necessary diffuseness, lead to no practical or satisfactory results. They therefore, in default of any specific instructions, either from Congress or the Secretary of the Treasury, other than were contained in the act authorizing the commission, adopted the plan of taking up specifically, for investigation, those urces of revenue which our own experience and the experience of other countries have indicated as likely to be most productive under taxation, and most capable of sustaining its burdens. The result of these investigations the commission propose to submit in the form of independent and special reports.

In carrying out this plan, they have sought to make themselves practically acquainted with each subject of inquiry by personal inspection, (when the investigation related to a specific branch of industry,) and by putting themselves. in all cases into direct and frequent communication with revenue officials, and with representative business men from every section of the country. The commission have also, in most cases, caused the information communicated to them the received in the form of testimony, under oath, and to be faithfully reported; and they express the hope that Congress will consider it expedient to order this record to be preserved in printed form. Representing, as it does, the experience and matured opinions of the best business men of the country, each speaking about his own profession, and often revealing facts which, in daily life, are screened from the public eye, this testimony cannot but be of great value for future reference; and in laying it before Congress and the people of the eantry, the commission feel that they will have rendered an important service, whether their specific recommendations shall be adopted or not. The parliaentary archives of Great Britain contain many such repertories of evidence, to the value of which the public men of England, and the scientific inquiries of all countries, have again and again testified.

It is evident that the work of the commission, prosecuted in the manner described, must necessarily be protracted and laborious. The six months during which they have been occupied have scarcely been sufficient for becoming acqanted with the requirements of their work, and for the gathering of materials to serve as the basis of investigation; and the unconsidered statements and memorials touching the relation of the business interests of our country to our revenue system, which have thus far accumulated in their hands, will require at bast six months for their proper examination and discussion. They accordingly fer no apologies, if in this their present report the extent of their investiga bne should seem too limited for the time during which they have been occu¡d.

One of the greatest difficulties encountered from the outset has been to obtain 11 and comprehensive information; and the commission, as the result of their Iperience, feel warranted in asserting that no full and reliable statistics contering any branch of trade or industry in the United States, with possibly a few exc prions, are now or have ever been available.

The census of 1860, only made available for detailed reference some four or fr years after its enumeration, has been to the commission of but little service. Ne do the statistics which have been furnished from time to time by the Tury Department afford the knowledge of those facts which are so essential w a groundwork for the labors of the commission.

the 9th day of August, 1865, in response to a call for information relative 1. importation of spirits distilled from grain, and the duties accruing there , the following returns were sent :

Statement (submitted August 9) exhibiting the quantity of spirits distilled from grain imported into the United States, with rates of duty and imposts accruing thereon, during the fiscal years ending on the 30th of June, 1862 to 1864, inclusive.

Subsequently the commission, finding that the above returns did not in any degree correspond with the statements of the New York trade, called for a re-examination of the same, and, in answer to their call, were furnished with a re-statement of the foregoing returns, as follows:

Statement (submitted November 2) exhibiting the duties collected upon the importations of spirits distilled from grain, at Boston, New York, Philadelphia, Baltimore and San Francisco,* during the fiscal years ending June 30, 1862, 1863, and 1864.

In further illustration, they also submit copies of the returns sent to the commission, under dates of September 12 and November 2, 1865, respecting the imports and duties accruing on chiccory.

Statement (submitted September 12) exhibiting the quantity and value of chiccory imported into the United States, with rates of duty and imposts accruing thereon, for the following years:

Statement (submitted November 2, 1865) exhibiting the duties collected on the importations of chiccory, &c., at Boston, New York, Philadelphia, Baltimore, and San Francisco* for the following years:

* Returns from San Francisco received only up to April 30, 1864.

+ Although the latter table embraced only the five principal ports, yet it will be observed that the quantity and value of chiccory imported in the year 1864, as given therein, exceed in amount those given in the former table, which purported to include the returns from all the ports in the United States.

Subsequently the commission called for a statement of imports, exports, and values of various articles for the fiscal year 1864-'65, and under date of December 19, 1865, they received the following statement, with others, respecting the coffee trade of that year:

The duties received on the above quantity consumed were, at five cents per pound, $4,117,681.

It will be seen from the above statement that the value of all the coffee imported during the year was returned at ten and a half cents per pound, when the actual fact was that the average invoice price of the coffee imported in the United States during the year 1865 was not less than thirteen cents, and was probably in excess of that figure. Looking next at the treasury statement of the exports of coffee, we find that the 21,962,943 pounds sent out of the country during the same year had the extraordinary value of nearly twenty-six cents per pound; while the 82,353,638 pounds retained for consumption had a value of only sir and four-tenths cents per pound; and finally, the value of the quantity retained for consumption, $5,278,685, paid, at the duty of five cents per pound, an azgregate of $4,117,681, being seventy-eight per cent. of the whole value.

The truth is, that until of late no occasion has existed to call for the preparation by the Treasury Department of correct statistical data concerning the comthree of the country, and consequently but little attention has been paid to this matter. The changed state of affairs, the present difficulties experienced by this commission, and the future difficulties which in many ways must occur from the want of correct and detailed commercial statistics, will, it is hoped, induce Congress to make careful provision for their preparation and publication.

In the Bureau of Internal Revenue a better system prevails, and the published returns of revenue and the amounts received from specific sources are believed, to be substantially correct. Overburdened, however, as this bureau was with work, and delayed by a want of promptness on the part of district collectors, many of whom are destitute of business experience, it was unable to furnish the mmission with any detailed statement of its specific sources of revenue for the feral year ending June 30, 1865, until nearly six months thereafter.

Another great source of difficulty experienced by the commission in conductmg their investigations, with a view of arriving at any correct estimates of the future revenue of the country, has been the abnormal and disturbed condition 4 every branch of trade and industry since 1861, owing to the effects of the war, the frequent alterations of the tariff, and the inauguration of the internal revenue system. Many branches of trade and industry have been curtailed durng this period from thirty to seventy-five per centum, and some few have been tirely destroyed. Every advance made in the tariff and in the excise has,

* Ev a evreular of the Commissioner of Internal Revenue, dated December 29, 1×65, it ap pears that during the previous tour months alone over three hundred and fifty errors in the „ts of district collectors, in sums varying in amount from a few cents to nearly sixty housand dollars were detected.

*See Special Report on Distilled Spirits.

moreover, been anticipated to such an extent by every class of importers, dealers, manufacturers, and speculators, that it cannot be said as yet that the government has fully tested the capacity of any one of what may be considered as its great and legitimate sources of revenue. Thus, for example, the commission estimate that on the 1st of July, 1864, the date when the advance in the tax on distilled spirits, of from sixty cents to one dollar and fifty cents per gallon, took effect, there were made and stored, in anticipation of this advance, at least forty millions of gallons, or a quantity sufficient to supply the wants of the country for at least a year in advance. Since July 1, 1864, therefore, the receipts of the government from distilled spirits have, from this cause, necessarily been inconsiderable. Of cigars, in like manner, it is estimated that from seventy to eighty millions were manufactured and stored in the city of New York alone, in anticipation of the tax. The stock of spices imported into the country, previous to the advance of the tariff, was also probably equal to nearly two years' supply; while in the case of the insignificant article of matches, on which the tax is only one cent per bunch, the stock accumulated in anticipation of the tax was so large, that it has not, even at the present date, (January, 1866,) been entirely exhausted.

This abnormal condition of things, coupled with the fact that the excise has been levied, to a great extent, on a basis of greatly inflated values, renders it extremely difficult to predicate anything with certainty concerning the future from the immediate past.

Before entering into any discussion on the working of our present revenue system, and of the changes which it may be expedient to make in it, the commission would ask attention to a brief résume of the revenue systems of the two countries of Europe which are most akin to the United States in population, resources, and development-France and Great Britain. In both of these countries the necessity of large taxation, extending over a period of many years, has induced a thorough investigation of the subject, and the record of their experience cannot be profitably ignored in the framing of a permanent system for the United States.

REVENUE SYSTEM OF GREAT BRITAIN.

The close of the great European war, in 1815, found Great Britain with a complex system of taxation, the growth of her necessities at a period when vast military and naval expenditures, and the burden of an increasing debt, had tasked the ingenuity of ministers to devise new sources of revenue. "The love of imposts was omniscient; it seized on every article which by any possibility an Englishman could want." More than a thousand different kinds of foreign produce paid tribute at the custom-house, while the heavy hand of the exciseman was laid on many articles of home production and of indispensable domestic use.

Navigation laws-long before adopted to control the carrying trade between Great Britain and her colonies and the rest of the world-had operated to repel foreign commerce; and corn laws, enacted in the interest of the landed aristocracy, had carried the food of the people to starvation prices. The law of 1815 wholly prohibited the importation of foreign wheat till the home price reached eighty shillings a quarter, or about $2 50 a bushel. Under the operation of this law the price of wheat rose from sixty-four shillings a quarter in 1815 to an average of ninety-four shillings in 1817, and in June of that year reached the frightful figure of one hundred and twelve shillings and eightpence, or $3 50 a bushel. Trade languished, the people were starving, and bread riots disturbed the peace and menaced the safety of the kingdom. This state of things gave birth to the struggle between the landed proprietors and the manufacturers, which ended thirty years afterwards in the repeal of the corn laws and the triumph of free trade. The workmen clamored for cheaper food, while their

employers petitioned Parliament to extend their markets. The war, with its restrictions on foreign intercourse, had made England the chief manufacturer of the world. A dense population, colonies planted in every clime, a great mercantile marine, and the possession of abundant coal and iron, and of much private capital, supplied conditions to cheap production and a wide diffusion of products such as set the competition of other nations at defiance.

These natural and acquired advantages were, however, in a measure neutralized by unwise commercial restrictions and burdensome taxes, but with the restoration of peace these burdens began gradually to be removed. The commerce of the east had been set free from the monopoly of the East India Company in 1-14. The treaty of reciprocity with the United States in 1815, which was followed by similar treaties with the European powers, and alterations made in the navigation laws in 1822, opened the British islands more freely to foreign emmerce, and at the same time enlarged the carrying trade of British ships. Heavy duties on raw materials, and materials partly wrought, entering into domestic manufactures, were repealed or greatly lessened; and though the duties on foreign fabrics were, also lowered, the importation of some of them seriously interfered with the home manufacturer. In silks alone the French were superior, and against that superiority the British manufacturer was protected by restrictive duties, down to the ratification of the treaty with France in 1860, when, for the sake of advantages to be gained in the export to France of coal, iron, machinery, and other British products, the silk duties were repealed.

From 1815 to 1840 the condition of the manufacturer was steadily improving; but great ameliorations were still needed before the productive capacity of the country could obtain its full development. Foreign competition in the home market had long ceased to be feared, and the only hindrances now lay in domestic restrictions. A parliamentary report in 1840 showed that out of a customs revenue of £22,000,000, £20,000,000 was derived from duties on raw materials and on food; and it disclosed the still more remarkable fact than ninetyfour and a half per cent. of this revenue was levied on seventeen articles, while more than eleven hundred articles contributed to make up the residue of five and a half per cent, being the insignificant sum of £1,250,000. In the more numerous category were included all foreign manufactures except of silk.

It thus appeared that the duties on the foreign imports of Great Britain were a direct tax on the home producer; the high price both of raw materials and of food helping to swell the cost of manufactures, and thus benefiting the foreign competitor. "A nation of manufacturers can only subsist as they sell their produce, and they can sell their produce only as they sell it cheap. But the ablity to sell their produce cheaply implies a cheap command of the raw material and of the workman's food; to tax these is to decree the nation's ruin and involve all classes alike in bankruptcy and pauperism."

This was the argument of the Manchester party in 1840, and it speedily came to be the creed of the nation. The policy of protection to agriculture yielded at last, and the revenue system was subordinated to the more important end of creating national wealth. All duties burdensome to the manufacturer were repealed, both in the nature of customs and excise, the policy being to enable the Briti-h producer to apply the largest amount of home labor to the smallest value in foreign staples, under conditions which enable him to put his product into foreign markets at the lowest possible cost.

Ti. principle is the key to British free trade, and it is claimed to be of univeral applicability; but it may be gravely questioned whether it is not protection in a more subtle form. Such is the opinion of M. Block, a modern French economist of eminence, who classes under protective measures the freeing of raw materials and of food from customs duties.

Having described the influences which have determined the present revenue system of Great Britain, we proceed to give the details of the modern budget.