ON THE ISSUE OF TREASURY NOTES.

HOUSE OF REPRESENTATIVES, DECEMBER 10, 1860.

AUTHORITY to convert the Treasury notes of 1857 into bonds having fifteen years to run was given by an act approved June 22, 1860; and Congress adjourned its session without taking any steps to strengthen the Treasury either by loans, increase of taxation, or reduction of expenses.

On the 3d of the following December the second session of this Congress convened. By the election of Mr. Lincoln to the Presidency the country had been thrown into an intense excitement, and political tumult was already swelling throughout the South.

On the 4th Mr. Buchanan transmitted to Congress his last message, in which he declared that, while Congress possessed many means of preserving the Union by conciliation, the sword was not placed in their hand to preserve it by force. Accompanying this message was the report of Secretary Cobb, showing the debt on June 30, 1860, to be $64,769,703, and a balance in the Treasury of only $3,629,206.

On the 10th Mr. Cobb resigned as Secretary of the Treasury-"his duty to Georgia required it"; and on the 12th Philip F. Thomas of Maryland was appointed his successor.

Since the beginning of the fiscal year the current receipts had been less than the expenditures, and, while the small balance in the Treasury was diminishing, there still remained unpaid appropriations to the amount of more than $10,000,000. In this condition of affairs, Mr. Sherman, on the 10th, reported from the Committee of Ways and Means a bill authorizing an issue of Treasury notes, not to exceed at any time the amount of $10,000,000, and, upon reporting the bill to the House, made this speech:

MR. SPEAKER: It is not my purpose to engage in this debate, but it is necessary to pass to-day a Treasury-note bill in order to relieve the pressing necessities of the Government. I hope, therefore, that, without objection, we may put upon its passage a bill for that purpose which I am instructed to report from the Committee of Ways and Means.

The House will perceive that the bill now before us is a mere temporary expedient to provide for the pressing demands upon the Treasury. Most of the members are aware that the Government has not been able to pay, for the last week or two, our own salaries, and many other demands at New York and other places. The revenues have fallen short during the last week, amounting, I believe, to but $250,000. Most of the revenues are now paid in Treasury notes. This bill only provides a mode of paying outstanding Treasury notes, the amount of which now outstanding is indeed in excess of the amount proposed to be authorized; so that the bill provides for no increase of the public debt.

I might here rest what I have to say about the bill; but it is proper

for me to add that it will be necessary for the House very soon and promptly to consider some other measures of relief. On the 1st of July last there was in the Treasury $3,629,206, a balance entirely too small to carry on the ordinary operations of the Treasury. During the first quarter of the fiscal year the expenditures exceeded the receipts some two hundred thousand dollars, and there are now unpaid appropriations to the amount of ten or fifteen millions.

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The receipts during the current quarter will probably fall short several millions of the necessary expenditures; and if we are to judge from the temper of the times, the distress in the country, and the litical difficulties that surround us, it is probable that during the remaining three quarters of this fiscal year there will be a deficiency of from ten to fifteen million dollars. This is not the fault of this House, but it is the fault of our revenue laws. For the last three years we have been living upon the credit of the Government. I have a paper before me showing that since the 1st of July, 1857, we have gone into debt to the extent of nearly fifty million dollars. In the fiscal year ending 30th June, 1858, the deficiency, or excess of payments over revenue, amounted to $27,162,188. In the next fiscal year it amounted to $15,902,932. During the last fiscal year it amounted to the sum of $6,725,000; and, according to the statement already made, during the present fiscal year the deficiency has been not less than from fifteen to twenty million dollars.

I have prepared a statement which shows at a glance the changed condition of the state of our finances in three years.

On the 1st day of July, 1857, the entire debt of Government, after deducting the balance then in the Treasury, was $11,350,272.63, as follows:

Public debt...

$29,060,386 90

Balance in Treasury..

17,710,114 27

$11,350,272 63

On the 1st day of July, 1858, the amount of the entire funded debt was....
Treasury notes.....

$25,155,977 66

19,754,800 00

Total debt...

$44,910,777 66

Balance in Treasury.

6,398,316 10

$38,512,461 56

On the 1st day of July, 1859, the amount of the entire funded debt was...
Treasury notes..

$43,601,037 69

15,153,661 64

Total debt...

$58,754,669 33

Balance in Treasury.

4,339,275 54

$54,415,393 79

On the 1st day of July, 1860, the amount of the entire funded debt was..
Treasury notes....

It is manifest, therefore, that the House, in order to preserve the

credit of the Government, ought to make some change in the revenue laws, or decrease the expenditures. We must either, by a bold stroke, reduce the expenditure to fifteen or twenty million dollars or contract new loans or raise new revenues. The bill now pending in the Senate, I need not inform the members of the House, authorizes a loan of some twenty millions, and in addition to that provides for increasing the revenue. If that bill should pass, and the present disturbed political condition of the country should be healed, the annual revenue would amply cover our expenditures upon the basis of existing laws and salaries; but with the present difficulties, and with our present revenue laws, it is manifest that this bill will not be the last loan bill or the last Treasury-note bill that the Committee of Ways and Means will have to report to the House. The provisions of the bill are similar to those of the act of 1857. It simply authorizes a temporary loan, and provides that that part of the loan authorized by the act of the 22d of June last not already contracted for shall be applied to the redemption of outstanding Treasury notes. This is all the statement that I desire to

make.

The bill, after some modification, became the act of December 17, 1860, and the Secretary immediately advertised the loan. Of the amount authorized, bids were received for $10,010,000, at par, with interest from six to twelve per cent. per annum. Additional offers were received at interest varying from fifteen to thirty-six per cent., but were refused.

LETTER OF JOHN A. DIX.

CONDITION OF THE TREASURY, JANUARY 18, 1861.

On the 2d of January, 1861, Mr. Sherman addressed inquiries to the Secretary of the Treasury concerning the debt, and also the condition and resources of the Treasury. On the 11th Secretary Thomas resigned, differing from the President and the members of the cabinet, especially in reference to the authority to enforce the collection of customs at the port of Charleston; and on the same day John A. Dix of New York was appointed his successor. On the 14th Mr. Sherman called his attention to the unanswered inquiries, and on the 18th the following reply was made.

TREASURY DEPARTMENT, January 18, 1861. SIR: I have the honor to acknowledge your letter of the 14th instant, asking my attention to the letter of the 2d instant to my predecessor; and beg leave to answer its several points of inquiry in their order.

"What amount of accounts, debts, or claims against the Government has been allowed and passed by the proper accounting officers, which remain unpaid?"

In reply to this inquiry, I beg leave to state that, except sundry small claims presented and settled through the Department of the Interior, amounting to $33,152.94, and certain claims presented and allowed through this department, amounting to $82,163.54, all claims duly allowed and passed by the proper accounting officers have been satisfied by warrants on the Treasurer; and that officer has remitted his drafts on the various depositories to pay the same. Within the last few days the amount of over-due Treasury notes presented for redemption has exceeded the power of the Treasurer to place drafts in payment on the Assistant-Treasurer

at New York, where the holders desired the remittances to be made; and an accumulation of warrants, to the amount of about $430,000, has occurred on this account in the Treasurer's hands, which he has been unable to pay.

"What amount of salaries, compensation and other dues, not embraced in the foregoing, which are due and payable on or before the 1st day of January, 1861?"

In reply to this inquiry, I beg leave to state that for all the salaries paid directly from the Treasury warrants have been drawn on the Treasury and drafts remitted accordingly. But it is proper to suggest that officers and soldiers of the army, officers, seamen, and marines in the navy, and a large portion of the persons employed in the civil offices of the United States, are not paid directly from the Treasury, but through disbursing officers, to whom money is advanced from time to time for that purpose, as well as for other authorized charges, upon the requisition of the proper Department. Requisitions from the Secretary of War in favor of disbursing officers of that Department, amounting to $912,905.90; from the Secretary of the Navy, in favor of disbursing officers of that Department, amounting to $615,487.21; from the Secretary of the Interior, in favor of disbursing officers of that Department, amounting to $124,866.87; and from the proper authorities of the Treasury Department, amounting to $255,435.07, in favor of disbursing officers and contractors; making an aggregate of $1,908,695.05, for which warrants have not been issued.

The periods when the sums thus called for were actually due and payable can only be ascertained by special investigation into the several cases; but it is supposed that the whole amount was due on or before the 1st instant. Beside these requisitions received by this Department, it is understood that the War and Navy Departments have calls for large amounts for which their requisitions have been delayed on account of the exhausted condition of the Treasury.

Besides these claims, the bounties payable by law to vessels employed in the cod fishery during the last season were due and payable on the 31st ultimo. Detailed estimates of these bounties, so far as proofs have been presented to the collectors of the several districts, have been received, showing the amount due and payable on that day to have been $447,201.89. This Department has been unable to make any provision for paying these bounties, for want of sufficient money in the Treasury. Adding this sum to the foregoing, the aggregate of sums due and payable on or before the 1st instant may be taken to be $2,355,896.94.

"The facts connected with the negotiation of the recent sale of Treasury notes, and how the proceeds thereof were applied?"

In answer to this inquiry, I have the honor to state that, under the notice issued on the 18th ultimo, inviting proposals for the exchange of five millions of dollars for Treasury notes, offers at twelve per cent. interest or less were made only to the amount of $1,831,000. Offers to exchange $465,000, for notes bearing interest at rates ranging from fifteen to thirty-six per cent., were also received.

The offers at twelve per cent. and less were accepted; those above that rate were rejected.

Previously to the issue of the notice, the Assistant Treasurer at New York was informed that the exchange of five millions was the smallest amount that would enable the Department to protect the public credit by the redemption of Treasury notes falling due and paying interest on the 1st of January, 1861, on the stocks of the United States. From the preliminary deposits of one per cent. made with him, under the terms of the notice, that officer became aware that not one half of the sum required had been offered in New York; and he probably endeavored to induce the banks and capitalists of that city to exchange the residue of the sum called for at twelve per cent. interest, which was the rate at which the bulk of the offers had been made.

Immediately after the decision of the Department on those offers had been made, that officer advised the Department that certain parties would take the residue, through the Bank of Commerce, at twelve per cent. This proposition was accepted, on condition that the amount required to make up the five millions should be deposited without delay. The whole amount has been applied to the payment of over-due Treasury notes and other pressing demands on the Treasury.

Presuming that you desired only the material facts of this negotiation, I have not sent the correspondence in regard to the offers for Treasury notes, or an ex

hibit in detail of the receipts and payments by the Assistant Treasurer at New York, from the 28th ultimo, when the proposals for the Treasury notes were awarded. Should these particulars be desired, they will be cheerfully furnished.

Your letter further asks "whether any defalcation of either of the present depositories of public money is known to the Department?"

In answer to this inquiry, I have the honor to state that, so far as is known to this Department, the depositories have promptly paid the Treasurer's drafts on them, and no defalcation or refusal of the present depositories has been reported.

"The receipts of the Government from all sources, from the date of the last annual report of the Secretary of the Treasury up to January 1, 1861, so far as known to the Department?"

I beg leave to suggest that the date up to which the receipts into the Treasury are given in the last annual report of this Department was the 30th of September last, being the close of the first quarter of the current fiscal year.

The aggregate receipts from all sources, during the quarter from October 1 to December 31, 1860, so far as returns have been received, appears, by the Treasurer's exhibit of current receipts, to have been $17,181,783.93.

"What amount of means, in addition to the Treasury notes authorized by law and the current revenue, will be required to pay outstanding current and accruing dues before the close of the current fiscal year?"

The first element for an answer to this inquiry is the amount required to be paid for carrying on the public service during the remainder of the current fiscal year. To ascertain this amount, we must refer to the estimated expenditures for the various branches of the public service during the three quarters of the fiscal year from October 1, 1860, to June 30, 1861, as stated in the last annual report of this Department. They will be found on page 3, and are $46,935,232.58. From this sum deduct the amount expended during the quarter ending December 31, 1860, which, by the Register's statement, is, exclusive of Treasury notes, $12,069,107.95, leaving the sum of $34,866,124.63 to be provided for, besides the Treasury notes maturing on and before June 30, 1861: which, on the 1st day of January, 1861, amounted to $11,795,600, making the amount required to be paid from January 1 to June 30, 1861, $46,661,724.63.

Of these outstanding Treasury notes there have been redeemed, between the 1st and 14th of January instant, $2,584,200, reducing the current liabilities of the Treasury to that extent.

The amount required, therefore, to meet the outstanding current and accruing dues before the close of the current fiscal year, besides any additional charges on the Treasury created by legislation during the present session of Congress, is $44,077,524.63.

The existing means for meeting this amount are:

1. The balance of the loan of $21,000,000 authorized by act of June 22, 1860, for redeeming Treasury notes. Of this loan $7,022,000 only has been negotiated and paid into the Treasury, leaving $13,978,000 to be realized from that source. Should the present disturbed condition of the country continue, some modification of the terms prescribed by the act may possibly be necessary to make the residue of this loan available.

It may not be improper to add that when the estimates before referred to were submitted, no difficulty was apprehended in meeting the outstanding Treasury notes, as fast as they fell due, by the proceeds of this loan. As this resource has failed, to the extent of the above stated balance of $13,978,000, to preserve the credit of the United States, it has become indispensable to pay these notes out of the revenue from other sources. During the last quarter about eight millions of Treasury notes were redeemed; which, with the two and a half millions redeemed since the 1st instant, make ten and a half millions. The amount received from the loan, being a small fraction above seven millions, threw upward of three and a half millions of these notes on the other resources of the Treasury for redemption. This is one of the principal causes of the delay and difficulty which have recently existed in providing for other demands of the public service.

2. Receipts from the ordinary sources of revenue. The Annual Report of this Department estimated the receipts from customs during the three quarters of the current fiscal year from October 1, 1860, to June 30, 1861, at $40,000,000.