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at similar moderate rates, thus indicating that tion, the language of the Constitution of 1787, there was no excess of circulation, and that the our convention intended to attach to it the meanrate of premium on specie was heightened by the ing which had been sanctioned by long and unexceptional causes which tended to its exhaustion interrupted acquiescence. without the possibility of renewing the supply. So long as there seemed to be a probability of

This review of the policy of your predecessors being able to carry out these provisions of the is given in justice to them, and it exhibits the Constitution in their entirety, and in conformity condition of the finances at the date when the with the intentions of its authors, there was an permanent government was organized.

obvious difficulty in framing any system of taxaIn the mean time the popular aversion of in- tion. A law which should exempt from the ternal taxation by the general government had burden two thirds of the property of the country influenced the legislation of the several States, would be so unfair to the owners of the remainand in only three of them-South-Carolina, Mis- ing third as it would be inadequate to meet the sissippi, and Texas-were the taxes actually col- requirements of the public service. lected from the people. The quota devolving The urgency of the need was such, however, upon the remaining States had been raised by that, after great embarrassment, and more than the issue of bonds and State treasury notes, and three months of assiduous labor, you succeeded the public debt of the country was thus actually in framing the law of the twenty-fourth April, increased instead of being diminished by the 1863, by which you sought to reach, so far as taxation imposed by Congress.

was practicable, every resource of the country, Neither at the first nor second session of the except the capital invested in real estate and present Congress were means provided by taxa- slaves, and by means of an income-tax and a tax tion for maintaining the government, the legisla- in kind on the product of the soil, as well as by tion being confined to authorizing further sales license on business occupations and professions of bonds and issues of treasury notes. Although to command resources sufficient for the wants of repeated efforts were made to frame a proper the country. But a very large proportion of system of taxation, you were confronted with an these resources could only be made available at obstacle which did not exist for your predeces- the close of the present and the commencement sors, and which created grave embarrassment in of the ensuing year, while the intervening exidevising any scheme of taxation. About two gencies permitted no delay. In this state of afthirds of the entire taxable property of the con- fairs, superinduced almost unavoidably by the federate States consists of lands and slaves. The fortunes of the war in which we are engaged, the general power of taxation vested in Congress by issues of treasury notes have been increased unthe Provisional Constitution (which was to be til the currency in circulation amounts to more only temporary in its operation) was not restrict- than six hundred millions of dollars, or more ed by any other condition than that “all duties, than threefold the amount required by the busiimports, and excises should be uniform through- ness of the country. out the States of the Confederacy.” But the per- I need not enlarge upon the evil effects of this manent Constitution sanctioning the principle that condition of things. They are unfortunately but taxation and representation ought to rest on the too apparent. In addition to the difficulty presame basis, specially provides that “representa- sented to the necessary operations of the governtives and direct taxes shall be apportioned among ment, and the efficient conduct of the war, the the several States according to their respective most deplorable of all its results is undoubtedly numbers, which shall be determined by adding its corrupting influence on the morals of the peoto the whole number of free persons including ple. The possession of large amounts of treasuthose bound to service for a term of years, and ry notes has naturally led to a desire for investexcluding Indians not taxed - three fifths of all ment, and with a constantly increasing volume slaves."

of currency there has been an equally constant It was further ordered that a census should be increase of price in all objects of investinent. made within three years after the first meeting This effect has stimulated purchase by the apof Congress, and that "no capitation or other parent certainty of profit, and a spirit of speculadirect tax shall be laid, unless in proportion to tion has thus been fostered, which has so debasthe census or enumeration hereinbefore directed ing an influence and such ruinous consequences, to be taken."

that it is our highest duty to remove the cause, It is plain that, under the provisions, capita- and no measures directed to that end can be too tion and direct taxes must be levied in propor- prompt or too stringent. tion to the census when made. It is also plain Reverting to the constitutional provisions a!. that the duty is imposed on Congress to provide ready cited, the question recurs whether it be for making a census prior to the twenty-second possible to execute the duty of apportioning in of February, 1865. It may further be stated accordance with the census ordered to be made that, according to the received construction of as a basis. So long as this appeared to be practhe Constitution of the United States, (a con- ticable, none can deny the propriety of your struction acquiesced in for upward of sixty years,) course in abstaining from the imposition of direct taxes on lands and slaves are direct taxes, and taxes till you could exercise the power in the the conclusion seems necessarily to be that, in precise mode pointed out by the terms of the repealing without modification, in our Constitu- fundamental law. But it is obvious that there

are many duties imposed by the Constitution would there be in imposing on the remainder which depend for their fulfilment on the undis- the whole amount of the taxation of the entire turbed possession of the territory within which State in proportion to its representation ? What they are to be performed. The same instrument else would this be in effect than to increase the which orders a census to be made in all the burthen of those who are the heaviest sufferers States imposes the duty on the Confederacy “to by the war, and to make our own inability to guarantee to every State a republican form of protect them from invasion, as we are require:] government.” It enjoins on us “to protect each to do by the Constitution, the ground for adding State from invasion," and while declaring that to their losses by an attempted adherence to the its great objects and purposes are, "to establish letter, in violation of the spirit of that instrujustice, insure domestic tranquillity and secure ment? No such purpose could have been onterthe blessings of liberty to ourselves and our pos- tained, and no such result contemplated by the terity," it confers the means and thereby imposes framers of the Constitution. It may adid weight on us the paramount duty of effecting its intent, to these considerations, if we reflect that, alby “laying and collecting taxes, duties, imposts, though the Constitution provided that it should and excises necessary to pay the debts, provide go into operation with a representation temporafor the common defence, and carry on the govern- rily distributed among the States, it expressly ment of the confederate States."

ordains, after providing for a census within three None would pretend that the Constitution is years, that this temporary distribution of repreviolated because, by reason of the presence of sentative power is to endure “until such enumehostile armies, we are unable to guarantee a re- ration shall be made." Would any one argie publican form of government to those States or that, because the census cannot be made within portions of States now temporarily held by the the fixed period, the government must, at the exenemy, and as little justice would there be in piration of that period, perish for want of a repimputing blame for the failure to make the cen- resentative body? In any aspect in which the sus, when that failure is attributable to causes subject can be viewed, I am led to the conclusion not foreseen by the authors of the Constitution, already announced, and which is understood to and beyond our control. The general intent of be in accordance with a vote taken in one or our constitutional charter is unquestionably that both houses at our last session. I shall, therethe property of the country is to be taxed in or- fore, until we are able to pursue the precise der to raise revenue for the common defence, and mode required by the Constitution, deem it my the special mode provided for levying this tax is duty to approve any law levying the taxation impracticable from unforeseen causes. It is, in which you are bound to impose for the defence my judgment, our primary duty to execute the of the country, in any other practicable mode general intent expressed by the terms of the in- which shall distribute the burthen uniformly strument which we have sworn to obey, and we and impartially on the whole property of the cannot excuse ourselves for the failure to fulfil people. this obligation on the ground that we are unable In your former legislation you have sought to perform it in the precise mode pointed out to avoid the increase in the volume of notes in Whenever it shall be possible to execute our circulation by offering inducements to voluntary duty in all its parts, we must do so in exact funding. The measures avlopted for that parcompliance with the whole letter and spirit of pose have been but partially successful, and the the Constitution. Until that period shall arrive, evil has now reached such a magnitude as to we must execute so much of it as our condition permit no other remedy than the compulsory renders practicable. Whenever the withdrawal reduction of the currency to the amount required of the enemy shall place it in our power to make by the business of the country. This reduction a census and apportionment of direct taxes, any should be accompanied by a pledge that, under other mode of levying them will be contrary to no stress of circumstances, will that amount be the will of the lawgiver, and incompatible with exceeded. No possible mode of using the credit our obligation to obey that will ; until that pe- of the government can be so disastrous as one riod the alternative left is to obey the para- which disturbs the basis of all exchanges, renmount precept, and to execute it according to ders impossible all calculations of future values, the only other rule provided, which is to "make augments, ia constantly increasing proportions, the tax uniform throughout the confederate the price of all commodities, and so depreciates States."

all fixed wages, salaries, and incomes, as to renThe considerations just presented are greatly der them inadequate to bare subsistence. If to enforced by the reflection that any attempt to these be added the still more fatal influence on apportion taxes among States, some of which the morals and character of the people, to which are wholly or partially in the occupation of I have already adverted, I am persuaded you will hostile forces, would subvert the whole inten-concur in the conclusion that an inflexible adhertion of the framers of the Constitution, and be ence to a limitation of the currency to a fixel productive of the most revolting injustice, in- sum is an indispensable element of any system stead of that just correlation between taxation of finance now to be adopted. and representation which it was their purpose The holders of the currency now outstanding

With large portions of some of the can only be protected in the recovery of their States cupied by the enemy, what justice I just claims by substituting for their notes some

VOL VIII.-Doc. 18

to secure.


other security. If the currency is not greatly of the burden on the note-holder, but to force and promptly reduced, the present scale of in- those who have few or none of the notes to part flated prices will not only continue to exist, but with a share of their possessions to those who by the very fact of the large amounts thus made hold the notes in excess, in order to obtain the requisite in the conduct of the war, those prices means of satisfying the demands of the tax-gathwill reach rates still more extravagant, and the erer. This is the only mode by which it is pracwhole system will fall under its own weight, ticable to make all contribute as equally as posthus rendering the redemption of the debt im- sible in the burden which all are bound to share, possible, and destroying its whole value in the and it is for this reason that taxation adequate to hands of the holder. If, on the contrary, a fund- the public exigencies, under our present circumed debt, with interest secured by adequate taxa- stances, must be the basis of any funding systion, can be substituted for the outstanding cur- tem or other remedy for restoring stability to our rency, its entire amount will be made available finances. to the holder, and the government will be in a condition enabling it, beyond the reach of any probable contingency, to prosecute the war to a To the report of the Secretary of War you are successful issue. It is, therefore, demanded, as referred for details relative to the condition of the well by the interest of the creditor as of the army and the measures of legislation required country at large, that the evidences of the public for maintaining its efficiency, recruiting its numdebt now outstanding, in the shape of treasury bers, and furnishing the supplies necessary for notes, be converted into bonds bearing adequate its support. interest, with a provision for taxation sufficient Though we have lost many of the best of our to insure punctual payment, and final redemp- soldiers and most patriotic of our citizens—the tion of the whole debt.

sad and unavoidable result of the battles and The report of the Secretary of the Treasury toils of such a campaign as that which will renpresents the outlines of a system which, in con- der the year 1863 ever memorable in our annals junction with existing legislation, is intended to --the army is believed to be, in all respects, in secure the several objects of a reduction of the better condition than at any previous period of circulation within fixed reasonable limits; of the war. Our gallant defenders, now veterans, providing for the future wants of the govern- familiar with danger, hardened by exposure, and ment; of furnishing security for the punctual confident in themselves and their officers, endure payment of interest and final extinction of the privations with cheerful fortitude and welcome principal of the public debt; and of placing the battle with alacrity. The officers, by experience whole business of the country on a basis as near in field-service and the action of examining boards a specie standard as is possible during the contin- in relieving the incompetent, are now greatly uance of the war. I earnestly recommend it to more efficient than at the commencement of the your consideration, and that no delay be permit war. The assertion is believed to be fully justited to intervene before your action on this vital fied, that, regarded as a whole, for character, subject. I trust that it will be suffered to en- valor, efficiency, and patriotic devotion, our army gross your attention until you shall have disposed has not been equalled by any like number in the of it in the manner best adapted to attain the history of the war. important results which your country anticipate In view of the large conscription recently orfrom your legislation.

dered by the enemy, and their subsequent call It may be added that, in considering this sub- for volunteers, to be followed, if effectual, by a ject, the people ought steadily to keep in view still further draft, we are admonished that no efthat the government, in contracting debt, is but fort must be spared to add largely to our effecttheir agent; that its debt is their debt. As the ive force as promptly as possible. The sources currency is held exclusively by ourselves, it is of supply are to be found by restoring to the obrious that, if each person held treasury notes army all those who are improperly absent, putin exact proportion to the value of his whole ting an end to substitution, modifying the exmeans, each would in fact owe himself the amount emption law, restricting details, and placing in of the notes held by him, and, were it possible the ranks such of the able-bodied men now emto distribute the currency among the people in ployed as wagoners, nurses, cooks, and other this exact proportion, a tax levied on the cu employés, as are doing service for which the nerency alone, to an amount sufficient to reduce it groes may be found competent. to proper limits, would afford the best of all The act of the sixteenth of April, 1862, proremedies. Under such circumstances, the notes vides: “That persons not liable for duty may be remaining in the hands of each holder, after the received as substitutes for those who are, under payment of his tax, would be worth quite as such regulations as may be prescribed by the much as the whole sum previously held, for it Secretary of War.” The policy of granting this would purchase at least an equal amount of com- privilege has not been sustained by experience. modities. The result cannot be perfectly at- Not only has the numerical strength of the army tained by any device of legislation, but it can be been seriously impaired by the frequent deserapproximated by taxation. A tax on all values tions for which substitutes have become notohas, for its effect, not only to impose a due share rious, but dissatisfaction has been excited among those who have been unable or unwilling to avail the men were enrolled, under act of sixteenth themselves of the opportunity thus afforded of April, 1862, the majority of men in each comavoiding the military service of their country. pany would consist of those who joined it at

I fully concur in the opinion expressed by the different dates, subsequent to the original musSecretary, that there is no ground for the objec- ter of the company into service, and that the tion that a new provision, to include those who discharge of those who had completed their term furnished substitutes under the former call, would at no time be sufficient to leave the comwould be a breach of contract. To accept a sub-pany with a less number than is required to stitute was to confer a privilege, not to enter into enable it to retain its organization. The diffia contract; and whenever the substitute is ren- culty of obtaining recruits from certain localities, dered liable to conscription, it would seem to fol- and the large number of exemptions from millow that the principal, whose place he had taken, itary service granted by different laws, have should respond for him, as the government had prevented sufficient accessions in many of the received no consideration for his exemption companies to preserve their organizations after Where, however, the new provision of law would the discharge of the original members. The fail to embrace a substitute now in the ranks, advantage of retaining tried and well-approved there appears, if the principal should again be officers, and of mingling recruits with expericonscribed, to be an equitable ground for com- enced soldiers, is so obvious, and the policy of pensation to the conscript, who then would have such a course is so clearly indicated, that it is added to the service a soldier not otherwise liable not deemed necessary to point out the evil conto enrolment.

sequences which would result from the destrucOn the subject of exemption, it is believed that tion of the old organizations, or to dwell upon abuses cannot be checked unless the system is the benefits to be secured from filling up the placed on a basis entirely different from that now veteran companies as long before the discharge provided by law. The object of your legislation of the early members as may be possible. In has been, not to confer privileges on classes, but the cases where it may be found impracticable to exonerate from military duty such number of to maintain regiments in sufficient strength to persons skilled in the various trades, professions, justify the retention of the present organization, and mechanical pursuits, as could render more economy and efficiency would be promoted by valuable service to their country by laboring in consolidation and reorganization. This would their present occupation than by going into the involve the necessity of disbanding a part of the ranks of the army. The policy is unquestion officers, and making regulations for securing the able, but the result would, it is thought, be bet- most judicious selection of those who are reter obtained by enrolling all such persons, and tained, while least wounding the feelings of those allowing details to be made of the number neces- who are discharged. sary to meet the wants of the country. Consid- Experience has shown the necessity of further erable numbers are believed to be now exempted legislation in relation to the horses of the cavfrom the military service who are not needful to alry. Many men lose their horses by casualties the public in their civil vocations.

of service, which are not included in the proviCertain duties are now performed throughout sions made to compensate the owner for the loss, the country by details from the army, which and it may thus not unfrequently happen that could be as well executed by persons above the the most efficient troopers, without fault of their present conscript age. An extension of the limit, own, indeed it may be because of their zeal and so as to embrace persons over forty-five years of activity, are lost to the cavalry service. age, and physically fit for service, in guarding It would also seem proper that the governposts, railroads, and bridges, in apprehending ment should have complete control over every deserters, and, where practicable, assuming the horse mustered into the service, with the limitaplace of younger men detailed for duty with the tion that the owner should not be deprived of nitre, ordnance, commissary, and quartermasters' his horse except upon due compensation being bureaus of the War Department, would, it is made therefor. Otherwise, mounted men may hoped, add largely to the effective force in the not keep horses fit for the service; and the field, without an undue burthen on the popu- question whether they should serve mounted or lation,

on foot would depend, not upon the qualifications If to the above measures be added a law to of the men, but upon the fact of their having enlarge the policy of the act of twenty-first horses. April, 1862, so as to enable the department to Some provision is deemed requisite to correct replace not only enlisted cooks, but wagoners the evils arising from the long-continued absence and other employés in the army, by negroes, it of commissioned officers. Where it is without is hoped that the ranks of the army will be so sufficient cause, it would scem but just that the strengthened for the ensuing campaign as to put commission should be thereby vacated. at detiance the utmost efforts of the enemy:

Where it results from capture by the enemy, In order to maintain, unimpaired, the existing which, under their barbarous refusal to exchange organization of the army until the close of the prisoners of war, may be regarded as absence war, your legislation contemplated a frequent for an indefinite time, there is a necessity to supply of recruits, and it as expected that be- supply their places in their respective commands. fore the expiration of the three years for which I This might be done by temporary appointments,

to endure only until the return of the officers impressment law, but the restoration of the curregularly commissioned. Where it results from rency to such a basis as will enable the departpermanent disability incurred in the line of their ment to purchase necessary supplies in the open duty, it would be proper to retire them, and fill market, and thus render impressment a rare and the vacancies according to established mode. I exceptionable process. would also suggest the organization of an invalid The same remedy will effect the result, universcorps, and that the retired officers be transferred ally desired, of an augmentation of the pay of to it. Such a corps, it is thought, could be the army. The proposals made at your previous made useful in various employments for which sessions to increase the pay of the soldier by efficient officers and troops are now detached. additional amount of treasury notes, would have

An organization of the general staff of the conferred little benefit on him; but a radical rearmy would be highly conducive to the efficiency form in the currency will restore the pay to a of that most important branch of the service. value approximating that which it originally had, The plan adopted for the military establishment and materially improve his condition. furnishes a model for the staff of the provisional The reports from the ordnance and mining army, if it be deemed advisable to retain the bureaus are very gratifying, and the extension distinction ; but I recommend to your consider- of our means of supply of arms and munitions ation the propriety of abolishing it, and provid- of war from our home resources has been such ing for the organization of the several staff corps as to insure our ability soon to become mainly, in such number and with such rank as will meet if not entirely, independent of supplies from forall the wants of the service. To secure the re- eign countries. The establishments for the castquisite ability for the more important positions, ing of guns and projectiles, for the manufacture it will be necessary to provide for officers of of small arms and of gunpowder, for the supply higher rank than is now authorized for these of nitre from artificial nitre-beds, and mining corps. To give to the officers the proper rela- operations generally, have been so distributed tion and coïntelligence in their respective corps, through the country as to place our resources and to preserve in the chief of each useful in- beyond the reach of partial disasters. fluence and control over his subordinates, there The recommendations of the Secretary of War should be no gradation on the basis of the rank on other points are minutely detailed in his reof the general with whom they might be serving port, which is submitted to you, and extending by appointment. To the personal staff of a gen- as they do to almost every branch of the service, eral it would seem proper to give a grade cor- merit careful consideration. responding with his rank, and the number might be fixed to correspond with his command. To

EXCHANGE OF PRISONERS. avoid the consequence of discharge upon a I regret to inform you that the enemy have change of duty, the variable portion of the per- returned to the barbarous policy with which sonal staff might be taken from the line of the they inaugurated the war, and that the exchange army, and allowed to retain their line commis- of prisoners bas been for some time suspended. sions.

The correspondence of the Commissioners of ExThe disordered condition of the currency, to change is submitted to you by the Secretary of which I have already alluded, has imposed on War, and it has already been published for the government a system of supplying the wants of information of all now suffering useless imprisonthe army, which is so unequal in its operation, ment. The conduct of the authorities of the vexatious to the producer, injurious to the in- United States has been consistently perfidious dustrial interest, and productive of such discon- on this subject. An agreement for exchange, in tent among the people, as only to be justified by the incipiency of the war, had just been concludthe existence of an absolute necessity. The re-ed, when the fall of Fort Donelson reversed the port of the Secretary on this point establishes previous state of things, and gave them an excess conclusively, that the necessity which has forced of prisoners. The agreement was immediately the Bureau of Supply to provide for the army repudiated by them, and so remained till the forby impressment, has resulted from the impos- tune of war again placed us in possession of the sibility of purchase by contract, or in the open larger number. A new cartel was then made, market, except at such rapidly increased rates and under it, for many months, we restored to as would have rendered the appropriations inad- them many thousands of prisoners in excess of equate to the wants of the army. Indeed, it is those whom they held for exchange, and encampbelieved that the temptation to horde supplies ments of the surplus paroled prisoners delivered for the higher prices which could be anticipated up by us were established in the United States, with certainty, has been checked mainly by the where the men were enabled to receive the comfear of the operation of the impressinent law; forts and solace of constant communication with and that commodities have been offered in the their homes and families. In July last, the formarkets, principally to escape impressment, and tune of war again favored the enemy, and they obtain higher rates than those fixed by appraise- were enabled to exchange for duty the men prement. The complaints against this vicious sys- viously delivered to them, against those captured tem have been well founded, but the true cause and paroled at Vicksburgh and Port Hudson. of the evil has been misapprehended. The re- The prisoners taken at Gettysburgh, however, medy is to be found, not in a change of the remained in their hands, and should have been

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