iron and steel industries of the country, including all its mines of both coal and iron.
An incident also illustrative of the character of an indirect tax was afforded some years ago when it was proposed in Washington to ex-Governor Warmoth, of Louisiana, as representative of the sugar-producing interest of that State, to substitute a bounty on domestic sugars in place of the protection afforded by the then tariff (taxation) on the importation of foreign sugars. The suggestion was repelled with no little warmth, on the ground that such a substitution would be most prejudicial to the domestic sugar industry. "The people," he said, "know that a bounty is a tax, and as soon as they found out its amount would insist upon its repeal, and thus the sugar interest would lose both the protection of the tax on foreign competitive imports as well as the bounty." How far subsequent events harmonized with this forecast by Mr. Warmoth is worthy of brief notice in this connection. Congress in 1891 entirely repealed all the tariff (tax) on the importation of raw sugars, and to compensate the domestic producers of sugar for the abrogation of the protection which had been previously given them, authorized the payment by the Federal Government of a bounty of from one and three fourths to two cents per pound on their product. In a little more than four years subsequently, when the effect of the bounty—aggregating over $30,000,000 and representing nearly the whole cost of producing the sugar entitled to bounty—had been fully recognized by the public. Congress repealed the act authorizing its payment without restoring the former protective duties; and with such a pronounced approval of its action on the part of the people of the United States as to render it almost certain that no Congress will hereafter authorize the direct payment of bounties by the Federal Government for any purpose.[1]
The Relative Burden on Taxpayers of Direct and Indirect Taxation.—Any discussion of this subject would be incom-
- ↑ The fundamental question involved in this sugar-bounty matter has never been passed upon directly by the Supreme Court of the United States; but the disbursement of the money voted by Congress for the payment of the sugar bounties having been withheld by the Comptroller of the United States Treasury on the ground that the appropriation was unconstitutional, the case came up before the United States Court of Appeals of the District of Columbia, which sustained the opinion of the Treasury official, and was adverse to the claim that "the general welfare" clause of the Constitution might be stretched to encourage the production of a commodity by a bounty. "If to Congress be conceded," it said, "the power to grant subsidies from the public revenues to all objects it may deem to be for the general welfare, then it follows that this discretion renders superfluous all the special delegations of power contained in the Constitution, and opens a way for a flood of socialistic legislation, the specious plea for all of which has ever been 'the general welfare.'" For further notice of this celebrated case see Chapter VII, Popular Science Monthly, p. 518.
