BOUNTIES, a term applied to a grant or benefaction from the government to those whose services directly and indirectly benefit it, and to whom, therefore, it desires to accord some recompense, or at least recognition.
Nature and In law or com merce a fiscal bounty is a premium paid by the government to the producers, importers or ex porters of certain articles or to those who em ploy ships in certain trades. This is done either to foster a new industry during its infancy or to protect an old one which is supposed to be of especial importance to the country. When the treasury actually pays a certain sum for each unit of goods produced or exported, the bounty is direct or open. It is an indirect or concealed bounty when the government grants some favor which reduces the cost of ing or marketing the goods, e.g., where goods for export are transported by government owned railways at specially low rates, in which case the reduction given virtually constitutes a bounty. Sometimes imperfect methods of ad ministration result in an unintentional grant of a bounty, especially in connection with draw backs on duties.
In effect a bounty encourages the production or export of the article upon which it is paid, and differs from a protective duty in that it enables the producer to sell at a lower price than he could afford otherwise and to recoup his losses at the expense of the treasury instead of the consumer. Thus unless nullified by for eign countervailing duties a bounty aids in both foreign and domestic markets, while protective duties facilitate sales only in the home market. Bounties bring to the industries affected capital and labor which otherwise would probably be employed in other channels of industry. If the bounties be applied to industries subject to di minishing returns, additional products are ob tained at enhanced cost, and the consumer receives less benefit than might be obtained if the same capital and labor had been employed in other industries. In the case of industries subject to increasing returns, the converse would be true. Hence it is said that greater benefits might accrue to consumers if com modities subject to diminishing returns were taxed and a part of the taxes used as bounties for commodities subject to increasing returns. Some bounties may be justified on other than purely economic grounds, such as bounties to shipbuilding and navigation, in the interest of national defense.
All bounties or premiums are not offered for the encouragement of domestic talent and in dustry to the exclusion of foreign competition. The British and French governments and also private associations offer many of their boun ties to competitors indiscriminately; and where the object is universal improvement, the offer of a bounty is one of the appropriate modes of encouragement, though others concur with it, such as the monopolies of copyrights and pat ents, and the honors and distinctions conferred on those who make any important improve ment. The productions of extraordinary skill
and ingenuity may also properly be made the subjects of bounties or premiums, since in this way a competition is excited by which none suffers and all the effects of which are bene ficial to a community.
Federal and State The na tional government has encouraged industries in two ways by direct grants of money to private concerns, namely, ship subsidies and bounties, but since ship subsidies have usually been granted to encourage mail transportation lines, they may best be discussed elsewhere. (See SHIP SUBSIDIES; SHIPPING; COMMERCE). Under the operation of the tariff, drawbacks have been paid on exports, but since, in its final analysis, a drawback is merely the refund of a duty it cannot be considered a contribution from the treasury.
Under an act of 1790 a bounty was paid on dried and pickled fish exported from American fisheries, the sum of 10 cents per quintal being paid on the former and 10 cents per barrel on. the latter. In reality this amounted to a draw back on the salt which was subject to duty and the so-called bounty was repealed in 1807. The most noteworthy recent example was the bounty on domestic sugar production constituting a part of the McKinley tariff act of 1 Oct. 1890. The act provided that between 1 July 1891 and 1 July 1895 the treasury should pay a bounty of two cents a pound to producers of cane beet and sorghum sugar grown in the United States, provided the sugar tested not less than 90 degrees by the polariscope, and for sugar test ing between 80 and 90 degrees the bounty was one and three-fourths cents. The bounty was in the nature of a contract (made with each and every person in the United States engaged in cultivation of such varieties of sugar) pro viding that, if their produce attained a given standard of saccharine strength, they would receive the bounty provided therefor by the appropriation from the treasury. It was neces sary also that the producer secure a license and file varic•s statements concerning the amount of his crops. While the act greatly stimulated the sugar industry in the country, the bounty was repealed by the act of 27 Aug. 1894. Dur ing the years 1892 and 1897 while the bounty act was in force, $36,041,134 was disbursed to sugar growers, most of which went to the pro ducers of cane sugar in Louisiana, the beet sugar producers receiving only about $2,000,000, while an insignificant amount was paid to sor ghum and maple sugar producers.