will be required to determine the quantity and quality of these various articles?

Again, I object to this measure from the complexity of the system. It has a different law for every subject of taxation. I object to this whole system of licenses. When the Constitution was formed, the question of internal taxes was considered, among other things and, although it was conceded that there was concurrent jurisdiction in the States and the Federal Government to levy internal taxes in such form as either might choose, yet possible collision between the several authorities. was regarded as a grave and not to be overlooked difficulty; and therefore Mr. Hamilton himself suggested that both the Federal and State governments, in looking to subjects of taxation, should avoid the same subjects of taxation. And there is hardly a subject of license in this bill that is not made the subject of State license.

All license systems are more or less unjust. There is the auctioneer who sells twenty-five dollars' worth a day, and the auctioneer who sells $25,000 a day, both taxed alike. There is the young fellow going to the bar who has not earned his first fee, and there is my friend from Illinois [Orville H. Browning], who accumulates his thousands per annum. This whole system of licenses is wrong. It is a system that restrains young energy, that breaks down the power of the young man full of heart, without money in his pocket. It is a system altogether unworthy of the Federal Government.

Again: I object to the tax on manufactures. I object to the tax particularly as inconveniently, unequally, and unjustly applied, and as being, as was proved by the Senator from Rhode. Island [James F. Simmons], a particular burden on the laboring poor. And, again, this tax is a demand for money before money is realized. It is asking for that which the parties taxed may not have, whereas in a tax on sales the price is considered in the purchase and the money is in the hands of the vendor.

Again: the bill imposes a tax upon the salaries of all persons in the service of the Government. That is considered a happy subject of legislation. Why should men in public employment be specially taxed? It has been my impression, it is the result of all my experience, that men in office who are fit for office are, as a general rule, inadequately paid. Who is there here in the Senate who does not make a sacrifice of his personal revenue in undertaking to discharge the duties of his office? I hold a tax upon the salaries of officers in the employment of the Government to be the rankest demagogism.

Again: I object to the tax on advertisements. Why make them a subject of taxation? A person wants to inquire for information; he is a seeker after knowledge of some particular thing; he wants to know something, and you make it a subject of taxation; and in that way tax the press, the vehicle of communication, and by taxing the press tax the person who inquires.

And now, Mr. President, I desire to enter my special protest against all those subjects of taxation which create a charge upon individual, intellectual, and commercial contact, upon moral, intellectual, and material intercommunication. Such taxation is against every rule of public policy.

It has been considered wise policy to promote the construction of railroads, canals, and telegraphs, to construct piers and lighthouses and harbors in the aid of foreign intercourse and trade.

If it is true policy to advance these interests and enterprises, there can be no good cause to disturb or impair them by impositions and charges.

You propose to tax them three per cent. on gross receipts; and what does it amount to? It amounts to at least eight per cent. on the profits of good roads, and probably takes the entire profits of inferior roads, for some of them hardly pay at all.

This brings me to the subject of coal. You say you want to reach everything. I insist that this is the great error of the bill and not any argument in its defence; we should not attempt to reach everything. Coal is the motive power that drives all our machinery, and that is enabling one man to do the work of a hundred-one of the things that when a nation finds anywhere about hidden in her earth she feels rich because of it, and promotes its development. Every development of that kind is something to be promoted, because it is a facility to the aggregation of our national wealth.

Again: I object to this universal system of stamps. Here are several pages of stamp duties. Everything is to be stamped, from the pill box to the locomotive. The child is not to be allowed to take its medicine until it is stamped. Stamps must be everywhere, presenting themselves to every eye at every moment. These things may seem expedient or necessary. I cannot think so. The idea is absurd, impracticable.

Again, Mr. President, I object to this tax on insurances. Insurance is a tax paid by the insured for protection against loss, and this is a tax upon a tax. If those who engage in in

surance pay a tax upon the income they derive from their investments, this surely should be satisfactory.

Mr. President, it is vain to attempt to enumerate the multitude of objections which may, as I think, be justly raised to this bill. I will content myself with reaffirming that it is an unintelligible, as well as impracticable, measure, one which, I trust, will not be forced upon the country, particularly at this time of general privation and suffering.

The speaker here presented a substitute measure, based on the views of the board of trade previously mentioned. First, this imposed a tax on sales.

These men of commerce say—and they should be authoritythat a tax on sales is the simplest, safest, and most just tax. The sale involves a money transaction. A man who sells receives the price, or what he regards as its equivalent. Having received the price, he is prepared to pay. One of the great objections to the bill reported from the committee is that it demands from people what they have not got. When you charge a tax on sales, you always charge it on what a man has received, on what he has in his pocket, which he is bound to account for to the Government.

I propose a tax on fixed incomes. I differ with the Senator from Rhode Island [Mr. Simmons] on that subject. How can you tax the income of a lawyer who keeps no books? It is not the habit of lawyers to keep an exact account either of their expenditures or incomes. They spend all the money they get generally. It is their own, unless it happens to be their clients', and then they pay it over. How are you going to get at the income of a merchant-a man whose life is engaged in venture, whose every enterprise is a risk of fortune, and who, if at the end of a lifetime of friendly and adverse fortune, is able to go quietly to his home among his people, and sit down and rest for the evening of his days, is a fortunate man? How are you going to get at his income?

SENATOR SIMMONS.-If the Senator will look at the provisions of the income tax, passed last August, he will find that that provides that a man shall render an account of his oncome for the year preceding the 1st of January of each year. His year's business ends at the 1st of January, and his income tax will be payable in six months afterward. I do not believe there is a man of business in the country who does not know his in

come.

SENATOR MCDOUGALL.-How is it with the men who venture in commerce, where the article they purchase at fifty dollars a ton to-day, and in which they invest $50,000, may be thirty dollars to-morrow or eighty dollars? How about those men who may be ruined or made prosperous by the accident of a day, news from Europe or from the East, war, or some treaty of peace, if you please? How about those?

SENATOR SIMMONS.-We do not tax a man's property. We tax his income. If last year he made a great income on his ships we ought to tax it. If these ships are not worth half as much this year, not paying half as much freight, then we only tax him half as much on his income.

SENATOR MCDOUGALL.-If I have any idea of commerce and its business, a man, say the master of $100,000, goes into trade; his trade runs prosperously along through a series of years, where he expects that he has means enough on hand to carry on an advancing and progressive business, but where in one day a single calamity like that which came in 1836, or came at the commencement of the present year, may destroy the most prosperous fortune: who has an income then?

I propose to tax income, but not the income of the merchant whose capital is invested in commerce, for the merchant is as much of a producer as the man who tills the soil. He who conducts it from hand to hand, who labors in that vocation, is increasing its value and producing wealth to the country. I do not tax the man who builds up machinery, workshops, and factories, whose capital is employed to support labor, for capital and labor are the two great elements of strength that enable us to pay taxes; that is active employed capital and labor. I do not tax employed capital or labor, but fixed capital, such as a man derives from rents, which comes to him as a matter of course. I tax the man who collects his interest on State and corporate securities, but not mortgages. If you tax mortgage interest, the borrower has to pay it; but bonded interests of railroad companies, of all organized companies, of cities, towns, and States of the United States, and of foreign countries, all fixed revenue where the party deriving the revenue has no relation either to active capital or to labor-they are all legitimate subjects of taxation, and have been so held by the best economists.

Then, again, I propose to tax inheritances. I am trying to avoid asking a man to give what he has not got. Inheritances are things that no one has been possessed of until they pass through administration. We have no particular or fixed right

in any other person's estate, no matter how near of kin he may be; certainly none in the estate of a stranger. England has adopted a policy by which she imposes as high a tax as ten pounds per cent. where a legacy is given to a person who is foreign to the blood of the testator. We can derive as large a revenue as England from this source, and from what no other person has got any special or particular right to. It is true, we generally feel that a child has a right to inherit from a parent; but suppose there should be taken out of that a tax of one per cent. for the administration of the laws for the benefit of the child, that would be no burden. I propose an ascending scale as high as eight per cent. to persons who are alien to the blood of the testator. That is less than the English rule. Those who pay it, never having had it, never feel the loss of it. Those are taxes that can be most conveniently collected. Estates pass here more readily than they do in England, and it would be a large source of revenue.

Under these various sources of revenue, as I have stated, and putting the income of the tariff at only $50,000,000-and I try to make small figures-I make a revenue of $203,000,000, and it does not ask a person for anything he has not got, and does not employ a large number of officers.

Expenditure is immediately related to production. Production is the subject of taxation. We must every year make the subject-matter out of which taxes are taken, or else there is a loss to the national capital. Expenditure and taxation being equivalent to production, there is no loss. If production is greater than taxation and expenditure, there is a national gain. England has gained through all her wars by the strength and will and energy of her people. Our energy is being expressed now with greater force than in any previous time. We will produce every year more than the equivalent of our expenditure and our revenue.

I think we are a new people with new conditions, and when the men of commerce, the first men of our commercial cities, say commerce can best stand this tax, they should be recognized as the highest authority; and I shall maintain them as authority so far as my conduct is concerned in voting upon this measure.

The bill was passed by Congress, and approved by President Abraham Lincoln on July 1.

On March 29, 1882, William D. Kelley [Pa.], chairman of the Committee on Ways and Means, introduced in