'GIBSON -PEACOCK. Editor. .
VOLUME XXIL---N0.'207;
REPORT
SEORETARY OF THE TREASURY
Ticeaseny DEPARTMENT, December 1, 1868.
In compliance with the requirements of law, the
Secretary of the Treasury has the honor to make
to Congress the following report:
In his former communications, the Secretary"
bus expressed so fully his views upon the great
+subjects of the currency, the revenues and the
public debt, that it may be thoughtequite-‘anne
'cease*. for him again to press them upon the
attention ot COngress. These subjects, however.,
have lost none of their Importance; on the con
trary, the public mind during the past year has
been turned to their consideration with more
ribeorbing interest than at any , former period.
The Secretary will, therefore, he trusts, be pare
doted.lot restating route of the views heretofore
presented by blur. ' • •
lf,lheri . la any qutellinfin finance or
.ptilltieal
economy which can be pronounced settled by ar
ettmeat and trial, it is that inconvertible and do
_ Predate(' PaPer rieolleY iniarlous to public and
private interests, a positive political teed titan •
elni evil, for which there can be but one lust Ple
a; lion or excuse, to' wit: a temporary necessity
arising. from an unexpected and greasing emer
gency; and it followe consequentiy, that such' a
circulation should only be tolerated untlimithont
a financial shock, it can be withdrawn or matte
convertible into specie. If an irredeemable bank
note circulation is an evidence of:bankrupt or I
badly managed banking institutions, which should '
lief deprived of their franebizes, or compelled to
husband and make AVAllable their resources in
order that tbey may be prepared at the earliest
-day precticabie to take up their dishonored obit
valour., why ehoulde not an irredeeinsale
Government currency be regarded as .le:vidence
-of bad management of the national fitiMees If
not of national bankruptcy?., And why should
met itch wise and equal revenue laws be enacted,
and } uch economy the use of the public "won
-eye be enforced, as will enable the Goiernment
-either judiciously to fund or promptly to redeem
' dis broken promises? The United State& notes,
--although declared bylaw-to be lawful moomere,
nevertheicss, a dishonored and disreputable car
reney. , The fact that they are a legal tendeepos
-seseleg such attributes of money as the statute
•can give them adds nothing to their real value,
1
but makea them all
the more dishonorable to the
-Government and_subversive of good morals. The
people are compelled to take as money what
is rot money; and becoming demoralized
be - it* -coustantlye changing ---,Mae, they
-die in danger of leen that sense of
honor in their de eliugs with the Govern
ment and with each other which Ls neeeeary for
the well being of veciety. It Is vain to expect on
the part of the people .a faithful fulfilment of
their duties to the Government as loug as the
'Government is faithicas to its own obligations;
nor will those who do not hesitate to defraud the'
public revenues long continuo to be scrupulous
in their private business. Justifiable and neces
eareeas the-Meesare was then regarded, it is new
apparent that an unfortunate step was taken
when Irredeemable promises were issued as law
ful money; and especially when they were made
a 'valid tener in payment of debts contracted
'when speele_wee the legal as well as the eons
. mextial -standard value. - The legal-tender
notes enabled debtors, to pay their debts In a cur
rency largely inferior to that which was atone
recognized as money at the time thee. were
incurred, and thus the validity of con
tracts was virtually impaired. If all
creditors had berm compelled by law to pay into
the public treasury fifty per cent or ten per mat e
or, indetele any portion of the amounts received
by theta from their debtors, such a law would
have been condemned as unequal and unjust; and
yet the effect of It would have been to lessen, to
the extent of the receipts from this source, the
necessity for other kinds of taxation, and thus to
relieve in some measure the class unjustly, be•
rause unequally, taxed. By the legal-tender acts
a portion of the property of one class of citizens
was virtually confiscated for the benefit of
another, without an increase thereby of the pub
lic revenues, and, consequently, without any
compensation to the injured clam. There can
be no doubt that these acts have tended to blunt
and deaden the public conscience, nor that they
are chargeable, in no small degree, with the de
moralization which so generally prevails. •
The economical objections to these notes as
lawful money—stated at length in previous re
ports of the Secretary—may be thus briefly re
stated. They increased immensely the cost of
the war, and they have added large to the ex
penses of the Government since the restoration
of peace; they have caused instability in prices,
uneteadiness in trade, and put a check upon judi
cious enterprises; they have driven specie from
circulation and made it merchandise; they have
sent to foreign countries the product of our
mines, at the same time that our European debt
has been steadily increasing, and has now reached
such magnitude as tube a heavy drain upon the
national resources and a Bedews obstacle in the
way of a return to specie payments; they
have shaken the public credit by rais
ing daegerons questions A in regard to the pay
ment of the,public debt; In connection with high
taxes, (to the necessity for which they have
largely • contributed,) they are preventing ship
building, and thereby the restoration of the com
merce which was destroyed by the war; they are
AU excuse; for (if indeed they do not necessitate)
protective tariffs, and yet Dal, by their 'fluctua
ting value, to protect the American manufacturer
against his foreign competitor; they are filling
the coffers of the rich, but, by reason of the high
prices which they create and sustain, they are
almost intolerable to persons of limited incomes.
The language of one of the greatest men of mod
ern times, so often, but not too often, quoted, is
none too.stronglaite deseriptlone of the injust
ice and the evils of an inconvertible currency.
"Of all the contrivances for cheating the labor
- ing classes of mankind, none has been more effee
tuft' than that which deludes them with, paper
money. Ordinary tyranny, oppression, excels
slue taxation—theae bear lightly on the happiness
of the mass of the - community compared with a
fraudulent currency.ard the robberies committed
by deprecieted romper. Onr own history has ,re
corded for our instruction enough and more than
- enough of the destioralizingtendency, the injus
tice, and the littolerablifeppreesion, on the virtu
out: and well-disposed, of a degraded paper cur
rency authorized or in any way countenanced by
Government." , ,
Theexperlance of all nations.that have tried the
experiment of Inconvertible paper ,money, has
proved the truth of the eloquent words of
_3O.
Webster. If our country Is, in a measure, pros
perces with such an incubus upon It,it is because
it is to magnificent in extent, so 'diversified In
dtma o, so rich in soil, so abundant in minerals,
with a people so fall of energy, that oven a de
based currency can only retard but not put astop
to Its progress.
The Secretary still adheres'. to the oulnion so
frequently expressed by him, that a reduction of
the paper , circulation of the country until It ap
preciated to the specie atandard was the true so
lution of our financial problem. Bat as this policy
was emphatically condemned by Congress, and
it Is now too late to'return to it, be recommends
the following measures as the next beat calcu
lated to effect the desired result.;
Agreements for the payment 'of coin seem to
be the only ones not contrary to good morals,
the performance of which cannot •be - enforced in
the courts. " Coin contracts" executed , before
the passage of the legal-tender acts, as'well as
those executed since, are satisfied in all the States
except California by the payment of the amounts
veiled for, in depreciated notes. This shackle
upon commercei this check upon our national
progress, this restriction upon individual rihts,
•
should no longer be continued. If it be admitted
;'that the condition of, tho country during the war,
and for a time after its close, created a necessity
for, laws and decisions malting promissold , notes
(fluctuating in value according to the
result—of - battles -and of - !,speculative
combinations) the-- medium , in which
• _contracta_should_be_dischargedrthis-nocasslty-tio
longer exists. Steps should •now be falcon to
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OP TOE
executed In coin should at once be legalized.
Perhaps no law could be peened which woultb be
productive of better results with so little private
or, public inconvenience.- Stich it law - would
simply enable the citizen to do what the Gov
ethment %doing. in its receipts for customie and
in, the payment of :its bonded debtrite-would
merely authorize the enforement of '.contracts
voluntarily entered futoir - actordieg to, the,
letter: The, effect, of such W•laW would
be ' 'check "the outflow- of. specie aired° to
other countriea- by • clvatlag - a necessity
far the use of It at home; to encourage enter
prises extendinglpto the future, by removing ail
uncertainty in regard to , the, value of thecurrency
with which they arc to be carried on. Such a
law would remove a formidable embarrassment
in our foreign trade, would familiarize our people
againevith specie as the staudard of ,value, and
ehow low groundless ,la the apprehension so
generally existing . , that &withdrawal, of depre
ciated Metes or the apprceirstion of these' notes to
par, would produce a scarcity of money, by
proving that epeelee expelled from the country
by an inferior circulating medium will re
turn „Naafi__ when it Is made 'the -basis
pf __contractil e —.and --is- needed- - - in- --their
performance Business Is now necessarily
speculative becaneethe basis is unreliable. .car
rency, by reason of its uncertain future value,
although usually - pleutiful in the cities: and
readily obtained' there et low rates on short time,
with ample collaterale, is comparatively scarce
and dear in the agricultural districts where longer
loans on commercial paper are required. Pee'
dent men heehaw both to lend or to borrow for
any considerable period by reason of their ins- 1
bility to determine the - valneof the medium in
which the loans are tom paid. With currency
now worth seventy cents on the dollar,and which
within six months may advance to eighty, or de
cline to sixty, ra it strange that the flow is to the
buslnces -- centres; where it can be, loaned
"on call," leaving the Interior without proper
soPpliee, at reasonable rates, for moving _the
crops and conducting other legitimate business?
Is it strange , that, in such an unsettled condition
of the currency, gambling ie active while enter
prise halts, trade etagnates, and distrust and are
preheneion exist in regard to the future? it is
not supposed that such a measure as is rer,oee-
Mended will the financial evils which now
alMet the country, but It will be a decided move
ment in the right direction, and the glecreterytn
-dulges the hope that - It - will reeeiveXhd - cerly and
favorable consideration of Congress.
The legal-tender acts were war measures. By
reference to the debates nptio their passage, it
will be perceived that, by all who advocated
them, they were expected to be temporary only.
It was feared that irredeemable Government
notes, In the unfortunate condition of the coun
try, could only be saved from great depreciation
by being made a legal tender—the great, fact not
being sullietentey considered that, by possessing
this character, their depreciation would not be
prevented, but Merely disgals. Hence it was
declared that they, should be "lawful money
and a legal tender in Payment of
all debts, public or private; within the
United States, except duties on Imports and In
terest on the public debt." They were issued in
an emergency, for which it then seemed that no
other provision could be made. They were in
filet a forked loan, justified only by the condltiou
of the country, and they were, so recognised by
Congress and the people. By no member of Con
gress and by no public journal was the issue of
these notes as lawful money advocated. on any
ado= ground tircar mac or neeressity; and the
question arises, should they not now, or at au
early day, be divested of the characee:i whieh Was
conferred,. upon them in a condition of the
country so different from the present.
The Secretary believes that they should,
and he therefore recommends, in addition
to the enactment by which contrasts
for the payment of coin can be enforced, that it
be declared, that after the first day of January,
eighteen hundred and seventy, United States
notes shall mem to be a legal tender in payment
of all private debts subsequently contracted; and
that after the first day of January, eighteen
hundred and seventy-one, they shall cease to bo a
legal tender on any contract, or for any purpose
whatever, except Government dues, for which
they are now receivable. The law should also
authorize the conversion of theze notes, at the
pleasure of the holders, into bonds, bearing such
rate of interest as may be authorized by Congress
on the debt into which the present outstanding
bonds may be funded. The period for which
they would continue to be a legal tender would
be sufficient to enable the people and the banks
to Prepare for the contemplated change, and the
privilege of their conversion would save them
from depreciation. What has been said by the.
Secretary in his previous: reports on the perni
cious effects upon business and the public morals
of luconvertibme legal-tender notes, and what is
said in this report upon the advantages which
would result from legalizing coin contrauteous
tain this recommendation. It may not beam
proper, however, to suggest another reason for
divesting these notes of their legal-tender charac
ter by legislative action. Although the deci
sloes of the courts have been generally favorable
to the constitutionalityof the acts by which they
were authorized, grave doubts are entertained by
many of the ablest lawyers of the country as to
the correctness of • these decisions; and it is to be
borne in mind that they have not yet been sus
tsined by the Supreme Court of the United
States. -
The illustrious lawyer and statesman, whose
language upon the subject of irredeemable paper
money has been quoted, in the -Senate of the
United States on the twenty-first day of Deoeem
ber, eighteen hundred and thirty-six, expressed
the following opinion: '
"Most unquestionably there le no legal tender
in this country, under the authority of this gov
ernment or any other, but gold and silver, either
the coinage of our, own mints or foreign coins,
at rates regulated by Congress. This is a consti
tutional principle, perfectly plain, and of the
very highest Importance. The States aro ex
pressly prohibited from making anything but
gold and "silver a legal tender in payment of
debts, and although no michexpress prohibition
is applied to Congress, yet, as Congress has.no
power granted to it in this respect but to coin
money and to regulate the value of foreign coins,
it clearly has no power to substitute paper Or
anything else for coin as a tender' In payment, Pf
debts and in discharge of contracts. Congress
has exercised this power fully in both its
branches. It has coined money, and still coins
it; it has regulated the value of foreign coins, and
still /lvitates their value. The legal tender,
therefore, the constitutional standard of value,
is established, and cannot be overthrown. To
overthrow it would shake the whole system."
It is by no means certain' that the Supreme
Court will differ from Mr. Webster upon this
'question,and no one can fail to perceive how im
portant it is that the legislation recommended
should precede a decision (from which there can
be no appeal) that United States notes are not,
under the Federal Constitution, a legal tender.
The receipts from' customs for the last three
years have been as follows:
For the Anent year ending Juno 30,1860. 6W11.046,751 58
do. do do. r do. 1867 176,418,810 88
do. do. do. do. 1130. 164.484.549 56
While it appears from these figares_that the
customs receipts Incie the commencement of the
fiscal year 1866 have been, in a revenue point of
view, entirelynatisfactory, the question naturally
arises, what do these large receipts, under a high
tariff, indicate In , regard to our foreign trade
and to our financial relations with foreign
nations?
It is impossible te ascertain with precision the
amount of our securities held in Europe, nor is
there any perfectly reliable (kite for 'ascertaining
even what amount has gone there annually since
the fret bonds`were issued for the prose - button of
the late war. " - In his report of 1866; the Secre
tary estimated the amount of United States , Be
eurities of different kinds, including railroad and
other etc*, held , in Europe; at +3609,000,000-
Ile soon after became satisfied that this estimate
was too low by from ono hundred to one hundred'
and fifty millions. It would be safe to put- the
emonnt so held at the present time, exclusive of
stocke,at eight hundred and fifty milliolis_of dol-_
lam; of which- not less - than six hundredmil
lions are United States bonds, nearly all or which
have — left - the r - United - State - If - Withiff - the last 'elk
years., The amount is fermi • • •
„pniLi.DELPHIA, WEDNESDAY, DECEMBER. 9, _ 18_68‘.7 - -Viting Bki ti gn -
,
-le r-femme t old foe foreign emumeddies; and just
,7, 1 17 Nr eti 11, the conelderation that
_probably not'
over Bye. eadred millions of dollars in gold
vane, have,ee u received for these eight hundred
and fifty. aullit,k_ . 9 of debt. In this estimate of
our foreleg' fee t 'btedreste railroad 'and other
stocky are not iteell•ded; as they are not a debt;
but therevidence mere'lY of the ownership of Pro
perty in the lardteetai l toWe - FortunatelY, 'for
,•eoetue yeas - prist, eiiividnal credits „hive
`been curtailed,
and' our foreign and
domestic tradT this particular, has
e
_ not _ been oceet e, ae r oe y . ler addition, then; to
theatoare referred to pea, the indlyidaal indebt
edness, of the atucnint erf ;Odd% no accurate 001
mate can be made, E urope be'lds not less than
eightlundred and fifty e entillotheeof-Amerlean
secarillee, on neatly elixir - interest, and
I
oil the greater pert of which' lateteet in gold; is
1 ,being, paid. Nor,. under the presertat revenue
vetents, and whir a depreci•sted. paper currency,'
is the increase of our foreign, debt likely to be
stayed. With an abundant harvest and a large
surplus of agricultural preduets of, ail deeerip
dons, United-States bonds are still creating, to
_ oo small extentellie exchange - with, which our
foreign balances ere - being adjusted. We ere even
now increasing out debt to' Europe at the rate of
eixty or seventy millions of dollara per annum
the form , of gold-bearing bonds. • '
'The geild-and eilver'prcianct of California and
the Territories, since 1818, has been upwards of
thirteen hundred mill ions-of dollars: Allowing
tbat one hundred illions have -been used in
manufactures, and that the coin in the country
hae been increased to an equal amount e the bat
ancextf_thie immeneatiumeeeleven hundred mil
lions—has gone to other countries in exchange
for their productions. Within a period of twenty
years, in addition to our agricultural products, and
to our manufactures which have been capered in
large "quantities, we hive parted, 'with eleven
hundred' - millions of dollars of the pre
cious metals, and are, nevertheless, confronted
with a- foreign -- deb t- -of "some -- eight hundred
and fifty millions, which is steadily in
creasing; and ail this has • occurred under
tariffs in a good degree framed with the view of
protecting American- against foreign manufae
turers. But this is not all. During the recent
war, most of our vessels engaged in the foreign
trade were either destroyei ,by rebel cruisers or
transferred to foreigners. Oar exports as well
as our imports are' now _chiefly in foreign hoe.
toms. The carrying trade between the Uctitee
States and Europe is almost literally he the hands
of Europeans. Were it not for the remnant of
ships still employed in the China trade, and the
stand we are making by the establishment of a
line of steamers on the Pacific, the coastwise
trade, wbich is retained -by_ the exclusion of
foreign competition, would seem to be about all
that can,eunder existing leplelation, be relied
upon for the employment of American shipping.
There arc many intelligent persons who enter
tain the opinion that the country has been bene
fltted by thelransfer of our bonds to Europe, on
the ground that capital hese:teen received - ha e*
change for them, which has been profitably em
ployed in the development of our 'national
resources; and that it matters little whether; the
ineereet, upon the debt is received by oar own
people or by the people of other countries.
This opinion is the result of ,misapprehension
of facts, and is unsound in principle. It is
not to a large , ,extent` true that • capital;
which is being used in developing the
national resources. has been received in exchange
fns rho lansarla callit;h_a••• .era.-.a,
many articles, 'each as railroad iron, machinery,
and-raw materialse-need-lie=manufactures--the
value of which to the country is acknowledged—
have been so received, a large proportion of the
receipts have been of a different description.
Oar bonds have been largely paid for in articles
for,which no nation can afford to run in debt—:„
for articles which have neither stimulated indite-.
try nor increased the productive 'power of the
country, which have in fact added nothing to the
national Wealth. A reference to the custom-,
home entries will substantiate the correctness
of these statements. Tweetairds of - the
Importations, of the United, States consist of
articles which, in economical times, would be
pronounced luxuries. The war and a redundant
currency have brought about unexampled extray-'
agance, which can only, be satisfied by the most
costly products of foreign countries. No excep e
tion could be taken to Bach' importations if they
were paid in our own Productions. Tills unfor
innately is not the fact. They are annually ry
. eel- 4
ling our foreign debt, without increasing oar abi-;
thy to pay it. How disastrous such a course
of trade, if long continued, mast be, it requires
no spirit of prophecy to predict.
Nor is it an unimportant matter that the in
terest upon a largo portion of our securities is
received by citizenshaf other countries instead of
our own. If the interest upon •a public. debt is
paid out where the taxes to provide for it are
collected, the debt, although a burden upon the
mass of tax-payers who are not holders of securi
ties, may be so managed as not to be a severe
burden mpon the nation. The. moneyeithich goes
into the Treasury by means of taxes will flow
out again into the same community in the pay
ment of interest; and were it ,not for the expenses
attending it, the process would not, in a purely
economical view, be an exhausting one. If the
bonds of the United Eitatesewere equally distri
buted among the people of the different States,
there would be less complaint of the debt than is
now heard. Anti-tax parties will attain strength
only in those States in which tow bonds are held.
IT the people of the West are more sensible of the
burdens of Federal taxation than are _those of the
Eastern States, it le becauee they are not holders
to the same extent of national securities. This
inequality cannot of course be prevented by legal
or artificial ]processes. The securities will be
most largely hold where ,capital la the most abun
dant; and they will be more equally distributed
among the respective States—et not among the
people—as the new States approach the older
ones in wealth.
These manifest truths indicate how important
it le thatthe debt of the United States should be
a - home debt; so that the money whichis collected
for taxes may be paid to our own people in the
way of interest. In fact, 4 large national debt,to
be tolerable, must of necessity be a home debt.
A nation that owes heavily must have its own
people • for creditors. If it does not, the
debt will be a dead weight upon its In
dustry, and will be , quite likely to force
it eventually.into, bankruptcy. =The United-States
are not only able to pay the interest on their
debt, but to set a good example to other nations
by steadily gild rapidly reducbg that debt. What
is now required, as has already been intimated,
are measures which will tend not only to prevent
further exportation of our bonds, and in the re
gular course of trade to bring back to
the country those that have" been exported, but
which will also tend to restore •those. important
interests that are now lanmilshing,as the result of
the war and adverse legislation. The first and most
important of these measures are those which
shall bring about, without unnecessary delay,the
restoration of the specie standard. The financial
difficultlea under which the country is laboring
may be traced directly to the issue, and continti
ance in cireolatlon, of Irredeemable promises as
lawful money. The country will note be really
and reliably prosperone until there is a return
to specie payments. The question of a solvent,
convertible currency, underlies all other finan
cial and economical questions. It is, in fact, a
fundamental question; and until it ,is settled,
and settled in accordance with the teachings of
experience, all attempts. at other financial and
economical reforms will either fall abso
lutely or he but partially successful. A sound
currency is the Life=blood of a commercial nation.'
If this is debased the whole current of its com
merclal life must be, disordered and irregular.
The starting point 14, reformatory legislation
must be here. Our debased currency must bo
retired or raised to the par of epode, or cease to
be lawful money, beforesubstantlal progress - can
be made with other roforme. -
Next in importance to the subject of the cur
rency is that of the revenue. Takes are indispen
sable for the support ()Utile Government,• for the
maintenance of the public credit,, and the pay
ment of the public debt. To tax heavily, not only
without inipoyerLshing the-.people, but without
checking enterprise or putting shackles upon in
requires-them:lost careful study,-not onl
of the resources of the country and its relations
OUR WHOLE COUNTRY.
study of _the _revenue , systems Of -B lS has. erenea
tfone, which have been perfected by years otos
perlence and the employment of the h test talent,
it must be ObVious that these systems must un
dergo very considerable ulodifleations before they.
will fitted_ to the political • and phyoical' cop
' dition of the United States. In a poDulatgo
sermnent like ours, sifter© the people virtually
assess the taxes, as well as pay them,the popular
will, if not the popular 'prejudice, must be lis
,terted 10 - in the• preparation of revenue lawn.
Justice must, in some instances yield, to expedl
- eneye, andf some legitimate% sources of revenue
may be unaillable- because resort to them'
might be odious to a. ,majority of tax-payers.
The peophi of the United States are enterprising
and sell-reliant. Most of them are the "architects
of their own fortunes;" few the inheritors of
wq,alth. Engaged in various enterprises, with
coßstantly viuying results, and in sharp compoti
tion with each other, they submit • reluctantly es
inquisitions of tax-gatherers, which might not be'
obnoxious to people less independent and
under less liberal- institutions.
Then, teo,. the United States, ttre a new ecentry,
of - large extent and _ interests; -
*itlfgreat natural resources, in, the , early process
of development. Not only .may systems of re
venue which are suited to England, or Germany.
or, /ranee, be-unsuited-to this--country, but care
ful end judicious observation- and study aro in
:dispensable to the preparation of tax bills sniteci
to the peculiar interests of its different Elections.
It wits with a, view of, supplying Congress with
such information as was needed to secure the
passage of equal and wise excise and tariff laws,
which Would yield the largest revenue with the
least oppression and - inconvenience it, the'peo
ple. that a revenue commission was- created in
1865. The creation of this commission was the
first - practical movement toward a careful
examination of the business and resources of the
country. svithe view to the adoption of a judi
cious revenue system. The repeats of this mn-
MissiOn were interesting and •valuable, and they
exhibited so clearly the necessity for further and
more complete investigations, that by the act of
July 13. 1866, the Secretary of the Treasury was
authorized to appoint an officer in his Depart
ment, to be styled the Special Commissioner of
Revenue, whose duty it should be "to inquire
into all the sources of national revenue, and the
best method of .collecting the revenue; the rela
tion of foreign trade to domestic- industry; thi,
mutual adjustment of the systemiser taxation by
customs and excise, with a view of insure
lug the requisite' revenue with the least
disturbance or inconvenience to the pro
gress of Industry, and the development
of the resources of the country,", , &c.
Under this act Mr. David A. Wells was appointed
Special Commssioner of the Revenue. With what
energy and ability he has - undertaken the very
difficult duties devolved upon him, has been man
ifested-by Rae reports which he - has already sub=
milted-to Congress. That which accompanies,
or will soonfollow this communication, will
prove more fully than those which have preceded
it have done, the importance of the investigations
in which bets engaged, and the judicious labor
which be is bestowing, upon them. The facts
which he presents, and the recommendations
based upon them; are entitled to the most careful
consideration. of Congress. These reports of the
Commissioner are so complete that they re
lieve the Secretary from discussing elaborately
the queitions of which they treat. His remarks;
therefore. -upon - .
- sarisewersai geaeral end brier. , -
The following is a statement of receipts from
internal revenues for theiast - three fiscal years:
For the year ending June 30.1866-5309,226,813 42
do do do 1867.. 266,027,537 43
do do do 1868,.. 194087,589 41
It thus appears that - the internal revenue re
ceipts for the year ending June 30, 1867, fell be
low the receipts for the year ending June 30,
27
1866, $13,199,5 99, and that the receipts for the
y ear ending June 30, 1868, fell short of the re
ceipts for istri, $74,939,948 02. The receipts for
the drat four months of the present fiscal year
were $48,736,348 33. If the receipts for these
months, are an index , of those for the remaining
eight, $1 .thereceiPts for the present fiscal year will
be 46,209;044.
This large reduction of internal revenue receipts
is attributable both to inefficient collections,
and to reduction of taxes. It is quite ob
vious that the receipts from customs cannot be
maintained without an increase of exports or of
our foreign debt. If the receipts - from customs
should be diminished, even with a large reduc
tion Of the expenses of the Government, our in
ternal revel:knee must necessarily be increased.
The first thing tote done is to introduce econ
omy into all branches of the public service, not
by reduced appropriations, to be made good by
"deficiency bills,"but by putting a stop to all an
necessary demands upon the Treasury. There is
no department of the government which is con
ducted with proper economy. The habits formed
during the war are still strong, and will only
yield to the requirements of inexorable law. The
average expenses of the next ten years for the
civil service, ought not to exceed forty millions
of dollars per annum: Those of the War De
partment, after the bounties are paid, should be
brottght down to thirty-five millions of
and those of the Navy, to twenty millions. The
outlays for pensions and Indians cannot for some
years be considerably reduced, but they can
doubtless be brought within thirty millions. The
interest on the public debt when the whole debt
shall be funded at an average rate of interest of
five per cent., will amount to one hundred and
twenty•five millions, which will be reduced with
the annual reduction of the principal.
When the internal revenue and tariff laws shall
be revised's° as to be' made to harmonize with
each other, At is supposed that three hundred
millions can _annually be realized from these
sources without burdensome taxation. How
much shall be raised from each, can be determined
whet/ thy 'whole 'subject of revenue duel be
thetrotig,hly investigated by Congress, with - the
light shed upon it ' by Commissioner Wells in his
e.xhaustive report 9f. ate present year.
does Th e Sec
; etarynot doubt, however, that the best in
terests of the country will be snbserved by a re
duction of the tariff and an increase of excise
duties.
According to thietathuate the account would
stand as follotvei
Receipts from customs and internal revenues. 6)300,000,00p
ExpeEditures fOr the civil service.
474 . 4? Navy Vr Bey art . Ment. ..... V. 49.00.000
for pensions and Indiarai. 20.000,060
" for interest on the public debt.... 125,000 000
........ .......... Mama*
Leaving as an excess of receipts t1t50,000,000 to
be applied to .the payment of the principal of the
debt. lithe growth of the country should make
an increase of expenditures necessary, this in
crease will; by the same cause, be provided for
by increased receipt& under the same rate of tax
ation; and as it is to be hoped'that the regular in
eteaSO of the revennes,without an increase of gaz
ettes, teittiling from the advance of the country
In wealth and population, will be greater than
the necessary increase of expenses there will be
a constantly inreiteing amount in addition to
that arising from ' a decrease of interest, to.be an
nually' applied to the payment of the debt. If
large additional, expenditures should be
unavoidable; they ..Shottld 'at 'once be
provided,.. for ,by .additional taxes. What is
reipired,,then,, at ,the present time, is a posi
tive limitation of the annual outlays to three
hundred millions of dollars, Including
fifty millions to be applied to the payment of the
priaciPal Of the debt, and such modifications of
the revenue laws as will secure, this amount,
without unwise restrictions upon commerce, and
with the least possible oppression and inconve
nience to tax payers. In the foregoing estimates
of resoure6s, miscellaneons receipts, and receipts
from the soles of public lands, are omitted. 'l'he
miscellaneous' receipts heretofore have been de
rived from -.sales et_gold and of .property pnr
chaied by the War and Navy Departments dur
ing the:war ' ,andno longer needed. qa a return
to Epeclo payments there will be no premiums
on coin, very little , Government property will
'he'reafter be sold, and under the homestead law,
and with liberal donations of thopublic domain,'
which are likely to be made as ttereto(ore, no
considerable amount can bo expected from lands.
Wliatever-may be-rectived—fronr-these-sources
will doubtless to covered by mideellaneous ox-
'3er. than distilledepiritatrfermentedliquorai'and
TH 4 ,...
ceo, was sudden and unexpected. It not
1a'3",., ieprived the Treasury of an imnaMse rove
' OmY.,_'• 1 the reduction was so great as to leave
nu e ' °II `
salon:' en , the public mind that it would'
an telPrt_ oporaty; and that a tax ,in some de
:' he eel,' 1 • 4-6 . lent -to that which was 'removed
gree e q° l47 '.' aelty - aeon - be resortedeto It is
would of nean . 1 •• '', •'
'reason that this measu r e has
perhape t fortillt. B r
f a il e d t o g i v e n *. eLte thplublie by a diminution
thanres; and:ban. ~i f ensun manufacturers . rather
ennantnera, %;,. e ',frequent „and important
ehingur which ilea ' 43 b e en ' - /hare in. , the
internal revenue ' i a.t v e; -- l_ the ease
with 'which ex.eniptrei& q ' rota taxatio n have
been
nbudnedr
and , tne ,, ak iddenness with 'which
aot getentad
'evilseduced,
taxes have been greatly
have constituted one of the' h ' :reatea t - of the
system. Sudden obarigto in s the revenue laws
are not only destruetive °frail' i 'nahleas•ealeela
tiope, but they,excite—not unit% .ona,bly--a feel
--Mg of discontent sind'a seileent its 'ustiee among
the pmoile.'unfavorable to an , efficica.!t collection
oftaxes. While it is admitted; that,, ha. a new and
growing country like ours, inodiflcatfea le, o f the
- - taxes will lie. fremactitly - necessarys somel7 l4 efinite -
policy should at once be inaugurate& In Cegard
to our internal revenues, the general' princi l fdee
of which should be• regarded as finally es -
tablisbed. '
lesurning that the receipts from customs will'
be reduced by a reduction °Unties,. or by the ef
fects of a return to specie payments upon im- '
portailons under the present tariLl s and that,
consequeutly, there must be an increase of Inter
nal taxes, there are I ll r o ee sources- of reveaua
which are likely to be naldered.
First. An increase of taxes upon distiliel spirits.
The idea of deriving the bulk of the revenue
from this article is a very popular one; and oven
our unfortunate experience has only partially
convinced the public of its impossibility. The
late-exorbitant-tax on distilled spirits, intended,
perhaps, not merely as a revenue measttra - but as
an encouragement to temperance, proved to be
the most demoralizing tax ever imposed by Con
gress, corrupting both the mnnufanturers and the
ievenne officers, and familiarizing the people
with stupendous violatleps of. the law. The re-
Aeration of it, or any considerable increase of
the present tax, would lead to a repetition of the
frauds which have brought the internal revenue
eystemanto such utter disgrace. .- -
Second. A restoration of the , tax on manufac
tures abolished in March last.
The objections to the restoration of this... tax
are, that it would indicatavacillation on the part
of Congress, and that this tax, principally. on'ac
count of numerous exemptions, was partial' and
unjust. It is also apparent that, if restored, it
would fail to be permsnent by' reason of the
persistent and united hostility of a claas of eiti=
zens influential and powerful, and , whose influ
ence and power are rapidly increasing.
Third. An increased and uniform tax on sales;
and this the Secretary respectfully recommends.
Under the present law - wholesale Sind rota
dealers in goods, wares and merchandise of for
-Men or domestic production,wholesale and re
tail dealers in !ignore; and de alers in tobacco, are
'subject to a similer but unequal tax upon sales.
This inequality should be removeiL and a tax
levied upon all sales sufficient, with the revenues
from other sources, to meet the wants of the
Government. The reasons in favor of a taxnpon
sales are t that , it could bej_fa,xlettsr AM cregt
'ltalie Imeetitati - On Of class' ' legislation; 'that it
would be so equally distributed as,not to bear so
oppressively as other taxes upon individuates:yr
sections; and that no depression of ono branch of
industry, which did not Injuriously affeet the
business of the entire country, could greatly les
sen its productiveness.
As has beua already stated, the receipts from
customs for thallscal year ending June 30,1866,
were $179,046,651'58; for the year ending Jane
30,'1867, $176,417,810 88; and for the last fiscal
year, 8164,464,599 56. These figures show that
the - tariff has produced large revenues„ although
it is in no just -tense a reventetariff. In this re
spect it has exceeded the expectations of its
friends, if, indeed, it hes not disappointed them.
It has not checked importations, and complaint
is made that it has not given the anticipated pro
tection to home manufactures,not because it was
not skilfully framed to thisend,but because an in
flated currency—the effect of which upon impor
tations was not fully comprehended—has, in a
measure, defeated its object. It has advanced the
prices of dutiable articles, and, by adding to the
cost of living, has been oppressive to consumers
without being of decided benefit to those Indus •
tries in wheat) interest it is regarded as having
been prepared. In his last report, the Secretary
. recommended the extension of specific duties,but
did not recommend a complete revision of the
tariff, on the ground that this work could not be
intelligently done as long as business was sub
ject to constant derangement by an irredeemable
currency. The same difficulty still exists, but as
decided action upon the subject of the
currency ought not to he longer postponed, the
present may not be an unfavorable time
for a thorough examination of the tariff. It is
obvious that a revision of it is required, not only
to"relieve it of incongraities and obscurity, and
to harmonize it with excise taxes and with our
agricultural and commercial interests, but also to
'adapt it to the very decided change which must
take place in tho bus iness of the country upon
the restoration of the specie standard. Large
revenues are now derived from customs, because
a redundant currency produces extravagance,
which stimulates importations. If the currency
were convertible, and business were regular and
healthy, the tariff would be severely protective,
if not in many instances prohibitory. Indeed,
of some valuable articles it is prohibitory already.
There will be in the future, as there have been
in the past, widely different opinions upon this
long-vexed and very important subject, but the
indications are decided that the more enlightened
sentiment Of the country deMande that the tariff
shall hereafter be A tariff for revenue and not for
protection, and that the revenues to be derived
from It shall be no larger than,in connection with
those received from other sources, will be re
quired for the economical administration of the
Government, the maintenance of the public faith,
and the psAthial eatinguiehMeht Of the public
debt. While the ' country's not a t present, and
may not be for manyyeara to come, prepared
for the abrogation of all reetrietions upon
foreign commerce, it is unquestionably prepared
fora revenue tariff: The public debt is an in
cumbrance upon , the property of tho.wition, oo
the taxesitheneeessity for Wre
hich it cates,
whatever mode and from whatever sources '-
lotted, are at least a Charge upon the coneumers.
Taxes should not, therefore, be increased, nor
will the tax-payers permit them to be perma
nently increased, for the benefit of any interest
or section. Fortunately, or unfortunately, as the
question may be regarded from different stand
points, the necessities of the Government will
be such for many years, that large reve
nues must be derived from customs, . so
that a strictly revenue tariff must mei
dentallp benefit our home manufactures.
According to the estimate made by the Secretary,
an annual revenue of three hundred millions will
be required to meet the necessary demands upon
the Treasury, andlor a satisfactory redaction of
the public debt. Hoer much :of this amount
shall be derived from customs it will bo for Con
gress to determine. In examining this difficult
question, the magnitude of our foreign debt, and
the necessity not only °of ; _ preventing its-in
crease but of rapidly redriciug it, must be kept
steadily in view. It may be necessary that 4
large portion of our bonds new - held' in Europa _
be taken up with bonds bearing a lower rate of
interest, payable in some Europeert clty, in order
'that they may 'be less likely ,to le returned
to the United -States 'at unpropitious
times. Whether this; is , ' accomplished
or not, it is of the last importance that our tax
laws, and eepeclailys the tariff, should-be so
framed as t - a encourage exports and enlarge our
commerce ;with foreign nations, so that balances
maybe in our favor, and the interest, and in due
time the' principal, of •our foreign debt•nlay be`
paid by our, surplus productions. Many of the
Investigations of the Revenue Commissioner have
been made with the view of furnishing Congress
with the data necessary for a thorongh examin
ation-and a - wise - determinatiatrof -this- most-ita--
portant question, and it Is fortunate that -tire
F. FEIROSTON. Pah-116;1w
PRIOE TURF& (*kik,-
- The tilibliedettlen the first day of November.
1867, amounted to $2,491,604,450, and codaiateit
of the following items: : •
Debt bearing coin
do. corseney
Matured debt notprezenteci tor payment.
Debt bearing no in
Oa
• 4E0374as Elg
- : 40 5485.87 T 311
Cash in the • / 8 4998438 a
Amount of debt lees earl' in tho Tresuntri 2.01.504,460
On the firer day of November,l66B,ltr amettagot
to $ 2 : 5 27,129,452 82, and consisted of Me
ingltems. _
peat bearing Coin intere5t..................52,107579,90_011
do, eurr enovAnterest:-.,... , ------.:7 114,519,000 att
Itfatured debt not presented for paymont,,, • • -.9.753.723 64
Debt bearing 409.44,898 CI
Total
Ceeti.4l tho Tresusury
'Zintasteris
••• .. . nsisistsis tai
Amount at debt b3es'etkett in theMeammy.. 2,07111419 SO
By a comparison of these statements it Apposes
that the debt, between thaflist day" of November.
1867, and; the first day of•November,lBoB.
creased $85,625,192 82. Of this inereadeAr2t,-
152,000 is chargeable to the Pacific railroads.tin& _
- $7i2.00,000- to the 'purchase of , Russian America.
Within the same period, •there was paid for belle.
ties $44,060,515; And at leasis4,ooo,ooo for later
est, on compound and leVelt. three-tentheotes„ --
which had acerued'Prior to theistof Nov.,lB6iF
-If these extraordinary advances and partied*
had not been made, the receipts world have se;
seeded the expenditures $48,787412•18.
idering the heavy reduction of internal texas,
made at the het session of Congress, and the
ia:ree_ expenditures which have attended r__ the
military operations against' the. ' Winter tote
the frontier, and the maintenance of large forces
at ecpensivepoints in the Southern - Statesi, Mis
statement of the amount of the debt cannot bee
regarded an unsatisfactory one. The , bountlea
will, it is expected, be entirely paid withia _they
next three months, andverylittleiaterest, except
that which accrues ripen the funded debt, la
hereafter to be provided for. Should there be -
henceforth no extraordinary expendittuts.... and.
no further donations of public• moneys in ,the
form of bounties or of additional subsidier tee
railroad companies—with propper economy ; in that
administration of the Genera , Government, ante
with judicious - atnendmerrts of the revenue laws*
and proper enforcement thereof, the, public debt,.
without _oppressive_ location,- ean - ber, rapidly --
diminished and 'easily extinguished within 'Me
period heretofore named by the Secretary.
The ability of the United States to malitake
their integrity- against , insurrection asWell "as
against a foreign enemy, can no longer be doubt
ed. The question of their ability, under demo
cratic institutions, to sustain a large national
debt, is still to' be decided. Thab , ,this queation
should be affirmatively settled, it isvin the *pin;
ion of the Secretary, of the highest importance
that the tax-paying -voters should beencouraged
by the fact, that the debt is in the 'progress or
rapid extinguishment, and it is not to be a per
manent burden upon, them end•their posterity.
if it be understood that this debt is to 'be
a perpetual ineurnbranee upon Llts,propertyandl
industry of the nation, it' is, eertainly- , ta
be feared that the collection^ of tares necessary
to pay the interest upon it may require the exer
cise of power by the central Government,•incon
sietant with repubileanism,anddangeousrs to the
liberties of the people. The debt must bet
Direct repudiation ett *tees:4l4lA;
initiness. 'To • insure its 'nay
ment withotit a change in the'essential charaCter
of the. GOvernment, every,year ehould_witness a
reduction of its amount and a diminution of
burdens. The Secretary is confident that he ex
pressed the sentiments of the intelligent tax
payers of the country when he said in his report,
of 18G5:
"The debt Is large, but it kept at home, as itia
desirable it should be, with a judicious syateat of
taxation, it need not be oppressive. Ills, how
ever, a debt. While it Is capital to the holders of
the securities, it la still a. national debt, and am
encumbrance upon thenational estate.. Neither
its advantages nor Its burdens are or can be aharcd
or borne equally by the people. Its , influences
are anti-republican. It adds to the power of the
Executive by increasing Federal patronager'
must be distasteful to, the ,pepple, became it Ulla
the country with informers and tax-gatherers-
It is dangerous to the public virtue, because'
involves the collection and disbursement of vasa
sums of money and renders rigid national econ
omy almost impracticabe. It is, in a; word,
_ra
mationatburden, and tbe work of reproving it,nia
matter how desirable it may be for individual in
;vestment, should not long bevostponed. •
"As. all true men , desire to leave te• their heirs
unineumbered estates,
so should it be the ambL..
tion of the 'people of the United Stated to relieve
their descendants of this national mortgage. We
need not be anxious that future •• generations
shall share the burden with us. • Wars are titot !
an end, and posterity will have enough to do ter
take care of the debts of their'own creation.
"The Secretary respectfully suggests that on
this subject the expression of Congress should
be decided and emphatic. It is, of the greatest.
importance in the management of a matter of so
surpassing interest that the right start should be
made. Nothing but revenue will sustain the na, 7
tional credit, and nothingless than a fixed policy
for the reduction of the public credit will be
likely to prevent its increase."
And in his report of 1867, when he renntrked=
"Old debts aro hard debts to pay; the ion
they are continued, the more odious they be
come. If the present generation should throw
the burden of this debt upon the next, it will be
quite likely to be handed down from ono genera
tion to another, a perpetual
,if; not a constantly
increasing burden upon the people. Oar country
is full of enterprise and resources. The debt will)
be lightened ©very year with great rapidity by
the increase of wealth and population. Mbar.
proper reduction in the expenses of the Govern-e,
ment, and with a revenue system adapted tn,the'
industry of the country, and not oppreseingl4
the debt may be paid before the expiration of the •
present centnrY. The wisdom of a policy whidS
shall bring about such a result Is vindicated v irs ,
advance, by the history of natiOrla Whose people!
are burdened with inherited debts, and with no, •
prospect of relief for 04 1 41 1 01 Veil or Weir pct.
In his last report the Secretary referred to the
condition of the Treasury at the close of the war.
and at some, ~subsequent periods, alluding es--
pecially to the emergency In the spring of 1865,. ,
4xleing from the very large requisitions which,
e Waiting_ for payment, and the still larger , _ _
• , nialtions that were to be provided for, to ern-:
ab e the War Department to pay arrearages due,
to the army, and other expenses which hadt•
already been incurred in the suppression of = the'
rebellion. . In briefly reviewing the adailnistra--‘
tion of the Treasury from April, 186510 did-not - -
think necessary to, state bow muck of the large'
revenue receipts had been expended in the pay—
ment of debts Incurred during the war; and he
would not undertake to-do it now did not misiip-•„
prehension exist in the liublle mind In regard. to •
the expenditures of the Government since the •
conclusion of hostilities prejudicial to both, the- ,
law-making and law-exectiting branches of they
Government
The war was virtually closed in April isa:
On the first day of that month the public debty
amounted, according to the books and aecotinta-
of the Department, to 42,366,955,077 34. on the,„
first day of September following. ltamonnted to •
42,757,689, , 571. 43, having increased, in four
months 4390,734,434 09. From that_ ,petiod•ig
continued to' decline until November 1, 1867;°
when
•
when it had fallen to $2.491,504;450. On the first
day of November last, it had risen Pi 42. ' 517,129.-A
552 82.8 y this statement it', appears, that, be,
tween v the firstd of April, 1860 and the first
day of September of the, same ye.ar, the debt year
creased 4390,734,494 09, an that between the
first day of September, 1865.. and •the first day of
November, 1868, it decreased 8230,560.010'
and that on the lastday mentioned It was 16G, T
174,475 48 larger than it was on the first dater
April, 1865. Since then the Treasurer's reeelptil
from all sources of revenue have been as follows:
For April. May And June. . . ..... . . etstsia64 in;
For the year ending Juno 80.1866. ' Essonsti es -
do. do. 30. 1E67 arlet6ZlAlarla
do. do._ 110.101.1405.034011 -
June 30 to November I. 1601 124.10,14 tlt
Total of receipts., ," --
Tdlvldeb fhoold—btradded-the-inereas
the debt between the flit da of d J
tiVolit MP