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 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. 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.

O

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

country might sink another in hopeless dishonor and repudiation. A heavy duty upon some articles would banish them from use, while upon others it would merely stimulate greater activity and industry to obtain them. A tax dependent upon the habits or vices of men is the most reliable of all taxes, as it takes centuries to change or eradicate one or the other. No matter what obstacles may be placed in the way of the introduction of opium, the Chinese will brave death itself rather than suffer the deprivation of their favorite stimulant. England taxes spirits enormously, but has her drunkards still. They raise, too, $28,000,000 (or about one dollar for each inhabitant) of revenue from duties on tobacco.

The accustomed objects of State taxation should, in some degree at least, go untouched. The orbit of the United States and the States must be different and not conflicting. Otherwise, we might perplex and jostle, if we did not actually crush, some of the most loyal States of the Union. It has not been possible, so multifarious are the systems of State taxation, and so large our wants, wholly to succeed in carrying out this idea; but it has been attempted in two modes; the first, by the avoidance of any tax or duty on live stock, and by declining to increase the direct tax on real estate-a very moderate one-levied at the last session of Congress; and the second, by a selection of new objects of taxation, and such others as for many reasons can sustain even the double taxation to which they may be for the time subjected.

Some gentlemen, and even some States, have manifested a solicitude that any taxes incident to the present rebellion should be levied in such a way as to allow the several States to assume, assess, and collect them, or, if not to include the assessment, at least to assume and collect after an assessment by the United States. If this were practicable, it might be very desirable. If State officers could be employed, and the increase of Federal patronage avoided by not creating a new corps of office holders, a great point would be gained. We provide in the present bill that the duties, if not paid at the proper time, shall be hereafter collected in the now rebellious States. Authorize the States to assume and collect, and then suppose South Carolina to set about it. How much revenue so farmed should we be likely to obtain? It would be for the interest of all State officials to collude and pay as little as possible. It is not too much to suppose some would improve the opportunity.

This idea is wholly impracticable as may be seen by anyone who looks at the scope of the bill, with its fingers spread