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surplus all chance of any considerable reduction of the debt for that time. In truth taxation is so painful that in a sensitive community which has strong organs of expression and action, the maintenance of a great surplus is excessively difficult. The opposition will always say that it is unnecessary, is uncalled for, is injudicious; the cry will be echoed in every constituency; there will be a series of large meetings in the great cities; even in the smaller constituencies there will mostly be smaller meetings; every member of Parliament will be pressed upon by those who elect him; upon this point there will be no distinction between town and country, the country gentleman and the farmer disliking high taxes as much as any in the towns. To maintain a great surplus by heavy taxes to
pay off debt has never yet in this country been possible, and to maintain a surplus of the American magnitude would be plainly impossible.
Some part of the difference between England and America arises undoubtedly not from political causes but from economical. America is not a country sensitive to taxes; no great country has perhaps ever been so unsensitive in this respect; certainly she is far less sensitive than England. In reality America is too rich, daily industry there is too common, too skilful, and too pro ductive, for her to care much for fiscal burdens. She is applying all the resources of science and skill and trained labour, which have been in long ages painfully acquired in old countries, to develop with great speed the richest soil and the richest mines of new countries; and the result is untold wealth. Even under a Parliamentary Government such a community could and would bear taxation much more easily than Englishinen ever would.
But difference of physical character in this respect is of little moment in comparison with difference of political constitution. If America was under a Parliamentary Government, she would soon be convinced that in maintaining this great surplus and in paying this high taxation she would be doing herself great harm. She is not performing a great duty, but perpetrating a great injustice. She is injuring posterity by crippling and displacing industry, far more than she is aiding it by reducing the taxes it will have to pay. In the first place, the maintenance of the present high taxation compels the retention of many taxes which are contrary to the maxims of free trade. Enormous customs duties are necessary, and it would be all but impossible to impose equal excise duties even if the Americans desired it. In consequence, besides what the Americans pay to the Government, they are paying a great deal to some of their own citizens, and so are rearing a set of industries which never ought to have existed, which are bad speculations at present because other industries would have paid better, and which may cause a great loss out of pocket hereafter when the debt is paid off and the fostering tax withdrawn. Then probably industry will return to its natural channel, the artificial trade will be first depressed, then discontinued, and the fixed capital employed in the trade will all be depreciated and much of it be worthless. Secondly, all taxes on trade and manufacture are injurious in various ways to them. You cannot put on a great series of such duties without cramping trade in a hundred ways and without diminishing their productiveness exceedingly. America is now working in heavy fetters, and it would probably be better for her to lighten those fetters even though a generation or two should have to pay rather higher taxes. Those generations would really benefit, because they would be so much richer that the slightly increased cost of government would never be perceived. At any rate, under a Parliamentary Government this doctrine would have been incessantly inculcated; a whole party would have made it their business to preach it, would have made incessant small motions in Parliament about it, which is the way to popularise their view. And in the end I do not doubt that they would have prevailed. They would have had to teach a lesson both pleasant and true, and such lessons are soon learned. On the whole, therefore, the result of the comparison is that a Presidential Government makes it much easier than the Parliamentary to maintain a great surplus of income over expenditure, but that it does not give the same facility for examining whether it is good or not good to maintain a surplus, and, therefore, that it works blindly, maintaining surpluses when they do extreme harm just as much as when they are very beneficial.
In this point the contrast of Presidential with Parliamentary Government is mixed; one of the defects of Parliamentary Government probably is the difficulty under it of maintaining a surplus revenue to discharge debt, and this defect Presidential Government escapes, though at the cost of being likely to maintain that surplus upon inexpedient occasions as well as upon expedient. But in all other respects a Parliamentary Government has in finance an unmixed advantage over the Presidential in the incessant discussion. Though in one single case it produces evil as well as good, in most cases it produces good only. And three of these cases are illustrated by recent American experience.
First, as Mr. Goldwin Smith-no unfavourable judge of anything American-justly said some years since, the capital error made by the United States Government was the “ Legal Tender Act," as it is called, by which it made inconvertible paper notes issued by the Treasury the sole circulating medium of the country. The temptation to do this was very great, because it gave at once a great war fund when it was needed, and with no pain to any one. If the notes of a Government supersede the metallic currency medium of a country to the extent of
$80,000,000, this is equivalent to a recent loan of 880,000,000 to the Government for all purposes within the country. Whenever the precious metals are not required, and for domestic purposes in such a case they are not required, notes will buy what the Government want, and it can buy to the extent of its issue. But, like all easy expedients out of a great difficulty, it is accompanied by the greatest evils; if it had not been so, it would have been the regular device in such cases, and the difficulty would have been no difficulty at all; there would have been a known easy way out of it. As is well known, inconvertible paper issued by Government is sure to be issued in great quantities, as the American currency soon was; it is sure to be depreciated as against coin; it is sure to disturb values and to derange markets; it is certain to defraud the lender; it is certain to give the borrower more than he ought to have. In the case of America there was a further evil. Being a new country, she ought in her times of financial want to borrow of old countries; but the old countries were frightened by the probable issue of unlimited inconvertible paper, and they would not lend a shilling. Much more than the mercantile credit of America was thus lost. The great commercial houses in England are the most natural and most effectual conveyers of intelligence from other countries to Europe. If they had been financially interested in giving in a sound report as to the progress