Mr. MORRILL. Mr. Chairman, I have no ambitious speech to make on the Present occasion. I propose merely to submit some business like statements, if I can do so, in expla nation of the principles and details of the bill. The ComWays&Means, in reporting the Present bill, have sought to afford the greatest possible amount of relief to the country consistent with a prudent regard to the public credit, and were. in the outset to consider what would be the most feasible mode of accomplishing this object and leave at the same time the fewest impediments in the way of general industry. If the tax on distilled spirits, tobacco, and cigars were fully paid or collected, the taxes on the major part of all other articles of manufactures could have been at once remitted; but unfortunately necessary changes in the law, followed by unnecessary and more unfortunate changes of internalrevenue officers, have proved that 2 dollars, whether above the price of whisky or not, is certainly above the price of those who make it; that no spirits have been sold by the maker for as much as the cost of production and the tax betrays the fact that whoever is in the business somehow corruptly evades the payment of some part of the tax, large or small, due to the Government. Trusting that the amendments proposed now to this branch of the law will hereafter secure a more effectual collection of the revenue from spirits, for the Present we are forced to lean tempo. rarily upon many other articles, which will doubtless be released at no distant day. 'wo obvious plans Present themselves: either we must reduce a% age of the tax on all manufactures or entirely exempt those articles having the strongest claims to exemption, in consequence of inevitable duplication of taxes or of directly swelling the cost of living. From the 1st and by intendment very little revenue has been sought by any tax upon property as such, and therefore the agricult and mining interests have been shielded, but commerce, manufactures, and the gains of realized capital have made by far the most bountiful contributions through multiplied taxation for the support of the nation. Licenses or special taxes, stamp taxes, and the tax on manufactures are at once advanced and paid by the parties engaged in business, and they have to trust to their chances whether any portion of these large sums are ever recovered or not. In prosperous seasons, or when prices are advancing, the n!timate consumer pays his due proportion; but in adverse seasons, or when prices are falling, losses by the producer are inevitable, leaving out of the question whether aggravated by taxes or not. he ComWays&Means have adopted the 2nd plan alluded to. It is certain that to reduce the rate of taxation from 5 to 4% and we could not at this time afford anything beyond such a reduction would have afforded a very inconsiderable amount of relief, and yet the same labor and expense of collecting and paying the revenue, both to individuals and the Government, would have been perpetuated. It is true that this course would have greatly simplified and lessened the labors of the ComWays&Means, but they have felt that the advan tage of the whole country was to be studied rather than their ease or comfort. When the articles remaining on the tax list shall be found entitled to equal favor this course may be properly pursued. By adopting the other alternative and exempting entirely from taxes such articles as salt, clothing, leather, pottery ware, tinware, and cooperage of all sorts, with a large number of other articles upon which a tax was a petty annoyance to the payer as well as to the government, the committee feel that they propose to distribute equal favor over the whole country, and by removing the tax from some of the common necessaries of life we shall perhaps indirectly actually aid all branehes of industry. as much as they would be aided by a direct 1%. diminution of the tax. theory is well settled that all taxes in the end are distributed, and if heavy taxation increases the cost of production of raw materials or of manufactures, so a reduction of taxation dimin ishes the cost in an equal ratio. Whatever lessens the cost of living is a palpable benefit to all branches of industry, as much so as whatever lessens the cost of production. by pursuing the plan indicated we shall soon reac the point where taxes may be levied only upon a very small number of articles, and the cost, vexation, and annoyance of revenue officers, reduced in numbers, will be roundly iminished. If the example of the country oftenest held up for our imitation is valuable for anything, and I am not disposed to overvalue it, it is in favor of comfining excise laws to the narrowest limits. Last year we liberated a very large number of articles, the benefit from which has only just began to operate, and now we shall have added to the number to the extent of surrendering an amount of revenue equal to nearly 1/2 of all we obtained in. the 1st of the operation of the internalrevenue aW. For what we have done in each case of exemption I trust satisfactory reasons and explanations, if required, will be at hand as the cases arise in the progress in the bill; but there are a few items which I shall attempt to explain in advance. I recognize the fact that our taxes for the tfive years have been excessive, and nothin. but the danger which menaced the life of the nation justified the heavy drain upon the pock ets of our people. Now we feel the keenest joy of legislators when they can again lighten the weight of taxation. But a little more than 6 months ago we gave relief to the extent of not less than $75,000,000, and now shall give still further relief fully equal in substance if not in amount. The boundary where we pause is the point at which we reach the amount which will pay our ordinary expenses, the interest on the public debt, and leave a snug balance for some diminution of the public ". This is absolutely essential to the public credit, essential to public faith; and beyond this no lover of his country would dare to go. For one I fully recognize the truth that no tax is so small the payment of which does not either impose increased toil upon the tax payer or deprive him of some indulgence or enjoyment of life. But notwithstanding the unprecedented amount of our taxes, the exhibit of our ineome tax which is after all but little more than what each individual chooses to pay on his own estimate of his income, leaving out the earnings of at least 3/4ths of our people, who by our mini mum are exempt shows that they have not fallen upon the capital nor even absorbed the annual income of the country. The ambition of the American people is to improve their condition and every year to know more, earn more, and have more. This prominent characteria tic is endangered by the paper fever and ague which now afflicts the country; but hitherto our people have made great exertions, not only to maintain their capitals undiminished in spite of increased taxation, but to add thereto their usual annual surplus. We have reached the point when this cannot be continued. The income of the country for the Present and coming year will be heavily reduced no sane man can doubt it and we must reduce our taxes and our expenses correspondingly. Although I cannot congratulate the House upon an entire and R. consistency in its course as to a speedy return to the old limits of our annual expenditure, yet we have not done altogether. We may at least not fear a contrast with the position of the finances of some other countries. France raises about 450 million dollars, and yet annually exhibits a small deficit. Italy, however unfavorable her balance sheet, is too young to be severely criticised. Austria, where a depreciated currency has largely contributed to the degradation and dismemberment of the nation, is an example so excessively bad that to cite it would not be refreshing even to those whose condition was much less forlorn. Prus sia is in a far sounder position and comes out of a successful war with no increase of taxation, but when Prussia wages battle her soldiers are paid a 6pence per day, forage upon the enemy, and an indemnity is demanded of the vanquished. England is a fairer example. She increased her national debt by the Cri mean war $450,000,000, and her annual expenditure has since been larger by about one million dollars per year, and instead of being diminished since the close of the war is now nearly 20 million dollars more than it was in 1858, at the close of the war. Be sides the annual charge of $350,000,000, GreatBritain raises $40,000,000 in a single item for poor rates. Though we were forced to create a mof large debt, yet since the close of the war we have steadily and largely reduced the sum of our expenses from the point at which they stood at the close of the rebellion. Our expend itures were in 1865 $1, 290, 312, 982; in 1866 $520, 750, 939; and in 1867 (estimated) $284, 317,000. This shows as the elasticity of our Government in rising to the height of the emergency as a facility in returning from the track of war to the inexpensive and more genial aths of penee. The people have already eaten their swords into plow shares. The colossal expenditures of years of war have not become altogether chronic and are not transmitted to succeeding years. Yet I must insist that much further retrenchment is practicable and should be rigorously pursued. Our expenses for next year are estimated at nearly 75 millions more than the Present year. The cost of government has been only in creased in exceptional depts, and elsewhere it should not be permitted to go beyond its accustomed limits. Large expenditures mean large taxation, and diminished expenditures mean diminished taxation. The important question in relation to the rate of the tax on distilled spirits now as here tofore Presents all of its usual points of embar rassment. As an original question, it was my opinion, in view of the insuperable difficulties in the way of enforcing the law, that a less rate than 2 dollars per gallon was advisable, and if whisky frauds should continue to be success fully perpetrated it is not impossible that a lower rate may be at some future time accepted; but now the ComWays&Means reached the conclusion to recommend an adherence to the Present rate, and have proposed some very stringent provisions, believed to be necessary if we expect any considerable reve nue, and without which we may as well retire vanquished from the attempt to enforce this part of the internalrevenue law. As a bev erage it may be estimated that the consumption of the U.S. is about one and a quarter to one and a half gallons per capita; or a total of about 45 to 50 million gallons. In 1860 we produced nearly 90 million gallons, of which it was estimated that 75 million gallons were consumed as a beverage. The large increase of cost has unquestionably somewhat reduced the amount consumed, and if it were wholly to extinguish it there would be few regrets and we might patiently bear the loss of F.from this source; but in a community tolerably prosperous an increase of duty has been found not to diminish consumption so much as to increase smuggling and illicit distillation. Father Mathew by his temperance labors from 1835 to 1841 reduced the consumption of spirits in Ireland nearly 5 million gallons, when the duty was only 2s. 4d. per gallon; but raising the in 1860 from even 8s. to 10s. per gallon did not reduce the number of gallons charged only about one million gallons, although the resources of the Irish population were notoriously of the most meager sort. In spite of all we can do it would appear to be mainly a revenue question, and as such it does not appear to be advisable to put down the rate of tax so low as to leave no temptation to smuggling and illicit manufacture, as the logical result would be to wholly abandon the tax. We have very boldly attempted to obtain the largest sum of revenue possible from the distillation of spirits, and guided by this principle it is but fair to give the highest rate of duty an ample and effectual trial, at least, before receding from it. It is true that the consumer has had to pay almost the entire amount of the increased cost added by the tax, but hitherto other parties than the Government have collected and pocketed much the largest share of the tax. If the Government have got $29,000,000 the whisky princes have got $50,000,000. The struggle now is to protect honest men, if any can be found, who may engage in the business, and to punish with a pitiless impartiality all of any other sort. Among other measures it is proposed to raise the special tax from $100 to $500. While it is known that many small sized distilleries are at work, concealed in garrets, cellars, and remote places, it is also known that distilleries which are duly authorized practice little integrity beyond paying the special license, but find an outlet for the largest quantities of the contraband article. "If the number of distilleries can be diminished we shall undoubt edly diminish the sources of fraud, and an increase of the special tax is a step in the right direction. We raised last year from distilled spirits $29, 188, 578 15. If we had collected on the full amount consumed it would have been perhaps $90,000,000 or over. The tax on sugar made from the sugar cane it is proposed to reduce to one uniform rate of one cent per pound. All other sugars being exempt, it may, without examination, seem that this is sectional and unfair, but when we examine into the facts and find that we import of competing sugars about 900 inil lion pounds, from which we derive more than 25 million dollars of revenue, and thus protect Louisiana sugars by a duty of 3 and 4 times the amount of tax, the charge of sectionalism and injustice at once vanishes. True, we might do more, but it would be uninst that Louisana and Texas should do less. y the unfaithfulness of Louisiana and other States we were involved in an expensive war to put down the rebellion, and now our own loyal people submit to an unusual tax of never less than 3 cents per pound on all the sugar they consume, while the people of Louisiana and Texas, though subjected to a tax of one cent per pound on the sugar they produce, receive as compensation an addition of not less than 3 cents to the price of all they sell by virtue of the facts already recited. The sugar business of the South is surpassingly profit able, and immensely more profitable than it would have been had we not been compelled to adopt the high tariff on sugars. The prices which must prevail will stimulate production largely. Southern sugar planters have no cause of complaint, and could much better afford to pay the internal tax of one cent than to see the tariff reduced to one cent per pound. Nor have we proposed to change the tax on cotton. This is about the only considerable tax we collect in the South, and I fear not 1/2 of this is actually collected. We collected last year from all sources in the ten States which rebelled $20, 599, 749 05; but from NewEngland, NewYork, Pennsylvania and NewJersey, 9 States only, we collected $170, 876, 246 26, and from 9 western States Ohio, Indiana, Illinois, Michigan, Wisconsin, Iowa, Missouri, Minnesota, and Kansas we collected $54, 259, 66239. But for the great crime of the South no tax on cotton would have been required, and now it is very certain that upon what goes abroad foreigners are paying the lion's share of the tax, and as much the largest amount of the remainder is consumed in the loyal States, ultimately southern planters are very lightly charged. What is sold to go abroad is undoubt. edly enhanced in price by reason of the tax, but exactly to M. extent must at Present remain undetermined. Should the tax ever be found opPressive to loyal men it will be. "; The cotton mills of the South were seldom busier or more profitably employed, and new mills are constantly springing up. Only last week I saw a notice of 12 mills in operation in SCarolina. The time when the South, with the provision in relation to the drawbacks on manufactured goods in force, will be likely to insist upon the perpetuation of all our laws intact on this subject may be assumed to be not more distant than the time of repeal. Other countries have been stimulated by extraordinary prices to increase their production, and with some success, but not much more than equal to the increase of the world's consumption, which appears to be growing with marvelous rapidity. The price also remains dear. The disposition to understate the crop of cotton is chronic and universal. Last year the amount in the country was so adroitly concealed that the experts were all deceived, and so greatly exceeded expectations that all who laid in stocks for a rise came to grief. The SecyTreasury, Mr. McCulloch, estimated the cotton remaining in the country and the new crop of 1865 at 1,300,000 bales, but it proved to be about twice as much, or 2,500,000 bales. The Liverpool cotton brokers estimated the amount which they might receive from America at but little more than half of the amount they got. An accurate inventory even of the stock on hand in Liverpool is a pursuit of knowledge under difficulties. When the price falls the stock is hidden, and only comes out when it is safe to uncover the actual facts. The India crop was similarly underestimated, the public being misled, too, by the Indian government. The amount already brought to the sea board and the amount of the weekly shipments show that the crop of last year has yet by no means been brought to market, and the expectation of 2 million bales is likely to be fulfilled. The crop cannot be hidden forever, although both the planters and speculators conspire to mislead. The price is too tempting to allow cotton lands to remain idle. Next year, if the season should not be unpropitious, we may anticipate a handsome increase over the Present. The crop of the past year after paying the 3 cents per.tax, wii have been sold for 3/4ths as much in gold as that of the largest crop (1859) ever produced in the U.S.. Liverpool is the great cotton market, and although the stock on hand is larger than for 5 years, yet the price is higher now and growing firmer than it was last May, selling for mid dling uplands at about 29 cents per pound in gold, and tending upward, and it is selling in NewYork at 34 cents per pound, currency. The promise for cotton from most other countries for 1867 is not improving. Egypt and Brazil will not increase their crops, not withstanding the temptation of high prices, and India will, it is estimated, fall short of the cro of the Present year by 400 do bales. There is no discouragement in the way of the production of cotton in the U.S., and the tax should no sooner be removed from it than that on petroleum. The manufacture of leather is hardly less extensive than its use. Nearly every State and Territory has more or less capital embarked in its production. The outlay for boots and shoes in the log cabin is not infrequently greater than in the 4 story brown stone mansion. The harness, trunk, and carriage maker also use it as a raw material, which if taxed duplicates their burdens. Before we were compelled to levy internal taxes we had a prosperous and growing export trade of several millions in boots and shoes, which, of course, must be nearly or quite annihilated by the tax on leather, no part of which could be returned by virtue of a draw. back; but with leather free this trade may again have a better chance of being recovered. Tinware, hollowware, stone and crockery ware, employi, large numbers of workmen, is used by all classes of people for domestic purposes, and by those in moderate circumstances perhaps beyond their fair proportion. If exempting tin pails and tin pans shall tend to diminish the cost of good butter who would be likely to complain? Last year we exempted all dry casks and barrels; but why jnot a pork or beef or oil or fish barrel be free as well as a flour bar rel? It is proposed to answer this question by making iP the work of the meritorious class of coopers free. I have before had occasion to say that a tax in the nature of an excise tax on manufactures could have been resorted to only from the im erative necessity of at once placing in E. the of the Government an unusual and large amount of revenue. This resort has been successful. Last year it produced $178, 356, 661 37. But the exigency has passed, and measures designed to be but temporary must be replaced by others of a more satisfactory character in. speediest time possible. I do not doubt that we shall at a very early day be able to relieve iron, cotton, woolen, and all other gen: eral manufactures from any internal tax. It is with this prominent idea that the committee have diligently labored in framing the Present bill. A reduction of expenditures and a more effectual collection of taxes on the few articles which the judgment of the world consigns to such burdens will hasten the day wheir there will be full relief to the industry of the country from all such taxes. Meantime, in addition to concessions in various other directions, it is proposed to reduce the tax on woolen manu: actures from 5%, to 2 and a half er focent. Some may think that bar iron should been liberated instead of woolens, but the tax on bar iron has been in the form of a spe cific, and is not now and never has been equal to the advalorem tax of 5%. The trade in each branch of business is equally dePressed, and the action now proposed will make the distribution of favors not unequal. But a higher motive, perhaps, moved the committee, and that was to place woolen manufactures in the hands of the consumer at reduced cost. By reducing the tax on home manufactures of woolens 2 and a half%. a reduction of the rates otherwise asked for by manufacturers can be made in the duties on imported woolens of 5%. as an equivalent. This will tend in some degree to satisfy the just claims of consumers. The amount of internalrevenue from woolens last year at 6%. was $8, 814, 101 03; but in the act of July last it was, with all other manufactures, reduced to 5%. The loss to the revenue this year by the proposed reduction to 2 and a half%., if our production remained the same, as it is not ikely to remain, would be $3, 172, 542 10. The revision of the income tax, it will be seen, Presents the subject in the main as it was Presented last year, or, the differential rate excepted, as it passed the House, though not then accepted by the Senate. That every person should contribute to the support of the Government in the exact ratio of the interests protected by the Government is a principle that will be universally admitted. An income tax is based on this theory, and yet it is beset with all sorts of difficulties in its practical application. Inequalities appear at every step. One man's skill is taxed as much as another man's property. Today one man pays no income tax, and tomorrow dies leaving a fat estate to his heirs though for the moment it had been unproductive:, Today one man pays a liberal income tax, his brains have given a generous support to a large family, and tomorrow he dies and all his heirs are penniless. An equal income tax in such cases can hardly be reconciled with justice. If an income tax was to continue as a permanent tax it should be based upon the value of the whole property possessed by each person. I am disposed to think, however, that a tax of the vexations character which must adhere to an income tax should rightfully place it on the list of those to be abandoned 1st in order after the tax on manufactures has been removed. In fact it is one of the resources which ought not to be appealed to except in great exigencies, but should he held in reserve. No nation can for any length of time afford to tax without exception all its available sources of revenue. Something must be left for extraordinary occasions. For the Presentitis merely proposed to amend the income tax and remove from it some of its most exceptionable features. The exemption of $600 is enlarged to $1,000, and, in addition, an allowance is to be made for all rents, taxes, insurance, and repairs. To be taxed at all any person must be in the receipt of something above this minimum amount, and which cer. tainly must be deemed as very iberal, and it will prove a large loss to the Government, as it will exempt entirely the vast majority of persons with moderate means; yet it is believed that the increased amount of the exemption would meet with favor even from a majority of those who will remain subject to the tax. Another change is proposed to relieve the manifest injustice of taxing incomes above $5,000 twice as much as those below; but one rate, and that 5%., is now recommended. To do more than this is to provoke a controversy as to theo: to do it, and to lodge in th; mind of every man, who finds himself as he thinks unjustly opPressed, an excuse for understating his income to such an extent as will avoid the wrong with which he is threat ened. To such persons it seems sheer confiscation, and if justifiable to the extent of 5%. then justifiable to the extent of 50%. They offset wrong for wrong. Few nations tolerate an income tax at all, and there is no nation which has any other than a uniform rate. The Treasury needs money; but on a question of taxation justice must be dealt out with an even hand, and the rule of perfect equality should be as immovable as the poles. The estimates of the receipts for the next fiscal year ending June 30, 1868, as recently revised by the Treasury Depastment and the ComrIntRev, reduce the estimates from the sums originally estimated 90 days ago to the following figures, namely: FFrroomm cinutsetronmalsrevenue. From lands. From miscellaneoussources. This last item will almost entirely depend upon the amount of coin we may have to sell and the premium obtained upon it. Looking at the general dePression of trade, as well abroad as at home, and the recent falling off of customs and internalrevenue, the revised and reduced estimates would appear to be fully justified. The same revision of the expend itures for the year ending 1868 brings out items to the original estimate already ascertained of not less than $7,000,000, or making the total at $357, 247, 641 32, besides any claims passed upon by Congress. This leaves to apply on the public debt and for reduction of taxes less than 34 million dollars. That some positive sum should be devoted to that object in order to restore our public credit to the level of the world, or even to keep it from sinking below the i. at which it now stands, is a principle so plain that it does not seem to require argument so much as correspondent action. The committee have ventured to use up the entire surplus or margin in various reductions of taxes and exemptions, believing that we have secured such an increase of revenue from other sources, by amendments designed to stop the waste gates of different portions of the law, as will beyond all doubt.something to apply on the public debt, provided we pass no bills which throw any considerable additional charges upon the Treasury. The committee have felt willing for the coming year to give the largest possible amount of relief to the business interests of the country, and have also been willing to so reduce the revenue that no large balance would remain in the Treasury to tempt anyone to disregard the wisdom of economy not that cheese paring economy which higgles at trifles and then swal. lows millions, but that which looks to o: the means for every debt contracted. having gone in the line of reduction to the extent, as estimated, of $36, 730, 500, and as far as it is prudent to go, it follows that if any other reduction should be proposed it will be our duty at once to seek something of equal amount to be restored to the list of taxable articles. It is possible, in spite of an earnest solicitude to avoid any mistakes as to what should be relieved from taxation, that the judgment of the House may make a different selection, and any improvements of the bill will be regarded with as much favor by the ComWays&Means as by any other member of the House. If there are any gentlemen who disbelieve the recitals concerning idle factories, forges, furnaces, and foundries, and who think that we are still on the top wave of prosperity, and so may be willing to venture a deeper cut into our revenues, I invite them to look at the comparative returns of some of our principal railroads, to the Present state of our navigation interests, to the decline in the commerce of our canals, to our diminished export trade in cattle, horses, hogs, beef, butter, cotton, and manufactures of cotton, iron, copper and brass, together with numerous other articles. This is an exposition of which I have the details, but which I shall not, unless compelled to do so, place upon the records. DePressed as trade must be conceded to be, the dePression is no greater, perhaps not yet so great, as might have been expected to follow the recent exhaustive struggle of the country. Nor is it at all equal to what has been the experience of GreatBritain for the past year, where cholera, cattle plague, cotton famine, bad harvests, and a commercial crisis have all successively culminated; where the bank rate of interest was for 3 months kept at the ruin point of ten%., and where 1000s of workmen are now only kept from starvation by daily charities from the Queen as well as those who are hard pushed even to pay their poor rates. But I am by no means despondent of the future. The people of the South in no long time, it may be hoped, will return to loyalty the Union, knowing that it is as “fixed as fate or foreknowledge absolute” that this is to be their and our common country and Government forever; a country and Government as formidable in war as beneficent in peace. They will speedily find how much more rapidly will be their growth with free institutions than when linked to one of the last relics of barbar. ism. They will then have, as we have now, a just pride in all that contributes to the pros perity of the nation, the grandeur of its position, and the splendors of its history. Our facilities for the development of wealth and power can only receive temporary checks, and the load we bear of taxation today with some weariness will ere long become light, and in a little more than 30 years, when our people will number 100 millions, there will not be more than enough left of our public debt to remind our children of the honor of the legacy. Reductions by the proposedbill as officeof internalreveneuset.imatedby the Alcoholic extracts.. $2, 500 Bale rope, twine, & 50,000 Canned meats. 30,000 Carpet bagframes.a. 30.000 Qasks, barrels, and all cooperage. 200,000 Castings 500,000 Hollow ware. 200,000 CCllootchkintrgimmings.. 4,02000,,000000 Qoffeemills 25,000 Drain, gas, and water pipe made of iron, cement, wood, or any other 5,000 Copper bottoms. 2,000 Doors, sash, &c 500,000 Saw handles. 5,000 Glue and gelatine, solid 60.000 Glue andgelatine, liqu 1,000 Horse rakes, tedders, & 50,000 Horse blankets, &c.;. Leather of all descriptions. 3, 250,000 Piano legs, &c 10,000 Licorice. 1,000 Manufactures of ju1,000 Molasses, &c. 50,000 Naphtha, &c 250,000 Palm leaf. 75,000 Pottery wa 120,000 Root diggers, &co00 Salt gg Scales umps, garden engines, &c. School lps, ginglines, urniture. Wagons, carts, and C Washing machines, & Boots and shoes, ru Brandy from grapes. Hats, &c.. 100,000 Hoop skirts. 300,000 Woolen manufactures 500,000 Sugar. 50,000 Sugarrefiners 600.fo) Wood screws. 110,000 Gunpowder. 100,000 Advertisemen 300,000 Income: Exemption of $1,000..6, 500,000 Ten%. reduction to 5%. 13,000,000 Total.$36, 730.509]