The Sun.
London, England, 1865-08-10 00:00:00

(From the Times' Special Correspondent.)
MONTREAL, July 25.
The question of free trade has suddenly become
of importance in America, as one of the unforeseen
but pressing issues of the late civil war. I therefore
devote this letter to a few considerations connected
with the subject, both as it affects the United States
and the proposed confederation of the provinces.
The Federal Government, as all the world knows,
imposed before the war a heavy duty upon foreign
manufactures for the purposes of protection, and
largely increasedthose duties during the war, osten-
sibly for the purposes of revenue. Experience has
shown in the United States, as elsewhere, that the
one design is incompatible with** other. The na-
'five manufacturer has grown rich at the expense of
the consumers of his generally inferior goods, while
the Government has been deprived of the revenue it
expected, and the commercial
community of that
trade with foreign nations which is the best bond of
peace. While the civil war lasted and the Federal
Government paid its way with borrowed funds and
the issue of inconvertible paper money the evil was
scarcely felt ; but now that domestic tranquillity has
been restored, with one-he if of the country, and that
naturally thericher and more productive of the two,
so devastated and ruined by the tramp of victorious
armies as to be unable to contribute to the neces-
sities of the State, the Federal Government begins
to see, if it would pay the annual interest of its
gigantic debt, that it must either reform its tariff,
or, if it choose to retain it in order to conciliate the
compact and powerful body of its home manufac-
turers, that it must adopt some supplementary and
less barren mode of raising a revenue. In Canada,
where a similar but much less onerous tariff has beenimposed upon British and foreign goods,
soley for purposes of revenue, as Mr. Galt, its
author, alleges, and not at all for purposes of pro-
tection, a similar result is highly probable. The
duties, ranging from 10 to 30 per cent., on imported
goods have really operated as a protection to the
native manufacturer. Canada, being denied free
trade with America, and having denied herself free
trade with Europe, from which she might have de-
rived many solid advantages, has begun to manu-
facture largely, and to turn her illimitable water-
power to profitable account. Having abundant
supplies of native wool, she already produces woollen
cloths and flannels of excellent quality, in which
there is not a particle of " shoddy." She also pro-
duces tanned leather, coarse calicoes, and papers of
all degrees of fineness for printing, writing, and mis-
cellaneous purposes ; and has establishments for the
wholesale manufacture of boots and shoes and plain
and ornamental furniture equal to any that exist in
the United States or Europe ; several large breweries
of ale and porter, and one sugar refinery, the pioneer
of the trade in this city, and which gives employ-
ment to 250 persons. In the year of the first Inter-
national Exhibition in Hyde-park the provinces had
no manufactures of importance to show, unless the
furs and peltry of the Hudson's Bay Company might
have been accepted as specimens of manufacturing
skill. Now she has attained such excellence in the
woollen manufacture, both in Upper and Lower
Canada, that her cloths rival the 'best manufactures
of Yorkshire and Galashiels, and are infinitely supe-
rior in quality to the wretched articles palmed off
upon the patient people of the United States by the
manufacturers of New England, and charged the
British price plus the import duty of 33 per cent.
and the 50 per cent. on that amount added as a
special war-tax. The consequence to Canada is,
that her revenues, derived from the duties on foreign
goods, are decreasing ; and to America, in which
even under the Reciprocity Treaty Canadian goods
are liable to the same duty as if they were imported
from Europe, that the smuggler has come to the
rescue of the consumer, and carries on a brisk trade
over the whole frontier from Maine to Michigan.
The heavy excise duties upon Spirits, from which
the Federal Government had a right to antici-
pate a large revenue, have in like manner
failed to be productive. A wholesome wine and
spirit merchant of extensive business in ITew
York informs me as a fact, within his own
knowledge, that within a radius of 20 miles
from the centre of that city no less than. 500 private
stills, unknown to, or at least unmolested by the
Excise, are busily at work, and that over the whole
country, and. especially in the West, illicit distilla-
tion is generally diffused and highly profitable. The
calculation of experts in the whisky business is that
the Government loses as much as a million dollars
per week, or 50 millions per annum (10 millions
sterling), on which it relied when it imposed the tax
on alcoholic liquors. When, in addition to this, it is
remembered that in Canada distillation of all kinds
is free of Excise duty, it becomes apparent that the
Federal Government incurs a risk of almost as seri-
ous a deficiency from this source of revenue as from
its quasi prohibitory tariff, and that both Canada
and the United States are in danger of financial
collapse if they do not judiciously reform a fiscal
system which enriches no one but the native manu-
facturer, and puts both of them at variance with
each other and with the commercial interests of the
rest of the world

The Reciprocity Treaty, which the Americans on
the Canadian frontier and the Great West, as well
as the Canadians, desire to be renewed, and against
which no reasons that are not political or vindictive
are ever urged by American merchants or statesmen,
would leave these difficulties untouched. During the
10 years of its existence agricultural produce alone
has been free to pass from one country to the other.
Canada could send its white wheats and oats, which
do not thrive sceluxuriantly in the States as in the
colder latitudes north of the lakes, through the Erie
Canal to New York, or over the rail to Portland or
Boston, while Chicago and Milwaukie could ship the
teeming produce of the West on the Canadian
canils and waterways to the great channel of the St.
Lawrence, and thence to _ the markets of Europe.
But for all manufactured articles reciprocity was
non-existent. Each country had its own tariff, and
• enforced it as well as it was able. The Americans
had the worst of the arrangement, inasmuch asthey
imposed the higher tariff, and thereby offered greater
profits to the Canadian smuggler than a fellow-
speculator in the contraband business, operating
from the American side, could discover in Canada.
Necessities growing out of the war have forced the
American Government to place an Excise duty
upon many of the articles produced on its own soil
that were previously admitted free of duty
from Canada. Among the most important of these,
as affecting Canadian interests, is lumber. The
American growers and lumberers insist that, in jus-
tice to them, Canadian lumber, under the new Re-
ciprocity Treaty, should be taxed -on entering the
United States to the full extent of the American
Excise, and argue the point not only with reference
to their own interests, real or supposed, but on behalf
of the Federal Exchequer, which if it did not need
all the revenue derivable from this source would be
unwise to impose a tax upon the home-grown article.
• Should the confederation of the provinces become
an established fact there must, of course, be a uni-
form tariff of Customs' duties. If it be to any ex-
tent Protectionistit mustassimilate to the American
tariff, or the United States, on their part, must re-
duce their duties to such a level as will encourage
and not impede trade with their neighbours. Other-
wise the irrepressible smuggler will either ply his
vocation to American detriment or compel the
Federal Government to establish Custom-houses
at intervals of five or six miles along a line almost
double the coast length of the British Isles from
Dungeness to Cape Wrath. If,:going still further
in the direction of free trade than Canada has
ever done, the new Confederation should, as a
large and increasing party in this city recommend,
' 1%;11 free commercial intercourse with Europe,
duties on all imported articles to 5
per cent. al eitimviii, solely for the purpose of reve-
nue, and supply the deficiency by an income and

Cat ti

or TO

lace the

property-tax, the American Government might find
it ;elf in a still moi.e serious dilemma—compelled
either to revolutionize its whole system of finance

n- to attempt the annexation of the Confederation

by force of arms and a war with England. The
- -

danger ha 3 not escaped the notice of the New York

Chamber of Commjrce. The Select Committee of
that body to whom was referred the subject of the
-Reciprocity Treaty express themselves as follows in

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