am sorry to say, experience convinces me can not be exaggerated in its gravity and extent. But with all these disadvantages it is after all a tax, as the country feels, which is founded on principle; and the fact that it has existed so long with equal rates is of itself a great advantage.

Two committees of the House of Commons, one in 1850 and another in 1861, who spent a long time in investigations of propositions for amending the income-tax law, made no report, having concluded that the law as it stood was as good a one as could be framed. In 1864 the House of Commons voted down the following resolution :

Resolved, That the inequalities and injustice attending the operation of the existing property and income tax disqualify it for being continually reimposed in its present form as one of the means for levying the national revenue.

The present Chancellor of the Exchequer, Hon. R. Lowe, said in the House of Commons, March 16, 1869 :

The real evil of the income tax, in my judgment, is not that it is levied in a par tial manner on land or realized property or profits of trade, but that, from the necessity of the case, persons having such income as that included in schedule D are judges in their own cause, and that this in many instances holds out a temptation to those persons to give too favorable an interpretation of the amount of their liability. But to say that there is an objection to income tax is only to say that this tax is a tax; for the ingenuity of the human mind never did and never will devise a tax to which there are not objections more than plausible, and which would be absolutely convincing and irresistible if taxation were not a necessity.

Again, in presenting to the House of Commons the budget on Monday, April 11, 1870, he said:

I have received many deputations respecting the income tax, and I concede that a good deal may be said against this tax; but as I am not prepared with a substitute for it, I must continue the tax at such a moderate rate as will make it tolerable to those who pay it, preferring to give them a little uneasiness and discomfort rather than to strike out so great and useful a branch of revenue.

I might also read from various writers on political economy on this subject, John Stuart Mill among the rest. In the second volume of his "Political Economy," page 398, speaking of the conditions necessary for making this tax consistent with justice, he says:

1. That incomes below a certain amount should be altogether untaxed.
We exempt $1,000.

2. That incomes above the limit should be taxed only in proportion to the surplus by which they exceed the limit.

We allow the same deduction of $1,000 from all incomes.

3. That all sums saved from income and invested should be exempt from tax. That also is provided for in our proposition. Then he proceeds:

An income tax fairly assessed on these principles would be, in point of justice, the least exceptionable of all taxes. The objection to it in the present low state of public morality is the impossibility of ascertaining the real incomes of the contributors. The supposed hardship of compelling people to disclose the amount of Notwithstanding, their incomes ought not, in my opinion, to count for much. . .

too, what is called the inquisitorial nature of the tax, no amount of inquisitorial power which would be tolerated by a people the most disposed to submit to it could enable the revenue officers to assess the tax from actual knowledge of the circumstances of contributors.

Here we have the testimony of this distinguished writer on political economy, broadly in favor of the continuance of the income tax; and he has repeatedly, as a member of the House of Commons, voted for it.

But, to come back to some of our own authors, Mr. Amasa Walker, lecturer on political economy in Amherst College, has written a very good work on the "Science of Wealth," in which he says, at page

322:

It is unnecessary to say that this tax is in perfect accordance with the first maxim laid down by Adam Smith, "that every man should be taxed according to the revenue he derives under the State," and also consistent with every other principle we have stated. It is "clear and plain" to the contributor and every other person. The income-tax-payer knows when and how much he pays, and it can be collected as conveniently and economically as any other. . . . Of all modes of taxation this is the most just and equitable. Every man can afford to pay according to his income, and ought to do so. There is no other perfect standard of taxation; none other which does not inflict more or less hardship and injustice. . . . Were it to supersede all other forms of taxation, perfect equality would be established. Property and labor would bear each its just share of the public burdens.

Sir, if we could devise a system of taxation that levied upon the aggregate income of all the people of the United States a fair and rightful tax, it would be, as Mr. Walker says, the best of our taxes. He says further:

The objection to this form of taxation is the difficulty of ascertaining what a person's actual income is. In the first place, it is said that many do not know their own affairs so as to be able to state their true income. There is doubtless much of truth in this; but the very fact that such a tax is certain to be enforced every year will, in a short time, remove this difficulty to a considerable extent, because men will be compelled so to keep their accounts as to know what they gain or lose. The operation of the law in this respect therefore is favorable to private interest. Secondly, it is said that some men will be dishonest in their disclosures and statements, and therefore a correct result can not be reached. That many men are dishonest there can be no doubt; but when the law taxing incomes is regularly enforced from year to year, the difficulty of concealment on the part of the tax-payer is constantly increasing. His neighbors and competitors in business have an eye upon him if they believe he is making false statements, and he can not long escape detection. . . The immense difference between the reported incomes of the United States in 1864 and those of 1863, even after allowing for the general rise of prices, serves to give an idea of the advance that will naturally be made in the application of the income tax.

And I may say here that under the same law every year the income tax is increasing, although the actual income of the country is diminishing. Every year that the law is enforced we are getting nearer to an accurate income tax.

Mr. Walker says further:

The third objection made is that men do not always like to have their incomes known. But why should they not? We have already said that in the matter of taxation all are copartners, having a pro rata interest; what one does not pay another must. All therefore may rightfully demand such information as shall furnish the means of assessing a correct tax.

Our purpose is to show that so far as practicable it (the income tax) is the most just and economical mode of raising a revenue.

Under the head of "State Taxation," Mr. Walker says:

That much hardship may often result from taxing credits as well as property is undoubtedly true; but that only affords additional evidence that the income-tax principle is the only correct one.

And again :

The income-tax principle, if universally adopted, while it would doubtless relieve poll-tax-payers of their present taxation, would at the same time bring their interests into harmony with those of property-tax-payers, and thus promote the general welfare of the public.

I might also read from another author, a citizen of Massachusetts, Mr. A. L. Perry, professor in Williams College, who says, in his "Political Economy," page 444:

An income tax, if the exact amount of income could in all cases be ascertained, would be a perfectly unexceptionable form of taxation.

Again:

The income law at present in force in the United States has perhaps been subject to less complaint than the manufacturers' tax and other forms of indirect taxation; and it is becoming more and more productive every year, as the forms are perfected.

Mr. President, if Congress now repeals the only tax that rests upon property, the only tax that is drawn from the income of the rich, if we higgle about the tax that is paid by the 273,000 people who pay our income tax, and yet keep upon the people the taxes upon their sales, the special taxes upon their employments, and all the burdens that now rest upon every article consumed by the poor, it will be a sorry spectacle. An English Parliament, when appealed to under circumstances much less difficult, maintained for twenty years in war a tax approaching ten per cent. on incomes. After the war was over they tried the other policy. They then renewed the tax, and levied it at the rate of from one to three or four per cent. for nearly thirty years more. And now, when we are paying $30,000,000 to our pensioners, when we are paying $126,000,000 as interest upon the public debt, to complain of a tax of three per cent. upon incomes above $1,000, on the ground that it is inquisitorial, unjust, and unequal, does not speak well for the patriotism of those who do it.

Most of the daily papers in the country seem to be united in the general complaint against the income tax. It is a good evidence that they are doing well and paying well, and they ought to be willing to pay their portion of the tax.

I repeat that the maintenance of the income tax is an absolute necessity for any system of internal taxes. If the Senate and House determine after full consideration to repeal the income tax, I shall favor the repeal of all the taxes upon consumption that bear upon the great masses of the people. If I had my way, I would retain the income tax at five per cent. on all incomes above $1,000, making such modifications as would afford the proper exemptions, and then throw off these taxes upon consumption that oppress the poor, and take coppers out of the dollars of people who earn them by their daily work.

Complaints have been received from widows and children whose incomes are less than $1,000, who have had to pay an income tax upon

the dividends and interest received from their stocks and bonds. Now, the operation of the law in this respect is unjust, and ought to be corrected by the proposed measure. The operation of the income tax upon Government employees is unjust, because it does not put their income on the same footing as other incomes. The income derived from corporations is now subject to tax without the deductions allowed to other incomes. Why is that? It is because it is more convenient for the Government to collect the tax from corporations, and yet in that way we do levy an income tax upon the income of the widow and the poor derived from corporations, and do an injustice. If the Senate is willing to go that far, I should be very glad to see this corrected, and to allow all incomes, whether derived from corporations or from interest on bonds, to go into the general income return and to be collected directly from the person who receives it, giving all an equal exemption.

It is proposed in the House bill to increase the exemption from $1,000 to $1,500. I do not think that is right. It may be popular. There are now 270,000 people who pay income tax. If the exemption is raised to $1,500, only about 170,000 will pay the tax, and 100,000 people will probably be relieved from it. But should they be? Is it just? Is it right? There is no reason for any exemption, except the fact that the incomes of those who receive less than $1,000 per annum are necessary for their daily wants. They pay taxes on consumption which fully make up their share. When you go above $1,000 you reach a region where persons are "passing rich," as Goldsmith's vicar says, "on £40 a year." They are independent when they have $1,000 net income, after paying taxes and after deducting the exemptions provided by the income law. I do not, therefore, see any justice in raising the exemption, although I can see it would be very popular with the hundred thousand well-to-do people who would thus be relieved, throwing the whole burden upon those who are of the wealthier class.

If the income tax is maintained at the rate proposed by the Committee, of three per cent. on all incomes above $1,000, including incomes derived from corporations and from all other sources, the people will gradually become accustomed to the tax, and those who are called upon to pay it will pay it cheerfully. It will be a mode of equalizing incomes from different sources, and will yield us from thirty to forty million dollars annually, probably enough to pay the pensioners who are now dependent upon our bounty.

I have thus stated, I know very imperfectly, the general ideas that influenced the Committee on Finance in reporting this bill. The substance of the whole is contained in the table which has been laid on the desks of Senators, and which I will add to my remarks. We propose to repeal about two thirds of the number of internal taxes, leaving nothing but the taxes on whisky, tobacco, fermented liquors, income, and stamps; repealing all the rest, and modifying the income tax and reducing it $14,000,000. This will leave in force about one hundred and fifteen millions of internal revenue, which will be ample, with the amount we collect from the duties on imported goods, to

carry on the operations of the Government, pay the sinking fund, and leave us a surplus of from twenty-five to thirty millions annually.

This is margin enough for an equal reduction in other taxes during the next session of Congress, and this process of reduction will, I trust, continue until all the burdens of the war are lifted from the industry of our people; and all that will be left of a painful struggle will be the increased strength and power and glory of our country, compared with its condition before the war, when internal faction continually threatened its overthrow.

COINAGE LAWS.

IN THE SENATE, JANUARY 9, 1871.

THE bill (S. No. 859) revising the laws relative to the mints, assay offices, and coinage of the United States, being before the Senate as in Committee of the Whole, on the amendment of the Committee on Finance to charge three tenths of one per cent. for coinage, Mr. Sherman said:

ON a question of this kind, which involves rather a matter of business detail, it is somewhat difficult to secure the attention of the Senate, but I hope I shall secure it sufficiently to show that this amendment is vital to the passage of this bill. Without this amendment I certainly would not vote for it, and I imagine that a majority of the Senate would not if they understood the subject as thoroughly as most of the Committee on Finance, who have examined it.

The original bill, introduced by me at the last session of Congress, retained the old mintage charge of one half of one per cent. on the gold coin of the United States. That bill was submitted to all the experts of the United States on the subject of mintage, and received the hearty approval of nearly every one of them, and generally (I think without any exception but the officers of the mint in San Francisco) they were in favor of retaining the minting charge, as it is called. Í have before me the testimony of Mr. Patterson, who, I presume, is regarded as the best expert in the United States in the minting business, and he speaks of the retention of the mintage charge in the bill introduced at the last session of Congress in these words:

The present one half per cent. coinage charge is retained. The only mint where coinage is free is the British, and the political economists and statesmen are so unanimous in recommending a seigniorage that the Chancellor of the Exchequer proposes to introduce it into Great Britain. It would be strange if we, by retrograding, while she is advancing, should become the sole exemplars of an exploded system. It would, in view of an international coinage, be especially inopportune to abandon a seigniorage, for it is recognized on all hands that under such a code there must be a tax, and a uniform tax for coinage. (See section 25 of revised bill; also English coinage act, 1879, section 8, Senate Miscellaneous Document 132, Fortyfirst Congress, second session, page 34.)

The theory of the coinage charge is this: that every process of