cannot put on a great series of such duties without cramping trade in a hundred ways and without diminishing their productiveness exceedingly. America is now working in heavy fetters, and it would probably be better for her to lighten those fetters even though a generation or two should have to pay rather higher taxes. Those generations would really benefit, because they would be so much richer that the slightly increased cost of government would never be perceived. At any rate, under a parliamentary government this doctrine would have been incessantly inculcated: a whole party would have made it their business to preach it, would have made incessant small motions in parliament about it, which is the way to popularize their view; and in the end I do not doubt that they would have prevailed. They would have had to teach a lesson both pleasant and true, and such lessons are soon learned. On the whole, therefore, the result of the comparison is, that a presidential government makes it much easier than the parliamentary to maintain a great surplus of income over expenditure, but that it does not give the same facility for examining whether it is good or not good to maintain a surplus, and therefore that it works blindly, maintaining surpluses when they do extreme harm just as much as when they are very beneficial.

In this point the contrast of presidential with parliamentary government is mixed: one of the defects of parliamentary government probably is the difficulty under it of maintaining a surplus revenue to discharge debt; and this defect presidential government escapes, though at the cost of being likely to maintain that surplus upon inexpedient occasions as well [as] upon expedient. But in all other respects a parliamentary government has in finance an unmixed advantage over the presidential in the incessant discussion though in one single case it produces evil as well as good, in most cases it produces good only;

and three of these cases are illustrated by recent Amer

ican experience.

First,

judge of anything American-justly said some years since, the capital error made by the United States government was the "Legal Tender Act," as it is called, by which it made inconvertible paper notes issued by the Treasury the sole circulating medium of the country. The temptation to do this was very great, because it gave at once a great war fund when it was needed, and with no pain to any one. If the notes of a government supersede the metallic currency medium of a country to the extent of $80,000,000, this is equivalent to a recent loan of $80,000,000 to the government for all purposes within the country. Whenever the precious metals are not required, and for domestic purposes in such a case they are not required, notes will buy what the government wants, and it can buy to the extent of its issue. But like all easy expedients out of a great difficulty, it is accompanied by the greatest evils; if it had not been so, it would have been the regular device in such cases, and the difficulty would have been no difficulty. at all, there would have been a known easy way out of it. As is well known, inconvertible paper issued by government is sure to be issued in great quantities, as the American currency soon was; it is sure to be depreciated as against coin; it is sure to disturb values and to derange markets; it is certain to defraud the lender, it is certain to give the borrower more than he ought to have. In the case of America there was a further evil; being a new country, she ought in her times of financial want to borrow of old countries; but the old countries were frightened by the probable issue of unlimited inconvertible paper, and they would not lend a shilling. Much more than the mercantile credit of America was thus lost. The great commercial houses in England are the most natural and most effectual conveyers of intelligence

from other countries to Europe: if they had been financially interested in giving in a sound report as to the progress of the war, a sound report we should have had. But as the Northern States raised no loans in Lombard Street (and could raise none because of their vicious paper money), Lombard Street did not care about them, and England was very imperfectly informed of the progress of the civil struggle; and on the whole matter, which was then new and very complex, England had to judge without having her usual materials for judgment, and (since the guidance of the "city" on political matters is very quietly and imperceptibly given) without knowing she had not those materials.

Of course this error might have been committed, and perhaps would have been committed, under a parliamentary government; but if it had, its effects would ere long have been thoroughly searched into and effectually frustrated. The whole force of the greatest inquiring machine and the greatest discussing machine which the world has ever known would have been directed to this subject. In a year or two the American public would have had it forced upon them in every form till they must have comprehended it. But under the presidential form of government, and owing to the inferior power of generating discussion, the information given to the American people has been imperfect in the extreme; and in consequence, after nearly ten years of painful experience they do not now understand how much they have suffered from their inconvertible currency.

But the mode in which the presidential government of America managed its taxation during the Civil War is even a more striking example of its defects. Mr. Wells tells us [ibid.]:

"In the outset all direct or internal taxation was avoided; there having been apparently an apprehension on the part of Congress that inasmuch as the people had never been accustomed to it, and

as all machinery for assessment and collection was wholly wanting, its adoption would create discontent, and thereby interfere with a vigorous prosecution of hostilities. Congress, therefore, accordingly confined itself at first to the enactment of measures looking to an increase of revenue from the increase of indirect taxes upon imports; and it was not until four months after the actual outbreak of hostilities that a direct tax of $20,000,000 per annum was apportioned among the States, and an income tax of 3 per cent. on the excess of all incomes over $800 was provided for; the first being made to take effect practically eight, and the second ten months after date of enactment. Such laws, of course, took effect and became immediately operative in the loyal States only, and produced but comparatively little revenue; and although the range of taxation was soon extended, the whole receipts from all sources by the government for the second year of the war, from excise, income, stamp, and all other internal taxes, were less than $42,000,000, —and that, too, at a time when the expenditures were in excess of $60,000,000 per month, or at the rate of over $700,000,000 per annum. And as showing how novel was this whole subject of direct and internal taxation to the people, and how completely the government officials were lacking in all experience in respect to it, the following incident may be noted:-The Secretary of the Treasury, in his report for 1863, stated that with a view of determining his resources he employed a very competent person, with the aid of practical men, to estimate the probable amount of revenue to be derived from each department of internal taxation for the previous year: the estimate arrived at was $85,000,000, but the actual receipts were only $37,000,000.”

Now, no doubt this might have happened under a parliamentary government: but then, many members of parliament, the entire Opposition in parliament, would have been active to unravel the matter; all the principles of finance would have been worked and propounded. The light would have come from above, not from below; it would have come from parliament to the nation instead of from the nation to parliament. But exactly the reverse happened in America. Mr. Wells goes on to say :

"The people of the loyal States were, however, more determined and in earnest in respect to this matter of taxation than were their rulers; and before long the popular discontent at the existing state

of things was openly manifest. Everywhere the opinion was expressed that taxation in all possible forms should immediately, and to the largest extent, be made effective and imperative; and Congress, spurred up and rightfully relying on public sentiment to sustain their action, at last took up the matter resolutely and in earnest, and devised and inaugurated a system of internal and direct taxation which for its universality and peculiarities has probably no parallel in anything which has heretofore been recorded in civil history, or is likely to be experienced hereafter. The one necessity of the situation was revenue; and to obtain it speedily and in large amounts through taxation, the only principle recognized — if it can be called a principle-was akin to that recommended to the traditionary Irishman on his visit to Donnybrook Fair, 'Wherever you see a head, hit it:' wherever you find an article, a product, a trade, a profession, or a source of income, tax it! And so an edict went forth to this effect, and the people cheerfully submitted. Incomes under $5,000 were taxed 5 per cent., with an exemption of $600 and house rent actually paid; these exemptions being allowed on this ground, that they represented an amount sufficient at the time to enable a small family to procure the bare necessaries of life, and thus take out from the operation of the law all those who were dependent upon each day's earnings to supply each day's needs. Incomes in excess of $5,000 and not in excess of $10,000 were taxed 24 per cent. in addition; and incomes over $10,000, 5 per cent. additional, without any allowance or exemptions whatever."

Now, this is all contrary to and worse than what would have happened under a parliamentary government: the delay to tax would not have occurred under it; the movement by the country to get taxation would never have been necessary under it; the excessive taxation accordingly imposed would not have been permitted under it. The last point, I think, I need not labor at length. The evils of a bad tax are quite sure to be pressed upon the ears of parliament in season and out of season; the few persons who have to pay it are thoroughly certain to make themselves heard. The sort of taxation tried in America, that of taxing everything and seeing what everything would yield, could not have been tried under a government delicately and quickly sensitive to public opinion.

VOL. IV.-4