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.1876 .


1st Session.

,V -' : ''




On the Finances.

DECEMBER 24, 1839.

Read, and ordered to be printed.


December 3, 1839.

The undersigned respectfully submits to Congress the following report
on tht; finances, in obedience to the " Ac^supplementary to the act to
establish the Treasury Department :"

It is gratifying to be able to state, notwithstanding the embarrassments
of the present year, that the revenues of the General Government have
been increased, the expenditures diminished, and most of the Treasury
notes redeemed*



The balance in the Treasury on the 1st of January, 1839, which could be
considered available for general purposes, was $2,466,961 95

The data on which this computation rests are in the table annexed,

The receipts from customs, the first three quarters, as ap-
pearing on the Register's books, are - - $18,328,393 50
This includes about two millions and three-fourths col-
lected last year in Treasury notes, but not carried on his
books till 1839. From this cause the actual receipts in
this year will, to that extent, appear larger than they
Receipts from lands the first three quarters, including also

some collected last year in Treasury notes - 5,417,286 31

Miscellaneous receipts - - 125.208 73

Estimated receipts for the fourth quarter from all those

sources - :V; - - 5,700,000 00

Receipts on some of the debts against banks not available

on 1st January, 1839, but since paid '-*' 1,322,686 00

From the third issue of Treasury notes under the act of

March 2, 1839 3,857,276 21

Aggregate means $37,217,812 75

Blair & Rives, printers.


[2] 2


Civil, foreign, and miscellaneous, for the first three quar-
ters - - - $3,649,508 23
Military, for the first three quarters - 10,791,799 21
Naval, for the first three quarters - 4,713,701 57
Estimate for all, during the fourth quarter - 5,600,000 00
Funded debt for the year .... 14.658 98

24,769,667 99
Redemption of Treasury notes in the first three quarters,

interest as well as principal - - 9,891,759 83

This includes two millions and three-fourths paid in for
duties and lands last year, but not carried on the Register's
books till 1839. From this cause the expenditures on
that account will appear larger by that amount than they
actually have been within those quarters.
Estimated amount of notes redeemed in the fourth quarter 1,000,000 00

Aggregate payments - 35,661,427 82

Leaving an available balance of money in the Treasury

on the 31st of December, 1839, of - - 1,556,384 93

37,217,812 75

General exhibits of the receipts and expenditures in 1838 are presented
in the table annexed, (B.)

The funds computed to be not available, nor applicable to public pur-
poses, at the commencement and at the close of the present year, can be
seen in the table before mentioned, (A.)

Details of the expenditures in the first three quarters of 1839 are also
given in the subjoined statement, (C.)


The condition of the small remains of the funded debt has not materi-
ally altered since the last annual report. A statement of it, with the seve-
ral payments made within the year, is herewith exhibited, (D.)

Though incommoded by repeated pressures in the money market and
suspensions of specie payment by the banks, within the last three years,
the interest and all the principal due on that debt, as well as on Treasury
notes, have been punctually paid in specie whenever desired. A detailed
statement of the issue and redemption of Treasury notes, during 1839, is
annexed, (E.)

Not more than one-fourth of a million of the first and second emissions,
and two millions and a half of the third, will probably remain outstanding
at the close of the year. The former emissions have been for some months
redeemable, but the last one does not begin to be till March, 1840, except
as previously offered in payment of public dues. The aggregate of (wo mil-
lions and three fourths of principal is therefore all that it is computed will be
unpaid of nearly twenty millions, which were issued since October, 1837, in
consequence of indulgences granted to the merchants on their bonds, and the

3 [2]

r * * *Ui r

banks on their deposite debts, At no one time has the amount of notes out-
standing been allowed to exceed ten millions, and the present very reduced
aggregate, unredeemed, is less than the sums still owing from the banks
that suspended specie payments in 1837, and from the Pennsylvania Bank
of the United States on its bond due in September next ; arid might with
ease have been paid during the present year, had the money been received
on those claims.


* % ' ., v ** "" ''**: ' % . - ' li \ '*~ *f~ t w - **. *vjj* & ** f~ ~

The exports during the year ending September 30, 1839, are computed
to have been $113,359,004. This is $9,872,388 more than those in the
year 1838.

Of the whole exports only $17,408,000 were of foreign origin, and of
the excess in exports over 1838, only about five millions were domestic

The imports during the same year were about $157,609,560, being the
very large excess of $43,892,356 over those during the previous year.
This may be a solution of a portion of the pressure in the money market.
The difference bet ween the imports arid exports, being $39,250,556 in favor
of the former, is larger than in any year, except three, since 1789, and is
much larger than any difference in the valuation of the same articles
with the profits in the foreign trade added. It must, therefore, except
so far as reduced by an unusual quantity of goods consigned here from
abroad, and yet in store unsold, be a very decisive evidence of an
increased indebtedness by this country to other nations. And except so
far as this new indebtedness may consist of stocks sold and the proceeds
returned here in merchandise, it must furnish another proof of one imme-
diate cause of the present pecuniary pressure.

The history of our commerce during the twenty years from 1818 to 1838,
presents a singular change in the last half of that period, which tends strongly
to illustrate the correctness of these suggestions. During the first half of it the
excess of imports over exports was only about seventy five millions of dol-
lars, or in the proportion of near seven millions and a half annually on
an average.

But during the last ten years of it the excess was near two hundred and
twelve millions, or over twenty millions annually ; and thus more than
two hundred and fifty per cent, greater than it had been. Supposing that
the seven and a half millions were composed principally of the fair profits
and difference in valuation, the excess over that rate in the last ten years
, must constitute a debt, either mercantile, State, or corporate. It equals
near one hundred and thirty-seven millions before 1839. The debt thus
computed to have been created abroad; by stocks and otherwise, within
that period, will, with the amount of previous indebtedness, form an aggre-
gate quite as large as has been estimated by many from other data.

Further particulars, possessing a general interest and relating to this
subject during the last six years, are exhibited in the statement annexed,
(F.) Additional information of some importance concerning our exports
and imports, from the commencement of the Government to 1838, inclu-
sive, has been prepared, and is subjoined in other tables, (G and H.)
These tables are intended to be in a form convenient for reference, and are
calculated, by easy as well as extensive comparisons, to throw new light
on several subjects of commerce and other branches of industry connected

[2] 4

with the finances. They exhibit not only the whole exports and imports
in each year, but the consumption of the latter, and the changes in the
whole aggregate value of each principal article, whether exported or
imported, and the progress of our foreign trade to and from each State
separately, as far back as is practicable, and to and from each country of
much commercial importance abroad. A few of the most striking results
are condensed in a note, (I.)


For reasons hereafter to be explained, the receipts into the Treasury,

the ensuing year, cannot be estimated so high as in 1839.

From the best information possessed by this department, it is computed

that the aggregate of them, available for public purposes, will not exceed

$18,600,000, viz : from

Customs - gl 5,000,000 00

Lands .... 3,500,000 00

Miscellaneous 100,000 00

Add to these the balance available and
applicable to other purposes, which
it is supposed will be in the Trea-
sury on the first of January, 1840 -

The efficient means in that year will
then amount, in the aggregate, to -

If Congress should make appropria-
tions to the extent desired by the
different departments, the expendi-
tures for .840, independent of the
redemption of Treasury notes, are
estimated at -

Including all the Treasury notes to be
redeemed, the aggregate expenditure
would be about

This would leave a deficit in the
Treasury at the close of the year,
amounting to

But there will be due from the United
States Bank, in September next, on
its iourth bond, about

The principal now due on the Treas-
urer's deposites in other banks,
which suspended specie payments
in 1837, is ...

"Should all these claims be collected in
1840, they would prevent a defi-
ciency, and leave an available bal-
ance in the J'reasuryof nearly

1,556,385 00
20,156,385 00

20,000,000 00

22,750,000 00

2,593,615 00

2,526,576 00

1,149,904 00
1,082,865 00

It is not, however, considered prudent to rely exclusively on the collec-
tion of these debts.

One mode, then, of obviating any difficulty from that circumstance/
will be to reduce the aggregate of new appropriations, by postponing some

5 [2]

and lessening others, so that the means probably available will be sufficient
to meet all calls upon the Treasury, and leave in it an average balance of
about two millions.

It is believed, for reasons enumerated hereafter, that such a reduction is
possible without essential injury to any useful object, and that this balance
is the smallest, which is adequate to secure promptitude and good faith in.
public payments, so heavy in amount as ours, so unexpected at times in
the demands for them, and so dispersed over a wide territory. If the appro-
priations are not thus reduced, it will be wise to provide seasonably in
some other way for the amounts of the contingent deficiency, and of such
a balance.

According to the opinions of the different departments, as to the sums of
money proper for each, and which constitute the basis of the estimates
submitted to Congress, the new appropriations required for the next year
will equal the sum of - $18,280,600 55


Civil foreign intercourse and miscellaneous $4,981,344 19

Military services, pensions, &c. - - 8,213,61074

Naval service - - - 5,085,645 62

For further particulars as to these, see the annual estimates herewith
submitted, (J) Besides these, the permanent appropriations, which, by
existing laws and the modification of them recommended, first become
chargeable on the Treasury in 1840, amount to $1,586,000. They are,
in the War Department, $1,236,000 ; in the Navy, $340,000; arid public
debt, $10,000. The principal on Treasury notes falling due will be about
$2,750,000 more. The appropriations already made and chargeable,
which will remain uncalled for at the end of the present year, are esti-
mated, by the different departments, at the further sum of $11,827,371,
though that is considered by the undersigned as likely to be about two
millions too small. Of these they compute that nearly $8,270,793 will
be required, in order to accomplish the objects contemplated by them. It
is proposed to apply $3,014,711 to the service of the ensuing year without
re-appropriation, and the residue of about $541,866, not being required in
order to accomplish these objects, will go to the surplus fund. It therefore
follows, if all the new appropriations called for are made, that the whole
charge upon the Treasury in 1840, exclusive of the Treasury notes out-
standing, will amount at least to $31,152,106, of which, as previously
observed, it is computed that $20,000,000 will be expended within that
year for ordinary purposes, or two millions and three-fourths more,
including the redemption of Treasury notes. From these statements, it
must be perceived that our condition in relation to the deposite of another
instalment of public money with the States remains much the same as
at the close of the year 1838. Consequently, the views then expressed by
the department have continued to govern its course.

This state of the finances renders it also unnecessary to submit any
remarks upon the impolicy of providing for the additional deposite or dis-
tribution of surpluses not likely to occur, or for any donation of the proceeds
of the public lands, while they are all needed to defray the ordinary-
expenses of the General Government.

Besides the further objection to some of these measures, arising from
their apparent conflict with constitutional principles, it must be manifest,

[2] 6

that if the proceeds of the lands should be given away when needed to
discharge appropriations, the deficiency must be made up by the unpleasant
alternative of a resort to loans or increased taxation.


The estimates of receipts from duties and lands during the next year
have been made lower than for 1839, for the following reasons :

A further reduction of certain duties, amounting "to nearly $SOO,OOO r
will take place after the close of the present year. It likewise happens
that, subsequent to a large importation and a foil of prices in the articles,
exported, as in 1839, the'amount of imports often declines for one or two
years. After 1825, it declined uninterruptedly for six years.

The contractions and expansions of our paper currency have at times
proved another striking indication of the reduction and increase in im-
portations. Without dwelling here on the intimate connexion between
them as cause and effect, by means of the foreign exchanges, and the neces-
sity, after overtrading and overissues by the banks, of drawing on them
and adjusting large balances in specie, it may be observed that a diminu-
tion in the circulation of paper has been going on for several months. Hence
a diminution in the imports has already commenced, and is confidently
expected to continue for some time.

The country is also supposed to be supplied with foreign merchandise
in greater abundance than it was a year ago. This will lead not only to
a reduced demand for the importation of more goods, but to a greater export
of what is already here, to other and better markets, and thus, by increased
drawback?:, as well as diminished imports, materially lessen the net receipts
from customs.

The price of some of our principal articles of exports being lower, the
same quantity will likewise furnish less ability to make purchases abroad,
and, where the quantity is larger, the commercial embarrassments
both there and here will tend to prevent buying, on either side of the
Atlantic, much beyond what is needed for early consumption. The greatly
increased liabilities on the part of many corporations, and States, for the
payments of interest and dividends on their stocks owned by foreigners,
will still more sensibly affect the revenue. Those payments must require
millions of exports either in produce or specie, which will lead to no returns
in additional imports. It is believed that within a few years past an an-
nual tax or drain on this country has thus been created, equal to twelve or
thirteen millions of dollars.

This is a new and important element, besides overbanking and over-
trading, to disturb the industry, the commerce and finances of the Union.
Its rapid growth has been accelerated by the distribution of the surplus in
deposite among the States, tempting them in several instances to new and
unprofitable enterprises, and stimulating delusive hopes of still further dis-
tributions. Its influence for evil has^ been aggravated by a few other
causes, some of them temporary in duration and limited in extent, but
others diffused in a degree over considerable portions of the civilized world,
and presenting some singular anomalies in credit, currency and trade. But
without enlarging on the consideration of them here, the following con-
clusions may be regarded as inevitable.

Should the States not speedily suspend more of their undertakings,
which are unproductive, but. by new loans or otherwise, find means to em-

7 [2]

ploy armies of laborers in consuming rather than raising crops, and should
prices thus continue in many cases to be unnaturally inflated, as they have
been of late years in the face of a contracting currency, the effect of it on
our finances will be still more to lessen exports, and consequently the pros-
perity and revenue of our foreign trade. It will also impede the sale of the
public lands by diverting labor from the soil to works which, for some time,
must be wholly without profit. Circumstances like those, with the scarcity
of money and high rate of interest abroad produced by them and other
occurrences, not necessary to be now repeated, have already diminished the
income in the present year below what it otherwise would have been, and
will probably manifest their power much more in the year to come.

The estimates for revenue from lands have been reduced the most in
proportion, because, besides the diminution of sales, which will probably be
caused by the present and prospective scarcity of money and fall of the
prices of produce, the amount received from them during the present year
has, as was anticipated by the department, been much increased by the
temporary power of the late pre-emption law.

The unusual quantity of land newly advertised during the year 1839,
and the consequent large receipts connected with that cause and the pre-
emptions, are circumstances not likely to recur in 1840. It is believed,
therefore, that the low estimates submitted as to lands will prove sufficiently
high, unless a graduation bill should pass. The effect of such a bill, judg-
ing from reason and from analogy to the graduated prices, under which
lands are now selling, on account of the Chickasaw Indians, at Pontitoc,
much more freely than elsewhere within the same State, would be to add
considerably to the revenue for a few years.


The estimates of expenditure for ordinary purposes in 1840 are in the ag-
gregate about five millions less than what it is computed will be spent in
1S39. This great reduction has been proposed, although the expenses of
1S39 will be quite six millions less than those of 1838, and those of 183S
were somewhat less than the expenses of the previous year.

The various items of new appropriations asked for are, as usual, in the
amounts requested by the different departments having charge of the dif-
ferent subjects. If any omissions or miscalculations occur in them, they
must, therefore, happen from inadvertence by those officers best acquainted
with the business within their own peculiar province.

But, in the present condition of the country and the finances, it is not
expected that much necessity will arise, either in the opinion of those'de-
partments or of Congress, to make important additions to the sums now re-
quested. On the contrary, it is confidently hoped that some reductions
from them can be effected without material injury to any great national

It is difficult in a young, growing, and enterprising community to re-
strict public expenditures within reasonable limits. "Certain exigencies
also occasionally occur requiring extraordinary sacrifices. When patriot-
ism and honor demand largs pecuniary contributions, the latter are richly
repaid by their tendency to impart vigor and security to the former. But,
an expenditure of twenty millions for ordinary purposes, though much re-
duced from the aggregate during a few years past, is believed by the under-

[2] 8

signed to be more, instead of less, than sound policy justifies, while the
present unusual embarrassment in moneyed affairs shall continue. Indeed,
strong doubts exist if it be not more than the real necessities of the General
Government usually require. The reasons for this conclusion are briefly
these: It is true that such an expenditure, equalling only a dollar and a
fourth per head of our population, is not a very large one to sustain a con-
federacy with such widely extended duties as this. If reduced to the
amount of imposts, which are the whole real burden, and if compared with
the taxes elsewhere, equalling sometimes fifteen dollars per head, under po-
litical institutions of different forms and less frugality, the pressure from that
source here would seem to be remarkably light.

But it should be remembered that the people of the United States are
obliged to defray a large amount of other public expenses imposed upon
them by State authorities, and, at the same time, that their forms of govern-
ment, among various excellencies, have been preferred particularly ior their
economy. Hence the true question with them in respect to expenditures,
is, not how large burdens can be borne, but how much can be dispensed
with. It is not what is splendid, but what is useful and necessary. Not
how much can be collected from them without suffering, but how much
can be left with them, both of money and power, and insure all the benefits
of the soqial system.

As the interests and wishes of the people formed the Government, they
should control it.

Considering these circumstances, and the severe simplicity and frugality
befitting a republic, what amount of public expenses is necessary?

In 1831, it was calculated that the ordinary expenses of the General Gov-
ernment need not exceed fifteen millions of dollars. The undersigned ex-
pressed an opinion four or five years afterwards, that sixteen or seventeen
millions would then be sufficient ; and he still believes that, notwithstanding
the continued increase of our population arid wealth, they might with pru-
dence be limited to eighteen millions in 1840. and, perhaps, alter the expi-
ration of most of the present pensions and the removal of the rest of the
Indians, be for some time diminished still lower.

Indeed, in point of fact, so recently as 1834 and 1835, the whole yearly ex-
penses were only seventeen and eighteen millions, independent or the pub-
lic debt. Though the amount has since been increased by wars, pensions,
Indian removals, and other peculiar causes, deemed at the time, in most
cases, sufficient to justify the appropriations by large and often unanimous
votes in Congress, yet a reduction has been going on during 1838 and 1839,
and all the ordinary expenditures would not in the present year, but for the
pension list and Indian disbursements, exceed the smallest sum last men-
tioned. The whole increase, however, has not been confined to these two
items, nor could the whole reduction safely be, which, in the opinion of
the undersigned, sound economy appears to require.

In the inquiry as to the amount of expenditure which should be con-
sidered necessary, light may sometimes be obtained by adverting to the in-
crease of population and wealth. Looking to those, if the expenditure, in-
dependent of the public debt, was reasonable in magnitude during the first
eight years of our present Government, the sum of seventeen or eighteen
millions annually would not now be greatly disproportionate, nor probably
be found either much deficient or very unnecessary. It would be nearly
five times the average amount about half a century ago, while our populu-

9 [21

tion, since that time, has undoubtedly increased more than four-fold, and
our wealth and resources have probably increased in a ratio still larger.
The last remark, however, is a matter of inference from various data, more
or less accurate in themselves; such as the average importations, which

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Online LibraryUnited States. Dept. of the TreasuryReport from the secretary of the Treasury, on the finances.. → online text (page 1 of 4)