Probably, in view of the great abundance of exportable products, had the affairs of the country continued in their usual condition, this estimate would have been realized. In October last the prospect justified very liberal estimates of the consumption of dutiable merchandise. Since that time so sudden and great a change has occurred in the financial, commercial, and political relations of the several States as to render any well-grounded estimate of the amount of dutiable merchandise which will be entered for consumption before the 30th of June, 1861, entirely impracticable. Although the amount of merchandise entered for consumption will for long periods of time be governed by permanent causes, it may for short periods depend almost entirely on public confidence, which fluctuates with every disturbance of the ordinary political or commercial condition of the country. This has been strikingly exemplified in the revenue from customs during the quarter ending December 31, 1860. Instead of amounting to fifteen millions, as was reasonably and confidently expected in October, the returns, so far as received, indicate that it fell below eight millions. At the port of New York alone more than six millions of the merchandise imported during the single month of December, instead of being entered for consumption, were placed in warehouse, and nothing was realized upon them to the Treasury.

So greatly is the amount of our customs revenue dependent on political and monetary changes, on which at the present time no reliable calculation can be made, that the receipts from this source during the remainder of the fiscal year must be, so far as regards this department, the subject of conjecture. At present, from all the light that I am able to obtain, it would seem that sixteen millions will be a liberal estimate for the revenue from customs between January 1 and June 30, 1861. This, with the amount received from that source during the quarter ending December 31, 1860, will make more than one half the aggregate receipts estimated in the annual report.

The receipts from the public lands for the three quarters from October 1, 1860, to June 30, 1861, were estimated in the Annual Report at $2,250,000. So far as returns have been received for the quarter ending December 31, 1860, the amount realized from that source appears to have been about $250,000. Should no change be made during the present session of Congress in the existing laws in regard to acquiring public lands by individuals, the amount that may be expected from that source may, between January 1 and June 30, 1861, reach $1,000,000. This would be one half of the amount estimated in the Annual Report, and at this time will probably be regarded as a large estimate from that source, and to be realized only under favorable circumstances.

The receipts from miscellaneous sources for the three quarters between October 1, 1860, and June 30, 1861, were estimated in the Annual Report at $750,000. For the quarter ending 31st ultimo, these receipts fell short of $200,000, and cannot be expected to realize more than $400,000 during the remainder of the current fiscal year to June 30, 1861.

Under the views herein set forth, the aggregate receipts from ordinary sources of revenue, during the half year from January 1 to June 30, 1861, may be thus stated:

From customs..

From public lands.....

From miscellaneous sources.

Adding to these the balance of Treasury notes, authorized by Act of December 17, 1860....

Makes the amount of means for the half year....

The estimated demands on the Treasury, under existing laws, during the half year, as before stated, including the redemption of $9,211,400 of Treasury notes, is.....

Showing the amount required, in addition to the five millions of Treasury notes and the current revenue, to pay outstanding, current and accruing dues before the close of the current fiscal year, to be..

$16,000,000 00

1,000,000 00

400,000 00

$17,400,000 00

5,000,000 00

$22,400,000 00

44,077,524 63

$21,677,524 63

This amount may be reduced to $7,689,524.63, if the balance of the loan authorized by act of June 22, 1860, being $13,978,000, should be made available to the Treasury.

Allow me to state that the materials of this letter were prepared under the direction of my predecessor; and the presentation of them to you in their present form is among my first official acts.

Before closing this communication, I wish to call your attention to the fact that there are deposited with twenty-six of the States, for safe keeping, over twentyeight millions of dollars belonging to the United States, for the repayment of which the faith of these States is pledged by written instruments on file in this Department. The annual statements of receipts and expenditures for the year ending June 30, 1860, represents this amount as a part of the "balance in the Treasury" on that day. It was subject when deposited to the draft of the Secretary of the Treasury, whenever required "for the purpose of defraying any wants of the public treasury,' as will be seen by the 13th section of the act of June 23, 1836, entitled, "An Act to regulate the deposits of the public money; " but by the act of Oct. 2, 1837, chap. I., the deposit remains with these States "until otherwise directed by Congress."

I refer to this financial resource as an available one, should the public exigencies demand it. It is not doubted that the greater portion of the amount so deposited would be promptly and cheerfully repaid, should an exigency arise involving the public honor or safety. If, instead of calling for these deposits, it should be deemed advisable to pledge them for the repayment of any money the Government might find it necessary to borrow, a loan contracted on such a basis of security, superadding to the plighted faith of the United States that of the individual States, could hardly 'fail to be acceptable to capitalists. I have the honor to be

Your obedient servant,

JOHN A. DIX.
Secretary of Treasury.

HON. JOHN SHERMAN, Chairman Committee of Ways and Means,

House of Representatives.

I

IBRAR

OF THE

UNIVERSITY

CALIFORNIA

ON THE LOAN OF TWENTY-FIVE MILLION DOLLARS.

IN THE HOUSE OF REPRESENTATIVES, FEBRUARY 2, 1861.

On the 2d of February Mr. Sherman introduced a bill authorizing a loan of $25,000,000, to pay ordinary expenses and to redeem Treasury notes, the stock to bear interest not to exceed six per cent. per annum, and to be redeemed in not less than ten nor more than twenty years. The bill coming before the House for consideration, February 2, 1861, Mr. Phelps spoke briefly in opposition to it, and Mr. Sherman replied as follows:

MR. SPEAKER: I am somewhat surprised that my friend from Missouri should oppose a measure intended to pay off the existing debts made by this Administration. I have here a communication from the Secretary of the Treasury, stating that there will be an actual deficit in the revenue of $21,677,524; the deficiency bill appropriates between two and three million dollars; so that, there is an admitted deficiency of about $24,000,000 to be now provided for. The amount in the Treasury on the first day of January was $2,233,220, while it requires at least $5,000,000 in the Treasury to carry on the daily operations

of the Treasury Department. So that a deficiency of not less than $25,000,000 exists, now to be provided for by loan. Now, Mr. Speaker, under these circumstances, while the Opposition side of the House brings forward a bill to place in the power of the Secretary of the Treasury money to pay off all the existing liabilities, it seems strange to me that any opposition should come from the other side of the House. All of this money will be required to pay off existing liabilities. By the law of the 22d of June last, we authorized a loan of $20,000,000. A portion of that loan was taken. The balance could not be sold under the terms of the law. In last December, at the pressing instance of Mr. Secretary Cobb, we authorized the issue of $10,000,000 Treasury notes, with the specific pledge of the balance of the loan of June 22d for the redemption of these Treasury notes. And now it is proposed to take that loan, thus specifically pledged for the redemption of these notes, and apply it to the current expenses of the Government. I say that it would be a violation of the public faith for this Congress to pass the law now proposed by the gentleman from Missouri. The moneyed men of New York would say the credit of the Government had been violated, because, when they took the Treasury notes under the law of December last, it was with a specific pledge, with a mortgage in fact, upon the loan of the 22d June last, for their redemption.

The public lands were pledged for the redemption of a very small portion of the public debt, and nearly all that to which it applied has been paid off. But here is a specific pledge, made only a little more than a month ago, that the balance of the loan of June last should be applied to the redemption of these Treasury notes; and now it is suggested that we take the loan thus set aside for a particular purpose and apply it to the ordinary current expenses of the Govern

ment.

Why, Mr. Speaker, the plain English of this matter is, that there is $25,000,000 of debts due, and no money, no revenues, to pay them with. We have got to resort to the credit of the Government. I suppose the $25,000,000 provided for in this bill will be sufficient to settle up the accounts of this Administration.

The tariff bill, if it becomes a law, will probably not take effect until July next, when it will become necessary to provide by law for a deficiency that will accrue in the next fiscal year. That tariff bill will probably contain a provision for a temporary loan, necessary to meet the deficiencies for the next fiscal year. This loan bill is for a present deficiency, and therefore its necessity will not be obviated even if the tariff bill becomes a law.

If the tariff bill provides a revenue sufficient to meet the current expenses of the Government, it will not become necessary to negotiate the loan provided in it. I certainly hope that the tariff bill will produce a revenue sufficient to meet all the expenses of the Government. If so, the loan bill which accompanies that law will lapse, and that I will be the end of it. The ordinary revenues of the Government should always be sufficient to meet its expenses, except in time of war. For the last three years, and during every session, the Chairman of the Committee of Ways and Means has been compelled to come in here

with a loan bill, to supply the deficiencies in the revenues of the Government for current expenses. I trust such an event may never occur again in a time of peace. But it is necessary now that we should make provision to pay off existing liabilities.

Whether these liabilities have accrued through maladministration of the Government, or through other causes, no man can doubt our obligation to make provision for paying them. And here let me say a word to my friends on this side of the House. I ask them, when we are compelled to come in here with loan bill after loan bill to enable the Goverment to meet its expenses, if it is not time to pause in the appropriations we are making: certainly those made for the benefit of moonshine speculations, for rights within the jurisdiction of a foreign Government?

I now move the previous question upon this bill.

The motion was seconded, and the bill passed the House. In the Senate an amendment was added providing for the repeal of the loan act of June 22, 1860 On the concurrence of the House in this amendment Mr. Sherman said:

MR. SPEAKER: I hope the amendment of the Senate will not be concurred in; and if I can have the attention of the House for two minutes, I think I can give ample reasons why it should not be concurred in.

This seems to be to some extent a party measure, an attempt to throw upon the incoming Administration all the indebtedness incurred by this, if possible. Now, all I ask is, that this Administration shall pay off its own debts, or provide for the payment of them, and not throw them over upon the incoming Administration. I do believe that, under the tariff act now pending in the other branch of Congress, if it becomes a law, the revenues of this Government will be sufficient to meet the expenses under the incoming Administration. I believe that it is the duty of that Administration to reduce the expenses of the Government to the standard of the revenues of the Government. Now, what is the condition of the Treasury at this time? The Secretary of the Treasury says he shall need a loan of $25,000,000 to meet the expenses of the Government up to the 1st of July next. This bill provides a loan to that amount to pay off the debts of the present Administration up to that time. Then, in addition to that, there is another debt to pay. This Administration, in December last, issued $10,000,000 of Treasury notes, at twelve per cent. Those notes are due next December. For the redemption of those Treasury notes the remaining portion of the loan of June last was specifically pledged. Yet it is now proposed to repeal that loan of June last, in express violation of the law of December last, in pursuance of which the faith of the Government was directly pledged to apply that loan to the redemption of Treasury notes, leaving no means for the retirement of the Treasury notes of last December. Now, that is the condition in which the matter stands. If the amendment of the Senate be concurred in, then, in December next, when the $10,000,000 of Treasury notes become due, there will be no means provided whatever for their retirement. They will go on bearing interest at the rate of twelve

per cent., to the disgrace of the Government. No government, and indeed no individual, can afford to pay twelve per cent. interest for any length of time.

The effect of the course proposed would be to throw the burden of providing the means for the payment of these Treasury notes, when they become due, on the incoming Administration, and to leave it with the responsibility of providing the means of paying its current expenses together with $10,000,000 of the debts of the present Administration.

But, sir, the gentleman refers to the Pacific Railroad bill. I do not know whether that bill will pass or not; but if it does pass, no money will have to be paid under it probably for years to come. No money can be paid, or liabilities incurred, until fifty miles of the road are completed.

If the tariff bill passes, I believe revenue enough will be raised under it to defray the ordinary expenses of the Government. The loan bill attached to it is only intended to provide for some unforeseen emergency. By the terms of the tariff bill, the money to be raised under it cannot be applied to a redemption of Treasury notes. On the contrary, it is specifically provided that the loan shall be devoted to the meeting of any deficiency in the current revenues of the Government. It is true that that may be changed. In the next place, if we should only give place to one loan by another, then we might reduce the loan provided in the tariff bill to $10,000,000.

I do not anticipate any deficiency; but I do say that it is wise to provide against any contingency which may arise. The sum we have here to do is not beyond the capacity of the youngest boy in an arithmetic class. Here we have a debt of $25,000,000, and how are we going to pay it? You have $10,000,000 of Treasury notes, bearing twelve per cent. interest, which are due next December. How are you going to pay them? By the loan in the tariff bill? But there is already a loan bill upon our statute-books under which these Treasury notes can be withdrawn when they become due. Why, then, repeal one law, to give place to another, unless it be to show that the new Administration has borrowed $21,000,000 to pay the liabilities of the Government? I say to you, gentlemen on the other side, pay your own liabilities, or pledge the Government credit for enough money to pay them. I hope the incoming Administration will conform its expenses to the revenues raised from the ordinary sources. If the revenues shall fall short, and be reduced to even less than the amount now realized, it will be the duty of the incoming Administration to reduce the expenses to that extent.

Now, Mr. Speaker, I do hope gentlemen on both sides of the House will permit us to make provision for paying the debts of the present Administration, and not saddle those debts upon the incoming Administration. I repeat that the $25,000,000 loan provided for in this bill is required to pay the debts of the Government up to July next; and that if this amendment of the Senate is concurred in, there will still remain the sum of $10,000,000 of outstanding Treasury notes for which no provision will have been made. We ask for nothing more than that this Administration should make provision for the settlement of