THE 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 Administ ration 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 a part of the design of those democratic | The interest is 5 per cent. The tax- The civil and foreign-intercourse list, is brought within $10,000,000 for the three last quarters of the year. That is to say, the salaries of the government functionaries, and foreign agents and embassadors, of a nation of 21,000,000, is somewhere about 5 1-4 cents per month, for each individual. A nation which pays so little for its government officers, may justly boast of the economy of its government. It will be seen, by consulting the tables given in the report, and which are subjoined, that the estimates for the present fiscal year are less in sum, and different in character, from those for the year following. Our limits forbid the review of particulars. A people who pay so little for the support of their government, cannot, with propriety or decency, allow it to run in debt. That a public debt should exist at all, is a slur upon our institutions. We find, however, that in its extreme solicitude to avoid the imposition of specific duties, and notwithstanding its affected preference of direct taxation, the party lately in office suffered the national liabilities to mount up to the enormous sum of $64,704,693; twice the entire annual expenditure of the government on a peace establishment. Let us, for a moment, hold up to contemplation this system of public debts, and observe its workings. The private adThe private adventurer in trade who borrows money on interest, does so with the expectation of realizing much more than that interest. He borrows at 10 per cent., expecting to realize 20 or 30 per cent., besides sinking nothing of the original capital. When government, on the other hand, becomes a debtor, it does so without any certainty of turning what it has borrowed to a profitable account. The money borrowed, is converted into cannon, soldiers' clothing, or ships of war, or it is consumed in the general expenses of the nation. These expenses are indeed necessary, and must be provided for; what we have now to consider is the method and economy of the provision. The government, we will say, has borrowed $1,000, to be repaid in 20 years. payers must pay each year $50 of interest, and at the end of twenty years, they must refund the money borrowed. They have then paid two thousand for one thousand. Whereas, if the necessary funds had been got directly through customs, or by any method of taxation, at the time when they were wanted, they would have had to pay only $1,000. If a war is to cost 50 millions, it will be made, by borrowing the funds, to cost 100 millions. The money borrowed by government is not put into a manufactory, or a farm, or a canal, there to re-produce and continually multiply itself; it is cast into the sea, shot away out of the mouths of cannon, and eaten up and worn out, the very year in which it is borrowed. Had it been borrowed for some project of improvement, there would have been less objection; for in that case it continues to be a productive capital, and is not withdrawn from the business of the country. The taxpayers will freely pay double for that which has doubled in value. But it is a severe trial of patience to be obliged to pay double for a vicious expenditure of war, twenty years after it had become thoroughly odious to the world. Twenty years ago a piece of ordnance was taken from New York to Vera Cruz, and cost, in all, a thousand dollars. We have already paid the full price of the vile thing in taxes for the support of the five per cent. stocks, and now, we have the entire price to pay over again to refund the principal. We should with much greater cheerfulness, have paid the full taxes when the money was wanted, and now it is not only intrinsically a more odious imposition, but it has doubled in amount. Giving up, however, all invidious distinctions between one public enterprise and another, it is evident that the system of raising money as it is needed, is far better; and at least one-half as expensive, as the system of loans. It will be offered, as an objection to the above, that when government borrows a sum of money, it suffers an equal sum to lie, in the shape of uncollected taxes, in the hands of the tax-payers, and that these tax-payers will readily pay the five per cent, to be allowed to retain their money: that the capitalist, in effect, loans it to the 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 |