NATIONAL REVENUE FROM IMPORTS.
1. The taxation of imports.
2. Ought the government to impose any taxes on imports? 3. Difficulty in getting a revenue from the states.
4. Should a revenue be collected without regard to the con sequences to home producers.
5. Should a revenue be collected both for revenue and pro tection.
6. Should a revenue be collected primarily for protection.
7. Review of arguments on the subject.
8. An impost tax is not necessarily paid by the consumer.
9. When it is paid by him.
10. When a tax intended to be protective fails to be so.
11. The amount and variety of protection furnished by the gov ernment.
12. Illustrations of state protection.
13. Illustrations of municipal protection.
14. Extent to which such aid is given.
15. Who have forfeited all right to the continuance of national favor by violating the principle on which aid was granted.
16. Why protectionists have generally favored large expendi tures.
17. In changing its policy the government should regard its former action.
18. Our national policy should also have reference to those of other governments.
19. The desirability of establishing reciprocal arrangements. zo. If the government aids one interest needing protection, it must aid all.
21. Impossibility of aiding all because their interests are so conflicting.
22. Conflict between the wood and grain alcohol manufacturers.
1. We shall now describe the different sources of na tional revenue, beginning with an indirect form of taxa tion, the taxation of imports. The revenues collected have varied from year to year with the changing wishes and fashions of the people, their ability to purchase, and the laws fixing the rates on imported merchandise.
2. 'Whether these are proper subjects of taxation is a question on which opinion converges around four an swers. The first is that the Government ought not to impose any taxes on imports, collecting the means need ful to sustain itself directly from the States. If this plan were adopted, the Government would dispense with many officials ; and very likely national economy would be greatly promoted, as the States would be strongly in clined to confine national operations within narrow limits.
3. On the other hand, the difficulties of drawing a revenue from the States would be very great. Each State would seek to contribute as little as possible, leaving the burden to fall more heavily on its neighbor. The same principle which now operates toward unequal contribu tions by municipalities to sustain the State would act with stronger force.
4. Another opinion, held by a larger number, is that the Government should collect a considerable revenue from this source, but without any reference to the pro tection thus afforded to home producers of commodities similar to those imported.
5. Another opinion is that a considerable revenue should thus be collected on imports, chiefly to extend the protection that may be afforded to promoting home in dustries.
6. A fourth opinion is that the revenue obtained from this source should be collected with the double object of providing for public wants, and also of protecting Ameri can producers of articles similar to those imported. Of the two objects, it is contended that, perhaps, protection to home industries should be the most important in im posing a revenue on imports.
combatted and defended that we shall simply escort the reader to the base of the mighty mountain of literature that has risen on the subject, where he can dig and blast, if he desires, during the remainder of his life.' To fa cilitate his investigation, a brief summary may be given of some of the points touching the question.
8. The imposition of a tax on imports does not nec essarily increase the price paid for them by consumers. The tax may come out of foreign sellers as deductions from their profits ; or it may be paid by importers ; or it may be borne by subsequent purchasers before goods reach consumers. It may be divided and borne in varying amounts by all the parties mentioned. Or, the effect of the tax may be prohibitory, though not raising the prices of things produced in the prohibited country.
9. If the tax be added to the price of the goods im ported and bought by consumers, they suffer to that ex tent by its imposition.
If consumers pay the tax and recoup or save them selves from loss by adding more to the things they sell, and those who buy them similarly increase the prices of their products and services, the tax as a protective meas ure is a failure. It cannot possibly be protective when the price of labor and all other products are raised cor respondingly with the increased price of the products imported. Of course, every increase in each element that enters into a pro iecteu product increases the cost and diminishes the profit thereon to the producer.
The amount of protection furnished by the Gov ernment to various classes is much more general than many imagine. It does not stop with the imposition of taxes on imports. The exceedingly low rates at which most of the second class mail matter is carried involving a loss of many millions to the Government, which is made up by others, is a rank form of protection. In many cases the favored are so blind that they do not see what the Government is doing for them while they are de nouncing its assistance to others. Bankers often are sturdy believers that the Government should grant no protection to American manufacturers ; yet many of them have been very loud in their denunciation of the Gov ernment's unwillingness to issue gold certificates against gold which they wished to deposit with the Sub-Treasurer in New York city, simply to save themselves the trouble and expense of building a place in which to store it. We can conceive no just reason why the Government should act the part of warehouseman to store the gold of bank ers, and to decline to act thus for the merchants and farmers. There is nothing peculiar about gold whereby, the Government should take it under its wings, either gratuitously or for a reward.
12. A similar illustration is found in the protection laws enacted by many of the States forbidding outside in surance companies from transacting business within their borders ; and also forbidding their citizens from insuring in outside companies. Why should the interests of one class of citizens in a State be sacrificed by law for the interests of another ? 13. Numberless ordinances of a similar character have been passed by cities and other municipalities. No wonder that those who have not yet been favored think that the time has come for claiming their share I No wonder that communism and socialism are making large demands ! They are the logical and legitimate out come of the unequal and favored legislation granted by governments.
14. A careful study of legislation will reveal much intended or accidental protection outside tariff laws, vary ing greatly in sweep and effectiveness. Under the guise of improving harbors and rivers, many a locality has been aided to the detriment of another. Of this nature are all the grants for local expositions, and also much of the work done by the Geological Survey ; bounties to sugar growers and the like.
15. Whatever justification may have once existed for this legislation, it has been certainly lost in all those cases in which the protected interests have united for the pur pose of selling their products at excessive prices. Wheth er a trust should be condemned or not depends entirely on its methods. We can discover no wrong in law or morals in the united action of all engaged in a common industry. On the other hand, many good results may follow from such a union. All turns on the policy pur sued. If a trust seeks to get only a just return on its capital, no consumer can rightfully complain ; if it seeks to get an excessive return, then he has a good cause for complaining. Unhappily, many trusts go beyond the
right line and seek to get excessive profits. In so doing they commit a double vice. For one of the cardinal ob jects of protection has been to build up American indus tries, freeing the people from dependence on foreign pro ducers, who, so runs the assumption, would be merciless in their dealings and extort the highest prices they could obtain. But American producers, when following pre cisely the same course as was expected of foreign pro-. ducers, have forfeited all claim to protection, and the Government can no longer favor them without flying in the face of the principle on which it was first granted. Whenever protection results in destroying home compe tion, whether by the action of the competitors themselves, or in other ways, it fails in its purpose and can be no longer justified.
16. Another consequence of the protective system is to cause discontent among those who are not protected. To remedy this, many protectionists have been willing that the Government should extend its province with the view of aiding and mollifying this class. Consequently, protectionists have generally favored "liberal expendi tures." Thus it will be seen that protectionism, by favor ing the extension of the functions of the Government, is allied with extravagance and socialism.
17. In any change that may be made the Government should have due regard to its former action. It has no right to smite down any class or interest which it has created, even though unwisely. On the other hand, it is contended that all receiving public protection have realized the uncertainty of its continuance, for neither Congress nor the State Legislatures nor municipalities can bind their successors.
18. The action of foreign governments in imposing taxes on American products may justify the National Government in a course which would not be justified if American products entered foreign ports without restric tion. In other words, if foreign governments impede and restrict the operations of American exchangers and pro ducers, our own Government is justified in taking such measures as the action of foreign governments may re quire. A tax thus imposed is regarded as retaliatory, though in effect protective.
19. To obviate such international difficulties, the na tions of the world should endeavor to establish reciprocal arrangements.
20. If the Government continues to protect any class, logically it must grant protection in equal measure to all who need it. It has no right to single out one class and exclude another ; to favor the manufacturer and dis regard the fanner and workingman. Justice should be rendered to all if the Government must play the pa ternal role. But the country is so vast, the population so great. interests are so varied, that the task of aiding all equally is quite beyond the achievement of the Gov ernment ; and it cannot continue the distinct policy of protection without deepening and spreading the disaffec tion it is so vainly trying to allay.
21. On the presentation of the last tariff bill for the consideration of the Senate, Senator Aldrich, chairman of the Finance Committee, remarked : "The industrial sys tem of the United States is growing more and more complex every year. It is becoming more difficult every year to satisfy, in a tariff revision, conflicting claims of sections, or to so adjust rates as to do no injustice to any of the varied interests of this great country.' We have no pride of opinion or authorship in regard to any of the provisions [of the bill] reported." Remem bering the multitudinous influences that entered into the bill, its extremely artificial and personal character, well might the Senator in genuine humility say that he had no pride of opinion or authorship in the measure.
22. An impressive illustration of the complex nature of a tariff law may be drawn from the report of a com mittee of Congress appointed to investigate into the desirability of relieving those who use alcohol in the arts from paying taxes. It was shown that they would save much if they were no longer required to pay the tax. But they were opposed by the manufacturers of wood alcohol, who asserted that if the tax were removed their business would be ruined, as wood alcohol could be sold as cheaply as untaxed grain alcohol and would be preferred. A prominent witness described how the charcoal iron manufacturers would be injured if the tax were removed, because the wood alcohol manufacturers were able to supply charcoal at very low prices. But they, in establishing the wood alcohol industry, had ruined the manufacturers of pit charcoal. Thus, an in dustry which had killed another was asking the Gov ernment to protect it from another industry that threat ened its life. What could the Government do ? Alas ! Alas ! The Government was sorely puzzled to find out how to help all and injure none.' 'Nothing more can be attempted than to refer to some of the more important and newer sources of information. Of course, the reader knows of the huge quarry composed of the reports and speeches of members of Congress. Perhaps those in quest of information are too much inclined to ignore these sources, thinking that they have been prepared too crudely and with too much partisan spirit to be worthy of study. But every argument may be found in them, besides numerous fig urea and statistics. The evidence collected by the Tariff Com mission of 1882 is a vast mine of varied information, and so are the volumes entitled "Tariff Hearings Before the Committee of Ways and Means," No. 338, 54 Cong., 2 Sess. The ablest exposi tion of protection from the speculative point of view, doubt less, is H. M. Hoyt's "Protection vs. Free Trade"; see also S. N. Patten's "Premises of Political Economy." Other works dealing with the subject from historical and practical sides are E. H. Roberts' "Government Revenue," R. E. Thompson's "Protection to Home Industry," and D. H. Mason's works, "How Western Farmers Are Benefited by Protection" and "A Short Tariff History of the United States." For facts and arguments opposed to systematic public pro tection, see A. L. Perry's "Introduction to Political Economy," W. G. Sumner's "Collected Essays in Political and Social Science," E. L. Godkin's "Problems of Modern Democracy," es pecially the chapter on "Some Political and Social Aspects of the Tariff"; D. A. Wells' "Practical Economics and Recent Economic Changes"; the series of works, "Questions of the Day," published by G. P. Putnam's Sons, and frequent articles in The Nation.
Cong. Record, Part 2, p. 1233.
'Senate Report No. 411, 65 Cong. 2 Sess. and No. 1141, 54 Cong. 2 Sess. For an account of another clash of interest by the tariff, see discussion in the Senate about the tariff on lead ores, the miners desiring a high tariff to shut out foreign ores and the silver smelters, who use lead ores for flushing, a lower rate. 30 Cong. Record, Part 2, p. 2100. See also the conflict between the gold producers using the cyanide process to re duce gold ores and the cyanide producers, 30 Cong. Record, Part 3, p. 2259. For the conflict between the growers and manu facturers of wool, see 30 Cong. Record, Part 3, Appendix, p. 54.