WASHINGTON, _March 25, 1842_.
_To the Senate and House of Representatives of the United States_:
Notwithstanding the urgency with which I have on more than one occasion
felt it my duty to press upon Congress the necessity of providing the
Government with the means of discharging its debts and maintaining
inviolate the public faith, the increasing embarrassments of the
Treasury impose upon me the indispensable obligation of again inviting
your most serious attention to the condition of the finances.
Fortunately for myself in thus bringing this important subject to your
view for a deliberate and comprehensive examination in all its bearings,
and I trust I may add for a final adjustment of it to the common
advantage of the whole Union, I am permitted to approach it with perfect
freedom and candor. As few of the burdens for which provision is now
required to be made have been brought upon the country during my short
administration of its affairs, I have neither motive nor wish to make
them a matter of crimination against any of my predecessors. I am
disposed to regard, as I am bound to treat, them _as facts_ which can
not now be undone, and as deeply interesting to us all, and equally
imposing upon all the most solemn duties; and the only use I would make
of the errors of the past is by a careful examination of their causes
and character to avoid if possible the repetition of them in future.
The condition of the country, indeed, is such as may well arrest the
conflict of parties.
The conviction seems at length to have made its way to the minds of all
that the disproportion between the public responsibilities and the means
provided for meeting them is no casual nor transient evil. It is, on the
contrary, one which for some years to come, notwithstanding a resort to
all reasonable retrenchments and the constant progress of the country
in population and productive power, must continue to increase under
existing laws, unless we consent to give up or impair all our defenses
in war and peace. But this is a thought which I am persuaded no
patriotic mind would for a moment entertain. Without affecting an alarm,
which I do not feel, in regard to our foreign relations, it may safely
be affirmed that they are in a state too critical and involve too many
momentous issues to permit us to neglect in the least, much less to
abandon entirely, those means of asserting our rights without which
negotiation is without dignity and peace without security.
In the report of the Secretary of the Treasury submitted to Congress
at the commencement of the present session it is estimated that after
exhausting all the probable resources of the year there will remain a
deficit of about $14,000,000. With a view partly to a permanent system
of revenue and partly to immediate relief from actual embarrassment,
that officer recommended, together with a plan for establishing a
Government exchequer, some expedients of a more temporary character,
viz, the issuing of Treasury notes and the extension of the time for
which the loan authorized to be negotiated by the act of the last
session should be taken. Congress accordingly provided for an issue of
Treasury notes to the amount of $5,000,000, but subject to the condition
that they should not be paid away below par.
No measure connected with the last of the two objects above mentioned
was introduced until recently into the House of Representatives. Should
the loan bill now pending before that body pass into a law for its
present amount, there would still remain a deficit of $2,500,000. It
requires no argument to show that such a condition of the Treasury is
incompatible not only with a high state of public credit, but with
anything approaching to efficiency in the conduct of public affairs.
It must be obvious even to the most inexperienced minds that, to say
nothing of any particular exigency, actual or imminent, there should
be at all times in the Treasury of a great nation, with a view to
contingencies of ordinary occurrence, a surplus at least equal in amount
to the above deficiency. But that deficiency, serious as it would be in
itself, will, I am compelled to say, rather be increased than diminished
without the adoption of measures adequate to correct the evil at once.
The stagnation of trade and business, in some degree incident to the
derangement of the national finances and the state of the revenue laws,
holds out but little prospect of relief, in the ordinary course of
things, for some time to come.
Under such circumstances I am deeply impressed with the necessity of
meeting the crisis with a vigor and decision which it imperatively
demands at the hands of all intrusted with the conduct of public
affairs. The gravity of the evil calls for a remedy proportioned to it.
No slight palliatives or occasional expedients will give the country the
relief it needs. Such measures, on the contrary, will in the end, as is
now manifest to all, too surely multiply its embarrassments. Relying,
as I am bound to do, on the representatives of a people rendered
illustrious among nations by having paid off its whole public debt,
I shall not shrink from the responsibility imposed upon me by the
Constitution of pointing out such measures as will in my opinion insure
adequate relief. I am the more encouraged to recommend the course which
necessity exacts by the confidence which I have in its complete success.
The resources of the country in everything that constitutes the wealth
and strength of nations are so abundant, the spirit of a most
industrious, enterprising, and intelligent people is so energetic and
elastic, that the Government will be without the shadow of excuse for
its delinquency if the difficulties which now embarrass it be not
speedily and effectually removed.
From present indications it is hardly doubtful that Congress will find
it necessary to lay additional duties on imports in order to meet the
ordinary current expenses of the Government. In the exercise of a sound
discrimination having reference to revenue, but at the same time
necessarily affording incidental protection to manufacturing industry,
it seems equally probable that duties on some articles of importation
will have to be advanced above 20 per cent. In performing this important
work of revising the tariff of duties, which in the present emergency
would seem to be indispensable, I can not too strongly recommend the
cultivation of a spirit of mutual harmony and concession, to which the
Government itself owes its origin, and without the continued exercise of
which jarring and discord would universally prevail.
An additional reason for the increase of duties in some instances beyond
the rate of 20 per cent will exist in fulfilling the recommendations
already made, and now repeated, of making adequate appropriations for
the defenses of the country.
By the express provision of the act distributing the proceeds of the
sales of the public lands among the States its operation is _ipso facto_
to cease so soon as the rate of the duties shall exceed the limits
prescribed in the act.
In recommending the adoption of measures for distributing the proceeds
of the public lands among the States at the commencement of the last
session of Congress such distribution was urged by arguments and
considerations which appeared to me then and appear to me now of great
weight, and was placed on the condition that it should not render
necessary any departure from the act of 1833. It is with sincere regret
that I now perceive the necessity of departing from that act, because I
am well aware that expectations justly entertained by some of the States
will be disappointed by any occasion which shall withhold from them the
proceeds of the lands. But the condition was plainly expressed in the
message and was inserted in terms equally plain in the law itself, and
amidst the embarrassments which surround the country on all sides and
beset both the General and the State Governments it appears to me that
the object first and highest in importance is to establish the credit of
this Government and to place it on durable foundations, and thus afford
the most effectual support to the credit of the States, equal at least
to what it would receive from a direct distribution of the proceeds of
the sales of the public lands.
When the distribution law was passed there was reason to anticipate that
there soon would be a real surplus to distribute. On that assumption
it was in my opinion a wise, a just, and a beneficent measure. But to
continue it in force while there is no such surplus to distribute and
when it is manifestly necessary not only to increase the duties, but at
the same time to borrow money in order to liquidate the public debt and
disembarrass the public Treasury, would cause it to be regarded as an
unwise alienation of the best security of the public creditor, which
would with difficulty be excused and could not be justified.
Causes of no ordinary character have recently depressed American credit
in the stock market of the world to a degree quite unprecedented. I need
scarcely mention the condition of the banking institutions of some of
the States, the vast amount of foreign debt contracted during a period
of wild speculation by corporations and individuals, and, above all, the
Doctrine of repudiation of contracts solemnly entered into by States,
which, although as yet applied only under circumstances of a peculiar
character and generally rebuked with severity by the moral sense of the
community, is yet so very licentious and, in a Government depending
wholly on opinion, so very alarming that the impression made by it to
our disadvantage as a people is anything but surprising. Under such
circumstances it is imperatively due from us to the people whom we
represent that when we go into the money market to contract a loan we
should tender such securities as to cause the money lender, as well at
home as abroad, to feel that the most propitious opportunity is afforded
him of investing profitably and judiciously his capital. A government
which has paid off the debts of two wars, waged with the most powerful
nation of modern times, should not be brought to the necessity of
chaffering for terms in the money market. Under such circumstances as I
have adverted to our object should be to produce with the capitalist a
feeling of entire confidence, by a tender of that sort of security which
in all times past has been esteemed sufficient, and which for the small
amount of our proposed indebtedness will unhesitatingly be regarded as
amply adequate. While a pledge of all the revenues amounts to no more
than is implied in every instance when the Government contracts a
debt, and although it ought in ordinary circumstances to be entirely
satisfactory, yet in times like these the capitalist would feel better
satisfied with the pledge of a specific fund, ample in magnitude to the
payment of his interest and ultimate reimbursement of his principal.
Such is the character of the land fund. The most vigilant money dealer
will readily perceive that not only will his interest be secure on
such a pledge, but that a debt of $18,000,000 or $20,000,000 would by
the surplus of sales over and above the payment of the interest be
extinguished within any reasonable time fixed for its redemption.
To relieve the Treasury from its embarrassments and to aid in meeting
its requisitions until time is allowed for any new tariff of duties
to become available, it would seem to be necessary to fund a debt
approaching to $15,000,000; and in order to place the negotiation of the
loan beyond a reasonable doubt I submit to Congress whether the proceeds
of the sales of the public lands should not be pledged for the payment
of the interest, and the Secretary of the Treasury be authorized out of
the surplus of the proceeds of such sales to purchase the stock, when it
can be procured on such terms as will render it beneficial in that way,
to extinguish the debt and prevent the accumulation of such surplus
while its distribution is suspended.
No one can doubt that were the Federal Treasury now as prosperous as it
was ten years ago and its fiscal operations conducted by an efficient
agency of its own, coextensive with the Union, the embarrassments of the
States and corporations in them would produce, even if they continued as
they are (were that possible), effects far less disastrous than those
now experienced. It is the disorder here, at the heart and center of the
system, that paralyzes and deranges every part of it. Who does not know
the permanent importance, not to the Federal Government alone, but to
every State and every individual within its jurisdiction, even in their
most independent and isolated individual pursuits, of the preservation
of a sound state of public opinion and a judicious administration here?
The sympathy is instantaneous and universal. To attempt to remedy the
evil of the deranged credit and currency of the States while the disease
is allowed to rage in the vitals of this Government would be a hopeless
undertaking.
It is the full conviction of this truth which emboldens me most
earnestly to recommend to your early and serious consideration the
measures now submitted to your better judgment, as well as those to
which your attention has been already invited. The first great want of
the country, that without answering which all attempts at bettering
the present condition of things will prove fruitless, is a complete
restoration of the credit and finances of the Federal Government.
The source and foundation of all credit is in the confidence which the
Government inspires, and just in proportion as that confidence shall
be shaken or diminished will be the distrust among all classes of the
community and the derangement and demoralization in every branch of
business and all the interests of the country. Keep up the standard of
good faith and punctuality in the operations of the General Government,
and all partial irregularities and disorders will be rectified by
the influence of its example; but suffer that standard to be debased
or disturbed, and it is impossible to foresee to what a degree of
degradation and confusion all financial interests, public and private,
may sink. In such a country as this the representatives of the people
have only to will it, and the public credit will be as high as it ever
was.
My own views of the measures calculated to effect this great and
desirable object I have thus frankly expressed to Congress under
circumstances which give to the entire subject a peculiar and solemn
interest. The Executive can do no more. If the credit of the country be
exposed to question, if the public defenses be broken down or weakened,
if the whole administration of public affairs be embarrassed for want of
the necessary means for conducting them with vigor and effect, I trust
that this department of the Government will be found to have done all
that was in its power to avert such evils, and will be acquitted of all
just blame on account of them.