At the end of the war internal taxes were cheerfully paid by the people, and yielded far more revenue to the government than the customs duties and all other sources of revenue combined.

The receipts from internal revenue for the first four years under this law were as follows;

For the year ending June 30, 1863 . . . . $37,640,787 For the year ending June 30, 1864 . . . . 117,145,748 For the year ending June 30, 1865 . . . . 211,129,529 For the year ending June 30, 1866 . . . . 310,906,984

These taxes were mainly upon spirits, tobacco and beer, but they also included stamp taxes of various kinds, special taxes on particular industries, and income taxes, so that practically nearly all forms of domestic manufactures were subject to a greater or less tax, according to the nature of the article. So sweeping were the provisions that it was frequently a matter of joke as well as comment.

Some one remarked to Senator Collamer that everything was taxed except coffins. He rejoined: "Don't say that to Sherman or he will have them on the tax list before night!"

The general prosperity that existed during the war under such a burden of taxation was frequently a matter of surprise. The truth is that all productive industries were active because of the enormous demand made by the army for supplies of all kinds, and everyone who was willing to work could find plenty of employment. The depreciation of the currency caused by the war did not embarra.s.s anyone, as the interest on securities was promptly paid in coin, and greenbacks were the favorite currency of the people. The people did not stop to inquire the causes of the nominal advance in prices; they only knew that the United States note was cheerfully received in every part of the United States as the current money of the country. At the beginning the tax on whisky was 20 cents per gallon, but it was gradually increased until it reached $2 a gallon, when frauds and illicit distilling became serious evils. The tax was then reduced to 90 cents a gallon.

When I became Secretary of the Treasury, I was impressed with the magnitude of illicit distilling, even after the rate was reduced.

At that time several hundred men, mostly in the mountain regions of North Carolina and Tennessee, were under arrest for violation of the laws against illicit distilling. A delegation of them, accompanied by Senator Ransom, appeared before me, and I heard their apologies for distilling, and their complaints against the officers. We entered into a formal engagement by which they agreed to stop illicit distilling upon condition that they should be relieved of punishment for their past acts, and, so far as I could learn, they substantially observed their obligation. As a rule, they were rough mountaineers who regarded whisky as a prime necessity of life, and thought they ought to be allowed to convert their grain into something better.

As the necessity for excessive taxation diminished after the war was over, taxes on various articles were gradually repealed, until, in 1894, they consisted of practically four items, spirits, tobacco, fermented liquors, and oleomargarine. These are the figures for two years:

Receipts during fiscal years Objects of Taxation. ended June 30-- 1893. 1894.

Spirits . . . . . . $94,720,260.55 $85,259,252.25 Tobacco . . . . . . 31,889,711.74 28,617,898.62 Fermented Liquors . 32,548,983.07 31,414,788.04 Oleomargarine . . . 1,670,643.50 1,723,479.90

In respect to these taxes, that on oleomargarine was not intended as, nor is it, a very material revenue tax. The purpose was especially to prevent the fraudulent imitation of b.u.t.ter by using an extract of beef. The tax on spirits, tobacco and beer ought to be retained as the best objects of taxation either of domestic or imported goods. Neither of these is an article of necessity, but all are used purely to gratify an appet.i.te, in many cases indulged to excess.

All civilized nations have come to regard these articles as the best subjects of taxation. To the extent that whisky is used as a beverage it is hurtful in its influence upon the individual and upon society at large. It is the cause of innumerable crimes, of poverty and distress in the family and home. Still, it is an appet.i.te that will be gratified, however severe may be the laws against its use, and while this habit exists the tax upon whisky, by limiting the quant.i.ty consumed, is beneficial to society at large. It is true that alcohol, the base of whisky, is useful in the arts and in the preparation of medicines and vinegar. If some feasible plan could be prescribed by which alcohol or spirits thus used could be freed from tax, it would be right to exempt it, but no such plan has been found that includes security against frauds being practiced to evade the tax on whisky. The tax on tobacco and cigars is a moderate one, but the consumption of them is far less dangerous than that of spirits in their influence upon society.

The tax on the cheaper form of tobacco and cigars is comparatively small and does not add materially to the cost of tobacco in any of its forms. No complaint is made of it. Its consumption is so general that the tax is fairly distributed and falls mainly on the richer cla.s.ses, as the tax is increased in proportion to the value of the tobacco. Beer, a beverage of almost universal use, yields the large sum of $30,000,000 a year, at the rate of one dollar a barrel. This does not cause a perceptible increase of the cost to the consumer, but rather tends to maintain the good quality of beer by the surveillance of the officers of internal revenue. No general complaint has been made of this tax. All internal taxes are collected at less cost than any other form of taxation devised, and should be maintained as long as the expenses growing out of the war shall remain unpaid.

The patience and even cheerfulness with which the people of the United States submitted to this severe taxation on their domestic productions, was a matter of surprise, not only among our own people, but in European countries. In 1867, accompanied by Mr.

Adams, our minister to England, I had the pleasure of breakfasting with Mr. Gladstone at his official residence, and he referred to the ease with which we collected, without complaint, taxes so burdensome as ours then were. He asked me if it was true that we had collected $1,600,000 annually from a tax on matches. I told him that we not only did so but that I had never heard a word of complaint, and the quality of matches was vastly improved while their price was actually reduced. He threw up his hands and said that the people of England would not submit to such tax and if any ministry would propose it, it would soon be out of power. Strange to say an administration of which Mr. Gladstone was at the head did subsequently propose such a tax, but it was so severely arraigned that it was at once abandoned.

The income tax, varied somewhat in terms from year to year, continued in force until 1870, when it was proposed to repeal it as no longer necessary. By the terms of the then existing law it expired in 1872. I urged as strongly as I could its retention at least until the time expired, but it was repealed. I then believed, and now believe, that a moderate income tax, levied on all incomes above the sum of $1,000, or above a sum that will supply the ordinary wants of an average family in the United States with the necessaries of life, should be levied, according to the exigencies of the public service. In the present condition of affairs, I doubt the expediency of such a tax, especially in view of the decision of the Supreme Court of the United States recently rendered.

The distinction made by that court between incomes from the rent of land and other incomes seems narrow and technical. A tax upon the value of land is a direct tax, and must be apportioned among the states according to population, but it does not follow that a tax on incomes from land is a direct tax. An income means that gain which results from business, or property, of any kind, from the proceeds of a farm, the profits derived from trade and commerce, and from any occupation or investment. In common language the word income applies to money received from any source. It may be qualified as gross income and net income. It may be limited by words defining the source of the income, as, from land, merchandise or banking, but, in its general sense, it means gross savings from all sources. When received in money it is an income and not until then. An income tax was paid, and cheerfully paid, by American citizens during and since the war, in vast sums, and it did not occur to citizen, lawyer or judge that the const.i.tution of the United States made a distinction between incomes from rents and income from notes or bonds. The states tax both land and bonds.

Why may not the United States tax income from each alike? Many of the largest incomes in the United States are derived from rents.

To except them by technical reasoning from a general tax on incomes will tend to disparage the Supreme Court among "plain people." If incomes from rents must be excepted, then no income tax ought to be a.s.sessed. This decision, if adhered to, may cripple the government in times of emergency. If made when the income tax was first imposed, it would have reduced the national revenue $347,000,000, for no income tax would have been enacted if rents were excluded from taxable incomes.

I do not propose to narrate the numerous internal revenue laws, which have been enacted and modified at every session of Congress since 1861, or the innumerable objects of taxation embraced in them, for such a narrative would fill too much s.p.a.ce. The discussion of these laws occupied a large portion of the time of Congress.

The articles or productions subject to taxation included for a time nearly everything for the use of man. I trust the time is far distant when such sweeping internal taxation will be required again, but if it should come, the Congress of that day can find in our experience resources more bountiful than Aladdin's lamp.

Direct taxes, to be apportioned among the states, are not likely to be again a.s.sessed after the experience we had as to the last direct tax. Besides the difficulty of collecting it, there is the palpable objection that it is an unequal, and therefore an unjust, tax. New states, and especially agricultural states, have not the same ability to pay direct taxes as older commercial and manufacturing states, having within them great cities with acc.u.mulated wealth, in the form of stocks, bonds and patents.

The office of commissioner of internal revenue has fortunately been filled, as a rule, by gentlemen of standing and character of a high order of intelligence, and their work has been of great service to the United States. This important bureau ought to be, and no doubt will be, retained as a part of the organized machinery of the government, and the taxes collected by it will be necessary as long as our public debt remains, and until the list of pensioners will be obliterated by the hand of time.

CHAPTER XIV.

LINCOLN'S EMANc.i.p.aTION PROCLAMATION.

Slavery in the District of Columbia Abolished--Law Goes Into Effect on April 10, 1862--Beginning of the End of Slavery--Military Measures in Congress to Carry on the War--Response to the President's Call --Beneficial Effects of the Confiscation Act--Visits to Soldiers'

Camps--Robert S. Granger as a Cook--How I Came to Purchase a Washington Residence--Increase of Compensation to Senators and Members and Its Effect--Excitement in Ohio over Vallandigham's Arrest--News of the Fall of Vicksburg and Defeat of Lee at Gettysburg --John Brough Elected Governor of Ohio--Its Effect on the State.

Another question of grave political significance was presented to the 37th Congress early in this session, that of the abolition of slavery in the District of Columbia. I had from the beginning declared my opposition to any interference with slavery in the District, but the changed condition of the country demanded a change of public policy in this respect. Slavery was made the pretext for, and, I believe, was, the real cause of the war. It had a foothold in the District of Columbia, but it existed there in its mildest form. By the census of 1860 there were, in the District of Columbia, 11,107 free negroes, 3,181 slaves, and 60,785 white people. It was considered the paradise of free negroes, where they were almost exclusively employed as laborers in household service.

When the war broke out a considerable number of slaves ran away from disloyal masters in Virginia and Maryland, seeking safety within our lines and finding employment in the District of Columbia.

As the war approached, most of the slaves in the District were carried away by their owners into Virginia, and other southern states, so that in 1862 it was estimated there were not more than 1,500, and probably not 1,000, slaves in the District, while the number of free negroes increased to 15,000. As a matter of course, when Virginia seceded no attempt was made to recapture runaway slaves from that state, and they became practically free. It was known that there was at that time a strong disposition in Maryland to try the experiment of emanc.i.p.ation, and it was believed that after the war was over Virginia would adopt the same policy. Little doubt was felt as to the power of Congress to abolish slavery in the District, should such a course be deemed expedient. By the const.i.tution Congress was invested with express "power to exercise exclusive legislation, in all cases whatsoever, over such district as may, by cession of particular states, and the acceptance of Congress, become the seat of government of the United States."

This power had been recognized by the most eminent statesmen of our country, and also by the Supreme Court of the United States.

Until Mr. Calhoun doubted or denied the power it was not questioned by any considerable number. The real question was whether that was the time for emanc.i.p.ation. I endeavored to give to the subject careful consideration, and came to the conclusion that it was expedient then to emanc.i.p.ate the very few slaves in the District, fewer than there had been at any time within forty years, and fewer than would likely be in case the war should end. I believed also that the social influence of Washington, and the wealth and property controlled and owned in a great measure by slaveholding residents there, had been always against the government of the United States and in favor of the Rebellion. While slavery existed it was a constant source of annoyance and irritation. The great ma.s.s of our const.i.tuents were opposed to slavery, morally, socially and politically. They felt it was wrong and would not change their opinion. As long as slavery existed in the District, where Congress had the power to abolish it, agitation and excitement would be ceaseless. The great body of the people of the northern states were opposed to the inst.i.tution theoretically, as were very many of the most intelligent people of the southern states. I felt that now was the time when this moral conviction should be heard and heeded by the national legislature. I felt that we were bound to consult the material interest of the people of the District, and that emanc.i.p.ation would add to the value of their property and also add to the population of the city. The abolition of slavery would bring to the city intelligent mechanics and laboring men who would never compete with the labor of slaves, and who, finding none there but freemen, would develop the great advantages of the city. In a speech I made upon the subject I enlarged upon this consideration and said:

"I see no reason why Washington, with a free population and as a free city, situated here at the head of the Potomac, with remarkable facilities of navigation, with great conveniences of communication, reaching to the west by the Baltimore and Ohio Railroad, the political capital of the country, might not be a great free city, ill.u.s.trating by its progress the operation of free inst.i.tutions.

But it can only be done by the active, interested labor of free people. Simply as a munic.i.p.al regulation it would be wise to abolish slavery in this district, because slavery is opposed to the moral convictions of the great ma.s.s of the people of this country, and the existence of slavery here keeps out of this District an active, loyal, true, manly, generous body of laborers, who will never compete in their labor with the labor of slaves."

There was another reason why the experiment of emanc.i.p.ation could be best tried in the District of Columbia. Emanc.i.p.ation was evidently the ultimate end of this question. We had the power to try the experiment. It would be an example likely to be followed at the close of the war by many of the border states. I therefore made up my mind in favor of the measure, made a long speech for the bill and voted for it. It became a law on April 10, 1862.

At that early day, I believed that it was the duty of Congress to confiscate the slaves in the seceding states as the natural result of the war. These states had placed themselves in a position by rebellion where they had no const.i.tutional rights which we were bound to observe. The war being open and flagrant to break up the Union, they were not ent.i.tled to the benefit of any stipulation made in their favor as states in the Union. I also favored the granting of aid to any policy of emanc.i.p.ation that might be adopted in the border states of Maryland, Kentucky and Missouri, but Congress was indisposed to extend the provisions of the then pending measure beyond the District of Columbia.

The President of the United States, on September 22, 1862, issued his proclamation containing the following declaration:

"That on the first day of January, in the year of our Lord one thousand eight hundred and sixty-three, all persons held as slaves within any state of designated part of a state, the people whereof shall be in rebellion against the United States, shall be then, thenceforward, and forever, free; and the executive government of the United States, including the military and naval authority thereof, will recognize and maintain the freedom of such persons, and will do no act or acts to repress such persons, or any of them, in any efforts they may make for their actual freedom."

This was carried out in a subsequent proclamation of January 1, 1863, in which the President declared:

"And by virtue of the power and for the purpose aforesaid, I do order and declare that all persons held as slaves, within said designated states and parts of states, are, and henceforward shall be, free; and that the executive government of the United States, including the military and naval authorities thereof, will recognize and maintain the freedom of said persons."

This was the beginning of the end of slavery.

In following the important financial measures of the 37th Congress, I have purposely pa.s.sed by, in their order of time, other measures of vital interest that were acted upon in that Congress. The military measures adopted were on the same grand scale as the financial measures I have referred to. In 1861 the United States contained a population of 32,000,000 people, of whom about 10,000,000 were in the seceding states, some of whom were opposed to secession, but a greater number living in states that did not secede were in hearty sympathy with the rebellion. No preparation for war had been made in any of the loyal states, while in the disloyal states preparations had been made by the distribution of arms through the treachery of Secretary Floyd. When the seceding states organized a confederate government, the executive branch of the general government was under the management and control of those who favored the rebellion, or were so feeble or indifferent that they offered no resistance whatever to such organization. The President of the United States declared, in an executive message, that the general government had no power to coerce a state. On the accession of President Lincoln, the confederate government was better organized for resistance than the Union was for coercion. When war actually commenced, the capital at Washington was practically blockaded, and in the power of the Confederates.

The response of the loyal states to the call of Lincoln was perhaps the most remarkable uprising of a great people in the history of mankind. Within a few days the road to Washington was opened, but the men who answered the call were not soldiers, but citizens, badly armed, and without drill or discipline. The history of their rapid conversion into real soldiers, and of the measures adopted by Congress to organize, arm and equip them, does not fall within my province. The battles fought, the victories won, and the defeats suffered, have been recorded in the hundred or more volumes of "The Records of the Rebellion," published by the United States. The princ.i.p.al events of the war have been told in the history of Abraham Lincoln by Nicolay and Hay, and perhaps more graphically by General Grant, General Sherman, General Sheridan, Alexander H. Stephens, Fitz Hugh Lee, and many others who actively partic.i.p.ated in the war, and told what they saw and knew of it.

The military committees of the two Houses, under the advice of accomplished officers, formulated the laws pa.s.sed by Congress for the enlistment, equipment and organization of the Union armies.

Henry Wilson, of Ma.s.sachusetts, was chairman of the committee on military affairs of the Senate, and he is ent.i.tled to much of the praise due for the numerous laws required to fit the Union citizen soldiers for military duty. His position was a difficult one, but he filled it with hearty sympathy for the Union soldiers, and with a just regard for both officers and men.

Among the numerous bills relating to the war, that which became the act to suppress insurrection, to punish treason and rebellion, and to seize and confiscate the property of rebels, excited the greatest interest, giving rise to a long debate. It was founded on the faulty idea that a territorial war, existing between two distinct parts of the country, could be treated as an insurrection.

The law of nations treats such a war as a contest between two separate powers, to be governed by the laws of war. Confiscation in such a war is not a measure to be applied to individuals in a revolting section, but if the revolt is subdued, the property of revolting citizens is subject to the will of the conqueror and to the law of conquest. The apparent object of the law referred to was to cripple the power of the Confederate States, by emanc.i.p.ating slaves held in them, whenever such states fell within the power of the federal army. This object was accomplished in a better and more comprehensive way by the proclamation of the President. The confiscation act had but little influence upon the result of the war, except that it gathered at the wake of our armies in the south a mult.i.tude of negroes called "contrabands," who willingly performed manual labor, but were often an inc.u.mbrance and had to be fed and protected.

The freedom of these "contrabands" was the result of the war, and not of the confiscation act. In the later period of the war, they, in common with the free negroes from the north, were organized into regiments commanded by white men, and rendered valuable service to the Union cause.

When the confiscation bill was pending, on the 23rd of April, 1862, I made a speech in support of an amendment offered by me and in substance adopted. A few extracts of my speech will show my opinions on this subject:

"Confiscation is not only justified by the laws of war, by the practice of many nations, but it is practiced by our enemies in the most obnoxious way. They seize all kinds of property of loyal citizens; they destroy contracts; confiscate debts. All the property of citizens of loyal states which is within a disloyal state is seized without exception, and that whether such citizen has aided the government or not. They also seize the property of all citizens in disloyal states who will not commit an act of treason by aiding them. Yet they profess to be governed by a const.i.tution similar to the const.i.tution of the United States, so far as it relates to the rights of person and property. They draw the distinction between the laws of war and the laws of peace. . . .

"Sir, it is time there was an end of this. We are at war. We must destroy our enemies or they will destroy us. We must subdue their armies and we must confiscate their property. The only question with me is as to the best measure of confiscation. That some one should be enacted, and that speedily, is not only my conviction of duty, but it will be demanded by those who will have to bear the burdens of the war. Now, it is the interest of every citizen in a seceding state to be a rebel. If a patriot, his property is destroyed. If a rebel, his property is protected alike by friend and foe. Now, the burdens of war will fall, by heavy taxation, upon loyal citizens, but rebels are beyond our reach. How long can we conduct such a war? Sir, we have been moderate to excess.

War is a horrible remedy, but when we are compelled to resort to it, we should make our enemies feel its severity as well as ourselves. . . .

"If too much is attempted in the way of confiscation, nothing will be accomplished. If nothing is confiscated, you array against you all who wish in a civil war merely to preserve their property and to remain quiet. This is always a large cla.s.s in every community.

If rebellion will secure their property from rebels and not endanger it to the government, they are rebels. Those whose position or character have secured them offices among the rebels can only be conquered by force. Is it not, therefore, possible to frame a bill which will punish the prominent actors in the rebellion, proclaim amnesty to the great ma.s.s of citizens in the seceding states, and separate them from their leader? This, in my judgment, can be done by confining confiscation to cla.s.ses of persons. The amendment I propose embraces five cla.s.ses of persons."

The confiscation act was more useful as a declaration of policy than as an act to be enforced. It was denounced by the Confederates and by timid men in the north, but the beneficial results it aimed at were accomplished, not by law, but by the proclamation of the President and by the armed forces of the United States.

The several acts providing for enrolling and calling out the national forces gave rise to much debate, partly upon sectional lines. The policy of drafting from the militia of the several states, the employment of subst.i.tutes and the payment of bounties, were contested and defended. I insisted that if a special fund for hiring subst.i.tutes was raised, it ought to be by a tax upon all wealthy citizens, and not confined to the man who was drafted. These and numerous questions of a similar character occupied much time, and created much feeling. It is now hardly worth while, in view of the results of the war, to revive old controversies. It is sufficient to say that all the laws pa.s.sed to organize the national forces and call out the militia of the several states in case of emergency contributed to the success of the Union armies. I do not recall any example in history where a peaceful nation, ignorant of military discipline, becoming divided into hostile sections, developed such military power, courage and endurance as did the United States and Confederate States in our Civil War. Vast armies were raised by voluntary enlistments, great battles were fought with fearful losses on both sides, and neither yielded until the Confederates had exhausted all their resources and surrendered to the Union armies without conditions, except such as were dictated by General Grant --to go home and be at peace.

During the entire war Washington was a military camp. Almost every regiment from the north on the way to the army in Virginia stopped for a time in Washington. This was especially the case in 1861.

It was usual for every new regiment to march along Pennsylvania Avenue to the White House. Among the early arrivals in the spring of 1861 was a regiment from New Hampshire, much better equipped than our western regiments. My colleague, Ben Wade, and I went to the White House to see this noted regiment pa.s.s in review before Mr. Lincoln. As the head of the line turned around the north wing of the treasury department and came in sight, the eyes of Wade fell upon a tall soldier, wearing a gaudy uniform, a very high hat, and a still higher c.o.c.kade. He carried a baton, which he swung right and left, up and down, with all the authority of a field marshal.

Wade, much excited, asked me, pointing to the soldier: "Who is that?" I told him I thought that was the drum major. "Well," he said, "if the people could see him they would make him a general."