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venue received in 1836, shall be as large as the estimates, and no Jarger, the nett surplus now applicable to new and other objects, will, probably, in the course of the ensuing year, become reduced to a sum between six and seven millions. This sum, therefore would, iu those events, renain on the 1st January, 1837, as a nett surplus, unexpended and unpledged.

Coosequently most of it could now be a pplied to other purposes, not included in the estimates, a ud liberally aid in promoting any constitutional objects which Congress may deeg most expedient.

Au unprecedented spectacle is thus presen:ed to the world of a Government, not only virtualiy without any debts, and without any direct

taxation, but with about one-fourth of its whole annual expenses de frayed from sales of its owo unincumbered and immense tracts of public lands, and no resort to even indirect laxation necessary, except for the other three-fourtlis; and the proceeds of that indirect laxation, though largely and frequently reduced, yet accumulating-so fast as to require further legislation to dispose of, or invest a considerable surplus on hand. Whether this state of enviable prosperity be. justly attributable to the form of our Governinent--to the administration of into the characier of our people the physical advantages of our country—or to all coin

bived, it is a sobject of strong congratulation, and exhibits a very remarkable phenomenon in the history of taxation and finance. Without

dwelling on these primary causes of our fortunate condition, or discussing any secondary ones, such as the great deinand and reward in this country for either labor or capital, the more appropriate inquiry, under these novel circumstances, and on an occasion like the present, seems to be to discover the most judicious course to pursue in using this surplus, and in preventing or regulating its future accumulation. The balance now on hand, or auticipated, does not differ so much in amount from that. at several prior periods, as to require any extraordinary steps, if the same available mode existed, of employing it legally and beneficially without new legislacion. There were three former years in our history, viz: 1315, ’16, and ’17, when our balances on hand, on the 1st of January each year, were respectively over 13, 22, and 14 millions of dollars, and in 1833, over 11 inillions. But these balances were either unavail. able for a time, or whenever productive, were soon able to be applied in the discharge of the public debt, and thus to prevent longer and larger accumulations, and to save interest. In that way, being reiluced from Lime to time, they at no other period ever exceeiled ten millious, though ou four other occasions they have accumulated beyond nine millions.

But, happily for the country, it is no longer compelled to part with its resources to discharge heavy burdens, imposed in foriner times; and, in the present prosperous state of our finances, it is respectfully submitted, that, in order to reduce the present surplus, there might be hrst, and judiciously, authorized, for purposes not enumerated in any of the estimates, other beneficial expenditures for objects clearly lawful and use. ful. Not considering it the province of this Department, in an annual

report, to enter into minule details in relation to the selection of those objects, the undersigned would merely advert to a few prominent ones, about which no constirutional difficulies interpose ; such as the erection of suitable and necessary buildings for the use of the General Government, whether in this city or the different States, and the earlier com

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mencement of important works contemplated, and the more rapid completion of others already begun, which are estentially connected with the commerce, the navy, or the frontier defences of the country.

Since the general estimates were closed, but appended to them in a note, various additional improvements at the navy yards alone, requiring the appropriation of three and a half millions, have been specified and submitted by the Navy Department, a which, in its opinion, could be now usefully undertaken. If so many works of these descriptions should now be authorized, or hastened by Congress, as were unquestionable in their utility and character, and were likely to be sufficieot to absorb the present and auticipated surplus of revenue in the Treasury from ordinary sources, it is hoped that, ere long, additional receipts from our stock in the Bank of the United States, would probably be more than sufficient to ensure their completion. But if the surplus from all sources should hereafter, from any cause, appear likely to become earlier exhausted, some of those works could be suspended, or again, as beretofore, be less rapidly bastened. If it be not deemed expedient, in this or any other manner, now to appropriate all the present surplus, this Department thinks that the most eligible course concerning any probable residue, after deducting all outstanding appropriations which may be made, and enough to 'ren der our fiscal system efficient, easy, and prompt, would be, that Congress retaiu such residue under its control, and provide for its investment for a sbort period as a provident fund, to be ready to meet any contingencies attending the great reduction contemplated in our revenue hereafter; or, in the mean time, to strengthen our financial position under the additional burden of any large claims now pending, which Congress may deem it just to allow, or at any future moment to aid under those inevi. table and great Auctuations in revenue and expenditure from which no country is exempt, and which no human sagacity can wholly prevent. For all such occurrences it is often economical, and, especially in our present prosperous condition, with surplus money on hand, it is consist.

ent with a wise foresight and sound political prudence, to be previously and well guarded. Whatever demands on such a fund may occur, before 1842, it is certain, under our existing laws, as before explained, that the revenue from customis must then, within a few months, be reduced in the large sum of nearly six millions of dollars. It is further probable that our whole revenue from customs will, by the close of that year, have fallen to only nine millions ; and from Jauds, (for public uses)

: have risen not to much above four millions of dollars, both making but thirteen millions of dollars, instead of their present annual amount of over twenty. For that great and sudden change, it is very desirable that the country should then be prepared by a dininished expenditure,

and a proper surplus on hand, io meet any probable deficiency, so as not to require new or increased 'taxation to defray the expenses then vecessary. It may reasonably be expected, that the revolutionary pension list

will by that time have chiefly disappeared; the Indian titles have been mostly extinguished; our necessary and convenient public buildings

throughout the country mostly finished, and our fortifications and navy, if the appropriations in the meantime be liberal, will have been placed in

a proper attitude to meet any hostile aggressions without the continuance of extraordinary appropriations. By this system, evincing a just and

far-sighted liberality in grants to objects clearly national and necessary, and pursuing a course of rigid economy and due retrenchment, where the great interests of the Union will permit, our expenses, though they must, from our rapidly extending population, business, and frontier, increase in some particulars, in nearly a corresponding ratio, and inay not, as a

whole, become reduced exactly to the amount of revenue received; yet they will, if no unforeseen calamities occur, so nearly approach it, that a surplus of a few millions, auly invested and retained, would doubtless obviate the necessity of a resort then, or soon after, to more taxes.

The investment of this, or any other surplus not soon wanted, could be effected till wanted, in any mode most agreeable to Congress, in whom the whole power on this subject resides, and without whose express authority nothing can be taken from the Treasury for any purpose whatever.

But, as it may not be deemed necessary or expedient soon to resort to any such investment, an explanation at this time of the different modes in which it might be accomplished, with the opinion of the Department on their fpeculiar merits and demerits, would perhaps be cousidered useless, and consequently only two general principles will now be proposed, which are respectfully suggested, as proper to have a material bearing on the whole subject. First, that whatever mode may be adopted, it should conform to the spirit of the act of March, 1817, which has been in successful operation ever since the surplusses became likely to be large and frequent, and which required, before the investment of theġi in purchase or extinguishment of the public debl, that enough should be left in the l'reasury, to 'meet all outstanding appropriations, and two millions more to sécure facility and promptitude in its various and distant operations. And, .secondly, that, following the analogy of the above act, which separated the investinent of any surplus for pecuniary profit entirely from the management of the public deposites and the duties of Deposite Banks, it should leave the bank agents of the Treasury as they and all its other fiscal agents, from the foundation of the Government, have been left, wholly disconnected, so far as practicable, in regard to their, agencies, with the dangerous relation of borrowers from the Treasury, for reloaning and for private gain. Should either of the above courses not be deemed advisable, so far as to exhaust all the surplus on hand, the residue, if not large, could be gradually disposed of by making a further reduction, whenever just and safe, in the revenue hereafter accruing from customş.

To obtain the balance estimated to exist in the Treasury at the end of 1836, the sum of fifteen millions is computed to be received from that source, and chiefly to accrue in the ensuing year; and if à part of it should be considered not desirable for any purposes whatever, it could be much, and perhaps usefully lessened, by an early diminution of the existing duties ou certain articles not supposed to be vitally connected with our domestic manufactures. The most prominent of these articles are wines and silks from beyond the Cape of Good Hope. They both yield, in duties, over half a million per annum; or, in 1834, wines over $445,000, and India silks, over $171,000; all of which might well be repealed, unless Congress should consider the former a judicious tax on a luxury,

and the latter as an encouragemeni to the domestic product of silk, which is becoming widely and successfully established ; and which, if deemed a proper object of incidental protection by legislation, (contrary to the views lalely entertained by Congress), would require a restoration of the duty on European silks, now entirely free. Other articles could be selected, on which the present duties could be reduced and repealed, at least to the extent of $400,000 annually, without injuring, it is expected, any domestic manufactures, or agricultural branch of industry, or impairing the spirit and good faith of the compromise intended by the act of Congress, of March 3, 1833, and which the undersigned would most scrupuJiously preserve unviolated. On this subject, a detailed report will soon be presented to the Senate, in-conformity to a resolution of that body, passed, at the last session. It is his deliberate opinion, that such of those reductions as are deemed permissible under the above limitations, should now be made ; and the balance remaining, if too great for common fiscal purposes, be temporarily and profitably invested, rather than a large surplus should continue to be collected for the express end of being, in any way, finally disposed of, otherwise than by appropriations to useful and constitutional objects.

The People themselves, it is believed can best manage all their own muney, which they and their Representatives think may not be wanted for public purposes; and it would seem to be far preferable to leave it

originally in their possession, than to withdraw it for the expensive operation of returring it suhstantially to the place whence it came, and that probably in a manner not conformable to the constitution, till after the delay of procuring an amendment to it, and even then, not espedient, because calculated injudiciously to strengthen the General Government, and to render the States more dependent on a great central power for yearly and important resources. Indeed, a reduction in the price of

public lands, whose unusually large sales the past year are the source of most of the present surplus, would, if their sales should not thereby be much increased, seem another more far more natural to obviate the present difficulty. But before adopting it, this and various other considerations must be weighed, and it must be fully considered, whether all the revenue anticipated from them at their present prices, would not be necessary, after the great reductions in the tariff, in 1842, and whether a resort to a higher tariff would not then become indispensable, if the average receipts from lands or customs should, froni any new legislation, become then much diminished below the estimates which have been submitted on the occasion

VI.-DEPOSITE BANKS AND THE CURRENCY. This Department takes pleasure in stating that the public money continues to be collected and deposited, under the present system of selected

banks, with great ease and economy in all cases, and with greater in some than at any former period. The transfers of it to every quarter of the country where it is needed for disbursement, have never been effected with more promptitude, and have been made entirely free of expense to the Treasury. The payments to creditore, offieers, and pensioners have břer: punctual and convenient ; and the whole fiscal operations through the State banks have, as yet, proved highly satisfactory. Incidental to this, the facilities that have been furnished to the commercial coinmunity in domestic exchanges, were probably never greater, or at so moderate rates. la the course of his year, additional, depositories have been selected in

four States where no new ones before existed, aud all the branches of the United States Bank, for some months, have been discontinued for ordinary fiscal purposes. They are, however, still used, as claimed by the Bank, under acts of Congress, for the payment of the outstanding portions of the funded debt, aud of invalid and other pensions, prior to 1932, except where the Department has been notified that the branches were withdrawn, as in New Hanipshire, Connecticut, Kentucky, Ohio, M uri, Western Pennsylvania, Maryland, South Carolina, and the interior of New York. The whole number of selected backs, without iocluding branches, is now thirty-four, being, notwithstanding the addition of four new ones, less by six, than last year.

This diminution has been effected by the discontinuance of various old, and to the Treasury, unimportant institutions, employed before

1833, in connexion with the United States Bank, and by adding no new ones, except where the public interests seemed to render it imperative or expedient. A great, though not the chief, cause of some loss, which formerly happened in the deposites in State banks, is believed to have been the multiplication of them to something over one hundred in num

ber. The system is now arranged so as probably to require hereafter few changes, excepting two or three instances, concerning which a cor

respondence is now pending, unless, as is not anticipated, such onerous conditions should be exacted by Congress, of the present safe and efficient

depositories, as to derange the system, induce soine of them to withdraw, and conipel the Department to intrust the public funds to other agents, less cautious, skilful and trustworthy. Great care has been exercised in preparing, from the last returns made to this Department, and from data since obtained by an extensive correspondence, tabular statements which show, in the most essential particulars, as near the 1st of January, 1835, and as fully as could be obtained, the names and condition of each of the State banks in the Union, of each of the selected banks, of the United States. Bank, and of all combined. They exhibit, further, the capital and situation of all the banks in each of the large cities in the United States, as well as of all in each State, arranged together for con

venience of reference, and the changes which have since happened in the condition of the deposite and United States banks. So far as regards the capital, discounts, &c., of all the State banks, only the general exhibit of the aggregate results in each State, is now communicated, but, in a few days, all the voluminous details on those points will be submitted to the House of Representatives, in compliauce with its resolution of the 10th of July, 1832.

It will be seen that the situation of the selected banks, as a whole, bears an enviable comparison with the rest.

In all cases deened proper, they have given collateral security, and are all believed to be entirely safe, to the extent they have been confided in. Their discounts have been, in general, somewhat increased, but, though teinpted by the enterprising spirit of the times, not usually

increased in a degree disproportioned to all their immediate available means. They have also, in some cases, been able to aid, and have liberally aided, other banking institutions in their neighborhood, by as large and long balances and other indulgences as would generally ap: pear to have been sanctioned by correct principles. The names of each,

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