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It is supposed that the viher receipts from miscellaneous sources will correspond nearly with those in 1835, except that the sum of $6,235, be. longing to this Government out of the Neapolitan indemnity, for the traosportation of seamen, at the time our vessels were seized, having in the first instalment, been promptly and honorably paid, according to treaty, has since the last annual report, been adjusted, and credited under his general head. It gives me pleasure to add, that about $100,000 more has been secured by means of that indemnity, on debts of long standing due from several of the claimants to the United States, and over one-fifth of it has already been paid into the Treasury. In-pursuance of the act of Congress on the subject, the balance of the first instalment, as soon as the awards were completed, was paid to those entitled to it, and certificates were issued for the remainder. All due under the second instalment has since been punctually discharged by the King of the Two Sici. lies, to the agent of the treasury abroad, and after some delay in its re

mittance from Naples to Paris, with a view to make it in a manner most advantageous to the claimants, the whole has been received here, and the nett proceeds, as soon as ascertainable, immediately paid over.

Explanalion of the Estimate of Expenditures. The expenditures in 1836 for ordinary purposes are, it has been seen, estimated at a still lower sum than they were for 1835. But as the preseit is a long session of Congress, the contingent excesses of appropriatrions beyond the general estimates, explained in the last annual report, have been submitted as likely to be half a million larger. It is gratisy: ing to state, that independent of the payments towards the national debi, leaving the community with all its capital and enèrgies entirely from that cause unburdened and untrammelled, the actual expenditures of the General Government have on other subjects since 1833, been reduced about lour and a half millions of dollars a year, or near uine millions in 1834

and 1835; and the country at large, during the same period, relieved froni taxation hy reductions in the tariff, equal to nearly twelve, and a hali millions a year, or about twenty-five millions in all. The probabili. ties a's to still further reductions in our expenditures for ordinary purposes during a number of ensuing years, excluding any extraordinary grants o'r account of the present large surplus, or other causes, cau best be weighed by a retrospect to the chief subjects of increase during a few past years, and by a discrimination between the items, which are in their character permaneni or temporary, and which still exist or have aleady expired.

The chief items of increased expense during those years which (from an increase in some of our national establishinents, caused by obvious reasons in most cases, such as greater population and business, and a rapidly extending frontier,) will probably be somewhat permanent, if not in some instances progressive, a re most of the large additions to the legislative expenses-the gradual auginentation in appropriations for the ju

diciary and the salaries of district judges, the new bureau of Solicitor of the Treasury, the corps of mounted dragoons in the araiy, the increased number of, and pay to officers in the navy, and the extra compensation co officers of the customs since the great reduction in the tariff. The chief additional items of expenditures during the last few years which may be deemed tomporary in their nature, but which still continue in a

greater or less degree, are the large increase in the extinguishment of lodian titles, and in grants of revolutionary peusions ; the payment of Virginia commutation claims, great additions to our light-houses and cus100-houses ; opening many new roads in the Territories; the continuation of the Cumberland road; the survey of the coast ;' more numerous allowances of miscellatieous claims; and the building of branch miots, commenced the prescut year, though their future support will be a new fitem of permanent expense. The issue of Virginia land scrip, virtually receivable instead of money for lands, is, in substance, though not in forin, another large item ; because, though not included in the usual exbibit of expenditures, it has in the last four years exceeded a million of dollars, and will in this, and the ensuing year, probably extend to eight bundred thousand more. The items of magnitulle in our expenses which have lately existed, but are now either terminated or suspendedl, are the building of the Potomac bridge ; though its repairs, lighting, and draws may hereafter be a durable charge. Macadamizing Pennsylvania Ave. oue, and several grails of money for various other purposes. in the District of Columbia ; repairs of the Cumberland road; finishing and enlarging some of the public buildings here ; refunding large amounts of duties under former laws; the expenses of the war with the norihwestern Indians in 1833 ; repayments for advances during the war of 1812; a large reimbursement of the waval pension fund ; several special expired appropriations towards naval objects; and almost every thing connected with the public debt. A tabular statement further illustrating many of these changes, as well as others under all the nio-t importanı heads of expenditure, by exhibiting the suns yearly paid under each malerial one from 1816 10 1834 inclusive, has been prepared with care, but is so voluminJous that it will not be submitted to Congress until some other appropriate occasion.

In the estimates for extraordinary purposes the present year, it will be seen that most of the increase is called for by the omissiou to pass the annual appropriations last year for fortifications, and by the unusually large surplus in the 'Treasury, which is not wanted for ordinary objects, and which, it is supposed, can be applied usefully to hasten those great improvements connected with our military and naval defences, and which are of a character admitted hy all to be natioval, beneficials and constilutional. Under our high state of Guancial prosperity, and reposing in peace, the liest period for due preparation for war, the undersigned consides the Treasury in a proper condition to meet any ineasures which the Executive or the appropriate departments have recommended for these desirable olijecis, as well as any similar and additional ineasures which Congress may be likely to ibink required by prudent Coresight, and a proper regard for national character and safety.

V.-SURPLUS IN THE TREASURY, AND DISPOSITION OF I'r. It has been shown that the available balance in the Treasury, over all outstanding appropriations, on the 1st of January, 1836, is estimated a' about ten and a half millions ; the expenditures for the ensuing year, for all purposes, whether ordinary or extraordinary, enumerated in the schedules at more than twenty-three inillions, and the receipts at less than twenty millions. Hence it follows, that if the appropriations made, and the re

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, ju those events, renain on the 1st January, 1837, as a nelt surplus, unexpended and uppledged.

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

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

taxation, but with about one-fourth of its whole annual expenses defrayed from sales of its owo uniucumbered and immense tracts of public lands, and no resort to even indirect laxation necessary, except for the other three-fourths; and the proceeds of that indirect taxation, though llargely 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 eaviable prosperity be justly attributable to the form of our Governinent to the administration of it-o the characier of our people the physical advantages of our country-or to all con

bined, it is a so bject 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 thèse 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 thai at several prior periods, as to jequire 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 unavailable 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 recluced 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, iinposed 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 first, and juIdiciously, 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 minute details in relation to the selection of those objects, the undersigned would nerely advert to a few prominent ones, about which no constitutional difficuliies 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 cóm

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, and 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 anticipated 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 lof those works could be suspended, or again, as heretofore, be less rapidly hastened. 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 retain 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. cable and great Auctuations in revenue and expenditure from which no country 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, be|fore 1842, it is certain, under our existing laws, as before explainer, 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, lo meet any probable deficiency, so as not to require new or increased taxation to defray the expenses then necessary. 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, áuly 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 authorlity 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 peculiar 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 likēly to be large and frequent, and which required, before the investment of theği in purchase or extinguishment of the public debt, that enough should be left in the Treasury, to 'meet all outstanding appropriations, and two millions more to secure 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 sui plus 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 customs.

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 on 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, uuless Congress should consider the former a judicious tax on a luxury, and the latter as an encouragement 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

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