most vividly the scenes and emotions of that four years of strife in which the most powerful passions of a nation were exercised in alternate distress and fear, in hope and exultation.

CHERRY AND VIOLET; A Tale of the Great Plague. By the author of "Mary Powell." New York: M. W DODD, 506 Broadway. 1866.

Every one who remembers the charming little book called "The Maiden and Married Life of Mary Powell," will gladly welcome its worthy successor in Cherry and Violet." Taking well-known historical facts or personages as a nucleus, the author weaves about them a pleasant net of fiction, so natural, fresh and quaint, that it might well be taken for a narrative of by-gone times. The present story runs through the period of the Protectorate and the Restoration as far as the time of the Great Plague, and the Great Fire which so soon succeeded that visitation. It is difficult to quote from a book whose interest is so evenly diffused, but perhaps the following extract gives as good an idea of the author's manner as any other. The conversation is between the learned Mster Blower, who has been driven from his London parish by the plague, and his faithful friend, Mistress Cherry. Cherry has been telling him how his poor parishioners have missed him:

"It's a very nice point," says he musingly, "where we ought to lie by. I believe, had I not left town when I did, I might have been dead now-and yet, perhaps I was like a soldier deserting his post."

I said, "No, sir; you were liker to a soldier carried off the battle-field to the hospital."

"Thank you, Cherry," says he, taking my hand and drawing it under his arm. "And what else?" says he; 66 come, let me hear all."

"Well, sir," said I," there's not much more to tell."

Something, though, I can see !" said he. "Come, out with it, Cherry!" "Sir," said I," it's of no use for us to trouble and vex ourselves about what wicked people will say of us in mere wantonness."

"Sometimes, though, we may hear the truth from an enemy," says he. "And what do wicked, wanton people say of me?"

"Why, sir,--some very evil-minded, malapert person hath written on your church door-- A pulpit to let !'”

"The rascal!" said he hastily, and coloring very red. 'Why, now, did I not keep on, Sabbaths and week days, till the plague-swellings were actually in my throat, though my congregation often consisted of only two or three old women?" So I said "Yes, sir-only there's no use in being provoked." "None, none," says he, much perturbed. "God forgive me for it!-I ean hardly have patience with them."

I said," Dear sir, you must have nothing but patience with them."
“You are right, you are right,” says he, coloring, but still much moved.

"Ill

or well, I must go back to them forthwith. . . . the fact is, there is a matter I would gladly have settled here, a little at my leisure. But duty before all! So I'll go back, Cherry, to mine."

I smiled a little as I said, "Somebody has been doing duty for you the last week or ten days, sir."

"Who?" cried be.

I said, "An Independent Minister."

A complex kind of expression crossed his face; for a moment he looked pained and provoked, and then burst out laughing.

"God bless the worthy fellow!" cried he; "I'll do him a good turn, if I can, the first time he'll let me !"

The author of this delightful little volume is said to be Miss Manning, and the publisher promises a series of her works,--the next to be "Mary Powell." They are issued in exceeding good taste, the paper, print and binding being faultless.

CORRESPONDENCE.

To the Editor of HUNTS' MERCHANTS' MAGAZINE:

NEW YORK, April 23, 1866.

Mr. R. G. Hazard, in your April number, has, from carelessness, not from intention misrepresented some of the views of my letter to the Secretary of the Treasury.

says.

He "to enable the Government to retain the gold, Mr. V. B. proposes that paper be issued at the market price to pay the gold inte est;" and he speaks in the next sentence of my proposing to "increase the supply of paper." Nothing can be found in my letter to warrant the inference that I proposed any additional issue of paper.

Again Mr. Hazard says: Mr. V. B. proposes that when the gold is thus accumulated, the Government should offer to redeem the legal tender notes, and thus make gold and paper equivalent." I did not propose thus to make gold and paper equiva lent. On the contrary I did not propose to redeem any of the notes until they had first become equal in current value to gold, under the influence of a constantly increasing gold fund which the people knew was to be applied exclusively to the pay m nt of these notes. I did not fix positively the point of accommodation at which this state of things would occur, but this was to occur first, and then, and not till then, redemption was to be offered.

Respectfully,

JOHN D. VAN BUREN.

ART.

CONTENTS OF MAY NUMBER.

PAGE. ART.

1. End of the Insurrection-Some of its Tendencies

2, The Balance of T ade and Protection.. 3. A Visit to the Bullion Vaults of the Bank of England..

4. Food and its Adulterations..
5. Virginia State Debt

6. Debt and Finances of Kentucky.
7. Commerce of the United States..
8. Analyses of Railroa Reports, No. 8..
9. South Carolina Railroad.

10. Mr. McCulloch's Letter on the Distribu-
tion of National Currency..

11. The Austro-Prussian War-Cloud 12. The State Tax on Sales....

13. Pork Packing in Chicago

14. The United States Debt

15. Application of Hydraulics to Steamships

16. Commercial Chronicle and Review. 329 17. Journal of Banking, Currency and Fi

PAGE.

387

331

THE

MERCHANTS' MAGAZINE

AND

COMMERCIAL REVIEW.

JUNE, 18 6 6.

TAXATION OF GOVERNMENT BONDS.*

BY HON. AMASA WALKER.

THE question of taxing credits assumes great practical importance when regarded in relation to the National Debt of the United States. We will assume that debt to be three billion dollars ($3,000,000,000); This forms a lien or mortgage upon the national wealth, which the Secretary of the Treasury, in his report, December, 1865, estimates at a little over fourteen billions, for convenience we will call it fifteen billions; In that case the national debt will be equal to one-fifth of the national wealth. On this debt of three billions the interest, at six per cent, will be 180 millions. If we suppose that all other demands on the Treasury amount to 120 millions annually, we have an aggregate of 300 millions as the amount of taxation. The national debt, if included in the national valuation would increase it 20 per cent., or from 15 to 18 billions. This would reduce the rate of taxation by one-sixth or 16 2-3 per cent; that is if only property was taxed, the rate would be 2 per cent., if property and national stocks, the rate would be 1.66.

Should the national debt be exempted from taxation there will be 180 millions of income that will go untaxed, and that, as can be readily seen is a large share of the net income of the whole nation, or what the people save annually after supplying their necessary consumption. The subject therefore is one of surpassing interest to the country. Quite fortunately however, the matter is wholly within the control of Congress, which can as fast as the present bonds and other securities become due, (and they may all be redeemed within seven, and most of them within three years, from 1865,) convert them into bonds not exempted from general taxation.

* From a forthcoming work on Political Economy, by Hon. Amasa Walker, of Massachussetts, now in the process of publication by Little, Brown & Co., Boston.

Public faith should be kept inviolate, but public justice should also be secured as soon as possible. Better far to pay a high rate of interest, if need be, than have so large a share of individual income, and consequently of ability to pay taxes, escape its proper responsibilities. This is desirable not only as a matter of policy, in removing a prominent cause of popular dissatisfaction, which may sooner or later endanger the security of the Debt itself but as an economical advantage to the country.

The effect of exempting the public debt from taxation may be illustrated as follows: A has an income of $1,500 derived from a salary, B has an equal income derived from coupons on the national stocks, A must pay taxes and of course must economize accordingly; B pays no taxes, and consequently has no occasion to save on that score. Now, as all national capital comes from the savings of the people, it can be seen at once, that if one-sixth the part* (in amount,) of the tax payers are exempted from taxation, they are to an equal extent exempted from all necessity of sav ing.

We are aware that the holders of public stocks pay indirect taxes (customs, excise, &c.,) but so also does the man who has no interest in the funds. What we intend to say is, that so far as a man's wealth is invested in our taxed securities, in so far he has no motive to save arising from a taxation to which all others are liable. Looking then at its economical bearings merely, ought not all public securities to be included in the general schedule of taxation, both by the national government, and the states, cities and towns in which the holders reside?

CONSOLIDATION OF THE NATIONAL DEBT.

While this work is passing through the press, a proposition is made in Congress to consolidate the debt of the United States into a uniform 5 per cent stock, having thirty years to run, payable, interest and principal in gold.

It is, doubtless, desirable to effect such a consolidation, provided it can be done in an economical and proper manner, but the proposal to exempt the consols from taxation is quite another matter. We have already spoken of the invidious as well as unjust operation of a system which exempts from taxation one sixth part of the national resources, but since the proposal has been made, it becomes desirable, we think, to give the subject some further consideration.

We shall not dwell upon the political bearings of a measure sure to create abiding dissatisfaction-sure to be a most dangerous weapon in the hands of political aspirants, and certain to endanger eventually the security of the debt itself. We shall speak only of its economic bearings.

1st. The exemption of $3,000,000,000 from taxation for all National, State. County, Town, School District and Parish, purposes, will create a very considerable and influential class of persons, who, while they will have the legal right to vote appropriations for all public objects, will be under no obligation to pay a farthing of the amount raised; who while interested in having large public improvements made, will have no respon

*It is, doubtless, far more than one-sixth part of the net national income, probably, at least one-fourth, or 25 per cent. A large share of the estimated 15 billions of aggregate wealth is of a character to escape taxation.

sibility for the expense of them; a class to whom it will be a matter of entire indifference how large the assessments may be, or how unwisely or wastefully the public finances may be conducted. Can any reasonable man think it expedient and proper to create such a class? Does any one doubt that its influence would be unfavorable to the public welfare? We already exempt labor, to a great extent, from the burdens of State and Municipal Taxation, by limiting the poll tax to a fixed and very trifling amount, so that the poll tax-payer can vote any sum he pleases, with entire impunity. By exempting three billions of the national credit from taxation, it is now proposed to place capitalists, so far as they are owners of the public stocks, in the same favored position. That interest of the two parties will then be identical in regard to all public expenditures paid for by a direct tax on property, as State and Municipal charges generally are. Both can vote away money, and leave the unfortunate propertyholders to settle the bills. By the exemption proposed, government creates a great antagonism in the body politic. It grants a special and most important favor to one class, at the expense of others. It may be urged that the favor has been paid for, by the creditors of the government, in that they took the stock at a less rate of interest than they would have done had it been subject to taxation. But can government with any propriety make any such condition? Can it rightfully grant for any consideration whatever, a dispensation to one class of citizens from all pecuniary obligation to State, City and Town authority throughout the nation? Surely not, consistently with justice and equality, because in our community the favor granted may be worth one per cent, in another two. In one locality it may advance the general valuation one half, in another only onetenth, in one Municipality it may increase the general rate of taxation five mills on the dollar, in another twenty.

Can that be just and equal? And yet all taxation under a free government, must be seen to be clearly impartial and just, or the people will not submit to it.

2d. Such an exemption will create a powerful influence against the payment of any thing but the interest of the debt. This can be readily seen, and hence we perceive another unfavorable effect from the proposed policy. The debt should be paid off as soon as practicable. It should not all be placed out of reach for thirty years, and exempted for all that time from contributing to its own discharge, unless we are prepared to resign ourselves to never ending taxation for the payment of interest.

In a sectional point of view, the exemption principle will be very unequal in its bearings. In the new States when capital is comparatively scarce and local taxation nominally heavy, its operation will be especially oppres sive and odious. Every available dollar will be put into government bonds, unless it will command an excessive rate of interest on individual security. Will not this enhance the rate of interest, when capital is most scarce? If so will it not be most burdensome to those who can least afford to bear severe taxation and high rates of interest?

A third consideration is that the contemplated exemption has a direct and powerful tendency to cripple the industry of the country by absorbing a large proportion of its wealth into the debt of the government. If the national bonds should be relieved of taxation for 30 years, no more will go abroad for sale, and those now in Europe will be returned upon us.