Indiana State Sentinel, Indianapolis, Marion County, 27 December 1893 — Page 9

i PAGES 9 TO 12. ESTABLISHED 1322. INDIANAPOLIS, WEDNESDAY MORNING, DECEMBER 27, 1S93-TAVELYE TAGES. ONE DOLL All A YEAR

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FINANCE AND FACT

Secretary Carlisle's Annual Report to Congress, Dealing with the Operations of the Treasury. NEED OF TARIFF REVISION In the Interest of the Masses of the People. Favors an Increase of Internal Revenue Taxes 'Jknd Recommend tlic linnet mrnt of Lu tr I'rovialiuK for mi Income Tat The C.iltt Hrf rc nnI tlie erM- . nlty 4it Times for nil Isue of llonds to Merl liiiierueneie A (nrf ful nnt Detailed Slalrnit'iit of the Country's I'Iiih nee Chairman AVI I "ton's litliorl. WASHINGTON". I. C. Pee. 20. The tinnuai report of Secretary Carlisle was f.r.t to both liut-s of congress today. The Jocumont is a very thorough anr exhaustive review of the condition of the povtrnrm nl's finances, and contains various recommendations for the. relief of th" treasury. The secietary discusses et con.-dderal le length the following general topics: "Co ndition of the Treasury." "Currency Legislation" and "Kt!t-v of the Revenue Laws." The report Is as follows: During the f rst five months of the present fiscal year the expenditures of the government have exceeded its receipts to the s.rrvurit of 3-M.tX.ji. There hau been not only a decrease of recvlpts, but also an Increase of expenditures during this period n compar-d with the corresponding live months if the last fiscal year. The revfrom custom-; hae fallen off ?22,5S!.fc".t.7l; from internal taxes $7'. '". I"'., and from inise. Haneeus receipts ::;4.1, The expenditures on aocount of the war department, in the execution of contracts made l-arln? the last fisea I year, hive increased J ;,liiM I.'.-li': on account of the navy department for the ?,irae reason tfio increase 1 Hf he. ii i'l.'MU.Jt.:;! ; on account of Indians.. J.")!' ;."7v.v,, and on account of interest j.i.4.Vi.i".; hot tie le have been r,-ducti.ns Pi some other branches of the public service to the amount of ..;. T.2.2"e., as compared with the corresponding p-rind last year. The result of thce changes is that on the 1st day rT I eeemher. lV-.i, the actual net balance in the treasury, after deducting the hank note 5 per cent. r.-d-mption futid. utstatidin drafts and checks, disbursing Ulcers' balances, agency arcoiuiis and the jol'l reserve, was only $1 l.o::4 JS.2T, and of the total amount held J 12.:;47.ö17.Sj was in subsidiary silver an 1 minor coins. It may be safely as-timed that the worst effects of the reeent financial disturbances fii'l Colistinen t business depression have 1 cen realized, and that the condition will 1 much more favorable hereafter for the collection of an adequate revenue for the support or trc pvernnia:; .hut ;t can teareejy be expected that the receipts during tlie remainder of the fiscal year will exrl the fjttn) litures for the same time to such an extent as to prevent a very considerable deficiency. I have, therefore, estimated a probable deficiency of $2S.OV,0u0 lit the close of the year, and if congress concurs In this view of the situation It will 1' incumbent upon it to make some provision for raising the amount as soon as practicable. Favor i Horn! Naur. On account of the difficulty of securing such a sum within the time it would be required, by the imposition and collection of additional tax-s, I recommend that the third section of the act. to provide for the resumption of specie payments, approved Jan. 11. 1x75, which confers authority upon the secretary of the treasury to issue and Fell certain descriptions of United States bonds, be so amended so as to authorize him to issue and sell, at not less than par, Jn coin bonds, to an amount not exceeding 5J',f.t",(i.o, bearing a lower rate of interest und having a shorter time to run than th-se now provided for. and that he be permitted to use from time to time such j art of the proceeds as may be necessary to supply any deficiency in the public revenue that may occur during the liscal year lxi?4 and is:-.".. The section referred to provides: "That to enable the secretary of the treasury to prepare and provide fur redemption in this act authorized or required, he is authorised to use any surplus revenues from time to time in the treasury, not otherwise appropriated, and to issue, sell and dispone of at not less than par In coin, ither of the descriptions of bonds of the rr.lted States, described in the act of congress approved July It, 1S70. entitled, 'An et to authorize the refunding of the, national debt." The bonds authorized by the act of July lt. 1S70. are described as follows: t. Honds not exceeding in the aggregate S-'".'X.i"o In such forma rd the secretary may prescribe, and of denominations of !'. or some multiple of that sum, redeemable in coin of th standard value at the pleasure of the 'United States after ten years from the date of their issue, and bearing1 interest payable semi-annually Jn Fuch coin at the rate of 5 per cent, per annum. 2. Ronds not exceeding In the aggregate $.",jo..(0, the tarn in all respects as those above described, but payable at the pleasure of the United States after fifteen years from the date of their issue and bearing Interest at the rate of 4'.i per cent, per annum. 3. Hon.1i not exceeding in the Aggregat Jl.onoKin.yiW), the same in ail respects, but payable at the pleasure of the United States after thirty years from the date of their issue, and bearing interest at the rate of 4 per cent, per annum. Justified in Emergencies. In the present condition of the public credit nothing lens than the existence of a. great and pressing financial emergency would, in my opinion. Justify the sale of any of these classes of bonds. On the first-c!as3, tho Interest would amount, at the maturity cf the bondg, to one-half the principal; on the second-class, it would amount to more than two-third of the principal, and on the third-class it would exceed the principal by 20 per cent. If any one of these methods of raising money were cow presented aa an original measure for consideration In congress, I am satisfied it would not receive the approval of that body or of the people. Whatever may have been their merits nearly a quarter a century ago, when the credit of the government was, to a certain extent, impaired by the existence of a large interest-bearing public debt, pni the general use of a depreciated paper currency not then redeemable in any kind of coin, our financial standing is now so high that our public obligations, bearing any of the rate of interest authorized by the law referred to, would have to be sold at a premium so great as to prevent lr?e classes of our people, who misrht otherwise invest in thrm. from becoming purchasers. The Cnited Suites 4 per cent, bonds, payable in 107, are now selling at a rate which yields investors less than 3 per cent, upon their cost. anH I am confident that a bond, bearing interest, at the rate of 3 per cent., payabla quarterly, and redeemable at the Pption of the Kovernment after five years, eouM be readily sold at par in our own country. If the authority now existing should b ao modified as to empower the secretary of the treasury to issue the bonds in denominations or Kiiirs of and its multiplies they could b readily disposed of through the sub-treasuries and postoffices without the agency or intervention of banks or other financial institution, and viibuut tb payment vZ cooimiion-'i. Such

bonds would afford to the people at large an opportunity to convert their surplus earnings into a form of security which, hile it would be perfectly safe, would not only increase in value by reason of accumulating interest, but be, at all times, available as a mean of procuring money When needed, and the experience of this and other countries justifies the confident belief that such a plan would be popular and successful. Jn case congress should not consider it advisable to authorize the secretary to use for the purpose of supplying deficiencies in the revenues any part of the proceeds of the bonds herein suggested, I recommend that he be empowered to execute from time to time, as may be necessary, the obligations of the government, not exceeding in the aggregate $.".0,j,CX. bearing a rate of interest not greater than 3 per cent., and payable after one year from date, and that he be permitted to sell them at not less than par, or use them at not less than par In the payment of public expenses to such creditors u.3 may be wdlling to receive them. Condition of the Treasury. The condition of the treasury is such that, unless some available means are promptly provided by law for supplying the growing deficiency, the public service will be seriously impaired, and pensioners and other creditors subjected to great delay and inconvenience. Congress alone has the power to adopt such measures as will relieve the present situation, and enable the treasury to continue the punctual payment of all legitimate demands upon it, and I respectfully, but earnestly, urge that Immediate attention be given to the subject. The necessity of the extension of the power of the secretary to procure and maintain a larger reserve for the redemption of United States currency must, I think, be evident to every one who has given serious thought to the subject. At the date of the resumption of specie payments, Jan. 1, 1ST9, the only form of currency, except coin certificates, which the government was required or authorized by law to redeem in coin on presentation, was the old legal-tender notes, then and now amounting to $Ti46,6l.'i6, and It was considered by the secretary of the treasury that a coin reserve of $l'K),0"u.0Ou would constitute a sufficient basis for the maintenance of that amount of currency at par. The correctness of this conclusion was shown by the fact that, so long as there was no material increase in the volume of paper redeemable by the govrenmcnt, the reserve remained unimpaired, and no serious disturbances occurrel in our monetary systems; but. under the act of July 14. 15Xi, additional treasury notes have been issued to the amount of $1."3,;m0.94'", of which there are now outstanding $153,31.22t, thus making the direct government obligations in United States currency amount to the sum of $4P9,yji.2i. all of which the secretary of the treasury is now required by Utw to redeem In coin on presentation. I-lesides this, there liat1 b'f-n coined, under authority of law, $liy.x::j.."." in l-gl tender silver, upon which certificates have b'-en issued to the amount of S'W4.13v"itd, and as congress, in the act of July 14. 10. declared it to he "the established policy or the United States to maintain the two metals on a parity with each other upon the present leral ratio, or such ratio as maybe provided by law," an additional reason now exists for conferring ujwn the secretary unquestionable authority to provide for such contingencies us may arise. Under these circumstances it is, in my opinion, necessary not only that he should be clothed wiih full authority to procure and maintain ample reserve in coin, but that tlie purposes for which the reserve is to be held and used should be made as comprehensive as the duty imposed upon him by the law. Tlie existence of such authority in a constantly available form would of itself inspire such confidence in the security and stability of our currency that its actual exercise might never become necessary; but the futility of declaring a specific policy tnd withholding means which may become necessary for its execution is too apparent to require comment. The ;ot Iteerve. Largely on account of apprehensions as to the ability of the government tinder the legislation then existing to continue the current redemption of its note in.Voln and maintain the parity of the two' metai. the shipments of gold from this country during the fiscal year 1S93 re-ached the unprecedented amount of J10S.fS',Slt. nearly all of which was withdrawn from the public treasury by the presentation of notes for redemption. During the thre months next preceding the 7th day of March. 1S3, when a change occurred in the administration of the treasury department, the withdrawals of gold from the trersury for export amounted to $:i4,14UiO, and during the eight months which have elapsed since tluit time such withdrawals have amounted to $3iw'.f.T.O. or $2.113,I0 more than during the preceding period of three months. The amount of free gold In the treasury on the 7th day of March, lsi.3, was $kJ.92,-U0, or 1'2,410 in excess of the lawful reserve, but by making exchanges of currency for gold with the banks in different parts of the country, the amount was increased to J107.4)-C2 on tho 25th of that month. Notwithstanding the most strenuous efforts by the department to maintain the hundred-milllon-dollar reserve intact, the presentation of notes for redemption to procure gold for shipment abroad continued to such an extent that, on the seo ond day of April, for the first time since the fund was established, it became necessary to use a part of it. and it was reduced to $:S, 432,307; but it was afterward Increased by exchanges of currency for gold so that on the 10th day of August it had been fully restored, and there was on hand $103.fis;i.2M in free gold. 15y Oct. 1, however, it has been diminished by redemptions of currency and otherwise to the sum of Jfl.BGl.SSS, which is the lowest point it has ever reached. So long as the government continue., the unwise policy of keeping its own notes outstanding to circulate as currency, and undertakes to provide for their redemption in coin cn presentation, it will be, in my opinion, essential for the soeretary of the treasury to possess the means, cr to have the clear and undoubted authority to secure the means, which may from time to time become necessary to enable him to meet suh emergencies e.s the one whlch has ractently occurred i: our financial affairs. Under existing .gislatlon the treasury department exercises to a larger extent tha.n all the other financial institutions of the country combined, the functions of a bank of issue, and while the credit of the government is bo strong that it may not be necessary to maintain at all times the actual coin reserve which experience has shown to be requisite in the eise of ordinary banking companies, still it would be manifestly Imprudent, to aay the least, not to adopt such precautionary measures as would enable the government at times of unusual monetary disturbance to keep its faith with the people, who hold its notes and coins, by protecting them agulnsf. the disastrous effects of an irredeemable and depreciated currency. Ilonnd by Provision. While the laws have imposed upon the treasury department all the duties and responsibilities of a bank of issue, and to a certain extent the functions of a bank of deposit, they have not conferred upon the secretary any part of the discretionary powers usually possessed by the executive heads of institutions engaged In conductin? this character of financial business. Jie Is bound by mandatory or prohibitory provisions in the utatutes to do, or not to do, certain things without regard to the circumstances which may exist at the time he is required to act, and thus he is allowed no opportunity to Ulte advanta of changes In the situation favorable to interests of the government, to protect its interests from injury when threatened by adverse events or influences, He can neither negotiate temporary loans to meet casual deficiencies, nor retire and cancel the notes of the government without substituting other currency for them when the revenues are redundant, or the circulation excessive, nor can he resort, except to a very limited extent, to any of the expedients which, in his Judgment, may be absolutely necessary to prevent injurious disturbances of the financial situation. These considerations emphsslze the necessity of such legislation as will make the department independent of speculative interests and operations, and enable it to maintain the c?Jit of the government upon a sound and secure basis. Whatever objection may be urged against the maintenance of a large coin reserve, procured by the sale of interest-bearing bonds, it must be evident that this course cannot be safely avoided unless the government abandons the policy of issuing its own notes for circulation and limits the functions of the treasury department to the collection and disbursement of the public revenues for purely public purposes, and to the performance of such other administrative duties ns may be appropriate to the character of Its organization as a branch of the executive authority To the extent that it Is required by Jaw to receive money on deposit iuil repay It. or to Issue noUa and redeem

them cn demand, it is engaged in a business which cannot be conducted without having at all timet the ability to comply promptly with its obligations. Its operations necessarily affect, beneficially or otherwise, the private financial affairs of all the people, ond they have a right to be assured by appropriate legislation that their confidence in the integrity and power of the government has not been misplaced. The recent repeal of so much of the act of July 14, ls:0, as required the secretary of the treasury to purchase silver bullion and issue treasury notes in payment for it, makes euch a radical change in the policy of the government respecting the currency of the country that until its effects are more fully developed I do not consider it advisable to recommend further special legislation upon that subject. Money In Circulation. As already shown in thl3 report, the amount of money in the country, outside of the treasury, on the 1st day of December, 1S03, was $112,404,517 .ater than the amount outstanding on U ist day of November, 1592. This vast increase In the volume of outstanding currency, notwithstanding the enormous exports of gold during the year, is the result of several causes, among which may be mentioned the issue of treasury notes for the purchase of silver bullion, the excess of public expenditures over receipts, the additional circulation called for by the national banks during the late financial stringency, and the large imports of gold, which amounted during the months of July, August, September and October, 1S03, to the sum of Jö5,7aö.52fi. That the amount of money in the country is greater than is required for the transaction of the business of the people at this time is conclusively shown by the fact that It has accumulated ani is still accumulating in the financial centers to such an extent as to constitute a serious embarrassment to the banks in whlcji it is deposited, many of which are holding large sums at a loss. This excessive accumulation of currency at particular points is caused by the fact that there is no such demand for it elsewhere as will enable the banks and other Institutions to which it belongs to loan it to the people at remunerative rates, and it will continue until the business of the country has more fully recovered from the depressing effects of the recent financial disturbances. Money does not create business, but business creates a demand for money, and until there Is such a revival of industry and trade as to reqidre the use of the circulating medium now outstanding it would be hazardous to arbitrarily increase its volume by law, or to make material changes in its character by disturbing In any manner the relations which Its different forms now bear to each other. In the meantime, it will be the duty of all who have power to influence the course of events, or to assist by legislation or otherwise in the solution of the grave questions presented by the altered condition of our monetary system, to carefully consider the whole subject in all its aspects, in order that it may be permanently disposed of by the adoption of a simple and comprehensive system, which will, as far as possible, relieve the government of the onerous obligations now resting upon it, an : the same time secure for the use of the people a currency uniform in value jnd adequate in amount. The unsatisfactory condition of the currency legislation has been for many years the cause of much discission and disquietude among the people, aid although one great disturbing element has been removed, there stiil remains such inconsistencies in ihe laws and such differences between the forms and qualities of the various kinds of currency in use that private business is sometimes obstructed, and the treasury department is constantly embarrassed In conducting the fiscal operations of the government. Different Kind of Currency. There are now in circulation nine different kinds tf currency, all except two being dependent directly or indirectly, upon the credit of the United States. One statute requires the secretary of tho treasury to redeem the old legal tender notes in coin on presentation, and another compels "blrrtto' re-Issue them so that, no matter höw ' often they are redeemed, they are never actually paid and extinguished. The act of July 1. 1S'.. provides that the treasury notes Issued in payment for silver bullion, shall be redeemed ia gold or silver coin, at the discretion of the secretary, and when so redeemed may be re-issued. I?ut the same act also provides that no greater or less amount of such notes shall be outstanding at -any time than the cost of the silver bullion, and the standard silver dollars coined therefrom, then held in the treasury, purchased by such notes, and consequently when these notes are redeemed with silver coined from the bullion purchased under the act, they cannot be re-Issued, but must be retired and canceled, for. otherwise, there would be a greater amount of notes outstanding than the cost of the bullion and coined dollars "then held in the treauury." In this manner notes to the amount of $2,62ö.i84 have been retired and canceled since August last, and standard silver dollars have taken their places in the circulation. If redeemed in gold coin tho notes might be lawfully retired or re-h-wed in the discretion of the secretarj , but the condition of the treasury ha been, and is now, such that practically no discretion exists, and for the reason that the necessities of the public service and the requirement of the coin reserve compel him to re-Issue them, defrayinff the expenditures of the government or in procuring coin to replenish that fund. One of the principal difficulties encountered by the treasury department results from the indisposition of the lubllc to retain standard silver dollars and silver certificates in circulation. It requires constant effort upon the part of the treasury officials to prevent the certificates, especially, from accumulating in the sub-treasury to the exclusion of legal tender currency. Why this should be the case Is not easily understood, for, although these' certificates are not legal tender in the payment of private deotn, they are, by the acts of 1S78 and lhStl, made receivable for all public dues, and by the act of May 12, liS2, national banks are authorlezd to hold them as part of their lawful reserves. Silver Certificates. With the policy of maintaining equality In the exchangeable value of all our currency firmly established, and the further accumulation of silver arrested, there is no substantial reason why the silver certificate should not be as favorably received and as liberally treated by the public as any other form of note in circulation; and for the purpose of creating a greater demand for their permanent use in the daily transactions of the people, I have directed that as far as the law permits and as rapIdly as the opportunity is afforded, the amount of such certificates of denominations less than $10 shall hi Increased by substituting them for larger ones to be retired, and that the small denominations of other kinds of currency shall be retired as they are received into the treasury and larger ones substituted in their place. There are now outstanding United States legal tender notes to the amount of $67.94,bll In denominations less than $10; treasury notes issued under the act of 1S50 of denominations less than S10. S64.6&8.489, and national bank notes, J6J.381.916. There is express authority In the act of Aug. 4, 18S5, to substitute small silver certificates for larger ones, and the secretary of the treasury also has power t make such changes as he may deem proper in the denominations of the treat ury notes. Issued under the act of July 14. lSyO, but congress. In the sundry civil appropriation act, approved March 3, 18a;l, provides that no part of the money therein appropriated to defray the expenses of the bureau of entrravlng and printing should be expended for printing United States legal tender notes of larger denomination than those retired or cancelled. As the law now specially designates the denominations in which national bank notes shall be Issued, that cannot be changed without further legislation, and consequently, during the present fiscal year at least, the 4,&3,4h9 In small treasury notes are the only ones that can be lawfully retired to enlarge the use of small silver certificates. I am of the opinion that if this policy can be carried out to the extent of supplying the country with small silver certilicaes to an amount sufficient to conduct the ordinary cash transactions of the people, and if, during the same time, certificates of the largest denominations were issued in the places of others retired, so as to encourage the national banks to hold them as parts of their lawful reserves, the existing difficulties would be removed, and ultimately a larger amount of such currency than is now In circulation could be conveniently and safely used. The Coinage of Silver. The treasury now holds liO,6,7G0 fine ounces of silver bullion, purchased under the act of July 14, 1890, at a cost of J12G.7T.S.21S, and which, at the legal ratio of to make lSl.DH.Stf silver dollars. The act provided that after the 1st day cf

July, 1S01, the secretary of the treasury should coin as much of the bullion purchased under it as might be necessary to provide for the redemption of the notes, and that any gain or seigniorage arising from such coinage should be accounted for and paid into the treasury. It is plain from this and other provisions of the act that so much of the bullion as may be necessary, when coined, to provide for the redemption of the entire amount of notes outstanding Is pledged for that purpose, and oa.nnot be lawfidly used for any other; but it was decided by the late attorney-general and by my predecessor In ofilce that the so-called gain or seigniorage resulting from the coinage as it progressed constituted a part of the general assets of the treasury and that certificates could ba legally issued upon it, notwithstanding the act of l&i0 Is silent upon the latter subject. The coinage of the whole amount of this bullion, which would employ our mints with their present capacities for a period of about five years, would, at the existing ratio. Increase the sMver circulation during the time named JST).136.6a Jrom seigniorage, beside such additions as might be made In the mean time by the redemption of the treasury notes on standard silver dollars. In order that the department might be In condition to comply rromptly with any" Increased demand that may be made upon it by the public for standard silver dollars or sliver certificates, or that it mifeht take advantage of any favorable opportunity that may occur to put an additional amount of such currency In circulation without unduly disturbing the monetary situation, I have caused a large amount of bullion to be prepared for coinage at New Orleans and San Francisco and have ordered the mints at those places to be kept in readiness to commence operations at any time when required. NECESSITY OF TARIFF REYISIOX.

The Only Proper Purpose of Taxation Is for Government Needs. The necessity for a comprehensive revisior of our tariff laws, in the interests of greater industrial and commercial freedom, need not be urged at great length upon the present congress, one branch of which has been recently chosen by the people, with that cbject distinctly In view, nor would it be appropriate here to discuss at any considerable extent, the particular alterations that ought to be made In the free and dutiable schedules, in order to make the revision conform to the requirements of the situation because the proper committee of the house of representatives is engaged in the preparation of a measure which will probably be presented for consideration to that body before this report is made. But It is not improper, under the circumstances, to submit some suggestions upon the general principles Involved in such legislation, and the best methods of applying them, in order to secure, as far as possible, equality in the distribution of the burdens of taxation and avoid, as far as possible, the taxation of one citizen for the benefit of another, or of one class for the benefit of another. The only proper purpose for which taxes can be levied and collected by the United States is to raise revenue for the support of the public service and the payment of public obligations, and it follows, as a plain matter of justice, that no citizen should bo required to contribute more than his equal nhare toward the accomplishment of these ends. While absolute equality is not attainable under any system of taxation that can be devised, it Is possible to correct the fragrant inequalities which characterize our existing legislation; and in doing so it 13 the Imperative duty of those who are charged with the responsibility of making the revision to select such subjects for taxation and prescribe such methods of assessment and collection as will secure the necessary means for the support of the government with the least possible injury to any part of the people, but without regard to the groundless apprehensions or unreasonable opposition to timid or selfish interests. , Dnttes According to Yulue. The equal distribution of the burdens of taxation depends not alone upon the rates of duty Imposed upon the different articles, but largely upon the manner in which the amount of duty is ascertained and fixed by the law. The basis of the duty must be a unit in some form, and the question whether It shall be computed upon t ,e weight, quantity, number or dimensions of the article, or upon its actual value, is one which lies at the very foundation of every proiosUion to impose taxes, and upon its determination depends to a great extent the Justice or Injustice of every revenue measure. The imposition of specific or compound rates of duty is so inconsistent with the true principles of just taxation that nothing but the plainest necessity can Justify it in any case, unless it be in a few exceptional instances where the articles taxed at the same specific rate are so nearly equal in value that the danger of unjust discrimination is not greater than it wou'.d be if an official valuation were required. It is manifestly unjust to compel one citizen to pay the same amount of taxation on a yard of cloth worth $1 that another citizen pays on a yard of cloth worth $5. Ia such oases it is evident that one has been taxed too much for the support of the government or the other lias been taxed too little, and the law has not dealt fairly with them in a matter which affects the equality of their rights and duties as citizens. A tariff Is a tax upon consumption, and the condition of those who are compelled by poverty of means to purchase and use the coarser and cheaper grades of goods should certainly proteet them against unjust dlscrrminatlons, even if it does not entitle them to some measure of exemption from the exactions of government. Taxation, according to value, does Injustice to no one unless the rates are too high, or are unequally adjusted upon articles of the same general character and utility. It is distinctly the American system of taxation and is recognized aa Just and equitable by the people in all the states in their laws for the assessments and the collection of local revenues upon the ad valorem basis. It Is not probable that any other method would be tolerated in any state of the union where the tax Is Imposed solely for the purpose of raising revenue with no incidental or ulterior object In view-affecting the public health or morals; and It would never have been tolerated in our federal legislation, except in rare Instance, If the use of the taxing power ha1 been limited to the real purpose for which It was delegate. Speclflo Itntes. As a means of concealing from the taxpayer the usual proportion which the charge upon his earnings bears to the value of the taxed article, specific and compound rates have been for many years Ingeniously employed to mask and perpetuate a system which subordinates the interests of the government to the exactions of private Individuals and corporations engaged in particular Industries and trades. But the objections urged against the ad valorem system of the tariff taxation are not generally based upon the proposition that It lacks the element of Justice or equality, but uiually upon the grounds that it is difficult of administration and that It furnishes stronar inducements for the commission of frauds and perluries in order to secure false valuations of Imported goods. While there Is some force In this contention, I sm not able to eee how unequal taxation can be Justified upon the ground that the burdens upon the people ought to be Increased in order that the labors of public officials may be dismissed, or that the honest citizen should bo punished in order to prevent the dishonest one from attempting to violate the law. Hut the difficulties of administration have always been greatly exaggerated, and so far as they really existed in former times, have now been much diminished by our increased facilities for ascertaining market values in other countries and by the improved organisation of our customs service. The markets of the world have been brought so near to each other, by the use of steam and electricity, that, as to ell staple articles especially, it is now much more difficult to find their cost or value abroad than at home; and If. under ' these clrcumsta-ncesi, it shall be demonstrated that official Intelligence and integrity cannot be safely relied upon for an honest collection of the revenues under the existing wystem of Indirect taxation. It will become necessary to consider whether some other method cannot be devised to raise moneys for the support of the government. So far as the inducements to comrilt frauds and perjuries constitute objections, the slightest examination of the subject will show that they are much rveater under the system of compound rate, which 1h one of the mowt prominent features of our existing legislation, than they couiil j0dsiLIy. Ld under a purely, uA

valorem arrangement of duties. The tariff 1 .1 e now tr f . r-. IrnLftU rtm rvil 1 n ll TI1 1 C S

of duty upon a great many Important ( articles In common use among tne peopie wqich are largely imported from abroad, and In everv such rase a tempting pre mium is offered for fraudulent undervalu ations by the importer or consignee. J-or instance, on woolen or worsted cloths, shawls and certain other manufactures of wool, worsted or hair of the camel, goat, alpaca, cr other animals valued at more than 30 cents and not more than 40 cents per pound, the tax per pound is three and a half times the duty Imposed upon a pound of unwashed wool of the first class (3S'j cents), and in addition 40 per cent, ad valorem; but if the goods are valued at more than 40 cents per pound, the tax is four time the duty imposed upon a pound of unwashed wool of the first class (44 cents) and DO per cent, ad valorem. Upon an Importation of 100,000 pounds of such goods under this law, an undervaluation to the extent of 'i per cent, per pound so as to reduce the appraisement below 40 cents a pound, would result in a clear pain to the importer and a loss to the revenue of J0.72T.; whereas, if the compound rate Imposed upon the first classification mentioned, exorbitant as It is. had been made purely ad valorem and onnllwl t.-, fill rnnjla of lilfA rJlnrioter ft n it description, such undervaluation would j have resulted m a gain to the importer and a loss to the revenue of only $tiS5, being a difference of $3.040. or more than 22 per cent upon the whole cost of the Importation. This Is only one provision out of a great number in the present law under which substantially the same result can be accomplished by a very small undervaluation of imported goods; and it would seem difficult to devise a scheme better calculated to encourage frauds ujon the revenue and make their prevention or detection next to impossible. For Free Itaw Material. Itaw and partially raw materials constitute the basis of all our manufacturing and mechanical industries, and unless our industrial establishments can procure them upon substantially the same terms as their competitors elsewhere they must continue to be seriously impeded in their efforts to supply the home market with their finished products, and wholly unable to extend their trade to other countries, except ns to certain commodities in the manufacture of which they have peculiar aptitude or employ superior machinery. Taxe3 upon materials uswd in our shops and factories are especially objectionable on account of the fact that they multiply themselves many time before the finished article reaches the hands of the consumer, and thus impose a burden altogether di-propor-tionate to the benefits supposed to be conferred upon the producer by the so-called protective system. A tax upon Iron and wool necessitates a still hlgMer rate upon all forms of manufactured Iron and steel, and upon all kinds of woolen goods, and these progressive increases in rates are piled one upon another at every stage of the manufacturing process until the completed article Is ready for sale and consumption. The result Is that the cost of production Is made so great that our manufacturers can neither exclude thir foreign competitors from our own market nor share their trade In the markets of other countries, while the American consumer is compelled to reimburse the increased outlay caused by the tax with a percentage of profit added. If the world's store of raw materials were as accessible to the American workmgman as it is to his competitor In other manufacturing countries his superior skill, sobriety and industrious habits would enable him, without artificial aid. to supply many parts of the world where his products are now never seen wdth machinery. Implements and various kinds of textile fabrics of such qualities and at such prices as would exclude all competition and create a demand for a large increase of our productive forces. With free raw materials' as a permanent feature of our revenue legislation, the demand for labor would steadily prow with the extension of trade, while enlarged opportunities for the profitable Investment of capital would stimulate the spirit of enterprise among our people and greatly diminish the danger of periodical suspensions, lockouts and Strikes, which have in recent years so seriously lnterrupte 1 t:r, industrial progress. ..siv-.j ' '-- Cheaper floods tV the-Ma!- , Nearly allied to the policy of free raw materials is that of cheapening the necessaries of life for the masses of the people. Legislation which unnecessarily increases the cost of living is wholly without Justification or excuse, and in the revision of our revenue laws this objectionable policy should be wholly discarded, In the Interest of both labor and capital. So long as the government maintains a system of taxation which aftects the prices of commodities In the markets, it should be so applied nw to exempt, or bear as strictly as possible upon those articles which are essential to the health and comfort of the people, such as food, clothing, shelter, and upon the tools end implements of trade tmployed by labor In earning the means of subsistence. Luxuries and articles of ttste and fashion, the use of which is entirely voluntary, are proper subjects of taxation under any system of raising revenue, and upon these the rates may very properly te placed at the highest revenue point. Such taxes do not ordinarily imios9 much hardship upon those who pay them, but taxes which diminish the purchasing power of the laborer's wages in procuring the necessaries of life strike at the foundations of the social system, because the material welfare of all our communities depends, in a large measure, upon the prosfterity and contentment of those who labor n some form for their own support. It is estimated that the revenues for the fiscal year 1S85 will amount, upon the basts of existing laws, to $455,427.74S, and that the expenditures. Including- the4 sinking fund, will amount to $44S.S03,79. The estimated reveime from customs ia $!S0,000.000, and the total estimated receipts from all sources will exceed the estimate of expenditures $6.130.S6S. Assuming these amounts to be approximately correct, It will be necessary in any changes that may be made in our revenue laws to provide for raising about JlS4,öw,000 from customs alone, or partly from customs and partly from such other subjects of taxation as congress may see proper to Include in our Internal revenue system. Dutiable Imports. If the amount and value of the importations of the same charcter of dutiable merchandise should not during the fiscal year 1S96 exceed the amount and value of euch importations during the fiscal year 1SS3, tlie receipts under tho measuro now pending would be about $122,000,000, but there are strong reasons for the opinion that the proposed reductions In the rates of duty wdll encourage Importations to a very considerable extent, and that consequently, the revenue will not be diminished in the same proportion as the rates are reduced. Moreover, experience has shown that under all our tariff legislation there has been an almost constant tendency toward annual increases in the amounts and values of dutiable imports, even though the rates of duty remained the same. The total value of dutiable Imports in 1S8 was $T9.GG1.302 and the receipts were $164,464,593, and although tea, coffee and hides, important revenue articles, were all subsequently placed upon the free list and some other changes made in the law, the value of dutiable imports had Increased to S433.916.3S4 In lstf, and the receipts amounted to $21 4,704. 4'J5. In the year ISM.the first after the passagre of the tariff act of March 3, 1SH3. the value of dutiable imports waa $136.205.124. and the receipts $l&5.0tf7.489, but In 18'.). the last full year under that act the value was $517,.71 ,754 and the receipts $29,6t8,W4. There have been but two entire fiscal years since the act of Oct. 6. 18S0, and during the first one, isn2, the value of dutiable imports was $.520,741, and the receipts $177.4Ö2,4, while, in ISM, the value was $400.22,519, ajid the receipts $2'J2,SjS,0!6, or an increase of nearly 15 per cent To what extent the importations will be increased, solely on account of reductions in the rates of duty. It is. of course, impossible to foresee, but It Is reasonable to conclude that this cause, together with the natural increase of our purchases from other countries, will result In a much larger revenue from customs In 1JJ6 than Is indicated br mere comparison of proposed reduced rates with those under wdileh the collections were made in 1S93. I am of the opinion that with proper economy in public expenditures, which it is hoped will result in a considerable reduction from the estimates, nn Increase of $.".0.000.000 to the revenue for the liscal year 155, by the imposition of additional taxes under the internal revenue system, will supply sufficient means for the support of the government, and that this sum can be raised without Beriously disturbing the business of tho country or doing injustice to any part of the people. Many different methods of providing this additional revenue have been suggested and discussed, and after a careful examination of the whole sublect I have reached the conclutioa Uiat it caa Lo most conveniently and

Justly raised by In creasing the tax on distilled spirits 10 cents per gallon, and by additional taxes on cigars and cigarcttts, and the imposition of new f ixes on playing cards, cosmetics and perfumeries, legacies and successions, and Inconu-y derived from investments in stocks and bonds of corporations and joint stock companies. The increased tax on öiulled spirits, cigars and cigarettes should be imposed upon all such articles in existence, nd upon wdiich the revenue has not been collected at the time the act takes effect, but a reasonable time should be allowed in tie cases of the nw taxes, in order tli.it th? necessary stamps may be prepared and distributed and the necessary rul'-s e.iv.l regulations made and promulgated. Thi propriety, under the circumstances, cf Increasing taxes upon distilled spirits, cigars and cigarettes, and the imposition cf new taxes at a reasonable rate upon playing cards and cosmetics ani perfumeries will not. I think, be feriously questioned, txcept by some of the producers of these articles, who constltuto comparatively a fcr.iail Tart of the people. Taxes which directly or Indirectly increase the cost of the actual uecersaries of life should be avoided whenever it is possible to do so, but Hie consumers of such articles as r.re not essential to health and comfort ousht not to complain when ciUed upon to contribute a part of their voluntary expenditures to the support of the government. Concerning an Income Tm. Taxes upon legacies ani successions, ijn l incomes acquired from Investments in stocks and bonds of corporations and joint stock companies, are less objectionable ia their nature and in the methods of collection than any other excises which it is competent for the United States to impose upon incomes according to their actual value or amount. They are not inquisitorial or liable to evasion by the fraudulent suppression of facts, because the as- ssments or returns need not 1 b.sel upon information extorted by the law from the persons charged with their payment, bat upon the public records and the regular and authentic accounts of the co:pjiations und companies in which il investments have been mal; and they have tee additional merit of being imposed entir- ly upon that part of the citizen's income which is not earned by Lis labor or skiii. but which, as in the cases of legacies an 1 successions, is acquired by mre operation of law by gratuitous bequest and in thii case of incomes from investments. Incorporations and Joint stock companies, by the simple earning capacity of Iiis capital as such without personal tfiort upua his part. When, the necessities of the government compel it to resort to additloual sources for procuring revenue it is but fair xht it should make its requisitions mainly upon thoe whose possessions are of such character as enables them to escape, wholly or partially, the general burdens of taxation, rather than upon those who are already taxed substantially to the extent of their ability to pay; anj as incomes from capital invested in the stocks and securities of the institutions mentioned are not subject to taxation under any law of the United States, or the laws of the several states, except in a few instances, it cannot be considered unjust to exact a small percentage of their amount for the public use. It is a generally recoi;nlz-d fact that capital in tho form cf money, bonds and other evidences of debt does not usually, by reason of lt3 intangible and transitory nature, bear its due proportion of the burdens of taxation under the revenue laws of the several states and municipalities as compared with real estates ani visible personal property, and whlla no discrimination should be made against it. whether it be represented by corporate or other investments, there appears to be no good reason why the contributions for the support of the public service generally should not be equalized as nearly as possible by Including this kind of property in th federal revenue system. Hut if it shall be said that there is no better reason for imposing a tax upon incomes derived from Investments of this kind than there would te in taxing incomes from other sources, the answer 13 that the institutions are invested by law with valuable franchises, privileges and Immunities not enjoyed by the Individual citizen, and that these frequently contribute more largtiy to their earning -a"pCitr .tari the charieter or .Value.f their other properfy; vter-ilcmiCw..u

ttocks and securities are In this respect more favored than their fellow citizens generally, and the exchangeable value of their shares and bonds, as well as the annual Incomes derived from them, are greatly increased because they are so favored. A t.x of 1 per cent upon an income of J3.000 derived from an investment of $00, OK) in a 6 per cent stock would amount to $:;c, sum so insignificant that the investor could not reasonably claim that the franchises and privileges granted to his debtor had not addid fully that much to his receipts. It is scarcely necessiry to suggest to congress, in this connection, that the present and prospective condition of the treasury and the general state of the country demand a policy of the strictest economy in public expenditures consistent witn an efficient administration of the laws. Reductions cf taxation cannot be logically insisted upon or be made practically beneficial without corresponding reduction of expenditures; but such a reduction cannot be permanently effected by merely withholding appropriations required for the proper execution of existing laws, which impose duties upon the heads of executive departments and other public officials. Deficiencies are not savings, but as a Reneral rule result in larger expenditures than would have been made If adequate appropriations had been granted in the first instance. Oenuine economy and frugality can be secured only by the repeal of the statutes authorizing or requiring unnecessary expenditures, and the refusal to enact newlaws creating charges against the treasury for purposes of doubtful utility, and, although such a policy will probably to vigorously opposed ly powerful Interests more or less dependent upon the patronnge of the government for support and by local influences seeking legislative favors, it Is evident that it must be adopted nnd edhered to if any substantial result is to be accomplished. Receipts nnd Expenditures. Reviewing the receipts and expenditures for the fiscal year 1S03, the secretary says: The government's revenue from all sources for the year were $4;i.7T?.ä0l.ll. of which $2o:?,3i5,0l;.73 was from customs and $lil,027.6Ä93 from internal revenue. The total expenditures were $4"9,374.bi7.uo. leaving a surplus of $2.341,675.2. As compared with 1S!2, this shows an increase in receipts of $?.3,SlS,3'd.72, and in expenditures of $3S.4T)4,C23.9L On the basis of existing laws, the revenues of the government for the present fiscal year are estimated at $430,121.315.38 and the total expenditures at $158,121.ori5.3S. or a deficit of SS.OOj.O'A). The principal items In these estimated revenues are: From customs ri5.0na.(M and from the internal revenue $130,0ji,'Jf,0. while $L"2,0O0.000 for pensions constitutes the largest item in the estimated expenditures. On the basis of existing laws, the revenues of the government for the present fiscal year are estimated at $4r.0.121 .S.V..30 and the total expenditure at 4S,lil.ÄÜö.30. or a deficit of 3.000,0'0 In round nrmhers. Discussing our foreign commerce tho secretary says: Our total imports were for Merchandise, JS27.402.4C2; gold, $W.t,r;4.".4; silver, $19,Kl3,fc6. Exports: Merchandise. J1:h27S.14S: gold. .vi.195.S27: silver, J.S10.."9. For 1S!3 Imports: Merchandise. $äS;.4..&22; Kold, $21,174. 351; silver, $J3,li:l.2i2. Kxports: Merchandise, $S47,GÜ.:?4; fold, $iuS,toO,is44; silver, $10.737.315. The prominent facts disclosed bv thce figures are that the values of imports of merchandise attained the highest point In the commercial history of the country, and that the exports of gold reached a "higher figure than ever before in a single year since the foundation of the government. This outward movement of gold, occurring In time of peace and apparently in defiance of commercial laws, will nvke the vear 18J3 memorable In financial and commercial experience. The Imports as well as the exports of silver coin and bullion were greater la amount than is recorded In any one year or tne country's h'storv exceeding even the panic year of 173. The year 1&33 also witnessed a further decline In the relative Importance of the American merchant marine in the foreign earning trade, falling from even the low per cent of 1S32 to the lowest on record, only 12.2 per cent, of o'ur Imports and exports being carried in American vessels. The Pacific Kallronds. On the subject of the Pacific railroads the secretary says that there are now outstanding $64,623,512 of the 6 rer cent. United States bonds Issued in aid of the Pacific railroads on Jan. 16, 1S03, $2,3C2,000 of these bonds mature and others at various dates to Jan 1, 1S09. lie adds: These bonds are absolutely payable on the rerpective datw of their iuafiTily,

differing In this recr.rl from the other outstanding interest-Ki-urliff lonJs of the Unite 1 States, v. lach are redeemable at the p!ens'ire of th- government after certain dates. In view of this fct It is imp-riant that congress shoul 1 take action nt t hi session, with r.-sect to the payment at l. tst of th. '.:.:. o, wh.ch will mature within the tiscal year lSl.."i. The seen. tary tli-n reviews th legislation with rciYrrr.re to th? Taclfic railroad--, brk-f.y states the linancial affairs cf the coir pan y as heretofore; published rind cloy .s v.ii.'i tho I-nowin recor.imen Jiti on: Mi account rf te reproaching maturity r both cl.v cf tie !..:ids i.tvl tr nne-rit':di of t'o Interests lnvoive-1. I respectfully submit that the subject should receive t;e early and earnest consideration cf C' .ncre.-s." wit h a xievc to the adoption of some i lan which will more certainly secure th ultimate payment of the i'r.del ta In-ss to t . povernni'-nt ani at the s;:i".e time peri--.it th companies to conduct toe business fr whi"h they were create I, under such limitation and restrictions as t t! e management and xpe:v lit ures as may i i-onsidere-i necessary t-) protect th rights if all parties interested in the property, it would be very unfortunate, in my opinion, if the government should be forced, by any comMnation of -irc-;m:anc-s. to xaV-e possesKion of and operate th-"j lines if railways, ! n 1 every reasonable eifort shuld be made by all partks to avoid such a result. IJEPOUT OX Till) TAIUFF RIM..

Chairman Wilson Present tlie Vieira of the Mnjority. WASHINGTON". IVo. 19. The fo: lowing is the maj-.rity report cf the ways and means committee. It was rrcsvr.tcvl ly Chairman Wilson today and reads: Tiie American i-ot,!-, aller the fullest and m- st thorough debate ver ilv a ty any people to th ir lis-r.l po'.icy, havu ile- !:: ratcly and n-r.t!y decided in it the tx-i--t:'i t ir:"' is w ror.g in j.ria qple snd grin-ousiy unjust in operation. They have i -eid'-l. as fr-e men mut always Jeolce. that th p-jWi-r of taxation has no lawful u' e-ns;in:tioi'.fel e.rcis., except for is"0vi ling revenue for the support cf ti e government livery departure from tl. s prineivle Is a departure from the tun-i-mental I rinciples of free institutions, s nd inevitably works cut a cross ln-qual.ty tu the citizenship of a country. For more t'u-a thirty years we have levied the latest part of our federal taxes in vi-dati. u cf t;:U vital truth, until we have reach e1. in he existing tariff, an extreme ani voVtmhious system of cla?- taxation, to whicii history cwy be challcnsjcl to furnish any parallel. many private enterpris"S have l-e.-n taken Into partnership with the government, so many private interests no-.v tture in the rich prerogative of taxing 7"'.0.,.w of peepie. that ar.y attempt to dissolve this ii.ep.d union is r.ectssarily eneountcre-i ly ;.n orvositi jn that rallte behind th intolerance of monopoly, the power of cor.eenfrvted wer.lth, tha inertia cf lixed habit, unl the honest errors of a generation of fa is t aching. The till cn which the committee has expended much p-aticr.t ar.d anxious labor la not offered as a complete re-pone to the mandate the Amervan p.-opie. It no more. prof.-.-s to be purged of all protection than to be fre of all error in its conipljx end rr.a-nitv.M details. However we may il?:iy the existence of any legislative ple-1re or of th- ri;ght of any congress to make s-i.'h pl.-dire for the continuance of autle that c;jrry with thera more f.r lor.s acknowledged protection, we must recognize that great J.-.ierests do exist, whote cxiiteace and profpenty it is r.o part ef cur reform either to imperil or to curtail. We believe, and we have the warrant of oi:r own psst experience for believing, that reduction cf dutle v. ill net Injur-; but :!ve more abundant life to all our great manufacturing industries, howerer much they drad the ehanee. In dealing with the tariff qucsM-m. as with every other long standing abuse that has interwoven itself with our social or industrial system, the legislator must always remember that in the beginning temperate reform is safest, havias in iUelf the principle of growth. An Artificial System. A xl'!nc at the tariff legislation cf cir pv ocght t satisfy every in telligent student that protection has always shown its falsity, as a system of economy, by its absolute failure to Insure; healthy and stable prosperity to manufactures. It teaches men to depend on artificial help, on laws taxing their countrymen for prosperity in business, rather than upoa their own skill and effort It throws business out of Its natural channels into artificial channel, where there must always fluctuation and un certainty, and it makes a. tariff system the foot ball of party politic, and the stability of larce business interests the slake of eeiy popular lecirei. None has ri-eocnlzel thi truth more fi.I'y than the wiser mm who. from time te time, have engaged In thi so-cal!el pro-f-cted it.tiustrica. Ir.ar tgo Mr. IMward, Uverett stated in an oration at Iowell that the sagacious men who founded the manufactures cf New Entrl.md were rever frienas nr a hih tsr.'n policy. The Hon. Amsa Walk r, a former member of this houso from Massachusetts, and one of our foremost writers on economic questions, declared it to bj within his own personal knowledge, that when the proposal was na-'lo to Impose, the protective tcriff of IMG the leading inatiu.ueturers cf Rhode Island, amor.gst v. was Mr. Slater, the f itlur cf the cotton spinning in this Country, met nt the counting room of one of fheir number end. s tltr delitterate consultation, came unanimously to the conclusion thnt they had rather be let alone, as their business had grown up naturally and succeeded w;), ani they felf conti lent of its continued prosenrity if let alone by the government. They arcuel that by lay.t-.g a protective tariff their business wooll be thrown out of its natural channels, ir.d be subjected to fluctuation and uncertainty. I hit. as usual, the clamor of spl.sh and less far-slrhted men. and the ambition of law-makers to ucnrp the place of Providence, prevailed. The country entered on a protective policy, with the unfailing result that the government help bo cot a violent demand for more government help. The Tu r Iff of li. The moderate tariff of P?:i rapidly grew Into the ''tariff of abominations" that carried the country to the verge cf civil discord and provoked a natural revulsion. Protection has run a like course since lvd. When congress began to repeal war burdens and to r-iieve manufacturers of the Internal taxc?, which they had used to secure compensating duties on like foreign product:?, there arose a demand throughout the country, without respoet t- party, for a reduction of the war tariff. Unable to resist this demand the protected Industries tailed and thwarted an.r reduction of consequence until 1J.72, when, they defeated a house till that did make a substantial reduction by substituting1 a senate bill, which carried a horizontal cut of P pr cent. As eoon. however, as the election of 1S74 nave the next house to tha democratic party, that till was repealed by the outgoing republicans and rates restored to what they were before 172. And although the demand for tariff reform and for reduction cf taxes has ever since b-en a burning and growing one in the country, the protected industries hT exacted ani received from every republican congress elected iince IVA an lacrease of their protection, occasionally permitting the repj,n! cr the lessening- of a tax that was paid Into the treasury. In order to Increase duties levied for their benefit. Protection left to its natural momentum, never stop s.hort of prohibition, and prohibitory walls are nlwavs neejir.g to Ie built higher or to be patchl ani strengthened. Can Xot Give stability. A protective tariff nvcr has given, and never can give, stability nnd satisfaction to its own beneficiaries. Kven If its victims are too weak, or too scattered to agitate for its decrease, those beneficiaries are sure to agitate for aa increase. When the reform tariff of 1? 46 was before congress the clr was full of rrophesies that it would destroy our manufacturing industries, throw labor out of emp'oyment or compel It to work at pauper wages, ami dwarf and arrest the prosperous prowtht of the country. Every representative of four great manufaoturlntr states of New Ungland voted against it with gloomy forebodings of its blichting effect The rate cf duties provided In that tariff was much, lower than those of the bill we here offer. What was the result? Instead of practically killing the industries and pauperizin? the labor of New Knciand or the rest of the country, the tari.f of IMS pave immense vigor to manufacturers, with Fteadji emplc;-rut and lacffeüin; w a.ta ta