a most distressed condition-bankruptcies, stoppages, and strikes being the chief incidents of their deplorable history."

This passage is a conclusive comment on the most unfortunate error which Mr J. S. Mill admitted into his "Principles of Political Economy," to the effect that in the early years of a state or colony it might be sound policy to extend protection to selected industries for a limited time, in order to give them a chance of becoming "strong and independent." The limited time is an impossibility. The selected industries become powerful vested interests; their trade, from the nature of the case, cannot be strong or independent in any real sense; and hence the constant "cries" and the ever impending ruin which not only prevent all removal of the original protection, but intensify it tenfold. It may be laid down as a maxim of fiscal policy that in no case are protective duties so pernicious and far-reaching in their mischief as when adopted by new countries under the specious plea of being required for only a limited time, and as a means of attaining strength and independence.

The petition goes on to give the real reasons which render this strength and independence impossible :

"And this is not far to seek. Holding fast to the simple truth that to protect' one industry is to put a burden on other industries, we find it at once. If you ask, for example, why the great industry of clothing manufacture does not flourish, we point you to the tariff table for an answer. Clothing wool is protected by a tax of 51 per cent., dyes are protected by 30 per cent., lining silks by 60 per cent., velvet by 60 per cent., and so on. Twisted silk thread is protected by 40 per cent., spool thread 75 per cent., alpaca lining 70 per cent., linen 40, foreign cloth 60 to 80 per cent., and even needles and other implements carry taxes of 25 per cent., and upwards. How can the American makers of clothing prosper under such a load? Supposing even that they can work the home market to its proper extent, how possibly can they compete with foreign makers and export goods? They cannot, and they do not. England, France, Germany, and Switzerland increase their exports of clothing year by year, and to the very countries and to the markets in which the United States would naturally have the advantage-Mexico, Canada, Brazil, Chili, Peru, the Argentine Republic, Australia, and New Zealand.”

As a fitting pendant to this statement of the petitioners, it may be recorded as a fact that there have been numerous cases of per

sons living in New York finding, on careful calculation, that it was worth while to visit Montreal and bring from thence an outfit of wearing apparel. The petition then discusses the effect of this very vigorous policy of protection on the working man :—

"We heartily agree with those supporters of the present protective tariff who declare that 'in this matter the interests of the labouring classes are as much at stake as those of their employers.' It is only too bitterly true. . . Pauperism and crime increase daily within our borders; skilled workmen tramp the country over in vain search for the means of living. In England, on the contrary, pauperism and crime have decreased in several of the largest cities, and the tide of emigration has greatly lessened. A day's labour in England will now purchase from 25 to 30 per cent. more than a day's labour in the United States. A silk operative in Lyons is far better off in all material comforts than a silk operative in Potsdam... The truth is that the working man is the man among all others who is most oppressed by the protective system. He does not receive an atom of protection himself, and he has to pay for the protection of every producer who ministers to his necessities. For everything he buys-his food, his clothing, his shelter-he has to pay from 20 to 100 per cent. more than the natural cost, because of protection. This it is which grinds him down. This it is which makes his portion to be privation and suffering in a land of boundless natural wealth. This it is which during the last twelve years has sown the seeds of Communism and filled the hearts of hundreds of thousands with blind desires for revenge upon the social order which, well or indifferently for the favoured few, works nothing for the toiler but hardship and suffering."

Then as regards that great and growing interest of agriculture represented by the rapidly filling States of the West and NorthWest-the States to which the next census of 1880 will give, under the decennial revision of representative power, a majority in Congress, which, when united, will be supreme :

"It is in no wise surprising that despite the most abundant harvests for several years past our farming countries are scourged by poverty, harassed by debt, and filled with the miseries of forced sales and mortgage foreclosures. . . . Everything the American farmer buys is protected, and everything he sells is sold in a free market. The timber for his barn is taxed 20 per cent.; the paint he puts on it is taxed 40 per cent. ; the iron he uses is taxed 35 per cent., and so on. Railway freights are increased by the protection

of all railway materials, ocean freights mount up because of the protective impositions upon foreign freights, and because American shipping has been swept from the seas by the protective navigation laws. Everything the agriculturist has to pay for is protected; but there is no protection for the farmer's wheat or the planter's cotton. The prices of these products is fixed at Liverpool, where the protective hand of America cannot reach."

Upon the financial part of the case the petitioners are very emphatic, and, considering that the statements they make are by persons exceedingly well informed and that the language they use has about it little if any of the usual American exaggeration, it is probable that this portion of the document will not fail to produce its effect.

"Now the last important consideration is the inevitably disastrous effect upon the national revenues of a revenue system which seeks everything before it seeks income. The expenses of the United States are met with increasing difficulty every year. No civilised nation in modern times ever submitted to such taxation as has so far been borne by the American people; but the limit of endurance is nearly reached. Relief means tariff revision. The mere Customs duties are not a fraction of what the American consumer must and does pay for the privilege of protection. The cost of all home productions is increased, and with the duties at an average of 40 per cent., it is a moderate reckoning to calculate that the American people have had to pay during the last twelve years 20 per cent. per annum more for the domestic goods they have consumed than they would have had to pay under the tariff of 1857. Putting the annual home manufactures at no more than 600,000,000 sterling, the tax for protection over 1857, and apart from the Customs duties, must be set down at no less than 120,000,000 sterling a year-that is to say, the American people in the last twelve years (1865-76) have paid the enormous sum of 1,440,000,000 sterling-three times the National Debt-to foster industries which are now in a more distressed condition than ever. Not one penny of this vast sum has passed into the United States Treasury. It is a most liberal estimate to credit the protective revenue system with one dollar of revenue out of four dollars of tax. The needs of an overtaxed people and the wants of the Treasury unite in demanding a reform of the tariff."

The petitioners conclude by expressing their willingness “to aid in any investigation which shall bring out the whole truth, and point

the way to the common benefit." As manufacturers, they are convinced that the immediate reforms demanded imply two clear principles; namely, first, the freeing of all raw materials from imposts; and, secondly, the extension of trade by the encouragement of imports. They believe that "a free and just inquiry instituted at once" will establish these two principles beyond all dispute ; and they ask that such an inquiry may be "prosecuted with rigid fidelity, and with no other purpose or motive than to establish the truth and secure the highest good for the greatest number.”Pall Mall Gazette, Feb. 4, 1878.

II.

CORRESPONDENCE between HENRY HUCKS GIBBS, Esq., Ex-Governor of the Bank of England, and Professor BONAMY PRICE, on the Reserve of the Bank of England.

WOODEND, WITLEY, GODALMING, July 19th, 1877.

MY DEAR GIBBS,-Let me call your particular attention to a statement in the "Economist” of July 14, at the end of long tables on rates of interest. It contains this-for me most memorablesentence :

"The entire thought and language of the last generation regarding what was called in most vague and misleading language, ‘the regulation of the currency, or the control of the circulation by the Bank of England' (meaning by currency and circulation, the amount of Bank of England notes in the hands of the public), has become obselete." This is from the pen of Palgrave, no doubt. I have had to say this in the Press for many years; and I have been called heretic, theorist, unpractical, unreal, and excommunicated; and lo! I am told everybody now is of my opinion. Not quite yet, Mr Palgrave, I should say; but it is fast being accomplished. Overstone and all the city erected and preached up the Bank Charter Act as the controller of the circulation, and thereby the creator of steady interest and trade, and the averter of panics. I had to cry, Bosh! and was put away as an unpractical fellow, who knew nothing about it. The talk about the Bank Act has been for the most part nonsense. From the very first, I wrote that it had done two things it had given a safe Bank of England note,—and, secondly, decreed the ultimate extinction in England of private

:

notes. It did nothing more. And now Palgrave testifies that "the uniform testimony of the actual facts over a long series of years has convinced everyone that the only control which the Bank of England can exert over credit, markets, and prices, is by changes in the rate of interest."

So much for the circulation theory. There remains the Bank rate and its principle, on which I am still reckoned a heretic of the most abominable order. I must have it out with you some day. The next generation will undoubtedly pronounce me right. There's conceit, you will say; no, it isn't, but conviction of truth.

My little book, "Currency and Banking," sums up all I ever said on the Bank Act.-Yours very sincerely, B. PRICE.

ALDENHAM HOUSE, July 29, 1877.

MY DEAR PRICE,-I have no doubt you are a heretic, and probably an incorrigible one—most people are in some point or other --but I don't discover in your letter before me any theses deserving excommunication.

Palgrave's language, though true, is itself misleading. It would lead one to think that some people supposed the Bank of England did still regulate the currency. It used to do so before '44. Since then it has no more intelligent regulating power than the “governor" of a steam-engine, which controls, indeed, the speed, but has no will of its own, but only that of the engineer who devised it.

It is quite true that many wise men said many foolish things about the real regulator of the currency--the Bank Charter Act. They expected it to cure panics, and perhaps stomach-aches; to create steady interest, and perhaps infuse wisdom into fools. It does none of these things (except giving a substitute for wisdomcontrol to fallible bank directors).

What it does do is exactly what is expressed by you. It gives a safe note, and has digged a pit for all notes other than the one national currency. They have not all fallen into it as yet, but their feet are that way turned, and the hill down which they go is steep.

I say the Bank Act is the regulator of the currency; by which I mean-not that it prescribes what notes are to be in the hands of the public (that the need of the public prescribes), but how they are to get into those hands, and what sort they are to be of.