FINANCES OF THE UNITED STATES. 



401 





used to represent or transfer property ; licenses 

 for the practice of professions and commerce ; 

 on dividends and profits ; on incomes 

 over $600 ; on manufactures an ad valorem 

 duty of 3 per cent., and a specific duty on 

 others. In the imposition of this duty many 

 exceptions in favor of agriculture are made. 

 Thus cheese is not considered a manufacture ; 

 sugar from sorghum is not taxed, while sugar 

 . from cane is taxed. Under these various forms 

 many persons are required to pay several taxes. 

 Raw material, after leaving the hands of the 

 farmer, is taxed at every new form it as- 

 sumes until it gets back to him manufactured 

 for consumption, charged with all the taxes 

 with which it has been loaded on the way. 

 Thus a cattle broker pays $10 license and a 

 stamp upon the receipt of sales. A calf slaugh- 

 tered is taxed 5 cents, the skin is taxed 6 cents. 

 The tanner pays 3 per cent, tax, and a stamp 

 upon receipt of payment and upon check paid 

 for skins. The leather dealer pays $50 license, 

 and for stamps upon receipts and checks. The 

 shoemaker pays 3 per cent, tax, and for stamps 

 upon receipts and checks. The wholesale skoe- 

 dealer $50 license and for stamps. The retail 

 dealer $10 license and for stamps, and the skins 

 have come back to the farmer in the shape of 

 a pair of boots loaded with 20 taxes besides 

 his own income tax and those of the seven 

 leading persons concerned in transforming the 

 calf skin into boots, and returning it to the 

 producer. All articles produced are loaded in 

 the same way as they pass from hand to hand, 

 and it results that the consumers of all prod- 

 ucts pay the whole of the tax accumulated 

 upon them. The majority of consumers are 

 agriculturists, and their productions are far in 

 advance of the consumption of the Northern 

 States. As a consequence they cannot charge 

 upon their productions the weight of the taxes. 

 The value of their crops, as a general thing, is 

 governed by the markets abroad. The weight 

 of the taxes has therefore a continued ten- 

 dency to discourage consumption, and conse- 

 quently production. This tendency is increased 

 by the mode of levying ; for example, some 

 manufacturers are sworn -48 times in a month 

 in relation to this operation. The whole amount 

 of taxes advanced to the Government by em- 

 ploying manufacturers, is so much money di- 

 rectly abstracted from the capital required to 

 prosecute industry. The census for 1860 states 

 that in the Northern States the capital so em- 

 ployed is in round numbers $900.000.000, and 

 that it produces a value of $1,700,000,000 per 

 annum. The three per cent, charged upon this 

 is $51,000,000 per annum; but the stamps, 

 licenses, income tax, etc.. it is estimated, will 

 raise the tax to be paid by those employers to 

 6 per cent., or over 100 million dollars a sum 

 drawn directly from their cash capital, which 

 in this country has always been inadequate to 

 the demand. The sum so withdrawn from the 

 employment of industry is used by the Gov- 

 ernment in supporting troops who no longer 



produce, but waste and destroy. The income tax 

 is imposed for the year ending December Olst, 

 1862, and is charged upon all profits of busi- 

 ness less $600. Many sources of income, such 

 as insurance, bank, and railroad stocks, bonds, 

 &c., that pay the tax otherwise, are not in- 

 cluded in the income charge. The tax is as- 

 sessed May 1st in each year, ending December 

 31st previous, and is due and payable June 30th 

 in each year until 1866, that is, for 5 years. This 

 tax, it will be observed, is on profits of business, 

 while the manufacturing tax of 3 per cent, is 

 on gross production, irrespective of profits. 

 The profits are deemed to be the actual net 

 profits of the business, irrespective of individual 

 or family expenses ; but it does not necessarily 

 follow that all business is conducted at a profit, 

 and the means of evading this law are nu- 

 merous. Nevertheless the Secretary estimated 

 that it would yield $150,000,000 per annum, 

 and that with customs the amount would reach 

 a sum equal to the ordinary expenditure, the 

 interest on the debt, and a surplus for a sinking 

 fund. The actual receipts from the taxes, ex- 

 cept from corporations, salaries, and stamps, 

 was. to January 3d, 1863, or five months, 

 $9,067,000 from twenty-four States. 



The tariff was also deemed capable, notwith- 

 standing the three revisions that it underwent 

 in 1861, of yielding a larger revenue by raising 

 the rates upon some articles; and it under- 

 went such a modification as, it was estimated, 

 would give $100,000,000, which, added to the 

 estimated $150,000,000 to be derived from the 

 internal taxes, would afford a sum sufficient to 

 meet the ordinary expenses of the Government, 

 the interest on the national debt, and afford a 

 sinking fund for the ultimate redemption of the 

 principal. This bill was passed and approved 

 July llth, 1862. 



The expansion of the irredeemable paper 

 currency produced its usual effect in causing 

 coin to disappear altogether from circulation. 

 The rise in the value of gold was followed by 

 that of silver in proportion to its relative value 

 as established by the law of 1852. That law 

 grew out of the effects of the gold discoveries 

 in California, which, at that time, it was appre- 

 hended would cause a depreciation of gold as 

 compared with silver, and that as a conse- 

 quence, in order to preserve the uniformity of 

 values, and retain silver in the country, gold 

 alone should be the legal standard, and the 

 quantity of silver in the coins should be re- 

 duced. Accordingly the quantity of pure silver 

 in the half and smaller fractions of the dollar 

 was reduced nearly 10 per cent, below the 

 standard, and silver was made a legal tender 

 only to the extent of $5. Under the operation 

 of this law the Spanish fractions, which had 

 formed the small currency since the settlement 

 of the country, disappeared almost altogether, 

 and the American coins became very abundant. 

 Of these there had been coined nearly $50.000,- 

 000 worth since 1852, and this amount circu- 

 lated as well South and in California as North. 



