Democratic Sentinel, Volume 10, Number 46, Rensselaer, Jasper County, 17 December 1886 — NATIONAL FINANCES. [ARTICLE]

NATIONAL FINANCES.

The Annual Report of the Secretary of the Treasury. Discontinuance of the Purchase of Silver Strongly Recommended. Tho Question of Reducing the Surplus—The Tax of Raw Materials to Be Reduced. The annual report of the Hon. Daniel Man-, ning, Secretary of tho Treasury, is a heavy document of nearly twenty-four thousand words. The main features of the report are as follows : Careful perusal of the instructive debates at the last session of Congress leads me to review the four policies which then received marked attention: 1 Dree coinage of silver. 2. Conferences. 3. Continued purchases of silver. 4. Stojv'ing purchases of silver. First- */he free-silver coinage prescription for the monetary dislocation satisfies but one of several indisi ensable conditions. While it is an indispensable condition of permanent restoration that the free monetization of silver shall be equally complete as of gold, yet were it now given to silver in this actual moment of dislocation the. practical result would be to withdraw the same from gold. That would be a change without advantage in any respect, and in every respect witn disadvantage. In the first place it would bring us to the Asiatic silver basis This has been commenced in some quarters. Thera is, however, no such public desire. Second —Mote conferences, further diplomatic corresponden e are jiroposed. I venture to think, with all due deference to those who are responsible foi a decision, that the time for another conlerence has not arrived, and that the moment for diplomatic interference is not perfectly felicitous. The Continental Powers await the action of Groat Britain, whose reluctance defeated the object of both conferences •called at the instance of the United States, and to whom again, almost within a twelvemonth, she has turned a deaf ear. If it suited the dignity of the United States again to besiege tho attention of European states, or again to make advances where they have been so lately repulsed, it would not suit our interests so to do when it is certain that the inquiry upon which Great Britain has suddenly entered at the instance and insistence of her great dependency, India, and of her own accord, is entered upon with an exclusive regard to her own interest. And of Great Britain’s interests the United States have no call to become advisers or guardians. Third—To go on as we are is the least creditable of all the courses open to our choice. The Treasury silver purchase is defended by nobody, approved by nobody; even every vote for the free coinage'of silver is a vote that the Treasury silver purchase shall cease, an assertion that it ought to cease. Fourth—To itop tho purchase of silver is our only choice, our dutv, and our interest. It will stop a wasteful and injurious expense, and the taxation which defrays it. It will commence and promote reform in the sum and tho methods of Federal taxation. It will recover to the United States an equality of position (noncoinage) with foreign powers which will give us due influence in negotiation. It will induce negotiation, and negotiation to the end of relief, not for the purpose of delay. If the law were repealed which makes compulsory Treasury purchases of Bilver, and if that repeal were accompanied by the declaration of Congress that the United States now holds itself in leadiness to unite with France, Germany, and Great Britain in opening their min's to the free coinage of silver and gold at a ratio fixod by international agreement, it is the deliberate judgment of tho undersigned that before the expiration of another fi-.cal year this international monetary dislocation might be corrected by such an international concurrence, the two monetary metals restored to their old a*d universal function as the one standard measure of prices for the world’s commodities, the depression of trade and industry relieved, and a general prosperity renewed. I respectfully recommend to the wisdom of Congress the unconditional repeal of the act of Feb. 28, 1878, accompanied by such a declaration. The financial situation, scanned at large and as a whole, plainly indicates our best policy. We should reduce taxation immediately to an annual revenue sufficient to pay our annual expenditure, including the sinking fund and excluding the silver purchase; pay our unfunded debt of $3 10,681,010 with the present surplus and the surplus which will accrue bofore the whole reduction of taxation can be made to take effect and while no more funded debt can be paid except at a premium during the five years from now until 1891. I therefore respectfully recommend : 1. Repeal of the clause in the act of Feb. 28, 1878, making compulsory Treasury purchases of silver, and lor the reasons heretofore given in ■ order to reduce surplus and unnecessary taxation $ ’4,000,000 a year. 2. Further reduction of surplus taxation, beginning in a manner which will be suggested below, close down to the necessities of the Government economically administered. 3 Repeal of tho act of May 31, 1878, making compulsory post-r. demption issues and reissues of United States legal-tender notes, thus facilitating— 4. Gradual purchase and payment of $346,681,- ■ 016 outstanding promissory notes of the United States with present and accruing Treasury surplus, issuing silver certificates in their room, and gold certificates if need be, without contraction of the present circulating volume of tho currency, these notes (called greenbacks) being now the only debt due and payable before 1891 except the 3 per cent, bonds, which are probably all to be called and paid early in the ensuing fiscal year. REDUCTION OF SURPLUS TAXATION. It remains to consider the reduction of taxation to the needs of the Government economically administered. What surplus we expend in paying off the greenback debt will diminish by so much the immediate reduction of our tariff taxation; for, while the funded debt stands, certainly it is not wise to discard the taxes on whis'iy, tobacco, and beer. Indeed, it is my own belief that whenever wo begin taking off the shackles of taxes on raw niaterials such increased prosperity will follow to the employers who dread it, and such larger and steadier employnn nt to the wage-earners who need it, by increasing the sales abroad of our own manufactures, and by whipping our foreign competitors in our own markets, that we shall see our income from imported manufactures dwindle so fast as not only to comp* 1 the retention of fit items of revenue—whisky, tobacco, and beer—but, perhaps, to drive us back to getting ten millions of revenue from two cents a pound tax on coffeo and half as much from tea. It is the reduction of war tariff taxation which we have to consider. Under our system of government by partv, and the rule of "the majoritv, Ixlo not think it unbecoming oven in a public officer at this time to recall certain responsible and specific pledgi s in respect to tho sum and methods of Fedeial taxation, subject to which tho people of tho United fctates, in the exercise of a lawful eiec'ion, took away the administration of this Government from the party entrusted therewith for a quarter of a century, and lodged it in other hands. Public life will cense to be the ambition of honorable and worthy men if the deliberate pledges and professed principles of political parties are not a law for their leaders. Discharging, if I might, whatever hostility of tone, now irrelevant, it contains, I desire to refer to the record of one public obligation thus assumed, and thus accepted, and made binding by the last general popular vote. These pledges i con nover be fulfilled without a reform in the sum and methods of Federal taxation. Nor can our country ever profit fully by its incomparable advantages among the nations of the e irth in population, peace, land, and liberty, so long as we so on pleading infancy, and swaddle, in mediaeval rags, its victorious energies. It is those which need release and liberty. All our requisits taxation maybe made an easy garment. We have mode a prison of it, plastered stiff with •beolete contentions about protection and free trade. It is actually the war rates of the war tariff cf the last generation under which we are mow living, for the undebated, unsifted law of MB3, made by a conference committee, did but keep alive the body of the tariff of 1864. The •verage percentage of the taxes to the val-

ues of imported commodities has been as follows : Per cent. Morrill tariff of 1859-61 (before the war) was 13.84 War tariff of 1862-64 (in 1866 was highest; was 48.35 Present prolonged war tariff (was in 1885)..46.07 EXPORTS AND THE TARIFF ON RAW MATERIALS. The total value of our domestic exports for the last fiscal year was almost exactly $667.000.000, of which 88 per cent were the products of our fields, forests, fislnries, and mines, and 16 per cent, only were the sum total of manufactured products in which American labor was inwrought. In the last quarter of a century progress in telegraphs, iransportatian, labor-saving inventions, and the mechanic arts has reduced the profits of cnpitul and the rate of interest by more than one-half; has increased the wages of labor throughout the world; his augmented by at least a third the surplus which our manufacturers can produce beyond domestic rfbeds for sale abroad. Prolonging without necessity our war-tariff taxes on raw materials, we "have been undersold and excluded from foreign markets by nations not taxing raw materials. Despite their low-priced, inferior labor and the high percentage of labor-cost therefore included in their product, our taxed raw materials and their lreo raw materials have protected the so-called “pauper labor” of Europe against American competition. Our increasing capacity to produce an industrial surplusage has been accompanied by war taxation exactly suited to prevent the sale of that surplusage in for. ign markets. Out of our actual abundance this war taxation has forged tho instrument of our industrial and commercial mutilation. Defeating our manufacturers in their endeavor to compete abroad w ith the manufacturers of untaxed raw materials, it has set them on a ferocious competition at cutthroat prices in our own home market, to which they are shut up, and for which their producing powers are increasing superabundantly. Long periods of glut and so-called overproduction have alternated with brief periods of renewed activity and transient prosperity like the present. These prolonged war-tariff taxes, incompetent and brutal as a scheme ot revenue, fatal to the existence of our foreign market, and disorderly to our domestic trade, have in the last resort actod and reacted with most ruinous injury upon our wage-earners. As the most numerous part of our population, our wage-earners are, of course, the first, the last, and the most to be affected by injurious laws. Every Government, by true statesmanship, will watchfully regard their condition and interests. If these are satisfactory, nothing else can be of very momentous importance; but our so-called protective statesmanship has disfavored them altogether. Encumbering with clumsy help a few thousand employers, it has trodden down the millions of wage-earners. It has for twentyone years denied them even the peaceable fruits of liberty. * TAXES TO RETAIN. Another proposal is to reduoo taxation by cutting down the tax on wisky, tobacco, and beers, and removing the duty on sugar. Nobody pays a tax on tobacco except the consumers of tobacco. They are williug to pay for the luxury, and they ask no relief. Any probable reduction ot the tax on whisky would be more likely to increase the revenue than to diminish it. Tho price of sugar has fallen to an exceedingly cheap rate. Our own sugar caop is so very small a part of tho total amount of sugar we consume that sugar ranks next to articles wholly produced abroad, like -tea and coffee, in suitability for taxation, on tho ground that its consumption is universal, that the tax is easily and cheaply collected, that the increased price p iid by the consumers is an unconsidered trifle, and that what is taken from the taxpayers goes into the taxpayers’ treasury, not into a few private bank accounts. Liko the casting away of the revenue from coffee and tea in 1872, the removal of the tax on sugar, which gives us our easiest and next to largest single item of revenue ($ <1,7/8.948), at an annual cost of less than ninety cents per head, is now pressi d forward to avert the repeal of other taxes which are desired to operate an incidental and prhate benefit by enhanced prices to the domestic consumers of a large domestic product. These incidental and private benefits in fact are subject to all the deductions I have already mentioned, and are subject to the chief deduction that the endeavor to make our tax laws exclude foreign competition in our hotne markets promotes the success of that competition, besides effectually preventing the "sale of our surplus product, our labor product, in foreign markets. But the incidental benefit of the sugar tax to our cane-sugar producers, who are under the harrow of beet-sugar competition and German bounties, which have driven them to improved processes and already lowered the price of sugar more than the removal of the whole tax, is not got by excludiug foreign sugar, for the great bulk of our sweetening conies from climates more tropical than ours. Nor does it prevent our Bales in foreign markets of imported sugars ri fined and increased in value by the process of American labor.

DUTIES 13 BE REMITTED. The taxes to be first remitted are those which prevent or hinder the sale of our surplus products in foreign markets. Their removal will set capital in motion by the promise of better returns, enlarge the steady employment and increase the annual income of many thousand wane-earners, whose prosperity will diffuse prosperity. These taxes are the duties on raw materials, and the most widely injurious of them is the tax upon raw wool. But the incomo of all the wage-earners in the United States can be at once enlarged effec ively, certainly, permanently, by reducing the cost to them of the great necessities of life. Our wartariff taxes increase needlessly the cost of clothing, shelter, food to every family. Every wage-earner’s expense, every taxpayer's expense, for the clothing of himself and his family is nearly doubled, at least in the Northern, Middle, and Western States, by taxation which can now be remitted, yet leave the Treasury a sufficient revenue. The duty on raw wool procured for the Treasury last year only $5,126,108. The cost of woolen clothing for our 59,000,030 people was thereby and otherwise enhanced many times more than 90 cents a head, the only cost of our 551,778,948 revenue from sugar. Moreover, any tax on raw wool imported will always make domestic woolraising a bad business ; for, in our dry climates, some varieties of wool required by the manufacturer are not produced. The tax prevents our manufacturers from competing in foreign markets with all manufacturers who cau buy untaxed wool. The tax prevents our manufacture and export of competing woolens that require the use or admixture of non-American wools, and so restricts the home demand, and the growth of the home demand, for domestic wool —thus making the export of our domestic woolens impossible, yet involving the enhanced price of foreign and domestic woolens. This pcttv tax of $ ,12 >,IOB on raw wool assists in nearly doubl ngthe actual cost of their clothing to the American people, with no real and no incidental benefit to anybody except the foreign manufacturer. WOOL SHOULD BE ON THE FREE I,IST. I respectfully recommend to Congress that they confer upon the wage-earners of the United States the boon of untaxed clothing, and in or er thereto, the immediate passage of an act simply and solely placing raw wool upon the free list. Of course, a repeal of the duty on raw wool should bo followed by, but need not wait for, a compensating adjustment of the duties on manufactured woolens, whilst our manufacturers are learning the lesson that, wita the highest paid and most efficient labor in the world, with the most skilled management and the best inventive appliance >, they need fear no couipetit on from any rivals in the world, in home or foreign markets, so long as they can buy their wools free, of every kind. But the common daily olothing of the American people need not be taxed ; therefore, it ought not to bo taxed ; to free their c otbing of taxes will finally reduce, by half, their expense for one of tho three great necessities of life, and thus enlargo houestly and justly the income of every wageearner in the United States. But this reduction of unnecessary aud injurious taxation is not enough, aud will op rate slowly in diminishing revenue. Last year’s import tax oil raw wo d is little more than the mere growth last year’of our taxes from whisky, tobacco and beer. To make wool free of tax may actually work a larger loss of revenue by enabling our woolen manufacturers to undersell nt a profit the foreign impo ters who brought in last year $40,530,509 worth of manufactures of wool, from which wo got a tax of 527,278,528. To say nothing of other taxes upcn raw materials, there are sox oral hundred articles among the 4,1 2 articles that wo tax which ought at once to bo swept off tho tax list into the free list—petty, vexatious, needless taxes, much enlarging the cost of collecting the revenues irom imports. I shall at an early dsy prepare and submit to Congress a supplementary report on the collect! n of duties. Daniel Manning, Secretary of the Treasury.