and yet at the same time there will be such a competition between the foreign and domestic producer as to yield us a fair revenue on imported goods. Nor am I alarmed by the statement made by my friend from New Jersey yesterday, that the amount of goods imported into this country was the enormous sum of $305,000,000. We must import goods to get revenue; and, when I reflect that $305,000,000 is only five per cent. of the magnificent production he shows we have annually made in this country, I do not think we need be frightened at the amount of imported goods. We can not entirely break up the importation of goods without surrendering our revenue. We dare not do that. The necessity rests upon us of raising $140,000,000 of gold. We must not, therefore, materially affect the trade between foreign countries and our own. All that our own people can ask is, that such reasonable protection shall be given to them that our currency and our system of internal taxation shall not operate injuriously to their interests. THE PUBLIC DEBT. IN THE SENATE, DECEMBER 17, 1867. Mr. Sherman made the following report: THE Committee on Finance, to whom was referred so much of the President's message as relates to the public debt, and the report of the Secretary of the Treasury on the state of the finances, is called upon to report upon three important subjects necessarily connected with each other: First. The funding of the public debt, and, as an incident to it, the redemption of the bonds commonly known as the five-twenty bonds: and Second. The taxation, State and national, of the public securities; Third. The redemption and conversion of the United States notes or legal-tender currency. Questions are presented in regard to each of these, the solution of which ought not to be delayed. There are disputes as to the mode of the payment of the public debt seriously affecting the public credit; there is wide-spread complaint as to the exemption of public securities from taxation; and the evils of a depreciated and unconvertible currency are so manifest, both in public and private business, that the early attention of Congress is properly called to them by the executive authorities. It should be the effort of Congress not merely to declare and obey the existing law, but to adopt a comprehensive policy that will preserve the public faith, restore confidence to the people and stability to our business interests, and yet appeal to the sense of justice of our constitu So. ents if it is unhappily drawn into the arena of party politics. Financial matters ought not to be in any sense partisan, but they may become Unless Congress can adopt a policy meeting all the requisites named, the contest on these most delicate and difficult questions may be transferred to the polls, where the heat of party strife may lead to dangerous results. It is impossible to overstate the importance of these questions. Next to the existence of government itself, and the security of personal rights, come the protection of property, the preservation of the public credit, the adjustment of taxes, and the regulation of the currency. Nearly all the legislation of peace is the legislation of finance. The action of Congress on these subjects affects the value of all property in the United States; the reward of all labor; the income of the rich; the wages of the poor; the pension of the widow; the enterprise and industry of all classes of our people; and thus touches the home and heart of every person in the United States. Therefore, in reporting upon these questions, your Committee appeal to the generous forbearance of each Senator not to condemn until he is convinced, to criticise with kindness, and to lend us the aid of his intellect and experience in making the measure proposed such a one as will accomplish the great objects we all have in view. Before examining the several provisions of the bill, your Committee begs leave to state the present condition of the public debt. It consists of numerous forms of public securities, nearly all of which grew out of the urgent necessities of the late war. The calls for money to maintain the army and navy were so imperative that many different forms of loan were resorted to, and, as a means to enable the Government to reach the resources of the people, a currency was improvised. This currency now forms a part of the public debt, and, being a legal tender in the payment of debts, is in the nature of a compulsory loan without interest. It has proved so convenient a currency that, apart from the advantage the Government derives from it by the saving of interest, it has been and now is of great importance in promoting enterprise and the exchange of domestic products. It only remains, either by reducing the amount or by other means of increasing its value to the standard of gold, to make it not only the most favorable form of loan, but the best national currency yet devised. During the war the residue of the public debt could only be contracted at high rates of interest and upon onerous conditions, caused by the uncertainty of our ultimate success, and by the efforts of a portion of our people to depreciate the public credit. For this reason those who were charged with the national finances constantly kept in view the principle of "redeemability" of the principal of the debt within a short time, with the confident expectation that the close of the war and the success of the national cause would enable us to redeem it by a loan on more favorable terms. The necessity of funding the public debt, as soon as possible after the war closed, into one clearly defined loan, at as low a rate of interest as possible, has been conceded by every one. The only questions are as to the most favorable time and manner. When this subject was under discussion a year or two ago, two chief difficulties were alleged to lie in the way. One was the compound-interest notes, now either paid off or provided for; the other was the option of the holders of the three-year seven-thirty notes to demand payment in money, or to convert them at their maturity into five-twenty bonds. These are now either converted or in such a state of conversion that, for our purposes, we may estimate the $285,587,100 of seven-thirty notes now outstanding as a part of our five-twenty bonds, into which it is the option, the interest, and no doubt the purpose of the holders to convert them. Our public debt is stated thus: Statement of the Public Debt of the United States on December 1, 1867. $2,855,400 00 MATURED DEBT NOT PRESENTED FOR PAYMENT. Three-year seven-thirty notes, due August 15, 1867... 7,065,750 00 260,000 00 163,011 64 54,061 64 868,240 00 2,880,900 55 31,000 00 14,178,363 83 A portion of this debt may be dismissed from our view. The bonds commonly known as the long bonds of 1881, $282,731,520, were negotiated on the gold basis, and are neither redeemable nor payable until 1881. The ten-forty bonds, about $200,000,000, also are neither payable nor redeemable until 1874, and both principal and interest are payable in gold. The smaller items of debt, amounting to $122,574,675, will be paid from the funds on hand or current receipts, and may be dismissed from our consideration. This leaves the five-twenty bonds, including with them the seven-thirties, in the aggregate amounting to $1,610,000,000, which, with legal tenders and fractional currency amounting to $387,142,457, compose the body of the public debt of the United States. A large portion of this debt is now redeemable at the pleasure of the United States, and the whole of it will become so in a comparatively short time. Your committee are of the opinion that now is the time to provide for the redemption of these bonds, as they become redeemable, by a new loan on more favorable terms to the United States, and also to secure to the holder of the United States notes, as soon as practicable, their full value in gold. Such a currency, convertible into gold, with a public debt bearing as low a rate of interest as practicable, with the right again to redeem the principal when more favorable terms can be had, with a moderate provision to diminish the principal annually, supported by a system of taxes levied as far as practicable on imported goods, luxuries, and incomes-these are elements of a financial system which your Committee seek to establish. Before examining the precise terms of this debt, and the measures proposed by your committee, it is proper to inquire whether this comprises the whole of the public debt. It is sometimes asserted that an unliquidated debt of a vast and uncertain amount exists, not included in the statement of the public debt. Upon this point the most vague and indefinite opinions prevail, not only in this country, but in Europe. Nothing can have a more injurious effect upon the public credit than the supposed existence and concealment of any portion of the debt. No comprehensive financial policy can be adopted that does not embrace every portion of it. Your Committee have therefore sought to ascertain the extent and amount of unadjusted claims likely to be established against the Government. The amount of claims pending which have arisen under existing law, and are likely to be allowed by the accounting officers, is less than $40,000,000, and this will be scattered through several years, and paid out of funds already or hereafter to be appropriated from current receipts. This is exclusive of bounties under the act of the last Congress, the estimated amount of which yet to be paid is $45,000,000. These are estimated for as a part of the current expenditure, thus swelling the estimates for the current and next fiscal year far beyond the sums needed for the ordinary current expenses for the year. And so, since the war, large sums, amounting to over $200,000,000, properly chargeable as a part of the public debt, have been paid from the current receipts as a part of the current expenditure, and this sum should properly be added to the $267,000,000 of the liquidated debt paid since the 1st of August, 1865. A more detailed statement of the unliquidated debt will be submitted to the Senate at a later period of the session; but for present purposes this debt may be regarded as a part of the current expenditure, and need not be considered in any plan for funding the public debt, and will depend entirely upon the future action of Congress. This fact will restrain Congress from adopting principles which will swell its amount. Every new bounty bill, every new railroad subsidy, every new and unusual expenditure for internal improvement, every new principle adopted in the settlement of claims growing out of the war, will involve new taxes or new loans. Therefore, as an incident to every such measure, there should be a new tax levied or a new loan made. The vague and indefinite appropriations of money by Congress, growing out of the vast expenditure during the war, can no longer be continued without the utter destruction of the national credit, or such an increase of our taxes as will bring back to these halls new faces and new names. It is idle to disguise the fact that the increase of our extraordinary expenses and the weight of taxes have alarmed the people. Dismissing the unliquidated debt as depending entirely upon the future prudence of Congress, we come to consider the present condition of the five-twenty loans. As all of these are of the same legal character, differing only in their dates and time of redeemability, it will only be necessary to examine the laws under which the original bonds were issued. These bonds were issued under the act of Congress passed February 25, 1862, entitled "An act to authorize the issue of United States notes, and for the redemption or funding thereof, and for funding the floating debt of the United States." The notes to be issued are provided for by the first section, and were limited to the sum of one hundred and fifty millions of dollars, fifty millions of which were to be exchanged for that amount of what were known as demand notes. These new notes were declared to "be receivable in payment of all taxes, internal duties, excises, debts, and demands of every kind due to the United States except duties on imports, and of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin, and shall be lawful money and a legal tender in payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid." This act does not rest the value of these notes solely upon the clauses making them a legal tender, and receivable for all public dues; but it further provides, as an additional and the highest inducement for the people to take them, that the holder of any of them may deposit them with the Treasurer of the United States, and "shall receive in exchange therefor duplicate certificates of deposit, one of which may be transmitted to the Secretary of the Treasury, who shall thereupon issue to the holder an equal amount of bonds of the United States, coupon or registered, as may by said holder be desired, bearing interest at the rate of six per centum per annum, payable semi-annually, and redeemable at the pleasure of the United States after five years, and payable twenty years after the date thereof." Thus these notes were invested with every possible security and value that could be given to them, except only that the holder could not demand their payment in coin. In lieu of such payment, the holder had the right to pay them |