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........ 409

IV. JOURNAL OF MERCANTILE LAW. 1. Auctioneer-Contract with Bid-

der-How far Auctioneer is bound to accept all Bids indiscriminately,
2. Transfer of Property in a Ship. 3. What is sufficient Evidence of the
Cause of Damage to Cargo. 4. The Petroleum Oil Act of England..... 418


Progress of Paper-Government Embarrassments-Appreciation of Gold-Specu.

lative Movement-Theories of Paper Currency-Alledged Causes of Appreciation-General Advance in Prices-Losses of Contractors - Government Remittances—War Expenses— Ultimate Discredit—Evils of ContractionInterference--Larger Importations—Imports- Valuations-Cost of Goods -Exports--Rates of Exchange-Rapid Rise in Bills-Gold Moven entIncreased Exports of Gold-Small Currency-Tax Law........

A Law................. 419


1. Trade of Cipcionati. 2. The Coffee Trade of Brazil. 3. Cotton, Tobacco, and

Sugar Trade in New Orleans. 4. The Hop Trade. 6. Salt Trade of Poland. 6. Successful Rice Growing in the Hawaiian Islands.........

....... 427


1. A Railway through the Pyrenees. 2. The Italian Railway Contract. 3. Tolls

on Railroads. 4. Steel for Railway Bars. 6. The New York Cavals... ... 438


1. The Consumption of Milk. 2. The Wheat Crop for 1862. 3. Productions of

Agriculture for 1850 and 1860 4. Agricultural Statistics for Ireland in 1862. 5. Tea in China. 6. Wheat Growing in Canada. 7. Composition of Milk at Different Times of Day...

.. 444


1. The Gold Mines of Nova Scotia. 2. The Preparation of Iron Plates. 3. Paper and Cloth made of Indian Corn Husks......

.......... 456


1. Foreign Navy Yards. 2. Navy of the United States. 3. England's Iron

Cased Fleet. 4. Notice to Mariners. 5. Shipping Interest of Great Britain. 459


1. City Weekly Bank Returns, New York Banks, Philadelphia Banks, Bos.

ton Banks, Providence Banks. 2. Weekly Statement Bank of England. 3. Bank of France. 4. French Budget of 1863. 6. Banks of Wisconsio. 6. Finances of Vermont. 7. Banks of Illinois. 8. Debt of Mexico. 9. Taxation of Government Securities. 10. The Balance of Trade. 11. Bank of England - Access to their Bullion Room....

.......... 468


1. Important Instructions to the Collectors. 2. Decisions on the Tax Law. 3.

Real Estate Sales and the Tax Law. 4. Banks must take out Brokers' License to deal in Exchange. 5. Tax Law-Rectified Spirits, etc. 6. Stamp Duty on Bond and Mortgage. 7. Stamps on Checks and Drafts must be Canceled by the Drawer. 8. Duties on Imports in Venezuela ............ 478


1. The late high Balloon Ascent at Wolverhamtop. 2. An Amusing Historiette

Developed before the Paris Police. 3. Vicissitudes of Speculation. 4.
Flower Leaves in France. 5. Currency Terms. 6. Death of a French Cen-
tepiere. 7. Hoarding the Precious Metals. 8. Common Sense in a Money
Panic, 9. Looking A bead. 10. Money Goes as it Comes. 11. Raymuod
Lully-Power to Make Gold. 12. Liberality in Business. 13. An Austrian
Anecdote .....

......... 485


Notices of New Publications in the United States........

........ 494







MONEY.* It is somewhat remarkable, yet nevertheless true, that although the United States have existed eighty years as a nation, they have never had a regular financial system for the service of the government, the wants of which have been supplied in a manner by expedients, and these have generally been of that character which, in the progress of science, the nations of the Old World have gradually abandoned. The injurious influence of indirect taxes upon productive industry, and upon the general distribution of wealth in a community, have become recognized by statesmen whose efforts have been directed to a more equitable mode, which should, in no degree, retard the stream of natural wealth as it flows from the springs of industry, but should draw from the great reservoir of ac. cumulated capital in just proportion, the sums that are requisite for an economical administration of public affairs. Direct taxes have been found best to fulfil these conditions. In the United States no progress has been made in this direction. Although empowered by the Constitution to raise money by borrowing, or by either direct or indirect taxes, the revenues from customs duties have been the main dependence of the government for its support in peace as well as in war, and when commercial revulsions have at times caused this staff to break under it, temporary loans, make-shifts, and expedients have been resorted to until better times should come round. It is no doubt true that this want of system in the financial affairs of the Republic has been a leading cause of the present difficulties in which the country is involved. The financial question has in. deed been at the bottom of all the great revolutions of modern times, and

* We cannot by any means agree with all the conclusions and statements in this very able article. Nor do we wish the fact of our publishing any contribution, to be taken as evidence of our endorsing it. It has always been customary to open the columns of the Merchants' Magazine to the advocates of both sides of every commercial question, and we intend of course to continue that custom.-Editor Merchants Magazine, VOL. XLVII. —NO. VI.


must continue to be a stumbling block to statesmen, until the science of taxation is so far developed that the burdens of government may fall with equal weight upon all the members of the community, and so operate as not to draw wealth from the pockets of one class into those of another, thus building up an interest dependent upon the government, at the expense of other interests, whose growing discontent will sooner or later convulse the State. The revolution in England was precipitated by the financial exactions of the crown; that of France commenced a century later, when the financial distress caused by the expensive sway of Louis XIV, aggravated by the paper money scheme of Law, under the Regent, culminated in the corruptions of Louis XV, and in the subsequent reign burst upon the people in revolution, when a flood of paper money destroyed all that remained of credit, public and private. The attempt of England to collect revenues in the colonies was fatal to her power on this continent, and the rebel colonies depended upon paper money to carry them through the struggle. An issue of $372,000,000 of paper notes sufficed utterly to destroy their value as money and the resources of the people, and with it the credit of the new government, which was no sooner organized than this financial question threatened it with reverse. The inability to pay the troops set them in array against the government, when the great personal influence of WASHINGTON saved the country.

The attempt to collect taxes from a people ruined by paper money, caused the rebellion of Shay in Massachusetts. The attempt to collect the whisky tax upon a people whose sole dependence was the sale of rye whisky, caused the rebellion in Pennsylvania, which was led by ALBERT Gallatin, afterwards Secretary of the Treasury. These and many other grave difficulties beset a government newly established over a people who had been ruined by the false paper system of finance that had been adopted. A similar systein destroyed the republican government of France, and made welcome the rule of the First Consul. It is no doubt the case that the creditless government of a ruined people had but little choice in the system of finance they were to adopt. Paper money as a resource was dead. Direct taxation only produced resistance to an authority not yet established, and to which the States of Georgia and Rhode Island had not yet adhered, and Mr. Madison held that it was a great advantage that, through the assent of the States, they were able to levy duties upon imports temporarily, as a means of paying current expenses and re-establishing public credit. The States that had been united under the confederation seceded from each other because that system did not suit them all. It was necessary that the new government should attract all back to the Union, and adopt its policy to that end. When the first session of the first Congress of the United States met in New York, March 4, 1789, the first serious business which engaged their attention were the finances. Mr. Madison, remarking upon the claims on the government that it was necessary to meet, said:

"To do this a national revenue must be obtained; but the system must be such a one, that while it secures the object of revenue, it shall not be oppressive to our constitutents." The system proposed was that which had been adopted by the Confederate Congress of 1783, which was in substance a duty of 5 per cent on imported goods, with an additional duty on some enumerated articles, among them tonnage. The debate was immediately opened upon the manner in which these duties would effect

different States. Some of the States that possessed shipping wished the rate so high as to exclude foreign tonnage; others favored a moderate duty only, and still others wanted no discrimination, but simply a revenue tax. Mr. TUCKER, of South Carolina, remarked, April 9, 1789, that in order to preserve peace and tranquility, a spirit of moderation was necessary. “ All that can be expected is such a degree of accommodation as to insure the greatest degree of general good, with the least possible evil to the individuals of the political community." All the speakers agreed that this system of indirect taxes was one, even at the low rate of 5 per cent proposed, which would benefit some sections at the expense of others. Mr. Madison contended that if the agricultural sections paid more under the system, they, being more thickly settled, stood more in need of national protection; on the other hand, that the populous sections having, before adopting the Constitution, the power to protect their interests, naturally came into the Union in the expectation that those interests should not be neglected. The debates continued on the subject of the large amounts that would be paid to enrich individuals. Mr. GOODHUE, of Massachusetts, a large shipowner, proposed a duty of 60 cents upon tonnage, which Mr. TUCKER, of South Carolina, said would amount to $50,000 per annum in the port of Charleston ; "onethird of the whole tonnage is foreign, two-thirds American. The first is all that would come into your treasury; the second goes into the pockets of individuals as an extra reward for serving us. I once more wish that gentleman will consider great duties as imposing a heavier burden upon the Southern States, as they import more, the others less, and the sum we pay towards the revenue must be in proportion to our importation." FISHER AMEs, of Massachusetts, followed in the same direction. " If the revenue system should fall with oppressive weight on the people; if it shall injure some in their dearest rights, it will shake the foundation of the government."

Mr. GERRY strongly favored moderation. “The energy of your government depends upon the approbation of the people. No doubt the citizens of the United States will support the government they have adopted, so long as they approve the measures it pursues, and no longer."

It will be remarked, that at the date of this debate, there were only eleven States in the Union, and the arguments of many of the speakers were directed to such compromises as would induce a “ reunion" of those States that had not yet adopted the Constitution. The system of customs duties was finally carried on a principle of compromise among all those interests, in view of the urgency of a revenue for the government, and of the great difficulty at that period of collecting any other tax. Nevertheless, the principle was fully recognized that their operation, even at the low rate of 5 per cent, was to benefit manufacturing at the expense of agricultural interests.

The operation of the customs, when trade resumed its course, and the large exports of the country to meet the famine in England and Western Europe, and to feed the armies in Spain and elsewhere, brought back large quantities of needed goods, realized a sufficient revenue to carry on the government and do something towards the discharge of its debt. There were also the internal taxes, mostly the excise upon spirits, which, in consequence of the events attending their collection, cost more than they yielded, and then gradually fell into disuse, when the uncertain yield of the

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