Rensselaer Republican, Volume 19, Number 15, Rensselaer, Jasper County, 16 December 1886 — NATIONAL FINANCES. [ARTICLE]

NATIONAL FINANCES.

The Annual Report of the Secretary of the TreasZ ur yDiscontinuance of the - Purchase of Silver Strongly Recommended. ' The Question of Reducing the Surplus—The Tax of Raw Materials to Be Reduced. The annual report of the Hon. Daniel Manning, Secretary of the Treasurv, 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 mo to review tbe four policies which then received marked attention: 1. Free coinage of silver. 2. Conferences. 3. Continued purchases of silver. 4. Stopping purchases of silver. First—The free-silver coinage prescription for the monetary dislocation satisfies but one of several indispensable 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 ad vantage 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. There is, however, no such public desire. Second—More conferences, further diplomatic correspondence are proposed. I venture to think, with all due deference to those who are responsible foi a decision, that the time for another conference has not arrived, and that the moment for diplomatic interference is not perfectly felicitous. The Continental Powers await the action of Great 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 the attention of European states, or again to make ad vances 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 al! 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 stop the purchase of silver is our only choice, our duty, 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 the 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 repeated which makes compulsory Treasury purchases of silver, and if that repeal were accompanied by the declaration of Congress that the United States now holds itself in readiness to unite with France, Germany, and Great Britain in opening their mints to the free coinage of silver and gold at a ratio fixed by international agreement, it is the deliberate lodgment of the undersigned that before the expiration of another fiscal year this international monetary dislocation might be corrected by such an international concurrence; the two monetary metals restored to their old and 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 reiwal of the.act.of Feb. 28j 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 $316,681,016 with the present surplus and the surplus which will accrue before the whole reduction of taxation can be made to take effect, and while no more funded debt can be maid except at a premium during the five years ’’from now until 1891.

I therefore respectfully recommend : 1. Kejieal of the clause in the act of Feb. 28, 1878, making compulsory Treasury purchases of silver, and for the reasons heretofore given in order to reduce surplus and unnecessary taxation $14,000,000 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 the act of May 31, 1878, making compulsory post-redemption 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 the 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 paving off the greenback dhbt will diminish bv 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 wl;is 4v, tobacco, and beer. Indced.it is my own belief that whenever we begin taxing off the shackles of war-tariff taxes on raw materials such .increased prosperity will follow to the employers who dread it, and such larger and steadier employin'! 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 these most 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 coffee and half as much from tea. It is the reduction of war tariff taxation which we have to consider. Under our system of government bv partv. and the rule of the majority, Ido not think it unbecoming even in a public officer at this time to recall certain responsible and specific pledges in respect to the sum and methods of Fedei al taxation, subject to which the people of the United States, in the exercise of a lawful election, took away the administration of this Government from the party entrusted there with for a quarter of a century, and lodged it in other hands. Public life will cease 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 can never 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 earth in population, peace, land, and liberty, so long as ■ we go on pleading infancy, and swaddle, in mediteval rags, its victorious energies. It is these which need release and liberty. All our requisite taxation may be made an easy garment. We have made a prison of it, plastered stiff with obsolete contentions about protection and free trade. It is actually the war Aa.tes of the war tariff of the last generation under which we are now living, for the undebatod, unsifted law of 1883, made by a conference committee, did but keep alive the body of the tariff of 1864. The average percentage of the taxes to the values of imported commodities has been as follows : . Per • cent. Morrill tariff of 1859-61 (before the war) wa5.......18.84 War tariff of 1862-64 (in 1866 was highest) was■48.35 Present prolonged war tariff (was in 1885). .46.07 KXFIRTS AND THE TARIFF ON RAW MATERIALS. The total value of our domestic exports for the last fiscal year was almost exactly s>i67,000,000, of which 86 per cent were the products fir our fields, forests, fisheries, 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, transportation, labor-saving inventions, and the mechanic arts has reduced the profits of capital and the rate es interest by

more than one-half; has Increased the wages of labor throughout the World ; has augmented by at least a third the surplus which our manufacturers can produce beyond domestic needs 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-j riced, inferior labor andthe high percentage of labor-cost therefore included in their product, our taxed raw materials an.dl their free raw mate- ■ rials -have protected the so-called “pauper labor" of Europe against American competition. | Our increasing capacity to produce an indusI trial surplusage has'been accompanied by war taxation exactly suited to prevent the stile of that surplusage in foreign markets. Out oi our actual abundance this war taxation has forged the instrument of our industrial and commercial mutilation. Defeating our manufacturers in their endeavor to compete abroad with 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 qre shut up, and for which their producing powers are increasing superabundantly. Long periods of glut aud so-called overproduction have alternated with brief periods of I renewed activity and transient prosperity like tbe 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 acted 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 bo affected by injurious laws. Every Government, by true statesmanship, will Watchfully regard their condition und interests. TAXES TO RETAIN.

Another proposal is to reduce 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 willing to pay for the luxury, and they ask no relief. Any probable reduction ot the tux on whisky would be more likely to increase the revenue than to diminish it. The price of sugar has fallen toon exceedingly cheap rate. Our own sugar crop Is so very small a part of the total amount of sugar we consume thatsugar ranks next to articles wholly produced abroad, like tea and coffee, in suitability for taxation, on the ground that its consumption is universal, that the tax is easily and cheaply collected, that the increased price p lid by tbe 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. •; Like 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 ($’>1,778,948), at an annual cost of less than ninety cents per head, is ■now-pressed forward to avert tire-repeal of other taxes which are desired to operate an incidental and private 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, und are subject to the chief deduction that the endeavor to make our tax laws exclude foreign competition in our home 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, bCet-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 excluding foreign sugar, for the groat bulk of our sweetening comes from climates more tropical than ours. Nor does it prevent our sales in foreign markets of imported sugars refined and increased in value by the process of American labor. DUTIES 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 wage-earners, whose prosperity will diffuse prosperity. These taxes are the duties on raw materials, and the most widely injurious of them is tbe tax upon raw wool. Hut the income of all the wage-earners in the United States can be at once enlarged effectively, 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 doubted, 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 lor our 59,000,030 people was thereby and otherwise enhanced many times more than 90 cents a head, the only cost of our $51,778,948 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 weol required by the manufacturer are not produced. The tax prevents our manufacturers from competing in foreign markets with all manufacturers who can Luy untaxed wool. The tax prevents our manufacture and exjiort 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 iuil>ossible, yet involving the enhanced price of .foreign and domestic woolens. This pettv tax of 8-,126,108 on raw wool assists in nearly doubling the 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 LIST,

T respectfully recommend to Congress that they confer upon the wage-earners of the United States the boon of untaxed clothing, and in order 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 be followed by, but need not wait for, a compensating adjustment of the duties on manufactured woolens, whilst our manufacturers are learning the lesson that, with the highest paid and most efficient labor in the world, with the most skilled management and the best inventiVe appliances, they need fear no competition 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 da ly clothing of the American people need not be taxed ; therefore, it ought not to be taxed : to free th; ir c.othing of taxes will finally reduce, by half, their -expense for one of the three great necessities of life, and thus enlarge honestly and justly the income of every wageearner in the United States. But this reduction of unnecessary and injurious taxation is not enough, and will operate siowly in diminishing revenue. Last year’s import tax on raw wo >1 is little more than the mere gowth 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 at a profit the foreign imjxnters who brought in last year $40,536,509 worth of manufactures of wool, from which we got a tax of $27,278,528. To say nothing of other taxes upen raw materials, there are several hundred aiticles among the 4,1 2 articles that we tax which ought at once to be swept off the tax list into the free list—petty, vexatious, needless taxes, mdeh enlarging the cost of collecting the revenues from imports. I shall at an early day prepare and sunmit to Congress a supplementary report on the collection of duties. Daniel Manning, - Secretary of the Treasury.