Mr. MORRILL. Mr. Chairman, let me say at the start, lest gentlemen should be too much frichtened, that the great length of the bill be ore us mainly arises from the fact that the ComWays&Means thought it advisable, wherever in the course of the revision a section of the old law was amended. even though but slightly, to strike out the old section and reinsert it as amended. This vastly swells the size of the bill, butwill be much more convenient for those who are to interpret or administer the law hereafter. In revising our internalrevenue laws, the question that meets us at the threshold is, how much revenue have we to spare? Or how much will our necessities require for another year? The lastquestion has conspecially answered by the SecyTreasury who has fixed, in a recent communication to the committee, $350000,000 provided the appropriations of COIlr ress do not exceed the estimates as the sum it would be safe to rely upon, including the rev cuuo from the tariff as well as internal taxes. In making an estimate of the probable recei ts from the latter, we have as a basis one all year and 3/4ths of the present year of experience, and the data are sufficiently complete to be of value. Our receipts for 1864 65 were, in round numbers, $210,000,000, and the returns thus far of 1865 66show that we may expect for the year an increase of nearly 50%., or not less than from 300 to 305 millions. One. of the largest and best paying consumers of the products of the country during the war was the Government, but is so no longer. War prices no longer rule, and it is inevitable that manufactures must be still further reduced in values until we reach the solid standard of gold as recognized by the commercial world. The tax on manufactures, therefore, must be far less productive for the year ending June 80, 1807, than heretofore, as it will be computed at a less%age, if our bill should e adopted, and on a far less aggregate amount. Then, as a general rule in a season of falling prices, it is not gains but losses which must be calculated at the end of the year; and therefore the tax on incomes, the dividends from banks and other corporations for the next year, cannot be expected to yield anything like the amount derived from these sourccs for the years ending December, 1804 and December, 1805. Nor can our foreign imnortations be maintained upon their present se a e. It is very desirable that they should not be as they are supplanting a large share of the labor of our own people, and because payment will at present be made chiefly in U.S. bonds. Financial disaster, as well as increased depression to our industrial interests, cannot fail to follow such an influx of foreign goods as we have witnessed the present season. That trade must in some degree be postponed until we recover from the exhaustion caused by the war, until capital and labor can adjust itself to its new conditions of peace, or until we have something to exchange for British, French, and German iron, wine, and haberdashery, besides merely our national credit. It is right, however, to look for some increase of revenue in consequence of the close of the war, and we may expect something from the States lately in rebellion, though not an amount in proportion at all to their relative numbers. Never fruitful in taxable resources, they have less now than ever. If we obtain outside of the receipts from cotton enough to cover the bills already passed in one or the other House for extra expenses on their account, it will equal my expectations. Taking all these things into consideration, as well as others not necessary tomention, the ComWays&Means have felt willing to report the bill as it stands; which will reduce taxation the present year in round numbers about 75 mil on dollars. It is also prudent to anticipate a large dim inution of the revenue from customs, as it ought not to be expected to long continue at double the amount ever obuiine in the most prosperous times. Our receipts from mise el neons resources the coming year will be very light, as they have recently accrued mainly from property disposed of at the close of the war, and premiums on sales of gold, sources already nearly extinct. We seek to make some compensation for these losses by increasing the tax on raw cot ton 3 cents, or by raising it from 2 to 5 cents perpound. Supposing that 2 million bales should be raised this season and be taxed and I think the amount will be considerably greater notwithstanding the actual want of good seed, and the change system of labor we ought to obtain a revenue from this source of $44,000,000, or an increase over the tax at present in force of $26, 400,000. The crop may so far exceed the number of balesmentioned as to cover all the cotton which will ese ape taxation, or which will be used on plantations, and all that will be exported in the shape of manufactures and upon which a drawback will be allowed; but itWill be safer to estimate probable receipts on a lower basis. All human calculations are subject to contin gent ies, and financial calculations are perhaps most exposed to be shipwrecked of all; but if we retain the tax on cotton as proposed, we can safely release, in my opinion, taxes to the extent contemplated by the bill. Otherwise we must reinstate something already stricken out of the roll of taxation by the bill, or find some new source of revenue which will produce an equal amount; and I say this without feeling very confident that the rates for the income tax will be allowed to be changed much from the existing law. Treumrureceiptsfor fiscal year ending June 30, 1865. Customs. Internalrevenue Miscellaneous. 83 200464.000, 175.126 Total receipts.exclusive of loans. Bdimated Deana urccenpln for fiscal your ending (um: 30.1806.,, Internalrevenue to April 1.1800, (nctual) 243, 890, 518 Mise ellaneous (actual) premium on gold. Ate. 37, 183, 309 Arlunl aggregatereceipts to April 1. 410, 011, 232 Estimated custom receipts, Ann 1 to Customsreceiptsto April 1, 1866, (actual) Juno 30,000,000 Estimated internalrevenue, April 1 to une. 60,000,000 Estimatedmise ellaneous, April 1to June 30. 1,500,000 Total aggregate ficcipts from all sources for the fiscal year ending June 30, 156.0. $501,541, 252 Eclimale of receipts Iago tile fucal year ending June. 567. Customs. Internalrevenue 312500000. 20tl, 0tXJ.000 increase on cotlpn. 10.000111) Inert useon spirits" loJNJtLUUO Mise ellaneous. Requirements of the SecyTreasury. 350.0,000 Available for reductionof taxation. $75,000,000 It will be seen that I estimate a reduction in the revenue received from manufactures, on account of a depreciation of values, of about 25%., and a reduction upon incomes and dividends of rather more than that amount. It is true that we shall be likely to have a more perfect administration of the law; and 1 take pleasure in soing that the present Commissioner is a most diligent and conseientious officer; but the increase of revenue on this account will be at least counterbalanced by many little favors distributed all through our amendments, and which it is impossible to accurately estimate. We could not, if we would, levy an export duty upon cotton, and, except for convenience of collection, on excise tax may he better, as, in the form it is here proposed, it is not necessarily to be paid by the planter, and may, in the same manner that we now transport spirits, be removed from one collection district to anyone other, upon giving bonds for the payment of the tax within 90 days, or upon its ar rival at its place of destination. heduties will practically thus be paid by the purchaser. In addition to this, while we guard our political citadel here against the dangers of any insidi ous treason from an quarter, when it comes to taxation we should not only be just but Generous, and the drawback on manufactured cot ton of all the taxes actuall paid, in any form, wili redonnd most to the benefit of southern and western States. They will at once manufacture coarse cottons and yarns an warps much more extensively than they have hither to done and the southern people will be the last to surrender the system of a tax on cotton, when once it shall be adopted and understood. Until the production of cotton shall be so large as to reduce the price below 20 cents perpound, or exceeds the wants of the world, this tax will not be greatly felt by Americans. Should the tax at an time operate adversely to our interests, as do not think it can at present, it must be reduced or removed as experience shall seem to require. Surely, if the entire cotton crop of the U.S., save what we consume, could be exportedin a manufactured state, or even in a partially manufactured state, instead of exclusively as a raw material, it would be an end worthy of states men, covering our country with blessings, and, wroning no man, would do much toward extingluishing resentments and restoring kindly fee ngs throughout the land. The southern coast, and the banks of the Rio Grande, the Mississippi, the Mobile, the Tennessee, and the Savannah would soon be decorated and en livened by factories, giving employment to 1,000s, and bringing the culture and contentment, the sociallife and comforts of organized industry into regions where hitherto useful labor has worn the bad e of dishonor. The saving in freightage, an in the cost of food, will secure at east handsome profits possibly large profits to those who may engage in the business. With prosperity human nature is rarely disposed to make war. Make the South prosperous, and we make them our friends. Vith freedom for all, and with such measures as will induce them to work, the may become prosperous, and that through the olicies of the national Government. Even t On h the cotton cro the present season should e but a half of testandard crop, the price will be so great that the South will realize more money from it than in any year of our previous history. as the laws of trade for the last 70 years prove that a short cro is always more valuable than a full one, an hence the Uniform ctfort to hide the fact of a great crop. The shrinkage of cotton in the process of manufacture is about 15 %., and that amount will be lost to the manufacturer in the drawback, and gained to the Government. The principle is not novel. We return duties upon imported goods when reship ed, and we gladly allow spirits, tobacco, and all sorts of domestic manufactures to go out of the country without the pament of any internal tax. If it were possible to ascertain with any precision the tax paid on other raw materials when manufactured for exortation as we can on cotton, as, for examp e, upon leather or iron, we should consider it unquestionably wise to refund the full amount paid. Exports of theManufacturerof Cotton. 88, 018, 652 6, 5tB, 109 5, 141, 044. 954, 315. 761.761 The largest export trade we have ever known of the manufactures of cotton was in 1853, when it was a trifle over 8 million dollars; but in consequence of the low priced Surat cotton and the lowerpriced labor of Europe it has steadily declined since that time, and during the late war nearly ceased, not reaching $1,000,000 in 1865. Pass the present law, however, and we shall speedily have restored to American manufacturers and American merchants the full amount of the foreign trade we ever enjoyed, and in due time our country will assume that supremacy in the cotton trade of the world to which it is so legitimately entitled. The system of levyin atax upon home manufactures would never have been dreamed of but for the grave necessities of the hour. Our Treasury was exhausted; our people were unused to paying taxes;:1large party among our people were not in harmony with the idea of maintaining the Union at all hazards and at any cost; loans at home could only be obtained at 1st in driblets; among foreign nations, with nristocracies ever where dominant, it was an irrepressible joy or the organs of public opinion to speak of our country as “ the late U.S.; among them all there was no Louis XVI to send us a man or to lend us a dollar, or (with the single exception of Russia) even to bid as God speed in the task of utting down a rebellion the most wicked in the annals of mankind; and u war not a little war, but a great war such as our count must and will always wage, if it wages any, of illimitable proportions had already begun. Under these circumstances we girded up our loins and became self reliant alone but independent and built up the credit of the great American Republic in the hearts of our own people; made them see and feel that it would) be safe to trust it by seeking objects of taxation which would yield promptly and yield abundantly. The experiment proved a success. During the whole term of the qmr it was borne by our manufacturers and by our whole people, not only without complaint but absolutely without in jury, for it is even doubtful whether they ever enjoyed a season of greater prosperity. The law was new and therefore not polished and perfected by experience or revision, but 1st put into operation by the distinguished Gentfrom Massachusetts, [Mr. Bovrwsu.] it at once vindicated the propriet of its principles and policy. Often amende subsequently in qousequence of the increasing wants of the Treasury bearing the misfortune of frequent changes, too, in its chief administrative officers itsoon broughtforth most bountiful supplies and disclosed a resource of unequaled magnitude that can be used in any sutiieiently urgent crisis, and which is an ample requital, rendered at the hour of our greatest need, for all the protection, direct or indirect, ever be stowed upon the products of domestic industry. Without these products of a free people we should have been as weak as our foes, and, if not vanquished, we should have retired after a single indeterminate campaign. To illustrate the wonderful fecundity of a tax on manufactures take buta single instance: the little stamp tax of one centupon each box of matches produced last year about 1500,000 dollars, or enough to arm, transport, and kee p in the field 1500 men and this tax had not only to contend with the stocks on hand but for some time with extensive fraudulent importations. The tax may be expected to prouce much more hereafter. But now the utics of peace return, and we must simplify our laws, reduce the burdens of tax payers so far as possible, and cheapen the cost of living. All cannot be done at once. We shall, do the best we can, leave something to be done by the next Congress and by future Commissioners of Revenue. At an early day spirits, malt liquors, tobacco, cigars, cotton stamp taxes, and perhaps a small number of other objects, it is to be hoped, with custom duties, will afford revenue commensurate with all the wants of the Government. The fixed economy of all civilized nations requiring large revenues appears to be to squeeze out of those articles considered as luxuries by mankind or which sustain and soothe but never slake habits deplored by good men everwhere the largest sums which the most stringent laws will secure, and our practice in this respect from this time forward should doubtless conform to that of the world. Some changes are now proposed relative to tobacco and cigars, concerning the utility of which I have serious doubts. I car the door which for the past year seemed effectually closed will be again opened to fraudulent practiccs, and that the revenue as well as the onest dealer will suffer. Still we must not be deaf to any well founded complaints of the people. I know that gentlemen, for whose opinions and wishes have great respect, from districts where low priced tobacco is produced find their people clam orous for grading the tax according to values. On the face of it the claim would seem to be just. But I am told by otheers connected with the administration of the internalrevenue laws that the law as it now stands is working well, and that the tax on smokin tobacco should not be reduced. Experts believe that any fair discrimination cannot be honestly enforced, and the loss to the Treasury may be large. The tobacco growing and manufacturing interest, it is true, has been and is now greatly depressed, but not so much on account of the form or amount of the tax as on account of the large influx of untaxed tobacco which flowed into our markets upon the cessation of the rebellion; and it may be added, too, that our tariff u n foreign cigars is much too low. The bill proposes to wholly exempt from taxation many articles, and to large y reduce it upon others, and among these will be found a ughtered animals, salt, sugar, starch, coal, soa, vinegar, saleratus, clothing, and boots an shoes. These exemtions and reductions Will lessen family expen itures and be a relief to all classes of the coinmumty. Dress makers and milliners, wielding a potent influence, as they do, will no longer be treated as men, subeet to taxation, but as deserving of favor. Though they may tax us, we do not propose to tax them. Provisions or products of the farm it has been the policy from the start (and its wisdom has been only exceptionally questioned) to keep free from taxes. All fertilizers, draining tiles, and man of the more expensive implements ofagriculture it is now also proposed to relieve. lreights, perhaps the most inde fensible tax we have had, perpetually checking commerce and adding to the price of urebases as well as diminishing the price of sa es, it will be seen are to be utterly abandoned, as are all the articles in schedule A, except gold watches, silver plate, billiard tables, and carriages val ued above $300, as by the testimony of the collectors the tax upon all the other articles therein embraced amounted to less than the cost of collection, while it imposed domiciliary visits, always obnoxious to a spirited people. It has been considered i ortunt not to check any enterprise for buil mit)? for repairs of buildings, and to this end uilding materials, such as brick, freestone, marble, slate, roofing slate, lime, and cement, have been placed on tlmfreelist. The taximposedupon a er, books, and binding, entertained with litt e iospitality from the 1st, is surrendered the 1st op ior tuuity without regret. The tax on knowle ge, as it has often been styled, if it ever existed, it is to be hoped will be now abandoned. The tax upon all repairs, always indefinite and of dubious propriety, may also wellbe removed. If a horse runs away with a carriage, or a locomotive gets smashed, it seems oppressive for the Government to seize the opportunity of such misfortunes for levying a fresh tax. We have proposed to exempt coal from any tax. If we regard it as an article of fuel we cannot anylonger afford to dealers the excuse of a tax for a dear rice. If we 100k upon it as the raw material from which gas is mu e, the tax on the latter would seem to be as great as we ought to subject an article so indisensableto the population of all our cities an most considerable towns. If we look upon it as the chief source the hidden giant of steam power, which drives so large a art of our machinery used in manufactures, from which so much of our revenue accrues, it certainly presents strong claims to be free. Iron being an article of such large consumption, shaped into such multifarious forms for the use of mankind, employing numbers so vast in its production, and an abundant supply being almost aprerequisiic in peace or war to national independence, the ComWays&Means have been willing to wholly exempt pig iron, railroad iron, railroad iron rerolle, when in the form of, and to leave but 3 dollars perton upon bar iron. Cheap iron is an advantage to the whole country, and especially so to agriculturists, to artisans, and even to the day laborer who wields but an ax or a spade. It is also important that we should not discourage railroad enterprises by making their cost so great as to frighten away all capitalists. Our iron should be made at home, but let us give ouiown people a fair chance to make it cheaply. That the universality of a tax upon all descriptions of manufactures, in an state or condition when offered for sale, ten 5 to a duplication of taxation, is sufficiently obvious, and the ComWays&Means havesought to remedy this evil so faras they could consist ently with their duty to the Government, whose wants though diminishing are still imperative. The increase of the tax on all manufactures last year, one 5th, or 20%., as our law of last year provided for, it is now proposed to repeal. Steel being in the nature of a raw material, a manufacture in its infancy and in some peril from the pressing comctition of the Old }World, it is deemed expe lent to entirely exempt from tax and more especially as it will mostly be taxed when it reaches a more advanced stageof mauufacture. The same argument applies to iron, which we have not yet felt able to wholly release, and also to cop per, lead, zinc, and brass, which we do propose to release. The bill, however, will show for itself. The reductions have been made with the sole view of the greatest good of the greatest number; and in the main 1 hope they will be accepted by the House. It is very likely to be true that many articles not now relieved can be pointed out having equal claims with those proposed for favor; but the answer is, civilly but firml, the time for those has not yet ar rived. fhe release of the tax upon many articles has not been done so much to favor them or any particular branch of manufacture as to favor those which remain still bearing the bur den of taxation. The removal, so far as it at present seemed prudent, of the constant duplication of taxes, will certainly tend to diminish the cost of a large number of articles, but until we reach the solid basis of a currencyequalin valueto coin, prices must remain dear and unstable, and producers and manufacturers, whileworking under circumstances of inflated cost, will be exposed to the chances of making sales in a falling market. The reduction must come at some time, and the pain will be severe if it comes suddenly, or lighter if it comes more slowly. It is the same in the sum total whether hastened or retarded. Savings banks, or provident institutions by far the most appropriate name it will be seen are to some extent relieved from the tax on deposits, entirely relieved when such deposits are invested inU.S. securities or when made in sums not exceeding $500 by anyone person. It cannot be doubted that it is sound public policy to induce those having but small earnings to establish a habit of thrift and econ omy by using these savings banks as a place of trust. Does it not speak well for the c aracter of our people, as well as that of our country, that these institutions now hold of these small earnings of the common people $500,000,000? Where else can a similar fact be cited? Wo men, young persons, and those unskilled in making loans and taking securities, who possess too little to be reached separately by taxes, should not be taxed when assembled together, but rather deserve the paternal care of the Government. The tax on the oss receipts of expresse om anics was misegrin the bill as 1st reported from 3 to 5%., but, upon iurther consideration, in the revised bill the rate has been restored to what it is now by existing law. When we are reducing taxation in every direction, it appeared too invidious to single out one class of business, and that one giving marked distinction to American enterprise, and doom it to a tax equal to 12 or 15 %. upon its net annual recei ts. The tax upon telegrap companies has also been placed upon the same level, or reduced from 5 to 3%. One of the companies last year paid to the Government a tax upon $700,000 gross receipts, amounting to $35,000, when they had made an absolute loss of $100,000, or $65,000 besides the tax. Express and tele raph companies may not all deal liberally with the people, and may seek extravagant profits, but the Government of the U.S. could hardly be expected to base its legislation upon resentments thus engen dered unless the companies were the creatures of its own creation. such abuses are more properly corrected by State legislation, or by even the more potent influence of competition and public Opinion. The tax in schedule A, although one of an inquisitorial character, and therefore objectionable in form, has been retained in part by the committee on the ground that the owners of carriages valued at over $300, and gold watches and silver plate, were amonv those persons best able to contribute some fhing to the support of that Government under whose protection they have been able to acquire articles indicative of wealth and assured means of an port. he law in relation to licenses, it will be seen, has been entirely changed in form, although the substance of the tax will be found adher iu to it. A special tax takes its place, and wi I, it is supposed, do equal service without being liable to the objections made in some quarters that it is an attempt to regulate the internal commerce of the States. Members of the House are nwarethat a case is still pending in the Supreme Court. of the U.S. involving the constitutionality of the existing license aw, and that this case, after having been tried, was considered of so much importance as to be postponed until next term, when the decision, whatever it may be. will be an nounced. I do not suppose that the court will be very eager to overturn the legality of laws which find precedents in our Statutes at Large almost from the foundation of the Government, but other gentlemen may think differ ently, and from abundant caution, as we are revising the internalrevenue laws, and as the technical objection, if there be one. can be so easily removed, the ComWays&Means have made the alterations to meet any circumstances that may arise, whatever they may be. There is no necessity for transe ending our legitimate authority, which is merciyto obtain the properamount of lawful revenue in the least objectionable form. It is not proposed at this time to change the rate of the tax on spirits nor upon malt liquors, mainly that we may have the law of high rates in operation a sntheient length of time to test its real value for revenue purposes, and inci dr tally. no doubt, its value as a mode of repression in the consumption of intoxicating bever ages. For the inrgest revenue purposes, the rate of 2 dollars pergallon, although the time elapsed since its adoption is too brief to definitely settle the question, seems likely to prove unsatisfactory: and if it were an original question, the recommendation of one dollar pergal long by the revenue commission would not be disregarded by the ComWays&Means. It is very clear that the whole tax fails to be collected, as the price has at no time or at any place been equal to the cost of spirits with the tax added thereto, and in some parts of the country the price has occasionally been below even the amount of the tax. The amount of spirits of domestic manufacture returned to the assessors for 1805 was 10, 936, 778 gallons as against 85, 295, 391 gallons in 1864, showing a falling off of nearly 4/5ths of the whole amount. It is to be noted, however, that much was distilled in 1864 in expectation of an increase of the tax, and this accounts for a diminished business in 1865, but does not proveadiminished consumption. Notwithstanding the heavy increase of duties upon foreign liquors, the total importations have not been materially curtailed. Our experience is likely to correspond with that of the world, which is. thatthe appetites of men for spirituous liquors are held in check very little by high cost unless that cost is very exorbitant, and only those in the most indigent circumstances check the regularity of their indulgence or surrender any portion of their accustomed allowance. It is curious to note that iron manufacturers, in making up the calculation of the increased cost of nton ofiron, put in $2 50as the increased cost of whisky, and the employer is compelled, no doubt, to increase the amount of his monthly pay roll to cover this new item in the cost of iving. It may be inferred that the consumption of liquors in the length and breadth of the land is as large as ever, but that the tax has not been. possibly cannot be, collected. The great temptation to illicit distillation and to smuggling which arises in cases of the imposition of high duties upon liquors calls for the enactment of stringent, almost despotic laws, not merely for the punishment of fraudulent practices, but for the protection of the honest importer and honest distiller. Owling, or the carrying of wool out of the kingdom, was for merly punished in Eurland by the imposition of heavy penalties, an we have. found that the introduction from Canada of tin babies filled with whisky by their reckless parents can only be suppressed by heavy penaltiea and by their rompt enforcement. hat a large trade has been carried on the past year in the manufacture of small copperstills there is abundant evidence. If these should he suffered to be used clandestinely, as it is to be apprehended, may have been the design, not only would the Government be deprived of a large amount of revenue, but public morals would be more or less debauched. The ComWays&Means recommend, with some modifications, 9. large part of the changes in the law as to spirits proposed by the revenue commission in order to increase its efficiency. It is believed that the country, as well as Congress, are in favor of obtaining the maximum amount ofreveuue from spirits, and that we are not so eager to reduce the cost of intoxicating liquors as to be unwilling to wait until experience has fully tested the policy or impohcy of the highest rate of taxation as now fixed by law. It is understood that the method of mixing wood ncid with alcohol, as practiced in England, so that alcoholmight be used in the arts and manufactures without the payment of any tax, has proved a failure, it having been found that such methylated spirit can be rectified and made into pure spirit again without any offensive smell. f any chemical preparation could be found which would accomplish this object its discovery and adoption would be a great relief to many legitimate branches of arts and manufactures. fhe ComWays&Means have proposed some modifications of the income law but have not reached the conclusion, while the industrial employments must remain to a considerable extent heavily burdened, that it can yet be wholly dispensed with. By its terms, as originally passed, it was to expire in 1870, and thus a temporary character was put upon its face. In our great emergency it contributed, not to be returned a sin with interest, a larger amountthan the ric test bankers in Europe would have loaned to us even at 60%. discount. Our loyal people paid the tncometax of 1863, in June. of$20, 740, 451 33, and then (estimated upon the same lists) they were called upon in 4 months to pay another income tax, and they responded by contributing $28, 929, 312 02. Again, in 1864 their income tax foots up $69,000,000. Ipoiut to these facts not only as a proud evidence of their patriot ism an wealth, but as a proud evidence of their strict integrity of character. Strong as the temtation might be for evasive returns, sore as they might e in consequence of the swift pursuit and the continuum; exactious of the tax gatherer, they even paid more in 1863 upon the 2nd call than the 1st. Their country was in need, and even the greed for gain con(1not tempt the American people to defraud their Government. The law left it almost to the conse ience of each man as to how much he should pay, and all seemed to vie with each other as to who should pay the most. I question whether any people ever paid a tax more honestly and accurately, and I question still more whether any free people ever imposed upon themselves, through their chosen Representatives, taxes so thiclr and fast. If our income tax should be contemplated as a part of the permanent policy of the country it is not to denied that it would need various and perhaps fundamental amendments. The objections to such laws are sutficiently obvious. 1. They are inquisitorial of necessityin their character, and Americans, like people elsewhere, though not averse to a knowledge of the secrets of others, are quite unwilling to disclose their own. Among commercial men such disclosures may be disastrous. If they show prosperity they invite envy and greater competition; or if they show any remarkable lean ness they damage credits. 2. The temptation to make understatements and lend to these statemrnts the sanction of an oath tends to sup and mine public morals, until men begin to excuse themselves for their own wrong doing, because, it being so common, that to do otherwise would be to fail in average smartucss. 3. When we take into consideration the sources from which income is derived, the habitudes of the different persons who pay the tax, the difficulty of apportioning it so that each will have paid in just proportion to every other person, leaving each relauvelyin the same conditions, the perplexities become almost insurmountable. Entertaining such views, and the pressing exigency having passed, we have undertaken to lessen but not to entirely remove the weight of the income tax. To this end we propose to exempt the 1st $1,000 of every person from any tax and only to reach any excess beyond that amount. This will increase the sum exempt from $600 to $1,000. Exactly how much of a reduction it will make in our receipts cannot be foretold, but probably not over ten to 15 %., While it is likely to diminish the number of persons taxed nearly one half. If it should excuse 50,000 persons, then the reduction will amount to $1,000,000 for every such 50,000 persons. There is perhaps no just reason for excusing any portion of the income of anyone from the tax, except that of the hardship and the inability of persons with a limited income to spare any part of it, but that is enough. In a RFG the true theory is to make no distinctions as to persons in the rates of taxation. Recognizing no class for special favors, we ought not to create a class for special burdens. Pursuing this principle a majority of the ComWays&Means have agreed to that portion of the bill which makes the income tax after this year a uniform one of 5%. upon the annual gains. The loss to the revenue will be large about $17,000.000 and it will be for the House to say whether the bill shall stand as reported or whether relief in any other direction is more urgently demanded. I shall append to my remarks an appendix containing an estimate, made with the aid of the office of the ComrIntRev, of the reductions appearing to me likely to occur in consequence of the present revision of the law. Other gentlemen may differ from me and count upon greater compensations to counterbalance these reductions; but I have never found that sanguine financial predictions were safe for legislators. In our list of exemptions we strove to reach earliest those articles upon which a reduction of cost would bring relief to the masses of our people, and those which are produced with such lean margins of profit as to be opposed and in danger of being annihilated by even so small a tax as 5 or even 3%. which is not nnfrequently, upon branches of industry closely cornered by foreign competition, in excess of what may be considered regular and satisfactory profits. I know that many gentlemen will render val uable assistance in the regress of the bill, and all will feel bound to show that they are alive to and not nnmindful of the interests of their respective localities, and some may wish to press amendments giving such interests further relief; and it is fair to allow a prominent record of the fact to appear in the G obe; but if the House shall reach the conclusion that we have proposed measures which will reduce the revenue as much as it will be prudent to do this yenr kcepin in view the uuestimated drafts our legislation as made and is likely to make upon the Ireasury remembering, m the large Operation of funding our national obligations so that they may bear the lowest rate of interest, that 50 millions now maybe more important to success than 200 millions at a later period I trust that the cod sense and forecast of members will lead them to vote down propositions for essential changes. The result of the labor of the ComWays&Means is, that of the headings in the Commissioners reart of the “receipts from specific and genera sources” 59 out of will no longer be required, and the number of articles released, in proportion to the whole number remaining taxed, is still greater. The law authorizing the SecyTreasury to assign to the Bureau of Internalrevenue a sutiicient force to carry it on will expire by its own limitation on the 1st of July next, and it therefore becomes necessary to make some arrangement for the permanent organization of the bureau. It will be seen that the bill makes provision for this object. The operations of this bureau are now on so large a scale as to require the services of able, clear headed men, trained to business, and ofunquestioned integrity. such men in our country are highlyprized, and command the highest salaries paid in financial and commercial employments, and unless we fix salaries at an adequate or competing point we shall only command the Servmes of 2nd rate men. The bane of the Treasury Dept is that so soon as officers receive the stamp of its confidence they receive a loud call and the offer of more pay to go elsewhere. The best otheers are, therefore, often more birds of passage. here today but may be gone tomorrow. The Bureau of internalrevenue, it is quite apparent, is deficient in executive force. It is impossible that the Commissioner, however faithful and industrious and Iknow of no man more so, should be able to consider all the complicated cases daily arising for investigation in the adminis tration of his Office, and we have conceded not only the propriety but the absolute necessity of reenforcing the office by 2 additional de utics and one solicitor. glotwithstanding all the disadvantages we have labored under in putting new and untried laws suddenly into Operation, it is gratifying to find that the expense of collecting the revenue has been far ess than was anticipated including everything except printing done by the Public Printer amounting, in 1805, to no more than 2 and 75/100ths, or 2 and 3/4ths%. This contrasts most favorably with the cost of collection in GreatBritain, where, after years of experience, the cost varies from 4 and one quarter to 5 and 3/4ths%. The services of the gentlemen employed on the revenue commission, I have no doubt, are properly appreciated by Congress, as they will e by the country, and the ComWays and hieans were unanimously, I believe, of the opinion that this kind of service should not be entirely discontinued. Believing that at least one similar officer can be profitably employed permanently, they have added a section to the bill for this purpose, and I have no doubt it will prove wise econom to adopt and continue it so long as we may c compelled to raise anything like our present revenues from taxation. The military power of the U.S. needs no eulogiums from any quarter. Its supremacy at home is not likely to be questioned, and when it is challenged elsewhere it will be time enough to answer back. Its financial power, also, even in the agonies of civil strife, has been vindicated. No stain of dishonor rests upon its credit. Every promise has been kept with entire good faith. lgo creditor, holding the obligations of the nation, has had to do more than to ask and receive. No faithful soldier has closed his service without receiving at the same moment with his honor able discharge the last dollar due. Is there then, any lurking danger as to our present and future financial condition? The confidence of the people in their own Government cannot be shaken; the vigor and elasticity of American industry is unrivaled; our resources, abundant today, will be greater tomorrow; no empire, ancient or modern, ever received, daily or annually, revenues of equal magnitude, and the wealth hidden in some of our single mount ains, if it could be placed in the balance, would make our national debt kick the beam. Where, then, is the cloud no bigger than a mans hand? It rises only in that quarter.from whence disQ loyal representatives may come. Open and inchoate repudiators lust for power. Save us from these and the U.S. Government will survive, with its credit and civil glories radiant with youth and the fame of ages, long after the final chapter in the history of antirepublican Governments shall have been written. Arrrsnix. Edimated (leductiomon articles exemptedand partly exempted Animal charcoal. 83.000 Alum. 5.000 Boeswax. 3,000 Barrels. cusks, boxcs. 250,000 Blooms, slabs, loops 60, Boots and shoes. Brass, rolled sheetcopperSheathing and yellow motnl Building stone of all kinds, burr stones,monuments, roofingslate, slabs and tiles",nlllk, draining tiles and water pipes 282.000 Bichromate of otaah.000 Blue vitriol an 10.000 Collins and burial 50,000 Uililribles. 10.000 Crates a 15,000 Crutches. artificial limbs, eyes 25,000 Copper, lead, and tin. 400, 100 Clothing. 11, 600,000 Feather beds, mattresses, Fertilizers of all kmds. 100.000 GFllaosvkess and pmaitttteernnss. Gold leaf apd foil. 32,000 Hemp and Jute prepared for textile purposes. (XX) Hubs. spokes, folloes. wooden handles for tools and pnplements. 175,000 Ilulls of ships and other vessels., Income, increase otexemption from$600to000M, l Income., reductionfrom tento 5%. on sumsover H0, Iron advanced beyond p Iron, railroad rerolled Iron, pup. Iron, rai r Iron castings for bridge KIreoyns. malleable actions, and strings for musical in struments. Lamps and lanterns. 50.000 Moldings torpicture frames, &o 5.000 Mineral waters &c. Mineral coal of all kind Metallic nickel, quicksilver. manganese, cobalt, Mi. 12.000 otallic zinc. XalsdtOs.sopf alirnse, a n. d. s. h. i.p. clock. 6405,000000 Paper. books, charts, and bookin inc". 2, 072,000 Productions of stereotypers.olectrotypers, lithographars, and ougravera. Photographs.,000 Plows, cultivators, barrows, stra ay cuttersmlantors, seed drills horse rakes, and wmnowmg mills. Paints and colors. Paralliiic oil and crudepetroleum, morphine, 5w. 12,000 cpuirs. Railroad chairs, ship spikes. ax polcs, horse shoes, rivets, horse tshoe nails. nuts, washers, bolts, visas. iron chains. anchors, anvils. 350,000 Roman and water cementand, limo. 144.000 Starch 100,000 Soap 33,000 SteeL 300000 Spelter. Saloratus. so a as, caustic soda, crude soda.bicarbonate of soda. Sulphate of barytes. Spindles and castin locks and ma. Umbrellas Ve stable and parasols. 111.000 animal. d Va no of bullion used fiinshowila. r.e. s and in "am. Vinegar. White lead and whiting Yeast powders. pm and warp. Naphtha. :lmmhtered animals.; hedulcA. ohedule C (rcceipts). ireights. goap (additional). steam engineskc Iobacc. Brokers cal Savings banks General tax cent. Telegraph!. 1V0!estimated. Bristle s, flavoring extracts, decrskins. oaknm. ver digris, illuminating gasof educational institutions, paintings and statues.aniline colors, bleaching pow ders. tar, turpentine, candle wicking.