What is the distinction between a protective tariff and a tariff for revenue? It may be briefly stated as follows : A protective tariff is a scale of duties so arranged as to prevent importation, wholly or in part, and to raise the price of commodities from abroad, the production of which within the country it is intended to encourage. The scale of duties is therefore arranged with a view to the supposed needs of the industries which it is intended to develop. A tariff for revenue, on the other hand, aims to avoid any effect upon industries within the country, and the duties are laid according to principles similar to those of the excise, upon articles of large consumption and great tax-bearing capacity. The term " a tariff for revenue only" so current in the United States, is the expression of an unattainable hope. A moment's consideration of the law of international exchange,2 namely, that the interchange of commodities between distant places is determined by differences in their possible cost of production in the same place, and not by their absolute cost of production in the separated interchanging places, will reveal the fact that even a very small duty upon a single commodity affects the demand of the country from which that commodity comes for other things, and indirectly affects every commodity manufactured in the country laying the tax. The same is true of an excise. In fact, any consumption tax has far-reaching effects. Strictly speaking, there can be no such thing as a tariff for revenue only. What is meant by that phrase is that the tariff shall be so arranged as to yield the needed revenue with the least possible effect on the trade and industry of the country.

1 To refuse, as Bastable does, to discuss protective duties because we believe them "vicious" and "uneconomic" is not scientific. In spite of the condemnation heaped upon them by economists of the old school, the people of many great nations have continued to use them. This fact alone necessarily forces them upon our attention. We must trace the effect and incidence of these taxes as of any others.

2 See Mill, Prin., Bk. III., Chap. XVII.

It must be noticed that every tariff, even though it contains many protective features, also necessarily contains many duties which are mainly for revenue. Thus in the United States even with high protective duties, the main revenues were obtained from the taxes upon a few commodities. The receipts in 1888, for example, were : from duties on sugar and the like, $52,000,000 ; from wool and woollens, $37,000,000 ; from iron and steel, $21,000,000 ; these three together being more than half the entire receipts from customs duties.