attribute business depression to the reduction of the tariff, as
is commonly done in protectionist arguments even to the point of
attributing the panic of 1893 to the reduction of the tariff a year
later!

At several times the tariff has been raised soon after a crisis when a
good occasion was presented by the need of larger revenues as in 1842,
1860, 1875, and 1897. Business at such times is just at the point
of the cycle when prosperity is due. The higher tariff of 1842 was
succeeded by the low tariff of 1846 without any check to business. The
war obscured the ordinary industrial effects of the tariff acts of the
sixties. The increase in the year 1875 was followed by four years
of hard times and slow recovery. The increase of the tariff in 1890
occurred as business was nearing the top of the cycle and was followed
by two years of prosperity culminating in the very severe crisis of
1893. The authors of the tariff of 1897 were peculiarly fortunate in
the time of their action, for the country was just fairly recovering
from the very severe crisis of 1893 and prosperity was to continue
(with brief hesitation in 1900 and 1903) until the severe crisis and
panic of 1907.

The advocates of higher rates are, of course, correct in declaring
that the great business prosperity of the years 1915 and 1916 resulted
from the unexpected demands in foreign trade growing out of the war,
and is not to be credited in large measure to the act of 1913. But
reason requires that the same restraint be exercised in crediting
to higher protective acts the prosperity which has in some--not
all--cases, followed their enactment; and requires further that the
present act be not held accountable for the next reaction in trade,
whenever it may occur, inasmuch as a reaction would be sure to occur
no matter what kind of tariff act we might chance to have at the
time.]

CHAPTER 16

OBJECTS AND PRINCIPLES OF TAXATION

Sec. 1. Public finance as a division of economics. Sec. 2. The police function.
Sec. 3. Social and industrial functions. Sec. 4. The enlarging sphere
of the state. Sec. 5. Industrial revenues of governments. Sec. 6. Governmental
receipts from loans. Sec. 7. Nonrevenue character of receipts from
loans. Sec. 8. Revenues from taxation. Sec. 9. Forms of taxation. Sec.10.
Defective tax "systems." Sec.11. Various standards of justice suggested.
Sec. 12. Social welfare as the aim. Sec. 13. Principles of administration.