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1790. In 1869 it is estimated that it will reach thirty-eight millions, or an increase of eight hundred and sixty-eight per cent, in seventynine years.

The annual expenditures of the Federal Government in 17tfi were $4,200,000; in 1820, $18,200,000; in 1850, $41,000,000; in 1860, $63,000,000; in 1865, nearly $1,300,000,000; and in 1869 it is estimated by the Secretary of the Treasury, in his last annual report, that they will be $372,000,000..

By comparing the public disbursements of 1869, as estimated, with those of 1791^ it will be seen that the increase of expenditure since the beginning of the Government, has been eight thousand six hundred and eighteen per cent., while the increase of the population for the same period was only eighteen hundred and sixtyeight per cent. Again: the expenses of the Government in 1860, the year of peace immediately preceding the war, were only $63,000,000; while in 1869, the year of peace three years after the war, it is estimated they will be $372,000,000— an increase of four hundred and eighty-nine per cent., while the increase of population was only twenty-one per cent, for the same period.

These statistics further show, that in 1791 the annual national expenses, compared with the population, were little more than $1 per capvta{ and in 1860 but $2per capita; while in 1869 they will reach the extravagant sum of $9 78 per capita.

It will be observed that all of these statements refer to and exhibit the disbursements of peace periods. It may, therefore, be of interest to compare the expenditures of the three war periods—the war with Great Britain, the Mexican war, and the war of the rebellion.

In 1814 the annual expenses incident to the war of 1812 reached their highest amount— about thirty-one millions; while our population slightly exceeded eight millions, showing an expenditure of only $3 ,80 per capita. In 1847 the expenditures growing out of the war with Mexico reached $55,000,000, and the population about twenty-one millions, giving only $2 60 per capita for the war expenses of that year. In 1865 the expenditures called for by the rebellion reached the vast amount of $1,290,000,000, which, compared with a population of thirty four millions, gives $38 20 per capita.

From the 4th day of March, 1789, to the 30th of June, 1861, the entire expenditures of the Government were $1,700,000,000. During that period we wer* engaged in wars with Great Britain and Mexico, and were involved in hostilities with powerful Indian tribes; Louisiana was purchased from France at a cost of $15,000,000; Florida was ceded to us by Spain for $5,000,000; California was acquired from Mexico for $15,000,000; and the Territory of New Mexico was obtained from Texas for the sum of $10,000,000. Early in 1861 the war of the rebellion commenced; and from the 1st of July of that year to the 30th of June, 1865, the public expenditures reached the enormous aggregate of $3,300,000,000. Three years of peace have intervened, and during that time the disbursements of the Government have successively been $520,000,000, $346,000,000, and $393,000,000. Adding to these amounts

$372,000,000, estimated as necessary for the fiscal year ending the 30th of June, 1869, we obtain a total expenditure of $1,600,000,000 during the four years immediately succeeding the war, or nearly as much as was expended during the seventy-two years that preceded the rebellion, and embraced the extraordinary expenditures already named.

These startling facts clearly illustrate the necessity of retrenchment in all branches of the. public service. Abuses which were tolerated during the war for the preservation of the nation will not be endured by the people, now that profound peace prevails. The receipts from internal rev* enues and customs have during the past three years gradually diminished, and the continuance of useless and extravagant expenditures will involve us in national bankruptcy, or else make inevitable an increase of taxes, already too onerous, and in many respects obnoxious on account of their inquisitorial character. One hundred millions annually are expended for the military force, a large portion of which is employed in the execution of laws both unnecessary and unconstitutional; $150,000,000 are required each year to pay the interest on the public debt; an army of tax-gatherers impoverishes the nation; and public agents, placed by Congress beyond the control of the Executive, divert from their legitimate purposes large sums of money which they collect from the people in the name of the Government. Judicious legislation and prudent economy can alone remedy defects and avert evils which, if Suffered to exist, cannot fail to diminish confidence in the public councils, and weaken the attachment and respect of the people toward their political institutions. Without proper care the small balance which it is estimated will remain in the Treasury at the close of the present fiscal year will not be realized, and additional millions be added to a debt which is now enumerated by billions.

It is shown by the able and comprehensive report of the Secretary of the Treasury that the receipts for the fiscal year ending June 30, 1868, were $405,638,083, and that the expenditures for the-same period were $377,340,284, leaving in the Treasury a surplus of $28,297,798. It is estimated that the receipts during the present fiscal year ending June 30,1869, will be $341,392,868, and the expenditures $336,152,470, showing a small balance of $5,240,398 in favor of the Government. For the fiscal year ending June 30, 1870, it is estimated that the receipts will amount to $327,000,000, and the expenditures to $303,000,000, leaving an estimated surplus of $24,000,000.

It becomes proper, in this connection, to make a brief reference to Out public indebtedness, which has accumulated with such alarming rapidity and assumed such colossal proportions,.

In 1789, when the Government commenced operations under the Federal Constitution, it was burdened with an indebtedness of $75,000^000 created during the war of the Revolution. This amount had been reduced to $45,000,000 when, in 1812, war was declared against Great Britain. The three years' struggle that followed largely increased the national obligations, &nd in 1816 they had attained the sum of $127,000,000. Wise and economical legislation, however, enabled the Government to pay the entire amount within a period of twenty years, and the extinguishment of the national debt filled the land with rejoicing, and was one of the great events of President Jackson's administration. After its redemption a large fund remained in the Treasury, which was deposited for safe-keeping with the several States, on condition that it should be returned when required by the public wants. In 1849—the year after the termination of an expensive war with Mexico—we found ourselves involved in a debt of $64,000,000; and this was the amount owed by the Government in 1860, just prior to the outbreak of the rebellion. In the spring of 1861 our civil war commenced. Each year of its continuance made an enormous addition to the debt; and when, in the spring of 1865, the nation successfully emerged from the conflict, the obligations of the Government had reached the immense sum of $2,873,992,909. The Secretary of the Treasury shows that on the 1st day of November, 1867, this amount had been reduced to $2,491,504,450; but at the same time his report exhibits an increase during the past year of $35,625,102; for the debt on the 1st day of November last is stated to have been $2,527,129,552. It is estimated by the Secretary that the returns for the past month will add to our liabilities the further, sum of $11,000,000—making a total increase during thirteen months of $46,500,000.

In my message to Congress of December 4, 1865, it was suggested that a policy should be devised, which, without being oppressive to the people, would at once begin to effect a reduction of the debt, and if persisted in discharge it fully within a definite number of years. The Secretary of the Treasury forcibly recommends legislation of this character, and justly urges that the longer it is deferred the more difficult must become its accomplishment. We should follow the wise precedents established in 1789 and 1816, and without further delay make provision for the payment of our obligations at as early a period as may be practicable. The fruits of their labor should be enjoyed by our citizens, rather than used to build up and sustain moneyed monopolies in our own and other lands. Our foreign debt is already computed by the Secretary of the Treasury at $850,000,000; citizens of foreign countries receive interest upon a large portion of our securities, and American tax-payers are made to contribute large sums for their support. The idea that such a debt is to become permanent should be at all times discarded, as involving taxation too heavy to be borne and payment once in every sixteen years at the present rate of interest of an amount equal to the original sum. This vast debt, if permitted to become permanent and increasing, must eventually be gathered into the hands of a few, and enable them to exert a dangerous and controlling power in the affairs of the Government. The borrowers would become servants to the lenders ■—the lenders the masters of the people. We now pride ourselves upon having given freedom to four millions of the colored race; it will then be our shame that forty million people, by their own toleration of usurpation and profligacy,

have suffered themselves to become enslaved, and merely exchanged slave-owners for new taskmasters in the shape of bond-holders and taxgatherers. Besides, permanent debts pertain to monarchical governments, and tending to monopolies, perpetuities, aud class legislation, are totally irreconcilable with free institutions. Introduced into our republican system, they would gradually but surely sap its foundations, eventually subvert our governmental fabric, and ersct upon its ruins a moneyed aristocracy. It is our sacred duty to transmit unimpaired to our posterity the blessings of liberty which were bequeathed to us by the founders of the Bepublic, and by our example teach.those who are to follow us carefully to avoid the dangers which threaten a free and independent people.

Various plans have been proposed for the payment of the public debt. However they may have varied as to the time and mode in which it should be redeemed, there seems to be a general concurrence as to the propriety and justness of a reduction in the present rate of interest. The Secretary of the Treasury, in his report, recommends five per cent.; Congress, in a bill passed prior to adjournment, on the 27th of July last, agreed upon four and four and a half per cent.; while by many three per cent, has been held to be an amply sufficient return for the investment. The general impression as to the exorbitancy of the existing rate of interest has led to an inquiry in the public mind respecting the consideration which the Government has actually received for its bonds, and the conclusion is becoming prevalent that the amount which it obtained was in real money three or four hundred per cent, less than the obligations which it issued in return. It cannot be denied that we are paying an extravagant percentage for the use of the money borrowed, which was paper currency, greatly depreciated below the value of coin. This fact is made apparent, when we consider that bondholders receive from the Treasury, upon each dollar they own in Government securities, six per cent, in gold, which is nearly or quite equal to nine per cent, in currency; that the bonds are then converted into capital for the national banks, upon which those institutions issue their circulation, bearing six per cent, interest; and that they are exempt from taxation by the Government and the States, and thereby enhanced two p^r cent, in the hands of the holders We have thus an aggregate of seventeen per cent, which may be received upon each dollar by the owners of Government securities.

A system that produces such results is justly regarded as favoring a few at the expense of the many, and has led to the further inquiry, whether our bondholders, in view of the large profits which they have enjoyed, would themselves be averse to a settlement of our indebtedness upon a plan which would yield them a fair remuneration, and at the same time be just to the tax-payers of the nation. Our national credit should be sacredly observed; but in making provision for our creditors we should not forget what is due to the masses of the people. It may be assumed that the holders of our securities have already received upon their bonds a larger amount than their original investment, measured by a gold standard. Upon this statement of facts it would seem but just and equita ble that the six per cent, interest now paid by the Government should he applied to the reduction of the principal in semi-annual installments, which in sixteen years and eight months would liquidate the entire national debt. Six per cent, in gold would at present rates he equal to nine per cent, in currency, and equivalent to the payment of the debt one and a half time in a fraction less than seventeen years. This, in connection with all the other advantages derived from their investment, WQuld afford to the public creditors a fair and liberal compensation for the use of their capital, and with this they should be satisfied. The lessons of the past admonish the lender that it is not well to "be over anxious in exacting from the borrower rigid compliance with the letter of the bond.*

If provision be made for the payment of the indebtedness of the Government in the manner suggested, our nation will rapidly recover its wonted prosperity. Its interests require that some measure should be taken to release the large amount ot capital invested in the securities of the Government. It is not now merely unproductive, but in taxation annually consumes $150,000,000, which would otherwise be used by our enterprising people in adding to the wealth of the nation. Our commerce, which at one time successfully rivaled that of the great maritime Powers, has rapidly diminished, and our industrial interests are in a depressed and languishing condition. The development of our inexhaustible resources is checked, and the fertile fields of the South are becoming waste for want of means to till them. With the release of capital, new life would be infused into the paralyzed energies of our people, and activity and vigor imparted to every branch of industry. Our people need encouragement in their efforts to recover from the effects of the rebellion and of injudicious legislation; and it should be the aim of the Government to stimulate them by the prospect of an early release from the burdens which impede their prosperity. If we cannot take the burdens from their shoulders, We should at least manifest a willingness to help to bear them.

In referring to the condition of the circulating medium, I shall merely reiterate, substantially, that portion of my last annual message which relates to that subject.

The proportion which the currency of any country should bear to the whole value of the annual produce circulated by its means is a question upon which political economists have not agreed. Nor can it be controlled by legislation, but must be left to, the irrevocable laws which everywhere regulate commerce and trade. The circulating medium will ever irresistibly flow to those points where it is in greatest demand. The law of demand and supply is as unerring as that which regulates the tides of the ocean; and indeed currency,.like the tides, has its ebbs'and flows throughout the commercial world.

At the beginning of the rebellion the banknote circulation of the country amounted to not

* See resolutions of Senate and House of Representatives thereon, pp. 391.

much more than $200,000,000; now the circulation of national bank notes and those known as u legal-tenders" is nearly $700,000,000 While it is urged by some that this amount should be increased, others contend that a decided reduction is absolutely essential to the best interests of the country. In view of these diverse opinions, it may be well to ascertain the real value of our paper issues, when compared with a metallic or convertible currency. For this purpose let us inquire how much gold and silver could be purchased by the $700,000,000 of paper money now in circulation. Probably not more than half the amount of the latter, showing that when our paper currency is compared with gold and silver its commercial value is compressed into $350,000,000. This striking fact makes it the obvious duty of the Government, as early as may be consistent with the principles of sound political economy, to take such measures as will enable the holder of its notes and those of the national banks to convert them, without loss, into specie or its equivalent. A reduction of our paper-circulating medium need not necessarily follow. This, however, would depend upon the law of demand and supply; though it should be borne in mind that by making legal-tender and bank notes convertible into coin or its equivalent, their present specie value in the hands of their holders would be enhanced one hundred per cent.

Legislation for the accomplishment of a result so desirable is demanded by the highest public considerations. The Constitution contemplates that the circulating medium of the country shall be uniform in quality and value. At the time of the formation of that instrument the country had just emerged from the war of the Revolution, and was suffering from the effects of a redundant and worthless paper currency. The sages .of that period were anxious to protect their posterity from the evils which they themselves had experienced. Hence, in providing a circulating medium, they conferred upon Congress the power to coin money and regulate the value thereof, at the same time prohibiting the States from making anything but gold and silver a tender in payment of debts.

The anomalous condition of our currency is in striking contrast with 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, semi-annually receive their notes in coin from the national Treasury. 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 naI tion, bearing the scars a»d 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 vesBels 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. Etjual 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 romove a discrimination which may, if it has not already done so, create a prejudice that may become deeprooted and wide-spread, and imperil the national credit.

The feasibility of making our currency correspond with the constitutional standard maybe seen by reference to a few facts derived from our commercial statistics.

The aggregate product of precious metals in the United States from 1849 to 1867 amounted to $1,174,000,000, while for the same period the net exports of specie were $741,000,000. This Bhows an excess of product over net exports of $433,000,000. There are in the Treasury $103,407,985 in coin, in circulation in the States on the Pacific coast about $40>000;000, and a few millions in the national and other banks—in all less than $160,000,000. Taking into consideration the specie in the country prior to 1849 and that produced since 1867, and we have more than $300,000,000 not accounted for by exportation or by the returns of the Treasury, and therefore most probably remaining in the country.

These are important facts, and show how com

Eletely the inferior currency will supersede the etter, 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 goldbearing 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 and banks, by continuing to issue irredeemable notes, fill 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 ex

pense incident to svch establishments, and let all our precious metai 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. Let specie payments once be earnestly inaugurated by the Government and banks, and the value of the paper circulation would directly approximate a specie standard.

Specie payments having been resumed by the Government and banks, all notes or bills of paper issued by either of a less denomination than twenty dollars 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 dtstructive 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, of 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 under bolts and bars, while the people are Left to endure all the inconvenience, sacrifice, and demoralization resulting from the use of depreciated and worthless paper. * * *

During the fiscal year ending June 30, 1868, six million six hundred and fifty-five thousand seven hundred acres of public land were disposed of. * * *

On the 30th of June, 1868, one hundred and sixty-nine thousand six hundred and forty-three names were borne on the pension rolls, and during the year ending on that day the total amount paid for pensions, including the expenses of disbursement, was $24,010,982, being $5,391,025 greater than that expended for like purposes during the preceding year. * * **

Treaties with various Indian tribes have been cfcncluded, and will be submitted to the Senate for its constitutional action. * ■* *

The strength of our military force oh the 30th of September last was forty1 eight thousand men, and it is computed that, by the 1st of January next, this number will be decreased to forty-three' thousand. It is the opinion of the Secretary of War that within the next year a considerable diminution of the infantry force may be made without detriment to the interests of the country; and in view of the great expense attending the military peace establishment, and the absolute necessity of retrenchment wherever it can be applied, it is hoped that Congr'ess will sanction the reduction which his report recommends. While in 1860 sixteen thousand :three hundred men cost the nation $16,472,000, the sum of $65,682,000 is estimated as necessary for the support of the army during the fiscal year ending June 30, 1870. The estimates: of the War Department for the last two fiscal yearB were, for 1867, $33,814,461; and for 1868, $25,205,669. The actual expenditures during the same periods were, respectively, $95,224,415 and $123,246,648. The estimate submitted in December last for the fiscal year ending June 30,1869, was $77,124,707; the expenditures for the first quarter, ending the 30th of September last, were $27,219,117, and the Secretary of the Treasury gives $66,000,000 as the amount which will probably be required during the remaining three quarters, if there should be no reduction of the army—making its aggregate cost for the year considerably in excess of $93,000,000. The difference between the estimates and expenditures for the three fiscal years which have been named is thus shown to be $175,545,343 for this single branch of the public service. * * *

The total number of vessels in the navy is two hundred and six, mounting seventeen hundred and forty-three guns. Eighty-one vessels of every description are in use, armed with six hundred and ninety-six guns. The number of enlisted men in the service, including apprentices, has been reduced to eight thousand five hundred. * * . *

The ordinarv postal revenue for the fiscal year ending June 30,1868, was $16,292,600, and the total expenditures, embracing all the service for which special appropriations have been made bv Congress, amounted to $22,730,592, showing an excess of expenditures of $6,437,991. * * *

Comprehensive national policy would seem to sanction the acquisition and incorporation1 into our Federal Union of the several adjacent continental and insular communities as speedily as it can be done peacefully, lawfully, and without any violation of national justice, faith, or honor. Foreign possession or control of those communities has hitherto hindered the growth and impaired the influence of the United States. Chronic revolution and anarchy there would be equally injurious. Each one of them, when firmly established as an independent republic, or when incorporated into the United States, would be a new source of strength and powsr. Conforming

my administration to these principles, I have on no occasion lent support or toleration to unlawful expeditions s*et on foot upon the plea of republican propagandised or of national extension or aggrandizement. The necessity, however,' of repressing such unlawful movements clearly indicates the duty which" rests upon us of adapting our legislative action! to the new circumstances of a decline of European monarchical power and influence, and the increase of American republican ideas^ interests, and sympathies.

It cannot be long before it will become necessary for this Government to lend some effective aid to the solution of the political and social problems which are continually kept before the world by the two republics of the Island of St. Domingo, and: which are now disclosing themselves more distinctly than heretofore in the Island of Cuba. The subject is commended to your consideration with all the more earnestness because I am satisfied that the time has arrived when even so direct a proceeding as a proposition for an annexation of the two republics of the Island of St. Domingo would not only receive the consent of the people interested, but would also give satisfaction; to all other foreign nations.

I am aware that -upon the question of further extending our possessions it is apprehended by some that our political system cannot successfully be applied to an area more extended than our continent; but the conviction is rapidly gaining ground in the American mind that, with the increased facilities for intercommunication between all portions of the earth, the principles of free government, as embraced in our Constitution, if faithfully-maintained and carried out, would prove of sufficient strength and breadth to comprehend within their sphere and influence the civilized nations of the world. * ■* *

I renew the recommendation contained in my communication; to Congress dated the 18th July lastj a copy of which accompanies this message, that the judgment of the' people should be taken on the propriety of? so amending the Federal Constitution that it shall provide^

First. For an election of President and Vice President by a direct vote of the people^ instead of through the agency of electors; and making them ineligible for re-election to a second term.

•Second.For a distinct designation of the person who shall discharge the duties of President in the event of a vacancy in that office by the death, resignation, or removal of both the President and Vice President.

Third. For the election of Senators of the United States directly'by the people of the several States, instead of by the legislatures; and

Fourth, tfor the limitation to a period of years of the terms of federal judges.

Profoundly impressed with the propriety of making these important modifications in the Constitution, I respectfully submit them for the early and mature consideration of Congress. We should as far as possible remove all pretext for violations of the organic law, by remedying such imperfections as time and experience may develop, ever remembering that "the Constitution which at any time exists, until changed by an explicit and authentic act of the whole people, is sacredly obligatory upon all.''

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