The actual amount reached by taxation is very much less than that known to be actually used by from ten to fifteen millions of gallons, or nearly one half the product. The openness of the frauds can be judged by the fact that proof spirits were "openly sold in the market, and even quoted in pricecurrents, at from five to fifteen cents less per gallon than the rate of tax and the average cost of manufacture."

In what manner the finer articles of manufacture, consumed by the rich, might most advantageously be taxed, I must leave to be decided by those who have the requisite practical knowledge. The difficulty would be, to effect it without an inadmissible degree of interference with production. In countries which, like the United States, import the principal part of the finer manufactures which they consume, there is little difficulty in the matter; and, even where nothing is imported but the raw material, that may be taxed, especially the qualities of it which are exclusively employed for the fabrics used by the richer class of consumers. Thus, in England a high custom duty on raw silk would be consistent with principle; and it might perhaps be practicable to tax the finer qualities of cotton or linen yarn, whether spun in the country itself or imported.

4. It will now well repay study to examine Chart No. XXI, which shows in what manner the United States have raised their revenues, and to consider how far the right rules of taxation have been followed.

I. For means of comparison, I shall give the last annual budget of the United States in order to make clear from what sources the country derives its revenues:

1 See Lalor's "Cyclopædia," article "Distilled Spirits," by David A. Wells.

Fiscal Chart of the U.S. showing the proportion of
the total receipts from each principal source of
Taken from F.A.Walker's STATISTICAL
ATLAS", and continued since 1870 by the editor.

Receipts:

UNITED STATES BUDGET, YEAR ENDING JUNE 30, 1883.

Customs..

Internal revenue

Direct tax...

[In millions and tenths of millions.]

Sale of public lands..

Miscellaneous....

$214.7

144.7

•1

7.9

30.8

$398.2

$48.9

15.3

7.3

66.0

68.7

$206.2

59.2

Total......

$265.4

This leaves a surplus of $132,839,444 above all expenditures, and our problem is now where to reduce taxation. The annual interest charge is lessening with the payment of the public debt, having fallen from its highest figure of $143,781,591 in 1867, to $59,160,131 in 1883. Our national taxation is practically all indirect, that of internal taxation being chiefly levied on tobacco and distilled spirits, and our customs falling on almost all articles which can be imported, materials as well as manufactures.

In the United States direct taxation on real and personal property is very generally levied for State, county, and municipal purposes. In fact, nearly all the perceptible taxation is the property tax, and, inasmuch as the State and county tax is very light, the burden is almost always owing to municipal and town expenditures. People do not seem to be aware of the enormous national burden, because the taxes are indirect, and only increase the prices of commodities. Other countries, it will be seen, make a greater use of direct taxation than the United States. In fact, the comparison of the ways by which different countries collect their revenues may naturally show us where we may gain by their experience.

II. The English system is especially interesting, because, after having had an extended scheme of customs duties, they abandoned it, and raised their revenue, some on imported arti

1 "United States Statistical Abstract," 1883, pp. 2, 3.

cles, it is true (generally on those which could not be produced in England), but by the income-tax, and other forms.'

In 1842 Sir Robert Peel found 1,200 articles subject to customs-duties. He began (1) by removing all prohibitions; (2) by reducing duties on raw materials to 5 per cent or less; (3) by limiting the rates on partially manufactured goods to 12 per cent; and (4) those on wholly manufactured goods to 20 per cent. Now customs-duties are levied only on beer, cards, chiccory, chocolate, cocoa, coffee, dried fruit, plate, spirits, tea, tobacco, and wine. The following budget gives the sources of revenue for Great Britain : 2

1 The old condition of things was well described by Sydney Smith: "We must pay taxes upon every article which enters into the mouth or covers the back, or is placed under the foot. Taxes upon everything which is pleasant to see, hear, feel, smell, and taste. Taxes upon warmth, light, and locomotion. Taxes upon everything upon earth and the waters under the earth. On everything that comes from abroad or is grown at home. Taxes on raw material. Taxes on every value that is added to it by the industry of man. Taxes on the sauce which pampers man's appetite and the drug which restores him to health. On the ermine which decorates the judge and the rope which hangs the criminal. On the brass nails of the coffin and on the ribbons of the bride. At bed or at board, couchant or levant, we must pay. The beardless youth manages his taxed horse with a taxed bridle on a taxed road, and the dying Englishman, pouring his medicine (which has paid 7 per cent) into a spoon (which has paid 30 per cent), throws himself back upon his chintz bed (which has paid 22 per cent), makes his will, and expires in the arms of the apothecary (who has paid £100 for the privilege of putting him to death). His whole property is then taxed from 2 to 10 per cent; besides the probate, large fees are demanded for burying him in the chancel: his virtues are handed down to posterity on taxed marble, and he is then gathered to his fathers to be taxed no more."

2 "Financial Reform Almanac," 1883, pp. 107-109.