space of time it was proved that not only | price of the import regulates domestic were the country and the institutions pe- prices. The net invoice value of the imculiar, but the nature of the people was re-portation of rough lumber during the fiscal fractory. Congress could easily enough year 1868 was about 1,500,000l., while the impose an eight-shilling excise duty on value of the domestic product for the same spirits, but the temptation of immense profit period, or that part of it which entered into at once called into action all the resources competition with the foreign import, may of Yankee ingenuity, all the shrewd and un- be approximately estimated at 12,000,000ž. scrupulous qualities of the people, to defeat For every dollar, therefore, which is taken the scheme; and we have shown how the in the form of a direct tax, seven are taken struggle, after shaking society to its found- indirectly through the increase of prices; ations, ended in an absolute overthrow of or, in other words, 450,000l. are received the law, until, so complete was the disaster, into the Treasury at an indirect cost of few Americans can now comprehend how about 3,200,000l." such a tax can be anywhere collected, under any system however perfect. The idea of taxing very heavily a few articles of large consumption had to be abandoned, and the only resource was a diffusion of taxes by means of licenses and stamps, which still had the disadvantage of interfering with industry, and allowing wide latitude of evasion without being equally productive. The Government was of necessity thrown back upon its import duties as the only very productive taxes that could be cheaply and thoroughly collected. Tax for tax, the internal duty was much the more expensive

of the two.

The duty on salt is from 100 to 170 per cent. on its importing price, or almost prohibitive. The consumption is not stated by Mr. Wells, but we believe it is equal to at least 15,000,000 bushels, and the unnecessary enhancement of cost, or tax, paid directly to American salt companies, is about sixpence on each bushel, or 375,000l. per annum, with no advantage to the Treasury.

The duty on pig-iron is equivalent to 50 per cent. on the cost of production in the United States. The community at large has been compelled to pay an unnecessary profit of from 28s. to 40s. per ton, on a present annual product of 1,500,000 tons, and has therefore been subjected during the past year to a tax of from 2,000,0007. to 3,000,0007., paid of course to the manufacturers of pig-iron exclusively.'

These instances are merely common examples of the recklessness and extravagance which is characteristic of the United States tariff, and their pith is contained in the fact that the lumber-merchant, the saltcompany, and the manufacturer of pig iron collect every shilling of their taxes, though the Government cannot collect more than sixpence in the shilling of its own. Lumber, pig-iron, and even salt cannot be smuggled in quantites large enough to affect the price. The whole tax falls directly on the consumer, and of these articles, every man, woman and child in the United States is directly or indirectly a large consumer.

High duties on imports, the highest that were consistent with trade and with healthy home industry, became, therefore, not merely advisable' but inevitable; and no foreign nation would have complained so long as they were adapted to bear equally and steadily on honest commerce. Even this result would have been difficult, if not impossible to attain, for within the borders of the United States are produced many of the staple articles of trade from which England and the other European nations derive the bulk of their income. Tea and coffee could bear high duties, but tobacco, sugar, and wine are all produced in large quantities in the United States, and high duties upon them were merely protective to the home producer. But Congress did not stop to consider what might be the most perfect form of tariff. With few exceptions, it imposed duties upon all imported articles with the avowed intention of stimulating The Government, therefore, collects one home industry. Mr. Wells's last Report tax, amounting to 60,000,000l. or therefurnishes some illustrations of the result in about. Certain favoured interests collect three prominent instances-lumber, salt, another tax, the amount of which we are and pig-iron. We prefer to quote his unable to estimate. A third tax is colauthority because it is official, not because lected by the smuggler. We have already we might not furnish other examples which mentioned the sum paid under this head would be equally curious. during several years to the whisky-ring,' and we have public official statements that fraud is equally successful in other branches of the internal revenue. The custom-duties are probably better collected, but any re

The duty on lumber is 20 per cent. ad valorem, equivalent, with resulting charges, to 25 per cent., and is of course directed only against Canadian competition. The

sponsible man may contract in Montreal or Liverpool for the delivery of smuggled goods in New York. This is the last report of the Commissioner of Customs, the third Commission we have to cite as to abuses on the revenue service. Mr. Wells states that the number of duty-paid foreign cigars, which in 1859 was reported at about 800,000,000 per annum was reduced in 1867 to 30,000,000 under a duty of 150 per cent. ad valorem, although the actual consumption is supposed to have increased. So too with champagne, opium, and many other dutiable articles. The consumer probably saves a certain amount by paying tax to the smuggler rather than to the Government, but the burden must be borne, and the cost of production in the United checked. But the tendency of the system States must ultimately tell what the burden

standard of wages. Increased wages imply increased capital, increased interest, increased cost of production, and so back again to increased wages. This process continues until capital commands 10 per cent. interest where it formerly received 7, and an average duty of 50 per cent. on all imported articles that pay duty at all, is acknowledged both by free-traders and protectionists to be no longer protective.

In all this operation there is no new principle involved, and if all political economy is not a deception, the ultimate pressure must sooner or later fall upon labour. The profits of capital are not diminished, and it is not likely that in a country like America the demand for capital can be permanently

amounts to.

is to increase the wealth of individuals and corporations at a more rapid rate than the wealth of the public at large. Capital accumulates rapidly, but it accumulates in fewer hands, and the range of separation between the wealthy and the poor becomes continually wider. Mr. Wells, in his last Report, has collected a great amount of evidence to prove that the burden has in fact fallen upon wages, as was to be inferred from à priori reasoning, and that the purchasing power of a day's labour in 1868 is considerably less than it was in 1860. But hitherto the stress of suffering has fallen most severely on the intermediate class, whose incomes were, to a greater or less extent, fixed. The ordinary expenses of life have nearly doubled in eight years, but in many cases incomes are not greater in paper than they were in 1860 in coin. All liberal professions have felt the shock. The Universities with their instructors were reduced to a pitiable condition. The clergy of all sects found themselves struggling with poverty hitherto unknown. The great mass of lawyers and the bench suffered a similar degradation. Science and literature languished. The United States Government in its western surveys could obtain the services of its botanists and zoologists at 107. a month in currency, while it paid 157. to the cook and mule-driver who accompanied them. We do not now speak of the inhabitants of great cities, nor of the few distinguished men whose incomes were swelled beyond the average, but of the population at large, especially in the rural districts of the older States, where changes went on in silence, and men, who in old times lived plentifully, now restricted their expenses, eat meat four times a week instead of every day, and said nothing of their economies. The public press seldom pauses to mark such changes as these. They lie under

Finally, the capitalist collects a fourth tax. Every influence, whether we call it tax or not, which increases the cost of production, increases immediately the amount of capital required to produce the same result as before. In the United States capital has always been deficient, and 7 per cent. per annum even before the war was a moderate return for its use. Government then intervened as a borrower, and has practically fixed the minimum of interest at between 7 and 8 per cent. This system of taxation compels every employer of capital to use a larger amount in his business than would be required if the system were reformed. The borrower, therefore, is compelled to increase the competition for capital, and to pay higher interest on a larger sum, with the understanding that his industry must perish unless he can compel the consumer to pay not only the addition al interest but also a certain additional profit in consideration of the increased risk incurred on the increased capital. Nor is this all. The currency is a discredited and fluctuating medium of exchange, and the capitalist charges his increased risk on this score also to the borrower, who must necessarily throw off the double risk again on the consumer. Government then intervenes and taxes the capitalist on his increased profits in order to escape taxing labour, and the capitalist quietly counts the increased tax as so much additional expense, and throws it off upon the borrower, who must either throw it on the consumer or become bankrupt.

The Government seizes, let us say, 20,000,0007. from the public, and gives it to certain favoured citizens who spend a considerable portion of it in hiring labour, creating an artificial demand, and raising the

neath the surface of society but they indi- | abroad to pay for purchases which no ts cate disaster to the principle of social nor law can stop. equality.

We will not undertake to predict bow long this process can last. If its results please the American people, England will not complain, for she will not be the principal sufferer in this drunken bout. Foreign nations, carrying out a selfish political policy, will probably find it to their interest that the United States should continue to produce for herself only, and pay her enor mous imports in notes bearing practically 8 per cent. interest, the return of which in any large quantity would damage her credit and disorganize her trade; that she should elevate the scale of social expenditure, and at the same moment depress the standard of the working class; that she should build up an oligarchy resting on corporate and private wealth, and prepare the way for that corruption which, in its own time, will overthrow her institutions. The great responsibility of the new Administration is to itself and not to the world. The best Americans are looking to it with the deepest anxiety, to save the country so far as possible from its dangers by effecting a reform the principles of which we have pointed out; but if the hope is disappointed, even though the country should go on increasing its wealth and power more rapidly than ever, the world will have a right to believe that neither the skill of the Government nor the virtue of American institutions has had any share in the result, except so far as the nation is receiving and exhausting advantages left to it by a past and purer generation.

Agriculture, at least in the western States, did not suffer, partly because the introduction of machinery has neutralized the rise in wages, partly because the western farmer is little affected by taxation and almost independent of society; partly, too, because all the harvests except the last have been short, and high prices have been maintained. The natural increase of population keeps pace with the development of new lands which the Government practically gives for nothing to the settler. The West, therefore, exists under exceptional conditions. But in the main, it is true, as Mr. Wells has said, that the rich become richer and the poor poorer; nor is this fact in any way disproved by the corresponding fact that production increases with great rapidity. The system is corrupt, it is an outrage on common sense, it is extravagant beyond belief, it exalts fraud and ruins honesty; but the physical growth of the country is in itself so energetic that misgovernment can at best pervert, but not seriously check it. The labourer can bear a diminution in his wages. The mechanic may be forced to economize and yet live well as compared with his rivals in Europe. A mere failure to increase production so rapidly as it might be increased, is all that can be premeditated; a mere retardation, not a stoppage, of national prosperity. But in the meanwhile all articles of export rise in price until foreign nations will no longer buy, and the country can only send gold and certificates of debt

much less trepidation, what they did at last in the case of the rams, namely, strain very decidedly a legal point to preMR. SUMNER has expounded in the Sen- vent a breach of international comity. No ate of the United States his conception of sensible person will doubt that it was the the reasons which rendered the late Con-insane enthusiasm of our aristocracy and vention negotiated between Lord Clarendon bourgeoisie for the most detestable of causes and Mr. Řeverdy Johnson totally unsatis- which really supplied the Southern rebelfactory as a mode of settling the liabilities lion with money, ships, arms, and good known popularly as the Alabama claims. wishes, and daunted our Government in its His speech is, from what we cannot but rather hesitating and tremulous attempt to regard as his very singular point of view, preserve a friendly attitude towards the temperate, dignified, and not wanting in Government of the United States. So statesmanlike grasp of the importance of much we admit without difficulty to Mr. the emergency. What astonishes us is not Sumner. Nay, we go further, and say that the sentiment of his speech, which is manly, had their case been ours, had the upper natural, and patriotic, nor in any consid- crust of the United States expressed its erable degree its practical counsel (to reject | hearty sympathy with an Irish rebellion, the Convention), which we can at least raised a loan for it, and sent out privateers fully understand; but the extraordinary under an Irish flag to scour the seas in mixture of strictly sentimental with strictly search of British commerce - we should in legal considerations which pervades it all probability have declared war with the throughout. If he had simply said that he, United States, or if deterred from that like the great majority of American states- course by a mere prudent calculation of men, considers the circumstances leading consequences, still have been thoroughly to the fitting-out and escape of the Alabama disinclined to condone the offence and and of many of her consorts less from any resume cordial international relations with legal point of view than as a symptom of the United States, without extracting from the deliberate unfriendliness of a great part their Government something more than a of the British people, and, as a consequence, dry contract to refer the legal claims of though in a less degree, of the British injured individuals to arbitration. Government, towards the Northern States during the Civil War; - that this unfriendliness was of a character which might well have led to war then, and which may still lead, if not to war, to greedy reprisals on England should we ever be in circumstances to suffer equally severely from a similar policy on the part of the United States, and that this source of bitterness cannot be removed without a frank apology and expression of regret from England for what has happened, if this, we say, had been the drift of Mr. Sumner's speech, we should have been disposed to agree with him very damages as reparation for an unretracted heartily. It is perfectly true that we must insult.' Such a line as that is quite intelliascribe to the favour with which the South-gible. But it is not intelligible to say, ern cause was looked upon by an influen- what, in effect, Mr. Sumner does, 'We tial portion of the English people, that is, ground our claims on a number of extremely of the aristocracy and the middle-class, the questionable and insecure, not to say unsubconfidence with which the South applied to stantial, legal considerations, which we us for their loan, and for the ships and expect you to admit, not on legal grounds, ammunitions of war in which they invested but as a mode of making moral compensathat loan. Had their cause been one as tion to us for entirely extra-legal blunders hateful to England as that of Ferdinand of and sins.' That seems to us simply unbusiNaples, they would have got little help and ness-like and wholly untenable. So far as no open sympathy:- our most " respecta- the United States make legal claims, let us ble" shipbuilders would not have under- treat them as legal claims in the strictest taken to build their ships, and if by chance sense of the word. And for claims of that any one of them had done so, our Govern- kind, what can we propose fairer than arbiment would have been supported by public tration by an impartial tribunal? But so opinion in doing much earlier, and with far as the United States complain of our

But while we admit all this to Mr. Sumner, we confess that it seems to go a very little way towards explaining his speech. One Government may fairly say to another,

The moral damage which your people have inflicted upon us, and to which you have been more or less a party, touches our honour so vitally, goes so far beyond any infraction of law of which we can complain, that we decline to enter into a convention which implies that it is in any sense á question of damages. You might as well ask a man of sensitive honour to accept

From The Spectator, 1 May. MR. SUMNER ON ENGLAND'S OBLIGATIONS TO THE UNITED STATES.

were

moral attitude, which they have every we should preface its decision by language reason to do, let us deal with that quite equivalent to an admission that we separately, not affect to mix it up with in the wrong. To plead guilty before the legal claims, but either settle it, or leave it Court first, and then defend our innocence, unsettled, if we cannot settle it, without is the strangest recommendation ever yet prejudice to those claims. made to an accused person. Yet, as far as we understand Mr. Sumner, that is what he kindly proposes for England; — unless, indeed, he really means that we are not entitled even to submit the legality of our conduct to arbitration at all, but only the amount of the penalty. We agree with Mr. Sumner that the tone of the English Parliament and the uppermost stratum of the English people in the beginning of the Civil War was in the highest degree un

The only pretence which Mr. Sumner seems to us to have for his very remarkable mode of mixing up the unfriendly animus of our people and press with the legal claims which, if they are tenable, may have been more or less due to that unfriendly animus as their fostering source, is that he has discovered two cases in which a convention, concluded expressly to determine the exact extent of the reparation we proposed to make, was preceded by a general friendly to the United States. But we do apology on the part of the English Govern- not happen to agree with him that there ment for the wrong we had done. But was any clear breach of legal neutrality then, in both these cases the wrong we had committed from beginning to end of the done was an undoubted and undeniable war, — though we do believe that there was legal wrong, which we admitted at the out-sufficient negligence in allowing the escape set, - indeed, could not deny, and there- of the Alabama to make that matter a fair fore, of course, never proposed to submit case for arbitration. Moreover, we do not on its merits to the arbitration of any trib- suppose that there is a single eminent unal. It would have been simply impossi- statesman (not even Mr. Bright) or lawyer ble, when we had, by our own admission, in England who would go further than we committed a grave breach of international do in Mr. Sumner's direction, and very few law, to begin our reparation otherwise than who would go so far. Now, what is it, by expressing our regret. When the then, which Mr. Sumner calmly proposes British frigate Leopard boarded the United to us all, even those who, like ourselves, States' frigate Chesapeake to regain posses- approach him most closely in political bias? sion of the persons of four British subjects Simply this; to submit our political and said to be impressed there, the act was so legal consciences in the most abject manner monstrous a breach of international law, to a dogma which not a single man amongst that when the matter was settled, it was us worth a moment's consideration holds to settled by disavowal, by restitution, and by be true,- to confess a legal guilt of which compensation; and, of course, a solution we are entirely unconscious, and this as a by which Great Britain acknowledged her- condition sine quâ non of reconciliation self wholly in the wrong was necessarily with the United States. Was anything so preceded by apology. So, too, of the in- monstrous ever proposed on this earth becursion across the Canadian border into the fore by any man taking the rank of a statesUnited States in 1837;- the obvious criti- man? He does not ask us to express popcism on that matter being not Mr. Sum-ular regret for a grave political error, ner's, one of satisfaction that we apologized and, as we think, even sin, for which the at last, but one of wonder that the apology, people at large were not responsible, so obviously required, was so long delayed. though the most influential of them were, There was in that affair a real defiance of - but to begin by a frank admission of the independent authority of a peaceful and legal culpability, and this on one of the friendly state, and of course the first condi- most important of all points of international tion of reconciliation was to express regret law, which might be turned against us tothat our people had been betrayed into so morrow, in a case where all our sympaindefensible an act. But Mr. Sumner fails thies, and all American sympathies too, to see that in the present case the whole might happen to be just the other way. question at issue is simply this, whether He wants us to make an insincere admiswe did in any respect whatever violate the sion, which, by the bye, if it were of any slightest rule of international law by our legal value as a precedent at all, would in proceedings in the Alabama case? That all probability be first quoted by Spain in is the very point to be decided. If it is to support of a peremptory demand for apolbe decided by the only fair method in the ogy from the United States for the advice case of any international dispute, equitable which the House of Representatives has arbitration, it is monstrous to propose that tendered to the President in relation to

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