a preamble, as follows: "Whereas it is necessary for the support of government, for the discharge of the debts of the United States, and the encouragement and protection of manufactures, that duties be laid on goods, wares, and merchandises imported: Be it enacted," etc.

We have seen that until 1861 direct taxes had been levied for only four years since the adoption of the Constitution; but duties on goods imported have been collected from the first, and have formed until recently the chief source of revenue. The term excises, though used in the Constitution, does not appear in the laws enacted by Congress. As commonly used, it signifies all indirect taxes except duties on imports and exports. In a narrower meaning, it is a tax upon the production of commodities. Thus, distillers pay a tax of so much a gallon on the whisky they manufacture, and oil refiners have paid a similar tax.

The first case of indirect taxation, other than duties on imports, was that of a duty on spirits distilled within the United States, by an act of Congress, March 3d, 1791. The duty ranged from nine cents a gallon to twentyfive, according to its percentage below or above proof. On the stills employed, there was also a yearly duty of sixty cents for every gallon of their capacity. In 1794, duties were levied upon carriages, and retail dealers in wines, etc., were required to pay five dollars a year for license. A duty of eight cents a pound was also levied upon snuff manufactured in the United States, and one of two cents a pound on sugar refined. About the same time duties were laid on auction sales; and in 1797 stamp duties were imposed on certain certificates, letters patent, insurance policies, bills of exchange, promissory notes, etc., etc. Thus a system of internal revenue was brought into full operation during the last century, having been commenced very soon after the adoption of the Constitution.

In April, 1802, an "Act to repeal the Internal Taxes," swept away "the internal duties on stills and domestic distilled spirits, licenses to retailers, sales at auction, carriages for the conveyance of persons, and stamped vellum, parchment, and paper." But in 1813, these were restored, and the office of Commissioner of the Revenue was established, "for superintending the collection of the direct tax and internal duties." In 1815, the list of manufactured articles on which internal duties were levied was largely increased, and taxes imposed also upon household furniture and gold and silver watches.

All these taxes-they are called duties in the statutes of the United States-were required to be uniform by the Constitution. Thus, if upon a promissory note for a given sum a certain duty was levied in one State, the same duty must be paid upon a note of the same amount in every other State. If the owner of one gold watch was required to pay a tax of one dollar, every one owning a gold watch must pay a like sum. But direct taxes must be in proportion to the population of the State. If two States are equal in population, their citizens must pay to the general government the same aggregate amount of direct taxes, though the citizens of one State may possess twice as much property as those of the other.

The act of Congress of August 5th, 1861, which levied a direct tax on the States and Territories, provided, also, for an income tax, believed to be the first ever levied by our general government. The tax was three per cent per annum on the excess of income over eight hundred dollars. In July, 1862, it was changed to three per cent on the excess of income over six hundred dollars; but five per cent on the excess over ten thousand. For the years 1870 and 1871, it was two and a half per cent on the excess of income over two thousand dollars. No income tax has been levied since that

for 1871. The amount collected on this tax in 1865, was $20,000,000; in 1866, $61,000,000; in 1867, $57,000,000; in 1868, $32,000,000.

On the first of July, 1862, an act to provide internal revenue was passed by Congress, which is by far the most elaborate and comprehensive scheme of internal taxation in the history of our government. It included duties on a great variety of manufactured articles, licenses for carrying on divers trades and occupations, duties on carriages, yachts, billiard tables, and plate; on banks, trust and insurance companies, railroads, steamboats, ferry-boats, railroad bonds, stamps, etc., etc.

The income to the government from internal revenue from 1791 to 1849 was about $22,000,000; ranging from about $200 in 1843, to $5,124,708 in 1816. During the same period the income from customs was about $946,000,000. But in the year 1866 the income from internal revenue was over $309,000,000, that from customs being about $179,000,000. For the year ending June 30, 1877, the receipts from customs were about $131,000,000, and those from internal revenue $118,000,000.

Clause 2. To borrow money on the credit of the United States.

In time of peace, the ordinary revenues of a nation should be sufficient to pay the expenses of its government; but in time of war these will be insufficient, and debts must be incurred. All nations possess this power of borrowing money, and all have exercised it. The usual mode of making loans is to issue the bonds of the government, which are its promises to pay the sums specified, at a given time, and with interest at given rates, usually payable semi-annually. These bonds are then sold at the best rates the government can command.

The United States have issued bonds from time to time since the formation of the government; though

these were in possession of the capitalists almost exclusively, until the war of the rebellion made large loans necessary. Then efforts were made to circulate them among the people, and with such success that multitudes purchased United States bonds who had never before seen securities of this character. The issues were of various denominations, $50, $100, $500, $1,000, and so on.

There have been three classes of loans which have been widely circulated among the people, viz., those known as seven-thirties, ten-forties, and five-twenties. The first were called treasury notes, and both principal and interest were payable in currency. The interest was at the rate of seven and thirty-hundredths per cent per annum, which gave them their name, seven-thirties. This rate gives the interest one cent a day on a note of $50, two cents on one of $100, etc., rendering it easy of computation. The five-twenties are payable, principal and interest, in coin, and the name, five-twenties, comes from the time of payment; the government may pay at any time after five years from their date, though they are not due till the expiration of twenty years. The interest is at the rate of six per cent per annum. The ten-forties may be paid, in like manner, after ten years, and are due at the end of forty years: interest five per cent per annum.

The bonds of the United States can not be taxed by the State governments, according to a decision of the Supreme Court, even if the bonds themselves contain no stipulation to that effect.

The public debt of the United States, on the first of January, 1791, was about $75,000,000. In 1816, it was over $127,000,000, which within about twenty years was entirely paid. In 1861, the debt was $90,000,000, and in 1866, it was $2,773,000,000. On the first of July, 1877, it was $2,060,000,000. The advantages of this method of distributing the payment of a debt over a

period of years are obvious. The country is every year becoming richer, and thus more able to pay off its indebtedness. What would have been an insupportable burden at the creation of the debt, becomes, in the lapse of years, tolerable and easy. At the same time, the temptation to postpone unduly the payment of principal should be steadily resisted. The ordinary expenses of the government will always call for heavy taxes, without adding to them interest on debts.

The act of 1870, and subsequent acts, authorized the issue of bonds for $1,500,000,000 at five, four and a half, and four per cent interest, payable principal and interest in coin, and redeemable at the pleasure of the Government after ten, fifteen, and thirty years respectively; to be sold at not less than par, and the proceeds to be applied to redeem the five-twenties. Over $700,000,000 of six per cent bonds have already (January, 1878) been thus redeemed, reducing the annual interest over $8,500,000.

A portion of our present public debt is in the form of Treasury Notes, commonly called legal tenders, which are circulated as money, and on which the Government pays no interest. The power to issue these comes from this clause (to borrow money) but it will be more convenient to consider them under another clause.

Clause 3. To regulate commerce with foreign nations, and among the several States, and with the Indian tribes.

Prior to the adoption of the Constitution the power to regulate commerce was not in Congress, but in the several States. Each State made such regulations as its own interests seemed to require, without regard to the influence upon its neighbors. "The States through whose ports the natural or artificial channels of trade principally passed, were able to exact a revenue from those which were less favorably situated for commercial