Year: 1864

varied materially from the estimates, particu-
larly from customs and internal revenue. This
variation is imputable, in great part, to the
legislation of Congress at its last session, in
creasing largely the rates of duty on foreign
and domestic articles. 1t is apprehended,
however, that similar results will not follow
for the residue OF the present year in both
these particulars. - rt'- .t14- YEA


The increase of duties on imports under the
act of June 30,. 1864, has already had the ef-
feet to decrease impOrtatiOns to considerable
extent, and the same effect will be likely to
continue. So that, estimating the receipts of
the three remaining quarters by those of the
first in the light of former experience, it will
not be safe to calculate upon a revenue from
custums much exceeding $4,000, 900 for the
current year. In the judgement of the Secre-
tary this disadvantage in q financial point of
view is more than cOunterbalanced by the slim
ulOus afforded to dOmistic industry, and the
consequent increasedire from that source.


From internal revenue different and far
more favorable result may be be anticipated.
1t will be noticed that instead of S77. .599 7O3 So
there was received from this source in the past
year $10S, ,26O, 32O.57 under the same law which
in ten months of the preceding year yielded
only $37, GAO, 1875. The new law. which went
into operation on LIST of July last largely increas
ing these duties. although 1t will probably fail
to produce the amount of revenue hoped for,
may, if not materially changed together with
the special income tax imposed by the joint
resolution of July 2, 1864, be safely estimated
to produce the sum of $25, 900, 900, should the
business OF the country be ordinarily prosper
ous The same causes which under preceding
laws, produced SO large an increase in the
second year would be likely to have similar
effect, to some extent, under the new law, go
that at least the amount of 1926, OO0,O 900 may be
expected from it in another year without the
aid of the special income tax.


But this amount is not, and ought not to be.
satisfactory. Three hundred millions at least
should be realized from internal duties. It is
for Congress to select the sources and devise
the modes in which this most desirable result
can be obtained, and the report of the Com
missioner OF internal revenue Is referred to for
bis views on this important point, as well as
for many valuable suggestions having reference
to same general subject.


ence, to remark that in his Judgment o COM
mission, properly constituted for the purpose,
OF inQuiring as to profitable sources of revenue.
and devising Improvements in the modes of its
collection, might, in country of such varied
production, and among people of such di-
verse industrial pursuits, elicit much informa.
ton which would materially assist the delibe-





q subject so new to legislative experience on
this continent. As, however, a resolution
pointing to this end did not meet the approval
of Congress at its last session, the Secretary
did not feel authorized to institute an inquiry
through such instrumentality, and he has been
unable to adopt other effective measures for
the same purpose. After much reflection and
q careful revision OF his opinions heretofore
expressed in another place-to which under the
circumstances he may be pardoned for refer
ring-the Secretary feels obliged to say that he
sees no other resource for raising the addition
al revenue so necessary to the national credit
than those pointed out by the commissioner.
He is aware of the great difficulties attending
the collection of the duties proposed, and feels
all the force OF the objections heretofore made
to their imposition. He nevertheless believes
that a tax on tobacco, in the leaf or unmanu-
featured, If it can be enforced, is the only mode
by which duty on the article can be collected
fairly and equally, and through which an ade-
Quate amount of revenue can be obtained from
It, He believes also that although tax on
sales would probably fail of collection to some
extent, yet, by applying to it stringent rules
requiring frequent periodical returns, verified
exhibit of books of account, 1t might become
very large and important item of revenue.


The Secretary would further suggest wheth-
er the income tax should not be collected upon
all. without exemption, as the law as it is
opens the door to innumerable frauds and, in
young and growing country the vast majori-
ty of incomes are small, while all participate
The adoption of q scale augmenting the rate
of taxation upon incomes as they rise in
amount, though unequal in one sense, cannot
be considered oppressive or unjust, inasmuch
as the ability to pay increases in much more
than arithpetical proportion as the amount of
increase Of income exceeds the limit of reason
able necessity. From the results of expert
ceived, the Secretary is well convinced that
much revenue was not collected through an
imperfect execution of the law, and more
through fraudulent evasion of its provisions.
Time and effort will, it is hoped, remedy these
evils in great degree, and the confident ex-
pectatiOns of those who framed it be realized.
In the meantime no effort should be spared to
ment to increase its efficiency, of which there
is reasonable hope of success, should be left
untried.


The act of February Is, 1862, provides that
the coin received for duties on imports shall,
after paying interest on bonds and notes, be ap.
prOpriated to the purchase of one per centum
of the public debt, to be set apart with its ac-
cruing interest as sinking fund, as the Secre-
tary might, from time to time direct. All ex-
pCiIcuCC uaS pIOtcu tuat IN Time Oh war,
when expenditures must largely exceed re-
ceipts from ordinary sources, and large sums
are borrowed in each year, the attempt to 'es-
tablish sinking fund Invariably fails 1t Is, in
fact, simply borrowing to lend again. For this
reason, no attempt to carry out this provision
has yet been made. As the time Is approach
ing, however, when the present unnatural con-
dition Of affairs may be expected to terminate,
it is we'll to consider whether some legislation,
poetponing for time the operation of the pro-
vision referred to, and designating board of
officers as commissioners Of the sinking fund,
under proper regulations may not be advisable
their duties to commence at such time as the
Secretary of the Treasury may designate Such
legislation should at least show that the pro-
vision for sinking fund is not intended to re.
main dead letter upon the statute book.


When peace shall return, and with 1t the
power to render that provision effective.
should any further aid be necessary, the Secre.
tary would respectfully suggest whether such
income as may be received from the puplic do
main, from sale, or in the shape of rents an 4.