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The Pamphlet Collection of Sir Robert Stout: Volume 51
[introduction]
Q. What is a tariff?
A. A tariff is a tax imposed on commodities imported from foreign countries.
Q. What is a tax?
A. A tax is the portion of property or product which the Government takes (by compulsion) from every citizen—not a pauper—for public purposes.
Q. What are public purposes, in the sense of this definition?
A. A definition given by the Supreme Court of the United States in 1874 was as follows : "for the purpose of carrying on the Government in all its machinery and operations."
Q. What is Free Trade?*
A. Free Trade is the right of every man to freely exchange the products of his labour and services in such a way as seems to him most advantageous, subject only to such restrictions as the State may find necessary to make for the purposes of
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revenue or for sanitary or moral considerations. Conversely, it is the denial of the right of a free government to arbitrarily take from any person any portion of the product of his labour for the benefit of some other man who has not earned or paid for it.
Q. What is Protection?
A. Protection, on the ground of advantages accruing directly or incidentally, advocates and defends the imposition of taxes on imports for other purposes than those of revenue. The protective system is opposed to the revenue system because the Government collects revenue on what comes in, while protection is secured only to the extent to which commodities are kept out.
Q. What is the idea underlying each?
A. Free Trade assumes that a people like those of the United States might be left to themselves to decide what is to their own advantage; Protection assumes that Congress can better decide what business the people shall do than the people themselves.
Q. What is a tariff for revenue only?
A. A tariff for revenue only "is one so framed that all the taxes which the people pay, the Government shall receive.
Q. What is meant by a tariff for revenue with "incidental protection"?
A. The adjustment of a tariff for revenue in such a way as to afford what is termed "incidental protection" is based on the supposition that by arranging a scale of duties so moderate as only to restrict and not prevent importations, it is possible to secure sufficient revenue for the State, and at the same time stimulate domestic manufactures by increasing the price of competitive foreign products.
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Q. Is this double object capable of attainment?
A. Undoubtedly; but it is also one of the most costly of all methods of raising revenue. For while revenue to the State accrues only from the tax levied on what is imported, another tax, arising from an increase of price, is also paid by the nation upon all domestic products that are sold and consumed in competition with the foreign article. A tariff for revenue so adjusted as to afford incidental protection, is therefore a system which requires the consumers, who are the people, to pay much in order that the State may receive little.
* The following definitions of free trade and protection appeared in the Philadelphia American, of August 7th, 1884, a representative Protectionist paper:
"The term Free Trade, although much discussed, is seldom rightly defined. It does not mean the abolition of custom houses. Nor does it mean the substitution of direct or indirect taxation, as a few American disciples of the school have supposed. It means such an adjustment of taxes on imports as will cause no diversion of capital from any channel into which it would otherwise flow, into any channel opened or favoured by the legislation which enacts the customs. A country may collect its entire revenue by duties on imports, and yet be an entirely Free Trade country, so long as it does not lay those duties in such a way as to lead any one to undertake any employment or make any investment lie would avoid in the absence of such duties. Thus the customs duties levied by England—with a very few exceptions—are not inconsistent with her profession of being a country that believes in Free Trade. They either are duties on articles not produced in England, or they are exactly equivalent to the excise duties levied on the same articles if made at home. They do not lead any one to put his money into the home production of an article, because they do not discriminate in favour of the home producer. It is, therefore, no concession to the protective principle when the Democratic platform says that 'since the foundation of the government custom house duties have furnished its main source of revenue,' and that 'this system must continue.'"
"A protective duty, on the other hand, has for its object to effect the diversion of a part of the capital and labour of the people out of the channels in which it would run otherwise, into channels favoured or created by law."