Newspaper Page Text
BY STOCKTON & CO
REPORT
OP THE
SECRETARY OF THE TREASURY.
Treasury Department, ;
Washington, November 30,1807. >
iu conformity with law, the Secretary ot the
Treasury has the honor to submit to Congress
this, his regular annual report.
The finances of the United Btates, notwith
standing the continued depreciation of the cur
rency, are iu a much more satisfactory condi
tion than they were when the Secretary had the
houor to make to Congress his last annual re
port. Since the first day of November, 1866,
$403,900,263 31 of interest-bearing notes, cer
tificates of indebtedness and of temporary
loans, have been paid or converted into bonds,
and the public debt deducting therefrom the
cash in the Treasury, which is to be applied to
its payment, lias been reduced #59,805,555 73.
During the same period dccideed improvement
lias also been witnessed in the goneral econom
ical condition of the country.
The policy of contracting the currency, al
though not enfoiced to the extent authorized
by law, has prevented an expansion of credits,
to which a redundant and especially a depre
ciated currency is always an incentive, and has
had no little intluenee iu stimulating labor and
itcreasing production. Industry has been
steadily returning to the healthy channels from
•which it was diverted during the war, and al
though incomes have been small, and trade
generally inactive, in no. other commercial
country has there been less financial embarrass
ment than in the United States.
In order that the action of the Secretary, in
the financial administration of the Department,
may he properly understood, a brief reference
to the condition of the Treasury at the time the
war was drawing to a close, and at some subse
quent periods, seems to be necessary.
On the 31st day of March, 1865, the total
debt of the United States was #2,366,955,077 34,
of the following descriptions, to-wit :
Funded debt $1,100,301,241 80
Matured debt 349,420 09
Temporary loan certilicutes.......... 52,452,328 29
Certificates of indebtedness 171,790,000 00
I nterr-Ht bearim; notes 520,812,800 00
Hupemled or unpaid requisitions 114,256,648 93
Untied States notes (legal tenders)... 433,180,509 00
Fractional currency 21,254,094 07
2,428,437,002 18
Cash iu the Treasury 50,481,924 84
Total 2,306,955,077 34
The resources of the Treasury consisted of
ilie money in I lie public depositories in differ
ent. parts oi l lie Taointry, amounting as above
.dated to #56,481,924 84 ; the revenues from in
ternal taxes and customs duties, and the au
thority to issue bonds, notes and certificates,
under the following acts to the following
amounts:
.Act ol February 25, 1862. b0ndd....... $4,023,600 00
Aet of March 3,186-1, bonds 27,229,900 00
Act of June SO, 1801, bonds, 7-30 or
compound interest notes 79,811,000 00
Uertifioat : for temporary loans, act
June 30,1504 97,540,471 71
United States notes for payment of
temporary loans, act duly 11, 1802.... 10,839,431 00
(Fractional oiniviice, act June 3(1, 1804.. 25,745,905 93
Act Ol March 3,1805, bonds or Interest
bearing notes.... 533,687,200 00
Making a total 0f.... 784,783,508 04
Certificates <>t indebtedness, payable one year
from date, or earlier at the option of the Gov
< rumen t, bearing interest at the rate ol six per
cent, per .minim, might lie issued to an indefi
nite amount, but only to public creditors de
sirous of receiving them in satisfaction of audit
ed and settled demands against the United
State?. .
Early in April (lie fall of Kielimoud and
■lurt ender of I lie forces which had so long de-‘
tended it, rendered it certain that the war was
anon to be terminated, and that provision'must
be made for the payment of the army at the
■earliest pm tiea'.ile moment.
Asa considerable amount of the seven-thirty
notes had recently been disposed of satisfactori
ly by the Department, and had proved to be the
most popular security ever offered to the people,
the Secretary determined to rely upon them.
Before the end of July the entire loan, exceed
ing five hundred millions, was subscribed and
paid for, ami the Secretary was enabled with
the proceeds, together with the receipts from
customs and iuternal revenues, and the nse to
a limited extent ot some of the other means at
lliis disposal, to pay every requisition upon the
Treasury, and every matured national obliga
tion. As evidence of the necessity that existed
for prompt, aetiou in the negotiation of this
loan, and the straits to which the Treasury was
reduced, it will he remembered by those who
examined carefully I lie monthly statements of
ike Department, that although during the
•mo«i.h of April upwards of one hundred mil
lions of dollars had been received from the sales
of 7-30iuiOl.es, the unpaid requisitions at its
close had increased to $120,470,000, while the
cash (coin and currency) in all the public de
positories amounted only to $16,835,800.
Between tlie first days of April and Septem
ber 1865, the Secretary used his authority to
issue securities as follows :
Bonds undei'the act of Feh’ry 25,1562.. $4,023,030 00
Bonds ei'-ler ti'c nei of June 30, 1804... 0,600,000 00
Compound inteffst notes, act June 30,
T SiU 24,978,390 00
Certificates lor temporary loans, act
Jline 30, 15T4.... 54,695,384 87
Fractional currency, net June <.9. 1864.. 2,090,648 44
Beven-thi:ty notes, March 3,1 s>oi. 629,187,200 00
£20,970,223 31
On the 31st of August, 1805, the j>uWlfl debt
reached the highest, point, and was up of
the following items, 10-wit:
Funded debt $1,108,568,191 SO
Mirtim and debt 1,503,620 09
Temnotary loans 107,148,713 10
Certificates ot indebtedness... 85,093,000 00
P'ive p-r e**ot. legal tender notes 38,954,230 00
Compound interest legal tender notes 217,024,160 00
;.;IJ notes 830,000,000 00
i r . 18. notes (legal tenders) 433,1(50,569 00
Fractional currency 26,344,742 61
{Juspcmled .requisitions uncalled fur.. 2,111,000 00
Total... 2,945,907,626 56
Deduct cash in Treasury 88,218,055 18
Balance 2,757,089,571 43
Os these obligations, it w ill be noticed, $684,-
138,959 were a legal tender, to-wit:
United States notes.. $433,160,669 00
Five per cent, n0te5.•................. 33,964.230 09
Compound intereet notes 217,024,160 00
Total 654,138,950 00
Avery large portion of which were in circu
lation ac currency.
The teotporary loans were payable lu thirty
days from the time of deposit, after a notice of
ten days.
Tlic five tier cent- notes were payable in lawful
money, in one and tyro years from December 1,
1863. *
The coumpound interest .notes were payable
in three years from their respective dates, all
becoming due between the tenth day of June,
1867, and the sixteenth day ol October, 1868.
The 7-30 notes were payable, in about equal
proportions, in August, 1867, and June and
July, 1868, in lawful money, or convertible at
maturity, at the pleasure oi the holder, into 5-20
bonds.
The certificates of indebtednes would mature
at various times between the thirty-first day of
August, 1565, and the second day of May, 1867.
During the month of September, 1865, the
army having been reduced nearly to a peace
looting, it became apparent that the internal
revenues and the receipts for customs would
be sufficient to pay all the expenses of the Gov
ernment and the interest on the public debt, so
that thenceforward the efforts of the Secretary
were to be turned from borrowing to funding.
Besides the United States notes in circulation,
there were nearly $1,300,000,000 of debts iu the
form of interest bearing notes, temporary loans,
ano' certificates of indebtedness, a portion of
■which were maturing daily, and all of which,
with ih« exception of the temporary loans
(which, be.Pg > n the nature of loans on call,
mi'dit or migi'- t not be continued, according to
the" will ot i he'hi, 1 ders,) must be converted into
bonds or paid in money before thelGthof Octo
ber, 1868.
Tbe condition of the country tncT.reasu
ry determined the policy of the Secretary, which
has been to convert the interest«itgariug notes,
temporary loans, into gold-btßU4#£ and8 >
and to contract Iho paper circulation 0* pupM
States notes. For the last two years this PPhey
has been steadily, but carefully pursued, and
the result upon the whole has been satislactory
to the Secretary, and, as lie believes, to a large
majority of the people. Since the first day of
September, 1565, the temporary loans, the cer
tificates of indebtedness and the five per cent,
notes have all been paid (with the exception of
small amounts of each not presented for pay
ment) the compound interest notes have been.
reduced from *217,034,160 to $71,875,040 <tll,-
560.000 haviug been taken up with three peT|
cent, certificates); the seven and three-tenth <
notes from $830,000,000 to $337,97.8,800; the
United States notes, including fractional cur
rency, from $459,505,311 51 to $387,871,477 39
while the cash in the Treasury lias been in
creased from $88,218,055 13 to $133,998,398 02,
and the funded debt has been increased $686,584,-
.800. While this has been accomplished there
has been no commercial crisis, and .(outside of
the Southern States, which are still greatly suf
fering from the effects of the war ajuff the JP.p-
®ri-tUcclUn (Constitutionalist.
settled state of their industrial interests and
political affairs) no considerable financial em
barrassment.
In his last report the Secretary remarked
that “after a careful survey of the whole field,
he was of the opinion that specie payments
might he resumed, and ought to be resumed,
as early as the first day of July, 1808, while he
indulged the hope that-such would be the
character cf future legislation and sack the
condition of our productive industry that this
most desirable event-might be brought about
at a still earlier day.” These anticipations of
the Secretary may not be fully realized. The
grain crops of 1866 were barely sufficient for
borne consumption. The expenses of the War
Department, by reason of Indian hostilities
and the. establishment of military governments
in the Southern Suites, have greatly exceeded
the estimates. Thg Government lias been de
frauded of a large part of the revenue upon
distilled liquors and the condition of the South
has been disturbed and unsatisfactory. These
facts, and the apprehension created iu Europe,
and to some extent at home, by tlie utterances
of some of our public men upon the subjects
of finance and taxation, that the public laitti
might not be maintained, may postpone the
time when specie payments shall be resumed.
But, notwithstanding these unexpected embar
rassments, much preliminary work has been
done, and there is not, in the opinion of the
Secretary, any insuperable difficulty in the way
of an early and a permanent restoration of the
specie standard. It may not be safe to fix the
exact time, but, with favorable crops next year
and with no legislation unfavorable to con
traction at this season, it ought not to be de
layed beyond the first of January, or at the
farthest the first of July, 1860. Nothing will
be gained, however, by a forced resumption.—
When the country is in a condition to maintain
specie payments they will be restored as a ne
cessary consequence. To such a condition of
national prosperity as will insure a permanent
restoration of the specie standard the follow
ing measures arc, in the opinion of the Secre
tary, important, if not indispensable :
First —The funding or payment of the bal
ance ot interest bearing notes, and a continued
contraction of the paper currency.
Second— The maintenance of the public faith
in regard to the funded debt.
Third —The restoration of the Southern
States to their proper relations to the Federal
Government.
If this opinion be correct, the question of
permanent specie payments, involving as it
does the prosperity of the country, underlies
the great questions of currency, taxation and
reconstruction, which are now engaging the
attention of the people, and cannot fail to re
ceive the earnest and deliberate attention of
Congress. In view of the paramount import
ance of this great question the Secretary deems
it to be his duty briefly to discuss the measures
regarded by him to he necessary for an early
and wise disposition of it, even at the risk of a
repetition ot what he has said in previous com
munications to Congress.
The measures regarded by him as important.,
if not indispensible for national prosperity, and
as consequence fora permanent resumption,
are:
First. The funding or payment c:' the balance
of interest bearing notes, and a continued con
traction of the paper currency.
By the act of March 2, '1867, the Secretary
was authorized and directed to issue three per
ceut. loan certificates to the amount of fifty
millions of dollars, for the purpose of redeem
ing and retiring compound interest notes ; and
such certificates, on the Ist. iust... had been
issued to the amount of #11,560,000, in redemp
tion of the notes becoming due in October and
December. The notes still outsanding will be
either taken up with certificates or paid at ma
turity. The seven and three-tenth notes, being
••payable in lawful money or convertible at the
option ot the holders into five-twenty bonds,
will be paid or converted according to the
terms ol the contract. Fortunately all Hie in
terest-bearing notes are to be paid or converted
within eleven months, and they need not, there
fore, to be regarded as a serious impediment to
a return to the true standard of value. As to
the redemption of these notes, aipl the manner
iu which they should he redeemed, there can
not, of course, he much difference of opinion.
It is iu regard to a contraction of the currency,
and upon which Os the two kinds of currency
—United States notes or the notes ol the Na
tional Banks—contraction should bo brought
to bear, that a difference of sentiment seems to
exist.
In bis report to Uons>CE9, under date ol (lie
4th of December, 1865, the sectvtary presented,
as fully and its clearly as he was aide to do, his
views upon the subject of the currency, and the
necessity of action for the purpose ol bringing
about a return to specie payments. The views
thus preseuted by'hup ucie approved by the
House of Representatives on tit.e «U| of Decem
ber, 1865. By the aet of April 12, 18t{6, tip;
Secretary was authorized to receive Treasury
uotes and other obligations of the Government,
whether bearing interest or not, in exchange
for bonds, with a proviso that, of United States
notes, not more than $10,000,000 should be can
celled within sik months from the passage of
the act, and thereafter not more tlmu lour mil
lions ot dollars iu any one month. This pro
viso, while it fixed a limit, to the amount of
notes which should be retired per month, so
far from indicating an abandonment of the
police of contraction, confirmed and estab
lished >t. To this polipy (aMiough for reasons
that seemed to him to be jqdipious, the regular
monthly reduction has not always been ijjade)
the action of the Secretary lias been conformed,
and the effect has been so salutary, and the con
tinuation of It would be so obviously wise, that
ha yyould not consider it necessary to say one
word in jfs favor were there not indications
that, under the teachings of the advocates of a
large and consequently a depreciated currency,
such views are being inculcated as, jf got cor
rected, isay lead to its abandonment.
No matter what J;>ws may be enacted to give
credit and value to it, an irredeemable curren
cy must, unless limited as above staged, always
be a depreciated currency. The attempt to
give value to paper promises by making them
lawful money is not original with the United
States. The experiment has been tried by
other nations, and generally with the same in
jurious, if not disastrous, resulis. Indeed,
with rare exceptions, nations that have com
menced the direct issue of paper money hare
continued to issue it until prevented by its ut
ter worthlessness. There may be no danger
that this will be true of the United States;
but there will always be ground tor apprehen
sion as long as au irredeemable and depreci
ated currency is not regarded as an evil—au evil
to be tolerated only so long as may he neces
sary to retire it without derangement of legiti
mate business. Inconvertible and depreciated
lawful moppv is an agreeable but demoralizing
deception, Uis agreeable because it is plenti
ful, and because if deludes by the creation of
apparent wealth. It is demoralising by famil
iarizing the public miud yvitb dishonor,eu obli
gations. The prices of (post hinds of property
in the United States advanced near three fold
daring the war, but this advance was plainly
the result of the increase of the circulating me:
diuro, and in reality only indicated Its depre
ciation, The purchasing power of the money
in circulation was diminished in the ratio that
its volume was increased. The farmer, for ex
ample, received three dollars per bushel for
his wheat, but, except for the payment of debts,
these three dollars were of no more value i.Q ,
him than one dollar was before the suspension
of specie payments. The same was true of
other kinds of property and of labor. The ad
vance, except so far os If w> B the result of au
increased demand, was apparent oqly and un
real. The same cause is sustaining prices
the present time, and will continue to do so ail !
long as the cause exists, but the advantages
resulting from it are merely imaginary, while
the evils are positive and actual. No saue man
supposes tbaf tfis own wealth, or the wealth of
the nation, is increased by the depreciation ot
the standard by which it is measured. If the
paper circulation of the United States
be doubled during the next year, and the
prices of property should be likewise doubled,
would it be imagined that the real value of
property would be thus advanced ? Or, if the
paper currency should, during the pgr
riod, be reduced fifty per pent., and prices of
property should decline correspondingly,
would it follow that the real value of property
would thus decline ? In the one case the value
pfthe currency would be reduced in propor
tion iff its increase in amount. In the other,
the currency sv°uld be increased in value as it
was diminished iff amount. The increase or
decrease of prices would, jf no counteracting
causes intervened, be the'natural result of the
increase or decrease of the measure of value,
while real values remained unchanged.'
The .United States notes were made a legal
tender apd lawful jnouey because it was
thought that this character was necessary to
Secure their currency. By reference so the first
debate* of Congress upon the subject, It will
be noticed those who advocated their issue
justified themselves j?n the grouud of necessity.
No one who spoke Jo favor pf the measure, fa
vored it upon principle, or hesitated to express
his apprehensions that evil consequences might
result from it. But the Government was in
peril, the emergency was pressing, necessity
seemed to sanction a departure from sound
principles of finance, if not from the letter of
jbe .Constitution, and an inconvertible curren-
cy lav/ful money of the country.—
While the "action of Congress, in authorizing
Hie issue of these notes, seemed necessary at
the time, aud was undoubtedly approved by a
large majority of the people, there can now, in
the light of experience, be no question that the
apprehensions ol those who advocated the
measure as a necessity were well founded. —
Had they not been made a legal tender, the
amount in circulation would not have been ex
cessive, and the national debt would doubtless
have been hundreds of millions of dollars less
than it is. The issue would have been stayed
betore a very large amount had been put in cir
culation, not because the notes would have been
really depreciated by not being made lawful
money, but because the depreciation would
have been manifest. By being made lawful
money Micy became the legalized measure of
value—a substitute for the precious metals—
which, as a consequence, were at once demone
tized and converted into articles of traffic. —
Made by statute a legal tender, they were of
course popular with those who had debts to
pay or property to sell; costing nothing, and
yet seemingly adding to the value of property,
supplying the means lor speculation and for
creating an artificial and a delusive prosperity,
it is an evidence oi the wisdom of Congress
that the issue was stopped before the notes had
become ruinously depreciated, and the business
of the country involved in inextricable difficul
ties. But, although the issue of these notes
was limited, and we thus escaped the disasters
which would have overwhelmed the country
without such limitation, it can hardly be doubt
ed that the resort to them was a misfortune.—
If this means of raisiug money had not been
adopted, bonds would have undoubtedly been
sold at a heavy discount, but the lact that they
were thus sold, without debasing the currency, <
would have induced greater economy in the
use of the proceeds, while the discount m the
bonds would scarcely have exceeded *6e actual !
depreciation of the notes below ff” <-‘Olll stan
dard . As long as notes could be issf/id an
bonds could be sold at a premium or at
for what the statute made money, there w
constant temptation to liberal, if not unn
sary, expenditures. Had the specie stain,
been maintained and bonds been sold at a
count for real money, there would have b
an economy in all the branches of the pti
service which unfortunately was not witn
ed, and the country would have escaped
evils resulting irom a disregard of the gre°‘
lernational law, which no nation c
with impunity, the one that makes
silver the only true measure of 1
financial evils under which the r
been suffering l'or some years past, *
ing of the dangers which loom np in
are, iu a great degree, to be traced tc
issues by the Government of an in
currency with the legal attributes o
Upon the demoralizing influee
convertible Government current
ccssary to enlarge. They are for
attention by every day’s observat.
eannot be blind to them it we w. u .
Government is virtually repudiating It. 0... .
ligations by failing to redeem its notes acaorrt
ing to their tenor. These notes are payable to
hearer on demand in dollars, and not one of
them is being so paid. It is not to he expected
that a people will|be more honest than the Gov
ernment under which they live-; and while the
Government ot the United States refuses to
pay its notes according to their tenor, or at
least as long as it fails to tuakg proper effort to
do so, itprictieally teaches to the people the
doctrine of repudiation.
If the views, thus presented, are con c
there can he no question thAt there is stilt a.
excess of paper money in the United States;
and that the legal tender notes are au obstacle, |
and, unless reduced, in amount, ftaust continue
to beg an obstacle to a .return to a sf.;fce cur
rency. .’
In opposition to these views it i.-, urged’
many intelligent persons that as the credit
tern lias been very much curtailed since
and sales are made chiefly for cash,
larger amount of currency is required
mcrly for the convenient trap
ness; that there is iu fact t
liey iu the United States, butt'
tiiiry, all Increase is required'
encourage enterprise, and
As an evideppe of the cot.
ion reference (s Ujajf: to too
money market" in the oouimei
Hie scarcity of money in thong
trie!?.
It isjindoubtedly true that the effect of a cur
tailment of credits would have been to increase
the legitimate demand for currency, if no other
meaus had intervened to counteract the effect
of if. But such means have intervened. Tn all
the cities’ bud t»iyi|S throughout the country,
checks upon credits in banks, agd bills of ex
change, have largely' taken the place of bank
notes. Not a fiftieth part of the business of the
large pities is transacted by the actual use of
money, and what is true in regard to the busi
ne-s of thg chief cities is measurably true in re
gard to that of towns aud yjllftges throughout
iln: country. Everywhere bank credits aru) bills
ot exchange perform the offices of currency to
a much greater extent than in former years.—
Except in dealing with the Government, for re
tail trade, lor the payment of labor and taxes,
for traveling expenses, the purchase of pro
ducts at first baud, aud for the banker's reserve,
money is hardly a necessity. The increased
use oj hank cheeks and hills of exchange coun
terbalances the increased demand for money
resulting from the curtailment of mercantile
credits. That money is in demand, aud is com
manding full rates ol interest, is true, but this
does if op Indicate a scarcity of it. The rates of
interest in England Slid fiance have rarely
been as low as within the last four months, Upd
yet for commercial or manufacturing purposes
money has not often been so difficult to be ob
tained”. The speculative reaction or over-pro
duction of manufactures, together with appre
hensions of political troubles, have caused bnsi
n,eg} po be sluggish and unprofitable, and made
capitalists cautipps aud timid. Thus, in those
countries, money was never more plentiful, aud
apparently never more scarce. Its apparent
scarcity in the United States is attributable to
high prices, to its uncertain value, and to its
inactivity. Money by no means becomes abun
dant by an increase, or scarce by a diminution
of its volume. The reverse is more likely to
ho trpe, especially when, as is generally the
case, high prices are 6pepulat|ve prices, and
prevent activity in exchanges. Ifouey is ip de
mand at the present (.tope, pot so much f.o tpove
crops as to hold them—not to bring them at
reasonable prices within the reach of con.
sinners, but to withhold them from market un
til a large advance of prices can be established.
Let ftie great staples of the country come for
ward and be sold at market prices, at
prlceg as, while the producer is fairly remune-.'
rated, will Ihcrcaa.e ficpsurpption and exports—
let capitalists be assured "t’hat'process to
a stable basis is to be uninterrupted—and mo
ney, now considered scarce, will be found to be
abundant. The actual legitimate business of
the country is not larger than it was in 1860,
\vneu {Jjfee hundred millions of coin and bank
notes jycre afl kmp'e circulating medium, and
when an addition of Jjfty would have
pjade it excessive.' “ *'
Tmou&fcout a .eqnshJejrabJe portion of tjae
best grain growingsegtlohs of the United Stafes
there has been, during the past year great com
plaint of scarcity of money, aud yet no single
article of agricultural product, except wool,
was to be sold there for which there was not a
purchaser at more than remunerating, if not
exorbitant, prices. There was no lack of money
in these sections, but a jack of products to
exchange for it. The bard tubes 'complained
of were the consequence ot short cropsi ana
not of deficient circulation. To the farmer who
had little to sell and much to buy, an increase
cl tjue circulation would have been an iujury: a
curtailment qf if s benefit. And yet, by men in
such circumstances' tie pejiqy of contracting
has met with a condemnation second only to
that which it has received at the hands '67
speculators in stocks. Next to the stock board
of the commercial metropolis, the opposition to
the policy of contraction has been most decided
in uiQie sections where, by reason of short
crops, .the peopia hayg been less prosperous
than heretofore. Unfortunately, ty t})p sapje
sections, the harvest has beeif again uri6atlsCi‘c
tory, and the demand, not only for a Cessation
fff contraption, but for an increase of paper
money, jiiay thus he more pressing than ever.
This deiq'and, no matter from wbat quarter it
comes, or by' what' interest bus'tained, should,
in the opinion of the Secretary, be inflexibly re
sisted by Congress. To increase the volume ol
paper money lor the purpose of giving relief to
the country, would be to foster the cause In
order to cure the disease. To stay the process
of contraction this year will not prepare the
way for an increase of circulation the next.—
Whenever the policy of reducing the paper
circulation op the country, with a view of a re
turn to specie payments, sfjgJ! be abandoned, it
is to be apprehended that ttie demand spy an
increase will be irresistible, and that the coun
try will plunge into bankruptcy. The specie
standard must be sooner or later restored. —
Whether this shall be accomplished by elevat
ing the curreucy, by lessening its volume, or
after lessening its value by 'inaraasisg ifQ
yolume, it is for Congress to determine. That
this question will be determined promptly and
wisely, the Secretary is not permitted to donbt.
Some progress has been made in the right
direction during the past, year, but there is still
in the United States a plethora of paper money.
AUGUSTA, (Ga.) SUNDj® MORNING, DECEMBER 8, 186?
If, then, it be admitted that the paper ekdftr
tion is excessive, the question arises why sQHfq
not the contraction be applied to the,
the national banks iustead of the United SfH
notes, and thus a large saving of interest KjM
Government be effected ? This questionjffj
already been answered infcrcntially, bnt itSjßfc
portance requires that it shall receive msift
definite consideration. . vJT
Prior to 1863 the banking institutions of fa
country, with the exception of the Bank oftfl
United States, were created by the States, am
were subject to State authority aloue.
were State institutions, over which the General
Government exercised no control. The rigJiF
of the States to create and mauage them li«&.
been so long conceded that no
with them by Congress, aud no decision oft&
epurts adverse to the constitutionality ot their
issues were apprehended.
Soon after the commencement T>f war R be
came manifest that a system of internal taxa
tion must be adopted lor the support of the
Government aud thq maintenance of it3 credit,
and that this would involve the necessity of a
national currency of nniform value aud un
doubted solvency. To meet this necessity
(United Suites notes being then regarded as
only a temporary expedient) the National Ba.ik
ing system was created, not to destroy, the
State banks nor iujmiowiy $o a licet their bad
ness, but to furnish, through their agency
and that of new institutions wbleh might be
organized under it, a permanent national funk
note circulation.
The qn:stiou now to be considered, however,
is not whether banks of issue should be created,
but w>”*’ M *r the National Banking system
shot : ucd. In 4,hc pr condition
of and in view of |
' .auks sustain to the _Gov«-;,^^’
ffiis connection tlyr.
i Secretary has
:ouclusion that
- are so iute’
bfness. --
bed
j netted
.bsiitut
j ational
iV ; nim
f g doliafs
is.
„ no r ;i, j v
*...•pop,is charly
2 <7; ren-sy, in
W.tk U the *»•; •>-.
, asi.eJ 1%
back- , and ti. y
• bi. #6CO.t >.ooo,
. ;. , i ho-r that have
g 1 interest ou the
f ! ciii as a r-rma
paid by them to the
* . intf-wilh a eom
, -, ib«s heeu savjd in
traush ..otng puii.ie money, it
would bfc uscertaiuud that the hanks were not
debtors to the United States. It is not neces
sary, however, lor the Secretary to dwell on
Ibis point, as his main ohiectio :'o (he substi
tution would, not bcremoiea it a. saving ot
interest would be effected by it Regarding as
lie does th 'issue r the United States notes In
" r t * having been a misfortune,
re as n circulating medium,
’> ” he “leadily reduced, as
•rotary can con
"ould justify a
. but legal ten
<.M« reduction that
in the wav of ‘ , e-'
. Substitution o f lIM) , n
regarded by him arm
ration that resumption
j postponed. If those now
oe retired the rate of onlv
r month, the amount in aetna'i
.J)-*soon be srf reduced that
■>usly retard the restoration oftne
of value. If, on the contrary,
nee, or for any purpose whnt
•ite should be increased, espe
■»Ltl tie mails ttm soifrpi*)*-f
e country, a false measure of
ontinned, speculation will be
iistry wjll decline, and the great
sis .... red that finauelr’-heoHU Will only
ho obtained by a revulsion, the effect of which
upon the material interests and credit of the
country no one can estimate. Such a revulsion
the Secretary is most anxious to prevent; aud
he therefore cannot approve the proposition of
substituting the notes of the United States for
these of the National' Banks, but recommends
U)af the policy of contraction be continued.
The next subject to be considered, in connec
tion with the permanent resqmptiqn of specie
payments, is the maintenance ot the public
faith, which involves the necessity of wise and
stable reyenue laws, impartially and rigorously
enforced ; ccononj.v in the public expenditure ;
tuid a recognition o| H)C obligation Cjf the Gov
ernment to pay its bonds iu accordance with
the understanding uoder which they were is
sued.
The power to (ax is one ot the most import
ant powers excrpjsed by governments. To tax
wisely, so as to raise large revenues without
oppressing industry, is one of the most difficult,
duties ever devolved upon the law making
power. In the present financial condition ot
the country large revenues are indispensable ;
and, in adjusting the present tariff, the question
ot revenue must necessarily be the question of
paramount importance.
When the Government was substantially free
from " debt and the publip expenditures were
small, as the case was before the rebellion, a
revenue tariff, properly adjusted to the public
necessities, would have been a low tariff. Blit
now, when a heavy debt aud liberal expendi
tures crcqpira necessity for large revenues, a
portion of which must, for some
years to/bme, be derived from customs, it is
difficult so perceive how, without excessive im
portations, a strictly revenue tariff clip fail tq be
a high one'. It may thus turn out that the ne
cessities of the Government may gjve incident
ally to American manufacturers the protection
they are supposed so require without special
legislation—always ofiionS and generally 'unre
liable—in their oehalf inasmuch as large and
permanent revenues cannot be realized unless
}a»'s arc so framed as not to bear heavily upon
Industrial pursuits, a tariff which, harmonizing
witii internal taxcf, should year by year yield
the largest revenues would undoubtedly prove
to be the least prejudicial to national growth
and prosperity. A high tariff, by reducing im
portations, or by oppressing important branches
ot trade and industry which are subject to in
ternal duties, might prove to be as unfavorable
tc revenue as a low one, and equally nnsuited
to the pubiip necessities. The present tariff,
although a high one, hak net 'proved to pe pro
tective, while, for the past two years, it has been
highly productive of revenue ; but its failure to
protect those interests for whose benefit it was
in a great measure framed, and the large reve
nues whic-li have been derived from it, do not
f roveitto be in any just sense a rtvenue tariff',
t has failed to give to American manufacturers
the' if was intended to afford, and it
hag yielded much' larg'd Vfejfetitye# tfoffn were
anticipated, because the high prices prevailing
in the United States have stimulated importa
tions. It does not follow, because it is produc
ing large revenues now, that it will continue to
do so when business and the currency shall be
restored to a healthy condition. The time will
soon come when the United States will cease
to be the raosf favorable country to sell in, and
when It must pay f6r Wbht it ptfrehases, not In
its bonds, but in its own productibns. In order
that the present tariff should be a revenue tariff
important modifications will be necessary,
which cannot be intelligently made until busi
ness ceases to be subject to derangement by an
irredeemable currency. Tbe Secretary does
not, tnerefdre, recommend a cpmplete revision
of the tariff at the present sesilbn ; bht ther'e
are some features of it, and some matters con
nected with it, which require early attention.
The experience of the Department discloses
many disadvantages attendant upon the collec
tion- of dptieg on imports wffep fbe sa|*s are
high and estimated On ah ad valorem basjsi—
For the collection of such duties, machinery
mere or less complicated‘is necessary for the
Verification abroad of invoices of :m portal ions
anff f° r the examination and appraisement of
tpercjiandlsq on Jt@ arrival in phis ; ountfv.
eyery' i’fiaia'hcie' a'gorapaßsdn is required be
tween the invoice estimate anff the general
value In tbe principal markets of the country
wheDee a commodity la exported. The diffi
culty ol ascertaining the foreign market value,
especially in cases where a commodity is manu
factured expressly for exportation, affords
tempting opportunities for successful under
valuation, and the high rates of duty offer in
ducements for evasion more than commensurate
With the risjf 9f detection,
Since the pafesdge Os the tariff act of March 8,
1861, the rates of duty which, from 1846't0 that
period, were exclusively ad valorem, have on
many articles been specific. The system of
specific duties appears to have given much aat
lsla'otion to houofahle de»lers and to officers of
the customs for the ease With Which the I'charac
ter and quantity of merchandise imported can
be determined ; for the uniformity with which
duties may be assessed at different ports, and
particularly as it precludes the possibility of
fraudulent undervaluations. Without recom
mending an exclusive adoption of specific dn
tles, the Secretary would suggest for the con
sideration of Congress whether the system
might not with propriety be extended to all
commodities ou which the duty bears a large
proportion to the value, or of which the foreign
market price is subject to great fluctuations, or
is from other causes with difficulty ascertained.
The Special Commissioner of the Revenue will
in his report present the result of his investi
gations as to the extent to which the ad valorem
rates of the present tariff cau be advantageously
converted into corresponding specific dnties.
Our commercial relations with Spain and her
colonies under the acts of July 13,1832, and
Juue 30,1834, particalarly so far as they-relate
[to trade with Cuba and Porto Rico, have been
j many yoars the source of much perplexity and
tas given rise to frequent discussions. The
ids above cited were designed as retaliatory
measures to induce by a sort of coercion a re
axation of the extreme protective system
Adopted by Spain in relation to her colonial
ki(ade. Not only have they entirely tailed to
HOduce the desired effect, but their operation
*)« proved on the contrary positively injurious
Ip onr interest in every respect. Their cflect,
Connection with Spanish exactions, has been
(i> drive the greater part of Cuban aud Porto
Alcan trade Irom our markets to others where
Tie same policy does not prevail.
■The countervailing system thus brings no
Muetit to our shipping interests and largely
“rtaili our commerce, which, considering the
proximity of these islands, should include the
wester part of thei.' foreign traffic. It is,
therefore, worthy of grave consideration
'■fliether sound, enlightened policy does not
dictate the repeal at least of the act of 1834.
■\ecomineudations to this effect have been at
arious times made to Congress by my prede
essors, particularly Mr. Walker in 1849 and iu
v. 2 by Mr. Corwin. The experience of the
st fifteen years has fully justified the views
u expressed.
'"he shippiug interest of the United States,
“ t great degree prostrated by the war, has not
wived during llie past year. Our ship yards
a. with rare exceptions, inactive. Onr sur
* products are being chiefly transported to
nVign countries in foreign ve. 's. The Bec
i.i ry is still forced to admit, in the language
of his last report, “ that with unequalled facili
ties for obtaining the materials, and with ac
knowledged skill in ship building, with thou
• ’s of miles of sea coast, indented with the
harbors in the world, with surplus pro
i that require in their transportation a
lai* tnd increasing tonnage, we can neither
pt' .bly build ships nor successfully compete
wi- i English ships in the transportation of our
ow /productions.”
al change for the better has taken place
silica that report was made. On the contrary,
the indiertions are that the great ship-building
imA ’st of the Eastern and Middle States has
been steadily declining, and that, consequently,
the * uited States is gradually ceasing to be a
gre.D.'maritime power. A return to specie
payments will do much, bnt will not be sulfi
wrn, to avert this declension and give activity
tfi our ship-yards. The materials which enter
into'the construction t.. vessels should he re-
Hei'l from taxation by means of drawbacks ;
or, '*Hhis may be regarded as impracticable,
subs, lies might he allowed as an offset to tax
ation If subsidies are objeclionabl i, t hen it is
recommended that all restrict ons upon the
regia ration of foreign-built vessels be removed,
so tin * the people of the United States, who
cannot, profitably build vessels, may be per
rnitlei to purchase them in the cheapest mar
ket. :t. is certainly unwise to retain upon the
statute-books a law restrictive upon commerce
when t no longer accomplishes the object lor
whiclwi was enacted. This subject is one of
great' r.efflßt to the whole country. The at
tention >f Congress is again earnestly called
to it.
• t''?** 1 the amount of revenue to be raised by
ln - e , r , n i taxes must continue to be large, it is
r °" a lint many articles now taxable must be
I*'"of® 1 uni taxation, in order that the nnm
ealiou P ' iute officers may be reduced, dupli
eii los .if 1 ** 8 avoided, and the system render-
Idcnt to tax-payers, it is also ev
he nn * > !e administration, of the law must
intenrikipvvemiea of the past year would have
largely «>cccded the estimates but lor the fail
ure of DP revenue oflicers to collect the taxes
Upon J* tilled liquors. This failure lias been
welt UtV-S’U to the country, and has been the
cause of deep regret and not a little humiliation
to the Secretary-as well as to the Commis
sioner.
The duty upon distilled liquors is so high
that there has been a temptation to avoid its
payment, wltich lias, to a great extent, demor
alized both the manufacturers and the officers
of the revenue. A tax of two dollars per gal
lon itpon an article which can be madp l'qr
thirty cents would be a difficult tax to collect,
even in a small country, where appointments
to revenue positions depend upon merit alone,
and where dishouesty is promptly and severe
ly punished. It is especially difficult in a
country so vast as the United States, where
politics are apt to influence, if not to control,
selections for office, and where skill in evading
the requirements of revenue laws is not among
the least characteristics of the people. The
Secretary is not of the opiniou that this tax
cannot he collected, bqt he does not hesitate tfl
say ihqt even if the ua ete r Which bns beep
adopted, and is intended to lie brought into
general nse, shall accomplish what is expected
from it, the collection of so heavy a tax with
thoroughness w'ill be impossible, unless a
higher standard of qualification for revenue of
ficers than now exists shall be established.—
The vjejyg of the Revenue pommissiq&eis on
this point are worthy of especial consideration.
Now, to what is tbe United States pledged in
regard to the public debt? Is it not that it
shall be paid according to the understanding
between the Government and the subscribers
to its loans at the time the subscriptions were
solicited and obtained ? And can there be any
question in regard to the nature of this under
standing? Wqs ft not tkfif, whije'the interesf
peariug notes could be converted into bonds or
paid in lawful money, the bonds should be
paid, principal as well as interest, in coin?—
tyas hf>t tffis the understanding of the Con
gress which' passed tbe Joan bills and of tbe
people who furnished the money? Did any
member of the House or of the Senate, prior
to 1864, iu the exhaustive discussions of these
bills, ever intimate that the bonds to be issued
jp aepprejappe with thisw provisions might be
paid, when redeemable, iu a depreciated cur
rency? Was there a single subscriber to the
520 bonds or to the 7 3-10 notes, which by
their terms were convertible into bonds, who
did not believe, aDd who was not given to un
derstand by the agents of the Government, that
both the principal and interest of these bonds
were payable in coin ? Does any one suppose
that the per,pie of the United sta.es, self-sao
rifieing as "they were In the support of the
Government, would have sold their stocks,
their lauds, the products of their farms, of
their factories and their shops, aud in .ested the
proceeds iu five-twenty bonds and seven and
three-tenth notes, convertible into such bonds,
if they had understood that these bonds were,
to be redeemed After five years from their ye
speetijie ffates iii"a 1 ctifreudy' of 'the' vilue'of
Winch they'could form too reliable estimate ?
Would the Secretary of the Treasury, of would
Congress—when the late of the nation was
trembling in the balance, and when a failure to
raise money for the support of the Federal
army Fould have been success to tbe rebellion
and rtin to tbe Union cause—have dared to at
teroptffo raise money on bonds redeemable at
the pilasure of the government after five years
in a turfency the feouVertible Value of Whifiti
migbtliiot depend upbff thfe solvency of the
Government, but upon tbe amount iu circula
tion? I No such understanding existed, aud
fortuffitely no such experiment was tried. The
bondajwcre. negotiated with the definite under
standing that they were mycblp in pqlfi, 4i»q
the sfteo aha : lhree-tbnj.h notes with'an equal
ly clMhite undersiatfdiog that they Were con
vertijie at the option of the holder into bonds
of character or payable in lawful
monel. The contracts were made ip gooff
faith fin pofn sines, a parti of tbeni when the
GovijnnU tot was In Imminent peril aad needed
ttooijk’ to preserve its existence, the balance
wlief|tß necessities were scarcely less urgent,
for the payment of its just obligations to ccn
traefiprs and'to tbe v r f;L,,
natS ba'cf bfieifi suveff.robdait.’ and public
hoillr wMdh to it nation are of priceless
■WO*! reqtori-e that thhaC contracts should be
coiMied w;th iu tip spirit in which they were
nuiM. Tlio holders of our bonds at home and
abroad who understand the character of the
pcnblc'of the United States and the greatness
of the national resources, ought not to need an
assitranee that they will be so complied with.
Here remarks upon a subject which it ought
not to be necessary to discuss might be closed,
but the great interest and alarm excited by the
doctrines recently promulgated Seem to justify a
reference tto the debitt'Cs Wheto the act of Febru
aarig), 1862, in somejrespects the most import
ajKof the loan bills, was under consideration,
hKrder that the action and intention of Con
gfsß in regard to tbe legal tender notes and tq
81 bonffs, which it authorized the issue of, may
bfunderstoOd. ' ’
act authorized an issue of one hundred
af ffifty million of United States notes, Which
HI a 6 made receivable for all Government dues,
except duties ou imports, and all claims against
the United States, except for interest upoii
bonds aud notes, which was to be paid iu coin.
It also authorized the issue of five hundred
millions of bonds, redeemable at the pleasure
of the Government after five years from date.
The purpose lor which these bonds were to be
issued was stated to be “ to enable the Secre
tary of the Treasury to fund the Treasury notes
and floating debt ot the Uuited States,” aud he
was authorized to dispose of them “ at the mar
ket value thereof, for coin of the United States
or for any Treasury uotes issued under any
former act of Congress, or fortheUuited States
notes that might be issued under the act.” Re
garding only the act itself, it is not supposable
that Congress intended to provide for iuuding
the floating debt in bonds which might, at the
expiration of five yers, he called in and paid in
the very notes which, with the Treasury notes,
were thus to be funded. These bonds, like all
others since and previously issued, were in
tended to be a part of the funded debt of the
Uuited States, the right to redeem them alter
five years having been reserved by the Govern
ment not that they might be called in aud paid
in a depreciated currency, but in order that
bonds bearing a lower rate of interest might be
substituted for them, if it should so happen
that before their maturity money could be bor
rowed ou more favorable terms. The act pro
vides that the Uuited States notes of which it
is authorized the issue shall be receivable in
payment “of all claims and demands against
the United States, cf every kind whatsoever,
except interest upon bonds and notes, which
shall bo p b' in coin.” It is not said, that they
shall rot be receivable for the principal of ibe
bonds, for the very obvious reason that they
were expected to be but a temporary circula
tion. A provision that these notes —intended
only to meet a temporary emergency—should
uot be received for the payment ol the princi
pal ol bonds which were not redeemable for
five years, would, if it had been advocated and
insisted upon, have been quite likely to have
prevented their issue. The public judgment
bad not then been perverted by an irredeemable
currency, and a proposition that indicated a
long continued departure from the specie stand
ard would have found few supporters in Con
gress or among the people.
In these debates very little was said upon the
subject ol the payment of the principal of the
bonds, apparently for the reason that no one
supposed that they would or could be paid in
anything else than in the heretofore recognized
constitutional currency of the country. The
same may be said in regard to the debates upon
the bills authorizing subsequent issues. The
acts of March 3, 1863, and March 3, 1864, arc
the only acts which state expressly that the
bonds to be issued under them shall be payable
in coin; and this provision in these acts, if not
accidental, attracted no attention at Hie time,
either in Congress or with the public. Under
the former net seventy-five millions of twenty
years six per cent, bonds (part of those known
as bonds of 1881) were issued, aud under the
latter aet nearly two hundred millions ol five
per cent, bonds, Known as ten-forties; and the
fact that tnese six per cent, bonds have had no
higher reputation than other bonds of the same
class, and that the five per cent, bonds never
were a popular security, and have, in the mar
ket, until very recently, scarcely possessed a
value corresponding with the six per cent, live
twenties, shows conclusively that dealers iu
Government securities, and the people general
ly, have not regarded this provision as placing
them on a different footing, as to the kind oi
money iu which they are to lie paid, from the
bonds issued under acts containing no such
provision. There was nothing in the condition
of the country when these acts were passed that
required at) unusual provision, in order that
the loans authorized by them might be suc
cessfully negotiated; ou the contrary, the na
tional credit was better then than at periods
when other loan bills were passed; nor was
there any intimation by any member of Con
gress, nor was it ever thought by the oflicers ol
the Treasury Department that the bonds au
thorized by them were of a different character
from those issued under other acts. It is un
reasonable to suppose that it was the intention
of Congress that the bonds authorized by the
acts of February 25, June 30,1864,
i>»M ‘t* Htosir
authorized by the acts ol March 3, 1863, and
March 3, 7864, could be paid only In coin. The
various isstjes of bonds, constituting the na
tional funded debt, stand upon the samo foot
ing, and all should be paid iu coin, if any are so
paid.
National debts are subject to the moral law
of the nations. Whenever there is no expres
sion to the contrary, coin payments in such
obligations are honorably implied. The policy
of the Government ot the United States in re
gard to the payment ot its debts lias been uni
torin and consistent. Prior to February 25,
1802, there \yas iu tjie jJnited States no lawful
rqoqey but specie, consequently its Treasury
notes, and its bonds previously issued, were
payable iu the same currency. Subsequently
all interest-bearing notes were made payable iu
lawful money, but no change was made in the
form of the obligation of the bonds. Thus the
seven and three-tenth notes issued after that
date, the live per cent, notes, and the compound
interest notes, were made payable in lawful
money, while the bonds not being so made
payable have ever been recognized by Congress,
by the Treasury Department, and by the peo
ple, as payable only in coin. These different
classes of securities were negotiated with
this distinct understanding—an understanding
which is as binding upon the honor of the na
tion as if it were explicitly stated iu the statutes.
It is true that the bonds, and notes convertible
into bonds issued after the passage ot the first
legal pjgder act, were'paid for in depreciated
currency, and were therefore, in fact, sold at a
discount; but it is not denied that they were
sold fairly, aud that every one had ample op
portunity to subscribe for them. Agencies
were established, and subscriptions solicited, in
every part of the country; and, liberal subscrip
tions were regarded as evidence of loyalty.—
Tbaf they were pqid lor in a depreciated cur
rency was not the fault of the subscribers.—
They were so'cj at highest price that could
be obtained for theip—pat ohiefty to the capi
talists o,f the cities, but to men of moderate
means throughout the country, who subscribed
for them, uot for speculation, but to aid the
Government in its struggles witli a gigantic re
bellion ; and it is a significant fact that, with
rare exceptions, the complaints that they were
sold at a discount eotpe irom-those who, doubt
ful p.f thp result of the conflict, declined to in
vest in them. How would the Government of
the United States stand before the wor, 1— how
would it stand in the estimation of its owr
people, il it should decline to pay, according to
agreement, the money it borrowed when its
very existence was in peril, ar.d without which
it could not have prosecuted the war, cq the
ground that the lender? tool; advantage of its
necessities and purchased its securities at less
Ilian their value ?
But if the honor of the nation were not in
volved in the question, the inquiry arises in
what shall the bonds be paid if not in coin ?
Some five hundred and fifteen millious ot five
twenty bonds are now redeemable according to
their tenor. No ope pertalpiy wopld propose
tl;at siisqe of thein'shall be called ip and paid
in a currency now worth seyenty cents on the
dollar, while the rest shqli remain unredeemed
until the currency shall be'still more deprecia
ted by additions to its volume or appreciated
by contraction. The holders of these bonds
stand on the same footing; if any are to be paid
before maturity in a depreciated currency, the
whole should be so paid, and in a currency of
equal value. Bnt the Government has no (Ini ted
States notes in the Treasury, aud sis the annual
receipts are not likely hereafter to be mnch in
exiccss of the expenditures, and as anew loan
to raise money for the purpose of violating an
agreement under which a previous loan was
negotiated would be impracticable, there would
be no way in which the bonds noy? yedeetoable
could be paid qa proposed, except by putting
tee printing'pVe&ses again' at work and issuing
more promises, which mnst themselves event
ually be paid in coin, converted into pain bonds,
of repudiated. The graces* of making money
seems so easy one, but our own experience,
and the experience of every other nation that
has tried it, prove it to be neither judicious nor
profitable. Am the paper circulation pi the
country is already redundant, it >»oUid be less
ened in value by every Adallibn to‘ft, and, by
Vpe distrust thus created, its depreciation would
doubtless tie in a greater ratio than the addi
tions would bear to the volume to which they
would be added, js pot too much to say,
tfcat'an additiiibal issue of five hundred millions
of United States notes would reduce the seven
hundred millions of paper money now in cir
culation to one-halt their present value; so that
a legal tender note or a national bank note,
now worth seventy per cent, in coin would not
be worth more than thirty-five per cent., even
if the apprehension of further issues did not
place it on a nay with Udhfiddrate notes at the
eoifapso of the rebellion. The bonds would of
course decline in valne with the currency in
which they would be payable. Can any one
seriously propose thus to depreciate, if not to
render valueless, the money and securities of
the people ? Cap pay one, - knowing the cfiTect
which suoh an issue’would have upon the Gov
ernment bonds, upon the currency uow afloat,
upon business, upon credit, upon the public
morals, seriously advocate such a measure, not
as a matter of necessity, but to anticipate the
payment of debts due many years hence ? The
statement ot the proposition exposes Us wick
edness. When fairly considered, it cannot fail
to be stamped with universal condemnation.—
It is a proposition that the people of the United
States, who own four-fifths of the national obli
gations, shall, by their own deliberate act, rob
and ruin themselves, and at the same time cover
the nation with inexpressible and ineffaceable
disgrace.
In opposition to all such expedients for pay
ing, oi rather for getting rid of the public debt,
is the upright, world-honored economical policy
of paying every obligation of the Government'
according to the understanding with which it
wa? created—the policy of appreciating the
paper dollar until it shall represent a dollar in
coin, of giving stability to business and assur
ance to enterprise, and wiping from the country
tlic reproach that re6ts upon it by reason of the
low price of its securities in the great marts of
the world. That this is the policy which will
be sustained by the people aud their represent
atives, the Secretary has the fullest confidence.
There may hereafter be nations which, ignoring
their honorary obligations, may look only to
their own statutes for the measure of their lia
bilities. If there shall be such nations, Ibe
Republic of the United States will not be found
among them. It has essentially suffered by the
actual repudiation of some gj the States and the
virtual repudiation >1 others; it is still suffering
Irom the same cause, although more than a
quarter of a ceutury lias elapsed since this
Htigue. was f-ted upon American credit. It is
; iuffei ’ag also from the fact that Massachusetts
a y . California alone, of all the States, have con-
Hiiuecl to pay the interest on their bonds in coin.
But althougL it bas suffered, and is still suffer
ing, irom the bad i'aitli or false economy of
some of is memb-.r-, its own financial honor
is unsullied. It has -omtmtted the mistake
ol making its inconvertible promises a legal
tender, but it has never taken advantage of its
own legislation to lessen iu the hands of the
holders llie value of its securities or violate
its engagements by covert repudiation. In the
darkest hours of the rebellion it falltered not
iu the observance of its contracts. Shall it falter
notv when its ability to pay to the utmost larth
ing, even without oppressive taxation, cannot
be questioned?
The importance of llie restoration of the
Southern States to their proper relations with
the Federal Government cannot be overesti
mated. A curtailment of the currency and the
maintenance of the public faith are not all that
is required to restore the country to perfect
financial health. We need, In addition to these,
a united country—united In fact as well as in
name. It may not lie proper for the Secretary
in this report to discuss the measures regarded
by him as host calculated to bring about this
most desirable result. This, however, he feels
it his duty to say, as ire substantially said In Ills
last year’s report, that the questions of recon
struction, as a purely financial question, Is iu his
judgment, second in importance to none ilmt
Congress will ever be called upon to consider.
The great staples ol the South have for many
years constituted a large portion of our ex
ports. But for the cotton held In that section
ut the close of the rebellion, the lorelgn ex
changes would have been so largely against the
United State# that a commercial revulsion
would have been imminent, if not unavoidable.’
Even in the deplorable condition of these
States, Inst year more than two-thirds of our
exports consisted of Uielr productions, and it
is the crop bt the present year—small though
it may be—that is to save us from ruinous in
debtedness to Europe. It is of the greatest
moment, therefore, that the productive power
of the Southern Slates should be restored as
rapidly as possible. Little progress has been
made in this direction during the past two
years, and no real progress will he made until
their political condition is determined by their
restoration to the Union with all the rights and
privileges of other States under the Constitu
tion. The Secretary does not allude to this
subject for the purpose of calling the attention
of Congress to it. This is unnecessary. It is
absorbing the public attention, and the further
action of Congress in relation to it will bo
watched by the people with intense solicitude.
Upon the judicious settlement of it depends,
iu a great degree, the national prosperity. The
views presented by the Secretarr »iw- *» >
sniffed, mi ins *iast report, are equally appro-
priato at the present tituo.
In his report for the year 1865 the Secretary
used the following language in retrard to taxa
tion by the States of Government obligations :
In view Os the fact that the exemption of
Government securities from State taxation is by
many persons considered an unjust discrimina
tion in their favor, efforts may be made to In
duce Congress to legislate upon the subject of
their taxation. Os course, the exisiting exemp
tion from State and municipal taxation of bonds
and securities now outstanding will bo scrupu
lously.regarded. That exemption is a part of
the contract under which the securities have
been issued and the money loaned thereon to
the Government, and it would not only be un
constitutional, but a breach ot the public faith
of the nation ro disregard it. Jtjwould also, in
the judgment of thp Secretary, be unwise for
Congress tft grant to the States the power,
Tfhieh they will not possess unless conferred
by express Congressional enactment, of impos
ing taxes upon securities of the United States
which may be hereafter issued. Such taxation,
in any form, Would result in serious, if not
fatal embarrassment to the Government and,
instead of relieving, would eventually injure
the great mass of the people, who are to bear
their full proportion of the burden of tie pub
lic debt. This is a subject in relation to which
(here should he no difference of opinion. Every
tax payer is personally interested in having the
public debt placed at home, and at a low rate
oi interest, which cannot be done if the public
securities are to be subject to load taxation.
Taxes vary largely in different States, aud in
different counties ;»nd cities of the same State,
and :\ra everywhere so high that, unless pro
tected against them, the bonds into which the
present debt must be funded cannot be distribu
ted among the people, except in some favored
localities, unless they bear a rate of interest so
high as to make the debt severely oppressive,
and to render the prospect of its extinguish
ment well nigh hopeless. Exempted irom local
taxation, the debt can, it is expected, be funded
at an early day at five per cent.-, if local taxation
is allowed, no considerable portion of the debt
wYich falls slue within the next four years can
be funded at home at leg 9 than eighty per cent.
The tax payers of the United States cannot af
ford to have their burdens thus increased. It
is also evident that the relief which iocal tax
payers would obtain from Government taxa
tion, as • ’ esx't of a low rate ot interest on the
fu-ersr ties, TV quid' At least be as great as
t in l ease of local taxes to which they would
bt -—ejected an account of the exemption of
Cjoyeynmert securities ; while if those securities
should hear a rate of interest sufficient to se
cure their sale when subject to local taxes,
few, if any of them, world long remain where
those taxes could reach them. They would be
rapidly transferred to other countries, into the
hands of foreign capitalists, and thus at last the
burdens of paying a high rate of interest would
be left upon the people of this country without,
compensation or alleviation.”
The views oi the Secretary, thus exposed,
have undergone no change, but the exemption
from taxation of any kind of property, by
which special privileges are, or seem to be,
granted to any class of citizens, is odious to the
heavily burdened masses in all countries, and
is especially so in a Republic like ours. Local
taxes in all the States aye heavy, and no matter
what the lay? may say upon the subject, no
maifer what the contract may have been under
which they were negotiated, there is a general
sentiment among tax payers that the exemp
tion ot Government bonds from local taxation
is not exactly right, and that it ought to be in
some way avoided in future \asue*. The Secre
tary has no hesitation in admitting that he is
iu sympathy with this sentiment. The difficul
ty in the way, however, as has been suggested,
arises from the fact that that if bonds hereafter
to he issued were to be subject to local taxa
tion, very few would be held where the taxes are
high, and there would boa constant tendency
to a concentration of them in §tq(d» and coun
ties and cities wbef? are low, or In
foreign where they would escape
taxation altogether. It is a matter of great im
portance that the Government bonds should be
a desirable investment ip gU parts of the coun
try, and it is obvious that the States should bo
in some mannercompensated for the right now
denied of iaxing them, as other kinds of pro
perty are taxed. After giving the subject care
ful consideration, the Secretary can suggest no
better way of doing it than by an issue oi
bonds to be known as the Consolidated Debt
of the States, bearing sjy; pey. cent. Interest,
and having twenty years ip run, into which all
other obligations of the Government shall as
rapjdiy as possible be converted ; oue-sixtb
part the interest at each semi-annual payment
to be reserved by the Government aud paid
over to the States, according to their popula
tion. By this means, all the bonds, wherever
held, wonld be taxed alike, and a general dis
tribution of them would be secured, fjtato
taxes, including the levies for county and mu,
nicipai purposes, now, as a geqeyar thing, ex
ceed one per cent., bnt tflie debts Incur
red for the paymep! bounties are paid (and
in most o£ States they are already In the
process of rapid, extinction) and economy is
again practiced yi the administration of State
affairs, this indirect assessment will be qnite
likely to equal the tax assessed other
VOL 24—NO 118
property, if the debt to be funded shall
amount to #2,000,000,000, the amount lo be re
served and paid to t.m Stales annually would
be 1-0,000,000, which would give t > c id, of i he
States, in gold, as nearly as now can bo osiima
ted, the following sums, to-be reduced of
course, with the reduction of the debt:
Maine $385,009 76
Massachusetts 748,678 4.4
N. Hampshire 194,411 17
Vermont 186,026 09
Connecticut.. 282,41 SOl
Rhode Island. 107,174 16
New York... 2,381,825 89
New Jorsey.. 412,466 92
Pennsylvania. 1,783,647 12
Ohio 1,449,559 68
Indiana 836,727 81
Michigan 472,909 32
Illinois 1,800 892 50
Wisconsin... 521,554,49
lowa 493,050 10
Minnesota.... 177,840 01
Missouri 773.831 70
Kentucky 709,368 45
Tennessee.... 081,147 55
Arkansas .... $207,259 98
Louisiana.,.. 434,640 77
Alabama 580,f>ii) 53
Mississippi... 471,792 23
Ib’GWa 618,906 93
Florida 00,203 00
8. Carolina... 451,905 13
N. Carolina.. 026,034 28
Virginia 730,602 60
Wist Virginia 249,088 IT
Maryland 421,080 53
Delaware 68,873 42
Iviinsa* 166,002 80
Nebraska 33,710 80
California.... 288 76 ;14
Nevada 24,048 73
I $20,000,000 OO
The bonds, the issue of which is thus recom
mended, would be six per cent, to the Govern
ment ands :e per cent, so the holders, which
is as low a rate of interest as can he expected
to prevail in the United States for many years,
lo come. Os the practibility of converting tho
outstanding obligations of tlie Government into
this consolidated debt at an early dav at no
considerable expense, the Secretary cntei b.ina
no doubt.
It is therefore respect,lolly recommended
that the act of March 3, 1805, be so amended as
to authorize the Secretary of the Trea- nrv to
issue six per cent, gold-hearing bomb to' bo
known as the Consolidated Debt H tin; ( mtccl
States, having twenty years to run, and redeem
able if it may be thought, advisable, at an earlier
da}', to be exchanged at, par for any and all
other obligations ottheGovernment -oue i-ixtU
part of the interest on which, ii. lien ,>f ail other
taxes, at eaclt semi-annual payment, shall bo
reserved by the Government and paid over to
thc Btat.cs according to population.
The following is a statement ot the public
debt on the Ist of July, PS67:
DEBT BEARING COIN INTEREST.
5 per dent. Bonds $l9B 431,300 60
6 per cent. Honda of
1867 and 1868 15,181,141 80
6 per cent. Bonds of
1861 283,746,350 00
6 per cent 6-20 bonds 1,127,531 800 cn
Navy Pens on Fund. 13,000,000 00
$1,637,890,041 80
lUJMT BEARING CURRENCY INTEREST.
6 per cent. 80nd5.... $14,762 000 00
3 year Compound In- ' '
terest Notes 122 394 isn n,, '
3 year 7-30 Notes 488,617,425 00
DEBT BEARING NO INTEREST,
United States Notes $371,992,029 00
Fractional Currency- 28,307,523 52
Gold Certificates of
Total debt 2 692.198.215 12
Amount iu Treasury,
. Coin $108,419 638 02
Amount in Treasury,
Currency 71,979,003 77
Amount of Debt,
less cash in Treasury 5t 1,800,003 33
The following is a statement of th public
debt on the Ist of November, 1807 :
DEBT BEARING COIN INTEREST.
Five per cent. Bonds. $198,846 350 00
Six per cent. Bonds ’
of 1867 and 1868... 14 090 041 80
Six per cent. Bonds, ’
Q , lBBl 283,670,000 0.1
Six per cent. 6-20
Bonds... 1,207,898,100 00
Wavy lYmdon Fund. 13,000,000 00
— 11,778,110,001 80
DEBT BEARING CURRENCY INTEREST.
Six per cent. Bonds.. $18,042,000 00
Three year Com
pound Interest
Notes 62,558.940 00
-Three year 7-00 union 004.007 ,’uo 00
Three per cent. C\m ’
liHf»a*e --•*•••• J n,>t*U,OOv o*'
426,7«8,i'.ii*y
MATURED DEBT NOT URKMKNTKII FOR pjriß M
Tnree-year 7-30 notes, duo AIN 1 ’
Aug. 15,1867 $3 371,100 00
Compound Interest Notes,
matured June 10, July
-15, August 15, and Octo
ber 16, 1867 9 316 100UO
Bonds, Texas indemnity. 162 Out) in
treasury Notes, acis July ’
17,1861, and prior there
to IjVl I. |
Bonds, April 15, 1842.... W ’ (M , ,u
Treasury Notes, March ;t ’
1863 ”7 868 oio no
Temporary Conn, 4 168 375 £,-,
Certificates of Indebted- ’
neM " 34,000 00
. . DEBT BEARING NO INTERS T
United States N0te5....5357,164,844 uu
Fractional Currency 3o 7nil on:: o
Gobi Certificates of lie- ’ ’
P° sit 14,514,200 OOJ
Total Debt 2 025 60" is (>2
Amount in Treasurv-
Coin $111,540 817 3fi
Currency 22,1;.5'050 iiv
Amonntof Debt, loss L’uhli in Treasurv, .',lol ;.ui i.iuTo
The following is a eta,amen I. of i.T’.ii.r, ae'i m
petlditu.cs for the llaeal year eiiflitu-.lnin .:ij •-.- ■
Receipts from Custom .$176,417 siu ,
Lund* 71.
Direct Tax 4 200/.';;:: 71
Internal tfeveuuc 2nt»,twi’vn 43
Mis.-, lUneous sources.... 42,820,852 on
Expenditures for civil ser
vice $.71,110/127 27
Pensions and Indians 25,670,083 48
War Department 95,224,416 65
Navy Department 31,034,011 04
Interest on the public
debt 148,781,591 Ot
Loans paid, 746,350,525 94
Receipts from loans 640,426,910 29
Deduction of loans 105,925,015 65
The following is a statement of receipts and expen
ditures for the quarter ending .September 30, 1867:
CECKI CT.S.
Customs $48,081,007 01
Lands 287.460 07
Direct tax 647.070 83
In'ernalrevenue 53 784,027 49
Miscellaneous sources... 18,301,462 62
— $121,161,928 03
EXrtiNDITCRE.S.
Civil service $13,152,34# 08
Pensions and Indians... 10,484,476 11
War Department 30,637,056 85
Navy Department 5,579,704 67
Interest on public debt. 38,515,640 47
, ~ 98,269,220 J 8
Loans paid 200,176,308 34
Receipts from 10an5.... 135,103,222 00
Reduction of loans 65,073,086 34
The Secretary estimates that the receipts and
expenditures lor the ihrcc quarters ending
June 30,1868, will be as follows:
Receipts from Customs,sll6,soo,ooo 00
Lands 7011,000 00
Int. Revenue 155,000,000 00
Misc’la so’ces 26,000,000 00
The expenditures for the same pe
riod, according to his estimates will
be: ’
For the civil service $37,000,000 Oil
For Pensions & Indians, 22,000,000 00
For tbe War Depart
ment, including $24,-
600,000 for bounties.. .100,000,000 00
For the Navy Dep’mnt, 22,000,000 00
Pot the interest on the
publie debt 114,000,006 00
Leavirg a surplus of estimated re
ceipts over estimated expenditures
of. », $1,000,006 00
The receipts aud expenditures for the next
fiscal year, eudiug June 30, 1860, are estimated
as follows;
Receipt* from Customs,sl4s, ooo,ooo 00
Int Revenue. 205,000,000 00
Lands 1,000,000 00
Misc’ls souc’s. 30,000,000 00
The expenditures for the same pe
riod are estimated as follows :
For the civil service.... $51,000,000 00
For Pensions Sfc Indians, 35,000,000 0O
For the War Departm’t,
including $25,500,000
for b0untie5.......,. .120,000,000 OO
For the Navy Popt’mnt, 36,000,000 00
For fho interest on the
public debt. 130,000,000 OO
Leaving a surplus of estimated re- ,
ceipts over estimated expenditures
of. $9,000,000 00
The foregoing estimates are made on the gen
eral average of the receipts and expenditures
for the past nine months. The Secretary is
hopeful, however, that Congress will take
measures to largely reduce expenditures in all
branches of the service, so that a steady reduc
tion of the debt may be continued.
The report of the Director ot tbe Mint con
tains the usual information relative to tbe coin
age of the past year.
The total value of the bullion deposited at the
mint and branches durimr the fiscal year waa
$41,893,100 76, of which $40,069,300 06 was in
gold, and $1,823,900 70 in silver. Deducting
the redeposit, the amount of actual dejiosit waa
$34,537,048 39.
Tb 9 coinage for the year was, in gold cou\