684 From The Economist, 20 Jan. FINANCE OF THE WAR. TAXES OR LOANS? But we rest much as a war is a very extraordinary occurrence, and its cost great, and, further, that the advantages of it are experienced as much or more by future generations, it is but reasonPARLIAMENT will meet on the 23d. What- which it entails. This is a very rough mode able that posterity should bear the burden ever slight hope there may be of satisfactory of disposing of these questions. It would not results arising out of the negotiations now pro- be difficult to show that there is scarcely an ceeding at Vienna, in consequence of the un- expense which we incur, either for the proexpected acceptance by Russia of the "four tection of the empire, the promotion of our points," it is agreed on all hands that nothing commerce, or the improvement of our people, which has happened could justify the Western in which posterity is not more interested than Powers in any suspension of their efforts with ourselves; and which, therefore, on this a view to the prosecution of the war. although the state of our finances is happily rather than of present taxes. And ground, might be made the subject of a loan, such as will not call for any undue precipta- nothing upon this point. The more we intion of provision for the next financial year, quire into the subject we shall find that there yet the time will have arrived when the is much less distinction between the real inamount of our expenditure will have to be es-terests of the present and future generations timated, and "ways and means" furnished to in respect to this subject than at first sight the requisite extent. France has had its loan may appear; and that, in truth, their inter-England must have its budget. Provision ests are so identical, that the system which is must be made for 1855 upon a scale adequate the best for the one is also the best for the to the greatest exertions of which the country other. There is but one remark that we shall is capable. The time has, therefore, arrived make upon this point. When we talk of poswhen it becomes needful that the public should terity sharing the cost of present wars, because fairly discuss the principles upon which the they will enjoy the benefits, if any, which the extraordinary demands upon its resources country will derive from them, what security for the conduct of the war should be met.Our success in this country lies very much in the fact that we attend to one thing at a time, and to each thing at its proper time. It is fortunate in approaching this subject, the importance of which can hardly be over-estimated, that we encounter no difficulties of a party character. Whether it is for the true interests of the country that we should raise the extraordinary means required for the war, by increased taxation, or by loans, or by both, and, in that case, how the limits of each are to be determined, must depend entirely upon considerations in which all alike, immediately or remotely, are interested; and the only desire, therefore, must be on all hands to arrive at a wise conclusion upon the various questions which must determine the best and wisest policy. have we that posterity may not have serious struggles of its own, in which its powers will be fettered by the burdens that may now be cast upon them? operation of each principle. To whatever exLet us, then, consider what is the practical tent we raise the means for conducting the war by taxes, to that extent must the individual expenditure of the country be curtailed, or the individual savings of the country at the end of the year lessened. But in this case the war would not cost the country a shilling more than was actually expended upon it, and no additional permanent taxation would be required to pay the interest of a debt. If, on the other hand, the cost of the the war is defrayed by means of loans, the whole amount would be abstracted from the existing capital Is the war to be paid by taxes, or by loans, to be imposed year after year to defray the of the country, and new taxes would require or by both; and, if so, on what principle is interest, not of the amount expended on the the limit of each to be defined? No one has war, but of the much larger nominal amount gone the length of contending that without of stock created in contracting loan after loan; any regard whatever to the duration of the -and as these claims would be permanent, war, or its necessary cost, the whole expense the taxes to meet them must be permanent alshould be defrayed by taxation; but the real so. practical questions which have to be decided former case the cost of the war would be paid The difference is simply this:-in the are these-which of the two systems is most from income, leaving no future charge ;—in advantageous of itself, and whether taxation the latter case it would be paid from capital, should be resorted to, to the greatest possible leaving an accumulating and permanent limit, before recourse is had to loans; or charge for interest. It must be plain, that to whether it is wise to resort in whole or in part rely for any particular expenditure upon the to loans from the first? Attempts have been income, or upon the capital of a country, must made to decide these questions in a very sum- in a considerable degree depend upon the mary way. It has been argued, that, inas- special and peculiar features of such country -for there is nothing more certain than the waiting for employment. But then it must be fact, that in different countries the same re-obvious that it is just in proportion as capital is lation does not exist between the amount of thus economized as it is in England, by active capital possessed and of income derived from employment, that the income of a country must it. This must be determined by the extent to be great in proportion to the capital it poswhich capital is fully employed, and the skill sesses. By its use, industry is encouraged, and judginent with which it is employed; and labor is demanded, wages are good, commerce also upon the favorable circumstances other is extended, profits in the aggregate are great, wise under which any particular country is a demand arises for agricultural produce, and placed. In this respect there is a striking the incomes of all, farmers and landlords incontrast between England and France. cluded, are increased. It is quite certain that In no country in the world, not even in the as in no country in the world is capital so United States is the margin of unemployed systematically economized as in England, so, capital smaller than it is in England:-in no in no country in the world is the whole excountry, probably, is it larger than in France. pendable income of a people so great, even in At first sight this may appear a startling asser-relation to the enormous capital possessed.tion, and especially to those who are accustom- Let it be borne in mind that in such aggregate ed to hear, and properly to hear, of the enor-income we include the wages of labor as well mous capitalists in this country as compared as the profits of capital and the rent of real with any other. But it must be borne in property. mind that the question is not as to the extent On the other hand, we doubt if there be of capital possessed by the country, but as to any country in the world in which the exthe portion of that capital at any moment un-pendable income of the people is less than it employed. The perfection and extensive is in France, in proportion to the accumulated ramifications of our banking system, and the capital which they possess. It is from these strict economy in the use of capital which considerations that a loan is so easily raised in severe competition enforces, are such, that France, while any increase in taxation is borne the smallest margin necessary to conduct the with so much difficulty; and that taxes are so monetary operations of the country is held little felt in England, while our money market unemployed at any ordinary time, and a su- exhibits so high a degree of sensitiveness from perstructure of credit extending over the any cause which touches our floating capital; whole world based upon it, such as was never and that the effects of a commercial panic, known at any former time or in any other which suspends for a moment the circulation country. Not to speak of every city or of of capital and interferes with the delicate every market town, but almost in every village chain of credit are so much more felt in Engin the United Kingdom, there exists banks or land than in France. From these considerabranch banks, which absorb from day to day tions we arrive at the conclusion, that while in deposits the spare pounds of men of all class-in some countries wisdom would counsel haves, from the extensive landowner to the hum-ing recourse to a loan for a given unusual exblest tradesman. These accumulated deposits penditure in preference to taxation, in others are made a source of profit to the banks only it would counsel taxation in preference to a by their employment; and that to a great ex-loan. tent is accomplished in trading districts by It is for us, then, to determine which of the facilities afforded to trade, and in rural dis-two systems is best adapted to the actual cirtricts, by the same means, through the London cumstances of England; and, in considering bill brokers. this question, we will narrow the ground to In France, on the other hand, there are few the interests of the present generation. We banks in the country, and those are confined do not require to enforce the fact that we are chiefly to large trading towns. The great peculiarly a commercial nation; that the mass of the money required for the opera- whole of our interests are immediately affecttions of agriculture and trade, in place of be-ed by whatever deranges or disturbs the ing in banks at call, is hoarded in hard coin course of trade; and that it is to the benefit in chests and cupboards;--and even the an- of all alike, at almost any sacrifice, that the nual savings, which among so careful and population shall be employed and trade flourthrifty a people amount to a large sum, are ishing. It has been computed that, in addition either hoarded at home, or, for greater securi- to our ordinary expenditure for the three ty in the house of the notary, with whom they services, which may be put down at £18,000,remain till an opportunity for investment oc- 000, we shall require £20,000,000 a year more curs. Capital to the amount of many millions of for the war. Of this £10,000,000 has already pounds, which in England would be actively been provided by increased taxes in the sesand profitably employed, through our banking sion of last year, and £10,000,000 more will system, in fostering industry and extending be required for each year while the war lasts. trade, lies idle in France, in five-franc pieces, The £10,000,000 already provided for from income will be a recurring resource year after credits are deranged, and a panic of less or year. Had it been raised by loan, the opera- more intensity ensues. These are the invarition must have been repeated in each year.-able and necessary consequences of any It will be remembered that at the commence- serious fall in the price of public securities. ment of the war there was a strong belief that Commerce becomes contracted, employment the Government would, as had been done up-is lessened, wages are reduced, consumption on former occasions, have recourse at once to falls off, prices fall, profits are converted into a loan for at least a portion of the provision losses, the usual revenue declines, the income required for the year. In anticipation of this, both of private persons and of the State is Consols fell from 95 to 85 1-2; and the opinion seriously impaired, and in order, in a time of at the time was that a loan of £10,000,000 emergency, to avoid the consequences of the would have driven them down to 82. When latter, either new taxes must be imposed where it was known that no loan would be required, the price rapidly rose again to 92, and subsequently to 94, and even now it stands at 92, or £10 above what the anticipated price would have been in the face of a loan. they can least be borne, or the same mischievous expedient of borrowing must be resorted to, at an increasing rate. It may be said that a single loan of £10,000,000 would not produce so great an effect. But let it be remembered, if the system be resorted to, loan after loan must be contracted, and as often as the war requires it ;—and that to every new loan must be added the interest of the former. In order to have obtained a net sum of £10,000,000, we must have created a debt of nearly £12,000,000, upon which already we should have been called upon to raise no less a sum than £360,000 a year in taxes, and that What it is worth for England to avoid even perpetually, year after year, for the interest. the slightest derangement of her capital markAs it is, the nation has actually saved £2,000,- et, and of all the transactions hanging upon it, 000, independent of a perpetual future annual through the entire circle of our trade? What charge of £360,000. But is this all? A re- is it worth to keep the value of money steady duction in the price of Consols by ten per cent.—to avoid such apprehensions as to the value does not alone affect the new part of the debt of public securities as will prevent bankers created-it equally affects the whole of the curtailing their ordinary accommodation-to seven hundred and sixty millions of which the avoid a disturbance of trade, and even a temdebt consists. In order to raise £10,000,000, porary cessation of demand, and the consethe marketable value of the national debt quent effect upon, prices? What is it worth to would thus have been reduced by more than avoid those disturbances which deprive thou£70,000,000. Nor would that have been all. sands of working men of employment, and reConsols are the barometers by which the value duce the incomes of millions more? That all of all other securities are tested. Railway these are the direct and certain consequences bonds and railway shares, canals, companies of a deranged money market, of a low price of all descriptions, the interest of money and of public securities, experience has too often the rate of discount of bills are all less or shown,-that they must be so, and to an exmore influenced by the price of Consols. But tent proportioned to the cause, all reasoning would the effect end here? We have refer- confirms. red to the great economy of capital by means of our banking institutions. £10,000,000 a year of taxes gives an average of 7s a-head, or of 35s for each family in the A large portion of the capital deposited with United Kingdom, for an entire year. As comthem is employed in assisting trade, chiefly by pared between an easy and steady money discounting bills. But a considerable sum is market, and one always agitated and kept in also invested in Consols and other interest a feverish and uncertain state,-between good bearing public securities, as a convenient re-trade and full employment as the result of serve in the event of their being required to the one, and bad trade, losses and want be converted. But when the price of such of employment as the result of the other, public securities is suddenly reduced, bankers what is the payment of 35s for each are naturally unwilling to sell at a considerable loss, or to rely upon that portion of their investments in the event of a demand being made upon them. To avoid the chance of such a sacrifice, they accordingly endeavor to limit their liabilities and to strengthen their cash reserve. This can only be done by declining to discount bills to the same extent as those which fall due, and by calling in the advances made to their customers. A rise in the rate of discounts takes place, money be comes what is called "extremely difficult," family in the year, or about 9d per week, being less than 2d per head? Of course a very much larger portion would fall upon the wealthy classes, but in the same proportion the contribution would be reduced to the humbler classes. The real secret of successfully governing England, is to see that everything is done to encourage her commerce and trade, and thus ensure ample employment for her capital and labor. Those objects secured, a little more or a little less taxation is a matter of comparative indifference. And this is best shown when we consider to what an enormous extent the a remarkable example of the way in which the people of this country inflict voluntary taxes national expenditure in one form has been reupon themselves. duced, and in another form increased. Public But, then, it may be said, that if you resort festivities have been almost suspended, and to taxation in place of loans, to whatever ex- private festivities have been much curtailed; tent we take from the income of each person but an enormous contribution has been made in the shape of additional taxes, to that extent to the Patriotic Fund, and enormous purwe reduce the means of expenditure, and re- chases of all kinds of things have been made duce the demand for commodities, which af- for the Crimea. On the whole, therefore, it fects trade, and ultimately employment, in the would seem that increased taxation, and with same way to which we have already adverted. it increased expenditure by the State, would Is this so? If in a time of peace the public not diminish the ordinary entire expenditure, spend £500,000,000 a year, and the State or in any perceptible degree affect the trade spends £50,000,000,--and if after imposing of the country. In the case, however, of £20,000,000 a year more of taxes the incomes loans, it would even in this respect be very of the public are reduced to £480,000,000, and different :-private expenditure would go on the expenditure of the State is increased to as before; the State expenditure of the loan £70,000,000, the total expenditure is still the would be all in addition, and by that excess, same. It is true that to the extent of £20,000,- independent of the derangement of the money 000 the expenditure in the latter case would market, the country would become poorer evbe diverted into new channels. To that ex-ery year. tent the general objects of private consump tion would be reduced, but that of stores and materials connected with the war would be increased. During the last three months we have seen The subject, however, is too large to be exhausted in one article. In our next we shall resume it, and will endeavor to show all the mischievous consequences of loans adverted to were experienced in former wars. Life and Landscapes from Egypt to the Negro Kingdoms of the White Nile.-BY BAYARD TAYLOR. With a Map and Illustrations by the Author. before me, against which six enormous statues leaned, as they looked from deep niches cut in its front. Their solemn faces were touched by the moon, which shone full on the cliff, and only their feet were wrapped in shadow. The lines of deeptemple were also filled with shadow, and painted cut hieroglyphics over the portal of this rocky legibly on the gray, moonlit rock. Below them yawned the door-a square of complete darkness. A little to the left, over a long drift of sand, peered out the mitred head of a statue of still more colossal proportions. I gazed on this broad, dim, and wonderful picture for a moment, so awed by its majesty that I did not ask myself where or what it was. We place this book among works on the fine arts, not in right of its pictorial illustrations, which are poor indeed, but in right of its vivid pictures in words, of that realm of awe and mystery which, visited and revisited as it has been of late years, still always offers some new point of interest to the sincere pilgrim. We have here admirable pictures of Alexandria and Cairo, and the Pyramids, and a pleasant sail up the Nile, which our author describes as 'the This is some grand Egyptian dream, was very Paradise of travel.' And fitted as he is my first thought, and I closed my eyes to see if it with so fine a taste for natural scenery, so keen and I knew it to be Abou Simbel. My servants all would vanish; but it stood fast and silent as ever, a perception of beauty in its every form, we are slept, with the boat moored to the shore-still I lay, sure that he found it so. Like all travellers and the great statues looked solemnly down on me, gifted with poetic feelings, Bayard Taylor de-and the moon painted their kingly names and banscribes with enthusiasm the solemn, overwhelm-ners with still darker distinctness on the gray rock. ing effect of the giant sculptures of Egypt, when The river made no sound below; the long grass seen, as they only can be adequately seen, on stirred not a blade at the foot of the crags, and the the vast plains where first they were reared, or slopes of sand were white and calm as snow. I lay from the sacred river that still flows at their in too deep a repose for thought, scarcely conscious base. Here is a moonlight view of the rock the moon held up that picture before me. how grateful was such a silence in nature, while temple of Abou Simbel, and of those huge fig-current slowly swung the stern of the boat, the picures, so wretchedly reproduced, as we remark- ture as slowly drifted from my view, leaving ined, amid palm-trees and flowers, at the Crystal stead the southern cross in its shrine of stars." Palace : "About two hours after midnight I was awakened from a deep sleep by the shock of the boat striking the shore. I opened my eyes, and saw as I lay, without moving my head, a huge wall of rock The The work abounds with similar vivid pictures, and we can recommend it as a most pleasant and suggestive volume to our readers.—British Quarterly Review. From the Economist, 20 Jan. France, as her maritime inferiority became more marked, and as her colonial trade was more interrupted in war than ours, in war THE law of blockade has become since the opened that trade to foreigners, from which, commencement of the war, of great import- when she was at peace they were excluded. ance, if the practice of some States, in which Our Courts, in 1756, ruled "that a neutral other States do not concur-which is a mere has no right to deliver a belligerent from the exercise of force, warranted, like any other pressure of his enemies' hostilities by trading exercise of force which injures an enemy-can with his colonies in time of war in a way that be called a law. There are laws of war in was prohibited in time of peace;" and as the same sense, which are obviously only the France acted on her own principle ofter 1793, usages of civilization tempering the destruct- England seized all vessels carrying goods to ive exercise of brute force in its vilest excess- or from her enemies' colonies except to the es, and they, like the law of blockade, are un- mother country of the trader. This, however, written, form no part of any code, and vary led to closing the ports of the North Sea and with the manners of nations. But concerning the rivers flowing into it by the direction of the practice of blockade, as it required the Bonaparte in 1806; to the blockade of those distribution of property among captors, as it ports by England as a retaliation; to the wellaffected neutrals, and as States often claimed known Berlin and Milan decrees; to the celecompensation for their injured subjects whose brated " Orders in Council," which inflicted a property was seized and confiscated, it became deep injury on our own trade; to the no less necessary to have legal decisions, and so there celebrated non-intercourse Act of the United grew up, between the decrees of States and States; and, finally, to a war with that counthe interpretation and decision of their Courts try, terminated by the treaty of Ghent in of Admiralty, sundry rules, laid down by 1814. Thus different nations had different grave judges, which are guides for future pro-practices; the practices varied at different ceedings, and are the only records or docu- times; and, as nothing definite or decisive on ments or general facts at all deserving the the subject was concluded after 1814, in the name of law. These have of course varied as hope, probably, that maritime warfare would the practices of different nations have varied, not again occur, it was necessary to take some and disputes concerning them have caused steps at the beginning of the present war, and several wars, though they were adopted only the description of what was done, after this to injure an enemy and bring a war to an abstract of the earlier part of the paper, we will take from Dr. Waddilove: end. from bors, or coasts. Thus we are informed, in an excellent paper by Dr. Waddilove, read before the Statis- The words of one order in council, dated the tical Society on the 15th inst., that it was 28th March, 1854, and which bear on the present generally considered as a rule of international subject, are "To preserve the commerce of neu law, though it was expressly set aside by the rals from all unnecessary obstruction. Her treaty of Utrecht, "that the property of an of the belligerent rights appertaining to her by Majesty is willing for the present to waive a part enemy on board a neutral ship is good and the law of nations. It is impossible for Her lawful prize." From acting on this principle, Majesty to forego the exercise of her right of England provoked against her the armed seizing articles contraband of war, and of preneutrality of 1780, which ranged the Powers venting neutrals from bearing the enemy's deof Europe on the side of the United States; spatches, and she must maintain the rights of a but, being strong at sea, she carried her will belligerent to prevent neutrals from breaking any out till the treaty of 1783-not a very honor- effective blockade which may be established with able one-put a stop to the dispute. In the an adequate force against the enemy's forts, harwar which ten years afterwards But Her Majesty will waive the the Revolution, England again acted on this light of seizing enemy's property, laden on board a neutral vessel, unless it be contraband of war. principle, and her great maritime superiority It is not Her Majesty's intention to claim the enabled her to make others submit to her will. confiscation of neutral property, not being conBut the exercise of this power excited con- traband of war, found on board enemy's ships; tinual ill-will in the northern nations and in and Her Majesty further declares, that being the United States, which were the neutral anxious to lessen as much as possible the evils carriers. They "laid down in their interest of war, and to restrict its operations to the regu the principle that free ships make free goods;" larly organized forces of the country, it is not her and in 1800 they endeavored by a combina-present intention to issue letters of marque for tion to enforce their own views. Their union mild language of the hostile policy of the present the commissioning of privateers. Such is the was dissolved by our armed force and the day. I need scarcely add that, both in practice death of the Emperor Paul, but our practice and theory an important change has been introwas never fairly acquiesced in, and brought duced into the exercise of our national belligerent us into perpetual collision with neutrals. rights. The flag of the neutral now covers and sprang |