FINANCES.--REDUCTION OF THE ARMY.
The distress of the country became that of the government. Small as
the government expenditure then was, only about twenty-one millions
of dollars (including eleven millions for permanent or incidental
objects), it was still too great for the revenues of the government
at this disastrous period. Reductions of expense, and loans, became
the resort, and economy--that virtuous policy in all times--became
the obligatory and the forced policy of this time. The small regular
army was the first, and the largest object on which the reduction
fell. Small as it was, it was reduced nearly one-half--from 10,000
to 6,000 men. The navy felt it next--the annual appropriation of
one million for its increase being reduced to half a million. The
construction and armament of fortifications underwent the like
process. Reductions of expense took place at many other points,
and even the abolition of a clerkship of $800 in the office of the
Attorney General, was not deemed an object below the economical
attention of Congress. After all a loan became indispensable, and
the President was authorized to borrow five millions of dollars.
The sum of twenty-one millions then to be raised for the service
of the government, small as it now appears, was more than double
the amount required for the actual expenses of the government--for
the actual expense of its administration, or the working its
machinery. More than half went to permanent or incidental objects,
to wit: principal and interest of the public debt, five and a half
millions; gradual increase of the navy, one million; pensions, one
and a half millions; fortifications, $800,000; arms, munitions,
ordnance, and other small items, about two millions; making in the
whole about eleven millions, and leaving for the expense of keeping
the machinery of government in operation, about ten millions of
dollars; and which was reduced to less than nine millions after
the reductions of this year were effected. A sum of one million of
dollars, over and above the estimated expenditure of the government,
was always deemed necessary to be provided and left in the treasury
to meet contingencies--a sum which, though small in itself, was
absolutely unnecessary for that purpose, and the necessity for
which was founded in the mistaken idea that the government expends
every year, within the year, the amount of its income. This is
entirely fallacious, and never did and never can take place; for
a large portion of the government payments accruing within the
latter quarters of any year are not paid until the next year. And
so on in every quarter of every year. The sums becoming payable in
each quarter being in many instances, and from the nature of the
service, only paid in the next quarter, while new revenue is coming
in. This process regularly going on always leaves a balance in the
treasury at the end of the year, not called for until the beginning
of the next year, and when there is a receipt of money to meet the
demand, even if there had been no balance in hand. Thus, at the end
of the year 1820, one of the greatest depression, and when demands
pressed most rapidly upon the treasury, there was a balance of above
two millions of dollars in the treasury--to be precise, $2,076,607
14, being one-tenth of the annual revenue. In prosperous years the
balance is still larger, sometimes amounting to the fourth, or
the fifth of the annual revenue; as may be seen in the successive
annual reports of the finances. There is, therefore, no necessity to
provide for keeping any balance as a reserve in the treasury, though
in later times this provision has been carried up to six millions--a
mistake which economy, the science of administration, and the purity
of the government, requires to be corrected.