IX. Tarrifs and Protection

CHAPTER IX. TARIFFS FOR PROTECTION. P ROTECTIVE tariffs differ from revenue tariffs in their object, which is not so much that of obtaining revenue as that of protecting home producers from the competition of imported commodities. The two objects, revenue and protection, are not merely distinct, but antagonistic. The same duty may raise some revenue and give some protection, but, past a certain point at least, in proportion as one object is secured the other is sacrificed, since revenue depends on the bringing in of commodities; protection on keeping them out. So the same tariff may embrace both protec tive and revenue duties, but while the protective duties lessen its power of collecting revenue, the revenue duties by adding to the cost of home production lessen its power of encour3,ging home producers. The duties of a purely revenue tariff should fall only on commodities not produced in the country; or, if levied on commodities partly produced at home, should be balanced by equiva lent internal taxes to prevent incidental protection. In a purely protective tariff, on the other hand, commodities not produced in the country should be free and duties should be levied on commodities that are or may be pro· ~uced in the country. And, just in proportion as it accomplishes its object, the less revenue will it yield.

The tariff of Great Britain is an example ~f a purely 80 TARIFFS FOR PaOTECTION. 81 revenue tariff, incidental protection being prevented by excise duties. There is no example of a purely protective tariff, the purpose of obtaining revenue seeming always to be the original stock upon which protective features are grafted. The tariff of the United States, like all actual protective tariffs, is·partly revenue and partly protective, its original purpose of yielding revenue having been sub ordinated to that of giving protection, until it may now be best described as a protective tariff yielding incidental revenue. As we have already considered the revenue functions of tariffs, let us now consider their protective functions. Protection, as the word has come to be used to denote a scheme of national policy, signifies the levying of duties on the importation of commodities (as a means) in order (as an end) to encourage domestic industry.

Now, when the means proposed in any such scheme is the only means by which the proposed end can be reached, it is only needful to inquire as to the desira bility of the end; hut when the proposed means is only one of various means we must satisfy ourselves that it is the best. If it is not, the scheme is condemned irrespec tive of the goodness of its end. Thus the advisability of protection does not,as is generally assumed, follow the admission of the advisability of encouraging domestic industry. That granted, the advisability of protection is still an open question, since it is clear that there are other ways of encouraging home industry than by import· duties. Instead of levying import duties, we might, fot instance, destroy· a certain proportion of imported com· modities, or require. the ships bringing them to sail so many times round the world before landing at· our ports. In either of these ways precisely the same protective effect could be secured as by import duties, and in cases 82 PROTECTION OR FREE TRADE1 where duties secure full protection by preventing impor ..

tation, such methods would involve no more waste. Or, instead of indirectly encouraging domestic producers by levying duties on foreign goods, we might directly encourage them by paying them bounties. As a means of encouraging domestic industry the bounty has over the protective system all the advantages that the system of paying public officers fixed salaries has over the system prevailing in some countries, and in some instances in our own, of letting them make what they can. As by paying fixed salaries we can get offi cials at such places and to perform such functions as we wish, while under the make-what-you-can system they can only be got at places and in capacities that will enable them to pay themselves, so do bounties permit the encouragement of any industry, while protection permits only the p,ncouragemellt of the comparatively few industries with which iIllported commodities com pete. As salaries enable us to know what we are paying, to proportion the r8wards of different offices to their respective dignity, responsibility and arduousness, while lllake-what-you-can may give to one official much more than is necessary, and to others not enough, so do bounties enable us to see and to fix the encouragement to each industry, while the protective system leaves the public in the dark and makes the encouragement to each industry almost a nlatter of chance. And as salaries impose on the people lnnch lighter and more fairly apportioned burdens than does the make-what-you-can system, so is the difference between bounties and pro tection.