PUBLIC DOCUMENTS. 



583 



done without a violation of contract. The public 

 debt is represented, in great part, by bonds having 

 from five to twenty and from ten to forty years to 

 run, bearing interest at the rate of six per cent, and 

 five per cent, respectively. It is optional with the 

 Government to pay these bonds at any period after 

 the expiration of the least time mentioned upon their 

 face. The time has already expired when a great 

 part of them may be taken up, and is rapidly ap- 

 proaching when all may be. It is believed that all 

 which are now due may be replaced by bonds bear- 

 ing a rate of interest not exceeding four and one-half 

 er cent., and, as rapidly as the remainder become 

 ue, that they may be replaced in the same way. To 

 accomplish this, it may be necessary to authorize the 

 interest to be paid at either of three or four of the 

 money centres of Europe, or by any Assistant Treas- 

 urer of the United States, at the option of the hold- 

 ers of the bonds. I suggest this subject for the con- 

 sideration of Congress ; also, simultaneously with 

 this, the propriety of redeeming our currency, as be- 

 fore suggested, at its market value, at the time the 

 law goes into eft'ect, increasing the rate at which cur- 

 rency will be bought and sold from day to day, or 

 week to week, at the same rate of interest as the Gov- 

 ernment pays upon its bonds. 



The subject of the tariff and internal taxation will 

 necessarily receive your attention. The revenues of 

 the country are greater than the requirements, and 

 may with safety oe reduced; but, as the funding of 

 the debt in a four or a four and a half per cent, loan 



postponement of this question until the next meeting 

 of Congress. It may be advisable to modify the tax- 

 ation and tariff in instances where unjust or burden- 

 some discriminations are made by the present laws ; 

 but a general revision of the laws regarding this sub- 

 ject, I would recommend the postponement of for 

 the present. 



I also suggest the renewal of the tax on incomes, 

 etc., but at a reduced rate, say of three per cent., ana 

 this tax to expire in three years with the funding of 

 the national debt as here suggested. 



I feel safe in saying that the taxes and the revenues 

 from imports may be reduced safely from sixty to 

 eighty millions per annum at once, and may be still 

 further reduced from year to year as the resources 

 of the country are developed. 



The report of the Secretary of the Treasury shows 

 the receipts of the Government, for the fiscal year 

 ending June 30, 1869, to be $370,943,747, and the 

 expenditures, including interest, bounties, etc., to 

 be $321,490,597. The estimates for the ensuing 

 year are more favorable to the Government, and 

 will, no doubt, show a much larger decrease of the 

 public debt. The receipts in the Treasury beyond 

 expenditures have exceeded the amount necessary 

 to place to the credit of the sinking fund, as pro- 

 vided by law. To leek up the surplus in the 

 Treasury and withhold it from circulation would lead 

 to such a contraction of the currency as to cripple 

 trade and seriously affect the prosperity of the coun- 

 try. Under these circumstances the Secretary of the 

 Treasury and myself heartily concurred in the pro- 

 priety of using all the surplus currency in the Treas- 

 ury in the purchase of Government bonds, thus 

 reducing the interest-bearing indebtedness of the 

 country, and of submitting to Congress the question 

 of the disposition to be made of the bonds so pur- 

 chased. The bonds now held by the Treasury amount 

 to about $75,000,000, including those belonging to the 

 Sinking Fund. I recommend that the whole be placed 

 to the credit of the Sinking Fund. Your attention is 

 respectfully invited to the recommendations of the 

 Secretary of the Treasury for the creation of the office 

 of Commissioner of Customs Eevenue, for the in- 

 crease of salary to certain classes of officials, and the 

 substitution of increased national bank circulation to 



replace the outstanding three per cent, certificates, 

 and most especially to his recommendation for the 

 repeal of laws allowing shares of fines, penalties, for- 

 feitures, etc., to officers of the Government and to 

 informers. 



The office of Commissioner of Internal Eevenue is 

 one of the most arduous and responsible under the 

 Government. It falls but little, if any, short of a 

 Cabinet position in its importance and responsibili- 

 ties. I would ask for it, therefore, such legislation as 

 in your judgment will place the office upon a footing 

 of dignity commensurate with its importance and 

 with the character and qualifications of the class of 

 men required to fill it properly. 



As the United States is the freest of all nations, so, 

 too, its people sympathize with all peoples struggling 

 for liberty and self-government. But, while so sym- 

 pathizing, it is due to our honor that we should 

 abstain from enforcing our views upon unwilling 

 nations, and from taking an interested part, without 

 invitation, in the quarrels between different nations, 

 or between governments and their subjects. Our 

 course should always be in conformity with strict 

 justice and law, international and local. Such has 

 been the policy of the administration in dealing with 

 these questions. For more than a year a valuable 

 province of Spain, and a near neighbor of ours, in 

 whom all our people cannot but feel a deep interest, 

 has been struggling for independence and freedom. 

 The people and Government of the United States 

 entertain the same warm feelings and sympathies for 

 the people of Cuba in their pending struggle that they 

 manifested throughout the previous struggles between 

 Spain and her former colonies, in behalf of the lat- 

 ter ; but the contest has never assumed a condition 

 which amounts to a war in the sense of international 

 law, or which would show the existence of a de facto 

 .political organization of the insurgents sufficient to 

 justify a recognition of belligerency. The principle 

 is maintained, however, that this nation is its own 

 judge when to accord the rights of belligerency, 

 either to a people struggling to free themselves from 

 a government they believe to be oppressive, or to 

 independent nations at war with each other. The 

 United States have no disposition to interfere with 

 the existing relations of Spain to her colonial posses- 

 sions on this continent. They believe, that in due 

 time Spain and the European powers will find their 

 interest in terminating these relations, and establish- 

 ing their present dependencies as independent pow- 

 ers, members of the family of nations. These de- 

 pendencies are no longer regarded as subject to 

 transfer from one European power to another. When 

 the present relations of the colonies cease, they are 

 to become independent powers, exercising the right 

 of choice and of self-control in the determination of 

 their future condition and relations with other powers. 

 The United States, in order to put a stop to blood- 

 shed in Cuba and in the interest of a neighboring 

 people, proposed their good offices to bring the ex- 

 isting contest to a termination. The offer not being 

 accepted by Spain, on a basis which we believed 

 could be received by Cuba, was withdrawn. It is 

 hoped that the good offices of the United States may 

 yet prove advantageous for the settlement of this un- 

 happy strife. Meanwhile, a number of illegal expedi- 

 tions ao-ainst Cuba have been broken up. It has been 

 the endeavor of the Administration to execute the neu- 

 trality laws in good faith, no matter how unpleasant 

 the task, made so by the sufferings we have endured 

 from lack of like good faith toward us by other 

 nations. 



On the 26th of March last, the United States 

 schooner Lizzie Major was arrested on the high- 

 seas by a Spanish frigate, and two passengers taken 

 from it and carried as prisoners to Cuba. Kepresenta- 

 tions of these facts were made to the Spanish Gov- 

 ernment as soon as official information of them 

 reached "Washington. The two passengers were 

 set at liberty, and the Spanish Government assured 



