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Q. I think you will find it under twenty millions.-A. There was a direct tax laid, to be collected by the States, to the amount of twenty millions.
Q. The amount collected under the law at the time of its repeal amounted to less than twenty millions, by the General Government.-A. I know before they repealed the tax they paid off the national debt from ten to twelve millions a month.
Q. You think taxation, if left alone, would have prevented the business depression ?A. Yes, sir. On account of the vast indebtedness of the country, I think we require those taxes, and I wrote about a year ago a memorial upon that very subject, and one of the members of our association gave the money to have it printed and there were some of them printed. The principles have once been embodied in the platforms of several of our parties. The National party, in their convention in Ohio, protested against the repeal of the income-tax, and demanded its retention. The committee that met at Syracuse a short time ago protested against its removal, and it seems that in that repeal Congress repealed pretty much all the taxes that boré upon wealth, and left those that bore on industry standing.
Q. You think it repealed the wrong taxes ?--A. Yes, sir.-A. As I gather from the writings of Jefferson, I believe for a nation in debt or at war it is necessary to lay on the taxes, and I believe that is what carried France through her late struggle with Germany. She put on her taxes good and strong, and when Napoleon fell, and the provisional government camè in, the first act they did was to add 25 per cent. to the taxes and require it to be paid in ten days, and it was done. Further than that, the country was permeated with gold and silver coin, and the general distribution of the land, and she came out of there like throwing a cat out of the window and landing on her feet. She don't seem to be depressed. I notice the papers of yesterday said there was a great decrease of pauperism in a few years. Her coin currency and the distribution of her land and the taxation in war carried her through. Ours was the opposite of that, and the inflation policy from the start, which has thrown the coin out of our country in its reaction, which is inevitable in the paper system, has brought about all those revulsions.
Q. Do you understand that France has of late years increased in the accumulation of capital ?-A. I understand she has increased rapidly in wealth.
Q. And I understand you to say that pauperism has decreased 1-A. Yes, sir. Q. Then the accumulation of capital and the decrease of pauperism have gone on simultaneously in France ?-A. With being freed from this disorganization and anarchy of industry which we have in this country, by her going on the cash basis. I made a compendium of my own views, and went in to the editor of the French newspaper to see whether I was correct. He says they have a coin currency strictly at the present time; that is, the paper they have afloat there has almost the representative of it, dollar for dollar, in the vaults of the Bank of France; and that people have in their pockets and in other small ways about ten or eleven hundred million dollars in coin.
Q. Can any country but a rich country have its currency in coin? Must it not be a rich country ?-A. Ours is the richest country in the world in natural resources, in the amount of good and productive land.
Q. Could a new country, rich in resources and undeveloped, have a sole currency of coin and be a prosperous country ?-A. I believe it would prosper a great deal faster, and more substantial money would abolish the whole paper system.
Q. You would favor the abolishment of paper money!--A. I would admit, perhaps, 20 per cent. in Treasury notes or greenbacks, as they are called--not more than that, and withont any other feature of redemption than being receivable in the payment of taxes. The experience in Mr. Van Buren's administration showed that a small amount of Treasury notes would float by no other feature of redemption than being received in taxes. I would commend a premium on gold.
Q. You think redemption in taxation is as effectual as any other kind of redemption unless the amount is in excess of what is required for it?-A. Yes, sir; 20 or 25 per cent. would float their paper. I believe this bank paper redeemable in gold or silver is the worst currency that can be adopted. It is always subject to revulsions, and hence I believe this resumption act is an entire mistake-that the paper should be redeemed by taxation, and that would come to equalizo gold and silver-with no other feature of redemption than being received in taxes. Those are the points that have been the salvation of France. It is said that the number of landbolders in France is almost equal to the number of heads of families.
Q: You think the underlying cause of the present depression of business is the excessive issue of irredeemable paper money ?-A. Yes, sir; and without adequate taxation to redeem it. If Mr. Chase, instead of issuing his paper, had laid or a vigorous taxation, I believe the bonds would have sold for twice as much as they did, and we should not have had to pay the fabulous prices for supplies at the end of the war. The debt need not have been half what it was if he had put on a vigorous taxation at the beginning. That is, we want the lightest tax we can have; but in a big war, and a big debt, if you undertake to shirk taxation, the country goes to the bad inevitably.
Q. I understood you to recommend at the outset the removal of the tax from foreign imports; you quoted the example of Sir Robert Peel.–A. No; it was internal excises. The taxes were upon twelve hundred articles, largely internal taxes but partly upon imports. He aimed to take it off where it bore upon injnry and production, and put it upon wealth.
Q. My object is now to have you explain, in order that it may be consistent, the recommendation you first made in regard to the removal of taxation in comparison with the one you now recommend of vigorous taxation, and from what articles would you remove taxation, and to what articles would you transfer it?-A. I am not sufficiently familiar with the tax bill, but I believe the bill that repealed the taxes in 1872 repealed all that bore upon wealth ; and all that bore on industry it left on; that, I believe, was the spirit of the bill. I would act on the reverse; we want taxes upon wealth, and that which bears upon industry as far as possible to be removed. I don't say on the poor, but that which is obstructive of industry.
Q. You do not remember the nature of the tax which was reduced in 1872, except the income tax and the tea and coffee tax?-A. The income tax and the tax npon tea and coffee.
Q. Do you not remember there was a very large increase of the free list at that time -of all materials entering into manufactures ?-A. I don't know the details of it.
Q. I think about 600 articles were relieved at that time.-A. It seems to have been a very fallacious relief, because industry began then to decline.
Q. Not in 1872.-A. It began in 1873. As soon as the law began to act it took place. The revulsion took place in 1873.
Q. Would you infer because it took place immediately afterward that it was the cause ?-A. Yes, sir. I believe if that one hundred millions had been paid in redemption of the national debt, that one hundred millions, if paid every year, would have to go into some productive employment.
Q. Would you not have had to take it out of some productive employment in order to get it? When you laid the tax to get the one hundred millions to pay the one hundred millions, didn't you take it out of industry to go into the hands of the capitalist ?-A. No, sir; not an income tax.
Q. You took it out of the pockets of the capitalists in that case and paid it to them ?-A. I think in removing this tax they damaged themselves and the whole country.
Q. That, you know, is assertion. You have to show some good reason for that. As I understand, the income tax took out of those who had incomes of over $2,000 $20,000,000 a year, and that money you would have taken off and paid to the bondholders ?-A. Yes, sir.
Q. Would that not, then, have taken it from one set of capitalists and paid it to another set of capitalists, and would it not have been out of employment in business? A. It didn't affect the capitalist unless he had an income, and it took so much from paid capital. That is, the holder of a bond that is on interest is not compelled to pursue any industry at all; but pay him off his money, and he has to put his money into some kind of improvements.
Q. He could have bought other government bonds, could he not?-A. Yes, sir; but paying off one hundred millions of them would surely put some of the capital into active business.
Q. You would have to take that capital from some place in order to pay them?-A. It takes it from idle capital and puts it into activity.
Q. After the reduction of the tax in 1872 went into effect, do you remember how much surplus revenue the government had ?-A. I only remember in general terms that the payment of the national debt was reduced from ten to twelve millions a month down to from two to three millions a month.
Q. As a matter of fact, in the fiscal year following, the surplus was still one hundred millions available for the payment of debt or reduction of debt ?-A. The payment of that debt kept the money moving around, and would carry in into productive industry.
Q. Does any one leave money lying idle for the sake of having it lying idle?-A. It is idle when it is in a bond. The holder of the bond is not required to pursue any active industry at all.
Q. Are you in favor of abolishing bondholders ?-A. By taxation, I am.
Q. Are you in favor of abolishing other people who own money as well as bondholders ?-A. I am not in favor of repudiation.
Q. But as long as capital exists it falls to some one ?--A. Yes, sir.
Q. When ho takes it out of government bonds, he will lend it still and get the revenue !-A. Some of it would be likely to go into other pursuits.
Q. Suppose there is a glut, what are you going to do then !–A. I merely quote the difference between this country and France. France paid off by a vigorous system of taxation. Her currency was only about twenty per cent. of paper to eighty per cent. of coin, and she pursued a vigorous system of taxation and escaped this trouble.
Q. Was it not because France was a richer country than this in accumulated capital? Must it not have been so to have all this money of which you speak ?-A. She has undoubtedly accumulated more wealth ; but I believe this revulsion was entirely unnecessary; that it was from the maladministration of the government. I don't especially indict Congress, because it went with the current of public opinion, but I believe it was a mistake. I believe that what it onght to do now would be this: It should restore the income tax and wind up the national banks, and, as far as we have paper, have the Treasury notes, or, commonly called, greenbacks. Both law and public opinion would co-op erate to have our country permeated with coin as France is.
Q. Then for any but about 20 per cent. of the currency you would have coin ?-A. Yes, sir.
Q. Would you compel people to carry the coin about in their transactions or let them get paper ?-A.That is the question I asked the editor of the French Courier.
Q. What did he answer 1-A. He said that all small business of wages, the butcher, the baker, and retail dealer and laborer, is in coin.
Q. How are the large amounts paid in large business ?--A. They use the paper of the bank.
Q. How much is the paper of the Bank of France, do you remember?–A. The last account I read it was about five hundred millions in round numbers.
Q. About 500 millions of dollars in bank ?-A. Yes, sir; and about the same amount of coin in bank.
Q. Would you allow the government or the banks to issue paper in this country, provided coin was kept behind it ?-A. Not to circulate as money.
Q. Then you would not adopt the plan adopted in France ?-A. That limited amount.
Q. Five hundred millions is a large amount !-A. It is scarcely one-quarter of the money in the country. They have about fifteen hundred inillions in coin.
Q. About 1,200 millions.-A. There were five hundred million in the bank at last account and one thousand to one thousand two hundred million in the hands of the people.
Q. You have confounded it. It was one thousand two hundred millions in the bank.A. One economist says, of course that is in the hands of the people; they have got to have it; it is in their pockets and tills and circulating about, and he thought it was over one thousand millions in the hands of the people.
Q. You would limit, as I understand you, our circulation to a governmental circulation of about 20 per cent. of the total amount, leaving 80 per cent. to be had in coin. The money that does the business of this country is about seven hundred millions. Twenty per cent. of that would be about one hundred and forty millions in paper, and that is all you would allow 1-A. I think we ought to have one thousand millions in coin and two hundred millions in paper.
Q. How would we get the 1,000 millions in coin ?-A. How did we get the silver in place of these stamps? Why, by abolishing the stamps.
Q. No; we bought the silver and issued government bonds bearing 5 per cent. interest and paid for them, and the government is now being taxed 5 per cent. for the bonds issued since for that silver; whereas before it had the stamps without interest.-A. I estimate that the only rational way is to abolish the stamps and let the coin flow in of itself.
Q. Some one has to buy the coin and pay for it. The government obtained it for bonds, and issued them and paid for it ?-A. As soon as there is a demand they will flow in.
Q. You will find the Government didn't put a dollar's worth of silver in a subsidiary coin; it only put about 80 cents' worth. It would not flow in, because the government would not let it flow in. The government wanted to make the 20 per cent., and, therefore, it bought the silver and paid it ont to the people, and made that money. It is paying interest on that purchase money now. If you want 1,000 millions more, some one has to buy it and pay for it ?-A. The products of our country would soon buy it. We have produced over 2,000 millions the last thirty years of gold and silver in our country, and we have very little of it now to help ourselves with.
Q. You would have to buy it?-A. I would have no objection—the kind of paper the silver bill provided for--that the people may carry in their coin and take the paper representative.
Q. Wonld you allow the coin to be deposited and then paper issued against it 1-A. To be exchanged. Issue as much as is properly an exchange. That is, I believe, all the workingmen of this day-if every dollar went into one fund, and they were certain of employment and this would buy the products, they would be a great deal better off.
Q. Take the case of your 1,000 millions, and suppose it was deposited in the Treas, ury and paper issned against it; would there not be 1,000 millions of capital lying in the Treasury idle ?-A. Not what you call idle.
Q. The coin is lying idle and the paper is doing its work, and if all the coin would keep that paper at par, would there not be idle coin in the Treasury I-A. I believe it is necessary to have it more solidified. Under the present system you are certain to have these revulsions; there is no remedy.
Q. In countries like France and England, where the coin is behind the paper, dollar for dollar, are they any more free from commercial revulsions than the United States ?-A. France is very much more free.
Q. Has not France had a commercial crisis during the last thirty years ?-A. They have had, probably, from our American customs; when they sent gold to the United States, they have been in trouble and embarrassment.
Q. Are you aware that a commission of the Chamber of Peers has been sitting for the last year upon the pending commercial crisis in France, to investigate the causes of the depression and suggest remedies, and that it has just made a report ou that subject-a committee charged with the precise duties of this committee 7-A. No, sir; I am not.
Q. That is the fact. The crisis has been so severe in France, and the difficulty of getting employment so great, that a committee has been sitting for a year past, and it has just inade its report; so that France, with its solid gold and silver basis, has not been exempt. Has England been exempt!-A. One word about France. It has been almost confined to the operation in United States customs cutting off the costs.
Q. Is France, with its solid gold basis, any more exempt?-A. It has been comparatively light. The Herald of yesterday stated that pauperism has been on the decrease in France.
Q. And capital has been increasing, and there has been a commercial crisis, all going on together?-A. The difference between France and this country is that theirs is on a proper basis, and ours is on what is called faith, and it must play the devil with business.
Q. Then it is the irredeemable feature of our paper money that makes it worse here than there?-A. It should be made to equalize with coin; and I believe bank paper redeemable with coin is the worst possible currency that can be invented. A moderate amount of Treasury notes redeemable by being receivable in taxes would always float on a par with gold and silver.
Q. Has there ever been a safer currency in any country than our present currency, secured by national bonds deposited in the Treasury ?-A. The mere safety of redemption is a very small part of the future. I believe the whole revulsion is from a ruinous paper system. I gather that from trying to understand the subject and reading the writings of such men as Hume, and Adam Smith, and Thomas Jefferson, and Paine; and my deliberate judgment is that our diseased paper money is at the foot of it all.
Q. Then you are not in favor of turning the government bonds into greenbacks ?A. No, sir; not in any inflation manner.
Q. Two thousand millions ?--A. No; I believe that cry is something like a man with delirium tremens calling out for more rum.
Q. Would you buy the railroads and pay for them in greenbacks?-A. I think they should be run by a company; but there I asked the same question of the editor of the French Courier, and he said the government has a set of commissioners that examine the railroads, and the public interest is much more guarded than it is here; the railroad company is not an irresponsible power, watering its stock and making extraorvinary dividends; the right of way is a public franchise, and wherever it is alienated the government should be secured, which is not done in our country.
Q. You think corporations of a public nature should be under the supervision of eommisssoners appointed by the government?-A. Sufficient to guard the public interests. That is, for instance, the South Ferry belongs to the city, and is leased. We have a very low ferriage and some revenue from it. If our city railroads were conducted in the same way, they would pay nearly all our taxes and give all the dividends that the stockholders are entitled to. I was told by a man thoroughly conversant with the subject that he believed the Third Avenue Railroad was deriving 70 per cent. on all the money ever invested in it at the present time.
Q. The Third Avenue Railroad, I take it, is owned by people who didn't originally start the road ; who bought it as an investment. How would you deal with the present owners? Would you deprive them of this property or compensate them -A. It might be proper to buy it up; but I do not believe the public franchises should be made the instrument of coining one fortune after another.
Q. Is not that the fault of the legislature who allowed such things at that time! A. Yes, sir.
Q. Now, how are you going to repair it?-A. They should pay their measure of the taxes, which I do not think they do now, and, if necessary, they should gradually buy up sufficient of the stock to have control of the road.
Q. I believe the constitution of the State of New York says all taxation shall be equal. How do the railroads escape taxation ?-A. They do it by watering their stock.
Q. The more you water a stock, and it pays dividends and is worth par, as the Hudson River stock is, will that make its value less to pay taxes ?–A. No; but they have a way of covering up a dividend of 30 or 40 per cent. by doubling the stock. Q. Whose fanlt is that ?-A. It runs all through the community, legislators and all.
Q. Is it not the fault of the community itself? Is the community sufficiently honest itself to enforce the laws and get justice ?-A. The community has failed to attend to its business properly in the matter.
Q. Then you think the community should do its duty better, and then its servants would do better?-A. Yes, sir. Here is a memorial which I wrote and got printed abont a year ago, and it has already found its way into the platform of some of the public parties :
"Vemorial for the remoral of the causes of the terrible stagnation of industry and business. "To the Senate and House of Representatives :
“ The subscribers and citizens of the United States respectfully represent that the great indebtedness and the interest to be paid thereon is the incubus that is prostrating industry, trade, and commerce in the dust and carrying the country rapidly to poverty, bankruptcy, and ruin.
* The aggregate amount of this indebtedness, including national, State, municipal, railroad, bank, insurance, bond and mortgage debts, &c., as set forth in recent statements, is over rather than under ten billions of dollars. A large amount of this indebtedness is held abroad. This is five or six times, and some estimate ten times, as oppressive as that held at home. With the latter, the interest is paid and spent at home.
" The aggregate of this interest is so great a load to carry that we believe it is not possible for industry and business to revive to much extent unless a large part of this debt is swept away by bankruptcy and consequent repudiation (which now seenis impending), or else paid off by a vigorous system of taxation upon the wealth and income of the country (exempting a moderate income as the recent law did). Such a system of taxation would, we fully believe, speedily revive industry in all its branches with trade and commerce, increase values and incomes, so that all parties, including the payers of these taxes, would be much better off. All would, in the end, be amply paid, and more than paid, for the sacrifices they had made.
“Nations indulging in the honors and luxuries of big wars and great national debts must pay big taxes or they will speedily go to industrial and commercial ruin.
“When the late income-tax was collected and the national debt was being paid off at the rate of about one hundred and twenty millions of dollars per annum, industry, trade, and commerce was prosperous and good. When the income-tax was repealed, industry and business began from that very time to droop and languish, and has grown worse and worse ever since, and will continue to grow worse until this will be one of the worst countries to live in, excepting it be for the wealthy few and the holders of stocks, bonds, mortgages, &c. Already emigrants are leaving the country by the thousand. It is the thrifty and energetic that leave, leaving the lower grade of tramps, the paupers, and criminals behind. There is no hope for the country until a very large part of the indebtedness is swept away, either by bankruptcy.or repudiation, or canceled by a vigorous system of taxation upon wealth. Your memorialists further request that you will without unnecessary delay substitute the National Treasury notes for the notes of the national banks, and cancel national bonds to that amount, thus saving to the country some twenty millions of dollars per annum.”
VIEWS OF MR. A. STRAUSSER.
A. STRAUSSER appeared and made the following statement:
By the CHARMAN: Question. What is your business ?-Answer. President of the Cigar-Makers' Union. Q. Are you an employer or a workingman ?-A. I am a workingman.
Q. Yon employ nobody ?--A. No, sir. I am not an employer, but am working for wages every day. Mr. Chairman and members of the committee, I want to state the causes of the depression simply in the cigar-trade and not in any other trade. It is a singular fact that, although the making of cigars has continually increased, the number of the unemployed has increased in the same ratio also, or about nearly in the same ratio. I will state here that in 1868 there were 590,000,000 of cigars manufactured in the United States; in 1870, it increased to 1,143,000,000; in 1872, it increased to 1,500,000,000; in 1873, the year when the panic commenced, it increased to 1,800,000,000: in 1874, the time when the panic was raging, it increased to 1,800,068,000; in 1875, it increased to 1,967,000,000; in 1876, it decreased 59,000,000.
Q. So that in 1876 it was within 59,000,000 of the highest product in 1875!-A. In 1876, it was 1,908,000,000.