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of wool. It is not a Southern question. It is a question among you gentlemen who are seeking the advantages of the Government. You raise a quarrel, and I am afraid the result will be to leave us to pay taxes to a government that does not want them. You levy $20,000,000 a year, which everybody says you do not want. You say now it is going to produce a commercial revulsion, and derange your currency. If that shall be the effect, it will be a just punishment to those who levy burdens on the people without public necessity. I thank God that there is an avenging Nemesis that follows in the train of false theories in politics and wicked legislation, and teaches communities the folly of wickedness.

I would enlarge the free list on the principles I have stated, but first I want a reduction on general taxation. Take off the public burdens by reducing duties upon all articles of general consumption all over the country and among all classes. This will be beginning at the right place. Why shall you tax Maine for the benefit of sheep growers in Vermont? In this dispute between the manufacturer and the grower, I think the argument is with the manufacturer. He has my sympathies; but I hope I have equal sympathy for all my countrymen. If I could settle this dispute on any just principle, I should be glad to do so; but I believe it is irreconcilable-one or the other must go. The idea of protecting both-the wool manufacturer and the wool grower-presents one of those problems that cannot be worked out. The more you try it, the worse it will be. If you give to woolen manufacturers and to raw wool a protection of one hundred per cent., it is quite certain, even then, that you would not drive out foreign competition. It would certainly injure both interests. Its operation could only be temporary. It is futile to think of building up both interests together by equal duties, no matter what they may be. The best protection to the wool grower is to multiply and strengthen the woolen manufacturers. I believe it to be the only mode of permanently benefiting them. On no sound principle of political economy can equal duty on both which you will lay harmonize them. If woolen manufactures and wool-growing can succeed together without duty, they will succeed if you go on taxing them pari passu; but, if either requires a duty, neither can succeed on any such basis as I have stated. We have not the same difficulty as to cotton manufacturers, because we raise our own cotton; and we do not raise sufficient wool for the home consumption. The great complaint of the woolen manufacturers is that they have to pay a large duty on the cheap wools of South Amer

ica. They are now working at a disadvantage, because the English manufacturer takes the wool from Buenos Ayres, where wool costs but little, and brings it cheaply to England duty free, while they pay thirty per cent. ad valorem. The result is that the duty on wool and on woolen manufactures at present being the same, our manufacturers of wool are driven out of foreign markets, and struggle hard for their own. I do not think that system is wise. In laying my duties I would protect a branch of industry which, in my judgment, will be able to support itself within a short time, and be a permanent advantage to the country.

Andrew P. Butler [S. C.], an advocate of free trade, supported horizontal reduction as a step in that direction.

I know that my State expects me to take a part in this debate, because I believe there is no State in the Union that has made as many issues on free trade as South Carolina. As to the theory which she entertains and has promulgated, I may say, without any vanity as far as I can speak of her doctrines, that she has not spoken in vain, although she was threatened with the sword for speaking. I might be considered as going very far if I were to say that I should be perfectly willing to have no custom houses at all. That is my opinion; but I know I cannot have that. I go so far as to say that, in a commercial point of view, the custom houses must necessarily, in the form of tariffs, make discriminations; and in a war point of view I know we must retain the power of discriminating, in order to protect iron or any other material which must be protected as an element of war. I have no idea now of being able to reduce the tariff to anything like the level to which the South Carolina doctrine would reduce it.

Sir, for myself, I want no tariff. I say to this Confederacy that I am perfectly willing to be placed in the original position of constituencies to pay for carrying on this Government. I am not, however, to be drawn into a discussion on that subject, for I know that anything which is untenable is a matter not to be discussed, or at least its discussion is fruitless.

We have $70,000,000 of revenue-$35,000,000 more than enough. The burden of this taxation is upon the poor and middle classes of the people, for the rich are well able to contribute their share. The persons who pay these taxes are the consumers-the humble milkmaid who pays for her calico, the humble mechanic who pays for the coat in which he works, the humble

farmer who pays for the plow he uses twenty per cent. more than he ought to pay. If you could bring to the mind of the people that these classes are paying more than they are bound to pay, they would resist; but as long as you delude them with this disguised form of taxation you make this a Government more irresponsible, in my opinion, than any, as far as I have read history-I say the most irresponsible Government on earth, so far as regards the collection and disbursement of revenue. You collect it sometimes on wool, sometimes on this article, sometimes on that; but you always take it from the industrial portion of the community. They pay it, and they do not know that they pay it. It is so diffused that they never know it. If you take off the taxation in the form proposed here, you will have prosperity, particularly in my portion of the country. Cotton would rise to twenty cents to-morrow, I believe, if we had no tariff. I believe, if you let all the world compete with the manufacturers here, we should raise the raw material; that I would be the result.

I desire it to be understood that your taxation comes out of delusive and fraudulent legislation in some respects, and unwise legislation in all respects. What right have you to build up the iron interest, the woolen interest, or any other interest, through the money contributed to this treasury for the benefit of the common objects of government?

I do not undertake to discriminate between my friends from Ohio, Virginia, and Georgia. If it were a matter of mere taste, I would rather go for the man who cultivates his land and feeds his sheep, and prepares the great element. But what right, in reality, have we to assume jurisdiction over matters of this kind, except to raise revenue? And in raising revenue it ought to be just. Who is to decide? Discretion. What is discretion? Interest. What is interest? Power. What is power? It is the combination of different influences; and that makes up the whole concern, so far as regards the regulation of the industrial concerns of this country. I shall vote for the amendment of the committee, and will take the best scheme I can get; but for myself I want no tariff. I would obliterate the whole concern.

The Senate adopted the substitute measure of Senator Hunter by a vote of 33 to 12. The Senate bill was accepted by the House on March 3, and approved by President Franklin Pierce upon the same day.

CHAPTER VIII

INTERNAL REVENUE

Thaddeus Stevens [Pa.] in 1862 Introduces in the House a Bill to Provide Internal Revenue-Debate: in Favor, Justin S. Morrill [Vt.], Mr. Stevens; Opposed, George H. Pendleton [O.]-Debate in the Senate: in Favor, James F. Simmons [R. I.]; Opposed, James A. McDougall [Cal.]-Bill Is Passed by Congress and Approved by the PresidentIn 1882 William D. Kelley [Pa.] Introduces in the House a Bill to Reduce the Internal Revenue-Debate: in Favor, Alexander H. Stephens [Ga.], George M. Robeson [N. J.]; Opposed, Philip B. Thompson [Ky.], Roger Q. Mills [Tex.]-Bill Is Passed in the Following Session, and Approved by President Arthur.

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N March 3, 1862, Thaddeus Stevens [Pa.], of the Committee of Ways and Means, introduced in the House a bill to provide internal revenue. In its final form this bill established the Bureau of Internal Revenue, under the Treasury Department, with what is essentially the present system for collecting excise from manufacturers of distilled spirits and malt liquors, and from rectifiers of wine and spirits. In addition, annual licenses ranging from $5 to $100 were required from almost every kind of business or profession, the peddler on foot and the juggler being assessed, as well as the banker, lawyer, and doctor. Manufacturers of every kind of commodity, from pins to railroad iron, were taxed at various rates, specific and ad valorem. All sales at auction, whether of real estate, merchandise, or stocks and bonds, were taxed one-tenth of one per cent. Luxuries, such as private carriages, yachts, billiard tables, and plate, were taxed at ad valorem rates. Live stock slaughtered for sale had to be paid for at so much per head, according to the genus. Railroad, steamboat, and ferry companies were assessed three per cent. upon their gross receipts; holders of railroad bonds had the same percent

age deducted from their dividends, as had also investors in banks, trust companies, savings institutions, and insurance companies. Three per cent. was also deducted from the salaries of those in the employ of the Government. The same rate was assessed upon the gross advertising receipts of publishers. The amount exempted by the preceding income tax bill was lowered from $800 to $600, and the rate was increased from three to five per cent. upon incomes exceeding $10,000 per annum. Stamp duties were laid upon legal papers and business instruments, as well as upon medicines, cosmetics, perfumery, and playing cards. Legacies of over $1,000, except from husband to wife, or wife to husband, were taxed at rates varying with the degree of consanguinity.

INTERNAL REVENUE

HOUSE OF REPRESENTATIVES, MARCH 3-JULY 1, 1862

Justin S. Morrill [Vt.], of the Committee on Ways and Means, supported the bill. After presenting the state of Government finances he said that the bill amply provided for all the great and unusual demands upon the Treasury.

When one of the European governments offered a reward to any person who should discover a new object of taxation, it was bestowed, I believe, upon the discovery of the stamp tax upon paper. That is not by any means our condition. There is but little more than one source, that of imposts, which we have relied upon to any extent for revenue, and that source has not been pushed to its utmost capacity. Driven, however now, like Milton's Adam, from our untaxed garden, to rely upon the sweat of the brow for support, like Adam, we have "all the world before us where to choose." In doing this we have to be just. It would not do to press any single interest with the entire burden that now weighs down upon the treasury. The weight must be distributed equally-not upon each man an equal amount, but a tax proportionate to his ability to payequally, yet not one that will be in the exact ratio of population, but in a just proportion to the means and facility of payment. What could be easily sustained in one quarter of the

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