increase in the rate of taxes imposed upon the remaining sources after 1872.
Of many other curious and instructive economic experiences, consequent upon the rapid and radical changes in the fiscal policy of the United States during the period under consideration, the following seem especially worthy of notice: The first abatement or repeal of internal taxation on various articles after the war to the extent of about fifty millions in 1866—was not attended with any general and immediate reduction in the prices of the articles relieved, corresponding to the reduction of taxation, but with rather an increase of prices. The explanation of this circumstance was, that the continuance of the heavy war taxation, for a period after the extensive war demands of the Government for various commodities had ceased, had diminished their production to a point below what would have been the normal consumption of the country; and that, therefore, prices increased concurrently with the abatement of taxes and a renewal of demand. Such a result was, however, but temporary, and the condition of affairs was soon reversed. The supply of manufactured products quickly became equal to or exceeded demand. The price of products fell faster than the price of either labor or capital, and taxation, which formerly had been paid wholly from profit, now fell mainly upon capital. The general result was a year (1867) of great industrial and commercial depression.
The enlarged use of stamps as machinery for the collection of taxes, and their novel application to fermented liquors and distilled spirits, were attended with very striking results. In the case of fermented liquors (beer), it was established almost beyond doubt by the Revenue Commission that previous to 1866 the Government was defrauded of its legitimate revenue to an extent of forty per cent, involving an absolute annual loss of about $6,400,000. The adoption, with no little hesitation by Congress in 1866, of the principle, that the payment of the tax on this commodity should be effected by the purchase and affixing a stamp to each barrel sold and removed from the place of manufacture, with the additional requirement that the stamp should be canceled by the retailer or consumer at once, increased the revenue from $3,657,000 in 1865 to $5,115,000 in 1866—the year of first application—and to $5,819,000 in 1867; and ever since has proved most effective and satisfactory.
A recommendation to make use of stamps for the collection of taxes on tobacco was acceded to by Congress in respect to smoking tobacco and snuff, but was refused in respect to chewing tobacco, cigarettes, and cigars; in the latter case on the assumption that it was impracticable to affix an adhesive paper stamp on the body of a cigar, while the "trade," not long afterward, and at its own volition, demonstrated its entire feasibility. Had the recommen-
