe, some message might have drifted in; seen you
writing a while back.”
“There was,” Cray laughed. “Fool operator on the Jessamine was
askin’ me if I’d bought my girl that diamond yet.”
Drake stood by the table, his lean fingers clasped about its
beveled edge. Cray, watching covertly, smiled. That table was
shaking, though it was fastened to the floor.
“You’re a strong man, ain’t you?” Cray asked.
“There’s stronger aboard this packet,” Drake answered tonelessly.
“Where’d the Old Man dig up those new sailormen? Two of them I
saw this morning, ramming at that bent stanchion that supports this
deck. Take four of me to make one of them.”
“That’s an idea,” Cray smiled, as if relishing his chance to play
with this man.
“What is?” Drake frowned. “Makin’ one of them from four of me?”
“Then there’s Quayle; he’s husky, too. Well, beef don’t count with
me.” Cray shoved a chair forward. “Want to listen in?”
He reached for an extra headset, plugged in, adjusted it for
Drake, then watched him, keenly, as some faint message came.
“So that’s what it sounds like?” Drake looked up. “I’ve often
wondered.”
But Cray was busy, writing. His pencil fairly shook as it sped over
the paper.
“What’s that?”
Drake looked over his shoulder. Too late, Cray shoved a hand
over what he had written, for Drake had seen, seen plainly, the
uncompleted sentences:
All ships.
Varnavosk died this morning.
Communicate with us if....
“You seen, hey?” Cray fidgeted, seemed annoyed; yet he might

be pretending. He was, at any rate, ill at ease.
“You seen? Well, what’s a Russky more or less to you or me?
Don’t tell the Old Man I showed you. The others came in code. This
one’s plain English. Best beat it; I’ve got to take this to the Old Man.”
Drake got up and walked silently out. On the threshold Cray
stopped him with:
“Ever know any Russians, Drake? Some of them is big men—hard
fighters. Take a powerful man to handle them.”
“Meaning—” Drake spun about fiercely— “Meaning—”
“You know more’n you let on,” Cray laughed. “Thought I’d catch
you. You know who Varnavosk was, owner of the Varnavosk
necklace? You know why he’s dead—”
Drake rolled a cigaret with his usual clumsiness.
“What mobsman doesn’t know?” he asked. “Come, come, Cray.
You know what sort we passengers are on this dirty little ship. Know
Varnavosk and his necklace? Who does not, in my walk of life? What
gang but has had their eyes on him and his jewels? And now, that a
cleverer man than myself has pulled the trick—”
“So you’re a crook,” Cray jeered. “So—”
Drake smiled pleasantly.
“Did you think me a lily?” Drake was composed now.
“Imagination’s a grand thing, Cray. Sometimes it leads men into
trouble, though. You’ve been reading dime novels.”
Drake walked away. Cray watched him go aft along the boat deck
and down the steep stairs.
“You’ll worry, my man,” growled Cray. “Now, what’s next.
Liverpool swine is ruled out. That fool of a skipper—a child could see
through him. He’s ripped that dub’s cabin to pieces. At this rate he’ll
have the whole ship torn apart, every manjack on edge. Not one’ll
get by him without him poking and prying. And he’s fool enough to
make a bad break. So, we’re five days from port, and—”
He stared at that last message, which he had left incomplete.
With a swift pencil he ended it.
All ships, westbound. Communicate with us if you have news.

Proceed with caution.
—Scotland Yard
“And that,” said Cray to himself, as he took the message to the

captain of the Cora, “that’ll hold him for a while. This ship is jammed
full of strong men.”
“SO YOU can’t find him, the thief,” Cray jeered.
There was no deference in his tone, no respect. Here he sat in
the Old Man’s cabin and yarned away as if such a thing as discipline
had ceased to exist.
“The thief? He’s been a murderer for two days.” Old Bain scowled
at him. “You have me nigh crazy. First we rip up that little rat’s cabin
—”
“That was you; I just hinted—” Cray began.
“Hinted like you did when that message came about lookin’ for a
strong man who could kill barehanded!”
“A strong man; you’ve found several,” Cray retorted. “Was it me
said it might be one of those two sailors? Oh, yes. I admit I didn’t
contradict you. I’ll say I let you have your way, do your own crude
sleuthing, searching that forecastle. Don’t you know that sailormen
are a neat lot, even such scum as this? They know this moment that
you have been prodding about. And now you say—”
“You put things into my mind, damn you!” The Old Man glowered
at him. “I thinks things, and says things, and there ain’t no reason to
them when said and thought. They ain’t my thoughts; they ain’t my
actions, an’—”
“Mine, of course, hey? I do it all? Mebbe I did this. This came
today.” Cray shoved a sheet of paper at him. The Old Man ran his
eye over a jumble of code, then reached for his book, translated.
“You know what it is?” He lifted his head and stared at Cray. “You
know—”
“All ships? No, not this time. The search has narrowed down,”
Cray grated. “This one is:
“Ships outward bound, Beverstock. Man aboard you. Hold him.”
“Which means—” The skipper of the luckless Cora waited.

“Us!” Cray’s face was tense. “Scotland Yard—they’ve got a line on
us; they’re closing in on their man.”
“And when—when some detective comes up the ladder— We’re
nigh into St. Lawrence Gulf—” the Old Man stared out of the grimy
port—“When the showdown comes.”
“Never such a ship for secrets as this,” Cray said. “They’ll come
for one. They’ll find a heap.”
“You, for instance,” the captain suggested.
“Sure, me an’ you. Think I’m sweating over this just for fun?
Think I give a damn if they get their man? Me? Hell, no! I got my
reasons; so have you. They’ll come aboard with the pilot, maybe.
They’ll begin poking round. Unless—”
“Unless what?”
“Unless the man’s ready for them. Then, it’s a pat on the back
and a clean bill of health for you; and, ‘Thanks, my noble radio man;
your message was music to our honest ears,’ for me.” Cray stopped.
“And so—”
Cray leaned closer.
“Get this. There’s two men we ain’t searched yet—Drake and
Quayle. Either one, mebbe—”
The old captain rose.
“We’ll start with Quayle, eh?” He made for the door, but he
stopped, turned. “You put that into my head, damn ye!”
“What if I did?” Cray cried. “What if I did? Since you have no
detective aboard, what price Cray, hey?”
“What price Cray? I’ll tell ye. I’d as soon to God we had a
detective aboard,” the captain growled. “That’s what price Cray!” He
stumped out.
The wireless man got up slowly and idled about the cabin as if it
were his own. That last remark of the skipper’s had hit him.
“A detective,” said Cray softly. “Maybe we have, at that, my brave
old sea-dog. Maybe we have, at that.”
He followed the captain on deck and twitched his sleeve. He drew
him into a corner.
“I’ll do this next job myself,” said Cray.
“You mean Quayle?”
“Him. You better stick to your knitting. Talk like a human being at
lunch, keep that solemn-faced, secretive Quayle there, until— You
ever figure there’ll maybe be a reward for them diamonds?”
“Reward?” The old captain of the Cora snorted. “Reward? If I can
sleep again o’ nights, that’ll be reward enough.”
“I could do with a good sleep myself,” Cray laughed. “I might
sleep through lunch hour, while Quayle’s cabin is empty.”
MORNING again and bright sunlight on the Gulf. Tomorrow would
see the pilot coming aboard at Father Point. Tomorrow would see,
well, something rather ghastly to men who clutched secrets close,
who feared the eye of the law.
But today the sun shone. Drake and the old engineer sat there by
the funnel.
Old M’Ginley was sleepy. A bearing had been heating. He had not
yet been to bed. He had come up for a whiff of fresh air. He was
soon wide awake, for Drake, leaning over, whispered—
“I’ve been thinking what you said.”
“I said a heap, laddie.”
“About hiding things.”
He opened his dungaree suit. The old man saw a long thin packet
of brown paper, sealed with wax, tied with many intricate knots.
“I’ve been thinking—and whispering a bit,” Drake went on.
“Oh, aye, doubtless.”
M’Ginley’s eyes glinted. A chief engineer, he knew, could hide
things, where nobody, not even the man who had trusted them to
him, could find them.
“Oh, aye,” he repeated, “something else has whispered, me bold
lad. Fear has, I’m thinking.”
Drake’s face was blank.
“I told the person what you said. There’s been funny work. Cray
and the skipper searching yesterday, today, all cabins but mine.
Tomorrow—”
“Perhaps yours. Tomorrow the pilot and—”
The old man too was leaning closer. The packet passed.
“If a knot’s untied, or a seal broken—my—my friend says there’ll
be no split,” Drake grated.
“Unless he goes where splittin’ is hard, save he split rocks,”
M’Ginley laughed, and he drew back. “That bearin’—it needs a pile o’
lookin’ after.”
He lumbered away. Drake sat there. The man Quayle, the silent,
secretive Quayle came up on deck. He walked along. He bent over
Drake. He whispered something. Drake sprang to his feet. Quayle
was of an age with him, taller by a head, powerfully built.
Both the captain, staring down from the bridge, and Cray, peering
out of his little window, saw Drake’s fist shoot out—a blow that
seemed but to glance off Quayle’s jaw. Yet Quayle fell, lay there,
knocked out.
Drake walked forward. He beat on Cray’s door with his fists,
crying:
“What kind of a ship’s this? What sort o’ man are you? Blabbin’—
blabbin’—”
The captain, clutching the bridge rail, leaned over and bawled:
“You keep still, mister. What’s wrong with ye? One more crack like
that and—”
He paused. Tomorrow, when the pilot and whoever else was
waiting came aboard, he would no longer have the power, save to
stand dumbly by and watch.
But now, now Cray had his door open and was talking to the
enraged Drake. And Drake, calming himself by an effort, was being
drawn inside. The captain wished that this strange man Cray would
leave that door open. He hoped, at least, that afterward he would
tell him frankly what now was going on.
Inside, Cray was talking swiftly:
“What’d he say? Did he tell you I was blabbing?”
“Blabbing. What talking’s been done—” Drake paused, as if
uncertain. “Forget it. A man don’t like to be told he’s like to swing.
I’m hot headed. I figured mebbe you’d told him what was in that
cablegram—the one about Varnavosk bein’ dead—mebbe more, too.
But—”
“Forget it is right.”
Cray was acting strangely. Yesterday he had told the captain that
the murderer, supposedly on their ship, must be either Quayle or
Drake. Now he seemed to have shifted his views, unless he wished
to lull Drake into a state of false security.
“Forget it is right,” he grinned, reaching for the spare headset,
already adjusted to fit Drake. “Want to listen in a spell? I’m goin’ out
for a breather. If you hear anything funny call me.”
Drake hesitated.
“What you planning to do?”
“Nothing,” Cray answered. “Be a sport. Most men’d get hot if you
come ravin’ at ’em; but me, I’m different. You set there. Forget it!”
“I’ll try,” Drake scowled. “If the Old Man says anything about that
row with Quayle, you tell him it’s an old score we were settling.”
“Right!”
Cray crossed the threshold and slammed the door shut. Drake
listened as he walked down the deck; he heard other footsteps. Out
of the window he caught a glimpse of the captain’s gray head, then
the boatswain, supporting a limp Quayle toward the stair.
“I wonder—” Drake frowned at the wireless set—“what’s their
next move. And old M’Ginley—what’s he doing?”
Old M’Ginley, cutting loose cord after cord, breaking through wax
seals, was opening that brown paper parcel.
What he found turned him into a covetous old man, who thought
furiously. Finally, one hand fondling his pocket, he climbed heavily
down ladders to his own peculiar domain.
ONCE more Cray faced the old skipper in his cabin.

“You saw that?” Bain was eager. He sensed, at last, the end of
this mystery. “You saw that Drake and heard him howl about
blabbing!”
“Yes,” Cray scoffed. “Heard a heap; but I’m not taking that for
gospel.”
“It must be him. You found nothing in Quayle’s cabin?”
“Not yet,” Cray answered. “I’m figuring on looking again. Know
what I think? They’re both in the theft, if not the murder. Take those
names. Both birds’ names—Quayle and Drake—ain’t they? Sort of
funny, them both choosing the same sort of monikers for this trip.
Like one had thought of one, and the other had followed suit. Crooks
are like that.”
The captain gazed at him speculatively.
“Cray—crayfish—another zoölogical name. Well, go on. You don’t
pass as an honest man, Cray. Lay to that. You’re no better, if no
worse, than the rest aboard this packet. What were you going to
say?”
“I got an idea they been passing that necklace from one to
t’other,” Cray explained. “They had hard words. What if Quayle had it
last, after I searched his dump? What if he wouldn’t hand over, an’
Drake—I been working on him, scaring him—if Drake, I say, figured
Quayle was goin’ to gyp him? How about that? Mebbe Quayle ain’t
scared of getting caught. I searched his dump careful. He may figure
he ain’t suspected no more. He may think, if he is suspected, that
we don’t know how to search right. And Drake, figurin’ he’s losin’
out, gets mad.”
The captain shook his head. Father Point was getting closer.
Morning and the pilot would come, and with them—well, iron bars,
perhaps; certainly a lost ticket and a lot of trouble. A man couldn’t
account for three extra men on his ship—and such men.
“I don’t know. If we miss this time—” He paused.
“We’ll search both cabins,” Gray broke in, “and both at once. You
take Quayle’s; I’ll go for Drake’s. We’ll win this time.”
The captain stared at him.
“We’ll do it; but how?”
“Easy,” Cray smiled. “That worthless old chief engineer—let him
tag on to Drake. They are thick, anyway. As for Quayle—he’s
battered up, ain’t he? Or if he ain’t exactly battered, he’s shook.
Take a couple of men, drag him out, say you’re givin’ him your room,
more light an’ air. Sure, he’ll suspect, but what can he do? Take
them two big sailormen.”
“It might be; but when? Drake sticks below of afternoons.”
“Tomorrow morning we got a couple of hours,” Cray went on.
“When we find that necklace—”
“We give it up, and get clear of—”
“Like hell! We keep it!” Cray corrected him. “Or I keep it. Never
mind how. I’ll pin the job on one of them. Don’t you worry.”
The captain stared at him, aghast.
“But they’ll search the ship.”
“Let ’em. They won’t find it.” Cray got up. “I left Drake in my
monkey- house. Best get him out of there. Tomorrow morning.”
“Tomorrow.”
The captain looked out the door, as Cray opened it. The hills of
the south shore of the Gulf stood out grim and gray, somber, all
shadow. Tomorrow. Well, sooner it comes, sooner over.
THE TWO big sailors dragged Quayle, protesting, out of his cabin. A
strangely ungrateful man he seemed. Up on the boat deck Drake
heard the row.
“What’s that?” he asked.
The old chief, M’Ginley, leaned closer.
“Them—them diamonds,” he whispered.
“How’d you know. You’ve broke the seals,” Drake accused.
M’Ginley shrank back.
“Me? What you think? Ain’t I acted straight with you?”
“You’d better.”
Drake thrust one hand inside his dungaree suit. Something
bulged under his arm. M’Ginley wasn’t looking at a paper packet this
time.
“You go heeled; don’t blame ye,” he blustered. “Why pull a gun
on me? They’re searchin’ your cabin.”
He told this with the air of one revealing a previous secret.
“They won’t find nothin’.”
“Not in mine,” Drake grated, “but elsewhere, perhaps. You sit still.
We’ve been playing blind man’s buff overlong. You sit still. This is
loaded, you old fraud. You figure on holding out, hey? Look me in
the eye, in ten minutes, and maybe you’ll change your mind.”
M’Ginley quivered. He was gross mountain of a man, and shaking
like jelly.
“Ten minutes. What you mean? Why—”
Drake rose.
“If you value your health, sit tight. If you don’t, I play a hard
game. I’ve an ace in the hole. A neat little ace, isn’t it, in its shoulder
holster. Sit where you are.”
The old man watched him as he walked, cat footed, to the stair,
and as he slowly disappeared down it.
“Some one is goin’ to catch plain hell,” said he, “but it won’t be
me, M’Ginley. Mebbe, when they finish their rough stuff there’ll be a
nice corpse for Scotland Yard and—what’s hid below for M’Ginley.”
But M’Ginley was not down in the alleyway; and it was there that
things were due to happen.
First the old captain’s voice, as he cried through the thin partition
between Drake’s cabin and Quayle’s:
“Come here, for God’s sake, Cray! I found somethin’...”
Cray, running in from Drake’s cabin, saw a velvet covered case,
long, narrow, bound with precious metal.
The captain laughed in relief.
“Got our man.”
“Where—where’d you find that?”
“There!” The captain kicked a disreputable handbag. “In the
lining, sewn in. I felt it, first shot. Now—”
“Open it, open it,” Cray urged. “Let’s see.”
“It’s locked some way; but—”
Old Bain’s strong fingers wrapped themselves about the slim
thing of metal and velvet. The cords of his wrists stood out for a
moment. Then the case was open, cracked like a walnut shell. It was
empty. The captain glared at the fragments in his hands. Cray,
leaning closer, muttered:
“Never mind. Hang on to that. It’s evidence, ain’t it? Quayle—he’ll
tell more, when them detectives get after him. He’ll talk. Man can
shorten his stretch that way. Unless—” he thrust his face close to the
captain’s —“unless we find them diamonds, ourselves. Then, this’d
do for Quayle; they’d take him on the strength of this. And we’d—”
“To hell with the diamonds!” In the old skipper’s voice was relief.
“This’ll do for me. You keep your gab shut, mister. The least you
know the best, I’ve got Quayle locked in my cabin. He’ll stay there.
If trouble comes aboard, it comes for him, personal. Not me, nor
you, if you’re wise. You stop snooping round for them diamonds. I
won’t have it, I tell you. First thing there’ll be a murder—another
murder.”
Cray, his voice edged, face pale, sneered:
“Changed your tune, hey? Now you found this useless junk, you
figure you’ll let them diamonds go, hey? But you figure without Cray.
I’ll have this ship apart, if need be, but I’ll lay hands on them stones.
I’ll—”
“You’ll go easy!” Captain Bain thundered. He was becoming
himself rapidly now. “You’ll keep quiet. There’s others besides
Quayle can be locked in their cabins, and nothing said of it. And I’m
master of this ship, by God!”
“And if—” Cray smiled, though he was still under tension,
although that smile was not a pleasant one. “If I told you the truth,
would you sing small, I wonder?”
“Truth? My God! Truth?” the badgered skipper rasped. “You tell
the truth? What in hell are you, to tell the truth?”
“A detective,” said Cray softly, “a detective.”
The captain stared, at first unbelieving; then he wilted. Too many
little things on Cray’s side. The chances were that he might be.
Certainly he’d acted like one at times. And if he were, what of the
Cora, of her secret sins?
“A detective?” he gasped.
From behind Cray came another voice; the cabin door swung
open.
“A detective? That’s fine; for there are two of us, then, my dear
Cray.”
It was Drake. He had his gun. In that tiny cabin a gun in the
hand meant mastery. Drake closed the door after him. His gun
covered Cray. He disregarded the old captain. Indeed, old Bain
hadn’t an ounce of trouble making left in him. He was a crushed
man. Not one detective, but two! Not one man, who might
conceivably be bribed, but two, each knowing his little immigrant
game, and, what was worse, each knowing that the other knew. He
slumped down on the single bunk. He stared from Cray to Drake,
from Drake to Cray. He shook his gray head sadly.
Cray, snarling, turned on him.
“A hell of a captain! Don’t you see his game? His turn to hang on
to them diamonds. He figures we’ll search his room next; likely
found out I’d been searching it. He’s desperate.”
“And a strong man, Cray, which you are not.”
Drake reached out suddenly with his left hand, caught both Cray’s
thin wrists, brought his hands together. Then with his right hand he
laid his revolver on the bunk.
“Which you are not, Cray, my man,” said Drake.
The captain heard steel jingle, then saw it flash. He heard a faint
click. Drake turned to him.
“We’ll adjourn to your cabin, Captain. This is a bit crowded.”
Glumly the old skipper obeyed. Cray stood there, handcuffed,
silent now, as if with the snapping of the steel handcuffs had gone
from him his last chance.
They stumbled out into the alleyway, Drake’s steady hand on
Cray’s elbow. As Cray walked along, men eyed him. He scowled at
the first; his face was blank as he passed a second. But when the
third man stared, he smiled cockily. He was on parade and would be
on parade until Drake and his kind had done their best, or worst. He
must act out his part, confidence in every look, every gesture. That
was his code; he would follow it.
Despite the reason for his captivity, there was a certain desperate
gallantry about Cray, as Drake led him off, handcuffed, to the
captain’s cabin. He even managed to whisper, as they climbed the
steep iron stairway to the boat deck:
“A pretty job, Drake; if your feet didn’t look it, nobody’d take you
for a dick. Only thing is you got the wrong man.”
“Have I?” Drake asked. “Have I? Maybe it’s Quayle should be
wearing these.”
Cray kept silent at that, as if reluctant to tell; as if, now the
enemy had appeared in his true form, he were changing his whole
tune; as if those under the law’s suspicion must close up their ranks
and stick together.
“Quayle—there he is in the cabin,” Drake went on. “I’ll be bound,
he’ll be glad to see us. You see, Quayle’s my partner, Cray.”
DRAKE and the old captain were alone. Quayle had taken Cray away,
had locked him up, was keeping an eye on him. Drake had remained
with Bain. He was talking jerkily, as if thinking back over this
business, partly because he rather plumed himself on the way it had
been managed and partly because he feared, should he stop, what
would follow. Old Captain Bain, there, lips moving, eyes downcast
was probably going over the sins of a long and pettily wicked life.
Probably, as soon as he got the chance, he’d pour out a flood of
confessions and would incriminate himself hopelessly in a dozen
dark matters.
Drake, a one idea man, busy with that one idea, didn’t have time,
or, to do him justice, inclination for the rôle of father confessor to
the captain of the Cora. So he talked, like a man talking against
time, elliptically, as things came into his head. And the captain half
listening, heard:
“Began at Dip’s American Bar. Bless you, we at the Yard have
known your little game for years, Captain. Began at Dip’s, when this
robbery thing broke, we traced a motor car within a mile of his
place. From then on, well, it was chance and luck and, if I may say
it, psychology. We came aboard, Quayle and I, separately. We looked
about, used our eyes, wormed in where we could. We had no idea
what the man was like, what he had done before. We just played a
hunch that he was aboard. Began with you—
“Remember that little note I brought you, ostensibly from Dip?
Well, that told me a lot. Bless you, Bain, you aren’t the murdering,
thieving sort. I ruled you out, right then. But, to go on. You
remember when the thing broke aboard? That first message?”
“Yes,” the old man nodded glumly, “I won’t forget. ’Twas as if
some big, horrible eye was lookin’ all over, slow but steady. An’ I
knew that sooner or later it’d stop on us; and then, o’ course—”
“That,” Drake laughed, hastily breaking in, “that was the
intention. I arranged for that wireless. Scotland Yard? Well, we at
the Yard don’t broadcast what we know, unless we want it known for
a damned good reason. I had that wireless sent. Fixed it up in the
hour I had between trailing the car to Dip’s and coming aboard here.
That was my bombshell.”
“But—” the captain stared at him, puzzled—“how’d you—you
didn’t know it was Cray you wanted?”
“What I wanted was a disturbance. If he wasn’t in the business
he’d perhaps talk. If he hadn’t talked, I could fulfill that omission
and blame it on him. I wanted every manjack aboard here to know
that diamonds had been stolen, that Scotland Yard—they don’t sign
themselves that way, I might confess—were on the trail. The rest—
well, ever throw a rock into a pool? The ripples follow each other to
shore. The rest was plain Cray. I’d struck it lucky. Those other
messages—he made ’em up, every one.”
“But why—why?” The Old Man was incredulous.
“His game.” Drake laughed. “First half of the voyage, well, Cray
was lying low. He knew his job, you see. He figured on passing as
the regular wireless man; but he didn’t know his ship, or its
company, and he didn’t like that company, when he looked ’em over.
So he carried the necklace in his pocket, like a pipe or a
handkerchief. Well, the day after that first bombshell of a message
came, he felt for the diamonds—and they were gone.”
“Gone?”
“Yes, never mind how.”
Drake got up, walked across to the old skipper of the Cora,
flipped one agile hand across his vest and dangled his watch, chain
and seals before his eyes.
“Like that,” Drake laughed. “Well, to get on, there he was, this
Cray, with those jewels gone and nothing for his pains. So he began
to get mysterious messages. Bit by bit suspicion formed, centered,
first on this one, then on that one. You played right into his hands,
Captain. You had me worried. I was afraid you two would run out of
suspects before we made our landfall.”
“You mean he deliberately had me on?” The captain shook his
head. “No—if ’twas just theft—but murder—You mean this man let
me think we had a murderer aboard, let me know it, when he could
have kept it dark—and him the guilty one? Man don’t tie his own
hang-man’s knot, mister, not even to get back diamonds.”
“There was no murder.” Drake laughed, again. “That was just his
artistic touch. No fool, Cray. He knew you’d rise to it. But you
worried him. He wanted to search every last cabin, but he also
wanted to make the job hang out till the last moment, in case you
might show a rush of brain to the head and get to suspecting him.
Well, you did it as he planned, between you. Until, well, there were
two of us left, Quayle and myself. Cray was getting scared by now.
So, when he searched Quayle’s cabin yesterday, he planted the box
that those diamonds had been in when he lifted them. Then he
worked things so that you would find it, not him.”
“But why?”
Drake stared at him. What use going on like this? How could this
man, who but half listened, understand, when even he saw some
things but vaguely? You threw a straw into the water, then a dozen
more. If one of them taught you anything of drift or eddy, you were
content. When he spoke again his voice was crisp and incisive.
“That fight. A fake of Quayle and me, in case Cray suspected us
of working together, as he did, eh? Just a precaution. It bothered
him, as other things did, too. His problem was twofold. Those
stories, you see; the wireless messages he was making up—they
worked on him in the end, as well as on you. He almost believed
them, believed that they might have some accidental truth in them.
And, of course, he wanted his loot back. Safety and loot; two ends
to gain. If you had it, it was as good as his, for he’s smooth and you

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APPLICATION: THE COSTS OF

WHAT’S NEW IN THE SEVENTH EDITION:

By the end of this chapter, students should understand:

➢ how taxes reduce consumer and producer surplus.

➢ the meaning and causes of the deadweight loss from a tax.

➢ why some taxes have larger deadweight losses than others.

CONTEXT AND PURPOSE:

I. The Deadweight Loss of Taxation

C. How a Tax Affects Market Participants

3. Welfare without a Tax

a. Consumer surplus is equal to: A + B + C.

b. Producer surplus is equal to: D + E + F.

c. Total surplus is equal to: A + B + C + D + E + F.

4. Welfare with a Tax

a. Consumer surplus is equal to: A.

b. Producer surplus is equal to: F.

c. Tax revenue is equal to: B + D.

d. Total surplus is equal to: A + B + D + F.

a. Consumer surplus changes by: –(B + C).

b. Producer surplus changes by: –(D + E).

c. Tax revenue changes by: +(B + D).

d. Total surplus changes by: –(C + E).

D. Deadweight Losses and the Gains from Trade

II. The Determinants of the Deadweight Loss

B. Case Study: The Deadweight Loss Debate

Activity 1—Labor Taxes

Type: In-class discussion

Points for Discussion

III. Deadweight Loss and Tax Revenue as Taxes Vary

A. As taxes increase, the deadweight loss from the tax increases.

D. Case Study: The Laffer Curve and Supply-Side Economics

3. Economists continue to debate Laffer’s argument.

a. Many believe that the 1980s refuted Laffer’s theory.

ALTERNATIVE CLASSROOM EXAMPLE:

▪ the price buyers pay will rise to $0.60.

E. In the News: The Tax Debate

Activity 2—Tax Alternatives

Type: In-class assignment

Common Answers and Points for Discussion

SOLUTIONS TO TEXT PROBLEMS:

Questions for Review

Quick Check Multiple Choice

Problems and Applications

Producer surplus would be E + F, because producers get surplus of D + E + F, then

Before After Subsidy Change

Release date: April 26, 2024 [eBook #73468]

Original publication: New York, NY: The Butterick Publishing

Credits: Roger Frank and Sue Clark

* START OF THE PROJECT GUTENBERG EBOOK CODE *