It appears to me to be evident that protection, without any change in
its nature and effects, might have taken the form of a direct tax,
raised by the State, and distributed as a premium to privileged
industry.
Let us admit that foreign iron could be sold in our market at $16, but
not lower; and American iron at not lower than $24.
In this hypothesis there are two ways in which the State can secure
the national market to the home producer.
The first, is to put upon foreign iron a duty of $10. This, it is
evident, would exclude it, because it could no longer be sold at less
than $26; $16 for the indemnifying price, $10 for the tax; and at this
price it must be driven from the market by American iron, which we
have supposed to cost $24. In this case the buyer, the consumer, will
have paid all the expenses of the protection given.
The second means would be to lay upon the public an Internal Revenue
tax of $10, and to give it as a premium to the iron manufacturer. The
effect would in either case be equally a protective measure. Foreign
iron would, according to both systems, be alike excluded; for our iron
manufacturer could sell at $14, what, with the $10 premium, would thus
bring him in $24.
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