PRINCIPLES OF TAXATION. i 77 



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 Wash- 

 ington to ex- Governor War moth, of Louisiana, as representa- 

 tive 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 protec- 

 tion of the tax on foreign competitive imports as well as the 

 bounty/' How far subsequent events harmonized with this fore- 

 cast by Mr. Warmoth is worthy of brief notice in this connec- 

 tion. Congress in 1891 entirely repealed all the tariff (tax) on the 

 importation of raw sugars, and to compensate the domestic pro- 

 ducers of sugar for the abrogation of the protection which had 

 been previously given them, authorized the payment by the Fed- 

 eral 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 produc- 

 ing 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 the public, Congress repealed the act authorizing its payment 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.* 



THE RELATIVE BURDEN ON TAXPAYERS OF DIRECT AND INDI- 

 RECT 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 Dis- 

 trict 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 wel- 

 fare.'" For further notice of this celebrated case see Chapter VII, Popular Science 

 Monthly, p. 518. 



