TAXATION. 



617 



churches, a high-school and several good schools, 1 

 daily and 2 weekly newspapers, and the State lunatic 

 asylum. The inc'lustrial works comprise locotnotive- 

 works, copper-works, 10 foundries, cotUin-uiills, and 

 factories producing nails, tacks, screws, jewelry, bri- 

 taunia ware, etc. There are also ship-j-ards and brick- 

 yards. Taiintup was settled in 1 039 and became a city 

 in 1864. Its population in 1880 was 21,213. 

 TAXATION. The United States furnish an excel- 



v win ' cn ^ ^ e .'^ ^ or l ' ie sll "ty f tne practical 

 * e &5 ( y ['operation of methods of taxation, in 

 Am lieu) that there are in this country forty-eight 

 separate governments besides that of 

 the nation, which have the right to determine the 

 methods in which they will levy upon the resources and 

 the extent of the people for public purposes, only ten 

 of them being in any way restricted by any superior 

 authority in tBM res-pert. The legislation of the ten 

 Territories, which are States in the making, is subject 

 to the revision of Congress. The Legislatures of the 

 thirty-eight States are limited only by the provisions 

 of their own constitutions and of that of the United 

 States. The national government is limited only by 

 the latter. 



The national government is the only one whose 

 duties and resources are co-extensive with the nation. 

 Before the Constitution of 1787 was adopted it had no 

 powers of taxation, and could only assess the States to 

 obtain money lor its necessary expenses in conducting 

 the wars and managing the diplomacy of the country. 

 The projiosal to extend to it the power to levy taxes on 

 imports, as much for the sake of a general system of 

 protection to home industry as to m;ike its treasury 

 independent of that of the States, was defeated by the 

 negative vote of New York. This fortunate refusal 

 precipitated negotiations lor the formation of "a more 

 perfect union," and the new Constitution conveyed to 

 the national Congress "power to collect taxes, duties. 

 imposts, and excises, to pay the debts and provide for 

 the common defence and general welfare of the United 

 States," and to "borrow money on the credit of the 

 United States." But this large grant was accompanied 

 by decided restrictions. The first is that "All duties, 

 imposts, and excises shall be uniform throughout the 

 United States." The second, that " No capitation or 

 other direct tax shall be laid, unless in proportion to 

 the census or enumeration " elsewhere provided for. 

 The third, that " No tax or duty shall be laid on articles 

 exported from any State. No preference shall be LMV< o. 

 by any regulation of commerce or revenue, to the ports 

 of one State over those of another." On the other 

 hand it is provided dint " No State shall, without the 

 consent of the Congress, lay any imposts or duties on 

 imports or exports except what may be absolutely nec- 

 essary for executing its inspection laws; and the net 

 produce of all duties and imposts laid by any State on 

 imports or exports shall be for the use of the treasury 

 of the United States; and all such laws shall be subject 

 to the revision and control of Congress. " The inter- 

 pretations of the Supreme Court have determined 

 (I) that Congress has no power to levy duties on ex- 

 ports under any circumstances ; (2) that the restriction 

 upon the power of direct taxation <locs not apply to an 

 income tax, that being a form of direct tax which the 

 authors of the Constitution could not have had in 

 mind ; (Z) that no State may tax the " instrumentali- 

 ties" which the Federal government deems proper to 

 create or employ for carrying out its purposes, such as 

 property in the debt of the United States. 



1 he grant of power thus conveyed has proved much 

 more extensive than its authors contemplated. In fact 

 it has transferred to the national government all the 

 popular and easy forms of taxation, as it possesses not 

 only the sole right to levy import duties, but the sole 

 power to collect excise duties also. The. at tempt of any 

 Slate to collect revenue from the makers of any com- 

 modity wotdd orny result in the transfer of its ruanu- 

 l.H ime to other Stales. At the same time the jealousy 



of the States at the time of the adoption of the Consti- 

 tution prevented any equally extensive transfer of the 

 duties and responsibilities of government to the na- 

 tion. Thus we have a national government possessing 

 the most ample revenues, but in time of peace doing 

 less for its people than any other national government 

 of the civilized world. The costs of maintaining the 

 national executive and his cabinet, Congress, the treas- 

 ury, the comparatively insignificant army and navy, 

 the post-offices, thu system of Federal courts of ex- 

 tremely limited jurisdiction, and the tax-collecting 

 machinery itself make up the necessary expenses of the 

 national government. J'o these it voluntarily, and iu 

 the face of protest from the friends of States' rights, 

 has added outlays for the construction of internal im- 

 provements, harbors, grants for education, and various 

 minor expenditures. And in addition to its revenue 

 from taxation, it long derived a revenue from the sale 

 of lands on the public domain, and still counts that 

 among its minor sources of income. Under the ordi- 

 nary working of the Constitution there is a vexatious 

 disproportion between constantly swelling revenue and 

 restricted possibility of expenditure. 



This anomaly aid not at once appear after the adop- 

 tion of the Co.istitution, nor for several years later. 

 as the United States government was burdened 

 by a considerable debt, incurred in the prosecution 

 of the war for independence, and, through the in- 

 fluence of Alexander Hamilton, was induced to assume 

 the war debts of the States. But as early as 1N>6 

 1'res. Jefferson announced to Congress the approach 

 of a time when the revenue would be in excess of the 

 constitutional wants of the government, although all 

 the excise taxes enacted in Washington's administra- 

 tion had been repealed in 1801. As in his view it 

 would be unwise to reduce the tariff in order to re- 

 duce the revenue, he proposed that the powers of 

 Congress be enlarged by the amendment of the Con- 

 stitution, so as to enable it to undertake a great 

 system of internal improvements. 



The outbreak of another war with Great Britain 

 both postponed the appearance of a surplus nf rev- 

 enue and forced the re-enactment of the excise taxes. 

 But in 1829 we find (icn. Jackson, in his first mes- 

 sage to Congress, again announcing the approach of 

 a surplus, and proposing that it be distributed among 

 the Nate governments in proportion to population. 

 After a futile attempt of the Whigs under Mr. Clay's 

 leadership to distribute the specific revenue from the 

 sale of lands, a law propossed by 5Ir. Calhoun was 

 passed in 1836, and signed by Pres. Jackson, "de- 

 positing" with the States in quarterly instalments the 

 surplus in the national treasury. 



Before the third of the contemplated instalments 

 had been made, the business depression of 1837. and 

 the losses of government money through the failure 

 of the State banks to which IVes. Jackson had trans- 

 ferred it, compelled the treasurer to stop payment. 

 In this course he was sustained by Congress, which 

 suspended the distribution law. In recent years the 

 State of Virginia has sued for this fourth deposit, 

 but was non-suited because the court upheld the 

 validity of the suspending law. Of the three deposits 

 made under the law of 1836, most of the States uia'ie 

 wise and fruitful use. The common schools of many 

 of them draw revenue from the fund to this day. 

 But in some States there prevailed ideas of financial 

 management now happily obsolete. Thus the Stale 

 of New Hampshire divided it up among its citizens, 

 while levying the usual taxes for the support of the 

 State government 



In the interval between the panic of 1837 and the 

 outbreak of the war there was no surplus, partly be- 

 cause of the war with Mexico and partly because of 

 the had financial management, which left a debt of 

 $61,140,496 on the country in I860, some of it paying 

 twelve per cent, interest Of course the expenses of 

 , t he war and the pressure of the debt prevented the 



