ended on the 30th day of June, 1896. In that year our imports increased
over those of the previous year more than $6,500,000, while the value
of the domestic products we exported and which found markets abroad was
nearly $70,000,000 more than during the preceding year.
Those who insist that the cost to our people of articles coming to them
from abroad for their needful use should only be increased through
tariff charges to an extent necessary to meet the expenses of the
Government, as well as those who claim that tariff charges may be laid
upon such articles beyond the necessities of Government revenue and
with the additional purpose of so increasing their price in our markets
as to give American manufacturers and producers better and more
profitable opportunities, must agree that our tariff laws are only
primarily justified as sources of revenue to enable the Government to
meet the necessary expenses of its maintenance. Considered as to its
efficiency in this aspect, the present law can by no means fall under
just condemnation. During the only complete fiscal year of its
operation it has yielded nearly $8,000,000 more revenue than was
received from tariff duties in the preceding year. There was,
nevertheless, a deficit between our receipts and expenditures of a
little more than $25,000,000 This, however, was not unexpected.
The situation was such in December last, seven months before the close
of the fiscal year, that the Secretary of the Treasury foretold a
deficiency of $17,000,000. The great and increasing apprehension and
timidity in business circles and the depression in all activities
intervening since that time, resulting from causes perfectly well
understood and entirely disconnected with our tariff law or its
operation, seriously checked the imports we would have otherwise
received and readily account for the difference between this estimate
of the Secretary and the actual deficiency, as well as for a continued
deficit. Indeed, it must be confessed that we could hardly have had a
more unfavorable period than the last two years for the collection of
tariff revenue. We can not reasonably hope that our recuperation from
this business depression will be sudden, but it has already set in with
a promise of acceleration and continuance.
I believe our present tariff law, if allowed a fair opportunity, will
in the near future yield a revenue which, with reasonably economical
expenditures, will overcome all deficiencies. In the meantime no
deficit that has occurred or may occur need excite or disturb us. To
meet any such deficit we have in the Treasury in addition to a gold
reserve of one hundred millions a surplus of more than $128,000,000
applicable to the payment of the expenses of the Government, and which
must, unless expended for that purpose, remain a useless hoard, or, if
not extravagantly wasted, must in any event be perverted from the
purpose of its exaction from our people. The payment, therefore, of any
deficiency in the revenue from this fund is nothing more than its
proper and legitimate use. The Government thus applying a surplus
fortunately in its Treasury to the payment of expenses not met by its
current revenues is not at all to be likened to a man living beyond his
income and thus incurring debt or encroaching on his principal.
It is not one of the functions of our Government to accumulate and make
additions to a fund not needed for immediate expenditure. With
individuals it is the chief object of struggle and effort. The
application of an accumulated fund by the Government to the payment of
its running expenses is a duty. An individual living beyond his income
and embarrassing himself with debt or drawing upon his accumulated fund
of principal is either unfortunate or improvident. The distinction is
between a government charged with the duty of expending for the benefit
of the people and for proper purposes all the money it receives from
any source, and the individual, who is expected to manifest a natural
desire to avoid debt or to accumulate as much as possible and to live
within the income derived from such accumulations, to the end that they
may be increased or at least remain unimpaired for the future use and
enjoyment of himself or the objects of his love and affection who may
survive him.
It is immeasurably better to appropriate our surplus to the payment of
justifiable expenses than to allow it to become an invitation to
reckless appropriations and extravagant expenditures.
I suppose it will not be denied that under the present law our people
obtain the necessaries of a comfortable existence at a cheaper rate
than formerly. This is a matter of supreme importance, since it is the
palpable duty of every just government to make the burdens of taxation
as light as possible. The people should not be required to relinquish
this privilege of cheaper living except under the stress of their
Government's necessity made plainly manifest.
This reference to the condition and prospects of our revenues naturally
suggests an allusion to the weakness and vices of our financial
methods. They have been frequently pressed upon the attention of
Congress in previous Executive communications and the inevitable danger
of their continued toleration pointed out. Without now repeating these
details, I can not refrain from again earnestly presenting the
necessity of the prompt reform of a system opposed to every rule of
sound finance and shown by experience to be fraught with the gravest
peril and perplexity. The terrible Civil War, which shook the
foundations of our Government more than thirty years ago, brought in
its train the destruction of property, the wasting of our country's
substance, and the estrangement of brethren. These are now past and
forgotten. Even the distressing loss of life the conflict entailed is
but a sacred memory which fosters patriotic sentiment and keeps alive a
tender regard for those who nobly died. And yet there remains with us
to-day in full strength and activity, as an incident of that tremendous
struggle, a feature of its financial necessities not only unsuited to
our present circumstances, but manifestly a disturbing menace to
business security and an ever-present agent of monetary distress.
Because we may be enjoying a temporary relief from its depressing
influence, this should not lull us into a false security nor lead us to
forget the suddenness of past visitations.
I am more convinced than ever that we can have no assured financial
peace and safety until the Government currency obligations upon which
gold may be demanded from the Treasury are withdrawn from circulation
and canceled. This might be done, as has been heretofore recommended,
by their exchange for long-term bonds bearing a low rate of interest or
by their redemption with the proceeds of such bonds. Even if only the
United States notes known as greenbacks were thus retired it is
probable that the Treasury notes issued in payment of silver purchases
under the act of July 14, 1890, now paid in gold when demanded, would
not create much disturbance, as they might from time to time, when
received in the Treasury by redemption in gold or otherwise, be
gradually and prudently replaced by silver coin.
This plan of issuing bonds for the purpose of redemption certainly
appears to be the most effective and direct path to the needed reform.
In default of this, however, it would be a step in the right direction
if currency obligations redeemable in gold whenever so redeemed should
be canceled instead of being reissued. This operation would be a slow
remedy, but it would improve present conditions.
National banks should redeem their own notes. They should be allowed to
issue circulation to the par value of bonds deposited as security for
its redemption and the tax on their circulation should be reduced to
one-fourth of 1 per cent.
In considering projects for the retirement of United States notes and
Treasury notes issued under the law of 1890, I am of the opinion that
we have placed too much stress upon the danger of contracting the
currency and have calculated too little upon the gold that would be
added to our circulation if invited to us by better and safer financial
methods. It is not so much a contraction of our currency that should be
avoided as its unequal distribution.
This might be obviated and any fear of harmful contraction at the same
time removed by allowing the organization of smaller banks and in less
populous communities than are now permitted, and also authorizing
existing banks to establish branches in small communities under proper
restrictions.
The entire case may be presented by the statement that the day of
sensible and sound financial methods will not dawn upon us until our
Government abandons the banking business and the accumulation of funds
and confines its monetary operations to the receipt of the money
contributed by the people for its support and to the expenditure of
such money for the people's benefit.
Our business interests and all good citizens long for rest from
feverish agitation and the inauguration by the Government of a reformed
financial policy which will encourage enterprise and make certain the
rewards of labor and industry.
Another topic in which our people rightfully take a deep interest may
be here briefly considered. I refer to the existence of trusts and
other huge aggregations of capital the object of which is to secure the
monopoly of some particular branch of trade, industry, or commerce and
to stifle wholesome competition. When these are defended, it is usually
on the ground that though they increase profits they also reduce
prices, and thus may benefit the public. It must be remembered,
however, that a reduction of prices to the people is not one of the
real objects of these organizations, nor is their tendency necessarily
in that direction. If it occurs in a particular case it is only because
it accords with the purposes or interests of those managing the scheme.
Such occasional results fall far short of compensating the palpable
evils charged to the account of trusts and monopolies. Their tendency
is to crush out individual independence and to hinder or prevent the
free use of human faculties and the full development of human
character. Through them the farmer, the artisan, and the small trader
is in danger of dislodgment from the proud position of being his own
master, watchful of all that touches his country's prosperity, in which
he has an individual lot, and interested in all that affects the
advantages of business of which he is a factor, to be relegated to the
level of a mere appurtenance to a great machine, with little free will,
with no duty but that of passive obedience, and with little hope or
opportunity of rising in the scale of responsible and helpful
citizenship.
To the instinctive belief that such is the inevitable trend of trusts
and monopolies is due the widespread and deep-seated popular aversion
in which they are held and the not unreasonable insistence that,
whatever may be their incidental economic advantages, their general
effect upon personal character, prospects, and usefulness can not be
otherwise than injurious.
Though Congress has attempted to deal with this matter by legislation,
the laws passed for that purpose thus far have proved ineffective, not
because of any lack of disposition or attempt to enforce them, but
simply because the laws themselves as interpreted by the courts do not
reach the difficulty. If the insufficiencies of existing laws can be
remedied by further legislation, it should be done. The fact must be
recognized, however, that all Federal legislation on this subject may
fall short of its purpose because of inherent obstacles and also
because of the complex character of our governmental system, which,
while making the Federal authority supreme within its sphere, has
carefully limited that sphere by metes and bounds that can not be
transgressed. The decision of our highest court on this precise
question renders it quite doubtful whether the evils of trusts and
monopolies can be adequately treated through Federal action unless they
seek directly and purposely to include in their objects transportation
or intercourse between States or between the United States and foreign
countries.
It does not follow, however, that this is the limit of the remedy that
may be applied. Even though it may be found that Federal authority is
not broad enough to fully reach the case, there can be no doubt of the
power of the several States to act effectively in the premises, and
there should be no reason to doubt their willingness to judiciously
exercise such power.
In concluding this communication its last words shall be an appeal to
the Congress for the most rigid economy in the expenditure of the money
it holds in trust for the people. The way to perplexing extravagance is
easy, but a return to frugality is difficult. When, however, it is
considered that those who bear the burdens of taxation have no guaranty
of honest care save in the fidelity of their public servants, the duty
of all possible retrenchment is plainly manifest.
When our differences are forgotten and our contests of political
opinion are no longer remembered, nothing in the retrospect of our
public service will be as fortunate and comforting as the recollection
of official duty well performed and the memory of a constant devotion
to the interests of our confiding fellow-countrymen.
GROVER CLEVELAND
End of Project Gutenberg's State of the Union Addresses, by Grover Cleveland