12. What then is a protective tax? In order to join issue as directly as possible, I will quote the definitions given by a leading protectionist journal,[2] of both free trade and protection. “The term ‘free trade,’ although much discussed, is seldom rightly defined. It does not mean the abolition of custom houses. Nor does it mean the substitution of direct for indirect taxation, as a few American disciples of the school have supposed. It means such an adjustment of taxes on imports as will cause no diversion of capital, from any channel into which it would otherwise flow, into any channel opened or favored by the legislation which enacts the customs. A country may collect its entire revenue by duties on imports, and yet be an entirely free trade country, so long as it does not lay those duties in such a way as to lead any one to undertake any employment, or make any investment he would avoid in the absence of such duties: thus, the customs duties levied by England--with a very few exceptions--are not inconsistent with her profession of being a country which believes in free trade. They either are duties on articles not produced in England, or they are exactly equivalent to the excise duties levied on the same articles if made at home. They do not lead any one to put his money into the home production of an article, because they do not discriminate in favor of the home producer.” 13. “A protective duty, on the other hand, has for its object to effect the diversion of a part of the capital and labor of the people out of the channels in which it would run otherwise, into channels favored or created by law.” I know of no definitions of these two things which have ever been made by anybody which are more correct than these. I accept them and join issue on them. (_E_) PROTECTIONISM RAISES A PURELY DOMESTIC CONTROVERSY.