Every owner of a watch is to pay 4s。 a year for a gold watch and 2s。 a year for a silver watch！ The American tax…gatherers will not like to be cheated。 They will be very keen in searching for watches。 But who can say whether they or the carriers of watches will have the best of it in such a hunt。 The tax…gatherers will be as hounds ever at work on a cold scent。 They will now be hot and angry； and then dull and disheartened。 But the carriers of watches who do not choose to pay will generally； one may predict； be able to make their points good。 With such a tax billwhich I believe came into action on the 1st of May； 1862the Americans are not fairly open to the charge of being unwilling to tax themselves。 They have avoided none of the irritating annoyances of taxation； as also they have not avoided； or attempted to lighten for themselves； the dead weight of the burden。 The dead weight they are right to endure without flinching； but their mode of laying it on their own backs justifies me； I think； in saying that they do not yet know how to obtain access to their own means。 But this bill applies simply to matters of excise。 As I have said before； Congress； which has hitherto supported the government by custom duties； has also the power of levying excise duties； and now； in its first session since the commencement of the war； has begun to use that power without much hesitation or bashfulness。 As regards their taxes levied at the custom…house； the government of the United States has always been inclined to high duties； with the view of protecting the internal trade and manufactures of the country。 The amount required for national expenses was easily obtained； and these duties were not regulated； as I think； so much with a view to the amount which might be collected as to that of the effect which the tax might have in fostering native industry。 That； if I understand it； was the meaning of Mr。 Morrill's bill； which was passed immediately on the secession of the Southern members of Congress； and which instantly enhanced the price of all foreign manufactured goods in the States。 But now the desire for protection； simply as protection； has been swallowed up in the acknowledged necessity for revenue； and the only object to be recognized in the arrangement of the custom duties is the collection of the greatest number of dollars。 This is fair enough。 If the country can； at such a crisis； raise a better revenue by claiming a shilling a pound on coffee than it can by claiming sixpence； the shilling may be wisely claimed； even though many may thus be prohibited from the use of coffee。 But then comes the great question； What duty will really give the greatest product？ At what rate shall we tax coffee so as to get at the people's money？ If it be so taxed that people won't use it； the tax cuts its own throat。 There is some point at which the tax will be most productive； and also there is a point up to which the tax will not operate to the serious injury of the trade。 Without the knowledge which should indicate these points； a Chancellor of the Exchequer； with his myrmidons； would be groping in the dark。 As far as we can yet see； there is not much of such knowledge either in the Treasury chambers or the House of Representatives at Washington。 But the greatest difficulty which the States will feel in obtaining access to their own means of taxation is that which is created by the Constitution itself； and to which I alluded when speaking of the taxing powers which the Constitution had given to Congress and those which it had denied to Congress。 As to custom duties and excise duties； Congress can do what it pleases； as can the House of Commons。 But Congress cannot levy direct taxation according to its own judgment。 In those matters of customs and excise Congress and the Secretary of the Treasury will probably make many blunders； but； having the power； they will blunder through； and the money will be collected。 But direct taxation in an available shape is beyond the power of Congress under the existing rule of the Constitution。 No income tax； for instance； can be laid on the general incomes of the United States that shall be universal throughout the States。 An income tax can be levied； but it must be levied in proportion to the representation。 It is as though our Chancellor of the Exchequer； in collecting an income tax； were obliged to demand the same amount of contribution from the town of Chester as from the town of Liverpool； because both Chester and Liverpool return two members to Parliament。 In fitting his tax to the capacity of Chester； he would be forced to allow Liverpool to escape unscathed。 No skill in money matters on the part of the Treasury Secretary； and no aptness for finance on the part of the Committee of Ways and Means； can avail here。 The Constitution must apparently be altered before any serviceable resort can be had to direct taxation。 And yet； at such an emergency as that now existing； direct taxation would probably give more ready assistance than can be afforded either by the customs or the excise。 It has been stated to me that this difficulty in the way of direct taxation can be overcome without any change in the Constitution。 Congress could only levy from Rhode Island the same amount of income tax that it might levy from Iowa； but it will be competent to the legislature of Rhode Island itself to levy what income tax it may please on itself； and to devote the proceeds to National or Federal purposes。 Rhode Island may do so； and so may Massachusetts； New York； Connecticut； and the other rich Atlantic States。 They may tax themselves according to their riches； while Iowa； Illinois； Wisconsin； and such like States are taxing themselves according to their poverty。 I cannot myself think that it would be well to trust to the generosity of the separate States for the finances needed by the national government。 We should not willingly trust to Yorkshire or Sussex to give us their contributions to the national income； especially if Yorkshire and Sussex had small Houses of Commons of their own in which that question of giving might be debated。 It may be very well for Rhode Island or New York to be patriotic！ But what shall be done with any State that declines to evince such patriotism？ The legislatures of the different States may be invited to impose a tax of five per cent。 on all incomes in each State； but what will be done if Pennsylvania； for instance； should decline； or Illinois should hesitate？ What if the legislature of Massachusetts should offer six per cent。； or that of New Jersey decide that four per cent。 was sufficient？ For awhile the arrangement might possibly be made to answer the desired purpose。 During the first ebullition of high feeling the different States concerned might possibly vote the amount of taxes required for Federal purposes。 I fear it would not be so； but we may allow that the chance is on the card。 But it is not conceivable that such an arrangement should be continued when； after a year or two； men came to talk over the war with calmer feelings and a more critical judgment。 The State legislatures would become inquisitive； opinionative； and probably factious。 They would be unwilling to act； in so great a matter； under the dictation of the Federal Congress； and； by degrees； one and then another would decline to give its aid to the central government。 However broadly the acknowledgment may have been made that the levying of direct taxes was necessary for the nation； each State would be tempted to argue that a wrong mode and a wrong rate of levying had been adopted； and words would be forthcoming instead of money。 A resort to such a mode of taxation would be a bad security for government stock。 All matters of taxation； moreover； should be free from any taint of generosity。 A man who should attempt to lessen the burdens of his country by gifts of money to its exchequer would be laying his country under an obligation for which his country would not thank him。 The gifts here would be from States； and not from individuals but the principle would be the same。 I cannot imagine that the United States government would be willing to owe its revenue to the good…will of different States； or its want of revenue to their caprice。 If under such an arrangement the Western States were to decline to vote the quota of income tax or property tax to which the Eastern States had agreedand in all probability they would declinethey would in fact be seceding。 They would thus secede from the burdens of their general country； but in such event no one could accuse such States of unconstitutional secession。 It is not easy to ascertain with precision what is the present amount of debt due by the United States； nor probably has any tolerably accurate guess been yet given of the amount to which it may be extended during the present war。 A statement made in the House of Representatives by Mr。 Spaulding； a member of the Committee of Ways and Means； on the 29th of January last； may perhaps be taken as giving as trustworthy information as any that can be obtained。 I have changed Mr。 Spaulding's figures from dollars into pounds； that they may be more readily understood by English readers：
There was due up to July 1； 1861 18；173；566 pounds。 〃 added in July and August 5；379；357 〃 〃 borrowed in August 10；000；000 〃 〃 borrowed in October 10；000；000 〃 〃 borrowed in November 10；000；000 〃 〃 amount of Treasury Demand Notes issued 7；800；000 〃 61；352；923 〃
This was the amount of the debt due up to January 15th； 1862。 Mr。 Spaulding then calculates that the sum required to carry on the government up to July 1st； 1862； will be 68；647；077l。 And that a further sum of 110；000；000l。 will be wanted on or before the 1st of July； 1863。 Thus the debt at that latter date would stand as follows：
Amount of debt up to January； 1862 61；352；923 pounds。 Added by July 1st； 1862 68；647；077 〃 Again added by July 1st； 1803 110；000；0