PRINCIPLES OF TAXATION. 45 



A brief historical retrospect is here pertinent to this subject. 

 The payment of bounties from the proceeds of taxation, or rather 

 of exaction, is a relic of the commercial methods of the middle 

 ages. They were, however, regarded as legitimate fiscal expedi- 

 ents for the encouragement of trade and domestic industries dur- 

 ing the whole of the last (eighteenth) century ; but since then, 

 under the influence of a higher civilization and modern economic 

 ideas, have been almost entirely discarded from the fiscal systems 

 of the leading commercial nations until within a comparatively 

 recent period, when they have been revived and made mainly 

 applicable to the production and sale of a single one of the world's 

 great commodities namely, sugar ; * and the history of this 

 experience constitutes a most interesting and instructive chapter 

 in economic history. 



Although the practice of stimulating the production of beet- 

 root sugar in Europe through high protective duties on imports 

 and export bounties dates back to the first quarter of the century, 

 the present complicated and curious state of affairs is really due 

 to a method of taxing beet sugar by Germany which was adopted 

 in 1869. The idea involved in this method was, in brief, to collect 

 an excise or internal -revenue tax on all sugar produced, and give 

 a bounty on so much of the domestic product as was exported or 

 sold to the people of other countries. The other states of conti- 

 nental Europe, finding the markets of their own product of beet- 

 root sugar everywhere supplanted by the German sugars, and 

 their domestic manufacturers being thereby brought to the verge 

 of ruin, made haste to follow the example of Germany, until the 

 policy of Germany, France, Belgium, Holland, Austria, and 

 Russia seems to have been to stimulate their domestic product 

 of sugar to the greatest extent, and then enter into competition 

 with each other to see which of them could sell cheapest to for- 

 eigners at the expense of their own people. The general result 

 is, that the great beet-sugar industry of Europe has been estab- 

 lished and is now conducted on what may be regarded as an arti- 

 ficial basis, and one not inaptly characterized as a most ingenious 

 method for entailing money losses on the mass of the people of 

 the countries above mentioned. 



The immediate sequence of this policy has been an enormous 

 increase in the beet-sugar product on the Continent of Europe 

 i. e., from 2,323,000 tons in 1885-'86 to nearly 5,000,000 (4,789,000) 

 tons in 1895-'96 with such a reduction in price that the whole 

 sugar industry of Europe is seriously depressed, with a general 



* The policy of payment of bounties for the encouragement of shipping and of ship- 

 building enterprise has also, to a limited extent, been established, more especially by the 

 two Governments of France and Italy. 



