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and consumption, and consequently of wealth, a of the lack of adjustment between the excise restriction of exportations and of foreign com- and the tariff existed in other branches of domerce, and a large increase in the machinery mestic manufactures. and expense of collection. The duplication of Notwithstanding these and other imperfectaxes threatened the very existence, even with tions in this system so hastily prepared, it very the protection of inflated prices and a high successfully attained the end designed of raistariff, of many branches of industry, and, under ing a revenue greater than was necessary for its a normal condition of the trade and currency legitimate expenditures, and, near the close of of the country, would become extremely disas- the war, Congress, on March 3, 1865, took imtrous. Its tendency to sustain prices was illus- mediate steps for its revision, by authorizing the trated very forcibly in the mannfacture of um- appointment of a commission to report upon brellas and parasols. The sticks, when of wood, the subject of raising revenue by taxation. In were made in Philadelphia, and in some parts June, Messrs. David A. Wells, Stephen Colwell, of Connecticut; part of native and part of for- and Samuel S. Hayes, were organized as such. eign wood, on which last a duty may have commission, and their first report was made been paid. If the supporting rod was of iron to Congress in January, 1866. In this report or steel it was the product of another establish- they take the ground that the increase of the ment. In like manner the handles of carved country in population and wealth is without a wood, bone, or ivory; the brass runners, the parallel among nations, being from 1840 to tips, the elastic band, the rubber of which the 1850 thirty-five per cent. in population, and band is composed, the silk tassels, the buttons, eighty-nine per cent, in wealth; and from 1850 and the cover of silk, gingham, or alpaca, were to 1860 thirty-five and five-tenths per cent. in all distinct products of manufacture, and each population, and one hundred and twenty-six of these constituents, if of domestic production, per cent. in wealth. paid a tax, when sold, of six per cent. ad ca If the development in any approximate delorem, or its equivalent. The umbrella manu- gree can be maintained and continued, the exfacturer then aggregated all these constituent tinguishment of the national debt in a counparaparts previously taxed, into a finished product, tively brief period becomes certain. To secure and then paid six per cent. on the whole. Thus this development, both by removing the shackles all the parts of the nmbrella were taxed at least from industry, and by facilitating the means twice, and in some instances three times—thus of rapid and cheap communication, they readding from twelve to fifteen per cent to the garded as effecting a solution of all the finandirect cost, while each separate manufacturer cial difficulties pressing upon the country. The doubtless made the payment of the six per future revenue policy of the country, they sent, tax on his special product an occasion for therefore recommended to be, the abolition or adding froin one to three or more per centum speedy reduction of all taxes which tend to additional to its cost price. Similar illustra- check development, and the retention of all tions existed in other branches of compound those which, like the income tax, fall chiefly manufactures, showing the sustaining influence upon realized wealth. Asserting this principle on prices, and making the taxes neither definite as a suitable policy for the Government, it bein amount, equal in application, nor convenient camo necessary to inquire into the nature and in collection.

capacity of the sources of revenue available to Another serious defect of the internal rev- the Government, in order to determine the enue system in its bearing upon the industry manner and extent to which this policy could of the country was the lack of equalization or be carried out, and insure adequate revenue. adjustment between it and the tariff. Thus the Briefly stating the extent of revenue derived cover of the umbrella or parasol, as a constit- from duties on foreign imports, the attention of uent element of construction, represents from this commission was chiefly devoted to the caone-half to two-thirds of the entire cost of the pacity of the country to bear internal taxation. finished article. The silk, the alpaca, and the The facts brought forward in this connection Scotch gingham, of which the covers were are too important in the history of the country made, were all imported at a duty of sixty per to passed over. cent. for the former, and fifty per cent. ad The aggregate receipts of internal revenuo valorem for the two latter. But the manu for the fiscal years 1863 (ten months), 1864, factured umbrella, covered with the same ma- 1865, and 1866, were as follows: terial, whose constituent parts were not taxed, 1863 (ten months)...

$41,003,192 93 either on the material used in their fabrication 1864..

116,850,672 44 or in the sale, were imported under a duty of


211,129,529 17

1866. thirty-five per cent. ad valorem ; or at a dis

309,226,813 42 criminating duty against the American, and The following table shows the amount dein favor of the foreign producer of from fifteen rived from the principal specific sources of to twenty-five per cent. Imported umbrellas internal revenue in the years 1863, 1864, 1865, were sold in New York and Boston with the and 1866, the aggregate annual amounts, and original coste duty, freight, and charges, paid the percentage ratio of the amount derived in gold, for a less price than the American arti- from each specific source to the whole for the dle could be manufactured. Other illustrations same periods :




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Animals slaughtered...
$710,812 1.73 $695,202 .59 $1,261,857

$1,291,570 .41: Gross receipts : Advertisements


183,815 .11 227,580 10 Bridges and toll-roads.

290,605 .097 18,674 .045

36,854 .08 Canals

75,269 .036 108,186 .034 4,210

92,421 .044

99.268 Express companies..

.082 2,680 267,778

529,276 .25 Ferries..

645, 769 .21 20,852 .65

60,074 .05 126,183 Insurance companies..

.059 48,764 .01

805,992 Lotteries

1,169,722 .87

29,249 .013 Railroads..

78,072 1,102,607 2.69 2,127,250, 1.82 Ships, barges, etc..

5,917,298 2.50 7,614,448 2.45

431,211 .20 Stage-coaches, wagons, etc..



469,188 .22 Steamboats.


.18 150,620 .36 278,097 .24 638,812 .80 Telegraph companies..

84,846 215,050 .10

808,488 .10 Theatres, circusos, etc...

140,542 .069 202,521 .06 Total..... 1,840,272 8.27 *2,895,999 2.48 9,697,866 4.50

11,262,430 8.62 Sales : Auction 64,004 .15 138,082 .12 410,176

.19 Mercbandise brokers..

503, 232 .16

696,474 23 Stock brokers.....

870,080 .27 Gold brokers, etc..

2,202.793 1.04 1,582,247 852,801 .40

1,046,704 .83 Total..

64,004 .15 188,082 .12 4,062,244 1.92 4,002,288 1.29 Licenses : Apothecaries

27,308 .068 29,792 .026


.015 Auctioneers

43,718 .01 49,092 .12 58,147 .05

80,545 Bankers

89,724 .03 90,863 .22

74,149 .06 Billiards


83,188 .028 54,025

.026) Brewers..

108,929 .083 70,850 .17 66,259 .06 77,747 .037


.083 Bowling alleys....


7,781 Cattle brokers.


19,7491 98,090 .24

106,837 .09 207,905 ,10 Commercial brokers...

294,448 .10 149,869 .86 204,098 .17

213,095 .10 Produce brokers..

196,846 .06

22,954 .0101 Stock brokers

72,145 .03 105,096 .28 98,678 .08

120,912 .055 Other brokers

75,794 .02 1,058

1,001 Builders and contractors.


26,117 .01 6,615

78,883 .06 Butobers

82,278 .099 181,178 .04 2,154

88.450 .07 Distillers ..............

152,421 .07

224,465 .07 38.682 .096 49,022


69,898 .03 Hotels

101,584 255, 278 .62 252,610 .21 415,279 Lawyers

.20 580,021 .13 142,900 .85 129,186 .11 190,877 Lottery-ticket dealers...


.08 10,200 Manufacturers.....



54,427 .017 463,630 1.13 471,091 .40 Peddlers.....

.80 1,048,081

.83 287,456 .70 205,435


.21 Photographers....


.21 44,859 ,11

52,586 .045 Physicians and surgeons.


98,186 .03 288,888

285,583 .20 Retail dealers.

802,847 .14

425,897 .187 1,227,912 8.00 1,836,846 1.14 Retail dealers in liquors...


1,949,017 62 1,477,754 3.60 Stallions and jacks...

1,612, 786 1.38 2,205,866 1.04 2,807,225 .89 45,985 .11

219,678 .19 277,166 .18 Wholesale dealers.

806,853 .10 1,315,118 8.20 Wholesale dealers in liquors...

1,229,787 1.05 8,548,105 1.68 6,428,845 1.74

884,160 .98 176,765 .14 400,693 19 Miscellaneous...

801,531 .25 249,878 .61 280,080 .24 477,458 .24

857,811 .27 Total.....

6,824,178 16.64 7,145,389 6.11 12,613,478 5.96 18,038,098 6.80 Income

455,741 1.11 14,919,280 12.76 Legacies and successions..

20,740,451 9.82 61,071,982 19.64 56,598 .14 310,836 .27

546,703) .26

1,170,979 .87 Articles in Schedule A : Billiard tables....


68,000 .06 67,754 .08 Carriages and harness.

17,853 243,704

.59 820,076 .28 822,720 .15 Plano-fortes

624,458 .20 Gold plate.....


403,572 .18 46 66 126

84 Silver plate.....

108,690 .26 180,024

117,987 .056) Watches..

216.490 .07 Yachts....


426,557 .187 2,459

2,673 Other articles..


4,408 252,690 .12

201 Total... 865,6301 .89 +520,283

780,266 .87

1,693,123 From U. B. Marshals, proceeds of suits. From U. S. Special Treasury agents..

210,234 .07 Banks, etc........

1,974,108 .63 1,910,988 4.66 Passports

7,017,547 6.00 18,670,594 6.43 12,109,420 8.90 8,407 .02 10,993

29,538 Special income-tax..

81,759 .01 Penalties, eto....

23,929,312 18.70 27,170 .07 193,600 .16

420,886 .255 282,619 .80 Stamps....

4,140,175 10.10 3,894,945 5.04 Salarios...

11,162.892 5.28 15,044,878 483

696,182 1.70 1,705,125 1.45 2,826,388 1.34 8,717,895 1.19 Aggregate receipts...

$41,003,193 \\$110,850,672 $211,129,529 $310,906,984 * Net amount, after refunding $6,864. The Commisioner of Internal Revenue, in a recent report, gives the aggregate receipts for the fiecal year 1964 at 0117,145,748

+ Net amount, after refunding 4556.





"..year 1863..


Distilled spirits were regarded as a source of at the time it was adopted, was deemed sufrevenue of the first importance. During the ficient to enable a small family to procure the fiscal year 1863, under a tax of twenty cents bare necessaries of life. Under the expansion per gallon, the amount of revenue was $3,229,- of the currency, the purchasing power of one 990.70. In the fiscal year 1864, the tax was thousand dollars declined until it became no twenty cents until March 7th, after which it greater than that of six hundred dollars when was sixty cents, and the revenue was $28,431,- the exemption was adopted. By authorizing 797.83. From July 1, 1864, until June 1, 1866, the deduction of rental, those of an excessive the tax was $1.50 per gallon, and afterward and unreasonable amount were often deducted, $2.00. The revenue of the year amounted to and considerable sums might have been gained $15,995,701.66. The average taxable produc- to the revenue in cities by allowing a detion from Sept., 1862, to July 1, 1865, returned duction of only a fixed amount. This tax has to the Department, was 40,537,371 gallons. The been assessed on the income of the calendar precedents of all countries are uniform in favor year and not on that of a fiscal year. Thus the of taxing spirits to the maximum, consistent incomes of 1862 were assessed in 1863, and the with revenue. While any relaxation of the law, tax mainly included in the receipts of the fiscal on the one hand, does not benefit the consumer, year 1864. The receipts from this source, since its stringent enforcement with a regulation of 1863 inclusive, have been as follows: the business will not diminish the amount which

Fiscal appetite, or industrial necessity, demands for

$455,741 consumption. Under a tax of one dollar per

14,919,279 1865..

20,567,350 gallon, it was estimated that forty millions of First six months of 1866...

54,549,128 dollars might be annually collected from distilled spirits. With fermented liquors the great An annual revenue of fifty millions has been difficulty has been to determine the proper mode estimated from this source. That from banks, of collecting the tax and preventing fraud. A in 1865, amounted to $13,579,594, and it was tax on malt is impracticable, as also the plan of estimated that a similar amount would be col. gauging and assessing the liquor during the pro- lected in the immediate future. It was also escess of manufacture, or while in the fermenting timated that the receipts from licences by the vats. The most acceptable plan for this object extension of the revenue laws over the whole approved by the commissioners and leading country would be greatly augmented. The brewers of the country, was to collect the tax revenue from stamps proved to be, perhaps, by means of a stamp, printed on insoluble parch- the most easily collected, with small expense, ment paper, to be affixed to each barrel sold and and with comparatively little fraud. It can be removed from the place of its manufacture, with readily augmented, without detriment to the a requirement that the same be cancelled by the industry of the country. The adhesive revenue retailer or consumer. With a tax of one dollar stamps embraced eight different classes or sizes,, per barrel of thirty-one gallons, it was esti- and thirty-two denominations, varying from mated that an annual revenue of five millions one cent to two hundred dollars. They were of dollars would be yielded from this source engraved on steel in an elaborate manner, and -A tax on cotton of three cents per pound was were believed to possess every guaranty against laid by Congress early in 1866, which is noticed counterfeiting which the best skill and knowlunder the title COTTON. The result of the in- edge could afford. To this security was added vestigations relative to tobacco, were, that the the safeguards of gumming and perforation, tax should not be laid on the leaf. The revenue processes necessary to perfect every stamp, and derived from this article was as follows: requiring costly and peculiar machinery. No

successful counterfeit of them has thus far been Cigars and Che-Chewing and Smok- made. Six-sevenths of the entire consumption

ing Tobacco.

has consisted of the two-cent bank-check and

receipt stamps, the various proprietary stamps, 1863..

$476,589 $2,576,888 1864.

and the one-cent stamp required to be affixed 1,255,424 7,086,684 1865.. 3,087,421 8,017,020

to matches. Thus the most important results

in this department of revenne flow from the The average annual taxable product of the smallest stamp taxes universally diffused. In different kinds of manufactured tobacco, from 1865 one-third of the stamp revenue was derived September 1, 1862, to June 30, 1865, was 42,- from bank-check receipts and match stamps. 809, 168 pounds. The income tax was consid- Considering the small actual tax of one cent on ered as less detrimental to the country than each bunch, and the insignificance of the busiany other form of taxation, with the exception ness, as contrasted with many others, this proof the excise on spirituous and fermented liquors duct of industry probably affords the largest and tobacco. But the discrimination in the rate comparative revenue accruing under the excise. levied on incomes above or below $5,000 was A legacy and succession tax is based upon the unjust, and in fact a tax on the results of suc belief that the entire property of the country cessful industry and enterprise, and should be changes hands once in thirty years. An abrogated and the rate equalized at five per estimate at the surrogate's office in New York centum. The exemption of six hundred dollars, is that the amount of property annually passing


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, or inheritance of kin, is about stock-brokerage business is otherwise most fro thirty-one millions of dollars. Such taxes when quently taxed; a tax being imposed apon moderate have little influence in checking the every certificate of stock taken, and on every development of industry. A tax of one per contract for delivery of stock. So that if it had cent., it was estimated, would yield three mil- been possible absolutely to enforce the law, the lions of dollars annually. The taxes on gross brokerage business for the sale of stocks would receipts are those mainly levied on transporta- have been nearly or quite extinguished. It was tion and intercommunication. The majority suggested that the tax should be made oneof them, excepting railroads, yield an incon- hundredth of one per cent. It is a long-recogsiderable revenue. The receipts from bridges nized and sound commercial principle that large and toll-gates, in 1865, were $75,269; from and frequent business transactions, turning on canals, $92,421; from ferries, $126,133; from small profits, should be subjected to the minstage-coaches, wagons, etc., $469,188; and imum specific tax. After some amendments of from railroads, $5,917,293. The tax on sales the internal revenue law on some of the points of stock-brokers was one-twentieth of one per above noticed, and with an estimate of $130,cent., or five dollars on the sales of ten thou- 000,000 from customs, and $21,000,000 from sand dollars of the par value of the stock sold, miscellaneous sources, the following estimate which proved to be too heavy to be raised from was presented by the commissioners above the whole amount of the business transacted, mentioned, as the aggregate results for the and was, doubtless, largely evaded. The fiscal year ending June 30, 1867:

Aggregate results for the fiscal year ending June 30, 1867. From Customs.

$130,000,000 Excise, viz. : Distilled spirits..

$40,000,000 Fermented liquors...

5,000,000 Tobacco and its manufactures...

18,000,000 Cotton (raw).....

40,000,000 Coal-oil, refined petroleum, etc.

3,000,000 Spirits of turpentine, and rosin.


$108,000,000 Licenses...

15,000,000 Incomes

40,000,000 Salaries.

2,000,000 Banks

15,000,000 Stamps..

20,000,000 Gross receipts.

9,000,000 Sales.

4,000,000 Legacies and successions,


$108,000,000 Bliscellaneous receipts, 1866-67...

21,000,000 Aggregate........

$367,000,000 By adding to the above sum the amount re- could not foresee. The views of this commisceived in the fiscal year 1865, from the various sion on the course to be pursued for the future direct and indirect taxes on industry, which were that at this time no such amount as fifty excepting the amounts derived from the excise millions should be withdrawn from the reveon spirits, beer, tobacco, cotton, petroleum, and nues for the redemption of the principal of the naval stores, was estimated at about sixty-eight public debt. On the contrary, they believed it millions of dollars, and the gross revenue pos- to be the true interest of the government that sible from all sources by the above estimate is taxation should be reduced at the earliest posfour hundred and thirty-five millions of dol- sible moment, to its minimum, thereby making lars. Allowing the annual expenditures to be sure the future industrial development of the increased sixteen millions, and setting aside country; and that no considerable sum should fifty millions for the reduction of the public be immediately raised by taxation for the redebt, a surplus would remain of sixty-eight duction of the principal of the public debt. In millions applicable to the reduction of taxation. this view, consideration was had for the fact Accepting these results as substantially correct, that the Government had taken to itself nearly the possibility of adopting a revenue policy every source of revenue except the single one which should consist in concentrating the of real estate, which was already burdened with sources of revenue, and of relieving industry the indebtedness of the State governments, of all those burdens which tend to check its that the people were largely in debt, and that development, was demonstrated. All parties, the development of the country had hitherto however, were conscious that in the existing surmounted every financial embarrassment. condition of the currency, and of the trade and On July 13, 1866, Congress passed an act commerce of the country, any financial esti- relative to internal revenue, which provided mate which uld be made of the future must for an abatement or repeal of the taxation on be somewhat problematical and liable to be various articles amounting to nearly fifty mil. affected by causes which the most sagacious lions of dollars. This legislation gave sensibla

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