value of the currency for which they are sold and in which the interest will be paid. Those classes of the community which sell bounds from necessity or for the means of living will probably gain more in the reduced market prices of the articles which they purchase than they will lose in the reduced market value of the bonds which they sell. Those who hold the bonds on speculation would gain or lose according to their ability to hold them, while all those who have taken them as investment will escape injury by simply holding them according to their original purpose. The contraction of the currency will increase the value of the interest paid them during the war; and at the end of it they will have a security which will command a price which will amply repay their confidence. The most conclusive answer, however, to this objection is to be found in the fact that whatever may be the amount of depreciation on thet exceed the depreciation in the value of the currency. If the Government must issue an obligation in the shape of currency to pay $21 for a barrel of flour, which in a normal condition of the currency could be purchased with $7, it is actually selling its paper at one-third of its face. At the same time by excessive issues it is disturbing all other values and all the commercial relations of society. The depreciation in the bonds could never reach this high rate, neither would if affect the prices of commodities or commercial relations. If, then, we are reduced to a choice between evils, the reduced value in the bonds is manifestly the less.
II. We now come to the consideration of the next great feature in the scheme, namely, the war tax. What shall be the subjects of that tax and what amount should it raise? The subjects upon which a tax may be levied are many, and the expediency of each involves questions which it is not proposed at present to discuss. It seems to me that a tax upon property and income is so much to be preferred to stamp duties, excises, licenses, and on the like taxes which call for a machinery vexations in its character and expensive in its operation that there will be little hesitation on the part of Congress in its acceptance. The direct tax heretofore levied has set in operation all the machinery necessary to leave another, and an income tax could be collected by the same means. It seems to me that both these forms of tax should be adopted. To lay a sufficient tax upon property alone would require too large an increase in the rate of last year. Such an increase would operate with peculiar hardship upon property producing no income. On the other hand, a tax upon income is so easily evaded that of itself it would furnish an insecure resource. It is proper, however, that incomes should be taxed; otherwise the whole profits of speculation and trade, together with those resulting from skill and labor, would escape contribution. I propose, therefore, that a tax be imposed upon property and upon the gross amount of incomes of every kind, excepting those below some minimum to be adjusted by Congress. The next inquiry is as to the rates of these taxes, to adjust which it must first be ascertained what amount it is necessary to ralready been shown that up to the 1st of July
next the Treasury notes in circulation will exceed. . . . $500,000,000
Deduct the circulation proposed to be left, say. . . . . . . 150,000,000
Remaining funded. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000,000
The annual interest on this sum at 8 per cent. is. . . . . 28,000,000