Richmond Enquirer

ANNUAL TREASURY REPORT.

[Concluded.]

III. Propositions for the improvement and management of the Revenue, and for the support of Public Credit.

The propositions which are now to be respectfully submitted, relate 1st, to the revenue; 2d, to the sinking fund; and 3d, to the national circulating medium.

1. Propositions relating to Revenue.

The changes contemplated in the revenue on the estimates of a peace establishment, having been already stated as the intended objects of recommendation, it is now only necessary to submit to the consideration of congress, the measures requiring their sanction for carrying the plan into effect.

First. It is respectfully proposed, that the act of the 1st July, 1812, imposing an additional duty of 100 per cent. upon the permanent duty on goods, wares and merchandize, imported into the United States from any foreign port or place, and the act of the 24th July, 1813, imposing a duty upon imported salt, be continued in force until the 30th day of June, 1816.

Second. It is respectfully proposed, that the act of the 24th of July, 1813, imposing a duty on sugar refined within the United States, and the act of the 2d of August, 1813, imposing a duty on bank notes, notes discounted, and bills of exchange, be continued by law, in force without limitation, but with proper amendments, to render the collection of the duties more equal and more certain: And that the act of the 15th of December, 1814, imposing duties on carriages and the harness therefor: and that so much of the act of the 23d of December, 1814, as relates to the duties on sales at auction, and to the increasing of the rates of postage, be allowed to remain in force.

Third. It is respectfully proposed, that there be a reduction or modification in the following taxes and duties:

1. That the direct tax be reduced from six millions to three millions of dollars, for the year 1816, and for each succeeding year.

2. That the duties on distilled spirits be discontinued after the 30th day of June, 1816; and that the duty on licences to distillers be doubled on that day, to double the amount fixed by the act of the 24th of July, 1813.

3. That the duties on licences to retailers of wines, spirituous liquors, and foreign merchandize, be reduced to the rates of the year 1813, with proper regard to the periods when licences commence & expire.

Fourth. It is respectfully proposed, that the act of the 18th of January, 1815, and the act of the 27th of February, 1815, imposing duties on various articles manufactured or made for sale within the United States, and that the act of the 18th of January, 1815, imposing duties on household furniture and watches, be absolutely and entirely repealed.

Fifth. It is respectfully proposed, that the act of the 3d of March, 1815, further to provide for the collection of the duties on imposts and tonnage: and the act of the 3d of March, 1815, to fix the compensation and increase the responsibility of the collectors of the direct tax and internal duties, and for other purposes connected with the collection thereof, as far as it relates to the compensation of the collectors of the direct tax and internal duties, be continued in force without limitation.

2. Propositions relating to the Sinking Fund.

The sinking fund, as it is at present constituted, amounts to the annual sum of 8,000,000

It is charged in the first instance with the payment of the interest and the annual reimbursement of the principal of the old funded debt, which will require, for 1816, and each of the two ensuing years, the sum of 3,460,000

And it is charged with the payment of the interest and the eventual reimbursement of the principal of the new funded debt. The interest computed on a capital of 70,000,000 of dollars, will require for the year 1816, and each subsequent year, the sum of 4,200,000

The total present charge on the sinking fund, on account of the funded debt, being the annual sum of 7,660,000

In the year 1818 the fund will be released from the annual charge of 1,380,000 dollars, accruing upon the old six per cent. stock, as the stock will be then paid and extinguished; but in the same year it will be subjected to a charge of 3,000,000 dollars for the first instalment of the principal of the Louisiana stock, which will then become payable. In each of the two succeeding years, a similar sum will be payable; and in the year 1821 such sum will be payable as may be necessary to complete the reimbursement of that stock, and which is estimated at 1,923,500.

The sinking fund, is also, at present, charged with the payment of the principal and interest of the treasury notes issued under the act of the 4th March, 1814, and prior acts; and of certain temporary loans obtained under the loan acts of 1812, and of subsequent years. The several acts charging these payments on the sinking fund have directed that such sums, in addition to the annual appropriation of 8,000,000, should be taken from any funds in the treasury not otherwise appropriated, as should be necessary to meet and satisfy the demands. The temporary loans and treasury notes will therefore probably be paid or absorbed in 1817; and it is deemed unnecessary, for the present purpose, to include them in the consideration of the form and extent which it is proposed to give to the sinking fund in that year.

In 1804, when the sinking fund was established on its present footing, the principal of the public debt, was about 86,000,000 of dollars, and the interest annually payable upon it, about 4,500,000 dollars. At that time, there was assigned to the sinking fund out of the public revenue, 8,000,000 of dollars; of which about 3,500,000 dollars were annually applicable to the reduction of the principal of 86,000,000 of dollars. At the commencement of the year 1817, it is estimated that the principal of the funded debt will amount to 110,000,000 of dollars, requiring the sum of 6,150,000 dollars for the payment of its annual interest. If a sum applicable to the reduction of the principal of the debt, were now to be assigned, bearing the same proportion to that principal which the sum assigned in 1804, then bore to the principal, it would amount to about 4,350,000 dollars. When it is added, therefore, to the sum of 6,150,000 dollars which is necessary for the payment of the interest, there would be required for the amount now to be set apart, to constitute the sinking fund, the sum of 10,500,000 dollars per annum. It is proposed, however, to carry the amount only to the sum of 10,000,000 of dollars, which will allow about 3,830,000 dollars as applicable to the reduction of the principal of the debt; a sum sufficient, if strictly and regularly applied without interruption, upon a compound principle, to pay off the whole of the funded debt in a period less than eighteen years.

Upon these grounds, then, the Secretary of the Treasury respectfully submits the following PROPOSITION.

That in the year 1817, and annually in every subsequent year, there be appropriated the sum of 2,000,000 dollars in addition to the sum of 8,000,000 of dollars now annually appropriated for the payment of the interest and principal of the public debt; that the payment of this additional sum be made out of the proceeds of the revenue derived from the customs, the sales of public lands, and the internal duties, or from either of them; available after the payment of the sums for which they are now respectively pledged or appropriated; and that the said additional sum of 2,000,000 of dollars annually, be payable to the commissioners of the sinking fund, to be applied by them in the same manner as the monies which they are now entitled by law to receive; that is to say: 1st. To the payment of the interest on the public funded debt; 2d, To the reimbursement of the principal, from time to time, as the same, or any portion of it, shall become reimbursable, according to the terms of the contracts by which it has been created; 3dly, After having answered these purposes, if there shall remain a surplus at their disposal, to the purchase of such parts of the funded public debt as shall appear to them to be most for the advantage of the United States in the manner prescribed by law and at a rate not exceeding the par value.

3dly. Propositions relating to the National Circulating Medium.

The delicacy of this subject is only equalled by its importance. In presenting it, therefore, to the consideration of Congress, there is occasion for an implicit reliance upon the legislative indulgence.

By the constitution of the United States, Congress is expressly vested with the power to coin money, to regulate the value of the domestic and foreign coins in circulation, and (as a necessary implication from positive provisions) to emit bills of credit; while it is declared by the same instrument, that "no state shall coin money, or emit bills of credit." Under this constitutional authority, the money of the United States has been established by law, consisting of coins made with gold, silver and copper.— All foreign gold and silver coins, at specified rates, were placed, in the first instance upon the same footing with the coins of the United States, but they ceased, (with the exception of Spanish milled dollars, and parts of such dollars,) to be a legal tender for the payment of debts and demands in the year 1809.

The constitutional authority to emit bills of credit, has also been exercised in a qualified and limited manner. During the existence of the bank of the United States, the bills or notes of the corporation, were declared, by law, to be receivable in all payments to the United States; and the treasury notes which have been since issued for the services of the late war, have been endowed with the same quality. But Congress has never recognized by law the notes of any other corporation; nor has it ever authorized an issue of bills of credit to serve as a legal currency. The acceptance of the notes of banks which are not established by the federal authority, in payments to the United States, has been properly left to the vigilance and discretion of the executive department; while the circulation of the treasury notes employed either to borrow money or to discharge debts, depends entirely, (as it ought to depend) upon the option of the lenders and creditors to receive them.

The constitutional and legal foundation of the money system of the United States is thus distinctly seen; and the power of the federal government to institute and regulate it, whether the circulating medium consists of coin or of bills of credit, must, in its general policy, as well as the terms of its investment, be deemed an exclusive power. It is true, that a system depending upon the agency of the precious metals, will be affected by the various circumstances which diminish their quantity or deteriorate their quality. The coin of a state sometimes vanishes under the influence of political alarms; sometimes in consequence of the explosion of mercantile speculations, and sometimes by the drain of an unfavorable course of trade. But whenever the emergency occurs that demands a change of system, it seems necessarily to follow, that the authority which was alone competent to establish the national coin, is alone competent to create a national substitute. It has happened, however, that the coin of the U. States has ceased to be the circulating medium of exchange; and that no substitute has hitherto been provided by the national authority. During the last year, the principal banks established south and west of New-England, resolved that they would no longer issue coin in payment of their notes, or of the drafts of their customers, for money received upon deposit. In this act, the government of the United States had no participation; and yet the immediate effect of the act was to supersede the only legal currency of the nation. By this act, although no state can constitutionally emit bills of credit, corporations erected by the several states, have been enabled to circulate a paper medium, subject to many of the practical inconveniences of the prohibited bills of credit.

It is not intended, upon this occasion, to condemn, generally, the suspension of specie payments; for appearances indicated an approaching crisis which would probably have imposed it as a measure of necessity if it had not been adopted as a measure of precaution. But the danger which originally induced and perhaps justified the conduct of the banks, has passed away; and the continuance of the suspension of specie payments must be ascribed to a new series of causes. The public credit and resources are no longer impaired by the doubts and agitations excited during the war—by the practices of the enemy; or by the inroads of an illicit commerce; yet the resumption of specie payments is still prevented, either by the reduced state of the national stock of the precious metals or by the apprehension of a further reduction to meet the balances of a foreign trade, or by the redundant issues of bank paper.

The probable direction and duration of the latter causes, constitute, therefore, the existing subject for deliberation. While they continue to operate singly or combined, the authority of the states individually, or the agents of the state institutions, cannot afford a remedy commensurate with the evil; and a recurrence to the national authority is indispensable, for the restoration of a national currency.

In the selection of the means for the accomplishment of this important object, may be asked—1st. Whether it be practicable to renew the circulation of the gold and silver coins? 2dly. Whether the State Banks can be successfully employed to furnish an uniform currency? 3dly. Whether a national bank can be employed more advantageously than the State Banks for the same purpose? And 4thly. Whether the government can itself supply and maintain a paper medium of exchange, of permanent and uniform value, throughout the U. States?

1st. As the United States do not possess mines of gold or silver, the supplies of those metals must, in a time of scarcity, be derived from foreign commerce. If the balance of foreign commerce be unfavorable, the supply will not be obtained incidentally, as in the case of the returns for a surplus of American exports, but must be the object of a direct purchase. The purchase of bullion is, however, a common operation of commerce; and depends, like other operations, upon the inducements to import the article.

The inducements to import bullion arise as in other cases, from its being cheap abroad, or from its being dear at home. Notwithstanding the commotions in South America, as well as in Europe, there is no reason to believe, that the quantity of the precious metals is now (more than at any former period) insufficient for the demand throughout the commercial and civilized world. The price may be higher in some countries than in others: and it may be different in the same country at different times; but generally, the European stock of gold and silver has been abundant, even during the protracted war which has afflicted the nations of Europe.

The purchase of bullion, in foreign markets, upon reasonable terms, is then deemed practicable; nor can its importation into the United States fail eventually to be profitable. The actual price of the gold and silver in the American market would in itself afford for some time an ample premium; although the fall in the price must of course be proportionable to the increase of the quantity. But it is within the scope of a wise policy, to create additional demands for coin, and in that way to multiply the inducements to import and retain the metals of which it is composed. For instance, the excessive issue of bank paper has usurped the place of the national money; and under such circumstances gold & silver will always be treated, as an article of merchandize; but it is hoped that the issue of bank paper will soon be reduced to its just share in the circulating medium of the country: and consequently, that the coin of the United States will resume its legitimate capacity and character. Again, the Treasury yielding from necessity to the general impulse, has hitherto consented to receive bank paper in payment of duties—& taxes; but the period approaches when it will probably become a duty to exact the payment either in Treasury notes, or in gold and silver coin of the United States.

Again, the institutions which shall be deemed proper in order to remove existing inconveniences, and to restore the national currency, may be so organized as to engage the interests and enterprise of individuals in providing the means to establish them. And finally, such regulations may be imposed upon the exportation of gold and silver, as will serve in future to fix and retain the quantity required for domestic uses.

But it is further believed, that the national stock of the precious metals is not so reduced as to render the operation of reinstating their agency in the national currency either difficult or protracted. The quantity actually possessed by the country is considerable; and the resuscitation of public confidence in bank paper, or in other substitutes for coin, seems alone to be wanting to render it equal to the accustomed contribution for a circulating medium. In other countries, as well as in the United States, the effect of an excessive issue of paper money to banish the precious metals has been seen, and under circumstances much more disadvantageous than the present: the effect of public confidence in national institutions, to recall the precious metals to their uses in exchange, has also been experienced. Even, however, if it were practicable, it has sometimes been questioned, whether it would be politic again to employ gold and silver for the purpose of a national currency. It was long and universally supposed, that to maintain a paper medium without depreciation, the certainty of being able to convert it into coin, was indispensable: nor can the experience which has given rise to a contrary doctrine be deemed complete or conclusive. But whatever may be the issue of that experiment elsewhere, a difference in the structure of the government, in the physical as well as the political situation of the country, and in the various departments of industry, seems to deprive it of any important influence as a precedent for the imitation of the U. States.

In offering these general remarks to the consideration of Congress, it is not intended to convey an opinion, that the circulation of the gold and silver coins can at once be renewed. Upon motives of public convenience, the gradual attainment of that object is alone contemplated: but a strong though respectful solicitude is felt, that the measures adopted by the legislature should invariably tend to its attainment.

2d. Of the services rendered to the government by some of the state banks during the late war; and of the liberality by which some of them are actuated in their intercourse with the treasury: justice requires an explicit acknowledgment. It is a fact, however, incontestibly proved, that those institutions cannot at this time be successfully employed to furnish an uniform national currency. The failure of one attempt to associate them with that view, has already been stated [VOL. 12.—NO. 70.] Another attempt, by their agency in circulating treasury notes, to overcome the inequalities of the exchange has only been partially successful. And a plan recently proposed, with the design to curtail the issue of bank notes, to fix the public confidence in the administration of the affairs of the banks, and to give each bank a legitimate share in the circulation, is not likely to receive the sanction of the banks. The truth is, that the charter restrictions of some of the banks; the mutual relation and dependence of the banks of the same state, and even of the banks of different states, and the duty which the directors of each bank conceive that they owe to their immediate constituents upon points of security or emolument; interpose an insuperable obstacle to any voluntary arrangement, upon national considerations alone, for the establishment of a national medium through the agency of the state banks. It is, nevertheless, in the State banks that the measures for restoring the national currency of gold and silver must originate: for until their issues of paper be reduced: their specie capitals be re-instated; and their specie operations be commenced; there will be neither room, nor employment, nor safety, for the introduction of the precious metals. The policy and interest of the State banks must therefore be engaged in the great fiscal work, by all the means which the treasury can employ, or the legislative wisdom shall provide.

3. The establishment of a National Bank is regarded as the best and perhaps the only adequate resource to relieve the country and the government from the present embarrassments. Authorized to issue notes which will be received in all payments to the United States, the circulation of its issues will be co-extensive with the Union; and there will exist a constant demand, bearing a just proportion to the annual amount of the duties and taxes to be collected, independent of the general circulation for commercial and social purposes. A National Bank will therefore possess the means and the opportunity of supplying a circulating medium of equal use and value in every State, and in every district of every State. Established by the authority of the government of the United States; accredited by the government to the whole amount of its notes in circulation; and entrusted as the depository of the government with all the accumulations of the public treasure; the National Bank, independent of its immediate capital, will enjoy every recommendation which can merit and secure the confidence of the public. Organized upon principles of responsibility, but of independence, the national bank will be retained within its legitimate sphere of action without just apprehension from the misconduct of its directors or from the encroachments of the government. Eminent in its resources, and in its example, the National Bank will conciliate, aid, and lead, the State banks in all that is necessary for the restoration of credit, public and private. And, acting upon a compound capital, partly of stock and partly of gold and silver, the National Bank will be the ready instrument to enhance the value of the public securities and to restore the currency of the national coin.

4. The powers of the government to supply and maintain a paper medium of exchange will not be questioned; but for the introduction of that medium there must be an adequate motive. The sole motive for issuing treasury notes has hitherto been to raise money in anticipation of the revenue. The revenue, however, will probably become, in the course of the year 1816, and continue afterwards, sufficient to discharge all the debts and to defray all the expenses of the government, and consequently there will exist no motive to issue the paper of the government as an instrument of credit.

It will not be deemed an adequate object for an issue of the paper of the government, merely that it may be exchanged for the paper of the banks, since the treasury will be abundantly supplied with bank paper by the collection of the revenue, and the government cannot be expected to render itself a general debtor, in order to become the special creditor of the State banks:

The co-operation of the government with the national bank, in the introduction of a national currency may, however, be advantageously employed by issues of treasury notes as long as they shall be required for the public service.

Upon the whole, the state of the national currency and other important considerations connected with the operations of the treasury, render it a duty respectfully to propose,

That a National Bank be established at the city of Philadelphia, having power to erect branches elsewhere; and that the capital of the bank (being of a competent amount) consist of three fourths of the public stock, and one fourth of gold and silver.

All which is respectfully submitted.

A. J. DALLAS.

Treasury Department, 26th December, 1815.