The Special Commissioner of Revenue (Mr. Wells) says: "Although it is an interesting fact, that investigation under such circumstances should reveal any degree of national progress, at the same time the demand for relief from the producing interests of the country, both manufacturing and agricultural, is most urgent and general; and however it may have been heretofore, it is certain that at present, in many descriptions of manufacture, the internal rates of taxation, superadded to the high prices paid for raw materials and for labor, sweep nearly all the profits into the coffers of the Government, and in many instances actually offer a bounty to the foreign competitor."

Those who find their industrial pursuits thus injured, or in danger of destruction by a foreign competitor, were urgent that Congress should advance the rates of duty upon their manufactures. Such a measure might afford them a temporary relief without exerting any beneficial influence upon the great problem before the country. No such advance of duties was required for the necessary increase of the revenue, as has already been stated. Such legislation, therefore, could be sustained only upon the still disputed principle that it was the duty of the Government, in all cases, to protect manufactures.

The special facts thus far stated relative to the operation of the currency, the internal revenue and tariff laws, present a very imperfect view of the condition of the great industrious

mass of the community. Before the war the revenue of the Federal Government was about $60,000,000 annually, chiefly derived from customs and land sales. No direct tax was levied upon the people, except for State and local expenditures, and these were moderate in amount. But during the last year the Government took from customs and internal revenue alone nearly $500,000,000 from the people, while the State, county, township, and city taxes have also vastly increased. The prices of all articles of prime necessity have also greatly increased, while agricultural products generally have advanced little more than the appreciation of gold. Wages are higher, but the advance is not proportioned to the rise in rent, fuel, and household necessaries. The Chairman of the Ways and Means Committee of the House of Congress says: A printer in Washington now gets $24 per week, and works but eight hours per day, where he formerly received $14 per week, and worked ten hours per day, and yet he will tell you that his condition and means to support a family have not been bettered." The industrial classes have been growing worse off, able to purchase less, and to save less; this poverty reacts on both traders and manufacturers.

The Commissioner of Internal Revenue thinks there have been three causes for the abnormal condition of the country, and suggests three corresponding remedies. The first cause has been a scarcity of skilled labor, which no legislation can remedy, except by creating encour

agement to immigration; the second cause has been, as he suggests, the adoption on the part of the Government, as a measure of value, as a medium of exchange, and as a legal tender, of an irredeemable paper currency, the remedy for which is a return to specie payment through the agency of contraction applied to the greatest possible extent, and at the earliest possible moment, compatible with the condition of the industrial interests of the country, and of the public obligations; the third cause, and perhaps the most influential, has been the extent of the burden of national taxation, which is thus illustrated:

The remedy suggested by the Commissioner is such a reduction of the existing taxes as can now be made compatible with the demands of the treasury for expenditures, interest, and a certain reduction of the national debt.

The Secretary of the Treasury, embracing in his view the currency, as well as the systems of taxation, suggests five measures as remedies for the present condition of the country. In the first place he would compel the national banks to redeem their notes as well at the commercial centres as at their own counters. Without such redemption there would be practically none at all until specie payments are resumed, and where there are no redemptions there is always a constant tendency to inflation and illegitimate banking. The frequent return of their notes is needed to keep the business of the banks in a healthy condition. The second remedy suggested by the secretary is a curtailment of the currency by the withdrawal of the United States notes. The present banks having taken the place of the State banks, and furnished a circulation as free from objection as any that is likely to be provided, they should be sustained, and not compelled to retire their notes. How rapidly the Federal notes may be retired must depend upon the effect which contraction may have on the business and industry of the country, and can be better determined as the work progresses. It could probably be increased to six millions per month for the fiscal year, ending July 30, 1867, and to ten millions per mouth thereafter. The policy of contraction should be definitely and unchangeably established, and the process should go on as rapidly as possible without producing a financial crisis, or seriously embarrassing those branches of industry and trade upon which the revenues are dependent. The third remedy suggested was a revision of the tariff for the purpose of harmonizing it with the internal taxes, etc. The question now before the

country he regards as one of adaptation rather than principle. How shall the necessary revenue be raised under a system of internal and external taxes without sustaining monopolies, without repressing industry, without discouraging enterprise, without oppressing labor? In other words, how shall the revenue be raised in a manner the least oppressive to the people without checking the growth and prosperity of the country? To the legislation now required, the Secretary of the Treasury recommended as a guide the following general principles: First, that the fewest number of articles now required, consistent with the amount of the revenue to be raised, should be subjected to internal taxes, in order that the system may be simple in its execution, and as little offensive and annoying as possible to the tax-payers. Second, that the duties upon imported commodities should correspond and harmonize with the taxes on home productions, and that these duties should not be so high as to be prohibitory, nor to build up home monopolies, nor to prevent that free exchange of commodities which is the life of commerce. Nor, on the other hand, should they be so low as to seriously impair the revenues, nor subject the home manufacturers, burdened with heavy internal taxes, to a competition with cheaper labor and larger capital, which they may be unable to sustain. Third, that the raw materials used in building and manufacturing, and which are to be largely enhanced in value by the labor to be expended upon them, should be exempted from taxation, or that the taxes upon them should be low in comparison with the taxes upon other articles. Fourth, that the burdens of taxes should fall chiefly upon those whose interests are protected by taxation, and upon those to whom the public debt is a source of wealth and profit, and lightly upon the laboring classes, to whom taxation and debt are without so many compensatory advantages. With these views upon the manner in which the tariff and internal revenue laws should be modified, the Secretary still further proposed, as a fourth remedy for the condition of the country, an issue of bonds bearing interest at a rate not exceeding five per cent., and payable in Europe, to an amount sufficient to absorb the six per cent. bonds in foreign hands, and supply the European demand for United States securities for permanent investment. The opinion that the country has been benefited by the exportation of its securities, which is founded upon the supposition that real capital has been received in exchange, is to a great extent unfounded. The importation of goods has been increased by nearly the amount of the bonds which have been exported. Not one dollar in five of the amount of the five-twenties now held in England and upon the Continent has been returned to the United States in the form of real capital. Some three hundred and fifty millions of government bonds, not to mention State and railroad bonds and other securities,

are in the hands of citizens of other countries, and may be returned at any time for sale in the United States, and thus seriously embarrass the efforts to return to specie payments. To avoid this embarrassment is the point to be considered. The last general remedy proposed by the Secretary is to restore to their former position in the Union, the ten Southern States. If these remedial measures should be approved by Congress and enforced by appropriate legislation, the Secretary expressed his conviction that specie payments could be resumed by the time the interest-bearing notes were retired, which would be less than two years. These suggestions of the Secretary looked to an increase of labor, and consequently of production-to a fulfilment of obligations by the government and by the banks-to a reduction of the public debt at the same time that taxes were equalized and lessened-to lower prices, and apparently harder, but really more prosperous times, and to a restoration of specie payments without the financial troubles usually preceding a resumption.

Various views were presented in different quarters respecting the measures necessary for the future financial welfare of the country, Some urged the extinction of the national banks, and the substitution in their place of a government currency. Others urged, with the Secretary, a contraction of the currency; Among these was the Chairman of Ways and Means (Mr. Morrill), in the lower house of Congress, who, in the beginning of 1867, thus closed a speech urging a resumption of specie payments:

From the facts to which I have already called the attention of the House, it would appear to be demonstrated that the simultaneous discovery of new auriferous deposits in various parts of the world, of marvellous extent and richness, has rapidly and forever depressed the standard value of gold, whether as a currency or as a commodity, throughout all civilized nations, and that the United States standard of the precious metals used as currency has been depreciated from time to time, either by alloy or dimin. ished weight, until it compares unfavorably with that of other nations; that while we have already entirely extinguished or propose to extinguish the circulation of State banks, we have supplied its place and much more by the erection of a family of national banks, whose issues alone are $100,000,000 greater than the circulation displaced-issues everywhere practically irredeemable and inconvertible, and only claiming to be convertible at some time or other into other paper currency of still larger proportions, which government will in some way and at some time redeem, if it does not choose instead to go more deeply into the monopoly of fancy-colored paper money; that deposits, bills of exchange, and checks of individuals really possess in commercial transactions all the functions of bank-note currency, and in modern times are used at least nine times

more extensively, and therefore, in proportion to the business of the world, far less money is actually required than formerly; that the rapidity of the circulation of money, or whatever circulates as money, greatly magnifies any currency which may be used in the United States; that the immensity of our paper-money circulation tends to the spread of unthrifty habits, and induces extravagance on the part of Congress and the executive de

partments as well as the people; that a postponement of the time of resumption will find our people less prepared-more deeply in debt, the banks with a heavier line of discounts, and the credit system more expanded everywhere-than now, for a wise, steady, and prudent adherence to the idea of an early resumption, and without this cardinal idea always in front, we are in danger, in the face of a violent or abrupt contraction of the present volume diminishing revenue, of no resumption at all. A of paper currency might not be advisable, and with the ever-present interest of the Treasury urging the maintenance of an easy money-market, there is no danger of its occurrence; but a moderate and per

sistent contraction of the flood within its old embankment is advisable, in order to restore health and vigor to languishing industries, and in order to build up our greatness as a nation upon that impregnable foundation for which the material, not more precious than solid, has been placed by Providence within our reach, and in greater abundance than is to be found in all other countries besides. We have just emerged from a most expensive war, and ought to exhibit that spirit which success justly inspires, grappling with the financial difficulties remaining as and thus secure the vital interests of our own people part of our inheritance with the courage that conquers, while we challenge the respect of foreign nations.

From all the facts which have been stated,

comprising, as they do, a history of the financial condition of the Government and people, it will be seen that the Federal Government requires large sums of money for the years immediately ensuing; that its systems of revenue being based upon the industry of the people, its receipts are increased or diminished according to the prosperity of the people; that at the close of the year serious depression existed in many branches of industry and threatened to invade all others, and cause to the Government a serious loss of revenue; that this depression was partly a result of the inflated paper-currency of the country; and that the Government, under the reduced scale of business on a specie basis, could not obtain the revenue necessary to its expenditures. In other words, a contraction of the currency would cramp and cripple the Government, but bring healthy prosperity to the people; whereas an expansion of the currency would give the Government temporarily a surplus, but ultimately depress the people. The Secretary hopes to find a medium way between these extremes; others believe the immense richness of the country will float both Government and people into a sea of healthy prosperity.

debt June 30, and October 31, 1866, exclusive The following is a statement of the public of cash in the Treasury: