f irredeemable paper. Money must not merely be promised,
it must be paid. The Government therefore required a strong,
efficient system of taxation--one that would promptly return large
sums to the Treasury. From customs, an increasing revenue was
already enriching the Government vaults, but the amount derivable
from that source was limited by the ability of the people to consume
foreign goods, and wise economists did not desire an enlarged
revenue the collection of which was at war with so many domestic
interests. The country therefore turned by common instinct to a
system of internal duties,--to incomes, to excise, to stamps. In
the extra session of the preceding year, Congress had, by the Act
of August 5, 1861, laid the foundation for a system of internal
revenue by providing for a direct tax of twenty millions of dollars
on the real estate of the country, and for an income tax of three
per cent. on all incomes in excess of eight hundred dollars per
annum. But the appointment of assessors and collectors under the
bill had been postponed "until after the second Tuesday of February,
1862," which was practically remanding the whole subject to the
further consideration of Congress before any man should be asked
to pay a dollar of tax under the law. The intervening months had
not decreased but had on the contrary largely developed the
necessities of the National Treasury, and enhanced the necessity
of a stable revenue system. The exigency had become so great that
Congress was compelled for the first time in our history, to resort
to the issue of government notes as a legal-tender currency.
Promptness and decision were essential to the preservation of the
National credit. The sources, the extent, the limitations of the
taxing power were closely examined by Secretary Chase in his report
and the subject was remanded to Congress for determination.

The Constitution gives to Congress to power to levy imposts, and
prohibits it to the States. It gives also to Congress the power
to levy internal taxes and excises, leaving to the States the right
to do the same. It is one of the traditions of the Convention
which met in Philadelphia in 1787 to frame the Federal Constitution,
that Mr. Hamilton remarked in a conference of its leading members
that if the power to levy impost and excise should be given to the
new government, it would prove strong and successful. If the power
were not to be given he did not desire to waste