Smith, Stephen; Wilkinson, J. Grains for the Grangers, Discussing All Points Bearing Upon the Farmers' Movement for the Emancipation of White Slaves from the Slave-Power of Monopoly . Philadelphia: John E. Potter and Company, 1873. [format: book], [genre: essay; history; letter; narrative; poetry]. Permission: Northern Illinois University
Persistent link to this document: http://lincoln.lib.niu.edu/file.php?file=smith.html

The question of taxation is becoming one of exceeding interest, as public attention, through the Farmers' movement, becomes more directed to the subject. The system of indirect taxes is invidious in its operation and pernicious in its ultimate tendency. There is no shape in which taxation can be made agreeable to the payers. It is a necessary evil, an expense incidental to the organization of civilized life, like house-rent, or the wages of domestics, and as such, should be met in the common-sense way. The actual necessary outlay, for the protection of persons and property, should be ascertained, and the amount levied upon the community seeking that protection, in a manner to lay the burden proportionably upon each individual. All the persons in a community look, in about an equal degree, to the government for security in person; for protection in life and limb against all aggressors whatsoever. It is, therefore, apparently reasonable, that every member

should contribute something to that purpose. In addition to this object, a portion of the public require security for property, and protection against those who would deprive them of it. In this latter object, a large portion of the community is not directly interested, or only in a very limited degree. True, all are interested in making the reward of industry secure, but it is not until a man has acquired property, that he becomes dependent upon the government protection for security in its enjoyment. Hence, the holders of property having a double demand upon the government — for security in property as well as person — are bound to pay doubly for its support.

The problem is to apportion and collect the required sum from each person in the cheapest and most prompt manner, so that the money may be applied as directly as possible to the purposes for which it is collected, and that the mode of its collection should not interfere, in the least degree, with the ordinary business of the country, and the interchange of its products.

The system of indirect taxation is comparatively of modern date, and it became a favorite with governments, from the facility with which money could be raised thereby, without exciting discontent. In former ages, when taxes were demanded directly from each citizen, the government was restricted in its expenditure, through the difficulty of collecting large sums from the people, and exposed to dangerous revolts, through the insolence and extortion of its agents. Had the wants of government been moderate,

and the direct collections conducted in a judicious manner, there is but little doubt but that much of that great inequality in condition, which now exists, would have been avoided; because wealth would have been obliged to pay its full share of the burdens of state, and industry, having the full enjoyment of its reward, would never have been so depressed as, of late years, it has become under indirect taxes. The substitution of these, threw upon labor the whole burden of the government expenses, and by making property comparatively exempt, enabled it to accumulate with greater rapidity, in fewer hands, and checked its acquirement by those whose only capital was their labor, and whose only income, its wages.

The operation of indirect taxes falls almost altogether on the laboring class, because taxes form part of the cost of every necessary purchased with the proceeds of their industry. The condition of Great Britain is a remarkable evidence of the evil of indirect taxes. The working many have, for centuries, discharged the national expenditure, and the wealthy few have not only been comparatively exempt from taxes, but, to a considerable extent, they have been the recipients of those paid by others. Had a just system of taxation been in operation at the close of the eighteenth century, Great Britain would never have spent years and much blood and treasure in European wars, in which the people had no real interest. As long as the wealthy classes were, however, to derive all the honor and profit, and the laboring portion to pay all the expense, there was no thought

of peace. The expenses of those wars vastly increased taxation, which only served to drain more rapidly the wealth of the country, created by the many, into the hands of the few. The moment peace was declared, direct taxes on property were abandoned, and indirect taxes on labor continued, for the discharge, not only of the current expenditure, but the enormous debts contracted for the wars.

The result has been, "vast mountains of wealth and deep valleys of poverty." Thirty years of this operation reached the "limits of indirect taxation," and produced a necessity for a return to direct taxes upon property and a remission of those upon labor. The government, in 1842, declared that the limits of indirect taxation had been reached, and that henceforth revenue must be raised from property, and the income tax was levied. The minister presented his plan in five schedules. The first comprised the rent of land, houses, tithes, railways, canals, mines, and iron-works; the next, the amount assessed on occupiers of land; the third, public funds and stocks; the fourth, profits of trades and professions; the fifth, income of public officers. The result was highly satisfactory, for it was found absolutely necessary to release labor from its burden and impose it upon wealth. McCulloch, and other distinguished writers, object to an income tax because "it lessens the means of employing labor." This idea rests on a fallacy. No man employs labor because he has an income. On the other hand, the largest incomes have been derived from the most extensive employment of labor, or, in other words, the most successful employment

of the wealth created by others. Many Eastern manufacturers, of inordinate wealth, acquired it by employing numbers of hands, and paying them far less than the value of their labor. If one such person, who derives $50,000 per annum from the labor of others, should be taxed $1,500, would he therefore discharge the hands that earn him that sum? It has resulted from the manufacturing indirect tax system that a very large class of the English people are dependent employers, while in the United States, as yet, the majority are independent producers, who pay not only the expense of government in indirect taxes, but are also made by that system tributary to manufactures, to an extent vastly greater than the amount paid to government. This process is rapidly producing great wealth on the one side and extreme poverty on the other.

The example of England has shown, that the ultimate tendency of indirect taxes is ruin to the many, and that direct taxes must be resorted to in the end. Wisdom would therefore dictate that the true principle should be adopted before universal distress compels it.

A well regulated legacy duty would, in time, become the most fruitful source of revenue to the government, and one which, while partaking of the nature of an indirect tax, would in no way interfere with business, or the operations of trade. There can be no more legitimate object of taxation than property which, under the protection of government, has gone on to accumulate from year to year in the hands of an individual, and passes, at his decease, into the

possession of another, who has done nothing to earn it, and into whose hands it falls by the death of the testator and the operation of law. Without good government, stable laws, and just administration, property would be very precarious in its descent, and it is, therefore, just that that property should pay its proportion of the cost of the government. We select one, among many eminent examples. Mr. Astor, of New York, by great enterprise, perseverance, and skill, through a long life, amassed a vast fortune, estimated, let us say, at $30,000,000. That fortune has been attained by a foreigner by birth, under the protection of the United States laws, and the action of congress has more than once been solicited to shield him from injuries to which his vast and praisworthy commercial operations have, from time to time, been exposed. Yet under a system of indirect taxes, Mr. Astor contributed no more to the support of the federal government than the laboring man, whose utmost exertions have not enabled him to accumulate a dollar. When the laboring man dies, he leaves nothing, and has no occasion for the protection of the law. When, in the course of nature, the vast Astor property descends to heirs, the operation of law and the protective influences of government are required to insure the passage of the property to its proper destination, and to secure to the heirs its full enjoyment. Hence, the property in its passage should be charged with a reasonable duty or tax, for the benefit of the government, in order to relieve the shoulders of those, without property, from taxes, and to remove obstacles in the way of trade. It is also

reasonable that fortunes accumulated in commerce, for the protection of which a navy is supported at vast expense, should pay their proportion. A tax of this nature can be no burden upon the recipient of a legacy. The amount received is, in any event, a gratuity. When a prize is drawn in a lottery, it is customary to deduct a percentage, usually a large one, yet the winner of a prize was never known to complain on that account. Nor does that circumstance retard the purchase of a ticket. When property passes to a widow, or descends to children, it is less in the nature of a prize, and the duty would admit of gradation. A tax of this nature, applicable alike to real and personal property, would probably produce $20,000,000 per annum, and be subject to annual augmentation. But we cannot go into the details of the operation of the several taxes, the space to which the author is limited not warranting discussion upon a subject so prolific.

Indirect taxes are a wasteful and injurious mode of levying an income tax, because they tax every article consumed by persons and families, and by so doing diminish incomes; that is to say, they make every article bought, dearer than it otherwise would be. By this operation, they compel each person to pay about four times as much as the government gets. The great disadvantage of indirect taxation, is not so much the amount actually paid by the consumers of taxed goods, great though it be, as the diminution it occasions to their revenue, by depressing prices. In this country the leading productions are agricultural, and they far exceed the wants of the people of the

United States. Whatever tends, therefore, to circumscribe the foreign market, contributes to glut those at home, and thus prices are depressed. The tendencies of the whole world are to freedom of intercourse, through the growing convictions of the public mind; that by such means alone can the prosperity of a whole people be promoted.

In conclusion, it must be clear to every Granger, that the property of a country must contribute to the support of its government. You have declared, as a fundamental article of your political creed, that contributions for that object should be levied upon all property of every kind, equally, and uniformly. Consider to what result an exception to this rule would lead. Suppose government enact a law exempting all property in land and houses from taxation, and it comes to pass that one-fourth of the inhabitants own all the land and houses that the country contains. Here we have a select society of nabobs, the absolute lords of the land, and the appurtenances thereof, supported in their feudal grandeur by a government which subsists upon the labor and earnings of a population which its policy condemns to perpetual slavery. Perhaps the professional politicians, with their "perfected organization," may tell the Granger how to cypher out the exact quantity of Democratic equality there would be in such an exemplification of the favorite policy of the professional politicians and their pet "perfected organization." Then carry the illustration to the property that consists in government bonds. If all the property owned by three-fourths of the inhabitants be represented by

$2,000, and all the property owned by the other one-fourth consisting in government bonds be represented by the same amount, the policy of the professional politicians of exempting the property of the latter from sharing equally with that of the former in the burden of government shall seize the whole estates of the three-fourths, and turn them over to the one-fourth, to pay a debt which justice and equity can only regard as a burden upon all alike, to be shared equally by all. This is the unavoidable result of the declaration made by the "perfected organization" of the professional politicians, that property consisting in government bonds should be made an exception to the rule; that the burdens of goverment should be borne by property of every kind equally and uniformly; that there should be no discriminations against, the many and in favor of the few.

Equally pernicious to the country at large is that system of subsidies and grants, whether of lands money, or privileges, by which are created and fostered into overgrown proportions those gigantic monopolies, which in their turn become powerful enough to corrupt and rule the government Let us have no more of it, but let the people's land be for the people's use — the people's money for the people's service. More dangerous than all, are the centralizing tendencies of the times. We can endure, if we must, unequal tariffs and oppressive taxation; we can bear a considerable amount of corruption; but these strides toward imperialism, if not arrested, may end in our ruin. Are the Grangers aware how the overshadowing power and presence of a great central

government is absorbing into itself the rights of states, the freedom of municipalities, and the individualities of citizens? Once the states chartered their own banking institutions; now the government indirectly taxes them out of existence, and puts in their places agencies of its own. It seizes the sword and the purse of the nation. We hear of the design of making the government general educator, taking this office from the state and school districts; and again, of taking the telegraphs and, perhaps, the expresses under its charge, giving its officers a perfect system of espionage over the business and social life of the people. The party in power will never arrest these tendencies.

Add to these, and other abuses, the artificial and oppressive system of raising the revenue, under which the burdens are unequally and unjustly distributed, the rich favored at the expense of the poor, some pursuits ruined that others may reap golden harvests. If we must have a tariff, let it be for revenue and not for protection, and as little of it as possible at that — keeping always in view the greatest good to the greatest number.

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