whilst another objection has to be added that all employers of labour would have the cost of labour raised by the necessaries of life being included in the taxation, although they would necessarily be employers of labour in most varying degrees disproportionate to the capital invested in their industry. Until such questions can be answered with some plausibility of argument in the affirmative, the idea of fair and equal protection to the industry of one nation by taxing the industry of others may, without further question, be rejected. Assuming, however, the objections of inequality and unfairness to the producer to be disputed and refuted, would such protection be expedient in the interest of the nation as a whole? Of course what is meant here is only the material interest of the nation, that is, its interest in the accumulation of wealth, and in affording facilities for the supply of revenue. It is to an inquiry into these two subjects that Adam Smith limits his application of the science of political economy; and there is no part of the great economist's reasoning which appears more conclusive than that in which he enumerates all the requirements for accumulation, and contends that no facility for the application and best exercise of human labour should ever be subject to hindrance or taxation. These requirements are food, and, in such climates as make them necessary, clothes and shelter, and the quality of these should be such as is necessary to maintain the highest standard of productive energy of mind and body-in other words, the highest condition of health and strength. If his reasoning is assented to, it follows that it is highly inexpedient to tax, and so increase the price of, any article which contributes to the maintenance of this highest standard; but if these may not be taxed, how can we hope to obtain fairness and equality between the producers of articles required for this purpose and the producer of articles which are not required for it? If we may not tax bread, the staff of life, nor the staple and manufacture of ordinary clothes which we require to keep us warm, nor the wood, nor the bricks, nor the iron which contribute to raise a shelter for us from storms and cold, how can we, with equal fairness to their producers-the object being an equal protection to all-tax ardent spirits, gold and silver plate, silk and satin dresses trimmed with lace or ribbons, ornaments and jewellery, none of which are necessary to maintain the standard described? If then fair and equal protection to all industries by means of taxation be impracticable, or, if practicable, inexpedient, is fair and equal competition in the production of wealth practicable, and, if practicable, have we obtained it for ourselves among ourselves? To obtain it among foreigners or in foreign countries depends upon the will of others, to influence which we can but apply the questionable and uncertain agencies of coercion or persuasion. That free competition principles have been accepted and acted . as occasion arose from 1823 to the present time can hardly be disputed. To whom or to which party in the State the greatest credit for their application is due is an unnecessary and invidious inquiry; sufficient is it for the reputation of this country that it can with truth be said that our indirect taxation, which we find it expedient to maintain, for reasons which commend themselves to us from moral rather than material considerations, is so adjusted that no owner or producer of wealth is afforded an advantage over the owner or producer of similar wealth, either at home or abroad, in offering that wealth in the home market to supply the legitimate wants of the whole population of the country. Let us try to follow in detail the process by which this principle is applied. All taxation imposed by the laws of Customs and Excise is indirect. In every instance the tax is levied on the release of the taxed goods from the control of the executive Government for use, sale, or consumption by the owner. The Excise is the department which, broadly speaking, controls and levies such taxes on the articles subject to them produced or manufactured at home, and the Customs that which controls and levies such taxes on the articles subject to them imported from abroad. The burden of such taxes falls upon the ultimate consumer, that is, on the individual who finally buys and consumes the taxed article, who, though he may not be aware of it, really pays the tax which is included in the price of the article he buys and con sumes. In taxing goods therefore, whether through the Excise or the Customs, it becomes necessary, if no owner or producer of them is to be given an advantage over another, that the tax shall be equal whether the article taxed is the produce of the home or of a foreign country. This, however, is only required when the article is one which can be produced in both countries, in which case, to preserve equality, it becomes necessary to impose a tax on any foreign commodities which can also be produced in the home country, and which 2 The first, and therefore the most difficult, successful steps in the direction of free competition were those of Mr. Huskisson from 1823 to 1828, in the ministry of Lord Liverpool and Mr. Canning. The most important, those of Sir Robert Peel, in removing taxation from foreign agricultural produce in 1846, supported by a remnant of the Tory party which adhered to him, and by the whole of the Whig and Liberal party under Lord John Russell. To anyone who desires to estimate degrees of gratitude due to those who gave practical effect to the principle of free competition for the guidance of British commerce, I recommend a reference to Mr. Huskisson's speech on the foreign commerce of the country, delivered in the House of Commons on March 25, 1825, followed by the Customs Acts 6th of George IV., chapters 104 to 108, and to his speech on the effects of the free trade system on the silk manufactures, delivered on February 24 of the following year. They are given in 'Hansard,' and also published in the second volume of Huskisson's Memoirs.' In reading these and other speeches of his during the time he filled the office of President of the Board of Trade, the reader should bear in mind the uninstructed and prejudiced public opinion of the time, and whilst another objection has to be added that all employers of labour would have the cost of labour raised by the necessaries of life being included in the taxation, although they would necessarily be employers of labour in most varying degrees disproportionate to the capital invested in their industry. Until such questions can be answered with some plausibility of argument in the affirmative, the idea of fair and equal protection to the industry of one nation by taxing the industry of others may, without further question, be rejected. Assuming, however, the objections of inequality and unfairness to the producer to be disputed and refuted, would such protection be expedient in the interest of the nation as a whole? Of course what is meant here is only the material interest of the nation, that is, its interest in the accumulation of wealth, and in affording facilities for the supply of revenue. It is to an inquiry into these two subjects that Adam Smith limits his application of the science of political economy; and there is no part of the great economist's reasoning which appears more conclusive than that in which he enumerates all the requirements for accumulation, and contends that no facility for the application and best exercise of human labour should ever be subject to hindrance or taxation. These requirements are food, and, in such climates as make them necessary, clothes and shelter, and the quality of these should be such as is necessary to maintain the highest standard of productive energy of mind and body-in other words, the highest condition of health and strength. If his reasoning is assented to, it follows that it is highly inexpedient to tax, and so increase the price of, any article which contributes to the maintenance of this highest standard; but if these may not be taxed, how can we hope to obtain fairness and equality between the producers of articles required for this purpose and the producer of articles which are not required for it? If we may not tax bread, the staff of life, nor the staple and manufacture of ordinary clothes which we require to keep us warm, nor the wood, nor the bricks, nor the iron which contribute to raise a shelter for us from storms and cold, how can we, with equal fairness to their producers-the object being an equal protection to all-tax ardent spirits, gold and silver plate, silk and satin dresses trimmed with lace or ribbons, ornaments and jewellery, none of which are necessary to maintain the standard described? If then fair and equal protection to all industries by means of taxation be impracticable, or, if practicable, inexpedient, is fair and equal competition in the production of wealth practicable, and, if practicable, have we obtained it for ourselves among ourselves? To obtain it among foreigners or in foreign countries depends upon the will of others, to influence which we can but apply the questionable and uncertain agencies of coercion or persuasion. That free competition principles have been accepted and acted as occasion arose from 1823 to the present time can hardly be disputed. To whom or to which party in the State the greatest credit for their application is due is an unnecessary and invidious inquiry; sufficient is it for the reputation of this country that it can with truth be said that our indirect taxation, which we find it expedient to maintain, for reasons which commend themselves to us from moral rather than material considerations, is so adjusted that no owner or producer of wealth is afforded an advantage over the owner or producer of similar wealth, either at home or abroad, in offering that wealth in the home market to supply the legitimate wants of the whole population of the country. Let us try to follow in detail the process by which this principle is applied. All taxation imposed by the laws of Customs and Excise is indirect. In every instance the tax is levied on the release of the taxed goods from the control of the executive Government for use, sale, or consumption by the owner. The Excise is the department which, broadly speaking, controls and levies such taxes on the articles subject to them produced or manufactured at home, and the Customs that which controls and levies such taxes on the articles subject to them imported from abroad. The burden of such taxes falls upon the ultimate consumer, that is, on the individual who finally buys and consumes the taxed article, who, though he may not be aware of it, really pays the tax which is included in the price of the article he buys and con sumes. In taxing goods therefore, whether through the Excise or the Customs, it becomes necessary, if no owner or producer of them is to be given an advantage over another, that the tax shall be equal whether the article taxed is the produce of the home or of a foreign country. This, however, is only required when the article is one which can be produced in both countries, in which case, to preserve equality, it becomes necessary to impose a tax on any foreign commodities which can also be produced in the home country, and which 2 The first, and therefore the most difficult, successful steps in the direction of free competition were those of Mr. Huskisson from 1823 to 1828, in the ministry of Lord Liverpool and Mr. Canning. The most important, those of Sir Robert Peel, in removing taxation from foreign agricultural produce in 1846, supported by a remnant of the Tory party which adhered to him, and by the whole of the Whig and Liberal party under Lord John Russell. To anyone who desires to estimate degrees of gratitude due to those who gave practical effect to the principle of free competition for the guidance of British commerce, I recommend a reference to Mr. Huskisson's speech on the foreign commerce of the country, delivered in the House of Commons on March 25, 1825, followed by the Customs Acts 6th of George IV., chapters 104 to 108, and to his speech on the effects of the free trade system on the silk manufactures, delivered on February 24 of the following year. They are given in 'Hansard,' and also published in the second volume of Huskisson's Memoirs.' In reading these and other speeches of his during the time he filled the office of President of the Board of Trade, the reader should bear in mind the uninstructed and prejudiced public opinion of the time, and it is found expedient to tax when produced at home, as nearly equivalent to the home tax imposed as that is found to be possible under the circumstances. For example, distilled spirit manufactured in the United Kingdom is taxed, on its consumption therein, at the rate of 108. per gallon, while the same spirit manufactured abroad is taxed, on its consumption in the United Kingdom, at the rate of 108. 5d. per gallon, the difference in excess of fivepence, to the apparent disadvantage of the foreign spirit, being added to place on an equality and compensate the British manufacturer for certain hindrances to which he is supposed to be subject by the laws and regulations of the home country in the production of the article when made at home, but which do not apply to it when made abroad. It is a condition that the hindrances allowed for must be artificial and compulsory, not natural, such as would be inferiority of soil, climate, or other conveniences and facilities for the production of the article. In our now existing scheme of taxation, the goods which are taxed, whether produced at home or abroad, at a rate which is intended to be equivalent, are malt, beer, chicory, vinegar, distilled spirit, including such goods as contain it, gold and silver plate, and playing cards. In the case of all these articles a tax is imposed on [their consumption or use in the United Kingdom, which is intended to be equal, as affecting their value in the market, whether they are produced at home or abroad. There are, however, several commodities produced in foreign countries which are taxed on their consumption in this country, and which are not taxed if produced in it only because it is so costly to produce them here that no one would incur the expense of producing them in competition with the foreign commodity, even with the protection and advantage afforded to him by the tax. Such are tea, cocoa, coffee, dried fruits of various sorts-principally the grapes called currants—and wine. Tobacco comes under a law affecting it alone, which prohibits the production of it at home-where the conditions for its growth are not favourable-for convenience in its taxation on its consumption after importation from abroad. In the instances above enumerated, which comprise everything subject to taxation—a taxation or hindrance to unrestricted production and exchange which is in direct opposition to the principle of free trade the principle intended to be applied to and to govern them is the principle of unrestricted competition, or absence of protection of one against the other. That it has been applied for such a purpose with most conscientious fairness (although precision of adjustment of the rates may in some cases be disputed) cannot reasonably be denied. Although it has been shown, as I think, that an equal protection to all home industries is impracticable, it may be still maintained on very plausible grounds that there are exceptional cases in which, on |