37TH CONG....1ST SESS. Message of the President. take all the trouble off the hands of secession, except only what proceeds from the external blockade. It would do for the disunionists that which of all things they most desire-feed them well and give them disunion without a struggle of their own. It recognizes no fidelity to the Constitution, no obligation to maintain the Union; and while very many who have favored it are doubtloyal citizens, it is, nevertheless, very injurious in effect. tional republic, or democracy-a Government of the people by the same people-can or cannot maintain its territorial integrity against its own domestic foes. It presents the question, whether discontented individuals, too few in numbers to control administration, according to organic law, in any case, can always, upon the pretenses made in this case, or on any other pretenses, or arbitrarily, without any pretense, break up their Gov-less ernment, and thus practically put an end to free government upon the earth. It forces us to ask: Is there, in all republics, this inherent and fatal weakness?" "Must a Government, of necessity, be too strong for the liberties of its own people, or two weak to maintain its own existence?" So viewing the issue, no choice was left but to call out the war power of the Government; and so to resist force employed for its destruction, by force for its preservation. The call was made, and the response of the country was most gratifying, surpassing in unanimity and spirit the most sanguine expectation. Yet none of the States commonly called slave States, except Delaware, gave a regiment through regular State organization. A few regiments have been organized within some others of those States by individual enterprise, and received into the Government service. Of course, the seceded States, so called, (and to which Texas had been joined about the time of the inauguration,) gave no troops to the cause of the Union. The border States, so called, were not uniform in their action, some of them being almost for the Union, while in others-as Virginia, North Carolina, Tennessee, and Arkansas-the Union sentiment was nearly repressed and silenced. The course taken in Virginia was the most remarkable-perhaps the most important. A convention, elected by the people of that State to consider this very question of disrupting the Federal Union, was in session at the capital of Virginia when Fort Sumter fell. To this body the people had chosen a large majority of professed Union men. Almost immediately after the fall of Sumter, many members of that majority went over to the original disunion minority, and, with them, adopted an ordinance for withdrawing the State from the Union. Whether this change was wrought by their great approval of the assault upon Sumter, or their great resentment at the Government's resistance to that assault, is not definitely known. Although they submitted the ordinance, for ratification, to a vote of the people, to be taken on a day then somewhat more than a month distant, the convention and the Legislature, (which was also in session at the same time and place,) with leading men of the State, not members of either, immediately commenced acting as if the State were already out of the Union. They pushed military preparations vigorously forward all over the State. They seized the United States armory at Harper's Ferry, and the navy-yard at Gosport, near Norfolk. They received-perhaps invited-into their State large bodies of troops, with their warlike appointments, from the so-called seceded States. They formally entered into a treaty of temporary alliance and cooperation with the so-called "confederate States," and sent members to their congress at Montgomery; and, finally, they permitted the insurrectionary government to be transferred to their capital at Richmond. The people of Virginia have thus allowed this giant insurrection to make its nest within her borders; and this Government has no choice left but to deal with it where it finds it. And it has the less regret, as the loyal citizens have in due form claimed its protection. Those loyal citizens this Government is bound to recognize and protect as being Virginia. || Recurring to the action of the Government, it may be stated that at first a call was made for seventy-five thousand militia; and rapidly following this a proclamation was issued for closing the ports of the insurrectionary districts by proceedings in the nature of a blockade. So far all was believed to be strictly legal. At this point the insurrectionists announced their purpose to enter upon the practice of privateering. Other calls were made for volunteers to serve for three years, unless sooner discharged, and also for large additions to the regular Army and Navy. These measures, whether strictly legal or not, were ventured upon under what appeared to be a popular demand and a public necessity; trusting then as now that Congress would readily ratify them. It is believed that nothing has been done beyond the constitutional competency of Congress. Soon after the first call for militia, it was considered a duty to authorize the commanding general in proper cases, according to his discretion, to suspend the privilege of the writ of habeas corpus, or, in other words, to arrest and detain, without resort to the ordinary processes and forms of law, such individuals as he might deem dangerous to the public safety. This authority has purposely been exercised but very sparingly. Nevertheless, the legality and propriety of what has been done under it are questioned, and the attention of the country has been called to the proposition that one who is sworn to "take care that the laws be faithfully executed" should not himself violate them. Of course some consideration was given to the questions of power and propriety before this matter was acted upon. The whole of the laws which were required to be faithfully executed were being resisted, and failing of execution in nearly one third of the States. Must they be allowed to finally fail of execution, even had it been perfectly clear that by the use of the means necessary to their execution some single law, made in such extreme tenderness of the citizen's liberty, that practically it relieves more of the guilty than of the innocent, should to a very limited extent be violated? To state the question more directly: are all the laws but one to go unexecuted, and the Government itself go to pieces, lest that one be violated? Even in such a case, would not the official oath be broken if the Gov ernment should be overthrown, when it was believed that disregarding the single law would tend to preserve it? But it was not believed that this question was presented. It was not believed that any law was violated. The provision of the Constitution that "the privilege of the writ of habeas corpus shall not be suspended unless when, in cases of rebellion or invasion, the public safety may require it," is equivalent to a provision-is a provision-that such privilege may be suspended when, in case of rebellion or invasion, the public safety does require it. It was decided that we have a case of rebellion, and that the public safety does require the qualified suspension of the privilege of the writ which was authorized to be made. Now, it is insisted that Congress, and not the Executive, is vested with this power. But the Constitution itself is silent as to which or who is to exercise the power; and as the provision was plainly believed the framers of the instrument intended that in every case the danger should run its course until Congress could be called together; the very assembling of which might be prevented, as was intended in this case, by the rebellion. In the border States, so called-in fact, the mid-made for a dangerous emergency, it cannot be dle States-there are those who favor a policy which they call "armed neutrality;" that is, an arming of those States to prevent the Union forces passing one way, or the disunion the other, over their soil. This would be disunion completed. Figuratively speaking, it would be the building of an impassable wall along the line of separationand yet not quite an impassable one; for, under the guise of neutrality, it would tie the hands of the Union men, and freely pass supplies from among them to the insurrectionists, which it could not do as an open enemy. At a stroke it would SENATE & HO. OF REPS. so extraordinary, and so long continued, as to lead some foreign nations to shape their action as if they supposed the early destruction of our national Union was probable. While this, on discovery, gave the Executive some concern, he is now happy to say that the sovereignty and rights of the United States are now everywhere practically respected by foreign Powers; and a general sympathy with the country is manifested throughout the world. The reports of the Secretaries of the Treasury, War, and the Navy, will give the information in detail deemed necessary and convenient for your deliberation and action; while the Executive and all the Departments will stand ready to supply omissions, or to communicate new facts considered important for you to know. It is now recommended that you give the legal means for making this contest a short and a decisive one; that you place at the control of the Government, for the work, at least four hundred thousand men, and $400,000,000. That number of men is about one tenth of those of proper ages within the regions where, apparently, all are willing to engage; and the sum is less than a twenty-third part of the money value owned by the men who seem ready to devote the whole. A debt of $600,000,000 now, is a less sum per head than was the debt of our Revolution when we came out of that struggle; and the money value in the country now bears even a greater proportion to what it was then, than does the population. Surely each man has as strong a motive now to preserve our liberties, as each had then to establish them. A right result, at this time, will be worth more to the world than ten times the men and ten times the money. The evidence reaching us from the country leaves no doubt that the material for the work is abundant, and that it needs only the hand of legislation to give it legal sanction, and the hand of the executive to give it practical shape and efficiency. One of the greatest perplexities of the Government is to avoid receiving troops faster than it can provide for them. In a word, the people will save their Government if the Government itself will do its part only indifferently well. It might seem, at first thought, to be of little difference whether the present movement at the South be called "secession" or "rebellion." The movers, however, well understand the difference. At the beginning they knew they could never raise their treason to any respectable magnitude by any name which implies violation of law. They knew their people possessed as much of moral sense, as much of devotion to law and order, and as much pride in, and reverence for, the history and Government of their common country, as any other civilized and patriotic people. They knew they could make no advancement directly in the teeth of these strong and noble sentiments. Accordingly they commenced by an insidious debauching of the public mind. They invented an ingenious sophism, which, if conceded, was followed by perfectly logical steps, through all the incidents, to the complete destruction of the Union. The sophism itself is, that any State of the Union may, consistently with the national Constitution, and therefore lawfully and peacefully, withdraw from the Union without the consent of the Union or of any other State. The little disguise that the supposed right is to be exercised only for just cause, themselves to be the sole judge of its justice, is too thin to merit any notice. With rebellion thus sugar-coated they havea been drugging the public mind of their section for more than thirty years, and until at length they have brought many good men to a willingness to take up arms against the Government the day after some assemblage of men have enacted the farcical pretense of taking their State out of the Union, who could have been brought to no such thing the day before. This sophism derives much, perhaps the whole, No more extended argument is now offered, as an opinion, at some length, will probably be pre-of its currency from the assumption that there is sented by the Attorney General. Whether there shall be any legislation upon the subject, and if any, what, is submitted entirely to the better judgment of Congress. The forbearance of this Government had been some omnipotent and sacred supremacy pertaining to a State-to each State of our Federal Union. Our States have neither more nor less power than that reserved to them in the Union by the Constitution-no one of them ever having been a State 37TH CONG....1ST SESS. Message of the President. that creditors shall go unpaid, or the remaining | Again: if one State may secede, so may another; The seceders insist that our Constitution admits of secession. They have assumed to make a national constitution of their own, in which, of necessity, they have either discarded or retained the right of secession, as they insist it exists in ours. If they have discarded it, they thereby admit that, on principle, it ought not to be in ours. If they have retained it, by their own construction of ours they show that, to be consistent, they must secede from one another whenever they shall find it the easiest way of settling their debts, or effecting any other selfish or unjust object. The principle itself is one of disintegration, and upon which no Government can possibly endure. If all the States, save one, should assert the power to drive that one out of the Union, it is presumed the whole class of seceder politicians would at once deny the power, and denounce the act as the greatest outrage upon State rights. But suppose that precisely the same act, instead of being called " driving the one out," should be called the seceding of the others from that one:" it would be exactly what the seceders claim to do; unless, indeed, they make the point that the one, because it is a minority, may rightfully do what the others, because they are a majority, may not rightfully do. These politicians are subtile and profound on the rights of minorities. They are not partial to that power which made the Constitution, and speaks from the preamble, calling itself "We, the People." out of the Union. The original ones passed into What is now combated, is the position that secession is consistent with the Constitution—is lawful and peaceful. It is not contended that there is any express law for it; and nothing should ever be implied as law which leads to unjust or absurd consequences. The nation purchased with money the countries out of which several of these States were formed: is it just that they shall go off without leave and without refunding? The nation paid very large sums (in the aggregate, I believe, nearly a hundred mill) to relieve Florida of the aboriginal tribes: is that she shall now be off without consent, or without making any return? The nation is now in debt for money applied to the benefit of these so-called seceding States in common with the rest: is it just either It may be affirmed, without extravagance, that the free institutions we enjoy have developed the powers and improved the condition of our whole people, beyond any example in the world. Of this we now have a striking and an impressive illustration. So large an army as the Government has now on foot was never before known without a soldier in it but who had taken his place there of his own free choice. But more than this: there are many single regiments whose members, one and another, possess full practical knowledge of all the arts, sciences, professions, and whatever else, whether useful or elegant, is known in the world; and there is scarcely one from which there could not be selected a President, a Cabinet, a Congress, and perhaps a court, abundantly competent to administer the Government itself! Nor do I say this is not true also in the army of our late friends, now adversaries, in this contest; but if it is, so much better the reason why the Government which has conferred such benefits on both them and us should not be broken up. Whoever, in any section, proposes to abandon such a Government, would do well to consider, in deference to what principle it is that he does it; what better he is likely to get in its stead; whether the substitute will give, or be intended to give, so much of good to the people? There are some foreshadowings on this subject. Our adversaries have adopted some declarations of independence, in which, unlike the good old one, penned by SENATE & HO. OF REPS. Jefferson, they omit the words "all men are created equal." Why? They have adopted a temporary national constitution, in the preamble of which, unlike our good old one, signed by Washington, they omit We, the People," and substitute" We, the deputies of the sovereign and independent States." Why? Why this deliberate pressing out of view the rights of men and the authority of the people? This is essentially a people's contest. On the side of the Union, it is a struggle for maintaining in the world that form and substance of government whose leading object is to elevate the condition of men; to lift artificial weights from all shoulders; to clear the paths of laudable pursuit for all; to afford all an unfettered start and a fair chance in the race of life. Yielding to partial and temporary departures, from necessity, this is the leading object of the Government for whose existence we contend. I am most happy to believe that the plain people understand and appreciate this. It is worthy of note, that while in this the Government's hour of trial, large numbers of those in the Army and Navy who have been favored with the offices have resigned and proved false to the hand which had pampered them, not one common soldier or common sailor is known to have deserted his flag. Great honor is due to those officers who remained true, despite the example of their treacherous associates; but the greatest honor, and most important fact of all, is the unanimous firmness of the common soldiers and common sailors. To the last man, so far as known, they have successfully resisted the traitorous efforts of those whose commands, but an hour before, they obeyed as absolute law. This is the patriotic instinct of plain people. They understand, without an argument, that the destroying the Government which was made by Washington means no good to them. Our popular Government has often been called an experiment. Two points in it our people have already settled-the successful establishing and the successful administering of it. One still remains its successful maintenance against a formidable internal attempt to overthrow it. It is now for them to demonstrate to the world that those who can fairly carry an election can also suppress a rebellion; that ballots are the rightful and peaceful successors of bullets; and that when ballots have fairly and constitutionally decided, there can be no successful appeal back to bullets; that there can be no successful appeal except to ballots themselves, at succeeding elections. Such will be a great lesson of peace; teaching men that what they cannot take by an election, neither can they take by a war; teaching all the folly of being the beginners of a war. Lest there be some uneasiness in the minds of candid men as to what is to be the course of the Government towards the southern States after the rebellion shall have been suppressed, the Executive deems it proper to say, it will be his purpose then, as ever, to be guided by the Constitution and the laws; and that he probably will have no different understanding of the powers and duties of the Federal Government relatively to the rights of the States and the people, under the Constitution than that expressed in the inaugural address. He desires to preserve the Government, that it may be administered for all, as it was administered by the men who made it. Loyal citizens every where have the right to claim this of their Government, and the Government has no right to withhold or neglect it. It is not perceived that, in giving it, there is any coercion, any conquest, or any subjugation, in any just sense of those terms. The Constitution provides, and all the States have accepted the provision, that "the United States shall guaranty to every State in this Union a republican form of Government." But if a State may lawfully go out of the Union, having done so, it may also discard the republican form of Government; so that to prevent its going out is an indispensable means to the end of maintaining the guarantee mentioned; and when an end is lawful and obligatory, the indispensable means to it are also lawful and obligatory. It was with the deepest regret that the Exccutive found the duty of employing the war power 37TH CONG....1ST SESS. in defense of the Government forced upon him. He could but perform this duty, or surrender the existence of the Government. No compromise by public servants could in this case be a cure; not that compromises are not often proper, but that no popular Government can long survive a marked precedent that those who carry an election can only save the Government from imme diate destruction by giving up the main point upon which the people gave the election. The people themselves, and not their servants, can safely reverse their own deliberate decisions. As a private citizen, the Executive could not have consented that these institutions shall perish; much less could he, in betrayal of so vast and so sacred a trust as these free people have confided to him. He felt that he had no moral right to shrink, or even to count the chances of his own life, in what might follow. In full view of his great responsibility, he has, so far, done what he has deemed his duty. You will now, according to your own judgment, perform yours. He sincerely hopes that your views and your action may so accord with his as to assure all faithful citizens who have been disturbed in their rights of a certain and speedy restoration to them, under the Constitution and the laws. And having thus chosen our course, without guile and with pure purpose, let us renew our trust in God, and go forward without fear and with manly hearts. July 4, 1861. ABRAHAM LINCOLN. Report of the Secretary of the Treasury. TREASURY DEPARTMENT, July 4, 1861. SIR: The Secretary of the Treasury is required by law to prepare and lay before Congress, at the commencement of every session, a report on the subject of finance, containing estimates of the public revenue and public expenditures, and plans for improving and increasing the revenue. This duty, always important and responsible, is now rendered doubly important and responsible by the peculiar circumstances under which the present session of Congress is held. A vast conspiracy against the union of the States, and the very existence of the national Government, which has been gathering strength and preparing hostilities in secret for many years, has at length broken out into flagrant violence, and has assumed proportions so serious that an extraordinary exertion of the public force, creating extraordinary demands upon the public resources, is required for its speedy and 'complete discomfiture and suppression. In the judgment of the Secretary, the clearest understanding of the actual condition of the public finances, and of the measures demanded by its exigencies, will be obtained by considering the whole subject under the following general heads: I. The balance arising from the receipts and expenditures of the fiscal year 1861, ending on the 30th of June. II. The demands upon the Treasury, arising under existing appropriations or created by the new exigencies, for which provision is to be made during the fiscal year 1862. III. The best ways of providing for these demands, and the means available for that purpose. I. Receipts and Expenditures. The balance in the Treasury on June 30, 1860, as shown by the last annual report to Congress, was.. $3,629,206 71 The receipts for the year ending June 30, 1861, have been: 39,593,819 81 824,687 80 861,096 54 42,064,082 95 85,972,893 81 Amount carried forward.....962,436,715 71 $86,972,893 81 II. Appropriations made and required. The balances of appropriations for the fiscal year ending June 30, 1860, remaining undrawn at its close, and therefore to be paid from the revenues of the fiscal year ending June 30, 1861, were, in the aggregate..$20,166,870 81 The amount appropriated for the service of the Government (including permanent and indefinite appropriations) for the fiscal year ending June 30, 1861, was....... 78,233,408 53 Making a total of appropriations for the year ending June 30, 1861, and of liabilities for appropriations of the preceding year, of.. 98,400,279 34 Of the appropriations intended for expenditure during the fiscal year ending June 30, 1862, there has necessarily been applied to the service of the year just closed the sum of.... 6,298,859 96 104,699,139 30 84,577,258 60 20,121,880 70 59,588,989 38 $79,710,870 08 SENATE & HO. OF REPS. and so adjusting the details of both, that the whole amount needed may be obtained with certainty, with due economy, with the least possible inconvenience, and with the greatest possible incidental benefit to the people. The Secretary has given to this important subject the best consideration which the urgency of varied public duties has allowed, and now submits to the consideration of Congress, with great deference and no little distrust of his own judgment, the conclusions to which he has arrived. He is of the opinion that not less than eighty million dollars should be provided by taxation, and that $240,000,000 should be sought through loans. It will hardly be disputed that in every sound system of finance, adequate provision by taxation for the prompt discharge of all ordinary demands, for the punctual payment of the interest on loans, and for the creation of a gradually increasing fund for the redemption of the principal, is indispensable. Public credit can only be supported by public faith, and public faith can only be maintained by an economical, energetic, and prudent administration of public affairs, and by the prompt and punctual fulfillment of every public obliga tion. It has been already stated that the appropriations for the ordinary expenditures of the fiscal year 1862, including the permanent and indefinite descriptions, amount to $65,887,849 34, and the interest to be paid on the debt to be incurred during the year has been estimated at $9,000,000; making an aggregate of ordinary expenditures of $74,887,849 34. If to these sums be added $5,000,000, as a provision for the reduction and final extinguishment of the public debt, the total sum will be $79,887,849 34. To provide for these payments, at least, it is proposed, in accordance with the principle just stated, to raise, by taxation, the sum of not less than $80,000,000. In considering the choice of means to insure a revenue adequate to the purposes just indicated, the attention of the Secretary has been necessarily drawn to the different modes of taxation authorized by the Constitution. The choice is limited to duties on imports, direct taxes, and internal duties or excises. Duties on imports constitute the chief form of indirect taxation. Direct taxes include capitation taxes, taxes on real estate, and probably general taxes on personal property included in lists embracing all descriptions and valued by a uniform rule, while under the head of internal duties or excises may be included all taxes on consumption, and taxes on particular descriptions of personal property, with reference to the use rather than value. The principal advantages of a system of direct taxes are found in the sensibility with which they are felt and observed; in the motives thence arising for economy and fidelity in administration; and in the manifest equity of distributing burdens in proportion to means, rather than in proportion to consumption. On the other hand, the advantages of indirect taxation, by duties on imports, are found in economy of collection, in facility of payment, in adaptability to the encouragement of industry, and, above all, in the avoidance of Federal interference with the finances of the States, whose main reliance for revenue for all objects of State administration must, necessarily, be upon levies on property.. These considerations have doubtless determined the preference which has always been evinced by the people of the United States, as well as by their Legislature and Executive, for duties on imports as the chief source of national revenue. Only on occasions of special exigency has resort been had to direct taxation, or to internal duties or excises. No departure is proposed by the Secretary from the line of policy thus sanctioned. He ventures to recommend only such modifications of the existing tariff as will produce the principal part of the needed revenue, and such resort to direct taxes or internal duties or excises as circumstances may require, in order to malood whatever deficiency may be found to es That the present tariff of duties will not produce the revenue required by sound principles of finance, under existing circumstances, is a proposition which will command general assent. It 37TH CONG....1ST SESS. was framed, indeed, with reference to a very different condition of affairs. The receipts for the Jast quarter of the fiscal year, just closed, were only $5,527,246 33; and, though a very considerable improvement in the revenue may be confidently anticipated during the current fiscal year, should no change be made in the rates of duties, it will be inadequate, beyond doubt, to the demands of the Treasury, which should be provided for without resort to loans. These demands, as has been already stated, will reach the sum of $79,887,849 34-a sum not greater, perhaps, than may be reasonably expected in more prosperous years from a well-adjusted tariff of duties, with the aid of the revenue from lands and from miscellaneous sources, though greater than can now be expected from any tariff. The disorders of business incident to the disturbed condition of political affairs will be gradually redressed as new channels open to receive the trade obstructed in former courses, and new employments engage the industry displaced from former pursuits. With this revival of trade and industry the revenue will improve, even though || the restoration of peace may be delayed beyond our present hope. It is hardly to be doubted, moreover, that the great body of the citizens of the States, now involved in the calamities of insurrection, will ere long become satisfied that order and peace, and security for all rights of property, and for all personal and political rights in the Union and under the Constitution, are preferable to the disorder and conflict and insecurity necessarily incident to attempts to subvert government, break up institutions, and to destroy nationality by force and violence. When, under the influence of this reasonable conviction, the people of the several States, now constrained by the criminal folly of political partisans into civil war against the Union, shall in their turn constrain these partisans to loyalty to law and obedience to the Constitution, unreasonable to expect that with restored union will come, not merely renewed prosperity, but prosperity renewed in a degree and measure without parallel in the past experience of our country. is not While recommending the changes in the existing tariff and the other revenue measures which seem to him necessary, the Secretary indulges, therefore, a confident expectation that they will ultimately prove wholly adequate to all reasonable demands for ordinary expenditures, for payment of interest, and for reduction of debt; and that they will, moreover, by establishing national credit on sure foundations, contribute in no inconsiderable degree to that revival of trade and industry which, by its healthful reaction, will, In turn, essentially promote the increase and security of the revenue. The sources of the revenue most promptly to be made available must be sought doubtless in the articles now exempt from duty or but lightly taxed. Nearly all these articles have heretofore - contributed in full measure to the national income. It was only when the debts contracted in former wars for the establishment of our national independence, or the vindication of our national rights, had been fully paid, and the revenue had increased largely beyond any legitimate uses of the Government, that it was thought proper to remove the duties on some of them and largely reduce the duties on others. That intelligent patriotism which cheerfully sustained the former charges will even more cheerfully sustain those made necessary now for the preservation of our national Union and the maintenance of the sovereignty of the people. Of the articles now lightly taxed, sugar, and of those wholly exempt from duty, tea and coffee, are the most important. The Secretary most respectfully proposes to Congress that a duty of two and a half cents per pound be laid on brown sugar; of three cents per pound on clayed sugar; of four cents per pound on loaf and other refined sugar; of two and one half cents per pound on sirup of sugar-cane; of six cents per pound on candy; of six cents per gallon on molasses; and of four cents per gallon on sour molasses; and it is also proposed that a duty of five cents per pound be imposed on coffee, fifteen cents per pound on black tea, and twenty cents per pound on green tea. || Report of the Secretary of the Treasury. From these duties it is estimated that an additional revenue of not less than $20,000,000 annually may be raised; while the burden of this revenue upon our own people will be to some considerable degree mitigated by participation on the part of the foreign producers. Without going here into other details of less importance, the Secretary thinks it proper to add, in general, that from proposed duties on articles now exempt, and from changed duties on articles now either lightly burdened or so heavily taxed that the tax amounts to a prohibition, a further increase of revenue to the amount of $7,000,000 may be anticipated; and that the improving condition of trade and industry warrant a just expectation that the revenue from the duties of the present tariff, not affected by the proposed changes, will not fall short of $30,000,000. He estimates, therefore, the total revenue from imports during the present year at $57,000,000, to which may be added the sum of $3,000,000 to be derived from sales of public lands and miscellaneous sources, making the total revenue for the year $60,000,000. While, therefore, there is every reason to believe that under a modified tariff, when the prosperity of the country shall be fully restored, an annual revenue of not less than $80,000,000, and probably more, may be realized, it will be necessary, in order to sustain fully the public credit, to provide for raising the sum of $20,000,000 for the current year at least, by direct taxes, or from internal duties or excises, or from both. The Constitution requires that the former be apportioned among the States, in the ratio of Federal population; the latter need only be uniform throughout the United States. Taxes on real estate, and perhaps general taxes on personal property, must therefore be apportioned. Taxes on distilled liquors, on bank notes, on carriages, and similar descriptions of property, must not be higher in one State than taxes on the same articles in another State. The Secretary submits to the superior wisdom of Congress the determination of the question whether resort shall be made to direct taxes or to internal duties, or to both, for the supply of the probable deficiency of that portion of the public resources, which, upon the principles already explained, must be furnished by taxation. The value of the real and personal property of the people of the United States, according to the census of 1860, is $16,102,924,116, or, omitting fractions, $16,000,000,000. The value of the real property is estimated at $11,272,053,881, and the value of the personal property is estimated at $4,830,880,235. The proportion of the property of both descriptions in the United States, excluding those at present under insurrection, is $10,900,758,009, of which sum $7,630,530,605 represents, according to the best estimates, the value of the real, and $3,207,227,404 the value of the personal property. A rate of one eighth of one per cent. ad valorem on the whole real and personal property of the country would produce a sum of $20,128,667; a rate of one fifth of one per cent. on the real and personal property of the States not under insurrection, would produce the sum of $21,808,516; and a rate of three tenths of one per cent. on the real property alone, in these States, would produce $22,891,590; either sum being largely in excess of the amount required. In some of the States the revenue for all purposes of State, county, and municipal expenditure is raised in this manner; and the assessments of real and personal property levied on valuations made under State authority form a certain and convenient method of collection. If such valuations existed in all the States it would not be difficult, through the assumption and payment by the several States of their several proportions of the tax, or through the coöperation of the State authorities in its collection, or through Federal agencies created for the purpose, but using the State valuations to assess and collect the levy for national purposes. It is the absence of such valuations in some of the States, and the uncertainty of effective cooperation in all, which make the employment of an extensive and complicated Federal machinery for the collection of direct taxes necessary, and SENATE & HO. OF REPS. supply the basis of the most serious objections against the mode of levying internal revenue. It has been objected, and not without apparent reason, to a resort to direct taxes at this time, that, in consequence of the disturbed condition of the country, the apportionment required by the Constitution cannot be made. The Secretary, however, adopts the opinion, that the constitutional requirement will be satisfied if Congress, in the act levying the tax, shall apportion it among the several States in the required manner. The tax cannot become unconstitutional, because it may be difficult, or even temporarily impossible, to collect it as apportioned. If it were otherwise, the objection would be fatal to internal duties as well as to direct taxes; for in the present condition of the country it is impossible, whatever uniformity may be observed in the law imposing such duties, to make them uniform in the collection. Internal duties may be collected more cheaply than direct taxes, by fewer agents, with less interference with the finances of the States. They may also be made to bear mainly upon articles of luxury, and thus diminish, to a certain extent, the burden imposed by duties on imports upon the classes of the people least able to bear them. It has been already shown that a light direct tax, from which, the Secretary ventures to suggest, very small properties may be properly and advantageously exempted, will produce the sum needed for revenue. In the judgment of the Secretary the needed sum may also be obtained from moderate charges on stills and distilled liquors, on ale and beer, on tobacco, on bank notes, on spring carriages, on silver ware and jewelry, and on legacies. If both sources of revenue be resorted to to the extent suggested, the amount required from loans will be proportionally diminished, and the basis of the public credit proportionally enlarged and strengthened. Whether both these modes of taxation be resorted to under present emergencies, or only one of them, the Secretary will but illy perform his duty to Congress or the people if he omits to urge the great importance-the absolute necessity, indeed-of such full provision of annual revenue as will manifest to the world a fixed purpose to maintain inviolate the public faith by the strictest fidelity to all public engagements. It will not, perhaps, be thought out of place if the Secretary suggests here that the property of those engaged in insurrection or in giving aid and comfort to insurgents may properly be made to contribute to the expenditures made necessary by their criminal misconduct as a part of the punishment due to the guilt of involving the nation in the calamities of civil war, and thereby bringing distress upon so many innocent citizens. Congress may justly provide for the forfeiture of the whole or part of the estates of offenders and for the payment of the proceeds into the public Treas ury. Before dismissing the subject of the proper provision for ordinary expenditures, including interest on public debt and a proper amount for a sinking fund, the Secretary respectfully asks the consideration of Congress for the question, whether the current disbursements of Government may not be themselves diminished? He ventures to suggest that a considerable saving may be judiciously effected by a reduction, for the time at least, of ten per centum upon salaries and wages paid by the Federal Government, in cases where such reduction will not interfere with existing contracts; and that a further saving, perhaps not less considerable, may be effected by the abolition of the franking privilege and the reduction of postal expenses. Retrenchment in other directions will doubtless suggest itself to the reflection of Congress; and it is most respectfully recommended that every retrenchment compatible with the vigor and efficiency of the public service be promptly and effectively made. The Secretary has already said that on the supposition that $80,000,000 may be raised by taxation in the modes proposed, or derived from sales of public lands and miscellaneous sources, it will still be necessary, in order to meet the extraordinary demands of the present crisis, to raise the sum of $240,000,000 by loans. A comparison of the acts by which loans have 37TH CONG....1ST SESS. been already authorized, and of the loans actually made, will show what resources of this description are available under existing laws. The act of June 22, 1860, authorized the borrowing of $21,000,000 at an interest not above six per cent. Under this authority, Mr. Secretary Cobb, in October, 1860, negotiated a loan of $10,000,000; but, from causes not necessary to be here speciffed, the takers of $2,978,000 failed to make good their offers. The amount realized was therefore only $7,022,000; leaving for future negotiation, under the act, the sum of $13,978,000. The act of the 8th of February, 1861, authorized another loan of $25,000,000, on bonds at six per cent., and permitted the acceptance of the best bids, whether above or below par. Under this act, in February, 1861, Mr. Secretary Dix disposed of bonds to the amount of $8,006,000, at rates varying from 90.15 to 96.10 for each $100, and realizing the sum of $7,243,500 35, leaving to be negotiated the sum of $16,994,000. The act of March 2, 1861, commonly called the tariff act, authorized another loan of $10,000,000, at an interest not exceeding six per cent., and also authorized the Secretary of the Treasury to issue Treasury notes in exchange for coin or payment of debts for the amount of any bids not accepted under the act of February 3, 1861, and for the amount of any loans restricted to par not taken under proposals authorized by the act of January, 1860, or by the tariff act itself. Under the acts of February and March, 1861, the present Secretary in April, 1861, disposed of $3,099,000 in bonds, at rates varying from ninetyfour per cent. to par, and $4,901,000 in Treasury notes, at and above par, realizing for the $8,000,000 offered the sum of $6,814,809 80 to the Treasury; and in May, 1861, he further disposed of $7,310,000 in bonds, at rates varying from eighty-five to ninety-three per cent., $1,684,000 in Treasury notes at par, realizing for the $8,994,000 offered the sum of $7,922,553 45. The present Secretary also invited proposals, at par, for $13,978,000, being the balance of the loan authorized by the act of June, 1860. No bids were received, except three for $12,000 in the aggregate, which, having been made under misapprehension, were permitted to be withdrawn or applied as offers for Treasury notes at par, or for bonds under the act of February, 1861, at eighty-five per cent. The Secretary has since, under the authority of the act of March, 1861, issued Treasury notes to offerers at par, and in payment to public creditors, to the amount of $2,584,550. The only authority now existing for obtaining money by loans is, therefore, found in the act of March 2, 1861, which authorizes the issuing of bonds bearing an interest of six per cent.; or, in default of offers at par, the issue or payment of Treasury notes, bearing the same rate of interest, at par, to the amount of $10,000,000. And in the act of June 22, 1860, as modified by the act of March 2, 1861, under which Treasury notes at six per cent. may be issued or paid to creditors at par, to the amount of $11,393,450; making an aggregate of loans authorized in some form of $21,393,450. This authority, under existing circumstances, is no further available than as creditors may desire to accept payment in Treasury notes at six per cent.; which is not to be expected, except perhaps as an alternative to delays, of which a just or prudent Government will not, unless under extreme necessity, permit the occur rence. It needs no argument to work the conviction that, under the existing laws, little or nothing of the required sum can be realized. The magnitude of the occasion requires other measures. As the contest in which the Government is now engaged is a contest for national existence and the Sovereignty of the people, it is eminently proper that the appeal for the means of prosecuting it with energy to a speedy and successful issue, should be made, in the first instance at least, to the people themselves. And it is highly desirable, in order that the circle of contribution may be widely extended, to make the burden press as lightly.as practicable upon each individual contributor, and, if possible, to transmute the burden into a benefit. | Report of the Secretary of the Treasury. To attain these desirable objects the Secretary submits to Congress the expediency of opening subscriptions for a national loan of not less than $100,000,000, to be issued in the form of Treasury notes, or exchequer bills, bearing a yearly interest of seven and three tenths per centum, to be paid half yearly, and redeemable at the pleasure of the United States after three years from date. The sum of $100,000,000 is named as the amount for which it now seems expedient to rely on a subscription of this kind; but it is not intended to restrict loans in this form to any precise limit short of the entire sum which may be required, in addition to the sums to be realized from other sources, for all the purposes of the year. The interest of seven and three tenths is suggested because it is liberal to the subscriber, convenient for calculation, and, under existing circumstances, a fair rate for the Government. SENATE & HO. OF REPS. beneficial and so advantageous, secured, both as to interest and principal, by adequate provisions of revenue, an appeal to the people will be answered with promptitude and liberality. In addition to the sums to be raised by national loan, the Secretary proposes, in case it shall be found inexpedient to provide the whole amount needed in that mode, that bonds or certificates of debt of the United States be issued to lenders in this country, or in any foreign country, at rates not lower than par, for sums of five hundred, one thousand, and five thousand dollars, or of one hundred, five hundred, and one thousand pounds sterling, not exceeding in the aggregate one hundred million dollars, or, if expressed in the currency of Great Britain, not exceeding twenty million pounds sterling. He proposes further that these bonds or certificates be made redeemable at the pleasure of the Government after a period not exceeding thirty years after a common date, not later than the 1st day of January, 1862, and bear an interest not exceeding seven per cent, ted States, with exchange at such rate as will make the payment equivalent to the payment in London. It is beneficial to the whole people that a loan distributed among themselves should be made so advantageous to the takers as to inspire satisfac-payable in London or at the Treasury of the Unition and hopes of profit rather than annoyance and fears of loss; and if the rate of interest proposed be somewhat higher than that allowed in ordinary times, it will not be grudged to the subscribers when it is remembered that the interest on the loan will go into the channels of home circulation, and is to reward those who come forward in the hour of peril to place their means at the disposal of their country. If the ample provision already recommended for the punctual payment of interest and final redemption of the principal be made by Congress, the Secretary entertains a very confident expectation that it will be found practicable to negotiate a very considerable part of this loan, if not the whole, in our own country, at favorable rates; and that whatever part, if any, may be wanted from capitalists in other countries, will be readily obtained. The convenience of calculation incident to the rate proposed is quite obvious; for, the interest being equal to one cent a day on fifty dollars, it|| is only necessary to know the number of days since the date of a note or of the last payment of For whatever sums may be needed to supply interest to determine, at a glance, the amount due the full amount required for the service of the upon it. To increase still further this facility of fiscal year, and as an auxiliary measure to those calculation, it is proposed also to issue the Treas- already proposed, the Secretary recommends that ury notes of this loan in sums of fifty, one hun-provision be made for the issue of Treasury notes dred, five hundred, one thousand, and five thou- for ten or twenty dollars each, payable one year sand dollars, with the amount of interest for after date, to an amount not exceeding in the ag specified periods engraved on the back of each gregate $50,000,000. These notes should bear note. The facility thus secured to the holder of interest at the rate of three and sixty-five hundetermining the exact amount of the note and in- dredths per cent., and be exchangeable, at the will terest, without any trouble of computation, will of the holder, for Treasury notes or exchequer materially enhance its value for all purposes of in-bills, payable after three years, bearing seven and vestment and payment. While the rate proposed is thus liberal and convenient, the Secretary regards it also as, under existing circumstances, fair and equitable to the Government. The bonds of the United States, bearing an interest of six per cent., and redeemable twenty years after date, cannot be disposed of at current market rates, so that the interest on the amount realized will not exceed seven and three tenths per cent.; nor is there any reason to believe that Treasury notes, bearing an interest of six per cent., receivable for public dues and convertible into twenty years' six per cent. bonds, can be disposed of in any large amounts, so that the interest of the sum realized will fall much, if at all, short of the rate proposed. For the difference of interest, if any, between such notes and those of the proposed national loan, the Secretary thinks that the absence of the feature of receivability for public dues in the latter is a sufficient compensation. To secure the widest possible circle of contribution, the Secretary proposes, in addition to the inducements just mentioned, that books be opened at the office of the Treasury of the United States in Washington, at the offices of the assistant treasurers and depositaries of public moneys, and at the offices of such postmasters and other selected persons in such cities and towns of the Union as may be designated; that subscriptions be received for fifty dollars, or any sum being the multiple of fifty dollars; that the sums subscribed be paid in cash, or, if the subscriber prefer, in installments of one tenth at the time of subscription and one tenth on the 1st and 15th days of each month thereafter, the first installment to be forfeited in case of non-payment of subsequent installments; that interest accrue, and be paid as it becomes due, on all sums paid in from the day of payment; and that Treasury notes be issued, if required, for all payments except first installments, and for these on final payment. The Secretary cannot doubt that for a loan so three tenths per cent. interest; or, should it be found more convenient, they may be made redeemable on demand in coin, and issued without interest. In either form, Treasury notes of these smaller denominations may prove very useful, if prudently used in anticipation of revenue certain to be received. The greatest care will, however, be requisite to prevent the degradation of such issues into an irredeemable paper currency, than which no more certainly fatal expedient for impoverishing the masses and discrediting the Government of any country can well be devised. In connection with the general subject of revenue, the Secretary thinks it his duty to invite the attention of Congress to the condition of foreign commerce, and of the commerce between the States as affected by the existing insurrection. At the ports of several States of the Union the collection of lawful duties on imports has been forcibly obstructed and prevented for several months. This condition of affairs, and the admission of foreign merchandise into those ports without payment of duties to the United States, have given opportunity to many frauds on the revenue, and must necessarily occasion great and harmful disturbance of the regular commerce of the country. It is the province of Congress to apply the proper remedies for these evils, and the Secretary begs leave to suggest that proper remedies may be found in closing the ports where the collection of duties is so disturbed, or by providing for such collection on ship-board, or elsewhere beyond the reach of such obstructions. Every independent nation exercises the right of determining what ports within its territorial limits shall be and what ports shall not be open to foreign commerce; and nothing can be clearer, where one or more ports may be temporarily in the possession of insurgents against the Government, than that suitable regulations may be prescribed by the proper authority to guard the revenue against diminution by |