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Distilled spirits were regarded as a source of revenue of the first importance. During the fiscal year 1863, under a tax of twenty cents per gallon, the amount of revenue was $3,229,990.70. In the fiscal year 1864, the tax was twenty cents until March 7th, after which it was sixty cents, and the revenue was $28,431,797.83. From July 1, 1864, until June 1, 1865, the tax was $1.50 per gallon, and afterward $2.00. The revenue of the year amounted to $15,995,701.66. The average taxable production from Sept., 1862, to July 1, 1865, returned to the Department, was 40,537,371 gallons. The precedents of all countries are uniform in favor of taxing spirits to the maximum, consistent with revenue. While any relaxation of the law, on the one hand, does not benefit the consumer, its stringent enforcement with a regulation of the business will not diminish the amount which appetite, or industrial necessity, demands for consumption. Under a tax of one dollar per gallon, it was estimated that forty millions of dollars might be annually collected from distilled spirits. With fermented liquors the great difficulty has been to determine the proper mode of collecting the tax and preventing fraud. A tax on malt is impracticable, as also the plan of gauging and assessing the liquor during the process of manufacture, or while in the fermenting vats. The most acceptable plan for this object approved by the commissioners and leading brewers of the country, was to collect the tax by means of a stamp, printed on insoluble parchment paper, to be affixed to each barrel sold and removed from the place of its manufacture, with a requirement that the same be cancelled by the retailer or consumer. With a tax of one dollar per barrel of thirty-one gallons, it was estimated that an annual revenue of five millions of dollars would be yielded from this source. -A tax on cotton of three cents per pound was laid by Congress early in 1866, which is noticed under the title COTTON. The result of the investigations relative to tobacco, were, that the tax should not be laid on the leaf. The revenue derived from this article was as follows:

1863. 1864.

1865.

at the time it was adopted, was deemed suf-
ficient to enable a small family to procure the
bare necessaries of life. Under the expansion
of the currency, the purchasing power of one
thousand dollars declined until it became no
greater than that of six hundred dollars when
the exemption was adopted. By authorizing
the deduction of rental, those of an excessive
and unreasonable amount were often deducted,
and considerable sums might have been gained
to the revenue in cities by allowing a de-
duction of only a fixed amount. This tax has
been assessed on the income of the calendar
year and not on that of a fiscal year. Thus the
incomes of 1862 were assessed in 1863, and the
tax mainly included in the receipts of the fiscal
year 1864. The receipts from this source, since
1863 inclusive, have been as follows:
Fiscal year 1863..

"

1864.

1865..

First six months of 1866..

$455,741

14,919,279

20,567,350

54,549,128

An annual revenue of fifty millions has been estimated from this source. That from banks, in 1865, amounted to $13,579,594, and it was estimated that a similar amount would be collected in the immediate future. It was also estimated that the receipts from licences by the extension of the revenue laws over the whole country would be greatly augmented. The revenue from stamps proved to be, perhaps, the most easily collected, with small expense, and with comparatively little fraud. It can be readily augmented, without detriment to the industry of the country. The adhesive revenue stamps embraced eight different classes or sizes,, and thirty-two denominations, varying from one cent to two hundred dollars. They were engraved on steel in an elaborate manner, and were believed to possess every guaranty against counterfeiting which the best skill and knowledge could afford. To this security was added the safeguards of gumming and perforation, processes necessary to perfect every stamp, and 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.

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The average annual taxable product of the different kinds of manufactured tobacco, from September 1, 1862, to June 30, 1865, was 42,809,168 pounds. The income tax was considered as less detrimental to the country than any other form of taxation, with the exception of the excise on spirituous and fermented liquors and tobacco. But the discrimination in the rate levied on incomes above or below $5,000 was unjust, and in fact a tax on the results of successful industry and enterprise, and should be abrogated and the rate equalized at five per centum. The exemption of six hundred dollars,

has consisted of the two-cent bank-check and receipt stamps, the various proprietary stamps, and the one-cent stamp required to be affixed to matches. Thus the most important results in this department of revenue flow from the smallest stamp taxes universally diffused. In 1865 one-third of the stamp revenue was derived from bank-check receipts and match stamps. Considering the small actual tax of one cent on each bunch, and the insignificance of the business, as contrasted with many others, this product of industry probably affords the largest comparative revenue accruing under the excise. A legacy and succession tax is based upon the belief that the entire property of the country changes hands once in thirty years. estimate at the surrogate's office in New York is that the amount of property annually passing

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in the city, by will, or inheritance of kin, is about thirty-one millions of dollars. Such taxes when moderate have little influence in checking the development of industry. A tax of one per cent., it was estimated, would yield three millions of dollars annually. The taxes on gross receipts are those mainly levied on transportation and intercommunication. The majority of them, excepting railroads, yield an inconsiderable revenue. The receipts from bridges and toll-gates, in 1865, were $75,269; from canals, $92,421; from ferries, $126,133; from stage-coaches, wagons, etc., $469,188; and from railroads, $5,917,293. The tax on sales of stock-brokers was one-twentieth of one per cent., or five dollars on the sales of ten thousand dollars of the par value of the stock sold, which proved to be too heavy to be raised from the whole amount of the business transacted, and was, doubtless, largely evaded. The

From Customs.

66 Excise, viz.:

stock-brokerage business is otherwise most fre quently taxed; a tax being imposed upon every certificate of stock taken, and on every contract for delivery of stock. So that if it had been possible absolutely to enforce the law, the brokerage business for the sale of stocks would have been nearly or quite extinguished. It was suggested that the tax should be made onehundredth of one per cent. It is a long-recognized and sound commercial principle that large and frequent business transactions, turning on small profits, should be subjected to the minimum specific tax. After some amendments of the internal revenue law on some of the points above noticed, and with an estimate of $130,000,000 from customs, and $21,000,000 from miscellaneous sources, the following estimate was presented by the commissioners above mentioned, as the aggregate results for the fiscal year ending June 30, 1867:

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

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Distilled spirits...

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Tobacco and its manufactures..

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Legacies and successions..

Miscellaneous receipts, 1866-'67...

Aggregate........

By adding to the above sum the amount received in the fiscal year 1865, from the various direct and indirect taxes on industry, which, excepting the amounts derived from the excise on spirits, beer, tobacco, cotton, petroleum, and naval stores, was estimated at about sixty-eight millions of dollars, and the gross revenue possible from all sources by the above estimate is four hundred and thirty-five millions of dollars. Allowing the annual expenditures to be increased sixteen millions, and setting aside fifty millions for the reduction of the public debt, a surplus would remain of sixty-eight millions applicable to the reduction of taxation. Accepting these results as substantially correct, the possibility of adopting a revenue policy which should consist in concentrating the sources of revenue, and of relieving industry of all those burdens which tend to check its development, was demonstrated. All parties, however, were conscious that in the existing condition of the currency, and of the trade and commerce of the country, any financial estimate which could be made of the future must be somewhat problematical and liable to be affected by causes which the most sagacious

21,000,000 $367,000,000

could not foresee. The views of this commission on the course to be pursued for the future were that at this time no such amount as fifty millions should be withdrawn from the revenues for the redemption of the principal of the public debt. On the contrary, they believed it to be the true interest of the government that taxation should be reduced at the earliest possible moment, to its minimum, thereby making sure the future industrial development of the country; and that no considerable sum should be immediately raised by taxation for the reduction of the principal of the public debt. In this view, consideration was had for the fact that the Government had taken to itself nearly every source of revenue except the single one of real estate, which was already burdened with the indebtedness of the State governments, that the people were largely in debt, and that the development of the country had hitherto surmounted every financial embarrassment.

On July 13, 1866, Congress passed an act relative to internal revenue, which provided for an abatement or repeal of the taxation on various articles amounting to nearly fifty mil lions of dollars. This legislation gave sensibla

and timely relief to many branches of industry, especially 'crude petroleum, domestic sugars, clothing, boots and shoes, books, cordage, railroad freights, and the manufactures of steel, iron, chains, cables, etc. The prices of the articles, however, did not show a reduction corresponding to that of the taxation; but on the contrary, in some instances, owing probably to the fact that heavy taxation had previously diminished production to a point absolutely below the necessary supply, the prices seemed to have been concurrently advanced with the abatement of taxes. The tax on stock-brokers' sales was changed to one-hundredth of one per cent., payable by means of stamps affixed to the bill or memorandum of each sale, with the most satisfactory results. Brewers of fermented liquors were required to make monthly returns of the product of manufacture, and to affix an adhesive paper stamp to each barrel sold, which was to be cancelled by the retailer. This plan proved to be a success in preventing frauds.

duties on imports. The basis of all values was a paper currency, the influence of which was felt immediately by those manufacturers that came into competition with the productions of other countries, whose basis of all values was gold and silver. The condition into which these industrial interests had been brought is chiefly shown by the advance in prices. The advance in the prices of the leading articles of consumption and in rents indicates an increase of nearly ninety per cent. in 1866, as compared with the mean prices during the four years from 1859 to 1862. The advance in breadstuffs is estimated at about 70 per cent.; coal (anthracite), 60 to 70 per cent.; salt fish, from 60 to 75; pork and beef, from 110 to 120; butter, over 100 per cent.; rice, 100; salt, from 110 to 120; soap, from 80 to 90; brown sugars, from 70 to 80; coffee, from 30 to 40; and teas, 140 to 150 per cent. The currency prices of textile cottons in October, 1866, show a nominal advance over the gold prices of such fabrics in July, 1860, of 172 per cent. ; the advance in the gold prices in the same period having been 81 per cent., assuming the premium on gold in October to have been 50 per cent. A portion of this advance in these textiles must be attributed to the advance in raw cotton, which varied from 300 to 500 per cent. above the price in 1860. The advance in the cost of manufacturing goods in one of the Eastern mills in 1866 over the average from the years 1857 to 1861, was 133 per cent. On the manufacture of woollens suitable for ordinary domestic use, the advance was estimated at 53 per cent. On silk goods in general, the advance was estimated at an average a little over 100 per cent., the lower grades having advanced at a still higher ratio. 53,187,512 The average increase in the price of labor since 89,582,126 1860 has been estimated at 60 per cent., al49,056,398 though no very exact and comprehensive statement can readily be made, owing to the varying nature of the conditions which affect the estimate. The following data in branches of manufacture show the advance from 1860 to 1866:

But it is necessary to consider the present tariff system of the country and its operation in order to have a full view of all the elements "which enter into the financial condition of the Government and country. The rates of duty imposed by the tariff in operation at the beginning of 1866, were about forty per cent. on the total value of imports, and about forty-three per cent. on the values of those paying duty. The following table exhibits the annual imports and exports, and duties of the United States from 1859 to 1866 inclusive:

FISCAL YEAR.

1859

1860

1861

1862 1863

1864

1865

1866

Value of Im- Value of Ex- Duties re-
ports.
ports.
ceived.

$338,765,130 $356,789,462 $49,565,824

362,163,941 400,122,296
350,775,835 410,856,818
205,819,823 229,790,280
252,187,587 331,809,459
328,514,659 340,665,550
234,434,167 336,697,123
437,638,966 179,046,630

69,059,642 102,316,153 84,928,260

Advance in wages from 1860 to 1966.

BRANCH OF MANUFACTURE
Agricultural implements....
Agricultural laborers in the Northern, Middle, and
Western States, average..
Book-binding
Boots and shoes-Men's

Women's and children's..
First-class custom work..nearly
Laborers, and unskilled, 50 per
cent......

China decorating..

So far as relates to the amount of revenue collected, no satisfactory reasons could be brought forward in support of a demand for an extensive change in the existing rates of duty. Since the revision made in 1864, the revenue has reached a point much larger than was ever anticipated, and beyond which no material increase can probably be obtained except Car building-Skilled mechanics, 60 to 75 per ct. by a large increase of importations. Reasons for a change of the existing rates were, however, urged from the condition and necessities of various industrial interests of the country, especially those brought into competition with similar producing interests of other countries. The condition and necessities of those industrial interests demanding a change in the rates of duty on imports, were not the results of the previous duties imposed, but the consequences of abnormal and unusual occurrences existing in other departments of social affairs, and operating upon those branches of industry affected by

Clothing-Ready made..
Copper mining...

Custom work..

Cotton manufactures-general average of all
branches

Furniture-Cabinet.

Hardware-Files...

Locks.
Saws

Hats, wool and fur...
India-rubber manufactures
Ink, printing..
Iron-Founding...
Rolling
Wire.

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Jute manufactures.

Locomotives and machinery in Paterson, N. J.,

average

Machinery, cotton and woollen, average......................
Machinery, general average......

Machinists' tools....

Paper hangings-Machine tenders and block cut

Printing-Composition.........

ters...

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Saddlery and harness..

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Ste cotyping

Urrellas and parasols...
Woollen goods-Miscellaneous...

Carpetings....

..............

89

93

60

60

68

50

72

63

45 to 50

621

71

100

50

471 to 50
67

85

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By the census of 1860, the average monthly wages of those employed in all branches of manufactures, was, of males, $27.10, and of females $12.50; while by the census of New York in 1865, the average monthly wages in the whole State was, for males, $44, and for females, $20; being an increase of sixty-two per cent. for males, and sixty per cent. for females. The average advance in the rents of houses occupied by mechanics and laborers in the great manufacturing centres of the country is estimated to have been about 90 per cent.

The effect of this great increase of prices has been a decrease of production and consumption, and a partial suspension of the development of the country. Thus a comparison of the industry of Massachusetts at the two periods of 1855 and 1865, in the articles of cotton goods, calico, woollens, paper, rolled and slit iron and nails, Advance in wages from clothing, leather, boots and shoes, mackerel and cod fisheries, it appears that the decrease in the number of hands employed at the latter period is about 11 per cent. Some of this decrease may have arisen from labor-saving machinery. 87 But the gold value of the industrial products above specified, at the latter period as compared with the former, showed a decline of nearly 3 per cent. The cotton manufactures of the two periods, other than calico, show a decrease in the number of hands employed of 31 per cent., and in the quantity of raw cotton used 56 per cent., while the diminution of product was 47 per cent. and the average value of the cotton goods per yard, showed an increase in gold in 1865 over 1855 of 75 per cent. The following table presents further details:

While in all branches of industry, including laborers as well as mechanics, the general average increase is...

In the State of Ohio, where the large majority consists of farm laborers, the average is.

In Massachusetts the increase in mechanics' wages is....

While that of all employés in this State, male and female, and including farm laborers, is.. In Western New York, the increase of wages of skilled farm laborers has been seventy-six per cent.; for month and day laborers, from fifty to sixty per cent.; for mechanics' labor, from fifty to one hundred per cent.

PRODUCTS.

100

75

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But the decline of the various branches of industry is clearly indicated in the shipping interest. The amount of American registered tonnage engaged in foreign trade in 1865-'66 was 1,492,924 tons, while in 1859-'60 the amount of this tonnage was 2,546,237 tons; which, allowing for the difference between the old and new measurement, indicates a decrease in five years of over fifty per cent. In 1853 the tonnage of the United States was about 15 per cent. in excess of that or Great Britain, whereas at the present time it is estimated at 33 per cent. less. The coast wise and inland commerce, by the official returns, after making allowance for the difference of measurement, shows a decrease of about 12 per cent. In the Brazilian, or South American trade, in 1861-'62, one hundred and ninety vessels were engaged, of which at present only thirty are reported as remaining, while the number of foreign vessels engaged in the same trade, has, during the same time, increased nearly threefold. One cause of this change was undoubtedly the frequent presence upon this part of the ocean of the Alabama and other privateers. The number of vessels of all classes engaged in the foreign trade which arrived at the port of New York during 1866 was 4,892, of which 1,658 were American bottoms, and 2,410 British bottoms. The building of ships has to a great extent been transferred from the Atlantic coast of the United States to the Britsh Provinces, where the tonnage, especially in New Brunswick and Nova Scotia, during the five years ending June 30, 1865, has increased

respectively 69 and 71 per cent. The decline of the foreign tonnage of the country has been commonly referred to the war; but since this cause ceased to operate, the declining movement has continued to prevail. The shipbuilding of the country had almost entirely ceased during the latter part of the year. Previous to 1860 abont one-half of the product of the copper mines of Lake Superior was exported to France and Germany; now the proprietors of these mines represent that their whole investments are threatened with ruin through failure to secure even the home market. During the year, flour from France and starch from Great Britain were imported into New York and Boston to be sold at a profit. The machinery for the manufacture of cotton and for refining sugar, is now in a very large proportion made abroad, as the price is about onethird less than that for which the same can be constructed in the United States. The value of that in the course of construction in Europe at this time is estimated at three millions of dollars. Notwithstanding the embarrassments to some manufacturing establishments, they were kept in operation at the merest appreciable profit, and every expedient for economizing labor and perfecting profit was resorted to. Other establishments continued to divide large profits among their stockholders, although their exhibits were generally less favorable than for the preceding year. The following were the dividends of some manufacturing companies of Massachusetts:

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