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 expected that the increase in the rate of duties on imported articles would raise the custom-house revenue from thirty-eight to fifty-seven millions; but this expectation was sadly disappointed, for these excessive duties, instead of increasing the custom-house revenue, reduced it to thirty-two millions.1 The law of August 3d added two direct taxes. One, on real estate, was divided equally among all the States, not in proportion to their respective wealth, but according to the rate of representation in the lower house of the national legislature, in conformity with the provisions of the Federal compact; so that, the States in rebellion being nominally contributors to this revenue, as well as those which had remained loyal to the Union, it followed that the total amount of taxation, which was twenty millions, was in reality reduced to less than fifteen millions. The second direct tax, which was to be the means of raising eight millions, and thus complete the amount fixed by the Secretary, levied three per cent. upon all incomes above eight hundred dollars. These last two measures were a serious innovation, for hitherto taxes of this kind had only been levied for the benefit of the States; but they had been contemplated by the Constitution and were justified by necessity. When the two houses met again on the 2d of December, 1861, the military expenditure had already reached a figure which was the more alarming because it was impossible to entertain any illusion regarding the duration of the war, and to believe that it would be ended in a few weeks. The budgets of the government of the Union are made up at the close of the first half of the fiscal year. On the 30th of June, 1860, the Federal debt only represented a nominal capital of sixty-four million seven hundred and sixty-nine thousand nine hundred and one dollars. A year later (June 30, 1861), when the Thirty-seventh Congress was about to assemble, this debt had only reached the figure of ninety million
1 Secretary Chase says the receipts fell short of his expectations because of— (1) the diminution (against his advice) in the duties on tea, coffee and sugar; (2) the exemption from the increased duties of the vast quantity of goods already in bond, and on which he had hoped to levy them when he made the estimate of fifty-seven millions; (3) the circumstances of the country having proved more unfavorable to foreign commerce than he had anticipated.—Ed.
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