fication of certain rebates in the taxes on beer will bring something into the Treasury. Barring these minor changes, protective duties, and these only, are relied on to convert the deficit into a surplus.

Additional revenue, doubtless, will come from the new tariff act. The increased duty on sugar will yield a fresh revenue, and one, moreover, whose amount can be forecast with reasonable certainty. The reimposition of duties on wool and the higher duties on woollens will swell the revenue considerably. Other new duties or higher duties will yield something. But how much? On this question some estimates were indeed made by the committees who submitted the measure to the two branches of Congress. In the House, the Committee on Ways and Means, in its formal printed report, estimated that the revenue would be increased by seventy-six millions for the first year (1897-98). When presenting the bill to the House, Mr. Dingley, the chairman of that Committee, stated that, once in full operation, the act would yield a round hundred millions of additional revenue. Towards the close of the session, when the conference report was under consideration, the same gentleman remarked that a great sum, forty millions or thereabouts, had been lost to the Treasury by heavy importations during the discussion of the bill, and that the revenue would be increased for the first year by a much smaller amount than he had originally expected; but for the second year he still forecast a great gain, of some eighty-five millions.* In the Senate, Mr. Aldrich, chairman of the Committee on Finance, was much more cautious. Beyond the first year he ventured on no prophecies. But for that year

* Among the sources which would contribute to this handsome final gain in revenue, Mr. Dingley mentioned the round sum of ten millions of dollars (!) as likely to come from "personal effects of American tourists arriving from Europe." The new provision as to these is that "no more than one hundred dollars in value of articles purchased abroad by such residents of the United States [residents returning from abroad] shall be admitted free of duty on their return.'

(1897-98) he estimated that the bill would not yield enough revenue to cover the expenditures. Hence the Senate Committee proposed the additional means of securing revenue, to which reference has already been made, an increase in the internal taxes on beer and tobacco and a slight import duty on tea. The new taxes on tea and on beer were to last for three years, until 1900, indicating that, in the judgment of this committee, the tariff changes, even after the first year, would not yield what was needed, unless re-enforced by additional sources of revenue.

It would be idle to follow the details on which these calculations rested, or to inquire whether one or another had the better basis; for, in truth, they all rest on guesswork. Supposing the imports to remain the same as in some previous year, it is possible to state what a given rate of duty will yield; but no one can foretell with any approach to accuracy what the imports will be. This is more particularly the case with imports of protected articles and the revenue derived from them. Sugar alone, once the rate of duty is fixed, yields a fairly regular amount. Being an article of steady consumption, mainly secured by importation, it belongs, so far as the financial effects of the duty are in question, in the same class as tobacco, beer, spirits, which bring to the Treasury a steady and calculable revenue. Setting aside sugar, we have dutiable imports that fluctuate greatly and unexpectedly from year to year. Even with rates unchanged, it is impossible to know in advance with any degree of certainty what the revenue will be. In times of activity imports tend to rise, and the revenue swells. In times of depression they tend to fall, and the revenue shrinks. He who could foretell the oscillation of the industrial tides would have something on which to base an estimate of the direction at least, if not of the rate, in the movement of the national revenues. But even for the most ex

perienced observer and under stable rates of duty, there must always be a large margin of uncertainty in estimates of the future tariff revenue. With rates much changed, no estimate can be more than a guess.

The uncertainty as to the yield of the act of 1897 serves to bring into vivid relief once more, not only the haphazard character of our fiscal methods, but the need of a thorough reform in the monetary system. Much has been said of late as to the beneficial effects of a surplus in enabling the Treasury to fulfil its obligations for the maintenance of gold payments; and it has even been preached that a surplus is the one thing needful. Whatever be the future course of legislation on the monetary system, whether towards a separation of the monetary from the strictly fiscal duties of the Treasury, or towards a more trenchant reform, by putting an end to its paper issues once for all,—it is of prime importance that it have a free hand in meeting its regular disbursements, as well as in preparing for any new system. But the revenue from such an act as the new tariff act is simply a matter of luck; and, if enough or more than enough is provided in one year, less than enough is likely to be provided in another. It would be too much to hope for a radical change in our fiscal methods, such as to secure a more regular and accurate balancing of receipts and expenditures. But, surely, the monetary system could be extricated from the confusion, and set on some rational and well-defined basis of its own.

As it happens, the prospects for the next few years warrant the expectation that the act of 1897 will so raise the revenue as to enable the expenditures to be met, and will remove for the time being that complication in the general situation. The enormous exports of 1896 and 1897, fortunate for the United States, as were those of 1878-81, will sooner or later be followed by inflowing imports. How large the inflowing stream will be, what

proportion of dutiable and non-dutiable imports it will contain, must be uncertain. The only thing that can be predicted is that, once the heavy imports brought in before the act are out of the way,-imports and revenue will rise for the next two or three years. For a while the Treasury is likely to be unembarrassed, and will have a comparatively easy task in performing its double duties. of paying the expenses of the government and of maintaining the solidity of the circulating medium.

Whether this will prove to be real good fortune depends on the use made of the favoring opportunity. The experience of the time, now near twenty years ago, when specie payments were resumed, may serve as an example and a warning. Then, too, there was a combination of favoring conditions, full crops and a large export demand, coming at a time when liquidation after the crash of 1873 had been nearly completed. Hence the resumption of specie payments was successfully accomplished, notwithstanding legislative provisions singularly ill defined and apparently inadequate. This was rare good fortune. But it caused a feeling that all had been done that needed to be done, and encouraged a policy first of drifting, then of reckless experimenting, which finally brought disaster in 1893, and a renewed contest for sound money, after all only half settled in 1896. Very possibly, if the conditions of 187881 had been less favorable, if the effort for resumption then had failed, we should have had a more earnest effort for definitive reform and a better final outcome. The same danger is before us now. The good fortune of the present may once again cause drifting, inaction, the continuance of vicious and inherently dangerous monetary conditions, and so may lead eventually to another crisis, another struggle, and a further period of anxious unsettlement. It remains to be seen whether the propitious occasion will be seized, and whether some setting of our house in order will be accomplished.

F. W. TAUSSIG.

NOTES AND MEMORANDA.

DISTRIBUTION OF SMALL BANKS IN THE WEST.

The tables in the Appendix, compiled from official returns, show the distribution of small banks, private, State, and national, in several of the Western States where there is a remarkable development of banking under State laws. Banks are classified according to the amounts of their capitals, and towns according to the numbers of their inhabitants. The number of banks of each class in towns of each class is shown, and vice versa the number of towns of each class having banks of a given size.

The tables show a large number of small State and private banks in small towns. In each table of private banks, except for Nebraska, the largest number is in the upper left-hand corner, showing how many banks having not more than $5,000 capital are in towns whose population does not exceed five hundred. In the table of South Dakota State banks, also, the largest number is found in the corresponding space. The largest numbers in the other State bank tables, and in the table of private banks for Nebraska, are in the spaces for banks whose capital is not more than $10,000 each in towns of five hundred inhabitants or less. $10,000 is the commonest figure of State bank capital. It should be noted that the minimum capital allowed by law to State banks is $10,000 in Missouri and $5,000 in Kansas, Nebraska, and the Dakotas.

It will be seen from the horizontal lines of totals that in Missouri somewhat more than one-half of the State banks are in towns the population of which does not exceed one thousand. In Kansas and Nebraska two-thirds of the State banks are in such towns, and in the Dakotas nearly all of them. Most of the private banks, too, are found in small towns.

The fact that in the region under consideration the State and private banks are small and are in little villages will be