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[272] at similar moderate rates, thus indicating that there was no excess of circulation, and that the rate of premium on specie was heightened by the exceptional causes which tended to its exhaustion without the possibility of renewing the supply.

This review of the policy of your predecessors is given in justice to them, and it exhibits the condition of the finances at the date when the permanent government was organized.

In the mean time the popular aversion of internal taxation by the general government had influenced the legislation of the several States, and in only three of them--South-Carolina, Mississippi, and Texas--were the taxes actually collected from the people. The quota devolving upon the remaining States had been raised by the issue of bonds and State treasury notes, and the public debt of the country was thus actually increased instead of being diminished by the taxation imposed by Congress.

Neither at the first nor second session of the present Congress were means provided by taxation for maintaining the government, the legislation being confined to authorizing further sales of bonds and issues of treasury notes. Although repeated efforts were made to frame a proper system of taxation, you were confronted with an obstacle which did not exist for your predecessors, and which created grave embarrassment in devising any scheme of taxation. About two thirds of the entire taxable property of the confederate States consists of lands and slaves. The general power of taxation vested in Congress by the Provisional Constitution (which was to be only temporary in its operation) was not restricted by any other condition than that “all duties, imports, and excises should be uniform throughout the States of the Confederacy.” But the permanent Constitution sanctioning the principle that taxation and representation ought to rest on the same basis, specially provides that “representatives and direct taxes shall be apportioned among the several States according to their respective numbers, which shall be determined by adding to the whole number of free persons — including those bound to service for a term of years, and excluding Indians not taxed--three fifths of all slaves.”

It was further ordered that a census should be made within three years after the first meeting of Congress, and that “no capitation or other direct tax shall be laid, unless in proportion to the census or enumeration hereinbefore directed to be taken.”

It is plain that, under the provisions, capitation and direct taxes must be levied in proportion to the census when made. It is also plain that the duty is imposed on Congress to provide for making a census prior to the twenty-second of February, 1865. It may further be stated that, according to the received construction of the Constitution of the United States, (a construction acquiesced in for upward of sixty years,) taxes on lands and slaves are direct taxes, and the conclusion seems necessarily to be that, in repealing without modification, in our Constitution, the language of the Constitution of 1787, our convention intended to attach to it the meaning which had been sanctioned by long and uninterrupted acquiescence.

So long as there seemed to be a probability of being able to carry out these provisions of the Constitution in their entirety, and in conformity with the intentions of its authors, there was an obvious difficulty in framing any system of taxation. A law which should exempt from the burden two thirds of the property of the country would be so unfair to the owners of the remaining third as it would be inadequate to meet the requirements of the public service.

The urgency of the need was such, however, that, after great embarrassment, and more than three months of assiduous labor, you succeeded in framing the law of the twenty-fourth April, 1863, by which you sought to reach, so far as was practicable, every resource of the country, except the capital invested in real estate and slaves, and by means of an income-tax and a tax in kind on the product of the soil, as well as by license on business occupations and professions, to command resources sufficient for the wants of the country. But a very large proportion of these resources could only be made available at the close of the present and the commencement of the ensuing year, while the intervening exigencies permitted no delay. In this state of affairs, superinduced almost unavoidably by the fortunes of the war in which we are engaged, the issues of treasury notes have been increased until the currency in circulation amounts to more than six hundred millions of dollars, or more than threefold the amount required by the business of the country.

I need not enlarge upon the evil effects of this condition of things. They are unfortunately but too apparent. In addition to the difficulty presented to the necessary operations of the government, and the efficient conduct of the war, the most deplorable of all its results is undoubtedly its corrupting influence on the morals of the people. The possession of large amounts of treasury notes has naturally led to a desire for investment, and with a constantly increasing volume of currency there has been an equally constant increase of price in all objects of investment. This effect has stimulated purchase by the apparent certainty of profit, and a spirit of speculation has thus been fostered, which has so debasing an influence and such ruinous consequences, that it is our highest duty to remove the cause, and, no measures directed to that end can be too prompt or too stringent.

Reverting to the constitutional provisions already cited, the question recurs whether it be possible to execute the duty of apportioning in accordance with the census ordered to be made as a basis. So long as this appeared to be practicable, none can deny the propriety of your course in abstaining from the imposition of direct taxes till you could exercise the power in the precise mode pointed out by the terms of the fundamental law. But it is obvious that there

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