AMERICAN REVIEW, No. XXVI. FOR FEBRUARY, 1850. REPORT OF THE SECRETARY OF THE TREASURY. THE Report of the Secretary of the Treasury is a document which confirms the judgment of President Taylor in the relection of that officer. Mr. Meredith has done equal honor to himself and the Administration by the use which he has made of the power entrusted to him. The document which he has prepared is not only a statement of the financial condition of the country, but embraces also a thorough refutation of the dogmas of freetrade put forth by his predecessor, Mr. Walker. We here present our readers with a re-statement or summary of its most important facts and positions, attended by such a commentary upon each and upon the whole as may arise on the suggestion of the moment. The receipts for the fiscal year ending July, 1849, were $59,663,097 50, which, estimating the population of the country at 21,000,000, gives somewhat less than $2 37 a head, of expenses, for the support of the most powerful, stable, and efficient government in existence. Of this sum, nearly one-half, or more than $28,000,000, was collected by duties on foreign goods; so that each individual in the country would have been taxed about $1 33 for the use of foreign commodities, had the use of those commodities bee equally distributed. An equal distribution of this tax over the entire property of the country, would be equivalent to a bonus of 28 millions to those persons who use foreign commodities. VOL. V. NO. II. NEW SERIES. It is only those who insist upon using a foreign commodity, or luxury, who contribute thereby to the public treasury. Thus it comes to pass, that taxation for the general government is thrown in a great measure upon those who live expensively, who are obliged to contribute a larger proportion of taxes than those who use homespun. The estimated receipts and expenditures for the fiscal year ending June 30th, 1850, are from customs $31,500,000. Adding those from various other sources, including public lands, balance in treasury, &c., and the total available means for the year, as estimated, will be rather more than $37,800,000. The expenditure, on the other hand, is estimated at more than $43,600,000, leaving a deficit of about $5,800,000. We refrain from giving the exact numbers, as they are unimportant in a general view. Besides the cheapness of collecting a revenue at a few points, by customs, the system has this great advantage, that it limits the patronage of the general government to a few places. The post-office patronage, employed as a political engine, by reason of its extension into every village of the continent, would prove incomparably more powerful than that of a few custom-houses in a few cities on the coast. What use, then, might not be made of a system of collectorships distributed through the interior, and made personally operative and efficient in every village. From this point of view we can easily penetrate 8 tax-payers, through the agency of govern- (as in the case of a war,) to load the taxment: that if the Rothschilds, for in-payer (i. e. voter) himself, with the restance, lend the goverment a million at 5 per cent. they have lent it to the tax-payers, who ought to consider it a very advantageous loan. But if the tax-payers are the borrowers, they are, by the same rule, the expenders of the money. Whether the transaction is a good one, or not, depends upon the manner in which the money is expended. If it is well employed by the government, in such enterprises as will yield a fair return to the public; it cannot be set down as a loss. The capitalists, in that case, have invested their money in a national enterprise, for which the people pay them interest, and neither party are the losers. If the national wealth is increasing at the rate of 5 per cent. per annum, or more, by the general and distributed industry of all the tax-payers, other things being equal, they will not find it a disadvantage to borrow money at 5 per cent. If, on the contrary, the body of the nation is not increasing its substance at that rate, it will be a loser by such a bargain. The most serious objection to a national debt is, however, that it facilitates the employment of capital, by government, in unjust and unprofitable projects. Capitalists are eager to lend. Ambitious and unjust governments are eager to borrow. The taxpayers are unthinking and ignorant. The consequences are, a dreadful waste of the substance of the nation. When governments refuse to borrow, capital is thrown into manufactures, commerce, agriculture, and other forms of industry. In these it increases rapidly, and with it increases the ability of the nation to pay such taxes as may be necessary at the time when they are needed. sponsibility of the thing, as in a private speculation. This policy would not only prevent all engagements in unnecessary and unjust wars, by keeping the conscience of the people in harmony with their pecuniary interests, (a sure means of making men honest and considerate,) but it would lead them to invest the public money in such projects as would reimburse the nation for its expenses. The democratic party maintain a speculative opposition to funded national debts. Were they to maintain, what they dare not do, a direct opposition, they would probably not have been able to force duty-payers into a support of the Mexican war. Another and highly important objection to a system of public debt, even when we suppose the money to have been justly and profitably employed, and to the advantage of the nation, is that it converts the government itself into a monied corporation, employing a prodigious capital for such purposes as it may see fit. The accumulated earnings of thousands of individuals are thrown into its hands, to be employed at its discretion. The Government of England is a monied corporation, which has sunk its capital, and taxes the people to pay interest on the money it has lost, and which yields it nothing. Thus, instead of being the agent and representative of the popular will, and the national industry, it has become an irresponsible corporation, with the right of raising funds by force. This is the effect of keeping the tax-payer separated from the government by the intervention of an unlimited credit system. A principal objection to the of late very democratic system of contracting public debts is, that the loaning of great masses of property, to government, deprives the tax-payers of a double advantage; first, that of having a capital, created out of small and scattered sums, employed for the general good; and, second, the use, to a great extent, of the concentrated means of capitalists. It matters not what may have been the nature of the enterprise, the lender must have back his money. Had he invested it himself, he would have been responsible for his own losses; but, for public loans, the tax-payers are responsible. One party manages the enterprise, (a war, for example,) and another is responsible for the cost. A million of poor tax-payers pay a dolThe great secret of economical government lar each into the public treasury. Let us will then be, to bring the opinion of the tax-suppose that the money is justly applied payer to bear directly upon the project it- for their defence, and for the assistance of self; and by making the payment follow their industry, by the government. A instantly upon the adoption of the project, good government is almost the creator of national industry. The dollar they have each paid in, well employed by their representative agents, will enable them all to increase their little wealth, some once, some twice, and some an hundred fold. At the same time, the capitalist, unable to make the government his debtor, is compelled to employ the million he would have lent, in industrial projects for his own and their advantage, realizing for them and for himself a much larger return, than if he had lent it; though, indeed, with greater labor. It is better, therefore, to pay a dollar to-day, than two dollars twenty years hence, inasmuch as we thereby enjoy in addition to the benefits of a good and wealthy government, devoted to the protection of industry, the employment offered by the capitalist whose money must now be directed upon private enterprises. We do not mean, by these arguments, to impress the idea, that we have already incurred a great and immediate danger, by the increase of the national liabilities. The commerce of the nation is, doubtless, fully equal, under an equitable system of specific duties, to cancel, by degrees, all our obligations. We would not even propose a sudden and violent change of policy, in regard to the contraction of debt. We desire only the gradual payment, not by any delusive system of a sinking fund, which, like a spend-thrift's reservation, puts conscience asleep; but by a method, first, of economical administration, and, second, of direct appropriations, of which the people will see the merit, and feel the force. On the 1st of July, 1850, by the estimate of Mr Meredith, there will be a deficit of nearly six millions, for which no provision has been made. On the 1st of July, 1851, there will be a deficit of more than ten and a half millions-the total deficit exceeding sixteen millions, which, if provided for by loans, temporary or funded, will be merely an addition to the national debt. The actual public debt already exceeds $64,700,000, the greater portion of which is redeemable before the year 1868. Under the system that has been pursued for the last three or four years, of contracting debt upon debt, and putting the day of payment as far as possible into the future, it is not unreasonable to suppose that the public debt will, within twenty years, have risen to $100,000,000. Mean while the expenses of the government have been greatly increased by additions to the national territory. The great increase of the business of the country, requiring an additional number of inspectors, guagers, weighers, will add considerably to the cost of collecting the revenue. The act of March 3d, 1845, limiting the number of these officers, will need to be revised for the more effectual prevention of breaches or evasions of the revenue laws. The warehousing system, introduced by Mr. Walker, has greatly increased the number of officials required by that service. The necessity of creating new collection districts in Texas and California, in addition to those already established, is also a necessity for new expense. In the jugdment of the Secretary, no reduction is practicable in these branches of service; on the contrary, the force will have to be increased. Nor are the expenses of the army, on a peace establishment, likely to be at all diminished. The necessity of protecting the frontier of Texas and New Mexico, and of maintaining military posts in the new territories, will draw largely upon the public purse, and there is every reason to believe that public opinion will soon demand a large addition to the navy for the protection of a commerce which attracts the attention and excites the jealousy of our commercial rivals. These latter suggestions are not, however, made by the Secretary of the Treasury. In a word, every thing points to a necessity for the adoption of the most efficient and economical means of increasing the revenue. We have our choice among three methods, the imposition of direct taxes, or of specific duties, or the augmentation of the national debt. Concerning the first method, the imposition of direct taxes, it is unnecessary to say much at present. If democratic economists think it a popular measure, they will not fail to propose it to the people. To all the influence and popularity which can be gained by saddling the country with excises, corn taxes, land taxes, taxes on legal proceedings, on churches, school houses, live stock, and the various necessaries of life, they are welcome; we shall not grudge it them; but we confess we are ambitious of the honor, the credit, and the praise which will belong to us if we suc ceed in paying the expenses of the government by the direct and economical method of specific duties. While at the same time we deprecate, nay, earnestly seek to avoid, the odium which must follow, if not in the present, then in the succeeding generation, of that slack, faithless and timid policy which shall content itself with pushing forward the national liabilities into the future, and fix upon us, as a nation, the habit of paying in promises to be kept by our posterity. Not only, therefore, to meet our present necessities and provide for the increased expenses of our government, but to nip this great evil in the bud, to keep our national liabilities within manageable limits, we cannot but give a warm support to the proposition of the honorable Secretary of the Treasury. Mr. Meredith has given us a statement of the excess of army and navy expenditure, occasioned by the war with Mexico. The excess of army expenditure for that purpose has been more than $58,800,000, and to this, added the excess of naval expenditure, makes a total exceeding $63, 600,000. The increase of debt by the use of the public credit, to meet the additional expense, was only $49,009,000; leaving $14,600,000 to be paid out of the revenue. Land warrants to the amount of $18, 000,000 have also been issued; thereby diminishing the sales of public lands, and the revenues therefrom accruing, in the sum of, perhaps, 2,000,000. To this, however, no reasonable objection can be raised, as the issue of a land-warrant is a cheaper process than the sale of as much land at auction. Mr. Meredith estimates that had there been no unusual expenditure, there would have been a balance in the Treasury, on the 1st of July, of more than $12,600,000. The Secretary attributes the deficit declared for the coming years to the extraordinary expenses of the war and treaty with Mexico; and that the justly high publie credit of the United States is not endangered by the fact, that a new loan will be required. He proposes, therefore, that a loan not to exceed $16,500,000, be authorized on such terms of interest and repayment as the President, in his discretion, shall, previous to their being issued, see fit to order. Mr. Meredith adds: "To provide for the payment out of the revenue of the instalment which will be due to Mexico in the fiscal year ending 30th June, 1852, to secure the raising of a fund for the gradual extinguishment of our heavy public debt, and to place the revenue on a sure basis of sufficiency for all the expenditures of the Government, it will be necessary to adopt measures for increasing the revenue; and the most available means to that end are to be found in raising the duty on imports. That an economy as rigid as may be found compatible with the necessities of the country will regulate the appropriations, under existing circumstances cannot be doubted." "In proposing some alterations in the existing tariff, with a view, as well to the necessary augmentation of the revenue as the encouragement of industry, I think it right to present distinctly the views entertained on the latter subject, in the hope that a course may be adopted by the wisdom and patriotism of Congress which may tend to harmonize discordant feelings and promote the general prosperity.” Under this head, he says he entertains no doubt of the rightful power of Congress to regulate commerce and impose duties in such a manner as shall favor the industry of the country. It will no doubt, at some future time be matter of wonder that it should ever have been necessary for any government, performing its natural duties, to defend such a position. The revenue, in whatever shape, or by whatever means, or under whatever theory it is collected, has to be expended, after, its collection for the protection of the national industry and property. To this end forts are built, an army and navy is maintained, commerce is defended, territories are purchased from foreign nations, post-offices are established, light-houses are erected, and the rights of each and all are defended. By what species of argumentation are we then to be convinced, that these ends are to be thought solely during the expenditure, and never during the collection, of the public revenue. Lighthouses are established in order that those who engage in commercial enterprises may not wreck their property on rocks and shoals. Light-houses are there for the protection of persons engaged in navigation. They could, if they chose, stay at home and live upon the products of the soil; but it is |