who have consumption, all who think they have it, all who fear they are getting it, and all who fear they may get it. This field is large enough, and easily got at only in one way, namely, by the profuse use of capital invested in popular advertisements and placards. The expense is great; far out of proporion to the material involved, for while the bottle, label, wrapping, &c., usally exceed the cost of the oil, the advertising exceeds all these in an enormous ratio, at least until the market is made. The market once made, however, the profits are enormous; quite proportionate to the skill, enterprise, and capital involved, and quite sufficient to afford a stamp duty, rather than a manufacturer's tax. And if the stamp duty be not imposed in such cases, it is an unfair discrimination against the interest of the articles enumerated in Schedule C. When a medicinal article is put up in a uniform manner, and is styled B's or C's compound or simple, and is popularly advertised in any of the usual forms, by newspapers or by handbills, as B's or C's peculiar product, as a remedy for disease, it is clearly no longer an article of simple manufacture, which is entitled to the protection of a moderate tax, but is strictly a proprietary medicine.

But if an apothecary, for convenience of dispensing, puts up any article of the pharmacopoeia or dispensatories by the authorized name, and simply with directions for use, and his own name as the maker and vender thereof, and without advertising it for popular use in the newspapers, or by handbills or placards, and without claiming that he has any individual right to it, or that it will cure any disease or diseases if taken, it is not the intention of the above proviso to render such article subject to stamp duty. For example, boxes, packages, bottles, &c., of whatever kind or uniformity, no matter how put up, if simply labelled "The celebrated cod-liver oil, carefully prepared by B & Co., from the livers of freshlycaught codfish only, carefully put up so as to keep free from rancidity in any climate, and be found always acceptable to the most delicate stomachs. For use in affections of the chest; dose, a table-spoonful three times a day." Or, for another example, if the apothecary, X, puts up little boxes of cough lozenges, and labels them "Wistar's cough lozenges, for the cure of coughs, colds, &c.; Dose, one lozenge, to be taken occasionally when the cough is troublesome; prepared and sold by X, No. 20, street."

Now, provided B & Co. and X show to the assessor that cod-liver oil and Wistar's cough lozenges, as they sell them, are, the one the officinal article, and the other the article long known, used, and described in the dispensatories, &c., as such; and provided they be not advertised in newspapers or by handbills as nostrums, then they should not be subjected to stamps as the articles of Schedule Care.

The commission would refer, in this connexion, to the main provisions of the British "patent-medicine act," which may be considered as the gradually attained result of some twenty years' experience in revenue legislation in respect to this subject in Great Britain. These provisions are substantially as follows:

"1. No medicine is liable (to stamp duty) if it be a simple uncompounded drug. The acts imposing the stamp duty apply only to compounded or prepared medicines.

"2. Secret medicines or nostrums sold as such are liable to the duty.

"3. Medicines that are represented to be prepared exclusively by the person whose name they bear are liable.

"4. Any medicine that is recommended on the label, or on a handbill, or by public advertisement, as a remedy for the cure or relief of any disease, is liable," A recent (British) authority, in commenting upon the provisions of this act, thus states its recognized and practical interpretation:

"The (British) law is interpreted leniently with regard to ordinary domestic remedies, such as anti-bilious pills, cough pills, aperient pills, stomachic powder, essence of ginger, &c., which are sold by chemists without any pretensions to exclusive right or mystery in the preparation. But if the words 'prepared only

by A B be used, then A B is liable as the maker of a nostrum exclusively prepared by himself Even if the formula or mode of preparation be publicly known, and the original maker or inventor state that the genuine article is prepared only by himself, all others being spurious, he is liable as a person claiming superiority over all others. Such preparations as liquor opii sedativus, liquor taraxaci, liquor sennæ, &c., although each maker may profess superior skill in the manipulation, are not liable, because these medicines are not sold as nostrums for any specific purpose, but are comprised among the preparations ordinarily prescribed by medical men, and used in dispensing establishments. But if such medicines, or even preparations of the pharmacopoeia, be sold with labels or directions recommending them for any particular disorder, they come within the fourth condition above named, and are therefore liable. This condition has given rise to a variety of questions and attempts at evasion, but the only qualification allowed is the following: It is granted to be a matter of necessity that every medicine shall be so designated that it shall be distinguishable from other medicines. For example, the words 'cough pills,' 'antibilious pills,' &c., may be used to identify the pills; but the words 'pills for a cough' or 'pills for bilious complaints,' &c., make them liable, because the license, to use such expression, would open the door to an extensive evasion of the act."

In order to avoid evasions, it appears to the commission to be necessary to draw the lines of distinction very finely and very closely to enable the letter of the law clearly to define its purpose and intention, and further experience may yet be required to insure a just and equal operation.

The commission recommend that Schedule C, under the head of "medicines or preparations," be changed and amended, by inserting near the end of the first paragraph, after the words "retail price or value," the words "as fixed by the maker of the article, the sum of ten cents, one cent; and for every additional ten cents or fractional part thereof, the sum of one cent additional," and by omitting all under this head, after the words "retail price or value" in the first paragraph.

This recommendation would increase the general stamp duty, upon this head of Schedule C, to ten per cent., and upon articles which retail at twenty-five and seventy-five cents to twelve and eleven per cent., and the reasons for it are as follows:

In the original law the manufacturers' tax was three per cent. upon the net sales, and the stamp duty on Schedule C four per cent. on the retail price. This is believed to have been intended as a just and proper discrimination in favor of legitimate manufacture in pharmacy. At subsequent revisions of the law, the manufacturers' tax was raised first to five per cent., and then to six per cent., while the stamp duties remained unchanged. The effect of this legislation was a very important discrimination against manufacturing pharmacy, and a reversing of the original intent and effect of the law, which is believed to have been unintentional, as it was certainly unjust toward legitimate pharmacy. Hence, it is now proposed to restore and increase this original discrimination. The present stamp duty applies very unequally to a class of proprietary medicines and perfumery, the retail price of which is below twenty-five cents, since a ten-cent article now requires a one-cent stamp, and this tax, though unequal, appears to be well borne. It is therefore recommended to equalize it upon this basis, as being the most convenient and practically applicable of any that could be adopted, with the exception of twenty-five and seventy-five-cent articles. A stamp duty of eight per cent. would apply better in a few cases, but it would hardly restore the original discrimination under existing circumstances, while it is claimed that the original discrimination was too small for the protection of the best interests both of the revenue and the public. The lengthened experience of the British excise has led to a very much higher stamp duty upon all this class of articles, with what is believed to be a good result.

By causing the maker to fix the retail price, and to affix the proper stamps in accordance therewith, the articles might be relieved from further taxation, no matter at what advance on the retail price they might be afterward sold, provided the maker's retail price be a fair one.

The commission recommend that Schedule C, under the head of "Perfumery and Cosmetics," be further changed and amended, by inserting, near the end of the first paragraph relative to perfumery and cosmetics, after the words "retail price or value," the words "as fixed by the maker of the article, the sum of ten cents, one cent; and for every additional ten cents, or fractional part thereof, the sum of one cent additional;" and by omitting all under this head relative to perfumery and cosmetics, after the words "retailed price or value" in the first paragraph.

By the requirements of the present law, (see Schedule C, section 170,) playing-cards are required to be stamped at the varying rates of two, four, ten and fifteen cents and upwards, per pack, according to their selling price and value.

The commission recommend that so much of Schedule C as imposes the above varing rates of excise by stamps be repealed and in lieu thereof the following be substituted:

PLAYING-CARDS.-For and upon every pack not exceeding fifty-two in number, irrespective of price or value, five cents.

The reasons which induce this recommendation are as follows:

To give to the law greater simplicity and uniformity, and to render it in every respect specific. A varying rate of tax, as at present, upon playing-cards, ad valorem in character, opens the door to frauds and abuses, and entails upon manufacturers and revenue officers alike a vexatious amount of labor in the keeping of accounts and the making of returns. As a very large proportion, moreover, of the playing-cards manufactured and sold, are included, by reason of their value, under the two and four cent rates of stamp excise, it is the opinion of the commission that the revenue received from this source will not be diminished in consequence of the proposed amendment, but, on the contrary, will be increased. The experience of Great Britain has led to the adoption in that country of but a single rate of stamp excise upon playing-cards, namely, threepence (six cents) per pack; and our own experience, as well as that of other countries, has shown that the most important results in the stamp department of the revenue, flow from the use of the smallest stamps employed extensively. Attention should also be called to the fact, that with a reduction in the prices of material-paper, paints, &c., and of labor, which is now taking place, the prices of cards will be also greatly reduced, thus obviating the necessity for the use of stamps of as high denomination as are now employed.

The commission estimate that with a uniform and specific tax of five cents per back upon playing-cards, an annual revenue of between two and three hundred thousand dollars will accrue from this source.

By a provision of section 169, foreign-made or imported cards, perfumery, medicinal preparations, cosmetics, &c., are not required to be stamped, if sold in original packages. It is represented to the commission that this provision is extensively taken advantage of by domestic manufacturers of the above-specified articles, to escape taxation, by fraudulently representing and selling their goods as of British or other foreign manufacture, thereby defrauding the government and injuring the business of the honest manufacturer. The remedy for this would seem to be, to enact that all articles enumerated in Schedule C-foreign as well as American-when offered for sale, shall each bear a stamp in accordance with the provisions of Schedule C. This might require the foreign manufacturer to purchase the stamps here, take them abroad, and affix them to his articles, from time to time, as they were needed. If such provision would in some instances seem onerous, more particularly as regards importers, who would be required to stamp their goods in advance, it may be replied that that difficulty

would be obviated in a great degree by the government allowing (as now) five (5) per cent. deduction on all sales of stamps, in sums of $1,000 and upwards; and in case of a manufacturer owning his plate, (always kept in possession of the government,) an allowance of five (5) per cent. additional; which allowances are considered, and actually are, an ample remuneration for the outlay and loss of interest and capital invested in the stamps. The commission would commend this matter to the attention of Congress, and would recommend that the law be amended in accordance with the above suggestion. Respectfully submitted for the commission.

Hon. HUGH MCCULLOCH,

Secretary of the Treasury.

DAVID A. WELLS, Chairman.

SPECIAL REPORT No. 10.

Report upon the relations of foreign trade to domestic industry and internal

revenue.

TREASURY DEPARTMENT,

Office of the United States Revenue Commission, February, 1866. SIR: The burden of heavy taxation being new to the people of the United States, they have much to learn, both as to the art of carrying and the mode of adjusting it. It could not be expected that complete success would be attained at once in a matter of so much complication and such varied aspect and bearing. In one respect, however, the success has been ample; the amount levied and collected has been large enough to commence auspiciously our new financial career. It remains now to establish a system of taxation and finance which, while it sustains the power and credit of the nation, will as little as possible obstruct the progress and success of national industry, and as little as possible prevent that industry from taking the deep root necessary to a strong and ull growth.

Something more than mere hard work is needful to give to industry the power to endure taxation; it is needful not only that labor should be remunerated, but that its products should be remunerative. People may work hard and long, and have little to spare for taxes. It is needful, in other words, that labor should not only be productive of great results and abundant commodities, but it should be productive of net income, for out of such income only can taxes be paid for any protracted period. To make industry productive and profitable all the labor of a country should be employed, for those who depend upon their labor for a living, and are not employed, must be a dead weight upon the community. If taxes do not come from net income, they must ultimately crush the industry upon which they are levied.

The union between capital and labor necessary to the largest profitable production must be undisturbed, and must enjoy the full patronage of the whole people to secure the highest result. In any country a well-ordered and successful industry works itself into a system, each part of which becomes necessary to the other, as the members of the body are each necessary to the human frame. No member can be removed or seriously impaired without serious damage to the whole. And if no such system is formed in a country, it is a proof that its industry is not well balanced, and cannot be fully effective.

A system of industry in any country grows out of the special wants of its people, and the special direction of its productive forces to supply those wants. The domestic interchange of a people living under the same laws, speaking the

same language, having the same money of account, the same coins, the same banking system, consists in mutually exchanging commodities and services. The agriculturist, the manufacturer, the mechanic, the artists, and the various professional classes, and, finally, the officers and employés of the government, all these exchange with each other their various productions, their skill, science, or other service. Daily intercourse and necessity establish between them a rate of valuation or price for commodities, for time, skill, art and science, in which each class and individual strives to secure due justice, so that the result of the whole of their efforts is that general range of prices which prevails in any country. Nothing in civilized society engages men's attention more constantly, nothing is more earnestly observed, yet nothing is more fluctuating than prices, and few things are so little understood. Thousands of influences, seen and unseen, are constantly bearing upon them, and the tendencies to change are so numerous and varied that they cannot be traced.

One of the most influential of these causes is the fact that, so far as the commodities of industry are concerned, the business of distribution has fallen into the hands of a distinct class, the merchants, who purchase and sell the products of industry, and whose interest is to purchase as cheaply as they can and sell at the highest rate they can. Prices of commodities are constantly and largely modified by their operations.

Disturbances and changes come from every quarter; a proper and just equilibrium is seldom long maintained. Extreme variations are very hurtful, bearing severely upon some, whilst other classes are unduly benefited. No boon could be more grateful to productive industry than regular and fair prices.

The most numerous and important class of society with reference to this subject is that of the laborers. The remuneration secured to them determines mainly the whole range of prices, especially in a country like ours, where laborers have so much power to exact large wages and select the best-paid employments. In some proportion to the general rate of their wages, salaries, professional and other compensations, are fixed. There is thus a proportion between prices running through all the transactions of a community governed chiefly by the remuneration of labor. This belongs to every system of industry. But every productive class has special characteristics to be noted.

It is

Manufactures on a large scale have in our day grown into an importance only inferior to agriculture. Very different, however, in general economy, processes, and movements. The capital, special skill, science, the capacity for extensive business, and the large operations involved in the modern economy of manufacturing, make it, in many aspects, a matter of vast national concern. so, not only on account of the multitudes of laborers it employs and the wages it pays, but in its relations to national independence. The greatest economy of manufacture can only be achieved in large establishments, and these cannot fail to be a benefit to the people among whom they are placed.

The United States has now become, if not the first manufacturing country of the world, at least the second; for though, on account of our high prices, we are not large exporters of manufactured goods, the people, in proportion to their numbers, are very much the largest consumers of commodities coming from large establishments.

Great manufactories more than double the productive power of a country, adding to manual labor the vast results of machinery and of water and steam power.

Our progress in manufacture, both in regard to quantity and quality, despite of difficulties, is far beyondany conception of those who have not, with adequate knowledge, observed it. Our superiority in invention, in the style of execution, and in the varieties of our applications of machinery, cannot be de

British manufactures, English hardware especially, have been almost expelled from our markets by superior articles of home production. Every