TOPICS OF TTIE DAY.
AMERICAN INSOLVENCY. FIVE years ago American Finance was the envy of the world. Taxation was not oppressive, the debt was being paid off at a rate beyond the dreams of economy, and every year there rolled into the Treasury a surplus which made European Chancellors of the Ex- chequer sigh with envy. Then came the Administration of General Harrison, and after four years of judicious indiscretions in the matter of finance, the whole condition of things was changed, and the Treasury was left com- pletely empty. And yet there had been no war to waste the resources of the nation, no plague, no famine, no terrible or exceptional financial crisis, none of the things which impair a country's vitality, and make her poor. The money, as the parish clerk set forth in his report to the Vestry, had simply been " moodled away," and " moodled away" consciously and deliberately. Strange as it sounds, the chief embarrassment of the Republican party when they lodged their nominee in the White House was the flourishing state of the finances. They came into power pledged to the manufacturers of the United States to maintain Protection, and if possible to extend it ; but this was a very difficult thing to do in face of the fact that the Treasury already had more money than it knew what to do with. It is easy to clap on a duty of 20 per cent. when money is needed. When, however, you have got too much money, the natural—almost the necessary—thing to do is to take off taxation. The Republican managers faced the disagreeable situation like business men. They saw that the only plan was, by some means or other, to get rid of the surplus. That once accomplished, the Tariff remained at their disposal. Till, however, the surplus was got rid of, and the finances were thoroughly embarrassed, there could be no sure founda- tion for a protective system. Accordingly, they set them- selves to bale out the Treasury, and to throw overboard the superfluous and unwelcome dollars. But the Pro- tectionists were far too shrewd to give away the surplus to the first comer. They saw that the problem before them, when properly understood, presented itself in the following way :—How to reduce the surplus in such a way that the money got rid of should buy the Protectionist party support in the country ? Keeping this object before them, they succeeded in devising a very ingenious scheme of expenditure,—one which not only most effectually embarrassed the Treasury, but which won or kept steady thousands of voters in every State of the Union.
The facts, which are well worth looking into in detail, are set forth in the speech in which Mr. Wilson introduced the New Tariff Bill into the House of Representatives on Monday. The surplus for the year 1889 amounted to no less than £21,000,000, and when the Cleveland Adminis- tration went out of office, the cash balance in the Treasury reached the enormous sum of £37,000,000. The first attempt to get rid of this incubus of gold was the pur- chase of bonds not yet redeemable at a high premium.
During the first seven months of General Harrison's term of office, bonds to the amount of £24,000,000 were thus purchased at premiums ranging from 5 to 8 per cent. on the bonds of 1891, and from 27 to 29 per cent, on the bonds due in 1907. In spite, however, of this, and of large disbursements at the beginning of the following year for redemption of bonds and payment of interest not yet due, it was impossible to keep the surplus within bounds by any such tentative methods. Accordingly, the Fifty- first Congress resolved to take the matter seriously in hand. It succeeded, and won itself an everlasting fame in so doing. The Fifty-first Congress of the United States of America will never need a monument. The emptying of the Treasury, and the imposition of new burdens on the people during a time of profound peace and prosperity, is its everlasting monument—one that will last till the end of recorded time as the great example of how public money may be wasted. Congress began by refunding to the various States of the Union the product of the direct taxes. This was a purely gratuitous and altogether uncalled-for ad. No matter. It relieved the bursting Treasury of some £2,800,000. The next scheme was the establishment of bounties on the growth of sugar, under which some £3,400,000 has been paid to the sugar--growerr. These, however, were mere nothings compared to the great scheme under which an extra £12,000,000 a year was added to the already bloated_ Pension List of the United States. Further, Congress re- mitted taxes on tobacco and sugar, and so lost a large block of revenue. Again, they got rid of a certain wind- fall connected with the Banking system worth over £10,000,000. Taking everything into account, Mr. Wil- son calculates that the Fifty-first Congress made ducks. and drakes of about £70,000,000. Remember that for the. bulkof this money there is literally nothing to show,—no ships, no forts, no military equipments, none of the great. publicworks on which most extravagant nations spend their money. It was simply thrown away, and as far as. the pensions are concerned the waste was entailed for the next twenty or thirty years. The net result is that, whereas- in 1889 the United States had a surplus of £21,000,000, it has now a deficit of £15,000,000, and a Tariff so burden- some that its weight is felt in every household and on every article of consumption.
At first sight, the Republican management of the finances of the Union seems a huge fiasco. If, however„ we consider it from the point of view of those who designed it, it will be seen to be a great success. The resources of the nation were deliberately squandered by the Harrison Administration, in order to create a breast-- work of deficit which should defend the Tariff. The Pro- tectionists may say with pride,—` We determined to create a substantial deficit, and in spite of every sort of difficulty,. we succeeded.' There is no denying this success. If the- Treasury had been solvent, the party of Tariff reform might at once have tackled the McKinley Act in earnest.. As it is, they fight with one hand tied. They cannot, when there is a deficit of £15,000,000, propose to reduce the revenue still further. All that they can do, is to loosen the weight of the Tariff at the places where it galls. most, and hope for better times. Meantime, the Treasury is occupied with the homely though difficult task of paying: its way. Instead of its energies being devoted to re- ducing the debt, it is actually contemplating an issue of £50,000,000 to enable it to regularise its position and_ leave it solvent. If any one in 1889 had predicted that this would be the state of things in 1894, and. that it would be reached, not by a reduction in_ taxation, but after an increase of the Tariff without. parallel in history, he would have been regarded as a lunatic. Yet this is what has happened. How Mr.. Cleveland and his Ministry will be able to raise the necessary £15,000,000 remains to be seen. Mr. Wilson's. Bill contains a clause imposing a tax "upon individual incomes and corporate investments." The Income-tax will, it is said, be a tax of 2 per cent. on all incomes over 84,000,—that is, £800 a year. It is calculated that only 85,000 persons will be liable to pay this tax. In all probability, however, the House of Representatives will not agree to the proposal without great modifications. Americans are not fond of direct taxation, which, in a country where people are too busy to stand up for their rights, means oppression for those not rich enough to- bribe. If the proposed Income-tax falls, it is difficult to. see whence the requisite supplies can be obtained. If,. however, the American people are still in earnest about Free-trade, these difficulties will all be surmounted. The. question is,—Has not their Anti-Protectionist zeal some- what abated ? If it has, then Mr. Wilson's Bill will be killed by the Senate. If, on the other hand, public opinion is still strong for Tariff reform, Tariff reform there will be. We can only wait and watch, admiring meantime the splendid imperturbability of a people who have allowed 70,000,000 of their money to be wasted without getting- in the least excited about it. The cranks talk of im- peaching President Cleveland over the Sandwich Islands affair ; but not the crankiest crank in the States would think it reasonable to impeach General Harrison for having allowed the national resources to be poured out.
like water.
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