182 



CONGRESS, UNITED STATES. (PKESIDENT'S MESSAGE.) 



Total receipts, actual and estimated $343,000,000 00 



Total expenditures, actual and estimated.. . . 258,000,000 00 



$85,000,000 00 

 Estimated amount due the sinking fund 45,816,741 07 



Leaving a balance of $39,183,25893 



If the revenue for the fiscal year which will end on 

 June 30, 1885, be estimated upon the basis of existing 

 laws, the Secretary is of the opinion that for that year 

 the receipts will exceed by $60,000,000 the ordinary 

 expenditures, including the amount devoted to the 

 sinking fund. 



Hitherto the surplus as rapidly as it has accumu- 

 lated has been devoted to the reduction of the national 

 debt. 



As a result the only bonds now outstanding which 

 are redeemable at the pleasure of ohe Government are 

 the 3 per cents, amounting to about $305,000,000. 



The 4i per cents, amounting to $250,000,000, and 

 the $737,000,000 4 per cents are not payable until 1891 

 and 1907, respectively. 



If the surplus shall hereafter be as large as the 

 Treasury estimates now indicate, the 3 per cent, bonds 

 may all be redeemed at least four years before any of 

 the 4i per cents can be called in. The latter at the 

 same rate of accumulation of surplus can be paid at 

 maturity, and the moneys requisite for the redemption 

 of the 4 per cents will be in the Treasury many years 

 before f.hose obligations become payable. 

 ^ There are cogent reasons, however, why the na- 

 tional indebtedness should not be thus rapidly extin- 

 guished. Chief among them is the fact that only by 

 excessive taxation is such rapidity attainable. 



In a communication to the Congress at its last ses- 

 sion I recommended that all excise taxes be abolished 

 except those relating to distilled spirits, and that sub- 

 stantial reductions be also made in the revenues from 

 customs. A statute has since been enacted by which 

 the annual tax and tariff receipts of the Government 

 have been cut down to the extent of at least fifty or 

 sixty millions of dollars. 



While I have no doubt that still further reductions 

 may be wisely made, I do not advise the adoption at 

 this session of any measures for large diminution of 

 the national revenues. The results of the legisla- 

 tion of the last session of the Congress have not 

 as yet become sufficiently apparent to justify any 

 radical revision or sweeping modifications of exist- 

 ing law. 



In the interval which must elapse before the effects 

 of the act of March 3,1883, can be definitely ascer- 

 tained, a portion at least of the surplus revenues may 

 be wisely applied to the long-neglected duty of reha- 

 bilitating our navy and providing coast defenses for 



the protection of our harbors. Tffis is a matter to 

 whicn I shall again advert. 



Immediately associated with the financial subject 

 just discussed is the important question what legisla- 

 tion is needed regarding the national currency. 



The aggregate amount of bonds now on deposit in 

 the Treasury to support the national-bank circulation 

 is about $350,000,000. Nearly $200,000,000 of this 

 amount consists of 3 per cents, which, as already 

 stated, are payable at the pleasure of the Government, 

 and are likely to be culled in within less than four 

 years, unless meantime the surplus revenues shall be 

 diminished. 



The probable effect of such an extensive retirement 

 of the securities which are the basis of the national- 

 bank circulation would be such a contraction of the 

 volume of the currency as to produce grave commer- 

 cial embarrassments. 



How can this danger be obviated ? The most effect- 

 ual plan, and one whose adoption at the earliest prac- 

 ticable opportunity I shall heartily approve, has al- 

 ready been indicated. 



If the revenues of the next four years shall be kept 

 substantially commensurate with the expenses, the 

 volume of circulation will not be likely to suffer any 

 material disturbance. 



But if, on the other hand, there shall be great de- 

 lay in reducing taxation, it will become necessary 

 either to substitute some other form of currency in 

 place of the national-bank notes, or to make impor- 

 tant changes in the laws by which their circulation is 

 now controlled. 



In my judgment the latter course is far preferable. 

 I commend to your attention the very interesting and 

 thoughtful suggestions upon this subject which appear 

 in the Secretary's report. 



The objections which he urges against the accept- 

 ance of any other securities than the obligations of 

 the Government itself as a foundation for national* 

 bank circulation seem to me insuperable. 



For averting the threatened contraction two courses 

 have been suggested, either of which is probably 

 feasible. One is the issuance of new bonds, having 

 many years to run, bearing a low rate of interest, and 

 exchangeable upon specified terms for those now out- 

 standing. The other course, which commends itself 

 to my own judgment as the better, is the enactment 

 of a law repealing the tax on circulation and permit- 

 ting the banks to issue notes for an amount equal to 

 90 per cent, of the market value instead of as now the 

 face value of their deposited bonds. I agree with the 

 Secretary in the belief that the adoption of this plan 

 would afford the necessary relief. 



The trade-dollar was coined for the purpose of traf- 

 fic in^ countries where silver passed at its value as as- 

 certained by its weight and fineness. It never had a 

 legal-tender quality. Large numbers of these coins 

 entered, however, into the volume of our currency. 

 By common consent their circulation in domestic trade 

 has now ceased, and they have thus become a disturb- 

 ing element. They should not be longer permitted 

 to embarrass our currency system. I recommend 

 that provision be made lor their reception by the 

 Treasury and the mints, as bullion at a small per- 

 centage above the current market price of silver of 

 like fineness. 



_ The Secretary of the Treasury advises a consolida- 

 tion of certain of the customs districts of the country, 

 and suggests that the President be vested with such 

 power in relation thereto as is now given him in re- 

 spect to collectors of internal revenue by section 3141 

 of the Revised Statutes. The statistics upon this 

 subject which are contained in his report furnish 

 of themselves a strong argument in defense of his 

 views. 



At the adjournment of Congress the number of in- 

 ternal-revenue collection districts was one hundred 

 and twenty-six. By Executive order, dated June 25, 

 1883, I directed that certain of these districts be con- 

 solidated. The result has been a reduction of one 



