1IVANOES OF THE UNITED STATES. 



303 



agement to immigration ; the second cnuso has 

 been, as ho suggests, tho adoption on tho part 

 of tho Government, as a measure of value, as a 

 medium of exchange, and as a legal tender, of 

 mi irmleetnable paper currency, the remedy 

 Vu-h is a rot urn to specie payment through 

 tho agency of contraction applied to the great- 

 est possible extent, and at the earliest possible 

 moment, compatible with the condition of the 

 industrial interests of the country, and of tho 

 public obligations; tho third cause, and per- 

 hrqis tin- most influential, has been the extent 

 of tho 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 bo made compatible with the demands of 

 tho 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 

 tho first place he would compel the national 

 banks to radeem their notes as well at the com- 

 mercial centres as at their own counters. With- 

 out such redemption there would be practically 

 none at all until specie payments are resumed, 

 and where there are no redemptions there is al- 

 ways a constant tendency to inflation and ille- 

 gitimate 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 curtail- 

 ment of the currency by the withdrawal of the 

 United States notes. The present banks hav- 

 ing 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 tho Federal notes 

 may bo retired must depend upon tho effect 

 which contraction may have on tho business 

 and industry of the country, and can be better 

 determined as the work progresses. It could 

 probably bo increased to six millions per month 

 for tho fiscal year, ending July 30, 1867, and to 

 ten millions per mouth thereafter. The policy 

 of contraction should be definitely and un- 

 changeably 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 in- 

 ternal taxes, etc. The question now before the 



country he regards as ono of adaptation rather 

 than principle. How shall the necessary rev- 

 enue bo raised under a system of internal and 

 external taxes without sustaining monopolies, 

 without repressing industry, without discour- 

 aging enterprise, without oppressing labor? In 

 other words, how shall tho revenue be raised 

 in a manner the least oppressive to the people 

 without checking tho growth and prosperity 

 of the country ? To tho legislation now re- 

 quired, the Secretary of the Treasury recom- 

 mended as a guide the following general prin- 

 ciples : 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 tho 

 system may be simple in its execution, and as 

 h'ttle offensive and annoying as possible to the 

 tax-payers. Second, that the duties upon im- 

 ported 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 monop- 

 olies, nor to prevent that free exchange of com- 

 modities which is the life of commerce. Nor, 

 on the other hand, should they be so low 

 as to seriously impair the revenues, nor sub- 

 ject the home manufacturers, burdened with 

 heavy internal taxes, to a competition with 

 cheaper labor and larger capital, which they 

 may bo 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 aro 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 bo 

 modified, tho 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 

 tho European demand for United States securi- 

 ties 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 un- 

 founded. 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 tho five-twenties now 

 held jn 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 

 Stato and railroad bonds and other securities, 



