This section is from the "The Science Of Wealth" book, by Amasa Walker.
At this point, it may be most proper to speak of the effect of bounties. If a home product is to be encouraged by government, it is desirable that it should be done as economically as possible; or in such a manner as to impose the least taxation and loss upon the public, while it shall be as effective as possible in securing the object.
Let us take the sugar crop of 1858, just referred to, as an illustration. It amounted to $25,000,000. To protect this to the amount of twenty-four per cent, the people paid, as we have shown, $14,300,000, of which the government realized but $4,968,000. Here was a clear loss to the consumers of $9,332,000.
Suppose, now, that instead of this protective duty of twenty-four per cent, a bounty of equal amount (twenty-four per cent) had been paid by the government. The matter would then stand thus: twenty-four per cent on $25,-000,000 is $6,000,000, which the people would pay to the sugar growers, instead of $9,332,000 they were obliged to pay through protection; a saving of $3,333,000, equal to thirty-three per cent of the amount paid under the protective system.
This principle applies, in all cases, where an article is actually protected, and shows that bounties are by far the most economical form of governmental assistance. Bounties, as a means of protection, have been but little resorted to by governments. The reason is obvious. The evident injustice of giving to one class of men a premium upon their productions, in order that they may be encouraged in a branch of industry that cannot live without contributions from the public treasury, is so apparent, and evidently unreasonable and unwise, that the people of no country would long tolerate it. It is, therefore, vastly more feasible to give protection by duties on the foreign article, although much more wasteful and onerous.