that which was originally designed. Our circulation now embraces,
first, notes of the national banks, which are made receivable for all
dues to the Government, excluding imposts, and by all its creditors,
excepting in payment of interest upon its bonds and the securities
themselves; second, legal-tender notes, issued by the United States,
and which the law requires shall be received as well in payment of all
debts between citizens as of all Government dues, excepting imposts;
and, third, gold and silver coin. By the operation of our present
system of finance, however, the metallic currency, when collected, is
reserved only for one class of Government creditors, who, holding its
bonds, semiannually receive their interest in coin from the National
Treasury. They are thus made to occupy an invidious position, which may
be used to strengthen the arguments of those who would bring into
disrepute the obligations of the nation. In the payment of all its
debts the plighted faith of the Government should be inviolably
maintained. But while it acts with fidelity toward the bondholder who
loaned his money that the integrity of the Union might be preserved, it
should at the same time observe good faith with the great masses of the
people, who, having rescued the Union from the perils of rebellion, now
bear the burdens of taxation, that the Government may be able to
fulfill its engagements. There is no reason which will be accepted as
satisfactory by the people why those who defend us on the land and
protect us on the sea; the pensioner upon the gratitude of the nation,
bearing the scars and wounds received while in its service; the public
servants in the various Departments of the Government; the farmer who
supplies the soldiers of the Army and the sailors of the Navy; the
artisan who toils in the nation's workshops, or the mechanics and
laborers who build its edifices and construct its forts and vessels of
war, should, in payment of their just and hard-earned dues, receive
depreciated paper, while another class of their countrymen, no more
deserving, are paid in coin of gold and silver. Equal and exact justice
requires that all the creditors of the Government should be paid in a
currency possessing a uniform value. This can only be accomplished by
the restoration of the currency to the standard established by the
Constitution; and by this means we would remove a discrimination which
may, if it has not already done so, create a prejudice that may become
deep rooted and widespread and imperil the national credit.
The feasibility of making our currency correspond with the
constitutional standard may be seen by reference to a few facts derived
from our commercial statistics.
The production of precious metals in the United States from 1849 to
1857, inclusive, amounted to $579,000,000; from 1858 to 1860,
inclusive, to $137,500,000, and from 1861 to 1867, inclusive, to
$457,500,000--making the grand aggregate of products since 1849
$1,174,000,000. The amount of specie coined from 1849 to 1857
inclusive, was $439,000,000; from 1858 to 1860, inclusive,
$125,000,000, and from 1861 to 1867, inclusive, $310,000,000--making
the total coinage since 1849 $874,000,000. From 1849 to 1857,
inclusive, the net exports of specie amounted to $271,000,000; from
1858 to 1860, inclusive, to $148,000,000, and from 1861 to 1867,
inclusive, $322,000,000--making the aggregate of net exports since 1849
$741,000,000. These figures show an excess of product over net exports
of $433,000,000. There are in the Treasury $111,000,000 in coin,
something more than $40,000,000 in circulation on the Pacific Coast,
and a few millions in the national and other banks--in all about
$160,000,000. This, however, taking into account the specie in the
country prior to 1849 leaves more than $300,000,000 which have not been
accounted for by exportation, and therefore may yet remain in the
country.
These are important facts and show how completely the inferior currency
will supersede the better, forcing it from circulation among the masses
and causing it to be exported as a mere article of trade, to add to the
money capital of foreign lands. They show the necessity of retiring our
paper money, that the return of gold and silver to the avenues of trade
may be invited and a demand created which will cause the retention at
home of at least so much of the productions of our rich and
inexhaustible gold-bearing fields as may be sufficient for purposes of
circulation. It is unreasonable to expect a return to a sound currency
so long as the Government by continuing to issue irredeemable notes
fills the channels of circulation with depreciated paper.
Notwithstanding a coinage by our mints, since 1849, of $874,000,000,
the people are now strangers to the currency which was designed for
their use and benefit, and specimens of the precious metals bearing the
national device are seldom seen, except when produced to gratify the
interest excited by their novelty. If depreciated paper is to be
continued as the permanent currency of the country, and all our coin is
to become a mere article of traffic and speculation, to the enhancement
in price of all that is indispensable to the comfort of the people, it
would be wise economy to abolish our mints thus saving the nation the
care and expense incident to such establishments, and let all our
precious metals be exported in bullion. The time has come, however,
when the Government and national banks should be required to take the
most efficient steps and make all necessary arrangements for a
resumption of specie payments at the earliest practicable period.
Specie payments having been once resumed by the Government and banks,
all notes or bills of paper issued by either of a less denomination
than $20 should by law be excluded from circulation, so that the people
may have the benefit and convenience of a gold and silver currency
which in all their business transactions will be uniform in value at
home and abroad. Every man of property or industry, every man who
desires to preserve what he honestly possesses or to obtain what he can
honestly earn, has a direct interest in maintaining a safe circulating
medium--such a medium as shall be real and substantial, not liable to
vibrate with opinions, not subject to be blown up or blown down by the
breath of speculation, but to be made stable and secure. A disordered
currency is one of the greatest political evils. It undermines the
virtues necessary for the support of the social system and encourages
propensities destructive of its happiness; it wars against industry,
frugality, and economy, and it fosters the evil spirits of extravagance
and speculation. It has been asserted by one of our profound and most
gifted statesmen that--Of all the contrivances for cheating the
laboring classes of mankind, none has been more effectual than that
which deludes them with paper money. This is the most effectual of
inventions to fertilize the rich man's fields by the sweat of the poor
man's brow. Ordinary tyranny, oppression, excessive taxation--these
bear lightly on the happiness of the mass of the community compared
with a fraudulent currency and the robberies committed by depreciated
paper. Our own history has recorded for our instruction enough, and
more than enough, of the demoralizing tendency, the injustice, and the
intolerable oppression on the virtuous and well disposed of a degraded
paper currency authorized by law or in any way countenanced by
government. It is one of the most successful devices, in times of peace
or war, expansions or revulsions, to accomplish the transfer of all the
precious metals from the great mass of the people into the hands of the
few, where they are hoarded in secret places or deposited in strong
boxes under bolts and bars, while the people are left to endure all the
inconvenience, sacrifice, and demoralization resulting from the use of
a depreciated and worthless paper money.
The condition of our finances and the operations of our revenue system
are set forth and fully explained in the able and instructive report of
the Secretary of the Treasury. On the 30th of June, 1866, the public
debt amounted to $2,783,425,879; on the 30th of June last it was
$2,692,199,215, showing a reduction during the fiscal year of
$91,226,664. During the fiscal year ending June 30, 1867, the receipts
were $490,634,010 and the expenditures $346,729,129, leaving an
available surplus of $143,904,880. It is estimated that the receipts
for the fiscal year ending June 30, 1868, will be $417,161,928 and that
the expenditures will reach the sum of $393,269,226, leaving in the
Treasury a surplus of $23,892,702. For the fiscal year ending June 30,
1869, it is estimated that the receipts will amount to $381,000,000 and
that the expenditures will be $372,000,000, showing an excess of
$9,000,000 in favor of the Government.
The attention of Congress is earnestly invited to the necessity of a
thorough revision of our revenue system. Our internal-revenue laws and
impost system should be so adjusted as to bear most heavily on articles
of luxury, leaving the necessaries of life as free from taxation as may
be consistent with the real wants of the Government, economically
administered. Taxation would not then fall unduly on the man of
moderate means; and while none would be entirely exempt from
assessment, all, in proportion to their pecuniary abilities, would
contribute toward the support of the State. A modification of the
internal-revenue system, by a large reduction in the number of articles
now subject to tax, would be followed by results equally advantageous
to the citizen and the Government. It would render the execution of the
law less expensive and more certain, remove obstructions to industry,
lessen the temptations to evade the law, diminish the violations and
frauds perpetrated upon its provisions, make its operations less
inquisitorial, and greatly reduce in numbers the army of taxgatherers
created by the system, who "take from the mouth of honest labor the
bread it has earned." Retrenchment, reform, and economy should be
carried into every branch of the public service, that the expenditures
of the Government may be reduced and the people relieved from
oppressive taxation; a sound currency should be restored, and the
public faith in regard to the national debt sacredly observed. The
accomplishment of these important results, together with the
restoration of the Union of the States upon the principles of the
Constitution, would inspire confidence at home and abroad in the
stability of our institutions and bring to the nation prosperity,
peace, and good will.
The report of the Secretary of War ad interim exhibits the operations
of the Army and of the several bureaus of the War Department. The
aggregate strength of our military force on the 30th of September last
was 56,315. The total estimate for military appropriations is
$77,124,707, including a deficiency in last year's appropriation of
$13,600,000. The payments at the Treasury on account of the service of
the War Department from January 1 to October 29, 1867--a period of ten
months--amounted to $109,807,000. The expenses of the military
establishment, as well as the numbers of the Army, are now three times
as great as they have ever been in time of peace, while the
discretionary, power is vested in the Executive to add millions to this
expenditure by an increase of the Army to the maximum strength allowed
by the law.
The comprehensive report of the Secretary of the Interior furnishes
interesting information in reference to the important branches of the
public service connected with his Department. The menacing attitude of
some of the warlike bands of Indians inhabiting the district of country
between the Arkansas and Platte rivers and portions of Dakota Territory
required the presence of a large military force in that region.
Instigated by real or imaginary grievances, the Indians occasionally
committed acts of barbarous violence upon emigrants and our frontier
settlements; but a general Indian war has been providentially averted.
The commissioners under the act of 20th July, 1867, were invested with
full power to adjust existing difficulties, negotiate treaties with the
disaffected bands, and select for them reservations remote from the
traveled routes between the Mississippi and the Pacific. They entered
without delay upon the execution of their trust, but have not yet made
any official report of their proceedings. It is of vital importance
that our distant Territories should be exempt from Indian outbreaks,
and that the construction of the Pacific Railroad, an object of
national importance, should not be interrupted by hostile tribes. These
objects, as well as the material interests and the moral and
intellectual improvement of the Indians, can be most effectually
secured by concentrating them upon portions of country set apart for
their exclusive use and located at points remote from our highways and
encroaching white settlements.
Since the commencement of the second session of the Thirty-ninth
Congress 510 miles of road have been constructed on the main line and
branches of the Pacific Railway. The line from Omaha is rapidly
approaching the eastern base of the Rocky Mountains, while the terminus
of the last section of constructed road in California, accepted by the
Government on the 24th day of October last, was but 11 miles distant
from the summit of the Sierra Nevada. The remarkable energy evinced by
the companies offers the strongest assurance that the completion of the
road from Sacramento to Omaha will not be long deferred.
During the last fiscal year 7,041,114 acres of public land were
disposed of, and the cash receipts from sales and fees exceeded by
one-half million dollars the sum realized from those sources during the
preceding year. The amount paid to pensioners, including expenses of
disbursements, was $18,619,956, and 36,482 names were added to the
rolls. The entire number of pensioners on the 30th of June last was
155,474. Eleven thousand six hundred and fifty-five patents and designs
were issued during the year ending September 30, 1867, and at that date
the balance in the Treasury to the credit of the patent fund was
$286,607.
The report of the Secretary of the Navy states that we have seven
squadrons actively and judiciously employed, under efficient and able
commanders, in protecting the persons and property of American
citizens, maintaining the dignity and power of the Government, and
promoting the commerce and business interests of our countrymen in
every part of the world. Of the 238 vessels composing the present Navy
of the United States, 56, carrying 507 guns, are in squadron service.
During the year the number of vessels in commission has been reduced
12, and there are 13 less on squadron duty than there were at the date
of the last report. A large number of vessels were commenced and in the
course of construction when the war terminated, and although Congress
had made the necessary appropriations for their completion, the
Department has either suspended work upon them or limited the slow
completion of the steam vessels, so as to meet the contracts for
machinery made with private establishments. The total expenditures of
the Navy Department for the fiscal year ending June 30, 1867, were
$31,034,011. No appropriations have been made or required since the
close of the war for the construction and repair of vessels, for steam
machinery, ordnance, provisions and clothing, fuel, hemp, etc., the
balances under these several heads having been more than sufficient for
current expenditures. It should also be stated to the credit of the
Department that, besides asking no appropriations for the above objects
for the last two years, the Secretary of the Navy, on the 30th of
September last, in accordance with the act of May 1, 1820, requested
the Secretary of the Treasury to carry to the surplus fund the sum of
$65,000.000, being the amount received from the sales of vessels and
other war property and the remnants of former appropriations.
The report of the Postmaster-General shows the business of the
Post-Office Department and the condition of the postal service in a
very favorable light, and the attention of Congress is called to its
practical recommendations. The receipts of the Department for the year
ending June 30, 1867, including all special appropriations for sea and
land service and for free mail matter, were $19,978,693. The
expenditures for all purposes were $19,235,483, leaving an unexpended
balance in favor of the Department of $743,210, which can be applied
toward the expenses of the Department for the current year. The
increase of postal revenue, independent of specific appropriations, for
the year 1867 over that of 1866 was $850,040. The increase of revenue
from the sale of stamps and stamped envelopes was $783,404. The
increase of expenditures for 1867 over those of the previous year was
owing chiefly to the extension of the land and ocean mail service.
During the past year new postal conventions have been ratified and
exchanged with the United Kingdom of Great Britain and Ireland,
Belgium, the Netherlands, Switzerland, the North German Union, Italy,
and the colonial government at Hong Kong, reducing very largely the
rates of ocean and land postages to and from and within those
countries.
The report of the Acting Commissioner of Agriculture concisely presents
the condition, wants, and progress of an interest eminently worthy the
fostering care of Congress, and exhibits a large measure of useful
results achieved during the year to which it refers.
The reestablishment of peace at home and the resumption of extended
trade, travel, and commerce abroad have served to increase the number
and variety of questions in the Department for Foreign Affairs. None of
these questions, however, have seriously disturbed our relations with
other states.
The Republic of Mexico, having been relieved from foreign intervention,
is earnestly engaged in efforts to reestablish her constitutional
system of government. A good understanding continues to exist between
our Government and the Republics of Hayti and San Domingo, and our
cordial relations with the Central and South American States remain
unchanged. The tender, made in conformity with a resolution of
Congress, of the good offices of the Government with a view to an
amicable adjustment of peace between Brazil and her allies on one side
and Paraguay on the other, and between Chile and her allies on the one
side and Spain on the other, though kindly received, has in neither
case been fully accepted by the belligerents. The war in the valley of
the Parana is still vigorously maintained. On the other hand, actual
hostilities between the Pacific States and Spain have been more than a
year suspended. I shall, on any proper occasion that may occur, renew
the conciliatory recommendations which have been already made. Brazil,
with enlightened sagacity and comprehensive statesmanship, has opened
the great channels of the Amazon and its tributaries to universal
commerce. One thing more seems needful to assure a rapid and cheering
progress in South America. I refer to those peaceful habits without
which states and nations can not in this age well expect material
prosperity or social advancement.
The Exposition of Universal Industry at Paris has passed, and seems to
have fully realized the high expectations of the French Government. If
due allowance be made for the recent political derangement of industry
here, the part which the United States has borne in this exhibition of
invention and art may be regarded with very high satisfaction. During
the exposition a conference was held of delegates from several nations,
the United States being one, in which the inconveniences of commerce
and social intercourse resulting from the diverse standards of money
value were very fully discussed, and plans were developed for
establishing by universal consent a common principle for the coinage of
gold. These conferences are expected to be renewed, with the attendance
of many foreign states not hitherto represented. A report of these
interesting proceedings will be submitted to Congress, which will, no
doubt, justly appreciate the great object and be ready to adopt any
measure which may tend to facilitate its ultimate accomplishment.
On the 25th of February, 1862, Congress declared by law that Treasury
notes, without interest, authorized by that act should be legal tender
in payment of all debts, public and private, within the United States.
An annual remittance of $30,000, less stipulated expenses, accrues to
claimants under the convention made with Spain in 1834. These
remittances, since the passage of that act, have been paid in such
notes. The claimants insist that the Government ought to require
payment in coin. The subject may be deemed worthy of your attention.
No arrangement has yet been reached for the settlement of our claims
for British depredations upon the commerce of the United States. I have
felt it my duty to decline the proposition of arbitration made by Her
Majesty's Government, because it has hitherto been accompanied by
reservations and limitations incompatible with the rights, interest,
and honor of our country. It is not to be apprehended that Great
Britain will persist in her refusal to satisfy these just and
reasonable claims, which involve the sacred principle of
nonintervention--a principle henceforth not more important to the
United States than to all other commercial nations.