742 EEPORT— 1897. 



pernicious notion that ' artificially cheap ' imports, such as the products of prison 

 labour, or of ' bounty-fed trades,' diminish employment. The elementary economic 

 text-books have scarcely furnished any answer since the doctrine that ' industry 

 is limited by capital ' was abandoned. The truth of the matter is that industry is 

 limited by labour, i.e., the amount of employment depends on the population. A 

 policy of protection cannot increase population, and consequently employment, 

 except temporarily and under very special circumstances. It is doubtful, however, 

 whether ' increase of employment ' has not come to be used in a metaphorical 

 sense, as simply equivalent to increase of pay for the same work. But if this is 

 granted, tbe protectionist argument falls to pieces, as there was no reason for sup- 

 posing that the advantages of division of labour cannot be obtained by territorial 

 groups co-operating as well as by groups on other than a territorial basis and by 

 separate individuals. 



The true national policy is to take as much advantage of the division of labour 

 as possible. The individual who gets most advantage from it is the one who is 

 able to do the most skilled work in the best way, and the same thing is true of a 

 nation. What statesmen ought to do, therefore, is to aim at improving the finest 

 industrial qualities in the population. There are many wavs of promoting this 

 aim, but one of the most important is to allow free importation of the most 

 ingenious and most cheaply produced products of other countries. 



2. On Public Finance, cldefly in relation to Canada. 

 By J. L. McDouGALL, M.A., C.M.G., Auditor -General of Canada. 



Account of the several operations in the receipt and disbursement of public 

 money. 



Practically only two sources of revenue — Customs and Excise. 



Security for collectors of revenue should not be taken from friends, but from 

 a guarantee company. 



All receipts belong to Parliament. No part of them may be paid out without 

 its direct order. Here the directions are given. 



Method of preventing officials being governed by routine. 



li.vpenditure. 



Advantage of direct connection of Auditor-General's office with Parliament. 

 Importance of full public accounts. 



National Debt. 



Expenditure on interest of debt. Two debts cannot be compared accurately 

 by considering the principals alone ; you must take into account the rate of 

 interest also. 



Excess of Dominion note issue over specie reserve, viz., ^12,000,000, costs 

 nothing, but outlay for engraving and redemption. 



Proofs that the whole of the debt and more were spent on permanent improve- 

 ments of a national character. 



Mode of separating what is paid for the use of money from what is exacted 

 for the probability of the debtor failing to pay the principal. 



Difference between annual interest on our debt due in England and on that of 

 the Imperial Government has decreased between 1874 and 1897 from \h per cent, 

 to h per cent., making our debts, when they come to be renewed, ;Sfl83,000,000 

 instead of ,^250,000,000, looking to the interest chara-es. 



3. Crown Revenues in Lower Canada (1763-1847). By J. A. McLeait. 



The 'financial difficulties ' that arose in the Government of Lower Canada 

 between 1791 and 1841 were not, in the last analysis, financial, but constitutional. 



