To

produced or made in this country. the foreigner the market of the United States has been a contracting market, unable to absorb what was long its natural taking, and becoming an aggressive and powerful competitor in lines where its peculiar strength confers almost a monopoly. This change is reflected in decreasing and more closely selected imports, and in the rising export of domestic manufactures.

- Any revision of the tariff that should not take this change into consideration would fail of its purpose of revenue. The truth has been more and more enforced that no revision of the tariff which passes over commodities of general and almost necessary consumption, like tea and coffee, can make the revenue as large as it should be, or enable the tariff to hold its position of importance as a producer of revenue. No juggling or shifting of duties, ostensibly for revenue, but really for protection, can force a larger tribute from imports, or even a tribute that will yield the share of revenue that has been expected from the tariff. In 1887 the imports of pig-iron were valued at $6,200,000, and gave in revenue $2,810,000. In 1897 the imports were only $517,000, and the revenue $88,515. No duty that could be imposed on pig-iron could make it an object of revenue. Iron is only one instance in many of this change in conditions, and both raw materials and manufactures show the same trend. The imports of manufactured iron and steel in 1887 were $50,619,000, and gave to the Treasury $20,713,000 in duties; in 1897 the government obtained less than $6,600,000 from imports valued at $16,362,000.

It has been this decay in tariff possibilities that has made new sources of revenue necessary, and this necessity the new financial measures have recognized to the full. Not a single tariff duty is altered, and only one, a purely revenue duty on tea, is added. All else is to be laid on internal sources-a remarkable change of policy in public finance since the passage of the Dingley tariff, about one year ago. No doubt abundant criticism could be made of the new revenue measure. Its preparation was postponed for many months, although the large demands incident to the staving off of war if possible, or the meeting it if actual, were falling upon a Treasury living in part upon its accumulations, and not on its ordinary

VOL. XCVII.-No. 580.-71

income. The excuses made for this delay were not good, for they showed blindness to existing commercial conditions, and a notable adherence to a policy that was no longer applicable. When the pressure of events became absolute, it was the war measure of 1862 that served as a model to the proposed measure. That a multiplicity of taxes, applying to many forms of business activity, of differing qualities, and hastily imposed, should have embodied a scheme to be imitated at this day was in itself improbable. More thought and selection, a more careful examination of the sources of State revenues, and an avoidance of a duplication of taxes, or of taxes touching thrift and the employment of small capitals, would have led to a bill of equal revenue ability without dangerously approaching that vague line which divides taxation from exaction.

In a year of normal expenditure the government requires an ordinary revenue of about $450,000,000. Of this sum $100,000,000 is obtained from the postal and miscellaneous receipts, and the customs and internal revenue must make good the balance. The tariff, at best, will give about $180,000,000, and the existing internal revenue system may be depended upon to give about $150,000,000. Here, then, on paper, is a revenue of $430,000,000 in a year of good returns, or some $20,000,000 less than expenditures in an ordinary year. A deficit was inevitable under the conditions existing at the end of 1897, before any extraordinary demands had been created. The tariff was falling behind, and no increase of internal taxes could make good this deficiency. At least $75,000,000 a year more revenue would be needed, and this estimate of deficiency was set aside for one much larger -from $150,000,000 to $200,000,000 a year -as soon as the war was inevitable.

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The sudden emergency created by war expenditure thus called for radical treatment. It was a situation in which a 'possible" return from experimental taxes would not suffice. An assured revenue from definite sources-and the fewer and more profitable the sources the better-was imperative. It was little wonder that even the Ways and Means despaired of making the tariff produce an appreciable part of $100,000,000 additional revenue, much less of any larger sum. Internal duties alone held out a promise of proper performance. As a result, the

general features of the stamp duties of 1862 are revived, and a number of other imposts have been added. A full detail of items and of rates would not assist to a proper understanding of the novelty of the measure or of the fiscal policy it involves. Legal and business instruments, transactions in stocks and securities, gross receipts of many important and highly concentrated occupations, such as express, telegraph, telephone, and parlor car companies, legacies and successions, insurance, etc.-each description of tax, whether stamp, license, or on gross receipts, would require a special examination to determine its revenue ability and its effect upon the transaction or occupation taxed; and even such an examination would be open to many errors. As the bill passed the House, an annual income of $105,000,000 was expected from its provisions; as the bill came from the Senate, a very much larger but somewhat indefinite sum, ranging from $150,000,000 to $200,000,000, is looked for from its tax provisions.

There is every likelihood that the larger return, $200,000,000, will be needed to meet the actual expenses of the government under the new policy that it has adopted. The actual cost of the war is of secondary importance, for it can-and under any condition will-be largely if not entirely met by loans. The new taxes cannot reach their maximum of production for some years, and due allowance must be made for the possibilities of evasion - always large, even under the most just of systems. While maintaining the ordinary rate of expenditure as it existed before the war, three very costly and non-productive objects of expenditure seem likely to be added a large and permanent navy, a permanent standing army for foreign as well as for home service, and the administration of distant colonies. A number of incidental questions have also arisen in connection with the future of the new ventures the construction and control of the Nicaragua Canal, the subsidizing of shipping lines that will "carry the flag" round the world, and, as is hoped, extend American commercial interests and our political influence even to domination among the neighboring states of Central and South America. New possessions imply new responsibilities of protecting and developing their resources

and populations, and these responsibilities involve great expense. An "imperial policy" must be paid for in an "imperial manner." So it is safe to predict that when conditions have simmered down to peace and normal relations the United States will require all of the $200,000,000 a year additional revenue believed to be provided by the new measure.

This will not arise wholly from expenditures. The cost of the navy in any year since the war had not passed $32,000,000 until 1897, when $34,560,000 was reached. A navy for offence and defence, with objects so distant as the Philippines to be protected or kept in subjection, will demand a larger sum, and $50,000,000 a year will not be too much. The army has cost in time of peace as much as $55,000,000 in a year; in war it costs nearly $1,000,000 a day, and on a return of peace can never be brought down to its former cost or dimensions. From $75,000,000 to $100,000,000 will be required, for no less than three corps of occupation, in climates deadly to our people, must be kept effective. Even at the lower figures these two branches of the service would require $125,000,000 a year, without any civil servants sent to those newly acquired colonies. A civil list of unknown size would be a necessity, but it may be assumed that enough local revenue could be squeezed out of the existing populations to meet that expense.

While leaving an apparent surplus, on the supposition that the $200,000,000 are obtained, there would be in reality no surplus, and even a deficit. It must be borne in mind that the government has faced a deficit during the current year of at least $50,000,000, and would have done so without the war expenditures. The deficit under the Dingley law would have become a permanent feature as long as that law was continued, for it arose from a disregard of trade conditions. Each year, therefore, a part of the new revenue must have been swallowed up in meeting the deficiency of the tariff revenue to produce what was expected. An even greater draft would be required by the change in revenue consequent upon the adoption of the new possessions.

The largest single source of revenue under the tariff is sugar, and about $80,000,000 a year is to be obtained under existing rates. But the sugar product of

Cuba, Puerto Rico, the Philippines, and Hawaii will be admitted free of duty into the United States. What this means, even when the figures are taken from previous years, a little estimate will show. The average importation of foreign sugars into the United States each year is 4,000,000,000 pounds. Of this quantity Cuba alone has in the past supplied more than one-half; and from the other islands named, Hawaii excepted, enough sugar can be obtained to bring the quantity to 2,500,000,000 pounds, or five-eighths of the whole importation. This means the wiping out of five-eighths of the sugar revenue, or some $50,000,000, which must be made up from other sources. A still further reduction must be made for other products imported from these islandssuch as tobacco, hemp, and fruits-making the prospect of heavier taxation at home still more probable, as well as assuring the permanency of the internal taxes now imposed.

In thus veering from a financial system in which taxation of imported merchandise has been the leading feature, to one based almost entirely upon internal taxation, it is not only the form but the substance that is altered. Capital becomes the object of taxation. The steady progress towards an income tax made in countries where democracy has recognized the force of wealth in dividing classes is a notable feature of modern popular finance. France has for some years sought to incorporate an income tax into her system, believing that it would still more tend to equalize the general distribution of well-being among the people, and at the same time give what may be the most important source of state income in her finances. In the United States the same tendency has been even more pronounced. At first, taking the form of a dislike of the money power," it found vent in propositions for paper money, free silver at a ratio to gold widely divergent from the commercial ratio, government certificates, advances as loans on farm products, and a number of such schemes, designed to make the payment of debts easier by wiping out a part or a whole of the capital of the debt. From moneylenders it was an easy transition to recognize in corporations, and especially in trusts, huge instruments of oppression, by which the poor and well-to-do were crushed. They used the inexorable law

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of competition to destroy their smaller and weaker competitors, and once settled in a monopolized market, they could squeeze the consumer and the wage-earner for their own profit. But the bond or share holder, the holder of realized capital, was the support of those corporations, and the fear of his machinations became pronounced. So the money power, the banker, the corporation, and the trust were objects of solicitude, and have figured in many political campaigns as real issues.

To tax them implies a certain control by government, as well as a certain taking, for the government, of a part of their gains. The experience in 1894, when an attempt to tax incomes was thrown out by a decision of the Supreme Court, showed how far this feeling had gone. It was well understood that the tax received its support almost entirely from the West and the South, and a very important consideration leading to this sectional or geographical division was the belief that such a tax would fall almost wholly upon the North and the East, where realized capital was supposed to be found. So narrow a view can only be laid to ignorance of general economic principles, but it proved sufficiently effective to secure the adoption of an income tax. The taxation of single corporations has been adopted in the new measure, together with duties on legacies and successions, and all forms of corporate activity. As a measure of protection against or retaliation upon supposed monopolies, and as a measure for appropriating to the state a part of great fortunes, these taxes commend themselves to the financial theories of a democracy. The gradual shifting of political power from a small and somewhat favored class to the largest component of any political community has been accompanied by this growth of socialistic taxation. It has further led to progressive taxation, in which the amount of tax is determined by an arbitrary scale of duties, graded by the amount of property to be taxed. This scheme of progression finds a place in the new system, and notably in the legacy tax, where it has features so oppressive as to contain a direct discouragement to realized wealth. As a step towards penalizing accumulations of wealth, the measure is of interest, but the point to be insisted upon is the cutting loose from a narrow adherence to a tariff on imports. WORTHINGTON C. FORD.

CHAPTER I.

THE COMPANY AT THE CLOCK HOUSE.

ΟΝ

N the stone posts of the entrance to the largest estate near Powellton, a few miles to the northeast of Fishkill-onthe-Hudson, is the painted word "Belview," but the people of the neighborhood call the place the "Clock House." This is because of the great clock, with perhaps the only plain plate-glass dial in our country, which almost grotesquely fills the face of the short thick tower in the front of the square Colonial mansion. As seen from other hills and risingsfrom Powellton, and from nearly as far as Fishkill this big disk, always illuminated at night, hangs in the lower air like such a moon as only the Japanese have the courage to paint. Except from a distance, or from the high seat of a hotel stage, nothing of the Clock House is to be seen, because the park which frames it around is enclosed by a tall brick wall built upon an embankment. From a stage-driver's seat, or when one stands before the superb gate of ornamental iron-work which breaks the wall at one end, one may see a part of the Lamont place. The view would bewitch the senses were not even more beautiful public views so common throughout that grander park which we call the Valley of the Hudson.

The place was built by the present owner's great-grandfather, who, though a Scotchman, early embraced the American cause, performed a long and honorable service as judge of the Court of Common Pleas, and retired from that post on the very day of the death of his friend General Washington. It was at first the finest country house in Dutchess County, and to-day it has lost nothing by standing, unimpaired, as a noble example of the dignified and hospitable fashion of our forebears. The long graceful reaches of a double wave, of welltrimmed grass are broken by a driveway, flung down like a loop of yellow ribbon by the mansion which caps the soft bosomlike crest of the first grassy wave,

and, on either side of the house, by a grove of oaks which act as screens, and were planted to serve as such. They are intended to prevent all possible visual intrusion upon the sports, the siestas, and possibly the courtships, which chime with such a place; in a word, to accompany a sort of English idea of privacy, which was that of the original Lamont, founder of the American family. This came with his blood as it stirred first across the Atlantic. There privacy is held to be the first essential of home comfort, if not of existence, and even the last of the Lamonts clung to this tradition.

It was after midnight of a day in the early spring of 189-, while the real moon and the brightly lighted windows of the house dimmed the diluted effulgence of the huge clock face, that two laborers, belated on their way to Powellton, stopped to stare through the gate and to listen.

"I can'd hear noding," said one, after a moment of silence.

"I don'd, neider," the other replied; "vind's der wrong vay, or maype der glock's shtopt already.'

"Vould dot mean

"Dot 'd mean dot der olt Kurnel's det," said the other. "Dwice I'fe seen der houze lighted up, all aplaze, like it is now. Firsht dime vos for a grant pall vhen dey camed home-der Kurnel und his pride. She vos a angel vot neffer vos meant for no such vorld as dis. Und der second dime vos only a year aftervards, vhen she dite in shildbed. I vos a young feller dot dime, und came mit a lot of oder young chaps sbecially to hear der glock dicking, shlow und shlower und shlower, as it alvays does vhen det comes by dot houze. I dit hear it, too-derrible slow it dicked; und den I didn't hear it no more, begause it shtopped. She hat dite vhile I vos listening."

"I hear it now," said he who had been the first to speak, a youth of twentytwo.

"Do yer? I ton't," said the other, who had passed sixty. "My hearing ain't vot I used to got."

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"It's got to be shlow," said the other, positively. Didn't I tell yer der Kurnel's dying? Vell, den, it has to be shlow; it alvays got to been derrible shlow at such a dime.'

They passed on up the road and were gone, but the subject was taken up within the house. Tappin, the butler, bustled in his quick, nervous, somewhat pompous way into the dining-room on the groundfloor to fetch the decanter of cognac to his dying master's bedside, and never suspected that his father stood, in the posture of a servitor, behind the empty chair at the table's head, and before the figures of Hamilton Lamont, his wife Deborah, Archibald Paton and his wife Flora, Isabel Lamont, the dying Colonel's mother, and several other relatives and connections long since rubbed off the slate of earthly reckoning. Nor did he knowhow could he?-that only a minute before this, in bending over the Colonel to catch his whispered "milk and brandy, Tappin," he had pressed his substantial body literally through and around another Etherian, Editha, once the child wife of the dying man.

His errand to the dining-room did not disturb the Lamonts of the past. They continued their conversation while he was by, but they did so in their own fashion, which could not jar the completest silence. They thought, instead of speaking; they knew what was thought, instead of hearing it; indeed, though they saw far better than we, it was by an extended comprehension that they did so. Each Etherian took the guise of a formless cloud of faintest light-a puff of luminous vapor around a spark a trifle brighter than the rest, yet not bright enough to be distinguished by mortal vision. Thus most of them appeared to each other. I say "most of them," because it was different with those who had known each other intimately as men and women, or as spirits among men. They saw each other somewhat as they had appeared on earth. So strong is our imaginative faculty that it resists death, and in an assembly of old friends like this the Etherians recall each other's physical personalities. It is immaterial whether they really saw their old selves in this earthly way. They believed they did. But it was a faint and nebulous

These at the Clock House saw Editha as she had been fond of dressing herself just before her last illness, in a robe of blue cloth, flaring open above the waist, to show a loose under - dress of thinnest lawn, which left her beautiful neck as bare as her plump oval face in its framing of black hair. And those she had known among men she, too, saw as they had been wont to dress. The other Etherians were mere rays to her vision-though they were as readable to her as books. She was obliged to imagine the human aspect of the elder Mrs. Lamont, who died before she had been born. She thought of her as being like the old lady's wellremembered portrait in the dining-room. And that was how Mrs. Lamont seemed to those who had known her in womanhood—with her kindly, motherly, wise face above a quaint evening gown of the first year of this century. The others were all commonplace, latter-day figures.

Editha's happy presence made itself felt in the dining-room soon after the fleshly Tappin had taken away the object of his errand.

"We knew you had come, dear," said the elder Mrs. Lamont. "We have all been thinking of you."

"Thank you, mother; I am very glad to see you all," said Editha. "You were talking about the clock. Is its beat very slow?"

"Not very," said Hamilton Lamont. "It is lengthening the intervals between the ticks, but his release is not to be immediate." After a pause he added, addressing his mother: "But you and Editha have been here some hours. The rest of us have just come, and are preparing for the disclosures that are to be made to us. Give us time to learn what is happening. I only know that the Colonel is passing from earth to us. He appeared to us with the summons to come and exert ourselves in our various interests, and that is all that any of us know." "I beg pardon of all of you," said Mrs. Lamont. "The truth is that I have been called so often that I can instantly put myself in the receptive state. I learned everything before I reached here. But do not let me delay you. Things are happening that are of the greatest moment, the keenest interest, to most of you."

Eagerly the new arrivals prepared to