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not under five, and bearing not exceeding six per cent. interest in coin. These bonds might also be disposed of for lawful money, certificates of indebtedness, or certificates of deposit. The secretary might, at his discretion, issue in lieu of an equal amount of the bonds so authorized, and as a part of said loan, not exceeding two hundred millions of dollars in treasury notes, payable at any time within three years; or, if thought expedient, redeemable after three years from date, and bearing interest in lawful money at the rate of seven and three-tenths per cent.

The act declared, in respect to these notes, that-" such of them as shall be made payable, principal and interest, at maturity, shall be a legal tender to the same extent as United States notes for their face value, excluding interest, and may be paid to any creditor of the United States at their face value, excluding interest, or to any creditor willing to receive them at par, including interest; and" that "any treasury notes issued under the authority of this act may be made convertible, at the discretion of the Secretary of the Treasury, into any bonds issued under the authority of this act." Treasury notes and United States notes issued under former acts might be redeemed and canceled by order of the secretary; and he might substitute for them the notes authorized by this act, or other United States notes. It was provided that the total amount of bonds and treasury notes to be issued should not exceed four hundred millions of dollars, in addition to the amounts theretofore issued. The act further provided that the total amount of United States notes (legal tender) issued, or to be issued, should never exceed four hundred millions of dollars, and such additional sum, not exceeding fifty millions of dollars, as might be temporarily required for the redemption of temporary loans. In addition to these limitations, the act provided that no treasury note bearing interest issued under it would be a legal tender in payment or redemption of any notes issued by any bank, banking association, or banker, calculated or intended to circulate as money.

The act of March 3, 1865, authorized the Secretary of the Treasury to borrow, in addition to the amounts theretofore authorized, any sums not exceeding in the aggregate six hundred millions of dollars, and to issue therefor bonds or treasury notes. The bonds were to be made payable at any period not exceeding forty years, and not less than five years. The principal and interest of this issue of bonds and treasury notes might, at the discretion of the secretary, be made payable in coin, or in other lawful money. The rate of interest in coin was not to exceed six per cent.; and when not payable in coin it was not to exceed seven and three-tenths per cent. These bonds and treasury notes might be disposed of in the United States or elsewhere, for coin or for lawful money, and were exempted from taxation by state or municipal authority. This was the last act which authorized a loan, except for the purpose of refunding.

On the 18th of March, 1869, an act was passed "to strengthen the pub

INCREASING THE REVENUE.

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lic credit." It solemnly pledged the faith of the United States to the payment in coin or its equivalent, of all the obligations of the United States not bearing interest, known as United States notes, and also of all the interestbearing obligations of the United States, except in cases where the law authorizing the issue of any such obligation had expressly provided that the same might be paid in lawful money, or other currency than gold and silver.

On the 12th of July, 1870, an act was passed providing that fifty-four millions of dollars in notes for circulation might be issued to the national banks in addition to the three hundred millions "authorized by the act to provide a national currency, secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof."

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To provide for the interest of the debt to be incurred during the war, well as to support the current expenses of the government, it was thought necessary greatly to increase the duties on imports.

The act of March 2, 1861, was passed before hostilities had commenced, but after South Carolina, Georgia, and the Gulf States had passed their ordinances of secession. It was introduced in the preceding December. It was so quickly superseded by the act of August 5, which was passed at the extra session of the next Congress, that there was no time to estimate its effects upon the revenue. These acts imposed nearly double the rates of duty that were exacted by the tariff act of 1857. Tea and coffee were now among the dutiable articles. The imports during the fiscal year 1861-'62 fell off nearly a hundred millions; but the higher duties imposed increased the revenue over that of the preceding fiscal year by almost seven and a half millions. At no time during the war did the amount in value of the imports come up to the figures of the fiscal year 1859-'60, notwithstanding the immense sums of money that were being disbursed by the government. Nevertheless, after July 1, 1862, the receipts from customs revenue steadily and enormously increased over those of the fiscal year 1859-'60. Our manufacturers had no reason to complain of the financiering that brought this about. They fattened on the carnage. While it is true that labor was also well rewarded, it is no less true that reactionary economy fell almost solely on its shoulders. Whether Democratic administration will lighten this burden, remains to be seen. Bad management can alone prevent the relief that strict and impartial adherence to Democratic policy would bring.

The following table will present in a small space, the amount of imports, the duties collected, and the rates of duty, for the whole period from 1860 to 1870. Duties began to be lowered in the latter year upon some articles which were peculiarly regarded as objects of war taxes. It is proper to preface this table with the statement that several acts were passed between the years 1861 and 1868 by which the rates of duties were increased or modified.

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It would be tedious and unprofitable to state in detail the changes made in the rates of duties. The tabulated figures indicate the tendency to higher or lower duties with sufficient clearness.

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In 1870 considerable reductions were made in the duties on a number of articles, the principal of which were on tea, coffee, sugar, molasses, fruits, spices, drugs, spirits and wines, and, mirabile dictu! iron in pigs and old scrap. The reduction in the duties on tea was from twenty-five cents to fifteen cents per pound, estimated to be equal to forty per cent. On coffee, from five cents to three cents per pound, equal to forty per cent. On sugar of the lower grades, from three cents per pound to an average of two, equal to thirty-three and one-third per cent. On clarified sugars, from three and a half and four cents per pound, to two and three-fourths and three and onefourth cents per pound, equal, respectively, to twenty-one and three-sevenths, and twelve and a half per cent. The reduction in the duties on spices ranged from thirty-three and one-third to seventy-five per cent. On brandy the reduction was from three to two dollars per gallon, or thirty-three and one-third per cent. On spirits from grain, twenty per cent. On pig and old scrap iron, about twenty per cent.

The following table shows the effect of these reductions on the imports and revenues:

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SOURCES OF REVENUE.

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An act passed on May 1, 1872, placed tea and coffee on the free list; and another, passed on June 6 of the same year, reduced the duties on a number of articles, and placed many others on the free list.

The following figures will show the result of these and the previous reductions :

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It should be remembered that the average rate of customs paid on the dutiable goods is the true test of the character of the tariff; since most of the articles on the free list are placed there more for the benefit of the manufacturers than for the good of the consumers,—they are articles which enter into their manufactures. Even under a "tariff for revenue," every article which is placed upon the free list increases the necessity for higher duties on others. The same is true of a "protective" tariff.

In 1874 reductions and modifications were made in the customs duties, with the following results:

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The Tariff Act of March 3, 1883, was passed in pursuance of the information collected by a Tariff Commission which was previously created by act of Congress. This act proposed to make tariff reductions amounting to twenty per cent. The following figures for the fiscal year ended June 30, 1884, show how this promised reduction was carried out:

The total amount of goods imported was,

Of which the free list embraced,

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$667,697,693

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209,884,184 457,813,509

The customs duties collected on this latter sum amounted to $190,413,849. This was at the average rate of 41.591 per cent. The average rate per cent. on the dutiable imports of 1883 was 42.646 per cent. It appears, therefore, that the reduction made by the Tariff Act of March 3, 1883, instead of being twenty per cent., was one per cent. and a fraction so small as to be unworthy of notice that is to say, 1.055. This slight reduction in taxes is the measure of the relief which the Tariff Commission gave to the people!

Another resource for meeting the extraordinary demands of the war, and its debts upon the treasury, was that by which the Congress was empowered to levy Direct taxes and Excises. Pursuant to this constitutional power, Congress, by certain sections of the Tariff Act of August 5, 1861, levied a direct tax of twenty million dollars, and apportioned it among the states. in proportion to their representation in Congress. This levy, even for the first year, was never fully carried out. Congress after postponing its enforcement from year to year, at length repealed it, the Southern States being in arrears. It has been proposed to return the money collected under it to the states, or to the people.

Some excise legislation was adopted early in the war period, but the Internal Revenue system was not regularly established prior to July 1, 1864. By the act of June 30, 1864, and subsequent acts, taxes were imposed on the sale, consumption, and production of a great variety of domestic manufacture, such as distilled spirits, malt liquors, tobacco, textile fabrics, hardware, wooden ware, drugs, cosmetics, and even lucifer matches, and farm products. Banking capital, circulation, and deposits, and incomes of individuals and corporations were also taxed, and a long schedule of documentary stamp duties concluded the array.

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The revenue from these excise duties during the first year was $36,158,For the fiscal year 1864, the yield was $109,526,000. The greatest income from this source was in the year 1866, when it rose to the enormous sum of $310,906,000. After that year Congress began to repeal or reduce these taxes. If the system had been maintained at the rates of 1866, the revenue therefrom would probably be twice as great now as it was that year. All these excises have been repealed, except those on the manufacture and

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