294 



FINANCES OF THE UNITED STATES. 



The debts of the several States, embracing 

 those known as State, county, and town or 

 city, as reported by the census of 1870, was in 

 the aggregate $868,676,758, of which the 

 bonded debt is about seven-eighths, distrib- 

 uted as follows: State bonds, $324,747,959; 

 county bonds, $157,955,880 ; town bonds, 

 $271,119,668. The unfunded debt is $28,118,- 

 739 for the States; $29,609,660 for the coun- 

 ties. These are small, but the town and city 

 debts are larger, and amount to $57,124,852, 

 of which New York has $10,355,669 ; Massa- 

 chusetts, $13,694,384; Louisiana, $8,616,062; 

 New Hampshire, $5,226,320 ; Connecticut, 

 $2,969,486; Maine, $2,174,227; Missouri, $1,- 

 442,753; Iowa, $1,833,740; Tennessee, $2,- 

 023,680, and New Jersey, $1,212,627. Much 

 of this is now funded. The foregoing table 

 gives the aggregates. 



The issue of bonds since 1870 to the close 

 of 1872 has been sufficient to advance the ag- 

 gregate to more than $900,000,000. 



The decline in the carrying-trade of the coun- 

 try continued during 1872. The imports and 

 exports of the United States, excluding gold 

 and silver, amounted to $1,070,641,163 for the 

 fiscal year ending June 30, 1872, and of this 

 vast trade only 28 per cent, was in American 

 vessels; in the year 1860 nearly 71 percent, 

 of our former commerce was in American 

 ships, but in 1864 it had fallen to 46 per cent. ; 

 in 1868 to 44 per cent., and in 1871 to less 

 than 38 per cent. The earnings of vessels 

 engaged in the foreign carrying-trade probably 

 exceed $100,000,000 a year, of which less than 

 one-third is earned under our own flag. On 

 this subject the Secretary of the Treasury says : 

 " The act of Congress allowing a drawback on 

 foreign articles used in the construction of 

 American vessels has given encouragement to 

 ship-building, but I am of opinion that the 

 measure is entirely inadequate. When we 

 consider that nearly three-fourths of the for- 

 eign commerce of this country is under foreign 

 flags, it is plain that there can be no consider- 

 able and speedy change unless the Government 

 shall act at once, and in a liberal and compre- 

 hensive spirit. The rise in the price of iron, 

 and the advance in the wages of labor in Eng- 

 land during the past year, favor the Govern- 

 ment and the people of the United States ; but 

 this advantage, due to natural causes, should 

 not lead us to trust the future to the force of 

 those causes, but should induce us rather to 

 act at once, and with vigor." 



In the opinion of the Secretary of the Treas- 

 ury, the time has come when the attention of 

 the public is turned naturally to the future 

 financial policy of the country. That policy 

 must rest upon the past and the present. The 

 war caused three great changes in business 

 and financial affairs that have received the 

 careful consideration of the American people : 

 First, the country was compelled to impose 

 heavy customs duties upon merchandise, and 

 thus, without general observation, and with- 



out argument upon the principles involved, 

 the nation entered upon a broad system of 

 protection. Second, the Government issued 

 Treasury notes for general circulation, as cur- 

 rency, and prohibited banks of issue by State 

 authority. Third, a system of national banks 

 was established, and their circulation protected 

 by the national credit. The wisdom of these 

 measures, speaking generally, has been estab- 

 lished, and, subject to such changes as the 

 changing condition and opinions of the coun- 

 try and people may demand, they will remain 

 a part of public policy until the financial con- 

 sequences of the war disappear. The weight 

 of the national debt has been so great that, 

 for more than ten years, there has been no 

 opportunity for the practical discussion of the 

 doctrines of protection and free trade, and, in 

 that long period of an unchanged protective 

 policy incident to the burdens of the war, the 

 nation has advanced rapidly and safely in the 

 development of its natural resources. Anti- 

 cipating a condition of peace, a general reduc- 

 tion in the percentage of customs duties may 

 be anticipated. This reduction, however, 

 should not be measured by the wants of the 

 Treasury, but regard should be had also to the 

 condition of the various branches of industry . 

 in which the people are engaged. In presence 

 of the fact that the leading pursuits of the 

 country are stronger than ever before in the 

 possession of adequate capital and a supply 

 of intelligent laborers, there may be a moder- 

 ate reduction from time to time in the rate of 

 duties, as the diminishing expenses of the Gov- 

 ernment shall permit, without either alarming 

 capital or injuring labor. 



The justification of the present protective 

 system, the Secretary asserts to be found in 

 the following considerations : 



For purposes of government, the principles of po- 

 litical economy are national, and not cosmopolitan. 

 A nation that can produce a given article at less cost 

 than it can be produced elsewhere, ma^ wisely ac- 

 cept free trade in it; but a nation having natural 

 advantages for its production, yet destitute of skill 

 in the incident art or trade, must wait for the oppor- 

 tunity that sometimes comes from the calamity of 

 war, or secure a more economical and a more con- 

 stant support in the policy of the Government. If 

 average natural facilities exist, the period of neces- 

 sary protection is a short one compared with the 

 lifetime of a nation, while the advantages gained can 

 never be wholly lost ; hut, if reasonable natural facil- 

 ities do not exist, then a system of duties for pro- 

 tection is a present and future burden without ade- 

 quate compensation. So varied and rich, however, 

 are the natural resources of the United States that 

 we either are, or may soon be, in successful compe- 

 tition with the older and more experienced countries 

 of the world in the production of the chief articles 

 of personal necessity, comfort, and luxury, and of the 

 machinery by which these articles are produced or 

 obtained." Herein is a sufficient justification for the 

 existing protective system, and for its continuance 

 during the transition period. Nor is the prospect 

 of ultimate successful competition with other coun- 

 tries disturbed by the circumstance that the wages of 

 labor are higher in this country than in those. 



The Secretary is of the opinion that the 



