place, the public debt, without deducting funds in the Treasury, amounted to $2,808,549,437 55, consisting of the following items: Bonds, 10-40's 5 per cent, due in 1904.. Bonds, Pacific Railroad, 6 per cent, due in 1895. Bonds, 5-20's, 6 per cent, due in 1882, 1884, and 1885. Bonds, 6 per cent, due in 1881 Bonds, 5 per cent, due in 1880 Bonds, 5 per cent, due 1871. ... Bonds, 6 per cent, due in 1868 Bonds, 6 per cent, due in 1867 Compound interest notes, due in 1867 and 1868," 7-30 Treasury notes, due in 1867 and 1868. Bonds, Texas indemnity, pas due.... Temporary loan, ten days' notice Certificates of indebtedness, due in 1866 The following is a statement of receipts and expenditures for the fiscal year ending June 30, 1865: Balance in Treasury agreeably to warrants, July 1, 1864.. Receipts from loans applied to payment of public debt. $96,739,905 73 $864,863,499 17 1,472,224,740 8 329,567,896 66 $1,898,539,533 24 EXPENDITURES. $607,361,241 68 $44.765.558 12 14,258,575 38 1,031,323,260 79 122,567,776 12 77,897,712 00 1,290.312,982 41 1,897,674,224 09 Leaving a balance in the Treasury on the 1st day of July, 1865, of....... The following statement exhibits the items of increase and decrease of the public debt for the fiscal year 1865: Amount of public debt June 30, 1865 Bonds, 6 per cent, acts July 1, 1862, and July 2, 1864, issued to Central Pacific $157,916,226 66 99,432,850 00 Treasury notes, 7-30, acts June 30, 1864, and March 3, 1865, interest payable in awful money. United States notes, acts Feb. 25, 1862, July 11, 1862, and January 17, 1863.. Gross increase..... 1,509,295 16 7,363,098 85 $1,135,232,320 63 From which deduct for payments Bonds, 6 per cent, act July 21, 1842. Treasury notes, 6 per cent, acts Dec. 23, 1857,and March 2, 1861 Certificates, of indebtedness, 6 per cent, act March 1, 1862.. Net increase.... In the report of the Secretary for the year 1864, there was excluded from the public debt the sum of $77,897,347 02, which amount had been paid out of the Treasury, but had not been reimbursed to the Treasurer by warrants, and was not reimbursed until after the commencement of the next fiscal year. This explains the ifference between $18,842,558 71, assumed in that report as the balance in the Treasury July 1, 1864, and $96,739,905 73, the balance according tothe warrant account, as above stated. The following is a statement of the receipts and expenditures for the quarter ending September 30, 1865: Balance in Treasury, agreeable to warrants, July 1, 1865. 858,309 15 ... 138,773,097 22 277,182,260 57 EXPENDITURES. For the redemption of public debt.... 138,409,163 35 For the civil service 10.571.460 99 Leaving a balance in Treasury on the 1st day of October, 1865, of........ 67,158,515 44 The Secretary estimates that the receipts for the remaining three quarters of the year ending June 30, 1866, will be as follows: From miscellaneous sources.. For interest on public debt. Deficiency 96,813,868 75- 484,853,462 64 112,194,947 20 The receipts for the year ending June 30, 1867, are estimated as follows: From customs.. From internal revenue. From lands The expenditures, according to the estimates, will be: 100.000,000 00 1,000,000 00 20,000,000 00- 396,000,000 00 Leaving a surplus of estimated receipts over estimated expenditures, of.. 111,682,818 12, The debt of the United States was increased during the fiscal year ending June 30, 1865, $941,902,537 04, and during the first quarter of the present fiscal year $138, 773,097 22. The Secretary has, however, the satisfaction of being able to state that during the months of Se tember and October the public debt was diminished to the amount of about thirteen millions of dollars. If the expenditures of the remaining three quarters of the present fiscal year sball equal the estimates, there will be a deficiency, to be provided for by loans, of $112,194,947 20, to which must be added $32,586,901 for the five per cent. Treasury ot 63 (part of the public debt), which become due the present month, and are now being paid out of moneys in the Treasury, and all other payments which may be made on the public debt. The heavy expenditure of the last fiscal year, and of the months of July and August of the present fiscal year, are the result of the gigantic scale on which the war was prosecuted during a portion of this period, and the payment of the officers and men mustered out of the service. The large estimates of the War Department for the rest of the year are for the payment of troops which are to remain in the service, and of those which are to be discharged, and for closing up existing balances, The statement of the probable receipts and expenditure for the next fiscal year is in the highest degree satisfactory. According to estimates which a e believed to be reliable, the receipts of that year will be suffi ient to pay all current expenses of the Government, the interest on the public debt, and leave the handsome balance of $111, 682.819 12 to be applied toward the payment of the d-bt itse`f. By the statement of the public debt on the 31st of October, it appears that, besides the compound interest, the United States, and th fractional notes, the past-due debt amounted to The debt due in 1865 and 1866 to The debt due in 1867 and 1868 to 69 $1,378.92 187.549,64 46 848.32391 NO During the month of October about $50 000,000 of the compound interest notes, were funded in 5-20 six per cent. bonds under the provisions of the act of March 3, 1855. The Secretary would be gratified if the Treasury could e put at o ice in a con lition to obviate the necessity of issuing any more certificates of indebtedness, or raising money by any kind of temporary loans; but he may, for a short period, be obliged to avail himself of any means now authorized by law for meeting current expenses and other proper demands upon the Treasury. It Of the debt falling due in 1867 and 1868, $830,000,000 consist of 7 3-10 notes may be regarded as premature to fund any considerable mount of th se notes within the next year; but in view ofthe fact that they are couvertible into bonds only at the pleasure of the holders, it will be evidently prudent for Congress to authorize the Secretary, whenever it can be advantageous y done, to fund them in advance of their maturity. FURTHER POWERS ASKED BY THE SECRETARY. The Secretary has already recommended that he be authorized to sell bonds of the United States, bearing interest at a rate not exceeding six per cent., for the p rpose of retiring Treasury notes and United States notes. He further recommends that he be authorized to se 1 in his discretion, bonds of a similar character to meet any defi ciency for the present fiscal year, to reduce the temporary loan by su h an amount as he may deem advisable, to pay the certifi ca es of indebte iness as they mature, and also to take up any portion of the debt maturing prior t 1869 that can be advantageously retired. It is not probable that it will be advisable, even if it could be done without pressing them upon the market, to sell a much larger amount of bonds within the present or the next fiscal year than will be necessary to meet any defi iency of the Treasury, to pay the past-due and maturing obligations of the Gov rnment, and a part of the temporary loan, and to retire an amount of the compound interest note s and United States notes sufficient to bring back the business of the country to a healthier condition. But no harm can result from investing the Secretary with auth rity to dispose of bonds, if the condition of the market will justify it, in order toanticipate the payment of those obligations that must soon be provided for. When the whole debt shall be put in such a form that the interestonly can be demanded until the Government shall be in a condition to pay the principal it can be easily managed. It is undeniably large, but the resources f the country are even now ample to carry and gradually to reduce it; and with the labor question at the South settled onterms just to the employer and to the laborer, and with entire harmony be tween the different sections, it will be rapidly diminished, in burden and amount, by the growth of the country, without ay increase oftaxa ion. After careful reflection the Secretary concludes that no act of Congress (except for raising the necessary revenue) would be mor acceptable to the people, or bette calculated to strengthen the nation il credit, than one which should provide that to hundred millions of dollars, commencin, with the next fiscal year, shall be annually applied to the payment of the interest and principal of the national debt. The estimates for the next fiscal year indicate that a very much larger amount could be so app ied without an increase of taxes. Before concluding his remarks upon the national debt, the Secretary would sugge t that the credit of the five-twenty bonds issued under the acts of Feb. 25, 1862, and June 30, 1964, would be improved in Europe, and, consequently, their market value advanced at home, if Congress should declare that the principal, as wells the inte rest of these bonds is to be paid in coin. The p licy of the Government in egard to its funded debt is well understood in the United State, but the absence of a proVision in these acts that the principal of the bonds issued under them should be paid in coin, while such a provision is contained in the act nder which the ten-forties we e issued, has created some apprehension in Europe that the five-twenty bonds might be called in at the expiration of fi e years, and pait in United States notes. Although itis not desirable that our secu ities should be held out of the United States, it is desirable that they should be of good credit in foreign markets on account of the infaeuce which these markets exert upon our own. It is, therefore, important that all misapprehensions on these points should be removed by an explicit declaration of Congress that these bonds are to be paid in coin. TAXATION OF GOVERNMENT BONDS. ay be In view of the fact that the ex mption of Government securities from S ate taxation is by many persons considered an unjust discrim nation in their favor, efforts made to induce Congress to legislate upon the subject of their taxation. Of course, the existing exemption from State and munici al taxation of bonds and securities now outstanding will be scrupulously regarded. That exemption is a part of the contract under which the securities have been issued and the money loaned thereon to the Government, and it would not only be unconstitutional but a breach of the public faith of the nation to disregard it. It would also, in the j dgment of the Secretary, be unwise for Congress to grant to the States the power, which they will not possess unless conferred by express Congressional enactment, of imposing local taxes upon securities of the United States which may be hereafter issued. Such taxation in any form would result in serious, if not fata', embarrassment to the Government, and, instead of relieving, would eventually injure the great mass of the people, who are to bear their full proportion of the burden of the public debt. This is a subject in relation to which there should be no difference of opinion. Every tax-payer is personally interested in having the public debt placed at home, and at a low rate of interest, which cannot be done if the public securities are to be subject to local taxation. Taxes vary largely in different States, aud in different counties and c ties of the same State, and are every where so high that unless protected against them, the bonds into which the present debt must be funded cannot be distributed among the people, except in some favored lo alities, unless they bear a rate of interest so high as to make the debt severely oppressive, and to render the prospect of its extinguishment well-nigh hopeless. Exempted from local taxation, the debt can, it is expected, be funded at an early day at five per cent.; if local taxation is allowed, no considerable portion of the debt which falls due within the next four years can be funded at ome at less than eight per cent. The tax-payers of the United States cannot afford to have their burdens thus increased. It is also evident that the relief which local tax-payers wou'd obtain from Government taxation, as the result of a low rate of interest on the national securities, would, at least, be as great as the increase of local taxes to which they would be subjected on account of the exemption of Government securities; while if those securities should bear a rate of interest sufficient to secure their sale when subject to local taxes, few, if any, of them would long remain where those taxes could reach them. They would be rapidly transferred to other countries, into the bands of foreign capitalists, and thus a last the burden of paying a high rate of interest would be left upon the people of this country without compensation or alleviation. INTERNAL REVENUE SYSTEM. It is important, therefore, that our revenue system should be frequently and carefully revised, in order that it may be accommodated to the habits and character of the people, to the industry of the country, to labor and capital, to wages at Lome and wages abroal. It is also of the highest importance that there should be a careful adjustment of our internal to our external revenue system. That views somewhat similar to these were entertained by Congress is indicated by the provision in the amendatory act of March 3, 1865, by which the Secretary of the Treasury was authorized to "appoint a commission, consisting of three persons, to inquire and report, at the earliest practical moment, upon the subject of raising by taxation such revenue as may be necessary in order to supply the wants of the Government, having regard to and including the sources from which such revenue should be drawn, and the best and most efficient mode of raising the same." This subject received the early attention of the Secretary, and under the authority of the act, after careful deliberation, a commission was organized, consisting of Me-ers. David A. Wells, Stephen Col-vell, and S. S. Hayes, representing, to a certain extent, different sections and in terests, and also different political sentiments. The commission was fully organized in June, and has since then been actively engaged in the prosecution of its labors. In view of the fact that the revision of the whole revenue system has been committed to this comim ssion, the Secretary does not consider it proper for him to present his views upon this important subject in advance of their final report, which it is hop、 d will be made early in the session There are some subjects, however, presented in the report of the Commissioner of Internal Revenue, which require the attention of Congress before the report of the commission is received, and in relation which there should be early action. COLLECTION OF TAXES IN SOUTHERN STATES. In putting into operation the system of internal revenue in the recently rebellious States, it beca e necessary for the Secretary to decide whether or not an effort s! oa'd be made to collect taxes which accrued prior to the establishment of revenue offies therein. After giving the subject due consideration, the Secretary, in view of the facts that there were no Federal revenue officers to whom payment of taxes could be made, that the people (many of them involuntarily) had been subjected to heavy taxation by the government which was attempted to be established in opposition to that of the United States, and had been greatly exhausted by the ravages of war, issued a circular, under date of 21st of une, declaring that. without waiving in any degree the right of the government in respect to taxes which had before that timeaccrued in the Sates and Territories in insurrection, or assuming to exonerate the tax payer from his legal responsibility for such taxes, the Department did not deem it advisable to insist, at present, on their payment, so far as they were payable prior to the establishment of a collection district embracing a territory in which the tax payer re sided." For substantially the sam reasons that induced the Secretary to issue this circular, he deemed it to be his duty to suspend all further sales under the direct tax law. Tax Commissioners, however, have been appointed for each State, and collections have been made, as far as it has been practicable to make them, without sales of property. Some sales had, however, been previously made in many of the States, and large amounts of property had beeu purchased for the government. in South Carolina a portion of the lands thus purchased have since been sold under the 11th section of the Act of August 1863. During the war, the laws in regard to stamps have been, of course, in the insurrectionary States, entirely disregarded; and, as a conseq ence, immense interests are thereby imperilled. In view, therefore, of the recent and present condition of the Southern States, the Secretary recommends First. That the collection of internal revenue taxes which accrued before the establishment of revenue offices in the States recently in rebellion be indefinitely postponed. Second That all sales of property in those states, under the direct tax law, be suspended until the States shall have an opportunity of assuming, (as was done by the loyal States) the payment of taxes assessed upon them. |