FUNDING BILL. CALIFO 283 the House bill there was no provision made in regard to the national banks. But when we came into conference the House conferees themselves proposed that the new banks to be organized under the currency act which recently passed should be upon the new description of bonds; a provision which was manifestly just in itself and not unjust to the banks. That was a proposition made by the conferees of the House, and we agreed to it. When the bill went back to the House, it seems that some of the very gentlemen who were so much opposed to our section about the national banks attacked the report of the committee on the ground that it did not extend this provision in regard to the new banks to the old ones. The contest thus sprang up on the proposition proposed by the House conferees, and the bill was defeated, after debate, upon this proposition. The second committee of conference, being composed of the same gentlemen, had but one of two courses to pursue: either to restore the section proposed by the Senate originally, which we thought was the better way, or to omit all reference to national banks in the bill. In view of the action of the House we concluded that it was better to strike out the seventh section of the bill entirely, leaving the old and new banks upon the same footing, and leaving the national banks entirely at liberty to help or to mar the funding of the public debt. TA I wish now to record my deliberate judgment that in this conclusion, to which we have been compelled to arrive by the action of the House, we are doing the national banks a great injury, which will impair their influence and power among the people, and that the opposition of the national banks to this provision, which would have required them to aid in the funding of the public debt, will tend more to weaken and destroy them than anything that has transpired since their organization. I do not see how we can go before the people of the United States and ask them to lend us gold at par for our bonds, when we refuse to require agencies of our own creation to take them; when we even refuse to require new banks not yet organized to take the new bonds, and when we refuse to require old banks, which have made on the average from fifteen to twenty per cent. annually upon the franchise derived from the United States, to aid us to this extent in funding the public debt. But, sir, the vote of the House shows the power of the national banks. It is so great, at least in the House, that in order to secure a funding bill we have been compelled to abandon all provisions in regard to the national banks; but I give notice that in the future I for one shall be prepared at all times to require the national banks to take that class of bonds which we propose in this bill, and I have no doubt this will be the result. But for the present, in deference to the wishes of the House, we have withdrawn the section in regard to national banks. This bill became the Refunding Act of July 14, 1870. RECEIPTS AND EXPENDITURES-REDUCTION OF TAXATION. IN THE SENATE, MAY 23, 1870. THE Senate, as in Committee of the Whole, having under consideration the bill making appropriations for the legislative, executive, and judicial expenses of the Government for the year ending the 30th of June, 1871, Mr. Sherman said: MR. PRESIDENT: This appropriation bill is the first of a series that will bring before us every branch of the expenditures of the National Government. It may be well before we enter into their details to take a general view of our expenditures, and of such measures of taxation as will be necessary to raise the vast sums about to be appropriated. Taxes and appropriations are inseparably associated. They are the pleasing and painful sides of financial legislation. If to appropriate money was the "end all and be all" of this and kindred bills, it would be the most gratifying employment in the world. We could indulge in the luxuries of art and the fancies of statesmanship; we could erect temples for custom-houses, and cover the ocean with our subsidized steamers; we could increase our salaries, and buy all the islands adjacent to our continent. But unhappily we can only appropriate what we first collect by taxation, and taxation is a painful cess at best, in its nature unequal, and generally inflicting more injury to the individual than it confers benefit upon the people. Every appropriation bill is a tax bill, and every item added is a draft upon the earnings and labor of our citizens, to which is superadded the cost of collection. If the money is borrowed, then interest is added, and interest is as consuming to the resources of a nation as it is to an individual. It never rests or sleeps. pro The estimates upon which these appropriation bills are founded are made annually by bureau clerks nearly one year before the commencement of the fiscal year for which they are made, and by law are submitted to us at the beginning of each session. A general résumé of these for the year may be found on pages 240 to 244 of the book of estimates, as follows: Permanent appropriations, mainly collection of customs and postal service. bounties, etc.. Interest of public debt.. Total... $155,297,617 62 5,110,000 00 9,031,300 00 129,077,815 00 $298,516,732 62 A palpable error occurred in the postal estimates, but this I have corrected in the statement read. The great mass of these estimates is to carry into effect existing laws, and can only be reduced by a change of the law. All the appropriations for public works, and some of the appropriations for other heads of expenditure, amounting in the aggregate to more than fifty million dollars, depend upon, and may be increased or diminished in, the annual appropriation bills. The amount estimated by the Secretary of the Treasury in his annual report for the service of the next fiscal year is $291,000,000, made up as follows: The difference between the two estimates is readily explained, and consists mainly of his reduction of estimates for public works; but the actual appropriation will depend upon the economy or liberality of Congress. I shall be gratified if the appropriations are kept within the estimates of the Secretary of the Treasury. Now, in these estimates there are elements of uncertainty growing out of other causes than the action of Congress; and some of these demand an immediate legislative remedy. Under the law and the practice of the departments unexpended balances of appropriation for one year are carried over to the credit of that fund in the next year. Thus we may appropriate a specific sum for the pay of transportation in the army, enough in the judgment of Congress for that purpose; yet a much larger sum may be expended by adding to the new appropriation the balances of former appropriations. It is at this moment difficult to estimate what balance of unexpended appropriations will remain on the 1st of July next, and it was much more difficult to estimate such balance in October last. The actual balance of unexpended appropriations on the 1st of July last was $102,390,159.37, of which $41,548,477.30 were for the War Department, and $26,532,453.94 for the Interior Department, or more than one full year's appropriations for each of those departments. Indeed, their "balances" were nearly as large as the whole appropriations for the present fiscal year, thus giving the departments two years' supplies for one. I refer Senators for further information upon this subject to Executive Document No. 155, House of Representatives. Here we have an element of uncertainty, which explains why the appropriations are not the limit of expenditures. The only way to correct this is by carrying all the balances of appropriations at the end of the fiscal year to the surplus fund; then the expenditures can never exceed the appropriations for that year. This reform has been adopted by the Senate in an amendment reported by the Committee on Finance to this bill, by confining these balances to expenditures included in the fiscal year for which they are appropriated. If unforeseen wants should arise, they can be provided for by deficiency bills; but with the present practice there is not sufficient check upon expenditure. I know of heads of appropriations kept alive in this way ever since the war, that would not for a moment be authorized in an annual appropriation bill now. Another element of uncertainty grows out of the authority during the war to transfer appropriations from one head of expenditure to another. This ought not now to be allowed in any case. The history of these transfers is a curious one. The Constitution of the United States provides that no money shall be drawn from the Treasury but in consequence of appropriations made by law. This highly important and fundamental provision has frequently been evaded under the specious device of a transfer of appropriations, authorized from time to time by different acts of Congress. This was cured by the deficiency bill of February 12, 1868, which repeals all acts authorizing such transfers, and provides that no money appropriated for one purpose shall hereafter be used for any other purpose than that for which it was appropriated. We had a case in point last summer, when our adventurous Admiral of the Navy, without consulting Congress, embarked in a vast sea of expenditure for building a navy, and his reliance was in the unexpended balances accumulating from appropriations under various heads during and since the war. This law, which must have been overlooked, guarded these balances from a transfer and checked an almost unlimited expenditure. Sometimes we have bills authorizing transfers; but the word whenever used ought to be regarded as an indication of fraud; it ought to excite distrust and suspicion. Annual appropriations for specific purposes, and for a specific time, are the only guards for expenditure. If then we have extravagance, it can only be the extravagance of Congress and not of executive officers. Another element of uncertainty in our estimates is the demand for public works, amounting this year to the sum of $24,625,173, against $5,493,000 appropriated last year. Upon the action of Congress on this branch of expenditure it will depend whether we have to provide for $280,000,000 or $305,000,000; and what I say in regard to the reduction of taxes will be affected by this uncertainty. Certain great works of improvement demand liberal appropriations, but they are often compelled to carry a multitude of appropriations for objects of minor importance. Another uncertainty arises from the manner in which the estimates and appropriations are made. We are asked to appropriate $100,000 for the erection of a custom-house; then a plan is adopted which requires $1,000,000; the money appropriated is sunk in the foundation, and this is made the basis for future appropriations. No public work should be authorized until its completed cost is ascertained and fixed by law or contract; and I am happy to see that this plan has been adopted in the bills of this session. The amount of claims that are provided for by Congress is also an indefinite sum. If the proposition which was supported the other day with a very able, eloquent, and elaborate speech should pass, it will cost from thirty to fifty million dollars to meet that demand for next year; and we must provide for it. As a matter of course, if the proposition should be adopted, and we should concede the principle that we must pay all the damages incurred and sustained by loyal people in the Southern States during the war, it would add to our expenditure an enormous sum, an amount which even the Senator from Indiana did not venture to state. It would amount to perhaps fifty million dollars, perhaps double that; I do not know how much. Besides that, there are judgments of the Court of Claims. In this estimate of the aggregate of expenditure, $1,000,000 is estimated for the payment of the judgments of the Court of Claims. But last year they were over $1,250,000, and this year will probably largely exceed that, as many cases are now pending on appeal in the Supreme Court, as well as in the Court of Claims originally. Then the action of Congress on private claims that come to us is very uncertain. We sometimes see, without attracting much attention, a claim of $50,000, or $100,000, or even $250,000, go through. That swells the vast aggregate of our public expenditures without our scarcely perceiving it. A still more dangerous element of uncertainty grows out of our Indian service. The conduct of the United States to the Indian tribes is infamous. It is in its results as cruel and heartless as the worst chapters of English domination in India under Hastings and Clive. It has been so for years. But two years ago we undertook to make a great reform. We undertook in the most solemn manner to gather our Indian tribes into reservations, to feed them, and adapt them to civilized life. We authorized a board of officers of the highest rank in military and civil life to make treaties with them. This was done with much ostentation, and the treaties were ratified and confirmed by the Senate. We guaranteed them reservations, food, shelter, assistance, and clothing, in obligations as sacred as the public debt. We have openly and knowingly violated these obligations. We even gathered bands of Indians on the reservations promised them, and left them to starve. Our people invaded the very reservations set apart for them, and Congress refused last year, and still refuses, to make appropriations to carry the treaties into effect. The Indians resorted to the only remedy for savages or civilized people for violated treaties; but their warfare is the warfare of barbarians. They steal and rob, burn, murder, and mutilate their victims. What else can they do? You have invaded their territory; you have cut off their food. They are starving. You promised them food, and you have sent them Quakers without money. They flaunt your violated treaties in your faces. You talk about Indian massacres! What death is more terrible than starving? What crime is greater than this Congress commits daily in violating these treaties? With them it is the crime of desperation; with you it is the crime of listlessness and indifference. I fear it is now too late to repair our error. We may be startled any day by a Fetterman massacre, to punish which our soldiers may be compelled to commit another. In any event, very large additional appropriations must be made, and these will be either in money for food, or in supplies and transportation for the army. Then there is another thing. The House the other day passed a bounty bill, which, in my judgment, if carried into a law, will cost us |