Reduction were now made in the taxes on several hundred articles of manufacture, on savings banks, on the gross receipts of certain corporations; and the income tax was in some degree mitigated.
The total reductions were estimated at $75,684,000, but an increase was proposed on raw cotton amounting to nearly one-third of this sum.
Prolonged discussion arose over this tax and resulted in a disagreement between the two Houses.

The bill was finally perfected in a conference committee and ended by reducing the total internal revenue to $265,920,474 per annum--with all allowance made for the growth of the country and the elasticity of Government receipts.
Not satisfied with the large reduction of taxes made at the first session after the close of the war, Congress resumed the subject at the second session.

Early in February, 1867, Mr.Morrill, from the Committee of Ways and Means, reported a bill for the further reduction of taxes, which became a law on the 2d of March.

The taxes removed were returning a yearly revenue of more than $36,000,000 to the National Treasury.

The principal reductions were $19,500,000 from the income tax; $4,000,000 from clothing; $3,500,000 from woolens; $3,250,000 from leather; $1,000,000 from engines; $600,000 from sugar-refiners; $600,000 from tinware; $500,000 from castings; $500,000 from doors, sashes and blinds; with many others yielding less sums.
All these formed a part of what were termed war taxes, and the steady purpose of Congress was to remove them as rapidly as the obligations of the Treasury would permit.