upon tobacco in its various
forms and upon distilled spirits and fermented liquors, and except also
the special tax upon the manufacturers of and dealers in such articles.
The retention of the latter tax is desirable as affording the officers
of the Government a proper supervision of these articles for the
prevention of fraud. I agree with the Secretary of the Treasury that the
law imposing a stamp tax upon matches, proprietary articles, playing
cards, checks, and drafts may with propriety be repealed, and the law
also by which banks and bankers are assessed upon their capital and
deposits. There seems to be a general sentiment in favor of this course.

In the present condition of our revenues the tax upon deposits is
especially unjust. It was never imposed in this country until it was
demanded by the necessities of war, and was never exacted, I believe, in
any other country even in its greatest exigencies. Banks are required to
secure their circulation by pledging with the Treasurer of the United
States bonds of the General Government. The interest upon these bonds,
which at the time when the tax was imposed was 6 per cent, is now in
most instances 3-1/2 per cent. Besides, the entire circulation was
originally limited by law and no increase was allowable. When the
existing banks had practically a monopoly of the business, there was
force in the suggestion that for the franchise to the favored grantees
the Government might very properly exact a tax on circulation; but for
years the system has been free and the amount of circulation regulated
by the public demand.

The retention of this tax has been suggested as a means of reimbursing
the Government for the expense of printing and furnishing the
circulating notes. If the tax should be repealed, it would certainly
seem proper to require the national banks to pay the amount of such
expense to the Comptroller of the Currency.

It is perhaps doubtful whether the immediate reduction of the rate of
taxation upon liquors and tobacco is advisable, especially in view of
the drain upon the Treasury which must attend the payment of arrears of
pensions. A comparison, however, of the amount of taxes collected under
the varying rates of taxation which have at different times prevailed
suggests the intimation that some reduction may soon be made without
material diminution of the revenue.

The tariff laws also need revision; but, that a due regard may be paid
to the conflicting int