Popular Science Monthly/Volume 48/December 1895/Principles of Taxation: US Government II

by David Ames Wells

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THE

POPULAR SCIENCE

MONTHLY.

 

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DECEMBER, 1895.

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PRINCIPLES OF TAXATION.

By DAVID A. WELLS, LL.D., D. C. L.,

CORRESPONDANT DE L'INSTITUT DE FRANCE, ETC.

I.—THE COMPARATIVELY RECENT TAX EXPERIENCES OF THE FEDERAL GOVERNMENT OF THE UNITED STATES.

BEFORE passing to the detailed consideration under proper and consecutive subdivisions of the above subject, the writer thinks it expedient to outline briefly the exceptional circumstances under which his studies and investigations have been prosecuted; inasmuch, as apart from any expectation of consequent intelligent criticism on his conclusions, a somewhat personal narration may help to a better popular understanding of a great chapter in the nation's fiscal experience, which, although without a parallel in all history, has thus far received scant notice and little appreciation on the part of economic writers and historians.

His first connection with economic and fiscal questions of public import was through the publication, at the darkest financial period of the war—1864—of the results of an inquiry into the resources and prospective debt-paying ability of the United States, and bearing the title of Our Burden and Our Strength. This essay, although first printed privately, was reprinted and circulated by the Loyal Publication Society of New York, and, receiving the approbation of the Government, became one of the current publications of the war period. Reprinted in different sections of the country by loyal citizens, and also in repeated instances in England, translated into French and German, it attained a very large circulation; in excess of two hundred thousand copies. Coming also at a period when the nation was beginning to be alarmed at the magnitude and prospective increase of its public debt, and apprehensive of an impending crushing burden of taxation, its publication and circulation was instrumental in restoring public confidence and maintaining the credit of the Government.

The attention of President Lincoln having been attracted to this publication, be invited the author in early February, 1865, to come to Washington and confer with him and Mr. Fessenden, then Secretary of the Treasury, on the best methods of dealing, after the termination of the war (then evidently near at hand), with the enormous debt and burden of taxation that the war had entailed upon the nation.^[1] The result of this conference was, that an amendment was added, at the last hours of the Thirty-eighth Congress, to a bill "To provide Internal Revenue," and passed March 3, 1865, authorizing the Secretary of the Treasury "to appoint a commission of three persons to inquire and report at the earliest practical moment on the subject of raising by taxation such revenue as may be necessary to supply the wants of the Government, having regard to and including the sources from which such revenue should be drawn, and the best and most effectual mode of raising the same." The commission was further empowered "to inquire into the present and best methods of collecting the revenue," and to take testimony. Of this commission the writer was, unexpectedly to himself, appointed chairman by the then Secretary of the Treasury—Hon. Hugh McCulloch—after the assassination of the President, but in accordance with his previously indicated wishes,^[2] It was also deemed expedient that, of the other members, one should be a representative of the agricultural interests of the West, and the third a citizen of Pennsylvania, the chairman being at the time a citizen of New York; and in accordance with this view Mr. S. S. Hayes, who had distinguished himself as Comptroller of Chicago, and Mr. Stephen Colwell, of Philadelphia, a gentleman of advanced age, and a successful manufacturer of iron, who had written some years before the war an able book entitled Ways and Means of Payment, a Full Analysis of the Credit System, were selected. A word of retrospection is here essential to an understanding of the situation.

If it be an axiom in political and social as well as physical and natural science, that the first requisite for progress consists in the correct observation and recording of phenomena, whereby old laws or principles may be verified or extended and new ones discovered, it would be difficult to imagine a field more fruitful for investigation and more promising of reward than the financial and industrial experiences of the United States immediately anterior and subsequent to the outbreak of the civil war—experiences which had truly the character of vast social and political experiments, made on a scale of magnitude rarely if ever before equaled; for the most part emphatically tentative in character, and affecting in their results not only the growth, the income, and the industrial pursuits of the nation directly and immediately concerned, but also in a greater or less degree the trade and commerce of the whole world.

At the breaking out of the civil war in 1861, the United States was in the anomalous position of a great nation practically unencumbered with a national or public debt. Excise, stamp, income, license, and direct or general property taxes under the Federal Government were absolutely unknown; the expenses of a simple and economical administration being defrayed almost entirely by indirect taxes, levied in the form of a tariff on the importation of foreign products or merchandise. In fact, the only other noticeable source of national revenue was from the sale of public lands, which, at a maximum price fixed by law of one dollar and a quarter per acre, returned to the Treasury an average income of from one to three millions of dollars per annum; rising in a few instances, during periods of wild speculation to six, fourteen, and in one exceptional year (1836) to even twenty-four millions of dollars.

The average rate of duties imposed on the aggregate value of foreign importations during the thirty years immediately preceding 1860 was about twenty per cent; but for a portion of the time the annual rate was much less, and for a number of years—1834, to 1843 and 1858 to 1861 inclusive—it was not in excess of fifteen per cent.

But notwithstanding these limitations on the sources and amount of income, the requirements of the national Government for all purposes were so moderate that the receipts of its Treasury continually tended to exceed its disbursements; and the difficulty which most frequently presented itself to its financial administrators, was not the customary one in all other countries, of how to avoid an annual deficit, but rather how to manage to escape an inconvenient but inevitable surplus. And it is a curious fact, and one perhaps altogether unprecedented and almost unrecognized in history, that from the years 1837 to 1857 there was rarely a single fiscal year, in which the unexpended balance in the national Treasury—derived from a few sources—at the end of the year, was not in excess of one half of the total expenditure of the preceding year.^[3]

To provide for the use, or rather to get rid of a continual surplus, various plans were from time to time suggested. In one instance the House of Representatives, on motion of Henry Clay (the leading statesman of his day), seriously considered the question of the expediency of the national Government becoming by purchase and investment a partner in various stock corporations or enterprises; and pending any conclusion the surplus funds were deposited in the local or small State banks, with reiterated injunctions "to loan liberally to merchants."

In 1836, the unexpended cash balance in the Treasury of the United States reported as available for public purposes, being $65,723,959—$46,001,467 of which was on deposit in ninety-one different State banks—Congress (by act of June 23d of that year) appropriated the sum of $37,468,859 for distribution among the States; of which $27,063,430 was officially certified in September, 1837, as having been actually paid. Most of the States applied the amount apportioned to them for educational purposes. Others used it differently and less wisely: Massachusetts, for example, dividing her share proportionally among her towns and cities, where it was expended at the discretion of the local authorities; in one instance, in a small fishing town, for the construction of walks on the sands for the benefit of pedestrians; and in others for the purchase of houses and lands for the use and settlement of the town's poor.

As might have been expected under such circumstances, fiscal and economic subjects were during the period under consideration, those that least of all attracted the attention of the American people. Few books or essays on such topics were either written or read, while the continually increasing agitation and interest respecting the existence or extension of negro slavery furnished the never-ending and predominant theme for discussion alike to the press, the politicians, the pulpit, Congress, and the local legislatures. There had been, indeed, fierce discussions and political divisions in 1836-'38 respecting the organization and management of banks, and the establishment of a national bank; and in 1840-'41 and 1846, respecting the construction and adjustment of the tariff, and the principles of free trade and protection. But during the decade from 1850 to 1860 all of these questions were generally regarded as old-time issues, and by the generation that then had control of the business and government of the country were both substantially ignored and forgotten; and it was during the latter years of this period, or from 1851 to 1860, that the comparative growth and progress attained by every department of American trade, commerce, and industry was greater than for any corresponding period either before or since, in the history of the nation. During the same decade the increase in population of the country was returned at 35·59 per cent, its increase in wealth at 126·4 per cent, and the average of property to each individual at $510. In short, it would be difficult to find a more happy illustration of the influence of the "noninterference" or "nonobstructive" policy of a government with the trade, commerce, and industry of a highly civilized and active people, than the condition of the United States at that time afforded.

That the country, viewed from a politico-economic standpoint, was at this time in all respects what it should or might have been, is not, however, asserted. The institution of slavery, denying to over four millions of human beings the freedom of the person, the right to real property, and the blessings of education, was tolerated and supported by law. The paper and ordinary currency of the country, neglected by the General Government, and issued by local banks under almost as many different systems as there were States in the Union, was as defective as could be well imagined, and often necessitated a rate of exchange between the different sections of the country which was equal to or in excess of the current rates of interest at the principal commercial centers.

But notwithstanding these drawbacks the people in general were highly prosperous. Pauperism, apart from the large cities, was almost unknown; wealth was very equitably distributed; while the opportunities for elementary education were free, and in all the more densely populated portions of the country amply provided. In short, the prosperity of the people was so great, through the utilization of their natural resources, their activity, and the continued influx of the population and capital of other countries, that it constituted in itself an obstacle to reform; and the nation at large may be said to have actually preferred to endure the various economic and social evils incident to their situation rather than devote time to their consideration and meet the grave political issues consequent upon any change or reformation. What would have happened? what would have been the economic and social condition of the United States, had not the people of its southern section appealed to the arbitrament of the sword in the matter of slavery and consented to its peaceful abolition,^[4] constitutes a most curious and interesting theme for speculation. Certainly it would have been something without precedent in the world's former experience.

It was with such antecedents and under such conditions, that the nation found itself in the early months of 1861 suddenly and unexpectedly involved in a gigantic civil war, in which its very existence was threatened by the uprising of at least a third of its population against the legitimate and regularly constituted Government. The most urgent and important requirement of the Federal Government at the outset was revenue. Men in excess of any immediate necessity volunteered for service in the army, but to equip and supply even such as were needed precipitated an avalanche of expenditure upon the Treasury. To meet these financial requirements there was on the part of the Government neither money, credit, nor any adequate system of raising revenue by taxation; the previous reliable supply of revenue from the customs having at the most critical period, through the diminution of imports consequent upon the political disturbances, become subject to a serious and ominous impairment; while the money returns from all sources, other than loans, for the year 1862 were only $2,867,057. For this latter year the total ordinary receipts of revenue of the Government were but $51,919,000, and its expenditures $456,379,000.

At the outset it was assumed that the war would be short, and that the expenditures of the Government could be met by the agency of loans and an issue of paper money, the detailed history of which, although not yet familiar to the American public, is not directly pertinent to the subject under consideration, and would require a separate essay for its presentation in any degree of fullness. All direct or internal taxation was accordingly for a time avoided; there having been apparently an apprehension on the part of Congress that inasmuch as the people had never been accustomed to it, and as all machinery for assessment and collection was wholly wanting, its adoption would create popular discontent, and thereby interfere with a vigorous prosecution of hostilities. Congress accordingly confined itself at first to the enactment of measures looking to an increase of revenue from the increase of indirect taxes upon imports, and it was not until four months after the actual outbreak of hostilities that a direct tax of twenty million dollars was apportioned among the States, and an income tax of three per cent on all incomes in excess of eight hundred dollars was authorized, the first being made to take effect practically eight and the second ten months after date of enactment. Such laws, of course, became operative in the loyal States only, and produced but comparatively little revenue; and although the sphere of taxation was soon extended, the aggregate receipts from all sources by the Government for the third year of the war—from excise, income, stamps, and all other internal and direct taxes was less than forty million dollars, and that too at a time when the expenditures were in excess of sixty million dollars per month, or at the rate of more than seven hundred million dollars per annum. And as showing how novel was this whole system of direct and internal taxation to the people, and how completely the Government officials were lacking in all experience in respect to it, the following incident may be cited: The Secretary of the Treasury in his report for 1863 stated that with a view of determining his resources he had employed a very competent person, with the aid of practical men, to estimate the probable amount of revenue to be derived from each department of internal taxation for the current year. The estimate arrived at was eighty-five million dollars, but the actual receipts were less than forty million—$37,640,787.

The people of the loyal States were, however, more determined and earnest in respect to this matter of taxation and revenue than were their rulers, and everywhere the one opinion expressed was, that taxation in all its forms should immediately, and to the largest extent, be made effective and imperative. And Congress, spurred up by and rightfully relying on public sentiment to sustain its action, at last resolutely took up the matter, and devised, or rather drifted into, a system of internal taxation which for its universality and peculiarities has no parallel in anything which had theretofore been recorded in civil history, or is likely to be thereafter.

The great necessity of the situation was revenue, and to obtain it speedily and in large amounts through taxation was the only principle recognized (if it can be called a principle), and was akin to that recommended to the traditionary Irishman on his first visit to Donnybrook Fair: "Wherever you see a head, hit it!" "Wherever you find an article, a product, a trade, a profession, a sale, or a source of income, tax it! And so an edict went forth to this effect, and the people cheerfully submitted. Incomes under five thousand dollars were taxed five per cent, with an exemption of five hundred dollars and house rent actually paid. Incomes in excess of five thousand dollars and not in excess of ten thousand dollars were taxed two and a half per cent in addition, and incomes over ten thousand dollars, five per cent additional, without any allowance or exemptions whatever. Nearly every industrial product was taxed. Cotton was taxed at the rate of two cents per pound; salt, six cents per hundred pounds; tobacco, from fifteen to thirty-five cents per pound; cigars, from three to forty dollars per thousand; sugar, from two to three cents and a half per pound. Distilled spirits were taxed progressively; first at twenty cents, and finally at two dollars per proof gallon.

But the most curious and complex taxes were those imposed on the various products of what may be termed ordinary manufacturing industry—a tax, by intent or construction, being first imposed on the raw material, and then on the total or increased value, according to circumstances, of each successive stage of its elaboration up to the finished product. And, as if this was not enough, every manufacturer was compelled to take out an annual license, while the goods produced, if sold by dealers or agents independent of the manufacturers, were subject to an additional tax of one tenth of one per cent, reckoned upon the amount of sales. This tax upon manufactures and products, with the exception of a few articles, was at first fixed, in 1864, at an average of five per cent; but in 1865 the rate was increased twenty per cent, making the tax for most articles six per cent.

Under the operation of this system the Government actually levied and collected on many articles of finished industrial products a tax of six per cent, the effect of which may be thus illustrated: Many manufacturing establishments sold products annually to three times the amount of their invested capital. If the capital invested was one hundred thousand dollars and the sales three hundred thousand, the tax on that business was eighteen thousand dollars, or eighteen per cent on the cost of the establishment.

The sales of its products by a manufacturing establishment are, however, no indication of its profits. It may make and sell to the amount of a million dollars without making a dollar of profit, but that, under the law, was no reason for the nonassessment and noncollection of a tax of sixty thousand dollars on the value of the product represented by its sales.

Again, the effect of the tax on every stage of elaboration of a manufactured product may be illustrated by a great variety of actual examples. Thus, in the case of the manufacture of umbrellas and parasols, it was shown that separate taxes were paid, first, on-the sticks or supporting rods; then upon the handles, if carved or turned separately, of bone, wood, or ivory; then, in like manner, upon the brass runners, the tips, the ribs, the cloth composing the cover, the elastic band which fastened the cover when closed, the rubber of which the band was composed, the button to which it was attached; and finally upon the umbrella itself, when the separate parts were aggregated, and thereby converted into a finished product. And if any of the constituents of the umbrella—as the ivory, the silk, or the metal—were of foreign production, the same were subjected on coming into the country to an import duty in addition.

In the case of books and pamphlets, it was proved by the New York Publishers' Association that, including the license and income taxes, the finished book and its constituent materials paid from fifteen to twenty separate and distinct taxes before it came to the reader—the paper and its constituents, the cloth, the glue, the starch, the leather, the slaughtered animal whence the hide furnishing the leather was obtained, the dyes with which the cloth or leather was colored or stained, the thread, the gold leaf, the type metal, the type, and the printing machinery; and then, when the whole was combined, the finished book paid an additional tax of six per cent, which was levied not upon the cost of manufacture but upon the price at which the book was sold. In addition to all these taxes, the manufacturer or publisher paid for the privilege of doing business an annual license tax, and an income tax of from five to ten per cent on his profits, if he had any.

In short, it was as if a frontier line had been drawn about each individual article or product in the nation, across which nothing could pass without being submitted to an exaction.

Besides these taxes on manufactured products of the character specified, a tax of from three to six per cent was imposed on repairs when the value of the article repaired was increased by the reason of the repairs to the extent of ten per cent; and a further tax of six per cent on what was termed "increased values," or the additional value given to any article, which had either paid an import or internal tax, by being "polished, painted, varnished, waxed, gilded, oiled, electrotyped, galvanized, plated, framed, ground, pressed, colored, dyed, trimmed, or ornamented."

The examples of difficult and nice adjudication experienced in enforcing these two classes of taxes are so curious as to justify somewhat more than a passing notice. Thus, if a worker in tin or iron made a stove at one hour and in the next hour repaired a stove to the extent of more than ten per cent of its value, he paid on the product of his first hour's work a tax of six per cent, and on his second three per cent. In like manner, a blacksmith making a taxable article, and then repairing one exactly like it, was liable to the payment of the two classes of taxes; and the theory of the law, furthermore, was that both the tinsmith and the blacksmith kept a separate and distinct account of their different transactions. Again, if a worker in wood repaired a wheelbarrow worth one dollar, and by so doing added ten cents to its value, the increased value was taxable. But if, on the other hand, he repaired a carriage or pianoforte worth five hundred dollars, no tax accrued unless the value of the repairs exceeded ten per cent, or fifty dollars. The following absurd case was presented for adjudication under these statutes:

A wheelwright repaired a carriage to the extent of eight per cent. The owner then passed it successively to a blacksmith, a painter, and an upholsterer, neither of whom added repairs to the extent of ten per cent, or knew the value of previous repairs or the value of the carriage before it was repaired. The question then was, shall the repairs, however extensive, go untaxed, or shall the owner be taxed? The construction of the law was, that the tax must be assessed on the manufacturer, or persons receiving pay for the work, and that the owner could not be the manufacturer unless he furnished the materials, in whole or in part, for making the repairs; and then the further question arose, whether the subject of repair in the shape of the old carriage furnished by the owner was a material for making the repair, and thus constituted the owner a manufacturer, and as such liable to taxation.

In another case the question came up whether the publishers residing in one assessment district and having their books printed and bound by contract in another, were to be regarded as manufacturers of the books; or whether the printers and binders who executed the work were to be so regarded and taxed. And in two instances, in two contiguous districts in the State of Massachusetts, the law was interpreted in both ways, or in one way in one district and another way in another district; and the parties interested submitted rather than incur the trouble and expense of contesting the matter before the courts.

In fact, it is safe to say that no more complicated and absurd questions have ever seriously occupied the minds of educated men since the discussions of the schoolmen in the eleventh and twelfth centuries (as, for example, as to how many angels could stand at once on the point of a fine needle), than were evolved from the tax system of the United States during and for some time after the war period.

We have said that the people of the United States submitted to such a system. They did more. For such was the fervor of patriotism and the determination to push the war to a successful issue, that they rejoiced in it; and during the continuance of hostilities there was no movement or protest against the system which found any notable response among the masses. The country was rich, and its accumulated resources had not for two generations been subjected by either the national or state governments to extraordinary taxation. Wealth, moreover, was very uniformly distributed, and the people pointed with pride to the annually increasing receipts of revenue under the new system; which, starting with $41,000,000 of internal revenue in 1863, rose rapidly to $117,000,000 in 1864, $211,000,000 in 1865, and culminated in 1866 with the large sum of $310,000,000, making the total revenue for that year, drawn from all sources by so-called taxation, $559,000,000, the largest sum previously contributed in any one year for the support of any Government by the free consent of its people. So long, moreover, as the war lasted, the attempts to evade taxation by illicit methods were exceptional and in amount inconsiderable. The demand for most manufactured and agricultural products, owing to the enormous consumption of the armies and the withdrawal of labor from its accustomed vocations by enlistments, was fully equal to or in excess of supply. Prices rose rapidly with every increasing taxation or additional issues of paper money,^[5] and under such circumstances the fiscal requirements of the war were not regarded by the majority of producers as oppressive. But, on the contrary, counting the taxes as elements of cost and reckoning profit as a percentage of the whole cost, it was generally the case that the aggregate profits of the producer were actually enhanced by reason of the taxes, to an extent considerably greater than they would have been had no taxes whatever been collected. Indeed, it was not infrequently the case that the manufacturers themselves were the most strenuous advocates for continued and rapidly increasing taxation, with a view of realizing thereby, through an advance in prices, large additional profits on products, or constituents of products, previously assessed or imported at lower rates of (customs) duties, and to bring about such advances influence and money were used without scruple. Thus, in the case of distilled spirits, the taxation was advanced in successive years from twenty cents per gallon to sixty cents, next to a dollar and fifty cents, and finally to two dollars per gallon, and in each of these instances, and particularly after the imposition of the first two and lowest rates, the distillers and speculators reckoned, with a great degree of certainty, that a further large advance would be enacted, and that the new law would not be made retroactive or applicable to spirits distilled and assessed previously and at lower rates. In this they were not disappointed, for Congress, under the influences to which it was subjected, did virtually legislate in each instance in the manner expected, and thus gave occasion for the realization of profits in strict conformity with law by the holders of stocks made in anticipation of the several advances, which can not be estimated at a less aggregate than one hundred millions of dollars. Thus, the evidence before the United States Revenue Commission in 1865-'66 showed that there was on the 1st of January, 1864, a stock of tax-paid distilled spirits, made in anticipation of an increased tax, sufficient to meet all the requirements of the country for a period of six months, and on each gallon of this quantity, a profit or revenue, which did not accrue to the Government, of from sixty cents to a dollar and forty cents per gallon was realized. And yet, with this lesson of costly experience before it, the Fifty-third Congress, in advancing the tax on distilled spirits from ninety cents to a dollar and ten cents per gallon, afforded again such facilities to distillers and speculators, for anticipating such advance, as to legislate into their pockets at least ten millions of dollars.

In the case of cotton, which advanced mainly by reason of conditions affecting its production or distribution, it was shown by actual calculation, in respect to one manufacturing corporation in New England, that if they had at the commencement of the war burned their mills, lost their insurance, and sunk their capital other than was invested in cotton, and had subsequently sold their cotton at the highest price obtainable in place of manufacturing it, the result would have afforded to the stockholders an annuity of at least twelve per cent on their original investments.

How much the cost of the war and its expression in the form of debt, were unnecessarily increased by this state of affairs, has not until very recently been taken into account by writers on the fiscal history of this period, and probably can not be accurately estimated. But the following data throw great light on the subject: Thus, assuming the general average of prices in the loyal States of the Union before the war, or, more precisely, in 1860, at 100, the average from 1860 to 1865 was 186·71. But for the last year of the war, or in 1865, it was 216·81, and it was during this latter period of greatest increase in prices that the heaviest purchases were made by the Government on account of munitions and supplies. The increased cost of the war by reason of this increase in the price of commodities, which in turn may be in a great degree attributed to the use of irredeemable paper money invested with legal-tender quality, has been estimated^[6] at over a thousand millions of dollars, and the interest on this increased cost, another equal sum. By so much, furthermore, as these supplies and other necessaries of life were increased in price through the depreciation of the currency, those who rendered personal service in the army and navy were deprived of what ought to have been the purchasing power of the payments made to them by the Government for such service.

 

1. Mr. Lincoln opened the conference by remarking that, although the war was evidently drawing to a close, he feared that great difficulties were yet to be encountered through the possible unwillingness or inability of the nation to pay the war debt, or the great increase in taxation which the war had made necessary; and followed this remark by asking if the writer had anything to suggest on the subject. The offhand answer returned was, that the best thing to be done was to have an examination made by competent persons of the resources of the country and the best methods of making them available for meeting the expenses of the Government through taxation. Turning to the Secretary of the Treasury, Mr. Lincoln remarked: "That's a pretty good idea, Fessenden, isn't it? We'll think about it"; and as the hour (evening) was becoming late, the conference substantially soon ended.
2. I The appointment was unsolicited and unexpected, and Mr. Fessenden some years afterward stated that when the composition of the commission was under consideration Mr. Lincoln remarked that "he thought we had better let the young man who had suggested the idea of it be at the head of it."
3. During the decade from 1821 to 1831 the average ordinary annual expenditures of the United States were $12,390,000, or at the rate of %l.07 per capita of its whole population.
   From 1831 to 1841, $24,740,000, or $1.61 per capita.
   From 1841 to 1851, $33,760,000, or $1.63 per capita.
   From 1851 to 1861, $57,870,000, or $2.06 per capita.
   
   

   For the year 1894 the total expenditures of the Federal Government, as officially reported, were $442,605,758, or $6.08 per capita of the entire population of the country; or $4.50 less expenditure for pensions.

4. Subsequent events have made it clear that with the continuance of slavery the development of the nation must have been greatly retarded.
5. Among the absurd theories put forth in justification of an extravagant issue of (irredeemable) paper money was a favorite one, that such a policy was a matter of necessity to make money easy, in order that the securities (bonds) representing Government loans should be easily floated; the one uppermost idea in the heads of the Government officials having been, apparently, that in the floating thus contrived, the bonds alone would possess the property of buoyaney. But in this they were mistaken. The bonds indeed floated, but everything else floated with them; or, to borrow the language of a writer of the period (who criticised this experience from the humorous point of view), "the bonds were floated, but by just about the same operation as that by which things are floated in the suburbs of a town or city submerged in a heavy freshet—hencoops floated, cellars floated, streets floated, barge houses and outhouses floated, stray children and first floors floated, all creation floated and floated together." The market for five-twenties was made easy, the market for flour, beef, cotton, and military stores, of which the Government was compelled to purchase immense quantities, was made particularly easy. The whole country was put under water and remained so for a considerable period after the war terminated.
6. Edward Atkinson.