But This Bill Applies Simply To Matters Of Excise.

As I have said before, Congress, which has hitherto supported the government by custom duties, has also the power of levying excise duties, and now, in its first session since the commencement of the war, has begun to use that power without much hesitation or bashfulness.

As regards their taxes levied at the custom-house, the government of the United States has always been inclined to high duties, with the view of protecting the internal trade and manufactures of the country. The amount required for national expenses was easily obtained; and these duties were not regulated, as I think, so much with a view to the amount which might be collected as to that of the effect which the tax might have in fostering native industry. That, if I understand it, was the meaning of Mr. Morrill's bill, which was passed immediately on the secession of the Southern members of Congress, and which instantly enhanced the price of all foreign manufactured goods in the States. But now the desire for protection, simply as protection, has been swallowed up in the acknowledged necessity for revenue; and the only object to be recognized in the arrangement of the custom duties is the collection of the greatest number of dollars. This is fair enough. If the country can, at such a crisis, raise a better revenue by claiming a shilling a pound on coffee than it can by claiming sixpence, the shilling may be wisely claimed, even though many may thus be prohibited from the use of coffee. But then comes the great question, What duty will really give the greatest product? At what rate shall we tax coffee so as to get at the people's money? If it be so taxed that people won't use it, the tax cuts its own throat. There is some point at which the tax will be most productive; and also there is a point up to which the tax will not operate to the serious injury of the trade. Without the knowledge which should indicate these points, a Chancellor of the Exchequer, with his myrmidons, would be groping in the dark. As far as we can yet see, there is not much of such knowledge either in the Treasury chambers or the House of Representatives at Washington.

But the greatest difficulty which the States will feel in obtaining access to their own means of taxation is that which is created by the Constitution itself, and to which I alluded when speaking of the taxing powers which the Constitution had given to Congress and those which it had denied to Congress. As to custom duties and excise duties, Congress can do what it pleases, as can the House of Commons. But Congress cannot levy direct taxation according to its own judgment. In those matters of customs and excise Congress and the Secretary of the Treasury will probably make many blunders; but, having the power, they will blunder through, and the money will be collected. But direct taxation in an available shape is beyond the power of Congress under the existing rule of the Constitution. No income tax, for instance, can be laid on the general incomes of the United States that shall be universal throughout the States. An income tax can be levied, but it must be levied in proportion to the representation. It is as though our Chancellor of the Exchequer, in collecting an income tax, were obliged to demand the same amount of contribution from the town of Chester as from the town of Liverpool, because both Chester and Liverpool return two members to Parliament. In fitting his tax to the capacity of Chester, he would be forced to allow Liverpool to escape unscathed. No skill in money matters on the part of the Treasury Secretary, and no aptness for finance on the part of the Committee of Ways and Means, can avail here. The Constitution must apparently be altered before any serviceable resort can be had to direct taxation. And yet, at such an emergency as that now existing, direct taxation would probably give more ready assistance than can be afforded either by the customs or the excise.

It has been stated to me that this difficulty in the way of direct taxation can be overcome without any change in the Constitution. Congress could only levy from Rhode Island the same amount of income tax that it might levy from Iowa; but it will be competent to the legislature of Rhode Island itself to levy what income tax it may please on itself, and to devote the proceeds to National or Federal purposes. Rhode Island may do so, and so may Massachusetts, New York, Connecticut, and the other rich Atlantic States. They may tax themselves according to their riches, while Iowa, Illinois, Wisconsin, and such like States are taxing themselves according to their poverty. I cannot myself think that it would be well to trust to the generosity of the separate States for the finances needed by the national government. We should not willingly trust to Yorkshire or Sussex to give us their contributions to the national income, especially if Yorkshire and Sussex had small Houses of Commons of their own in which that question of giving might be debated. It may be very well for Rhode Island or New York to be patriotic! But what shall be done with any State that declines to evince such patriotism? The legislatures of the different States may be invited to impose a tax of five per cent. on all incomes in each State; but what will be done if Pennsylvania, for instance, should decline, or Illinois should hesitate? What if the legislature of Massachusetts should offer six per cent., or that of New Jersey decide that four per cent. was sufficient? For awhile the arrangement might possibly be made to answer the desired purpose. During the first ebullition of high feeling the different States concerned might possibly vote the amount of taxes required for Federal purposes.

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