We have, therefore, the following cla.s.sification:--

I. Direct | persons,[26]| Must be apportioned among taxes, | lands, | the States according to levied on | | population.

II. Indirect | duties, | Must be uniform throughout taxes | imposts, | the United States.

| excises, | | income | | taxes. |

[Footnote 26: These are _poll taxes_. Such a tax was levied on slaves in 1798 and 1813.]

So far, we have discussed the indirect taxes only, for at present the United States levies no direct taxes. In our previous history, however, the government has imposed all the kinds of taxes mentioned in the outline above. In levying a direct tax, Congress must determine the total amount to be raised (as $2,000,000 in 1798, and $20,000,000 in 1861), and then apportion this amount among the States, according to their population.

The bills introduced into Congress which provide for taxation are called "bills for raising revenue." They must originate in the House of Representatives (Article I, Section 7, Clause 1). The Committee on Ways and Means frames these bills. In the Senate such bills are referred to the Committee on Finance, and here the bills may be amended.

The Appropriation of Money.--Appropriation bills are those which provide for the expenditure of the government's funds, and these bills are in charge of the committee on appropriations in each house.

Below is a list of the princ.i.p.al items in the revenues and appropriations for the year ending June 30, 1910.

REVENUES.

Duties $333,000,000 Internal revenue 290,000,000 Miscellaneous 52,000,000 ----------- Total $675,000,000

EXPENDITURES.

War Department $156,000,000 Navy Department 123,000,000 Indian Bureau 18,000,000 Pensions 160,000,000 Interest on public debt 21,000,000 Civil list and miscellaneous 180,000,000 ----------- Total $659,000,000

The Power to Borrow Money.--We have now seen how money is provided for the government under ordinary circ.u.mstances. In extraordinary cases this revenue is not sufficient; accordingly, Congress has been given power by Article 1, Section 8, Clause 2, _To borrow money on the credit of the United States_.

Money is borrowed in most cases by the sale of bonds. These are of the same nature as the promissory notes by which individuals obtain loans.

National bonds state the promise of the United States to pay a certain amount, at a stated time, with interest. A "registered" bond contains the name of the owner, and this is a matter of record at the Treasury Department. When this bond is sold, the record must be changed. "Coupon"

bonds are usually payable to bearer; they have attached to them a number of coupons equal to the number of interest payments due during the term of the bond. Each of these is cut off as the payment becomes due, and can be cashed at any bank.

Bonds are bought and sold on the market, and their prices are quoted in the daily papers. When the bonds fall due, they are _redeemed_ by the government at their face value, or "at par." On the market all United States bonds are now selling "at a premium."

Issues of bonds were made in 1898, the rate of interest being 3 per cent, and in 1900, the rate being 2 per cent. The Public Debt Statement issued monthly by the Treasury Department gives the divisions of the bonded debt and the amount outstanding. On December 1, 1910, the amount of the interest-bearing debt was $913,000,000.

II. THE POWER OF CONGRESS OVER COMMERCE.

The Control of Commerce.--The power over commerce, which we are next to discuss, was given to Congress because the history of the country under the Articles of Confederation showed clearly that State control of commerce resulted in confusion and constant disputes. It is necessary that merchants and ship-owners should conduct their business under laws that are as _uniform_ as possible. It is also necessary that they should be _certain_ as to the terms of the law. These conditions could not exist if each State were to make laws controlling the commerce going to other States and to foreign countries.

The Const.i.tution gives Congress the power, in Article I, Section 8, Clause 3, _To regulate commerce with foreign nations, and among the several States, and with the Indian tribes_. Not all commerce that is carried on by the citizens of this country is subject to control by Congress.

There is a vast amount of commerce that is carried on entirely within the limits of the different States. Over this commerce Congress has no power; it is regulated by State laws relating to trade and transportation.

Interstate Commerce.--The distinction between State and interstate commerce is not readily seen in many cases; but in general it may be said that if a commodity starts in one State destined for another, its control throughout its course lies within the power of Congress. This principle applies to both land and water transportation. So the coast trade among the States lies within the jurisdiction of Congress; also, commerce upon those rivers that form highways between different States.

The harbors and waterways of the United States have been improved by the expenditure of many millions of dollars. This money has been appropriated in the "River and Harbor Bills" that are pa.s.sed by almost every Congress.

The Interstate Commerce Law.--The importance of railroad transportation led to the enactment, in 1887, of the "Interstate Commerce Law," controlling this form of commerce. The law became necessary because of certain abuses which had arisen. In many instances the railroads gave lower freight rates to certain persons than to others doing the same kind of business; again, the merchants or manufacturers of certain cities were favored by more liberal rates than could be obtained by those who were engaged in the same industries in other cities. As a result, the business of many persons and places suffered injury, while the business of their rivals prospered through the advantages given to them by the railroads.

In consequence of these and other evils, various laws, beginning with that of 1887, have been pa.s.sed to control not only railroad and steamboat lines, but also telegraph, telephone, express, and sleeping-car companies in so far as they are engaged in interstate and foreign commerce.

Some provisions of these laws will now be stated, (1) Charges must be just and reasonable. The Interstate Commerce Commission has power to decide what is reasonable, and to _fix rates,_ after an investigation.

(2) It is unlawful to give one person or corporation a better rate than another for the same service. This is called "discrimination." Pa.s.ses cannot be granted, except to employees. (3) All rates must be posted where they can be consulted by any person. (4) All companies engaged in interstate commerce must open their books to inspection by the commission and must make reports that they require. (5) If any person objects to a decision of the commission, he may appeal to the Commerce Court, which has been created to consider such cases.

The Control of Trusts.--Among the abuses arising in connection with interstate commerce are those which result when persons enter into agreements or combinations to prevent free compet.i.tion; for under these circ.u.mstances prices are raised, or certain persons are favored in trade. In 1890, Congress pa.s.sed a law prohibiting such combinations "in restraint of trade or commerce among the several States or with foreign nations." This is known as the Sherman Anti-trust Law.-Now, a trust is simply a large corporation which has absorbed or killed off, more or less completely, other establishments engaged in the same industry. The trust may or may not have a monopoly, that is, complete control in that line of business; and it may or may not be engaged in interstate commerce. An agreement among certain, railroad companies to establish and maintain freight rates was declared to be in violation of the law of 1890. Also, a combination, or "conspiracy," among railroad employees to stop the running of trains was declared illegal.

The "trust problem," which is so prominent in current political discussion, is the question of preventing the evils of combination in industry. These evils become evident when excessive prices are charged by persons who control certain lines of business; that is, when free compet.i.tion is prevented in the production, transportation, or sale of commodities. If the business conducted by a trust lies entirely within the limits of a single State's boundaries, then it must be regulated by State law.

III. THE MONEY of THE UNITED STATES.

Our National Currency.--Another of the most important powers of Congress is that granted in the following clause:--

Article I, Section 8, Clause 5. _To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures._

In civilized countries it is the practice of the government to furnish the people a "circulating medium" for use in trade and commerce. Two kinds of money are in use in the United States: (1) coin or specie; and (2) paper money. The total amount of money in circulation in the United States on November 1, 1910, was $3,124,679,057 or $35.01 _per capita_ for the whole population. We shall first consider the coins of the nation.

How Coins Are Made.--The coinage of money takes place at the mints, which are located at Philadelphia, Denver, New Orleans, and San Francisco. Gold and silver come to the mints in the form of bricks, or rough bars, to which the term _bullion_ is applied. Alloy must be added to the pure metal for the purpose of rendering it of sufficient hardness to withstand wear. In our gold and silver coins one-tenth of the weight is an alloy composed of copper and nickel. A quant.i.ty of the bullion of the required purity is first melted and then cast into ingots, or long bars. Each bar is next run between heavy rollers until it takes the form of a thin strip. From the strip are punched round pieces, called "blanks," of the size and thickness of the coin that is being made. In the next process the blank is weighed on a delicate balance; when found to be of the correct weight, the coin is placed in a powerful press, and from this it comes with its edge raised above the face and its edge milled. In a similar press the designs are stamped upon the faces of the coin.

Below is a list of the coins now being minted.

GOLD Coins.[27]

Double eagle Half-eagle Eagle Quarter-eagle

SILVER COINS.

Standard dollar Quarter-dollar Half-dollar Dime

MINOR COINS.

Five-cent (nickel) One-cent (bronze)

The silver coins less in value than one dollar are called _subsidiary_ coins.

[Footnote 27: No gold one-dollar pieces have been coined since 1890.]

The Ratio of Gold and Silver Coins.--The law fixes the weight of pure metal in a silver dollar at 371.25 grains, troy weight, and that of the pure metal in a gold dollar at 23.22 grains. The _ratio _ of these weights is 15.988+: 1, or nearly 16:1. This indicates the origin of the famous expression, "sixteen to one."

Free Coinage.--By _free coinage _is meant a policy established by law, under which any person may bring bullion to the mint in any amount and have it coined; that is, the amount which the government will coin is _unlimited_ by law. Our country has always had the policy of free coinage with respect to gold. This was also the policy in the coinage of our silver dollars until 1873. At that time the coinage of the silver dollar was discontinued until a law was pa.s.sed in 1878 (the Bland Act) renewing its coinage, but in _limited_ quant.i.ties. The government purchased silver bullion under this law, and under the Sherman Act (1890), but since 1893 no silver bullion has been purchased for the coinage of silver dollars, but the bullion already on hand has been used for this purpose.

Paper Money.--We have in the United States five kinds of paper money in general circulation:--