December coin had reached a premium of only about 20 per cent, although it had already become apparent that the commerce of the country was threatened with permanent suspension by reason of the conduct of neutral nations, and that the necessary result must be the exhaustion of our specie reserve. Wheat, in the beginning of the year 1862, was selling at $1.30 per bushel, not exceeding, therefore, its average price in time of peace. The other agricultural products of the country were at similar moderate rates, thus indicating that there was no excess of circulation, and that the rate of premium on specie was heightened by the exceptional causes which tended to its exhaustion without the possibility of renewing the supply.
This review of the policy of your predecessors is given in justice to them, and it exhibits the condition of the finances at the date when the permanent Government was organized.
In the meantime the popular aversion to internal taxation by the General Government had influenced the legislation of the several States, and in only three of them, South Carolina, Mississippi, and Texas, were the taxes actually collected from the people. The quotas devolving upon the remaining States had been raised by the issue of bonds and State Treasury notes, and the public debt of the country was thus actually increased instead of being diminished by the taxation imposed by Congress.
Neither at the first nor second session of the present Congress were means provided by taxation for maintaining the Government, the legislation being confined to authorizing further sales of bonds and issues of Treasury notes. Although repeated efforts were made to frame a proper system of taxation, you were confronted with an obstacle which did not exist for your predecessors, and which created grave embarrassment in devising any scheme of taxation. About two-thirds of the entire taxable property of the Confederate States consists of lands and slaves. The general power of taxation vested in Congress by the Provisional Constitution (which was to be only temporary in its operation) was not restricted by any other condition than that "all duties, imposts, and excises should be uniform throughout the States of the Confederacy." But the permanent Constitution, sanctioning the principle that taxation and representation ought to rest on the same basis, specially provides that "representatives and direct taxes