PRINCIPLES OF TAXATION. 155 



rich, and its accumulated resources had not for two generations 

 been subjected by either the national or state governments to 

 extraordinary taxation. Wealth, moreover, was very uniformly 

 distributed, and the people pointed with pride to the annually 

 increasing receipts of revenue under the new system ; which, start- 

 ing with $41,000,000 of internal revenue in 1863, rose rapidly to 

 $117,000,000 in 1864, $211,000,000 in 1865, and culminated in 1866 

 with the large sum of $310,000,000, making the total revenue for 

 that year, drawn from all sources by so-called taxation, $559,000,- 

 000, the largest sum previously contributed in any one year for 

 the support of any Government by the free consent of its people. 

 So long, moreover, as the war lasted, the attempts to evade 

 taxation by illicit methods were exceptional and in amount incon- 

 siderable. The demand for most manufactured and agricultural 

 products, owing to the enormous consumption of the armies and 

 the withdrawal of labor from its accustomed vocations by en- 

 listments, was fully equal to or in excess of supply. Prices rose 

 rapidly with every increasing taxation or additional issues of 

 paper money,* and under such circumstances the fiscal require- 

 ments of the war were not regarded by the majority of producers 

 as oppressive. But, on the contrary, counting the taxes as elements 

 of cost and reckoning profit as a percentage of the whole cost, it 

 was generally the case that the aggregate profits of the producer 

 were actually enhanced by reason of the taxes, to an extent con- 

 siderably greater than they would have been had no taxes what- 

 ever been collected. Indeed, it was not infrequently the case that 

 the manufacturers themselves were the most strenuous advo- 

 cates for continued and rapidly increasing taxation, with a view 

 of realizing thereby, through an advance in prices, large additional 

 profits on products, or constituents of products, previously assessed 

 or imported at lower rates of (customs) duties, and to bring about 

 such advances influence and money were used without scruple. 



* Among the absurd theories put forth in justification of an extravagant issue of (irre- 

 deemable) paper money was a favorite one, that such a policy was a matter of necessity to 

 make money easy, in order that the securities (bonds) representing Government loans 

 should be easily floated ; the one uppermost idea in the heads of the Government officials 

 having been, apparently, that in the floating thus contrived, the bonds alone would possess 

 the property of buoyaney. But in this they were mistaken. The bonds indeed floated, but 

 everything else floated with them ; or, to borrow the language of a writer of the period (who 

 criticised this experience from the humorous point of view), " the bonds were floated, but 

 by just about the same operation as that by which things are floated in the suburbs of a 

 town or city submerged in a heavy freshet hencoops floated, cellars floated, streets floated, 

 barge houses and outhouses floated, stray children and first floors floated, all creation floated 

 and floated together." The market for five-twenties was made easy, the market for flour, 

 beef, cotton, and military stores, of which the Government was compelled to purchase im- 

 mense quantities, was made particularly easy. The whole country was put under water and 

 remained so for a considerable period after the war terminated. 



