764 EEPOKT— 1888. 



cent, of the yearly interest-charge has disappeared. The rapid debt payment has 

 now been brought to a halt by the cancellation of all matured obligations and the 

 high premiums commanded by the outstanding bonds, about one-fourth of which 

 become payable at the Government's option in 1891, while the remainder do not 

 mature until 1907. 



Before the war the U.S. Government was depending upon customs' duties for 

 its revenue. Fluctuations of trade subjected the public income to inconvenient 

 yariations, and the need of a second principal source of income was obvious. The 

 heavy cost of the Civil War compelled the creation of an elaborate system of 

 internal taxation — including excise, income, stamp, banking, and other taxes. The 

 outgoings of the four war years aggregated ^^3,350,000,000. Current revenues con- 

 tributed about ^^730,000,000 towards this sum, of which the larger half came 

 from the internal taxes. After the war the unpopular income-tax was abolished, 

 and by gradual remissions the 'internal revenue system' was reduced to the 

 proportions of an excise-tax upon spirits, tobacco, and fermented liquors, which 

 produces nearly two-thirds as much revenue as is derived from the customs. 



The annual surplus income exceeds ,^100,000,000. In the fiscal year 1886-7 

 there were called in and cancelled ^^12.5,000,000 of matured bonds, drawing 

 3 per cent, interest. Less than ,^'34,000,000 of this class of bonds remained 

 to be paid in the year 1887-8. They were soon extinguished, and the country 

 •was embarrassed by the accumulation in the Treasury of large sums of the 

 circulation medium. The stringency was relieved by the deposit of Government 

 funds with banks throughout the country, and by the purchase on public account 

 in open market, at high premiums, of about ,^45,000,000 of the unmatured 

 bonds, half of them being bought at an average price of more than 125. 



It is agreed that the volume of revenue ought to be reduced at once. This 

 would be an easy thing to accomplish if advantage were not taken of the situation 

 by those desiring to force a reform of the revenue system. The reduction of 

 surplus revenue should be accomplished first upon a plan that would secure unani- 

 mous consent. Then the question of tariff and revenue reform could be properly 

 taken up. The current discussion is likely to end in a measure that will merely 

 reduce revenue without affecting the essential character of the revenue system. 



The Federal Government is to be regarded as practically restricted to indirect 

 sources of taxation, other sources being in the hands of the States and municipal 

 corporations. The main dependence for revenue must continue to be a tariff upon 

 imports. Good financiering also requires the maintenance of the excise system as 

 a supplemental source of income. 



There seems little reason to believe that in arranging the tariffs of the future 

 the protection principle will be abandoned, however much the existing duties may 

 be re\ised and modified. The pending MQls' Bill places a few articles, chiefly 

 crude materials for manufactures, upon the free list, and reduces the average rate 

 of duty upon the remaining articles of the tariff-list from about 47 per cent, to 

 about 42 per cent. — by no means a revolutionary proposal. 



The tariff should be revised by an impartial, permanent Commission, acting in 

 the light of information to be supplied by exhaustive and thoroughly scientific 

 statistical inquiries. Until such investigations are made, the real operation and 

 effect of the American system, whether as a system of taxation or as a system of 

 protection, can only be a matter of opinion and assertion ; it cannot be a matter of 

 demonstration. 



2. On the Distribution of the Licences proposed to he transferred in aid of 

 Local Expenditure. Bij R. H. Inglis Palgrave, F.B.S., F.8.S. 



This paper is based on the statements respecting the licences dealt with by the 

 Local Government Bill of this year contained in the Memorandum, dated June 21, 

 1888, prepared by the Local Government Board. The licences referred to were 

 those on publicans and all other licences for retailing beer, spirits, wine, &c., and 

 also those on carriages, male servants, armorial bearings, &c. 



The licences on game dealers, tobacco dealers, appraisers, auctioneers, house 



