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BRYANT & CO., “The Evening Post,” New York. \Ay\ To the Readers of the Evening Post. * ( i Revenue Commissioner Wells’s Report, for the year 1868, which is here¬ with presented to the readers of the Evening Post in a form convenient for reading, and for preservation, is a document which men of all parties and opinions have acknowledged to be of very great value and importance. It has attracted attention in Europe as well as here, and the facts and figures which Mr. Wells has brought together have become the foundation for earnest discussions all over this country. Mr. Wells is not a free trader ; he has always been a protectionist But he is a man of sense ; a man accustomed to scientific investigations; and a lover of fair play. He has not endeavored to make his statistics conform to any theory ; but in this report, has suffered facts to speak for themselves. He shows, 1st. That the present enormously high tariff duties, while they enrich a few capitalists, injure most of the industries of the country. 2d. That they impoverish the people, so that under the present system, while the rich grow richer, the poor become poorer. 3d. That the high duties have disabled us, in many products—chairs, for instance—from selling in foreign markets, whereby it happens— 4th. That as we must buy some things abroad—as for instance, hides in South America, to supply our shoemakers with leather—we must export gold to pay for them, where we formerly, under moderate duties, exported the products of American industry. 5th. He shows that the high tariff has produced a great inflation in prices ; and 6th. That owing to this fact, American working men and women are actually paid more poorly now than before the war under lower tariffs. Elaborate but easily understood tables, comparing wages with prices, prove this beyond dispute. jp 'O 4 7th. Finally, he shows, that the monopolists who have induced Con¬ gress to adopt a high tariff have been unscrupulous and selfish to the last degree, and have not cared whom or what they ruined, if only they could carry their own measures, and secure monopolies for themselves. We advise those who receive this report, to study it attentively, and to discuss its facts with their neighbors and friends. The country is now suffering terribly; all working men feel that “ something is wrong.” This report will tell them what is wrong, and where the remedy lies. Re¬ form of taxation must come from the people. Let every man make up his mind to influence his Representative in Congress to vote for a reform of the tariff system, and a reasonable scale of duties. Let it be remembered that we may have a simple system, if only we can overcome the monopolists, who call themselves “ protectionists.” Great Britain owes as much as we do; she has a smaller population ; she needs a larger revenue, for her government is more expensive than ours. Yet nearly the whole revenue of the British empire from customs or tariff du¬ ties is derived from seven articles; and ninety-six and a half per cent, of the revenue from excise comes from spirits, malt and licenses. The official figures for customs in Great Britain for the last two years are these: Sugar and molasses... Tea. Coffee. Corn, meal and flour.. Spirits. Wine.. Tobacco and snuff. Other imports. v Sundries. Total customs 1867. 1868. , £5,647,787 £5,582,473 . 2,658,716 2,827,317 397,190 390,161 797,339 869,323 . 4,173,027 4,298,403 , 1,391,192 1,468,993 . 6,455,011 6.542,250 577,666 581,481 200,838 104,580 £22,290,066 £22,664,981 Yet instead of seven articles we lay a tariff on nearly sixteen hundred! England has tried both plans ; first, that we follow, of adjusting uni¬ versal taxes so as to protect and help everything; and secondly, that of selecting a few articles to tax, solely for revenue purposes. By the latter plan she now collects more revenue, more cheaply, and with incomparably less pressure on the people, than she ever did by the former. Agitate, agitate, agitate, for fair play, and no monopoly. REPORT OF TIIK SPECIAL COMMISSIONER OF THE REVENUE. Treasury Department, Office of Special Commissioner of the Revenue, Washington , D. C., January, 1869. Sir :— I propose in this my third annual re* port, which I have the honor herewith to pre¬ sent, to ask through you the attention of Con¬ gress to the results of a somewhat extended in¬ vestigation, instituted with a view not of estab¬ lishing or confirming any particular theory, hut rather of determining, through the collection of positive data, what policy in legislation is likely to prove hereafter most advantageous to the rev¬ enue, and most certain to establish the credit and industry of the whole country upon a sound and substantial basis. As all reasoning in respect to the future must necessarily be predicated upon the experience of the past or present, it is obvious that the first step or starting point of this inquiry is involved in the determination of the question as to what is THE PRESENT CONDITION OF THE CAPITAL AND IN¬ DUSTRY OF THE COUNTRY. The facts which constitute an answer to this question are to a considerable degree contradic¬ tory and paradoxical. On the one hand there is much that indicates that the country is rapidly recovering from the effects of the war, and re¬ suming that wonderful career of progress and development which especially characterized its history during the period embraced in the thir¬ teen years from 1847 to 1860. On the other hand there is another class of facts which as un¬ mistakably indicate the existence of agencies which tend to arrest or obstruct national devel¬ opment, and which foster speculation, idleness, extravagance of living, discontent with moderate and slow gains, haste to, be rich, and the spirit of trading as distinguished from the spirit of pro¬ duction. , It is proposed, in the first instance, to briefly state the evidence in support of the first propo¬ sition ; and although this evidence has been pre¬ sented in great part already by the Commissioner in his two previous reports, yet a recapitulation «of the leading elements of national wealth, on which rest the elements of national credit, can never be considered as untimely so long as a distrust of the resources of the nation is for any purpose fostered and encouraged—particularly by persons holding official or other public posi¬ tions. This evidence may be grouped as follows: First: Immigration. —From the 1st of July, 1865, to the 1st of December, 1868, about 1,000,000 natives of foreign countries have sought a permanent home in the United States. Investigations made some years ago (since when the character of the immigration has greatly im¬ proved), showed that these immigrants bring with them specie or its equivalent to the average amount of eighty dollars per head ; while their average value to the country as producers cannot be estimated at less than half the average value of an ordinary laborer in the south prior to the war, viz: $1,000 each. Immigration, then, since the termination of the war, may be regarded as having added $80,000,000 directly, and $500 000,000 indirectly, to the wealth and resources of the country. Secondly : A General Increase in the Pro¬ ducts of Domestic Industry.— The Commissioner is fully aware of the difficulties attendant upon the determination of estimates in this depart¬ ment; prices, with the present irredeemable, fluctuating currency being wholly valueless as a measure; while a statement of quantities, to be strictly accurate, must be considered not only with reference to quality, but also to the normal increase in production, which under all circum¬ stances accompanies an increase of population. Nevertheless, the wealth of the country is its ca¬ pacity for annual production; and an analysis of this production is the surest, and at present the only, available method of testing that wealth. Speaking generally, however, in the first in¬ stance, the Commissioner asserts that all the available data tend to establish the following conclusions, viz: That within the last five years more cotton spindles have been put in operation, more iron furnaces erected, more iron smelted, more bars rolled, more steel made, more coal and copper mined, more lumber sawed and hew r n, more houses and shops constructed, more manu¬ factories of different kinds started, and more pe¬ troleum collected, refined, and exported, than during any equal period in the history of the country ; and that this increase has Teen greater both as regards quality and quantity, and greater than the legitimate increase to be expected from the normal increase of wealth and population. To support this general statement, the follow¬ ing specific evidence may be adduced: 1. Cotton manufacture .—The number of cot¬ ton spindles in the United States, according to the census of 1860, was 5,235,727. From 1860 to 1864 there was little or no increase of cotton machinery, but possibly a diminution—many mills, under the great demand for army clothing, having been converted into establishments for the manufacture of woollens. The number of spindles, however, at present in operation, is shown by the recent returns of the Arner- 6 ican Cotton Manufacturers and Planters’ Associa¬ tion to be about 7,000,000, a gain of 31-78 per cent, in from four to five years, and mainly since the termination of the war in 1865. An esti¬ mate, based on less perfect data, given in the last annual report of the Commissioner, fixed this in¬ crease at only from 15 to 20 per cent. 2. Woollen manufacture. —Imperfect statistics, collected by the Northwestern Woollen Manu¬ facturers’ Association, show the increase in the woollen manufacture of seven States of the west, viz., Ohio, Michigan, Indiana, Illinois, Wiscon¬ sin, Iowa, and Minnesota, to have been since 1860, as follows: compared with 1860; and of 60 per cent, as com pared with 1862. 4. Copper .—The product of the copper mines of Lake Superior from 1860 to 1867, inclusive, is returned as follows: Tons. 1860 1861 1862, 1863, 1864, 1865, 1866, 1867. 6,000 7,400 9,062 8,548 8,472 10,790 10,375 11,735 No. of estab¬ Capital Sets of ma¬ lishments. Invested. chinery. 1860. 259 $1,616,740 294 1868. 557 5,448,000 995 3. Pig iron production. —In the department of iron industry the Commissioner would again call attention to the fact stated in his previous re¬ port, that the recent average annual increase in the production of pig iron is remarkably uniform and greatly in excess of the ratio of increase of population ; the latter, at the present time, being assumed at about the ratio of increase from 1850 to 1860, viz., 3% per cent., while the annual increase in the product of pig iron, during the last five years, has been as follows: Annual product of pig iron from 1863 to 1868. Tons. Annual increase. 1863 . 947,604 1864 . 1,135,497 19.82 per cent. 1866 . 1,351,143 9.50 per cent. 1867 . 1,447,771 7.16 per cent. 1868, (estimated)... 1,550,000 7.06 per cent. For the seven years from 1860 (when the pro¬ duction was 913,770 tons) to 1867, the average annual increase has been 8.35 per cent. This increase is in excess of the present aver¬ age annual increase of the pig iron product of Great Britain, which since 1863 has been as fol¬ lows : Tons. Increase. 1863 . 4,510,040 1864 . 4,767,951 5.71 per cent. 1865 . 4,819,254 1.08 per cent. Decrease. 1866 . 4,523,897 6.50 per cent. In France the annual product of pig iron was in 1866, 1,253,100 tons, and in 1867, 1,142,800 tons, showing a decline of 110,300 tons. In Austria the official returns of the iron trade show a diminution of 42 per cent, in 1866, as During the same period the copper product of Great Britain largely declined, viz: from 15,968 tons in 1860, to 11,153 tons in 1866, and 10,800 ( tons in 1867. 5. Petroleum. —In 1862 the export of petro¬ leum was returned at 10,887,701 gallons.— During the years 1864 and 1865, with the ad¬ vantage of a high premium on gold, the export increased to an average of about 30,000,000 gal¬ lons. In 1867 the export was 67,052,020 gal¬ lons, and for 1868 the export to December 18 is returned at 94,774,291 gallons. 6. Covl. —The recent increase in the produc¬ tion of anthracite coal, which may be taken as a measure of the product of all American coal, is reported as follows: 1862, 7,499,550 tons ; 1866, 12,379,490 tons; 1867, 12,650,571 tons; 1868, to December 12, 13,500,000 tons. During the past year the supply of anthracite coal has been seriously affected by strikes and constant inter¬ ruptions of labor; otherwise there is no reason to doubt that the aggregate product mined would have shown a much larger increase than has been indicated. But as the case stands the increase which has actually taken place proves that the conditions of ability to consume—which conditions are mainly industrial—have not been impaired, but have increased during the past year in about a three-fold ratio to the estimated increase of population. 7. Lake tonnage. —The following table, pre¬ pared for the Chicago Board of Trade, shows the recent increase of tonnage upon the northern lakes, (exclusive of canal boats,) for the years ending March 31, 1864, 1866, and 1867: Vessels. Tonnage. Increase. 1864. 648 202,304 1866. 997 251,077 24 per cent. 1867*. 1,196 279,981 11 per cent. 8. Consumption of sugar and coffee .—In Eu¬ rope, some measure of the prosperity of the peo¬ ple can, it is believed, be obtained by noticing the rise or fall in the consumption of certain ar¬ ticles which cannot be considered as belonging wholly to the catalogue of necessities, such as sugars, tea, coffee, acturer8 promote it, then the profits on salt sold for curing meats and other purposes, on which 15 to 17 cents per bushel additional is charged, must be exorbitant; and it should also be borne in mind that (he expenses ol con¬ ducting the latter branch of the business are much less than when the sa t is delivered alongside the fishing vessels. Q. W’as any reduction made in the price of domestic salt in consequence of abatement in 1SG7, and the entire removal in I86S of the intern »1 revenue tax on the tnanu facture of salt ? A.—I think not. The price of domestic salt, when sold for salting fish on board vessel, is fixed so as to compete with foreign salt in bond, without regard to tax of any kind.* With, this exposition of facts and testimony the question of the necessity or expediency of further increasing the high duties on salt may well be submitted without argument. On the other hand, however, when we consider how, through the indispensable use of this article, an increase of its price (from 23 cents per bushel in 18G1, to 48 eents in 1868) has come home to the whole people; how such increase affects the great industrial interests involved in the pack¬ ing of beef, pork, fish and butter, and conse¬ quently the distribution and price of food at home and its exchange for foreign commodities ubroad: and especially when we consider that the internal tax on this article—which in 1865 was collected from one company to the extent of about $200,000—has been entirely removed ;f in view of all these circumstances, may we not well ask, whether protection to American in¬ dustry and a regard to the interests of the whole people does not demand, not only that there bo no further increase of the tariff on the price of salt, but that a reasonable and moderate reduc¬ tion of the existing duties be promptly conceded. One further illustration of the effects of the existing duties on salt may he presented. In the Gulf of California, just north of the 26th parallel, there is an island — Carmen—where salt of remarkable purity is deposited by natural agencies in inexhaustible quantities. The situa¬ tion and condition of this island are such, that it wouid seem as if it were intended to he the natural and cheap source of supply of salt for the whole Pacific coast of our country; and yet by the agency of men, and in the name of protection, this free gift of God, and this great source of national wealth, has been ren¬ dered praetically of no account, inasmuch as the royalty exacted by the Mexican government, the United States tariff added, and the expenses * We condense this testimony for the benefit of those readers who are not business men: The testimony of John W. Barker, Secretary of the Onondaga Salt Company, given in October, 1807, shows that the average production of the Syracuse salt for ten years past has been 6,895,000 bushels. The Company was organized in 1S63, for tea years, by a combination of all those who were then engaged In producing salt on the Onondaga reservation. All these propriciors put in their property at their own valuation, which Mr. Barker admits to have been a high one, but not 33 per cent, too high, making in the aggregate $3,200,000, and 12 1-2 per cent, is paid on that valuation as rent to the original owners ; making an actual cash dividend of that amount, at least, before any profits whatever appear on the books of the Company. The parties in interest contributed five per cent, on their shares as working capital, making $160,000. Since 1360,1 he Com¬ pany lias paid in cash dividends $2,000,000 ; has doubled its working capital, making it $320,000 ; and has a cash surplus on hand of $600,000 ; and it lias improved its property till “ it is absolutely worth $1,493,969.” To these confessed profits of $2,653,000, must be added the 12 1 2 per cent, “rent” paid on $3,200,000 for seven years, amounting to just $2,800,000 ; so that the actual profits to the proprietors for seven years were $5,853,000. This sum, an average of $837,000 per annum, is earued by a cash working capital of $160,000 upon property which, when the Company was formed, was wholly unproductive, was in fact, worked at a loss. Mr. Barker also testified that the Company exported 100,000 barrels every year to Canada; the quantity being quite uniform. It appears, therefore, that where they have no “ protection,” they are fully able to compete with foreign pro¬ ducts. He further swore that the Company sell their salt in H ew York, after paying 37 1-2 cents a barrel to get it there, at $1 75 to $1 80 per barrel ; but charge at the wells $2 35 per barrel; so that it is actually cheaper for the peop’e of Syracuse or Buffalo to b»,y the Syracuse 9alt in New York and take it hence by rail, than to buy it at the works. This they do because there is “ competition” In the New York market; but where there is no competition they take all they can get. And they want laws to prevent “competition” everywhere. “ I think it would be for the benefit of the Salt Company, and mankind generally,*' swears Mr. Barker, “ if we could have a market in New York at the same profit as in the West.” Again, Mr. Duncan Stewart, the President of the other great Salt Company of this country, that at Saginaw, Michigan, testifies that the enormous duty on salt merely goes to swell the unreasonable profits of the Syracuse monopoly, giving them tho control of the Eastern markets, and so enabling them to break £down all competition elsewhere ; and that this duty is not necessary to encourage domestic production. Mr. James Oakes, of Boston, a salt dealer, testified that the Syracuse Company sell their salt to fishermen on board vessels at from 15 to 17 cents per bushel lower than they will sell it to those who salt fish on shore; and are so eager to make sales, even at the low price which they get outside of the “ protection” of the tariff, that they employ agents to solicit this form of patronage, and deliver the salt at the ship’s side, at an additional expense to the Company of not less than ten cents per bushel* —[Editors of the Evening Posr.] t As has been before shown, the price of coarse salt per barrel in Chicago ruled higher during the years 1866-63, subsequent to the removal of the internal revenue tax, than in the year 1835, when a heavy tax was imposed. 32 of collecting and transportation, in the aggregate amount so nearly to the price of salt obtained from other sources in San Francisco, as almost completely to eat up all profits, and thus close in a great degree the only market to which it can be taken.* The result of all this is, that capital and labor, in a section of country where capital and labor are of all things most in demand, are withdrawn from other employments and diverted to doing that which nature herself has already done much more perfectly, viz.: making salt from sea-water in the bay of San Francisco, at a cost of from $7 to 10 per ton. The character and results of this unnatural in¬ dustry may be inferred from the following ex¬ tract from a report made to the Commissioner by one of the best recognized authorities on this subject on the Pacific coast. The bay salt produced at San Francisco is frequently Qf an inferior quality, and is mixed with a large propor¬ tion of Carmen Island salt before it can be made suitable for many of the purposes for which salt is required. The high price of labor, the absence of all reasonable facilities, and the inferior quality of the salt produced at the works, all combine to make the industry one of no importance on this coast, and not one that deserves special protection. At present the duty on Carmen Island salt amounts almost to prohibition, and but from 3,000 to 4,000 tons are yearly consumed. Could it be admitted free or at a lower rate of duty, the consump¬ tion of this one variety would amount to at least 15,000 tons per annum. It is now utterly impossible to make money in many parts of California and Oregon by packing beef and pork, owing to the high price of salt, occasioned by the excessive duty ; which upon the Carmen Island product amounts to more than 300 per cent, of the original cost, exclusive of freight by steam¬ ers. I say nothing about the mining interests which would be advanced by cheap salt, but these wall be ultimately very important, as the sulphurets containing gold are being worked with great success by chlorina¬ tion in California, and salt in this is one of the principal items of expense.! TAXATION ON PIG IRON. Again, the article of pig iron affords a striking illustration of an instance where a duty originally levied for revenue and protection, or as an offset to internal taxes, has been continued long after its object has beenfully attained, for the interest, of the few, but to the detriment of the many. The ‘existing duty on pig iron is $9, gold; equivalent to over $12 currency. The average expenditure requisite to produce a ton of pig iron in the United States to-day may be fairly esteemed as not in excess of $26 per ton, cur¬ rency ; and in the cases of furnaces favorably situated as regards cheap coal or ore, and under good management, the actual cost, could it b<* truly ascertained, would not probably be found in excess of $24. Now the Selling price of Nos. 1 and 2 pig iron in the markets of the United States at present, and for the last year, has ranged from $37 to $42 per ton, with a demand continually tending to exceed supply.:}: Under these circumstances the manufacturers of pig iron have, to the detriment of the rolling- mill interest, and to the expense of every ‘consumer of iron from a rail to a ploughshare, and from a boiler plate to a tenpenny nail, realized continued profits which have hardly any parallel in the history of legitimate industry, the returns of one set of furnaces, in one of the middle States, com¬ municated to the Commissioner, showing a yearly product of 35,000 tons, on a capital of $450,000, sold at a profit of from $10 to $13 per ton. *The items which make up this cost, as reported to the Commissioner, are as follows ; Cost of collecting and delivering on board a vessel, per ton of 2,000 pounds. $1 16 United States duty, (over 300 per cent.)... 3 60 Freights. 5 00 Mexican royalty and incidentals. 2 74 Cost of Carman Island salt laid down in San Francisco, August, 1868, gold. 12 50 t The following analyses, made during the past year at San Francisco, show the superiority of Carmen Island salt as compared with that manufactured in the Bay of San Francisco. Carmen Island. Bay Salt. 3.320 5.950 Sulphate of lime... 1.416 . 0.157 “ “ magnesia. 0.000 0.742 Chloride of calcium.. 0.402 0.000 “ “ magnesium. 0.066 1.016 “ “ sodivm. 95.796 92.135 100.000 100.00^ t Thus wc quote from recent price currents of recognized authority : July, 1868 — Furnaces are stil* running on hard iron, and there Is not enough No 1 iron to meet the demand. Trices are nominally $42 for No. 1 extra; $36 to 33 for No. 2 extra for American, and $42 to $45 for Scotch. The latter is also becoming scarce. August , 1S63 —No 1 extra and 2 American extra irons continue scarce, and prices rule from $41 to $43 ; the offerings few a^d stock exhausted The demand for 1 extra and 2 extra pig iron is increasing, without at present an adequate supply. September. 1868.—American pig iron has not materially changed in price, and we do not alter our quotations No. 1 continues very scarce, and the demand is in excess of the supply. No 2 extra is al»o hard to find Bar iron is verv firm, and holders are indisposed to make concessions The mills are fully occupied, at-d in most instances considerably behind their orders—in some cases four to six weeks The stock they have on hand is unusually small. November. 1568—Ameiican pig is unchanged, with scarcely enough in market to make any business. We quote No. 1 $4.2 to $13 ; No 2 extra, $38 ; No. 2$3£ on the pound of rental value. Genera) rate, (street lighting, watering, paving, &c.) - - 0 0 11 on the pound of rental value. 1-ewer rate.004 on the pound ot rental value. Church rate 0 0 1 on the pound ot rental value. Metropolitan main draining rate ...... o 0 4 on the pound of rental value. 3 10K 37 In France the revenues for local and municipal expenditures are derived in a great degree from what is termed the personal and property tax. The first of these is in the nature of a poll tax, and is estimated at the average value of three days’ labor, which cannot, however, be rated un¬ der 50 centimes or above 1 franc 50 centimes; in other words, this annual tax varies from 1 franc 50, (30 cents,) the lowest, to 4 francs 60, (90 cents,) the highest. It is the only tax levied on the individual in France, and includes every inhabitant, native or foreign, male or female, not a pauper. I The French property tax falls on “ tenant oc- cupany,” and is usually fixed at about one-twen¬ tieth part of the rent paid by each resident, but only for the portion of the building which serves as a residence. It has regard to the rent really 7 paid, and if the individual resides in his own house he is taxed to the amount which would be payable if the apartments he occupies were leased to a tenant. It is also curious to note that, going back to the commencement of the seventeenth century, we find the same system of indiscriminate State, local and municipal taxation at present existing in the United States was recognized both in France and Great Britain. Experience, however, has gradually brought to them that reform which probably at no distant day will also be entered upon in this country. It would be difficult, how¬ ever, to find in the ancient records referred to anything of greater inconsistency than is exhib¬ ited in the existing legislation of some of our States; as, for example, in the State of New York, in which the statute holds, as respects its own citizens, that personal property follows per¬ sonal residence, and exactly the reverse in re¬ spect to foreigners and citizens of other States. A citizen of the United States not a resident of New York is therefore liable to double taxation in respect to all capital invested in business or banking in New York: first, by virtue of the lo¬ cation of the property; aud secondly, in virtue of the residence of the owner in some other State. One suggestion, in view of these facts and cir¬ cumstances, may be pertinent, which is, that if any State should determine to adopt a system of local taxation analogous to that recognized in Great Britain or France, it might confidently an¬ ticipate a very large influx of capital and manu¬ factures from beyond its borders, thereby rapid¬ ly increasing its wealth and development, and possibly as an ultimate result, compelling other States to adopt the same liberal and enlightened piolicy as a measure of defence and protection. FUTURE FINANCIAL POLICY. Having thus presented, in part, the evidence which demonstrates the rapid developement of t*e country, and having also endeavored to deter¬ mine and analyze the causes which at the same time tend to check or interfere with such develop¬ ment, we are now prepared to take up and intelligently consider the lesson to be deduced from these investigations relative to the inquiry proposed in the outset, viz., what policy of legis¬ lation is likely to prove hereafter most advan¬ tageous to the revenue, aud most certain to establish the credit and industry of the whole country on a sound and substantial basis. It seems clear that whatever fiscal policy may be proposed for adoption, it must not only recog¬ nize and be based on the existing condition of affairs, but must be also in the nature of an amendment which shall to the smallest extent possible partake of the character of an experi¬ ment. Violent change, uncertainty, and instabil¬ ity are, of all things, what the business interests of the country have most reason to dread, while, on the other hand, the determination and recog¬ nition of a clear, well-defined, and practical issue, to be attained to by a certain progressive, even though slow, movement, is sure to bring with it stability, hope, and confidence in the future—the elements which constitute in no small degree the basis of both private and national prosperity. Can such a policy be determined ? Can such an issue be consummated ? The ends to be attained are, mainly, three: first, full restoration of the national credit and re¬ sumption of specie payments ; second, refunding the national debt at a lower rate of interest; third, reduction of the cost of national production, with a view of enabling the products of American industry to compete on terms of greater equality with the pro¬ ducts of foreign nations than is now possible, thereby establishing a system of national protection and insuring stability, increased product, and a re¬ development of American commerce and ship¬ building. Let us now inquire what elements are ready at hand for the accomplishment of these results. The nation at present is excessively in debt, and is further embarrassed with the volume of its matured and suspended paper. To free itself from embarrassment and to redeem its suspended paper, there would seem to be but the one method, which is alone available to individuals under similar circumstances, viz., to manage in some way to receive more than is expended, and to apply the surplus of receipts over expenditures to the payment of debts and to the restoration of credit. The determination of the probability of obtain¬ ing such a surplus, and also its possible extent, involves the consideration of the national finances, present and prospective, and to this attention is next invited. NATIONAL RECEIPTS AND EXPENDITURES FOR THE FISCAL YEAR ENDING JUNE 30, 1868. The accounts of the national treasury for the fiscal year ending June 30, 1868, show an aggre¬ gate of receipts of $405,638,083 32, and of expend¬ itures of $377,340,284 86, leaving a balance to These rates, which are probably among the highest levied in Great Britain for municipal or local purposes, would in the aggregate be equivalent to nearly twenty per cent. (19 37) of the annual rental value of the real estate liable to taxation. It will be ob¬ served that the highest single item in the account is that known as the “poor rate.” It should also be stated that in this system of rental taxation the rate is levied only on real estate occupied and having a rental valuation ; and that government property also of certain descriptions does not enjoy the privilege of exemption as in the United States, from local taxation. * 1 38 the credit of surplus income of $28,297,798 46. In this statement the bonds issued to the Pacific railroads are not included, such issue, at least for the present, being regarded as a loan of credit, rather than a direct expenditure. For a more detailed statement of the receipts and expenditures of the treasury of the United States for the fiscal year ending June 30, 1868, together with the general result of the payment or refunding of the various species of national indebtedness during the same period, reference is made to the balance-sheet submitted on page 39.* * The expense of collecting the revenue, both “ internal” and “ customs” for the last three fiscal years, is shown by the following statement: The percentage of entire expenditures of the Internal Revenue Bureau, including cost of assessment, collection, office expenditures, &c, to net receipts, during the fiscal year ending June 30, 1866, was 2.49 per cent. ; 1867, 3.41 per cent. ; 1868, 4.94 per cent. The expenses attending the collection of the revenue from the customs during the same years were as follows : Fiscal years. Custom receipts. Cost of collec¬ tion. Percentage of cost to re¬ ceipts. $53,187,612 102,316,153 $3,324,431 4,146,585 5,356,458 5,738,971 6.25 4.05 179,046,652 2.94 1867 . 176,417,811 164,464,599 3.25 a7,615,675 4.63 Total« ., T T T ... 675,432,727 26,182,120 3.88 a The increase in expenditures for the collection of customs for the fiscal year 1868, was due mainly to the reorganization of the custom service at the South, to the increase of salaries of officers, and to the increase of expenses incurred for the prevention of smuggling. Ji RECEIPTS AND EXPENDITURES OF NATIONAL TREASURY FROM JULY 1, 1867, TO JUNE 30, 39 t- 03 00 'H O osofflo 03 V g i .2 b o B.B M tUD g'SI ■g 23 ;g§ a -g h •e a g •S 03 <3 5 « ft£ « p ^ p O •M | .Q 03 t* gg ll 03 -S I a ■sg •rH P< o o CO ^ co •S § ^ ABO 03 a, 1 - 1 §■*§ m SP Ir 03 S =B d) 03 & L-8 § s' 8ft §<£ d ® § 9 •a 8 ftH ^aotot; o i« •J' oo 00 00 -* t- 00 © g x M X H 42 4^4^-242 42 03 ri SB O " M § fl aa ° o 03 CO 00 .q 03 03 73 M X +> co H <0 B II QD 2 I to §1 > e3 83-° S-S's 03 O o d) ja® a »-l s §§.2 ! B i n “O B £ ^ "o, 9 — o 11 &Bg 03 03 B O ^ 03 U $? .2 03 O ® « u «.2 a'«s2g*2i , fl" to CS .. B „ O m'o ® 8 03 C0 &J. i & §j5 «a * b b 0,0*00 a 03 'B 03 CO fl 03 fl 03 03 00 X C) X X $ 42-2 O *3 §*.| s § ft ft fl o3 2 03 30 03 j§ B ® oo.9 a B .b -B «8 ft'B a ft ft * This amount, as given by the Commissioner of Internal Revenue, shows a difference from the figures reported by the Treasurer and given above, and is due to the fact that the same receipts are not entered upon the books of the two offices upon the same day. 40 NATIONAL RECEIPTS AND EXPENDITURES FOR THE CURRENT FISCAL YEAR ENDING JUNE 30, 1869. For the current fiscal year ending June 30, 1869, the Commissioner estimates the receipts of the national treasury* as follows : From customs. $170,000,000 00 From internal revenue. 155,000,000 00 From public lands. 1,700,000 00 From miscellaneous sources... 30,000,000 00 Total. 356,700,000 00 The total expenditures for the same period, in" eluding $7,200,000 gold paid for Alaska, are es¬ timated by the Secretary of the Treasury as fol¬ lows : Civil and miscellaneous, (inclu¬ ding $7,200,000 for Alaska)... $61,227,106 00 War Department, (including bounties). 93,219,117 00 Navy Department,. 21,704,785 00 Pensions and Indians. 30,358,648 00 Interest on public debt. 129,742,814 00 336,152,470 00 The estimates of total expenditure for the above period as made by the Commissioner are somewhat less than those presented by the secre¬ tary, viz : $326,300,000, (a reduction of about ten millions,) and indicating a surplus of receipts for the fiscal year ending June 30, 1869, according as one or the other of the above estimates is ac¬ cepted, of from twenty to thirty millions. And it is especially to be noted that the surplus actually attained during the last fiscal year, and the one predicted for the current year, are on the basis of a system of revenue administration, which, to use a very mild expression, has been exceedingly im¬ perfect. NATIONAL RECEIPTS AND EXPENDITURES FOR THE FISCAL YEAR ENDING JUNE 30, 1870. Let us now look forward to the fiscal year commencing July 1, 1869, and ending June 30, 1870, the first complete year of a new adminis¬ tration ; and starting with the relation of receipts and expenditures as above shown to exist, in¬ quire what it is further possible or practicable to accomplish. Such a basis allows us to anticipate a surplus of thirty millions for the year under consideration, with the law and the administra¬ tion of the law in relation to the collection and expenditure of revenue remaining unaltered; and this surplus, the Commissioner has reason to believe, may be increased through the follow¬ ing agencies: First. From the certain a.ncl continued gain which will undoubtedly accrue to the national reve¬ nue under any circumstances, from the continued in¬ crease of the wealth and ‘population of the country. The amount of such increase in Great Britain, for the six years prior to the year 1865-66, is esti¬ mated to have averaged £1,780,000 ($8,900,000) per annunf. The data for arriving at this esti¬ mate in Great Britain, viz., a comparison of an¬ nual receipts, are not, however, at present avail¬ able in the United States, as the aggregate of taxation in the latter has been materially affected by legislation for nearly every year since the in¬ auguration of the internal revenue system. Nev¬ ertheless, it cannot be doubted that the yearly gain from this source is very considerable, inas¬ much, as in no year since the commencement of the reduction of the internal revenue taxes have the aggregate receipts of revenue been dimin¬ ished to an extent commensurate with the corres¬ ponding reduction or abatement:of taxation. Ta¬ king this fact into consideration, and also the fact established by the census returns of the two countries, viz., that the annual rate of increase in the value of real and personal property in the United States is considerably greater than that of Great Britain, the Commissioner believes he is warranted in assuming that the gain of revenue likely to accrue from the increase in the wealth and population of the United States will, for the preseht, be at least $10,000,000 per annum. Second. A gain to the credit of the treasury from the discontinuance of payment through settlement of the claims of soldiers and soldiers for arrears of pay and bounty. This gain, as predicated on the payments actu¬ ally made under these heads during the last and current fiscal years, may be estimated at $25,- 000,000* Third. A gain from a further general reduction of national expenditures. This gain for the next fiscal year through a continued reduction of the army, reconstruction and pacification of the southern States, and a greater economy in civil expenditures, and in the appropriations annually made for fortifications, ordnance stores, rivers and harbors, and private claims, ought to aggregate at least $30,000,000 ; especially if the amount paid during the current fiscal year for the purchase of foreign territory ($7,200,000, gold) be carried to the credit of this account. If we should adopt the estimates of reduction of expenditure which the Secretary of the Treas¬ ury has stated in his last report (December, 1868) to be practicable, the amount to be carried to the credit of surplus income from a reduction of expenditures Avould be nearer $50,000,000 than $30,000,000, as above assumed by the Commis¬ sioner. Under this head the Secretary says : “ There is no department of the government which is conducted with proper economy. The average expenses of the next 10 years, for the civil service, ought not to exceed $40,000,000 per annum. Those of the War De¬ partment, after the bounties are paid, should be brought down to $35,000,000, and those of the navy to $20,000,-, 000. The outlays for pensions and Indians cannot for 1 . T * The total amount disbursed to soldiers aDd sailors for arrears of pay and bounties since July 1,1S66, is believed to be approxi* mately as follows: For Fiscal year 1866-67, bounties.. $11,882,859 85 For Fiscal year 1867-’68 . 43,476,549 48 First four months of fiscal year 1868-’69.13,4iojl42 77 The balance of claims for back pay and bounties yet unsettled (December, 1863) arc estimated at, approximately $15,000,000. but it is not probable that claims will be allowed to this amount. 41 some years be considerably reduced, but they can doubt¬ less be brought within $30,000,000. The interest on the public debt, when the whole debt shall be funded, at an average rate of interest of five .per cent., will amount to $125,000,000, which will be reduced with the annual reduction of the principal.” Pensions. In looking forward, furthermore, to the relation which in the future the national re¬ ceipts are to sustain to the national expendi¬ tures, it should be borne in mind that although the amount now annually paid by the government for pensions is very large, (approximating $25,- 000,000 per annum,) and may possibly for a year or two longer continue to increase, yet there is . nothing more certain than that the expenditure under this head will soon begin to diminish. In proof of his we have only to refer back to the past expterience of the government in regard to this matter. Thus we find that in 1816, * immediately after the close of the war with Great Britain, the amount annually disbursed for pensions was $188,804; which increased in four years, or in 1820, to $3,208,000; and de¬ creased in the next eight years, or in 1828, to $850,573. Again, at the close of the Mexican war the annual pension expenditure, which was $1,226,000 in 1848, rose in 1852 to $2,431,000, and declined in 1861 to $879,000. If we argue, therefore, from the past experience of the gov¬ ernment,it will be safe to predict that in the course of the next six or eight years the annual amount disbursed for pensions will be reduced 50 per cent., thus effecting a reduction of nation¬ al expenditures to the extent of from $10,000,000 to $12,000,000 per annum. Fourth. Gain from reform of revenue admin¬ istration. —But in addition to whatever of sur¬ plus may accrue to the national treasury through the agencies above cited, a very large increment of receipts can also, undoubtedly, be secured by means of a thorough and effective reform of the administration of the internal revenue. It is useless here to enter into any discussion as to the extent of the losses to which the government is annually subjected, through the positive dis¬ honesty or gross inefficiency of great numbers of the subordinate officials intrusted with the man¬ agement of this branch of the public service; but that such losses are very great no one who has given the subject attention can have the slightest reason to doubt. Assuming $155,000,- 000 as the annual average of receipts from inter¬ nal revenue, as the law and its administration now stand, the Commissioner believes that an inci*ease of $75,000,000 in the receipts as a mini¬ mum could be obtained without any practical y difficulty. On the other hand, as an offset to these esti¬ mates, we may have a reduction of treasury receipts from miscellaneous sources—which are largely derived from the premium on sales of Igold—and also from certain unforeseen expendi¬ tures. But allowing for all these contingencies, it seems possible for the treasury to have at its command at the close of the next fiscal year an available surplus of from $100,000,000 to $125,- 000,000; and with such elements of strength, there is not a single fiscal problem of our imme¬ diate future which will not be greatly aided in its solution. The Commissioner, furthermore, maintains that the realization of such a surplus involves nothing impractical, and nothing which partakes of the nature of an experiment. It requires, however, that there should be unity of purpose on the part of the Executive, of Congress, and of the people, and a full realiza¬ tion of the fact that the work to be accomplished is of such paramount importance that nothing else should be allowed to interfere with it. It requires that the agents who are to be intrusted with the collection and disbursement of the rev¬ enue shall be appointed on some other grounds than the devotion to party service, the length and number of their campaign speeches, or the amount of money contributed to aid in elections. It requires that Congress shall exercise the most rigid economy in respect to appropriations, and that the sums heretofore expended for fortifica¬ tions, rivers and harbors, coast survey, new buildings, the manufacture of arms, for private claims and war damages, and as subsidies to rail¬ roads, shall constitute no precedent for the im¬ mediate future. It requires that no more money shall be disbursed for the purchase of foreign territory, and that no reciprocity treaty shall be negotiated like that proposed with the Sand¬ wich Islands, the operation of which is calcula¬ ted to immediately impair the revenue.'* It re¬ quires that there shall be a broad distinction made between the promotion of mere private and selfish ends, and the true protection of American industry. It requires that we shall stop talking about the letter of the contract in respect to the payment of debts, but in the spirit of the same honestly determine that the debts shall be paid. With these requisitions supplied, the extrication of the nation from its financial embarrassments and the attainment of great na¬ tional prosperity becomes within a limited pe¬ riod a matter of no uncertainty. To disregard and refuse them is to protract but not to prevent the attainment of a like result, for the nation, even under bad management, will in the course of time drift out of its difficulties; but this will be through the honesty and economy of its indi¬ vidualism, and through the development of its great national resources, and not because the government either wills or directs it. RESTORATION OF NATIONAL CREDIT, AND RESUMP¬ TION OF SPECIE PAYMENT. The Commissioner does not feel that it is his province to present any plan in detail, whereby a surplus like that anticipated can be best used for facilitating a return to specie payments; but he does feel convinced that if one-half of such surplus, or from two to two and a half per cent, on the whole debt, were applied regularly, month after month, and year after year, to purchase in * The present cost of the ratification of the proposed treaty with the Sandwich Islands, through a diminution of the current receipts xrom imports, will not be less than five hundred thousand dollars, gold, per annum ; which amount in a comparatively short time, through the profit assured by the treaty to the sugar-growers of the Islands on the one hand, and to the sugar refiners of San Francisco on the other, will undoubtedly be increased three or four fold, or from a million to a million and a half, gold, per annum. I he Commissioner submits that there can be no advantage shown to accrue to the United States at the present time from the ratification of this treaty, which will at all compensate for the detriment which it will surely bring to the treasury. 42 the open market, and to the cancellation of the gold interest-bearing obligations of the govern¬ ment, so long as those obligations can be obtained at a discount from their par value in gold; and if, at the same time, the legal-tender notes were, under certain restrictions as to time and quantity, made convertible at the pleasure of the holder into interest-bearing bonds, that the value of both bonds and currency might be so greatly and so rapidly enhanced as to make a resumption of specie payments a matter of much less difficulty than it now appears.* If it be objected that this measure involves contraction of the legal-tender currency, the Com¬ missioner would reply that he is in favor of such contraction. Resumption of specie payments can be commenced at any time; but the question is not of commencement, but of continuance; and in order that there may be continuance, there must be a certain proportion or ratio first established between the amount to be redeemed and the agency (coin) which is to redeem. This ratio, considering the amount of legal-tender and national bank currency in ex istence, could not probably with safetjq at the existing premium on gold, be assumed at less than the total amount of United States notes now outstanding. At present the treasury has no such amount of gold at command, and for the future but two methods present themselves for its obtainment, viz: either to hoard and accu¬ mulate gold out of the national surplus revenue, or to reduce the volume of the currency, either by direct payment, or by funding, (which is in once sense also payment,) to a point where the ability of the treasury will be sufficient to com¬ pass the end desired. The first is a work of time, and dependent upon many contingencies. The second can be effected more rapidly—per¬ haps as rapidly as may be desirable. But this is the problem to be worked out sooner or later, and if the Commissioner has rightly stated its conditions; much of the discussion which is con¬ tinually taking place respecting the necessity of currency, and the desire of the people for its con¬ tinuance, is of comparatively little moment. As bearing upon the proposition to accumu¬ late gold in the treasury with a view of resump¬ tion, it is important to consider the exact posi- tfon of the United States in respect to its foreign commercial relations and exchanges. Thus it appears from the statistics of com¬ merce and navigation, that the imports and ex¬ ports of merchandise—exports reduced to gold values, and exclusive of the movement of bullion and specie—for the fiscal year 1858, were as follows: Net imports of merchandise.$347,549,209 Net exports of merchandise. 269,042,041 Apparent bal. against the U. S... $78,507,168 To settle this treasury balance and for other purposes, there was sent out of the country du¬ ring the fiscal year 1867-68, specie and bullion to the value of $83,746,161, and national bonds and other evidences of indebtedness to an esti¬ mated amount of $100,000,000 ; and that this ad¬ ditional amount was needed to pay an indebted¬ ness of the United States to foreign countries over and above what the returns of imports would indicate, is evidenced by the fact that exchange during the whole period in question was in favor of Europe and against the United States. This indebtedness was undoubtedly created through the following agencies: first, freights, which are in a great degree carried by foreign vessels; second, expenses of Americans travelling in foreign countries; third, interest on public and private securities held abroad; fourth, undervaluation, and smuggling. With a drain of gold out of the country from legitimate causes, therefore, in excess of the an¬ nual product of our mines; and with influences at work which tend to increase rather than di¬ minish such a movement for the future, the prac¬ ticability of accumulating within any reasonable time a quantity of coin in the treasury sufficient to insure the continuance of resumption, without at the same time producing great disturbances in business, appears to the Commissioner to be altogether problematical, Again, as bearing upon the proposition of contraction as a method of arriving at resump¬ tion, the Commissioner believes that no man can look back to the period when a moderate con¬ traction was authorized by Congress, and put his fin ger on one single bad result assumed to have flowed from such contraction, which was not due, in the first instance, to a wholly imagi¬ native influence; and furthermore, the Commis¬ sioner asserts that no man caa review the his¬ tory of prices when contraction was authorized and in operation, without feeling convinced that there was, during such time, i. e., from March, 1866, to January, 1868, a tendency to a gradual and healthy shrinkage of values and prices ; and that the shrinkage in prices which actually did occur was equivalent, through an increase in the purchasing power of the money in use, to a practical increase and not to a diminution of the power of the currency to effect exchanges. This increase was estimated by the Commis¬ sioner in his last report to have been equal, du¬ ring the year 1867 alone, to at least $100,000,- ooo. The Commissioner sees no economical objec¬ tion to an increase of the national bank circula- ' tion equal to the proposed decrease of the United States notes, inasmuch as the banks are required to resume specie payments whenever the gov¬ ernment shall do so. The authority for such, increase of national bank notes would be imme- I diately availed of in the event of monetary strin- * The Commissioner would again invite the attention of Congress to the fact that the legal-tender notes Issued under the acts of February 25 and July 11, 1862, are, by the terms of their issue, convertible into United States 5-20 bonds, the pledge of the government having been engraved upon each one of said notes. It is true that Congress attempted, subsequently to the issue of the notes, to revoke this privilege by declaring that the right of conversion should cease on a certain day. The right of the gov¬ ernment to alter the terms of the issue without the consent of the holders of the notes has recently been called in question, and the Commissioner is advised that these notes have, within a few months, been sorted and hoarded in the reserve fund of the banks to a very large extent, under the impression that the government will be compelled ultimately to convert them into bonds, gency, but not otherwise. If we assume that the aggregate paper circulation is not to be increased until specie payments are fully restored, the Com¬ missioner cannot conceive of any better mode of giving flexibility to the currency than this. It is alleged that an undue proportion of the exist¬ ing circulation issued under the national banking law is held in the eastern States, and that the west and south are entitled, by virtue of their population, to a greater ratio than they now have. If this be true, as the Commissioner be¬ lieves, the additional amount here contemplated might properly be assigned to those States where the alleged inequality is complained of, thus re¬ storing the equilibrium contemplated by law without taking from the eastern States any privi¬ leges which they now enjoy. REFUNDING OF THE NATIONAL DEBT AT A LOWER RATE OF INTEREST. The national bonds and the legal tender notes being once brought to par with gold, and the national credit thus fully restored, the gradual refunding of the debt at a lower rate of interest becomes then, for the first time, really practica¬ ble. We use the expression “the first time,” because a principle should be kept clearly in view which heretofore has not always been done in the discussion of this subject, viz., that the rate at v)hich governments can borrow is indicated not by the nominal rates of interest which they may offer, but by the price of their stocks. They may indeed, as has been expressed by a recent foreign writer, “ fix once for all in issuing a loan the in¬ terest of which they will have to pay, but the interest which the individual fund holder will derive is, of course, entirely determined by the price at which he buys his stock.” Whoever, at this moment, buys in Europe our bonds, nomi¬ nally yielding six per cent, interest, for 75 gold, practically expresses the fact that the rate at which it suits him to lend money to the United States is eight per cent, gold per annum; and there is no possible way in which the United States, or any other government, can help itself, with advantage in this matter, except to so far elevate its credit as to render the purchase of its securities at a higher figure desirable, or, what is the same thing, induce a loan to itself from the capitalist at a lower rate of interest. So long, therefore, as the government credit is depreci¬ ated, any advantage to be derived from the issue of bonds bearing a lower rate of interest, will be fully compensated by the reduction in price which such bonds must sustain in the open mar- * ket; or, in other words, the only method avail¬ able alike to nations and individuals for the attainment of a low rate of interest is to offer perfect security. Furthermore, with the eleva- \ tion of the national securities to par, the issue of national bank currency, based upon bonds, will be equivalent, or nearly so, to the issue of cur¬ rency based upon specie, and with a system of redemption, either in specie or treasury notes, (legal tenders redeemable in specie,) which could be easily provided for, the government might then safely remove all restrictions from free banking, and allow the demand for currency to regulate the issue. CONTRACTS ON A GOLD BASIS. One of the most wholesome measures, in the judgment of the Commissioner, for smoothing the way to specie resumption would be an act legal¬ izing gold contracts. A much larger share of the business of the country than is generally sup¬ posed is now transacted in gold, the parties rely¬ ing upon the rules of commercial integrity for the fulfilment of contracts which the law fails to provide for their enforcement. These transac¬ tions relate principally to foreign goods, the cost of which is always computed in coin. Under existing laws the citizen may make any contract for the disposition of his property or services, payable in anything except the recognized money of the world, and the government stands ready to enforce it. When he bargains for gold or its equivalent he becomes practically an outlaw. Under the operation of this policy we are, to a large extent, cut off from the money reservoir of the world, i. e., the aggregate amount of gold and silver coin and bullion in use among all nations. Gold will go where it is appreciated, and will refuse to stay when there is no use for it. It is idle for us to expect to retain the product of our own mines if we refuse to give it as good em¬ ployment and character as other nations do. The question whether the introduction of two standards, possessing unequal value, into com¬ mercial transactions would be deleterious to the business of the country, seems to be sufficiently answered by the fact that no harm has come from the employment of gold as the standard in reference to articles imported from abroad. Rea¬ soning a priori, it can hardly be supposed that the introduction of a better currency will have the effect to deteriorate the whole mass. The immediate effect of an act of Congress legalizing gold contracts might be to advance the price of gold by creating a sudden demand without add¬ ing to the supply. But this effect (if it should take place) would be only temporary, for the demand would be answered by unlocking hoarded gold, by checking the exportation of bullion, and by calling in as large a supply from abroad as might be needed for legitimate business. It has been objected that an act legalizing gold contracts would cause the holders of promissory notes, mortgages, &c., to call in their loans and require borrowers to make new contracts with them on a gold basis, thus practically increasing the rate of interest. The Commissioner believes that this objection is fallacious. The lender of money will always charge the borrower for the risk of depreciation of the currency in which the loan is payable. Such risk must always be greater in an irredeemable paper currency than in the precious metals ; therefore the rate of in¬ terest must be higher. Usury laws may aggra¬ vate, but cannot overturn this principle, which is as well established as any fact in economical science. The rate of interest depends, in general, upon the demand and supply of loanable capital, and in particular upon the nature of the security offered. An Act of Congress legalizing gold contracts will not alter the demand or supply of loanable capital, but it will furnish a higher se¬ curity for loans. Payment cannot be demanded 44 upon outstanding notes, mortgages, (fee., until they bedome due. When they fall due the pay¬ ers will settle with the payees according to these principles, and if new loans are necessary the rate of interest will not be higher by reason of the security being better. To conclude this branch of the discussion, the Commissioner would remark that a government ought not to deny its citizens, in time of peace, the right to put their business upon a substanial basis. If it is impolitic for government to en¬ courage a gambling spirit among men, it is still more impolitic to compel them to resort to games of hazard and chance in their daily transactions. Under existing laws, each man is required to take into his calculations the probable fluctuations of the currency, and these are dependent upon cir¬ cumstances so numerous and complicated that nothing short of omniscience can foretell them. We have recently witnessed the unhappy results of what is called a “ currency corner,” or the sudden locking up of a large amount of legal- tender notes at the financial centre of the coun¬ try, the apparent purpose and actual consequence of which were to create a panic and cause an ar¬ tificial decline in the prices of property. We are justified in denominating this procedure not only as gambling, but gambling with loaded dice. So long as we are cut off by law from participation in the gold supply of the world, which consti¬ tutes the balance wheel of human industry, we are subject to these and similar cheating de¬ vices. The aggregate amount of gold and sil¬ ver coin, and bullion, in the world is too large and too widely distributed ever to be made the subject of an artificial “ corner.” It is now nearly seven years since gold and silver disappeared from circulation among us. During this time a large proportion of the young men and women of the coun¬ try have come upon the stage of active life. They have grown up without any practical knowledge of the virtues of a metallic currency. Their ideas and habits have been formed in the most vicious school of economy; and it is ex¬ ceedingly desirable that specie should reappear among us before this baneful education shall have ripened into its natural fruit of universal extravagance and insolvency. REDUCTION OF TAXATION, WITH A VIEW OF RE¬ DUCING THE COST OF PRODUCTION. In the application of a moiety of the antici¬ pated surplus to the reduction of taxation, the especial object sought to be accomplished should be the reduction of the cost of national produc¬ tion; with a view of removing those impedi¬ ments which now so greatly restrict and, in many instances, prevent the free exchange of the products of American industry with the needed products of other nations; and thus bring to the country a more favorable balance of trade than now exists. In using the expres¬ sion, balance of trade, the Commissioner does not wish to be understood as recognizing in any way the old exploded ideas in respect to this subject, viz.: that a nation gains in proportion to what it sends abroad, and loses in proportion to what it receives back; but he does mean to clearly express the opinion, that a condition of affairs like that now existing in the United States, whereby gold and silver, and certificates of national indebtedness continually tend to flow out of the country in payment for foreign commodities, in preference to the products of domestic industry, is both unnatural and in¬ jurious, and is a condition of affairs exactly the reverse of what prevails in Great Britain, France, and other prosperous commercial na¬ tions. The Commissioner believes that he has already sufficiently indicated the course he would recom¬ mend in reference to the application of the an¬ ticipated surplus to the reduction of taxes. In the department of internal revenue, the removal of the taxes on the transportation of passengers, the receipts of telegraph and express companies, the manufacture of gas, and possibly upon sales, would reduce that branch of our revenue sys¬ tem to almost the simplest form that can be devised for the collection of the requisite amount of money which the requirements of the treasury may necessitate. In the matter of the tariff, the Commissioner trusts that the government will not allow itself to be diverted from the consideration of the real question at issue, through any prejudice which may be evoked,either on behalf of free trade or protection. There is no considerable propor¬ tion of the people of the United States in favor of the adoption of free trade in the European sense, even were the necessities of the treasury for reve¬ nue far less urgent than at present. There are none worthy to bear the name of an American cit¬ izen who desire that the industry of foreign coun¬ tries should prosper and be extended at the ex¬ pense of our own. Since the Commissioner entered upon his official duties in the spring of 1865, he has made it his special business to enquire into the condition of American industry, in all its de¬ partments, and acquaint himself with its neces¬ sities and deficiencies. He has for this purpose visited the principal seats of the most important branches of industry in the country, conferred with their most intelligent representatives, and personally inspected the detail of many manu¬ facturing operations. He has, also, during this period, been afforded an unusual opportunity of observing the manufacturing systems of Europe, and acquainting himself, through per¬ sonal and local inquiry, in respect to the cost of European production, and the condition and wages of European laborers. He has sought in all this to promote the interests of his country, to know only the truth, and when found he has not, thus far, in his official communications, hesitated to speak it boldly ; and the general conclusion of his investigations in this depart¬ ment is, that the policy of moderate and judicious protection under the tariff is certainly, for the present, the policy best suited to subserve the indus¬ trial interests of the whole country. Thus, it cannot be doubted, that, so long as the existing systems of national, State, and local taxation continue to impose heavy burdens upon the American producer, such burdens 45 should not be allowed to work to the advantage of the foreign competitors in the domestic market. So long, moreover, as a system of diversified manufacturing industry, is recognized as desir¬ able in the United States, so long it is the duty of the national government to guarantee to that interest the conditions of stability. Such sta¬ bility is not, however, possible, if undue facili¬ ties are offered to the European manufacturer of using the American markets for temporary realization to meet emergencies through the forced sale of commodities ; or for the disposal, at any sacrifice, of stock which may have hap- * pened to constitute an unsaleable surplus in Europe. The argument that if foreigners are willing to sell goods under cost it is our interest to receive them, loses in a great measure its force, from the fact that such a trade is not 1 regular and legitimate, but spasmodic and ex¬ ceptional, and renders success in many branches of industry dependent upon accident rather than upon the exercise of skill, foresight, and pru¬ dence. In short, such trade is a perpetual menace to the domestic market without produc¬ ing any commensurate good. During the period of commercial depression throughout Europe, in 1867, it is known to the Commissioner that it became a question with many of the continental manufacturers whether to close their mills and allow their operatives to disperse, or to continue their manufacturing operations at a loss, retaining thereby their supply of skilled labor ; and in many instances the latter alternative was decided to be the most advantageous. In such cases the Ameri¬ can market was regarded as the most available for the disposal of the commodities thus manu¬ factured, not only without profit, but with an absolute loss, even under the most favorable condition as regards European prices for labor and material. JSTow, how far it is for the inter¬ ests of this country to allow itself to be made the means of assisting foreign manufacturers to tide over a period of financial embarrassment, may be an open question, but the Commissioner has no doubt that even the temporary gain which might result to the United States, from the opportunity to purchase cheap commodities under such circumstances, would be more than compensated by the disturbance which would be occasioned thereby to legitimate domestic industry. It should, however, be remarked, that the condition of things, as here described must be necessarily of short duration in any particular instance. v There is furthermore another view of this question which cannot be overlooked in this country—its social aspect. Free trade looks only to the increase of wealth. It takes no account of social results; it does not even regard the distri¬ bution of property. Even English economists admit that its axioms lead to sameness of occupa¬ tion, and sameness of occupation means a tardy development of society. But in this country every man is a citizen and nearly every citizen a voter. As the possessors of power we cannot afford to have any class of the people ignorant or socially degraded. To insure a safe standard of education and of domestic comfort, there must be a certain scale of wages, and these must be relatively higher than are paid to the competing laborer of Europe, to whom power is not intrust¬ ed and education is denied. These degraded laborers constitute the “ dangerous classes,” but no dangerous classes ought to be suffered to exist in America. Whatever discrimination, therefore, may be necessary to keep up the social status and the self-respect of the American voter, is a tax imposed by our political system, and it is a tax which the enjoyment of that system amply repays. COMPARATIVE WAGES IN CERTAIN LEADING BRANCHES OF INDUSTRY IN TIIE UNITED STATES AND EUROPE. As the data in respect to this matter heretofore accessible to the public have been very vague and indefinite, the Commissioner, through his assistant, Mr. Edward Young, has made the col¬ lection of such information a specialty; and although the work of comparison is extremely difficult, and often most unsatisfactory, by reason of differences in the nomenclature, division, and hours of labor in the different countries, yet some exceedingly interesting results have been arrived at. These in detail will be found in the appen¬ dix to this report, marked E, but in brief are substantially as follows: Manufacture of cotton .—Average excess of wages paid in the United States in 1867, over those paid for corresponding labor in Great Britain, (gold being taken as the standard in both cases,) 35^ per centum. A reduction having been made in the wages of some operatives in cotton mills during the present year 1868, amounting to a general aver¬ age of five per cent, on the aggregate wages paid, the excess over the average rates paid in Great Britain, is thereby reduced to 28.7 per cent. In Belgium, from an examination of less com¬ plete data, the average depression in wages, as compared with the United States, appears to be about 48 per cent. The following are specific illustrations of the wages in leading specialties of labor in the cotton manufacture in the United States, Great Britain, and Belgium: Average weekly wages or earnings (in gold.) Occupations. In the United States, (g^d,) In England. In Belgium. Excess of wages in United States over England Excess of wages in England over Belgium. Drawing frame tenders. $3 44 $2 75 $2 10 25 per cent. 31 per cent. Roving frame tenders. 3 54 3 38 3 00 5 per cent. 13 per cent. Mule spinners. 7 14 5 36 5 00 35 per cent. 7 per cent. Weavers. 6 06 4 54 3 60 33 per cent. 36 per cent. 46 In France the average weekly earnings of per¬ sons employed in manufactories of cotton are as follows: men, $4 27; women, $2 51; boys, 81 cents, and girls, $1 04. Taking the 467 men and 1,446 women employed in that branch in Paris, the average weekly wages of adults is 14,93 francs, or $2 98; and including the children the average is 13.82 francs, or $2 16. Manufactures of wool .—The average excess of wages paid in woollen mills of the United States in 1667-68, over those paid for similar labor in Great Britain, would appear to be about 25 per cent. (24.53 per cent.;) and in carpet and other worsted mills 58 per cent. The following are specific illustrations of the average weekly wages paid in the woollen mills of the three countries above referred to: Occnpation. In the United States, (gold.( In England. In Belgium. Carflfirs. $4 37 8 23 $3 85 6 05 $3 00 Spinners, (males). Spinners, females)... 3 91 2 75 2 00 2 40 Drawers. 5 89 4 13 “yVfiavp.rs ..... 5 73 4 67 3 20 Fire-arms .—The average weekly wages of all employes in the manufactories of fire-arms in the United States, Geeat Britain, and France, in the year 1867, were as follows: In the United States, (Colt’s, Sharp’s, and Remington’s). $12 22 In England, (Birmingham). 11 9 In France, (Paris). 5 94 In this branch, therefore, the rates of wages in the United States are 56 per cent, more than in England, and 105 per cent, more than in France; while the rates in England are 24 per cent, in excess of those in France. Iron founding and machine building .—Average excess in wages paid in iron foundries and ma¬ chine shops in the United States in 1867-68, over those paid for similar labor in England, 58 per cent. The following are specific illustrations of the average weekly wages paid to the following enumerated employes in this branch of industry in the countries above referred to: Occupations. In the United States, (gold.) In England. In Belgium. In Saxony. Moulders .... $11 52 11 54 12 64 12 32 11 40 7 03 $8 00 7 00 7 50 7 12 7 50 4 50 $5 40 3 60 4 20 4 12 ]VlB ch uni sfs. ,.... Boiler-niakerp.. $4 50 3 75 Blacksmiths. Engineers. Laborers.. 2 40 1 80 Iron Manufacture .—In this department we se¬ lect the price paid for puddling, as an indication of the entire average of wages in this branch of industry in the different countries, although the work performed under this head is not always the same in every establishment. The following data are submitted: Price of puddling iron per ton in New Eng¬ land, $5 00; in New York, $5 50; New Jersey, $6 00; Eastern Pennsylvania, $6 00; Western Pennsylvania, $6 75; in Western States, $7 50; average price in currency, $6 1234 - Average price in gold, United States, $4 37%; England, $2 37%; Belgium, $1 20. The average weekly earnings of puddlers in the leading iron producing countries are as follows: United States, (gold).$16 54 England. 8 75 France. 8 00 Belgium. 6 00 Russia, (at the Vicksa iron works). 1 93 Unskilled Labor .—The following are the ave¬ rage rates of weekly wages paid for unskilled labor in the manufacturing establishments of the countries below enumerated: In the United States, general average, (in gold). $6 81 In Great Britain, general average. 4 50 (Sheffield $5 25, Hull $4 50, Wigan $4 25, Bradford $4 00, Glasgow $3 75.) France. 3 60 Belgium—Liege $2 40, Ghent, in cotton mills, $2 52, Mayence $2 40. Saxony, (Dresden). 2 25 Prussia, (Berlin). 3 10 Russia, (at the Yicksairon works). 1 33 COMPARATIVE COST OF PRODUCTION IN THE UNITED STATES AND EUROPE. Now while the American producer, in these and doubtless some other respects, labors under great and serious disadvantages as compared with his European competitor, it seems equally clear to the Commissioner that these disadvan¬ tages are not and cannot be compensated for by the adoption of an indiscriminate, arbitrary rule of protection, and that it is not for the interest of the country that such indiscriminate protec¬ tion as has heretofore been granted, and seems likely to be further asked for, should be con¬ tinued. 47 Thus in most of the tariff discussions that have taken place of late in the United States, the question of the necessity and extent of protec¬ tion is made to turn almost wholly upon the dif¬ ference in the cost of labor employed in do¬ mestic as compared with foreign industry— which differences, as already shown, are cer¬ tainly very considerable. And it is also very generally taken for granted in such discussions, that the nominal rate paid for wages, of itself alone, or at least in a very great degree, deter¬ mines both the cost of production and the social condition and prosperity of the laborer. It is difficult, however, to conceive of a more egre¬ gious fallacy that is involved in such assump¬ tion ; inasmuch as it is not the nominal rate paid for wages, but rather what the labor employed actually produces, and what the wages paid are i able to purchase, that determines both of these questions. A striking illustration of the truth of the first proposition is to be found in the circumstance that while the wages paid in Great Britain in almost every branch of industry are uniformly much higher than those paid for the purchase of similar labor upon the continent—the rates, for example, paid for female labor, in the cotton manufacture, ranging from 12s. to los. per week in Great Britain,; 7s. 3 d. to 9s. 7 d. in France, Belgium and Germany: and 2s. 4 d. to 2s. lid in Russia—the one thing which is the most dreaded by continental manufacturers every¬ where is British competition; and this feeling of apprehension manifests itself most strongly, and the demand for protection becomes the loud¬ est, in those very districts of continental Eu¬ rope, as, for example, in France, Austria and Russia, where the average of wages reach their minimum, and moreover, at those times espe¬ cially when through commercial depression and the scarcity of employment, a supply of labor becomes available to the continental manufac¬ turer at rates even below the general average. The recently manifested opposition in France to the continnance of the Cobden treaty, and the | demand on the part of the French manufacturers for its abrogation and for a renewal of high du¬ ties, is in itself also a further proof and confes¬ sion of the truth of the proposition we have sub¬ mitted.* It is also worthy of note, that notwithstanding the many statements which have been made of late respecting the interference of the cheaper labor of the continent with the industry of Great Britain, there has been up to this time, taking the average of the last five years, no decrease whatever, in any of the great leading products of British industry, or in the quantity of such products exported and sold to foreign countries; but, on the other hand, the commercial returns show, for the period specified, a rapid and con¬ tinual increase of such products and of such ex¬ ports. The markets and the character of the product may change, but the aggregate of pro¬ duction increases in defiance of all competition. The explanation of this curious politico-eco¬ nomic phenomena is undoubtedly to be found in the fact that whatever of increased price Great Britain pays for her labor, as compared with the price paid for similar service upon the conti¬ nent, is far more than compensated by the greater corresponding product of British indus¬ try, and also to some extent by the gain which results to the British manufacturer by the com¬ mand of cheaper and more abundant fuel. As an illustration of this we quote from a re¬ cent report of the inspectors of British factories,! the following statement showing the average number of persons employed to spindles in the cotton manufactories in Europe: “In France, one person to 14 spindles; in Russia, one person to 28 spindles; in Prussia, one person to 37 spindles; in Bavaria, one per¬ son to 46 spindles, in Austria, one person to 49 spindles ; in Belgium and Saxony, one person to 50 spindles; in Switzerland and the smaller states of Germany, one person to 55 spindles; in Great Britain, one person to 74 spindles. ” And the inspector further adds that this com¬ parison “ is unfavorable to Great Britain, inas¬ much as there is so large a number of factories in the latter country in which weaving by pow¬ er is carried on in conjunction with spinning, while the factories abroad are chiefly spinning factories.” Now, if the above statement is correct, it fol¬ lows that although the British cotton manufactu¬ rer pays on an average 200 to 300 per cent, more for his labor than is paid by the cotton manufac¬ turer of Russia, the labor of Great Britain is re¬ ally, of the two, the cheaper labor, and the Rus¬ sian manufacturer acknowledges it by asking and receiving a high protective tariff. \ The report above referred to also furnishes a * “ Addresses are being signed in the manufacturing districts of Moravia and Lower Austria, petitioning the Reichsrath not to sanction the treaty of commerce concluded between Austria and England. As according to the provisions of the treaty, the woollen and cotton of English manufacture may, instead of paying by weight, pay 15 per cent, ad valorem , which, no doubt, is a signal advantage for the cheap goods, of which the chief import in woollens ' and cottons from England consists. According to the calculations of the petitioners, 15 per cent, ad valorem is tan¬ tamount to reducing the duty, which they think in itself low, to about one-half. As it is, they complain that English goods are inundating the country, and if the treaty takes effect, the native manufacturers in those articles will be ruined .”—Correspondence London Times , November 1868. And yet the wages of Austria in the woollen manufacture are probably full 85 per cent, less than the corresponding , wages in Great Britain.— Commissioner. t Report of Alexander Redgrave, Esq., Inspector of British Factories, to her Majesty’s principal Secretary of State for the Home Department, London, 1867. $ From what appears to be entirely reliable evidence submitted in the report of the inspectors of British factories, above referred to, we present some further details of interest derived from a comparison of results of labor in Russian and British cotton factories, respectively. The estimate of relative production shows “ that the same machinery in England would produce half as much again either yarn or cloth as in Russia.” “ Mules in Russia seldom make above two and a half draws per minute when spinning 82s twist, while in England they do not run at less ihan three and a half.” “ In Russia, looms on 32s run at the rate of 145 picks per minute; in England, 220 is not considered too fast. No weaver in Russia ever minds more than two looms; in England it is not unusual for hands to keep four looms run¬ ning without any assistance.” 48 comparison of the working of a cotton factory located at Oldenburgh, in Germany, with the av¬ erage results attained in Great Britain, which shows “ that the German machinery, superintend ed by British overlookers, turned off weekly the same weight of work with hours of labor extend¬ ing every day from 5 30 a. m. to 8 p. rn. t (inclu¬ ding Saturdays,) as would be turned off in an av¬ erage British factory during a like period, with the hours of labor extending from 6 a, m. to 6 p m., and not including the whole of Saturday ; and further, that if German in place of English overlookers, were employed, the product would not be nearly so much.” To show, furthermore, that these differences in the results of British and ether European production are not confined to the department of textile manufactures, we sub¬ mit the following data in respect to the manufac¬ ture of iron. Taking puddling as the represen¬ tative process of this department of industry, we find the average daily wages paid in Staf¬ fordshire, England, in France and in Belgium, to be as follows : England.7s. Gd. to7s. 100. Western slope, Westmoreland, |l 50; Pittsburg banks, $1 68; Brazil, Indiana, $1 25; La Salle, Illinois, $2. Previous to the war, coal at the pit’s mouth in the United States was much cheaper. In 1S58 the Philadelphia and Heading Railroad Company mined and delivered anthracite coal on cars, per contract, for 87)£ cents p?r ton ; while the details of the workings of one of the best conducted iron furnaces in the middle States for the year I860—*61, exhibited to the Commissioner, show the average cost of the best coal at the furnace mouth to have been but little in excess of 60 cents per ton. Eukopk. —Newcastle, best, $1 75 to $2, gold, per ton; Wigan, $2 12 %; near Liverpool, $1 02%; Gartsherle, Scot* land ,*1 &1 %; Belgium, Mons, $2 07; Charleroi, $1 94; Westphalia, $1 50. 50 j^cted was sold to go to the United States.” To complete the story, it is only necessary for the Commissioner to add that the owners of this second-hand machinery have since its importa¬ tion demanded and received an increased pro¬ tection on its products. Third. In further enumeration of the effects of the national policy under consideration, we assert that it has largely contributed to the de¬ struction of our foreign commerce by rendering an exchange in kind, for most articles of domes¬ tic production, an absolute impossibility. The proofs already submitted under this head are believed to be conclusive. Fourth. It has contributed to repel the immi¬ gration into the country of skilled labor, and has not improved the condition of the working man at home. Thus, instances are not infre¬ quent where skilled workmen from Europe have visited the United States within the last three years with the view of engaging permanently in their special industries, and have returned with the feeling that the inducements offered were not sufficient to render a change of residence on their part desirable ; and the Commissioner is assured by manufacturers that, at the present time especially, the tendency among skilled workmen, brought from Europe in pursuance of special arrangements for the extension of special branches of industry, is rather to return to the Old World than remain in the United States. The explanation of this is, that although the wages paid at present in the United States for skilled labor are nominally much greater than in Europe, their purchasing power, as respects commodities and rents, are so much less as to leave either no balance whatever in favor of the industry of the United States or one that is com¬ paratively trifling. We will produce a few facts in proof and illustration: In a leading establishment in central New York, manufacturing an article of hardware in competition with Sheffield products, the present advance in wages for skilled workmen, as re¬ turned to the Commissioner, calculated on a gold basis, is about 11 per cent, on the established Sheffield prices—an advance not sufficient to compensate for the difference in favor of the foreign workman, in respect to rents, to clothing, and some other commodities. In an establish¬ ment in the vicinity of New York city, manu¬ facturing the same products, the difference in still even less. By reference to tables of prices of commodi¬ ties, of rents, dec., die., in the United States, it will be seen that the average rent of six- roomed tenements in the United States is $84* gold, per annum; and for four-roomed tene¬ ments, $63. Compare, now, these rents with those of tenements in the manufacturing dis¬ tricts of Great Britain. In the cotton districts, according to official returns, the average rentals of the houses occupied by operatives are £8 16s., or $43 per annum; while in Sheffield 66 per cent, of the houses rented by operatives are un¬ der £1 ($35) per annum, and only 26 per cent, command a rental of £10 ($50) and upwards. At the celebrated iron-works of Le Creusot, France, a small, ordinary, but comfortable house, with a garden, rents for $16 per annum; but this latter price is believed to be exceptional. The Commissioner believes that the mischief wrought to the laboring classes in the eastern sections of the United States during the last two years, by the high prices of food, which have in part resulted from the repeal of the reciprocity treaty, has far more than counterbalanced any advantages which have otherwise accrued to the country through this specific legislation; for al¬ though the quantity of food supply which is ca¬ pable of being imported from the British prov¬ inces is, as compared with the national aggre¬ gate most trifling, yet it has been sufficient du¬ ring the period referred to to constitute the dif¬ ference between “enough” and a deficiency; and such deficiency or tendency thereto, combined with the uncertainties of an irredeemable paper currency, has placed the consumer almost en¬ tirely at the mercy of the speculator.* That the existing policy brings prosperity to certain branches of domestic production cannot be questioned; but like the vigor of the tropical parasite, which eventually paralyzes the tree on which it leans for support, such special pros¬ perity is most antagonistic to the normal and healthy growth of the State. Thus, under the influence of an almost prohibitory tariff, the business of manufacturing pig iron enjoys a high degree of prosperity, and furnaces continue to be multiplied; but if the community at large has been compelled to pay an unnecessary profit of from $7 to $10 per ton on a present annual product of 1,500,000 tons, and has therefore been subjected during the past year to a tax of from $10,000,000 to $15,000,000, the pros¬ perity of the pig iron manufacture in question has cost the country a great deal more than it is worth; and further, it is only necessary that a few more such waves of commercial prosperity should sweep over the land in order to necessi¬ tate the enactment of an average tariff of 100 per cent, ad valorem in order to enable the great * A striking illustration of the disproportionate ratio in which a deficiency in the ordinary supply of an essentia 1 commodity increases prices is afforded by the experience of Great Britain in reference to her supply of wheat for the years 1863 and 1867. The present average yearly consumption of wheat in Great Britain is about 20,800,000 quarters. The domestio product being insufficient to meet the requirements for domestic consumption, the purchase of an addi¬ tional supply from foreign countries is every year a matter of necessity, which purchase varies in amount in accordance with the abundance or deficiency of the home crop. In 1863, the home crop being good, the requirement from foreign countries was 4,500,000 quarters, while the total cost of the wheat consumption of Great Britain for that year was £40,000,000 ($200,000,000); of which £6,100,000 ($80,500,000) was paid for foreign purchases. In 1S67, on the other hand, the home crop was deficient and necessitated a supply from foreign countries of 11,100,000 quarters, as compared with 4,500,000 in 1863; which deficiency, and the necessity for purchasing 6,600,000 additional quarters from abroad, carried up the cost of the total home consumption from £40,000,000 ($200,000,000) in 1863 to £70,000,000 ($850,000,000) In 1867; and that, too, notwithstanding the total home consumption, by reason of enforced economy, was undoubtedly considerably diminished, or supplemented by the consumption of other and cheaper articles of food. To obtain the additional supply needed in 1867 there was furthermore paid to foreign countries the sum of £33,500,000, ($107,500,000) as compared with £6,100,000 ($80,500,000) paid for the necessary foreign supplies In 1868. mass of less favored producers to effect the sale of any product even in their own markets.* And furthermore, that such prosperity as is continu¬ ally pointed out to prove the beneficial effects of the existing tariff does tend to produce such a re¬ sult, is proved by the fact that although the tariff has been constantly and largely advanced since 1861, and although the internal revenue taxes, which neutralized in part its protective influ¬ ence, have been substantially removed during the last year, the demand for still further ad¬ vances is at present as urgent as at any time previous. As offering some explanation of this circumstance, we commend to the careful con¬ sideration of all interested the following signifi¬ cant answer given under oath to a question pro¬ pounded by the Commissioner to the largest and most successful manufacturer in a special de¬ partment of the iron and steel industry of the Ufrited States: Question. What, according to your experience, wa 8 the effect of the increase of the tariff in 1864 on the in dustries with which you are specially connected ? An* swer. The first effect was to stimulate nearly every branch—to give an impulse and activity to business ; but in a few months the increased cost of production, and the advance in the price of labor, and the products of labor, were greater than the increase of the tariff, so that the business of production was no better, even if in so good a condition, as it was previous to the advance of the tariff referred to. That was the effect on most arti¬ cles with the manufacture of which I am practically ac¬ quainted. Now, what the country needs is a tariff look¬ ing first to the attainment of public revenue, and not primarily to the furtherance of mere private interests. Government can add nothing to the capital of the country by legislation. It can only prescribe the channels into which capital already ereated shall flow. It is time, furthermore, that the United States should have a broader and more liberal policy- in respect to its industrial development, than is at present made the basis of legislation: and that this policy should not be, as it were, self¬ defensive, and looking merely at the retention of our own markets, but aggressive. THE POSSIBLE FUTURE OF AMERICAN INDUSTRY. The Commissioner prefers no claim to the possession of any extraordinary insight into the future, but he believes it is possible to look for¬ ward to the attainment of results, in respect to a development of national industries, which shall find no parallel in the history of our for¬ mer experience. Now, is this mere fanciful writing, or has it a basis of substantial reality ? Let us see. By the recently published mine¬ ral statistics of Great Britain, it appears that the mean market price of pig iron for the year 1867-68, taking Welsh pig as the standard, was £4 3s. 9 d. ($20.38). But, as has been already stated, the present average cost of pro¬ ducing pig iron in the United States under favorable conditions and good management is not in excess of $26 per ton currency; and as respects some of the furnaces of Pennsylvania and Maryland, the Commissioner is assured that the present cost of production is little in excess of $23, which price, reduced to gold at 36 per cent, premium, $16.91, is $3.47 per ton less than the market price of the cheapest and standard supply of this article in the markets of Europe. It is evident, therefore, that it is pos¬ sible for the United States, at the present time at least, to compete on terms of equal advan¬ tage in the markets of the world for the partial supply of an article that is even more essential to civilization than cotton ; and this advantage which has accrued to the country under the most unfavorable circumstances, is capable of being rendered still greater and more pre-eminent, by the attainment through legisla¬ tion of results which, by increasing the pur¬ chasing power of wages, shall render labor less costly and more available, and thus decrease the present cost of production and transporta¬ tion. And if the representatives of the indus¬ trial interests of Pennsylvania and Maryland, instead of interesting themselves to prevent a natural distribution of cheap coal, would devote themselves to the full solution of the problem referred to, ten furnaces would speedily spring up within their territories where one now ex¬ ists, and the eommerce of the world would be¬ come tributary to their products. Again, let us consider the condition of the manufacture of cotton. It is well known that before the war American coarse cottons were obtaining a preference over all others, in the markets of the east and of South America, and that their export was rapidly increasing, The war interrupted, and in a great degree destroyed this business ; but the Commissioner, after a careful examination and comparison of all the elements of the cost of producing coarse cottons (No. 25 and under) in the United States and ' Europe, in which examination he has had the assistance of experts in both countr*es, has come to the conclusion that if the Amerii an manufac¬ turer could be put upon the same basis as his foreign competitor as regards direct and indirect taxation, cost and excellence of machinery, and would bring to his business the same skill and economy, he would be enabled to produce cotton goods and yarns, of the number specified, at a cost which would enable him to undersell all other similar producers. The attainment. of such a result, which involves nothing that is im¬ practicable, nothing that is visionary, "would determine the exportation of no small part of the cotton grown in the United States in a manufactured, rather than in an unmanufactured condition; would erect two cotton mills where one now exists; would largely increase the de- * It should be especially noted that this enhanced price of iron enters into the cost of every article made of lion or steel; that is to say, it increases the cost of every tool and implement of production and transportation. Upon this enhanced cost must be predicated the necessity ol greater capital in other manufactures of iron, more loss of interest, decreased consumption and increased risk. No tax can be more vicious than one imposed upon tools, implements and machinery—upon the processes rather than the results of labor. The enhanced cost of iron beams, c dlings, cornices and stairways for fire-proof buildings, may also be mentioned &b one of the unfavorable results of a high price of pig iron. 52 to and for agricultural produce in the home markets, and would bring back four-fold that commerce of the ocean which now wanes almost to annihilation, in great part through want of legitimate occupation in effecting exchanges. And what has been said of the possible future of the coarse cotton mauufacture is equally true of the manufacture of medium table cutlery, common locks, axes, spades, shovels, agricultu¬ ral implements generally, and many other articles of hardware; the advantage inithe pro¬ duction of which, growing out of the application of superior skill and the greater use of machin¬ ery, is already so far on the side of the United States, that to go from one of our first class establishments, manufacturing many of the above articles, into similar ones in Great Bri¬ tain, France, or Germany, is like going from the 19th century back to the middle ages. Now, if we will but give to the American manufacturers in these departments, who have already estab¬ lished their business on a basis of sufficient skill and capital, an opportunity to produce cheaper, a result clearly within the reach of legislation, we shall also afford an opportunity for the extension of production which can have no limit, except the ability of three-quarters of the population of the globe to purchase and consume; and the skilled labor of other na¬ tions must either come to the United States to pursue their special avocations or seek other employments. But a prospect of industrial development, which far transcends all others in importance, awaits the Pacific coast of our country, when reason and common sense, rather than prejudice, shall exercise control over its population and the enactment of its laws. No one can study the industrial elements of Great Britain and of western Europe without becoming impressed with the fact that an ade¬ quate supply of intelligent and cheap labor, to meet the increasing demands of the world for manufactured products, is one of the most diffi¬ cult problems of their future. Already in France and Germany the drain of labor from the rural districts, to engage in manufacturing industry in towns, has become a cause of com¬ plaint by reason of the embarrassment which it entails upon the planting and harvesting of the crops, and the continuance of a further supply of labor from this source can only be effected by the offer of higher wages.* Increased wages, iu turn, tend to increase the price of agricultural products and other like raw material; and also contribute directly to largly increase the capa¬ city for the consumption of domestie manufac¬ tured products, inasmuch as the cost of all articles, which are in a great part the result of the application of natural forces through ma¬ chinery, does not even increase in the same ratio as the wages of manual labor that attend such machinery. Thus, Saxony, in 1866, re¬ ported to have produced six million dozen pairs stockings, and of this product to have exported some two million dozen to the United States, equivalent to about three-quarters of a pair of stockings to each man, woman, and child of our population per annum. But to effect this result Saxony has already drawn upon her rural popu¬ lation to an extent sufficient to produce a marked diminution of labor available for agricultural purposes, so that if she should propose to double her product of stockings and supply the popula- of the United States with one and a half pairs, instead of three-quarters of one pair per head per annum, she must provide herself with such an additional supply of labor as will require an additional supply and probable importation of food. But such an additional supply of labor can only be obtained through such an induce¬ ment of increased wages as will enable the re¬ cipients to purchase and use more largely ma¬ chine-made domestic products; or, in other words, to wear stockings, or some other equiva¬ lent article of clothing, in place of dispensing with them as they may at present. It is, there¬ fore, obvious that there is a limit beyond which , Saxony cannot go in supplying stockings in com¬ petition with other countries where food is cheaper and labor more abundant. And this illustration in respect to Saxony holds good in respect to all the other manufacturing countries of Western Europe. Again, an examination of the present condition of the production of pig-iron will show, that of all the countries of Europe, Great Britain is the only one that has any resources adequate for meeting the future greatly increased demand of the world for this article, or, possibly, of even supplying their own future requirements for do¬ mestic consumption; and in Great Britain the prospect of future increase is dependent altogether upon her ability to supply coal on a scale of con¬ sumption that already is in excess of the rate of 100,000,000 tons per annum. How great this prospective demand is likely to prove, may be inferred from a comparison of the present average per capita consumption of iron in different coun¬ tries, which ranges from about 189 pounds in Great Britain and Belgium, to 100 pounds in the United States, and 69 pounds in France. If we turn now to the Pacific coast of the United States we shall find the fundamental con¬ ditions for an unlimited extension of manufactur¬ ing industry supplied to a greater and more per- * The demand for labor in France, consequent on the impetus given to manufacturing activity, has tended to drain It from the rural districts and congest it 1 i the great towns. The consequences have been very seriously felt In the -.agricultural districts, where a dearth of labor has at times e tailed great embarrassment and heavy losses ou the farmers. Oa the othe~ hand, large numbers of foreign workmen, chiefly Belgian, Germaa, and English, are employed j Q the manufacturing tow is. In the town of Mulhouse alone there are more than 3,000 Term m workmen, anil the inamher of lidgi ms employed at Roubaix is stated to be nearly 15,000.” (C >rres ondence with her Majesty’s ministers abroad, regarding industrial questions. Mr. Fane to Lord Stanley—L indon, 1S67.) “luereaset industrial activity, in Belgium, has naturally produced a corresponding increase in wages as well as In ihe price of raw materials. Several establishments could yield a greater produce had they but a sufficient amount of fiands at their disposal. The demtid for w .rkmen, particularly in the co.«l districts, has raised great pretensions on their part a id has led to several strikes, which, how :ver, have f irtunately lasted >ut a short thn j, owing to concessions usually made by the masters.” (Ibid. Lord Howard de Walden to Lord Stanley, Brussels, 1667.) 53 feet extent than in any other country, viz: an unlimited supply of cheap and fertile land, thereby entailing a supply of cheap food; great natural resources in respect to valuable minerals, lumber, and the product of the seas; and finally, but above all in importance, a practically unlimited supply of cheap, docile, and sufficiently intelligent Chinese labor. Under these circumstances there is, really, nothing wanting but capital, which will speedily flow, in accordance with a demand that can offer both security and profit, to rapidly develop an industry which, favored with the means of rapid and cheap intercommunication, shall be able to supply to the markets of the east 4 all that its immense population shall need of the products of a higher civilization. And the pro¬ position is as true now a3 in the great days of Alexandria, Venice, Constantinople, and Genoa, a that the people and the country which controls ' the trade of the east, controls in great part the wealth and the dominion of the world. At present, however the people of the Pacific repel rather than attract the labor which can alone make their natural resources and wealth available, and fail to afford it adequate protection either as respects life or the possession of prop¬ erty. How suggestive a commentary on the ex¬ isting state of things is embodied in the following statement recently made to the Commissioner by the president of one of the largest mining proper¬ ties on the Pacific coast: “ The hostility of our miners , which is sustained by •public opinion, will not allow us to avail ourselves of cheap Chinese la¬ bor. Could we do so, the profits on our business would be increased from ten thousand to fifteen thousand dollars per month” CONCLUSION. In what has thus been submitted the Commis¬ sioner believes that he has sufficiently indicated his views in respect to the tariff. He cannot re¬ sist the conclusion that, as it now stands, it is in many respects injurious and destructive, and does not afford to American industry that stim¬ ulus and protection which is claimed as its chief merit. He believes that to grant, in the main, the advances asked in the bills now pending before Congress would be but to aggravate the very difficulties under which the country now labors to impair the revenues and hinder the return to specie payments. In fact, our present tariff is in many particulars apparently based upon the old fallacy that, in the exchange of commodities between nations, which constitutes commerce, what one gains the other loses. It needs but a moment’s thought to §e convinced that there can be no permanent trade or commerce unless it is for the gain of both nations: all trade is based upon the mutuality of services, and it is one of the evidences of the Ijpogress of modern thought, that the inter-depen¬ dence of nations is beginning to be recognized. This is eminently true in England, France and Germany, true in China and Japan, true even in Spain, but not yet recognized in the United States, if our laws are to be taken as the evidence of our thought. With these feelings and convictions he would therefore prove untrue to his trust did he not here enter his most earnest protest against any further general increase of the tariff, but would, on the contrary, recommend— First. An enlargement of the free list. Second. A reduction of some rates of duty, and, as an exception, an increase of a few others, with a view to the increase of the revenue. Third. A reduction of some rates of duty with a view to an absolute abatement, on the simple ground that the reduction of a duty is the reduc¬ tion of a tax, and that the most efficient method of protecting home industry is by the removal of obstacles in the form of taxes. Fourth. Tim conversion to the utmost possi¬ ble extent of the present ad valorem duties into specifics, as the only practicable method of insuring certainty and equality in the assess¬ ment of duties and the prevention of undervalua¬ tions and the abrogation of the privilege which enables returning tourists to import free of duty an amount of goods corresponding to their real or supposed social position. In behalf of the conclusions thus expressed the Commissioner confidently appeals to the true friends of American industry for counte¬ nance and support; for nothing can be more cer¬ tain than that if unnecessary and iniquitous burdens of taxation under the tariff continue to be laid upon the people, the day is not far dis¬ tant when a reaction of public sentiment will compel either a sweeping reduction of duties, or induce through agitation such an instability in legislation as will in itself prove most injurious and destructive. The Commissioner does not believe it expedi¬ ent in this, a general report, to enter upon the specific details of a tariff revision, but the pre¬ cise changes required in his judgment will, if called for, be presented in the form of an addi¬ tional report, or be submitted personally to the finance committee of Congress. As a bill pro¬ posing a change in the existing warehouse sys¬ tem is, however, now pending before Congress, some recommendations in respect to this topic are herewith appended in the form of a supple¬ ment. I have the honor to be yours, very respect¬ fully, DAVID A. WELLS, Special Commissioner of the Revenue. Hon. Hugh McCulloch, Secretary of the Treasury. 3 0112 061585722 FAIR PLAY FOR ALL. DOWN WITH MONOPOLY AND PRIVILEi fp fJurtt (fopiiuj Ipost, THE EVENING POST defends the rights of the people againsl friends of Privilege and Monopoly. It opposes all Special Legisla 1 for the benefit of the few at the expense of the many. 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