Nicaragua during the last two or three years have received the prompt
attention of this Government. Some of these injuries were of the most
aggravated character. The transaction at Virgin Bay in April, 1856, when a
company of unarmed Americans, who were in no way connected with any
belligerent conduct or party, were fired upon by the troops of Costa Rica
and numbers of them killed and wounded, was brought to the knowledge of
Congress by my predecessor soon after its occurrence, and was also
presented to the Government of Costa Rica for that immediate investigation
and redress which the nature of the case demanded. A similar course was
pursued with reference to other outrages in these countries, some of which
were hardly less aggravated in their character than the transaction at
Virgin Bay. At the time, however, when our present minister to Nicaragua
was appointed, in December, 1857, no redress had been obtained for any of
these wrongs and no reply even had been received to the demands which had
been made by this Government upon that of Costa Rica more than a year
before. Our minister was instructed, therefore, to lose no time in
expressing to those Governments the deep regret with which the President
had witnessed this inattention to the just claims of the United States and
in demanding their prompt and satisfactory adjustment. Unless this demand
shall be complied with at an early day it will only remain for this
Government to adopt such other measures as may be necessary in order to
obtain for itself that justice which it has in vain attempted to secure by
peaceful means from the Governments of Nicaragua and Costa Rica. While it
has shown, and will continue to show, the most sincere regard for the
rights and honor of these Republics, it can not permit this regard to be
met by an utter neglect on their part of what is due to the Government and
citizens of the United States.
Against New Granada we have long-standing causes of complaint, arising out
of the unsatisfied claims of our citizens upon that Republic, and to these
have been more recently added the outrages committed upon our citizens at
Panama in April, 1856. A treaty for the adjustment of these difficulties
was concluded by the Secretary of State and the minister of New Granada in
September, 1857, which contained just and acceptable provisions for that
purpose. This treaty was transmitted to Bogota and was ratified by the
Government of New Granada, but with certain amendments. It was not,
however, returned to this city until after the close of the last session of
the Senate. It will be immediately transmitted to that body for their
advice and consent, and should this be obtained it will remove all our
existing causes of complaint against New Granada on the subject of claims.
Questions have arisen between the two Governments as to the right of New
Granada to levy a tonnage duty upon the vessels of the United States in its
ports of the Isthmus and to levy a passenger tax upon our citizens arriving
in that country, whether with a design to remain there or to pass from
ocean to ocean by the transit route; and also a tax upon the mail of the
United States transported over the Panama Railroad. The Government of New
Granada has been informed that the United States would consider the
collection of either of these taxes as an act in violation of the treaty
between the two countries, and as such would be resisted by the United
States. At the same time, we are prepared to discuss these questions in a
spirit of amity and justice and with a sincere desire to adjust them in a
satisfactory manner. A negotiation for that purpose has already been
commenced. No effort has recently been made to collect these taxes nor is
any anticipated under present circumstances.
With the Empire of Brazil our relations are of the most friendly character.
The productions of the two countries, and especially those of an
agricultural nature, are such as to invite extensive mutual exchanges. A
large quantity of American flour is consumed in Brazil, whilst more than
treble the amount in value of Brazilian coffee is consumed in the United
States. Whilst this is the case, a heavy duty has been levied until very
recently upon the importation of American flour into Brazil. I am
gratified, however, to be able to inform you that in September last this
has been reduced from $1.32 to about 49 cents per barrel, and the duties on
other articles of our production have been diminished in nearly the same
proportion.
I regret to state that the Government of Brazil still continues to levy an
export duty of about 11 per cent on coffee, notwithstanding this article is
admitted free from duty in the United States. This is a heavy charge upon
the consumers of coffee in our country, as we purchase half of the entire
surplus crop of that article raised in Brazil. Our minister, under
instructions, will reiterate his efforts to have this export duty removed,
and it is hoped that the enlightened Government of the Emperor will adopt
this wise, just, and equal policy. In that event, there is good reason to
believe that the commerce between the two countries will greatly increase,
much to the advantage of both. The claims of our citizens against the
Government of Brazil are not in the aggregate of very large amount; but
some of these rest upon plain principles of justice and their settlement
ought not to be longer delayed. A renewed and earnest, and I trust a
successful, effort will be made by our minister to procure their final
adjustment.
On the 2d of June last Congress passed a joint resolution authorizing the
President "to adopt such measures and use such force as in his judgment may
be necessary and advisable" "for the purpose of the differences between
the United States and the Republic of Paraguay, in connection with the
attack on the United States steamer Water Witch and with other measures
referred to" in his annual message, and on the 12th of July following they
made an appropriation to defray the expenses and compensation of a
commissioner to that Republic should the President deem it proper to make
such all appointment.
In compliance with these enactments, I have appointed a commissioner, who
has proceeded to Paraguay with full powers and instructions to settle these
differences in an amicable and peaceful manner if this be practicable. His
experience and discretion justify the hope that he may prove successful in
convincing the Paraguayan Government that it is due both to honor and
justice that they should voluntarily and promptly make atonement for the
wrongs which they have committed against the United States and indemnify
our injured citizens whom they have forcibly despoiled of their property.
Should our commissioner prove unsuccessful after a sincere and earnest
effort to accomplish the object of his mission, then no alternative will
remain but the employment of force to obtain "just satisfaction" from
Paraguay. In view of this contingency, the Secretary of the Navy, under my
direction, has fitted out and dispatched a naval force to rendezvous near
Buenos Ayres, which, it is believed, will prove sufficient for the
occasion. It is my earnest desire, however, that it may not be found
necessary to resort to this last alternative.
When Congress met in December last the business of the country had just
been crushed by one of those periodical revulsions which are the inevitable
consequence of our unsound and extravagant system of bank credits and
inflated currency. With all the elements of national wealth in abundance,
our manufactures were suspended, our useful public and private enterprises
were arrested, and thousands of laborers were deprived of employment and
reduced to want. Universal distress prevailed among the commercial,
manufacturing, and mechanical classes. This revulsion was felt the more
severely in the United States because similar causes had produced the like
deplorable effects throughout the commercial nations of Europe. All were
experiencing sad reverses at the same moment. Our manufacturers everywhere
suffered severely, not because of the recent reduction in the tariff of
duties on imports, but because there was no demand at any price for their
productions. The people were obliged to restrict themselves in their
purchases to articles of prime necessity. In the general prostration of
business the iron manufacturers in different States probably suffered more
than any other class, and much destitution was the inevitable consequence
among the great number of workmen who had been employed in this useful
branch of industry. There could be no supply where there was no demand. To
present an example, there could be no demand for railroad iron after our
magnificent system of railroads, extending its benefits to every portion of
the Union, had been brought to a dead pause. The same consequences have
resulted from similar causes to many other branches of useful manufactures.
It is self-evident that where there is no ability to purchase manufactured
articles these can not be sold, and consequently must cease to be
produced.
No government, and especially a government of such limited powers as that
of the United States, could have prevented the late revulsion. The whole
commercial world seemed for years to have been rushing to this catastrophe.
The same ruinous consequences would have followed in the United States
whether the duties upon foreign imports had remained as they were under the
tariff of 1846 or had been raised to a much higher standard. The tariff of
1857 had no agency in the result. The general causes existing throughout
the world could not have been controlled by the legislation of any
particular country.
The periodical revulsions which have existed in our past history must
continue to return at intervals so long as our present unbounded system of
bank credits shall prevail. They will, however, probably be the less severe
in future, because it is not to be expected, at least for many years to
come, that the commercial nations of Europe, with whose interests our own
are so materially involved, will expose themselves to similar calamities.
But this subject was treated so much at large in my last annual message
that I shall not now pursue it further. Still, I respectfully renew the
recommendation in favor of the passage of a uniform bankrupt law applicable
to banking institutions. This is all the direct power over the subject
which I believe the Federal Government possesses. Such a law would
mitigate, though it might not prevent, the evil. The instinct of
self-preservation might produce a wholesome restraint upon their banking
business if they knew in advance that a suspension of specie payments would
inevitably produce their civil death.
But the effects of the revulsion are now slowly but surely passing away.
The energy and enterprise of our citizens, with our unbounded resources,
will within the period of another year restore a state of wholesome
industry and trade. Capital has again accumulated in our large cities. The
rate of interest is there very low. Confidence is gradually reviving, and
so soon as it is discovered that this capital can be profitably employed in
commercial and manufacturing enterprises and in the construction of
railroads and other works of public and private improvement prosperity will
again smile throughout the land. It is vain, however, to disguise the fact
from ourselves that a speculative inflation of our currency without a
corresponding inflation in other countries whose manufactures come into
competition with our own must ever produce disastrous results to our
domestic manufactures. No tariff short of absolute prohibition can prevent
these evil consequences. In connection with this subject it is proper to
refer to our financial condition. The same causes which have produced
pecuniary distress throughout the country have so reduced the amount of
imports from foreign countries that the revenue has proved inadequate to
meet the necessary expenses of the Government. To supply the deficiency,
Congress, by the act of December 23, 1857, authorized the issue of
$20,000,000 of Treasury notes; and this proving inadequate, they
authorized, by the act of June 14, 1858, a loan of $20,000,000, to be
applied to the payment of appropriations made by law."
No statesman would advise that we should go on increasing the national debt
to meet the ordinary expenses of the Government. This would be a most
ruinous policy. In case of war our credit must be our chief resource, at
least for the first year, and this would be greatly impaired by having
contracted a large debt in time of peace. It is our true policy to increase
our revenue so as to equal our expenditures. It would be ruinous to
continue to borrow. Besides, it may be proper to observe that the
incidental protection thus afforded by a revenue tariff would at the
present moment to some extent increase the confidence of the manufacturing
interests and give a fresh impulse to our reviving business. To this surely
no person will object.
In regard to the mode of assessing and collecting duties under a strictly
revenue tariff, I have long entertained and often expressed the opinion
that sound policy requires this should be done by specific duties in cases
to which these can be properly applied. They are well adapted to
commodities which are usually sold by weight or by measure, and which from
their nature are of equal or of nearly equal value. Such, for example, are
the articles of iron of different classes, raw sugar, and foreign wines and
spirits.
In my deliberate judgment specific duties are the best, if not the only,
means of securing the revenue against false and fraudulent invoices, and
such has been the practice adopted for this purpose by other commercial
nations. Besides, specific duties would afford to the American manufacturer
the incidental advantages to which he is fairly entitled under a revenue
tariff. The present system is a sliding scale to his disadvantage. Under
it, when prices are high and business prosperous, the duties rise in amount
when he least requires their aid. On the contrary, when prices fall and he
is struggling against adversity, the duties are diminished in the same
proportion, greatly to his injury. Neither would there be danger that a
higher rate of duty than that intended by Congress could be levied in the
form of specific duties. It would be easy to ascertain the average value of
any imported article for a series of years, and, instead of subjecting it
to an ad valorem duty at a certain rate per centum, to substitute in its
place an equivalent specific duty.
By such an arrangement the consumer would not be injured. It is true he
might have to pay a little more duty on a given article in one year, but,
if so, he would pay a little less in another, and in a series of years
these would counterbalance each other and amount to the same thing so far
as his interest is concerned. This inconvenience would be trifling when
contrasted with the additional security thus afforded against frauds upon
the revenue, in which every consumer is directly interested.
I have thrown out these suggestions as the fruit of my own observation, to
which Congress, in their better judgment, will give such weight as they may
justly deserve.
The report of the Secretary of the Treasury will explain in detail the
operations of that Department of the Government. The receipts into the
Treasury from all sources during the fiscal year ending June 30, 1858,
including the Treasury notes authorized by the act of December 23, 1857,
were $70,273,869.59, which amount, with the balance of $17,710,114.27
remaining in the Treasury at the commencement of the year, made an
aggregate for the service of the year of $87,983,983.86.
The public expenditures during the fiscal year ending June 30, 1858,
amounted to $81,585,667.76, of which $9,684,537.99 were applied to the
payment of the public debt and the redemption of Treasury notes with the
interest thereon, leaving in the Treasury on July 1, 1858, being the
commencement of the present fiscal year, $6,398,316.10.
The receipts into the Treasury during the first quarter of the present
fiscal year, commencing the 1st of July, 1858, including one-half of the
loan of $20,000,000, with the premium upon it, authorized by the act of
June 14, 1858, were $25,230,879.46, and the estimated receipts for the
remaining three quarters to the 30th of June, 1859, from ordinary sources
are $38,500,000, making, with the balance before stated, an aggregate of
$70,129,195.56.
The expenditures during the first quarter of the present fiscal year were
$21,708,198.51, of which $1,010,142.37 were applied to the payment of the
public debt and the redemption of Treasury notes and the interest thereon.
The estimated expenditures during the remaining three quarters to June 30,
1859, are $52,357,698.48, making an aggregate of $74,065,896.99, being an
excess of expenditure beyond the estimated receipts into the Treasury from
ordinary sources during the fiscal year to the 30th of June, 1859, of
$3,936,701.43. Extraordinary means are placed by law within the command of
the Secretary of the Treasury, by the reissue of Treasury notes redeemed
and by negotiating the balance of the loan authorized by the act of June
14, 1858, to the extent of $11,000,000, which, if realized during the
present fiscal year, will leave a balance in the Treasury on the 1st day of
July, 1859, of $7,063,298.57.
The estimated receipts during the next fiscal year, ending June 30, 1860,
are $62,000,000, which, with the above-estimated balance of $7,063,298.57
make an aggregate for the service of the next fiscal year of
$69,063,298.57. The estimated expenditures during the next fiscal year,
ending June 30, 1860, are $73,139,147.46, which leaves a deficit of
estimated means, compared with the estimated expenditures, for that year,
commencing on July 1, 1859, of $4,075,848.89.
In addition to this sum the Postmaster-General will require from the
Treasury for the service of the Post-Office Department $3,838,728, as
explained in the report of the Secretary of the Treasury, which will
increase the estimated deficit on June 30, 1860, to $7,914,576.89. To
provide for the payment of this estimated deficiency, which will be
increased by such appropriations as may be made by Congress not estimated
for in the report of the Treasury Department, as well as to provide for the
gradual redemption from year to year of the outstanding Treasury notes, the
Secretary of the Treasury recommends such a revision of the present tariff
as will raise the required amount. After what I have already said I need
scarcely add that I concur in the opinion expressed in his report--that the
public debt should not be increased by an additional loan--and would
therefore strongly urge upon Congress the duty of making at their present
session the necessary provision for meeting these liabilities.
The public debt on July 1, 1858, the commencement of the present fiscal
year, was $25,155,977.66.
During the first quarter of the present year the sum of $10,000,000 has
been negotiated of the loan authorized by the act of June 14, 1858, making
the present outstanding public debt, exclusive of Treasury notes,
$35,155,977.66. There was on the 1st of July, 1858, of Treasury notes
issued by authority of the act of December 23, 1857, unredeemed, the sum of
$19,754,800, making the amount of actual indebtedness at that date
$54,910,777.66. To this will be added $10,000,000 during the present fiscal
year, this being the remaining half of the loan of $20,000,000 not yet
negotiated.
The rapid increase of the public debt and the necessity which exists for a
modification of the tariff to meet even the ordinary expenses of the
Government ought to admonish us all, in our respective spheres of duty, to
the practice of rigid economy. The objects of expenditure should be limited
in number, as far as this may be practicable, and the appropriations
necessary to carry them into effect ought to be disbursed under the
strictest accountability. Enlightened economy does not consist in the
refusal to appropriate money for constitutional purposes essential to the
defense, progress, and prosperity of the Republic, but in taking care that
none of this money shall be wasted by mismanagement in its application to
the objects designated by law.
Comparisons between the annual expenditure at the present time and what it
was ten or twenty years ago are altogether fallacious. The rapid increase
of our country in extent and population renders a corresponding increase of
expenditure to some extent unavoidable. This is constantly creating new
objects of expenditure and augmenting the amount required for the old. The
true questions, then, are, Have these objects been unnecessarily
multiplied, or has the amount expended upon any or all of them been larger
than comports with due economy? In accordance with these principles, the
heads of the different Executive Departments of the Government have been
instructed to reduce their estimates for the next fiscal year to the lowest
standard consistent with the efficiency of the service, and this duty they
have performed in a spirit of just economy. The estimates of the Treasury,
War, Navy, and Interior Departments have each been in some degree reduced,
and unless a sudden and unforeseen emergency should arise it is not
anticipated that a deficiency will exist in either within the present or
the next fiscal year. The Post-Office Department is placed in a peculiar
position, different from the other Departments, and to this I shall
hereafter refer.
I invite Congress to institute a rigid scrutiny to ascertain whether the
expenses in all the Departments can not be still further reduced, and I
promise them all the aid in my power in pursuing the investigation.
I transmit herewith the reports made to me by the Secretaries of War, of
the Navy, of the Interior, and of the Postmaster-General. They each contain
valuable information and important recommendations, to which I invite the
attention of Congress.
In my last annual message I took occasion to recommend the immediate
construction of ten small steamers of light draft, for the purpose of
increasing the efficiency of the Navy. Congress responded to the
recommendation by authorizing the construction of eight of them. The
progress which has been made in executing this authority is stated in the
report of the Secretary of the Navy. I concur with him in the opinion that
a greater number of this class of vessels is necessary for the purpose of
protecting in a more efficient manner the persons and property of American
citizens on the high seas and in foreign countries, as well as in guarding
more effectually our own coasts. I accordingly recommend the passage of an
act for this purpose.
The suggestions contained in the report of the Secretary of the Interior,
especially those in regard to the disposition of the public domain, the
pension and bounty-land system, the policy toward the Indians, and the
amendment of our patent laws, are worthy of the serious consideration of
Congress.
The Post-Office Department occupies a position very different from that of
the other Departments. For many years it was the policy of the Government
to render this a self-sustaining Department; and if this can not now be
accomplished, in the present condition of the country, we ought to make as
near an approach to it as may be practicable.
The Postmaster-General is placed in a most embarrassing position by the
existing laws. He is obliged to carry these into effect. He has no other
alternative. He finds, however, that this can not be done without heavy
demands upon the Treasury over and above what is received for postage, and
these have been progressively increasing from year to year until they
amounted for the last fiscal year, ending on the 30th of June, 1858, to
more than $4,500,000, whilst it is estimated that for the present fiscal
year they will amount to $6,290,000. These sums are exclusive of the annual
appropriation of $700,000 for "compensation for the mail service performed
for the two Houses of Congress and the other Departments and officers of
the Government in the transmission of free matter."
The cause of these large deficits is mainly attributable to the increased
expense of transporting the mails. In 1852 the sum paid for this service
was but a fraction above four millions and a quarter. Since that year it
has annually increased, until in 1858 it has reached more than eight
millions and a quarter, and for the service of 1859 it is estimated that it
will amount to more than $10,000,000.