During the fiscal year 1914 imports of books and music, in raised print, used exclusively by the blind, were valued at $1,452; books and pamphlets printed chiefly in languages other than English, $1,814,764; books, maps, music, etc., imported by societies or institutions for educational, religious, literary, or scientific purposes, for use of such societies and not for sale, $412,507; books, maps, etc., printed more than 20 years, and hydrographic charts and publications issued for their subscribers or exchanges by scientific and literary associations or academies, publications by individuals for gratuitous private circulation, and public documents issued by foreign governments, $1,211,518; textbooks used in schools and other educational institutions, $65,822; books, engravings, etc., imported by authority of or for the use of the United States or for the use of the Library of Congress, $20,924; engravings, bound or unbound, etchings, etc., $238,660; books and printed matter, n. s. p. f., $2,352,467. Later statistics follow:

Exports of books, music, maps, engravings, etchings, photographs, and other printed matter in 1914 were valued at $9,639,860. In 1918 their value was $11,493,524; 1920, $24,803,932; 1922, $16,929,628; 1923, $17,874,639.

BOOTS AND SHOES. See Leather, ManUFACTURES OF.

BORAX, CRUDE, AND BORATE MATERIALS. Borax, crude, "tinkal" or biborate of soda, was formerly the main source of borax in California. Borate of lime, or the mineral colemanite, which is now the chief source of borax and boric acid, occurs extensively in California. Other borate materials are boracite, a borate of magnesium from the Stassfurt deposits of Germany; sassolite, a native boracic acid from volcanic springs of Italy and California; ulexite, a borate of lime and soda occurring in California and Nevada; and pricelite, a borate of lime occurring in Death Valley, Calif.

Production of crude borax materials has about doubled in recent years. In 1913 it was 58,051 tons, valued at $1,491,530; in 1917, 108,875 tons, valued at $3,609,632. Subsequent figures are as follows: 1920, 120,320 tons, valued at $2,173,000, and in 1922, 85,220 tons, valued at $2,705,140. Chile, Italy, Turkey, and Germany are other sources. The United States supplies about one-half and Chile one-third of the world's demand. (See also SODIUM COMPOUNDS.)

Imports of crude borax and of other borate materials since 1917 have been as follows:

1918.

427,638

1,959, 012

679, 731

Year.

289,150

1922 *.

1,355, 517

1922 t..

474, 770

1923.

Textbooks used in schools and

1,672, 044

15

15

Borate of lime or soda and other borate

materials:

1918..

1919.

1920..

1921.

1922.

1923.

1 Not shown separately prior to 1921. *

The linen industry in Ireland offers a wellknown example of the application of bounties. Previous to their employment there had been little linen manufactured in Ireland. About 1740, however, an annual subvention of £20,000 was allowed a board of trustees formed at Belfast to encourage the industry in the country. These bounties were paid without interruption from 1740 to 1830, and were extended successively to England and Scotland. The results were regarded as satisfactory. From 1742 to 1771 exportation of linen cloth rose from a value of £333 to £44,000, and the linen trade of Ireland at length became the largest of Europe.1

In France what amounted to export bounties were granted by Colbert (see) for silk culture and various industrial enterprises. The bounties were usually granted to particular individuals rather than to industries in general. They took various forms, such as freedom from taxes, the bestowal of gifts, annual pensions, loans without interest, etc. Bounties given in a general way without designation of the person or company to which they were applicable seem to have been rare in France in the seventeenth century.2

From an early day France granted bounties on sugar. For many years prior to 1648 the exportation of raw sugar from France was forbidden. This ban forced most sugar exported from that country to pass through French refineries. When the prohibition was abolished in 1648, the Government decided to indemnify the refineries for the loss of their former privileges by granting them an export bounty. This premium was paid about 100 years. In 1786 it assumed a different form. A. decree at that time provided that all sugar coming from French colonies, if refined in one of the ports of the realm, should enjoy, upon exportation, a restitution of the import duties which had been paid upon it as raw sugar. This was the first application of the drawback in France. Had it been a simple drawback, not exceeding the amount of duty paid, it would not have been a bounty, but in order, as alleged, to avoid difficulty in the evaluation of the reimbursement a quintal of refined sugar, which was then equivalent to 187-198 pounds of raw sugar, was considered the equivalent of 278 pounds of the raw article. Thus the drawback exceeded the duty originally paid and became a concealed bounty.

These privileges were suppressed by the revolution. They came into existence again early in the nineteenth century.

Certain other products, such as oriental embroideries, were also given a bounty similar to that on sugar. Until the Restoration, however, sugar was almost the only merchandise granted general bounties.

But in 1822 a strong program of protection was adopted, and it was necessary to provide compensation, by means of a system of premiums, for the losses caused thereby to commerce. After this every export industry threatened by foreign competition demanded the protection of the State by bounties. Among the products to which the system was applied were lace, straw hats, meats, butter, various chemicals, soap, glass, furniture, steam engines, iron, yarn, and fabrics of wool, etc. In 1848 a decree increased by 50 per cent all the existing drawback rates. The same decree granted a special export premium of 44 per cent of their 1 Lavison, A. De, La Protection par les Primes, Paris, 1900, p. 150. 2 Ibid., pp. 144-146.

value on silk, linen, and hemp of French manufacture. Statisticians have estimated that prior to 1860 premiums and drawbacks paid annually by the treasury amounted to from 25,000,000 to 27,000,000 francs. Of this total those on refined sugar averaged 16,000,000, those on yarns and fabrics of wool 7,500,000 francs.

The economic reforms which commenced in 1845, and which in 1852 resulted in the lowering of tariffs, grew into the treaties of commerce of 1860 and caused almost the complete disappearance of the system of bounties." The bounty on the export of fish was continued largely for naval purposes, with the object of insuring a sufficient supply of seamen. Toward the end of the century the system was regarded with more favor, however, and bounties were established for the culture and manufacture of silk (1892), for linen (1892), and hemp (1898). Other recent bounties granted by France have applied to the production of flax and olives.*

Germany has not been prominent in the use of direct state bounties, although indirect and private aid has been common (see below).

Hungary employed bounties extensively when she endeavored to become economically free from Austria, and success was claimed for the method.

Austria and Italy established bounties on silk in the latter part of the nineteenth century, and Japan in 1897 on the exportation of silk.

In 1910 Venezuela temporarily placed bounties on the exportation of sugar, cane products, various textile fibers, fruits, oil, starch-containing substances, and animal products.

Iron

Australia has granted bounties for the production of shale oil, certain forms of iron and steel, some agricultural products, and preserved fish. products subject to bounty in that country have been pig iron, puddled bar iron, steel, galvanized sheet or plate iron, wire, wire netting, and pipes. Among agricultural products favored have been vegetable fibers, oil seeds, rice, rubber, coffee, tobacco, and dates produced in Australia. In 1907, bounties were granted on combed wool and silver destined for exportation.

Bounties were paid by Canada on various iron and steel products for many years; crude petroleum produced in the Dominion and Manila hemp (now repealed) used in the manufacture of binder twine were among the commodities receiving material encouragement. Mineral oil and quicksilver have been subject to a bounty in New Zealand, and Russia has granted a premium on the manufacture of agricultural machinery.

8

A sugar bounty was authorized in the United States by the tariff act of 1890. It provided that between July 1, 1891, and July 1, 1905, the treasury should pay "to producers of sugar testing not less than 90 by the polariscope, from beets, sorghum, or cane sugar grown within the United States, or from maple sap produced within the United States, a bounty of 2 cents per pound." A bounty of 12 cents was offered for sugar testing between 80° and 90°. To secure the bounty it was necessary to obtain a license and to file various statements concerning the amount of the applicant's

Say, Léon, Nouveau Dictionnaire d'Économie Politique, Paris, 1900, vol. 2, pp. 574--578.

U. S. Bureau of Foreign and Domestic Commerce, Foreign Tariff Systems, Washington, 1913, p. 28. • Fontana-Russo, L., Traité de Politique Commerciale, Paris, 1908, pp. 240-253.

Lavison, op. cit., pp. 158-159.

7 Grunzel, Josef, Economic Protectionism, p. 202.

8 U. S. Bureau of Foreign and Domestic Commerce, op. cit.;

p. 28.

crop. The bounty was repealed in 1894. Between the years 1892 and 1897 $36,041,134 was paid under this law, nearly all to producers of cane sugar in Louisiana. Producers of beet sugar received about $2,000,000, which went mostly to California raisers. An insignificant amount went to producers of sorghum and maple sugar.1

The sugar export bounties were the most important group of export bounties. They grew out of a tax levied in the nineteenth century upon sugar beets in most of the beet-producing countries of Europe. The tax was imposed on an assumed percentage of sugar content in the beets. Upon the exportation of refined sugar, the tax was refunded on the actual sugar. Owing to a constant tendency to underestimate the sugar content of the beets, the rebates generally exceeded the tax previously paid and became in effect an indirect export bounty. For the purpose of equalizing matters, direct export bounties were introduced by Austria-Hungary in 1888, by Germany in 1891, and in part by France in 1897. Stimulated by these measures, the export of sugar so increased as seriously to impair the home industry in some countries-England and the United States, for example. As a means of protection the United States tariff act of 1894, in addition to a duty of 40 per cent ad valorem, placed a uniform supertax of one-tenth of a cent on each pound of imported sugar which had enjoyed in the producing country either a direct or an indirect bounty. The tariff act of 1897 fixed the equalizing duty at the amount of the bounty granted by the producing country. (See COUNTERVAILING DUTIES.) To remedy conditions, the International Sugar Conference was held in Brussels in 1901, but failed to advance beyond academic pronounce ments until England suddenly announced that equalizing duties would be introduced unless some agreement was reached for the removal of the bounties. Under this pressure the Brussels sugar convention was finally signed on March 5, 1902. The states party to the treaty assumed in it three essential obligations, as follows: First, to remove all direct and indirect production and export bounties on sugar; second, to reduce the import duty, exclusive of the consumption tax, to a fixed moderate level; third, to levy upon sugar coming from a country not a party to the convention a counteracting duty equal to any bounty granted in that country. The enforcement of the convention was placed in the hands of a standing commission in Brussels. The convention has been renewed from time to time. The United States did not subscribe to the Brussels convention. 2

Italy withdrew from the convention in 1915. In 1918 Great Britain withdrew from all obligations with respect to her fiscal treatment of sugar. In the same year France, and in 1920 Holland, withdrew from the convention.

"With the unsettled political conditions in Russia, the changes which have resulted from the war in the sovereignty over some of the important sugar-growing regions, and the apparent expulsien of Germany from the Convention by the terms of the Treaty of Versailles, the Brussels Sugar Convention ceased to be effective." (See also SHIPPING DISCRIMINATIONS, ETC.)

113

Indirect bounties. In the nineteenth century a species of indirect bounty growing out of drawbacks (see), admission temporaire (see), and the general "improvement trade" attained importance. Under these systems raw material, upon being converted into manufactures and exported as a finished product, was given a refund of duty. For a number of reasons, as in the case of the prerevolutionary French sugar drawback referred to above, the nominal refund frequently amounted to more than the original duty and became in effect a bounty. Sometimes (as in the case of sugar bounties) an improvement in methods made the official rate for refunding fail to correspond to the actual productive conditions. Sometimes inferior and cheaper materials were exported in the place of those imported. Sometimes materials were imported from a cheap market and exported where prices were higher. Such indirect bounties have been common in France, Germany, Russia, and Italy. They have applied chiefly to grain, textiles, iron, and leather.**

Less direct forms of bounties are found in preferential freight rates (see PREFERENTIAL TRANSPORTATION RATES), guarantees of interest to capital engaging in new industrial enterprises (a method frequently employed in Mexico and in some South American countries); also in certain exemptions or reductions of duties granted to new enterprises. The last-named type has received favor in Hungary and Rumania.5

Private bounties. Before the war private export premiums were common in Germany. These were granted by syndicates and similar organizations, partly to their members, partly to outside concerns using their products in further manufacture for export. The premiums consisted in part of direct export bounties, and in part of price rebates on materials used for export goods. In general the bounties were on articles subject to customs duties. Rough and bar iron, rails, shapes, etc., enjoyed a considerable protection, with the result that these products could not be sold in foreign markets at the inland prices. Export became possible only at reduced prices and by means of export premiums. When domestic prices threatened to sink, exportation was increased, or production decreased. These bounties were not granted to single concerns, but to cartels (see). In contrast to governmental bounties, they were readjusted quarterly, and at times discontinued. Exclusion from the benefits of premiums was especially injurious to independent concerns, which were compelled to buy their materials at the high domestic prices. They were therefore more and more superseded by large cartels, which prepared their own raw material. A result of the lower prices granted to foreign manufacturers was the more serious competition of the latter. Thus, in Holland, there was an extraordinary development of industry dependent on cheap German iron, and a large part of the Rhine shipbuilding industry emigrated thither. Furthermore, foreign producers of manufacturing materials were greatly perturbed, and as a result many antidumping (see DUMPING) laws were enacted by other countries. In 1897 private spinning companies, organized as a group in Austria, paid a bounty upon the export of cotton textiles. Exports were increased tenfold by this method.

4 Dönges. Reinhard, Die Handlungspolitische Bedeutung der Ausfuhr prämien, Frankfort, 1902, pp. 93-95.

Gide, Chas., Cours d'Economie Politique, Paris, 1913, p. 446. • Handwörterbuch der Staatswissenschaften, Jena, 1909, Vol. 1, pp. 234-238.

Countries Paying Export Bounties. A list of countries which have followed more or less the policy of granting export bounties is given below. This list and the data contained in it are by no means exhaustive, as a more detailed delineation of the subject would be beyond the scope of this work.

It will be noted that the term export bounty is here given a wide interpretation, and that the list includes examples of measures whose primary purpose and effect is to stimulate production for the home market, but which affects or may affect exports also.

AUSTRALIA pays a direct bounty on certain fencing wire, wire netting, and traction engines, under the provisions of the iron and steel products bounty act of 1922. Bounties are likewise granted on the production of sulphur, sulphuric acid, and shale oil, and on the canning and export of certain fruits. Canned and frozen meat and live cattle have enjoyed a direct export bounty for several years.

BRAZIL, in its desire to assist several local industries, adopts another method which may be considered equivalent to a bounty-the grant of long-term loans at low rates of interest, exemption from taxes over a period of years, and special concessions in transportation and customs treatment. Among the industries thus favored are cotton growing, rubber development, coal mining, and iron and steel and other manufacturing.

CANADA pays a direct bounty, under specified conditions, on the production of petroleum. The hemp bounties act of 1923 provides that the payment of bounties may later be authorized on hemp grown in Canada and used in the manufacture of yarn or twine, or in the manufacture of hemp further advanced than yarn or twine, manufactured in Canada and sold for consumption therein; this latter, of course, is not an export bounty.

CHILE pays export bounties, the respective amounts of which are fixed annually, on wines, alcohol, liquors, and beer manufactured in the country, in conformity with the provisions of sections 66 and 67 of Law No. 3087 of April 3, 1916, approved by decree of the Treasury Department No. 1007 of April 30, 1919.

FRANCE has a scale of export bounties on dried or salted cod exported by sea in French vessels, the amounts ranging from about 10 franes to 16 francs per hundred kilograms ($17.50 to $28.50 per ton). A bounty is also paid on French exports of iron and steel products through the medium of reduced prices on the coke used in the production of such goods for export. With the basic price of coke at 212 francs ($30.92) per ton, the amount of the bounty has reached 58 francs ($11.20) per ton of coke used in manufacturing for export. Recently steps have been taken to develop, by means of bounties, both the spinning of silk in France and the culture of silkworms in Algeria. GERMANY granted after the armistice a form of indirect bounty in special freight rates, fuel prices, and bread subsidies. These really operated as an indirect and general export bounty, since they represented an artificial maintenance, out of taxation revenues, of low price levels.

GREECE allows a direct bonus on alcohol exported from the country.

HAITI has at times granted indirect bounties in the form of concessions to stimulate the development of the country's agricultural resources, such concessions occasionally calling for full or partial exemption from Federal taxes.

MEXICO has done the same as Haiti. An example is a mining company in Lower California, which is exempt from all Federal and local taxes except stamp taxes until December 17, 1925; from import duties on fuel used until 1935; and from other customs duties until 1942. (International edition of the Mines Handbook, New York, 1920, p. 1666).

RUMANIA, aiming to encourage national industry, began in 1912 to accord certain advantages to manufacturers exporting not less than one-fourth of their annual production. These advantages consist of the official sale of factory sites, free use of water power, freedom from payment of duties on imported machinery, exemption from direct taxation aside from a fixed percentage on net profits, reduced freight rates on raw materials used, etc.

SOUTH AFRICA grants a direct export bounty on slaughter cattle and on beef, and has taken steps to provide a production bounty on iron and steel.

SPAIN, from March 1923, to June, 1924, offered a bounty on all coal mined, and a bounty of varying amounts on coal carried by rail or shipped for export.

Theory. Adam Smith (see) endeavored to overthrow the mercantile theory of export bounties. He maintained that bounties increased prices, but his opponents could point to the fact that prices were lowest when exports. and consequently bounties, were highest. Malthus (see) defended bounties on the ground that they encouraged production to such an extent that the supply was largely increased and prices therefore were lower, especially in unfavorable years, because of the larger domestic harvest. Ricardo (see) was a pronounced opponent of this form of State encouragement, holding that it diverted capital to unnatural channels. He also held that when premiums were given on articles the production of which could not be easily extended at constant cost the price was thereby largely increased. Agricultural products especially belong to this category. But for manufactured articles, the production of which may be accomplished at decreasing cost, bounties may call forth sufficiently greater production eventually to decrease the price. Alexander Hamilton (see) spoke well of bounties.

The principal arguments for the employment of bounties are as follows: They do not impose burdens upon foreign commerce, and they avoid some of the cost incidental to collection of customs duties; they have less tendency than protective tariffs to provoke international conflict; they do not necessarily prejudice the consumer or user of raw materials through rise of prices; on the contrary, they may be adjusted to stimulate production.

The principal disadvantages of the bounty are political; it appears as a debit; tariff levies appear, if at all, as items of revenue on the Government budget; also the restricted and more or less personal application of Government subsidies makes them an object of popular disapproval. Another objection to the bounty is the uncertainty of the amounts that will be payable by the State under Its provisions. Competing States frequently award similar premiums, so that the bounties mutually destroy each other's effects, and only the importing countries are benefited by the cheaper prices. Furthermore, other States sometimes retaliate by the imposition of countervailing duties (see).

As a rule, articles to which export bounties apply are subject to protective duties. This was true in respect to the grain bounties in England. It is 1 Gide, Chas., Cours d'Économie Politique, Paris, 1913. pp.

447-448.