OF THE

UNITED STATES.

DEVOTED CHIEFLY TO FINANCE AND CURRENCY, AND TO BANKING AND COMMERCIAL STATISTICS.

"It is the interest of every country that the standard of its money, once settled, should be inviolably and immutably kept to perpetuity. For whenever that is altered, upon whatever pretence soever, the public will lose by it. “Men in their bargains contract, not for denominations or sounds, but for the intrinsic value."-Locke on Money.

EXTRA SESSION OF CONGRESS,
COMMENCED ON 4TH SEPTEMBER, 1837.

REPORT

FROM THE SECRETARY OF THE TREASURY ON THE

FINANCES.

September 5, 1837.

No. 23.

of collectors, subject to draft. All these make the aggregate for that half of the year $13,187,182, if no further postponements be granted on duty bonds, it is estimated that the whole receipts for the last half year, from all sources, will be about $9,500,000; which would make them, as ascertained and estimated for the whole year, $22,687,182. But if the brief extension of the present postponement, brought into view hereafter, and ceipts will probably be about $7,000,000; while by a In pursuance of the duty of this department to sub-postponement of the whole another year, they will not mit to congress, at each session, the state of the finances, be likely to exceed $4,500,000. and in conformity with the request of the president, Looking at our whole revenue, therefore, from all that such other fiscal matters should, on this occasion, quarters, it appears that the balance of money reserved be presented, as appear to require early legislation, the at the commencement of the year, as finally ascerundersigned has the honour to offer the following re-tained to be $6,670,137, with the actual receipts for the first half at $13,187,182, and those now anticipated for the last half of it at $7,000,000, will constitute an aggregate of $26,857,319.

port:

1.-CONDITION OF THE TREASURY.

It is not proposed to give all the particulars relating to the receipts and expenditures, which usually accompany an annual statement. But an exposition of them, under the customary general heads, so far as they have been ascertained, for the first half of the year, is subjoined.

Brief estimates for the other half are made, and such explanations added, as seem necessary to show with clearness, not only the condition of the treasury at this time, but its probable state for the residue of the year.

According to the treasurer's running account, the whole amount of available money in the treasury on the first of January, 1837, applicable to public purposes, was $42,486,859 97. From that sum, there were on that day reserved $5,000,000; and the balance, being $37,486,859 97, was, under the provisions of the act of June 23, 1836, to be placed in deposite with the states. It is ascertained that $27,063,430 80 of it have since been actually received by them.

The expenditures required to meet existing appro-
priations, during the last half of the year, will, as com-
whole year $32,733,884.
puted, equal the sum of $16,000,000; making for the

Whatever expenditures shall arise within the year, upon new appropriations which congress mry think proper to make, will require a corresponding addition to this amount. But, without them, it will constitute The amount of that portion of the first three instal-an excess of $5,876,565 of expenditures over both the ments, the payment of which has not yet been acknow-receipts and the balance at the commencement of the ledged, though transfers were seasonably issued for it, year, besides not leaving, at the close of it, any thing is $1,165,575 18. The remainder is $9,367,214 98, in the mint or the treasury for future uses, or to meet and is the sum which was designed for the fourth incontingencies. stalment of deposites with the states on the 1st of October next. The amount reserved in the treasury on the 1st of January has since been increased, by returns subsequently received from banks, to the sum of $6,670,137 52; and which, of course, could not then be ascertained or taken into computation.

In order, therefore, to discharge that excess, and retain of the money reserved on the 1st of January, one million, which is the smallest sum deemed proper, under the acts of congress, for the efficient cperations of the mint, and at least three or four millions more, to answer sudden and contingent calls, there will probably be a necessity to resort to the deposites now with the states, and to the instalments destined for them in October, or to some other resource, for a sum equal to $10,000,000. By a report of the treasurer of the 30th ultimo, it appears that the balance in the treasury, including what was in the custody of banks, the mint, and collecting officers, was then $14,596,311; that the amount of this, subject to immediate draft, was only $8,929,072; but the whole balance in the treasury, including all which had been deposited with the states,

and ordered to be, though only a small part of the amount is subject to immediate draft, was $41,532,381. Deduct all which has been, and was designed to be, deposited with the states, and there would be no balance left on hand subject to draft, though including every thing in the mint, and in the possession of receivers and collectors, which is applicable to general purposes.

Hence it is probable, that, besides the deficiency for the expenditures of the year, no sufficient means of any kind will exist on the first of October next, after defraying the intervening expenses, to complete the instalment of deposites, then payable, unless a large part of the bonds for duties postponed to that day, and amounting to near $4,000,000, and the million and a half then due on the first bond from the United States Bank, shall be punctually paid, or in the mean time, some provision on this subject made by congress.

before as well as after suit, in all cases of embarrassment, great hardship, or insolvency.

The particular terms, and the reasons for such postponement, are more fully set forth in the documents annexed.

When the difficulties in discharging bonds in a legal currency became increased by the suspension of specie payments in some of the principal cities, and the preident decided to call a special session of congress, the post; onement was allowed to be extended till after the commencement of the session, in order that an opportunity might be afforded to obtain further relief by new legislation. Urgent requests were made for an indiscriminate delay of payment on all bonds to the 1st of January next, and for the receipt in discharge of them, of notes issued by banks not paying specie. It was not deemed proper to comply with these requests. But as long a delay as our fiscal situation The money standing to the special credit of the post justified, and every relief as to the currency which office department and the patent office, as well as vari- seemed legal, by the receipt of debenture certificates ous trusts, is not included in the above exhibit, for and treasury drafts, for duties, were permitted in mitireasons explained in the last annual report. Outstand-gation of the existing embarrassments. ing and unexpended appropriations at the end of the year will, in this view of our financial condition, be still left charged on the treasury, amounting to about $16,000,000.

This does not differ much from their amount at the close of the last year. Whether the appropriations unexpended on the first of January 1838, prove, therefore, to be one or two millions larger or smaller than is now anticipated, it must be manifest, from all the above data, that some new legislation is indispensable to complete satisfactorily the service of the year, and leave a suitable amount in the mint and the treasury.

Indeed, before submitting the last annual report, the indications of a decrease in the receipts, and of an ap. proaching revulsion in our commercial prosperity, ap. peared so strong to the undersigned, that he felt compelled, with reluctance and regret, because differing so much from the views of many others, to estimate the accruing receipts for the year at only $24,000,000.

As the appropriations asked for were about $27,000,000, it was then suggested that the occurrence of a deficiency was probable. When those appropriations became in fact enlarged by congress to more than $32,000,000, it rendered a deficiency inevitable, to the extent now anticipated, unless the receipts should happen greatly to exceed the estimates.

Having, in this, done all that a sound and liberal exercise of the discretion of the department appeared either to justify or require, no intention exists, nor would it be proper in the present state of the treasury, to grant any indulgences beyond those already authorised, without the express direction of congress.

Some further facts which may be useful to aid its members in coming to a correct conclusion on this subject, are, that the amount of bonds which have already been postponed to the 1st of October, is about $3,500,000, and by that date will, it is presumed, be increased to $4,000,000.

If congress permit no longer postponement, the receipts for the year will probably be increased by the indulgences already granted, as they have been allowed, generally, on additional security, and always on interest.

But as suits and delays in collection will still occur, though to a less extent than in the first stages of the pressure, it is expected that not over two-thirds of the amount postponed before the close of this month can be collected during the current year.

The bonds already put in suit since the middle of May, amount to nearly $1,00,000. But if congress extend the postponement till next January, as was originally requested by some of the parties, or for one year, as recently requested by the Chamber of Com

II. ON THE POSTPONEMENT OF THE PAYMENT OF BONDS merce of New York, the receipts for the present year

Early in May last, the collection of the revenue from customs became much obstructed through the severe pecuniary difficulties of the mercantile interest. The treasury department felt an anxiety not only to take steps which might increase the security of the government for eventual payment, but, in an emergency so great, and to many so unexpected, to furnish all the relief from sacrifices which could judiciously be extended under its limited powers, and in anticipation of what would probably be its straitened condition in a few months.

A postponement of the payment of the bonds falling due was, therefore, and in accordance with the views of the executive, authorised for periods of from thirty to ninety days, on interest and additional security, and in a manner more liberal than usual, by permitting it

will probably be thereby lessened from four to five millions.

Should congress, however, adopt an intermediate course, as an act not of mere benevolence, but of additional relief, which appears reasonable, ander the extraordinary mercantile distresses of the times, and more safe to the government in respect to eventual collections, it might sanction a delay not to exceed altogether six months beyond the original period of pay ment, in any particular case. It is computed that this would diminish the receipts, during the present year, about two and a half millions of dollars; but if granted on the usual terms, would increase the receipts next year, in a greater proportion, by the interest accruing, as well as by the fuller collections which would probably be made in a greater number of cases.

The opinion of the department on these various propositions is, that, considering merely our present financial necessities, no further postponement can be regarded as expedient, though in some other respects, as fully detailed in the recent letter from the Chamber of Commerce, the last delay mentioned might be found justifiable, and more beneficial. But if a law be passed

extending credit on the bonds, it is supposed that, in | transfer from one public depository to another. This any correct view of the subject, its provisions need not be continued in full force beyond the period when the worst effects of the pressure will be likely to have ceased, and when all imports could, by a further extension of the warehouse system, be advantageously made payable in cash, at the time the goods are wanted for iminediate consumption.

The extension of that system is, therefore, respectfully recommended to the consideration of congress, in connection with the present subject, as it might introduce as great an improvement in the collection of imposts, as the substitution of cash for credit did in the collection of revenue from the sales of public lands. It would certainly increase the security, ease and promptitude of the operation; would dispense entirely with the trouble and risk in the payment of debentures; work favourably to the manufacturing interests; and at the same time, facilitate our trade in foreign articles, as well as exonerate the merchant from many embarrassments in regard to sureties and guarantees.

III.-OBSTACLES IN THE WAY OF TRANSFERRING THE LAST
INSTALMENT OF DEPOSITS TO THE STATES.

Early legislation has likewise become necessary, either to withhold or postpone, for a reasonable period, the fourth instalment of deposites with the states; or to furnish such aid as may be necessary to complete them in a satisfactory manner.

institution has demanded of the banks on which they are drawn that payment should be made to her in specie; and, on their failing to do so, has caused the orders to be protested. Under these circumstances, and, as the deposites with the states were to be made of what was in the treasury, and consequently in the banks, on the 1st of January last, it is for congress to decide whether payment shall be made of any of those orders in a mode and currency different from the rest of the third instalment of deposites with the states. Another reason for withholding or postponing the October deposites, or for some legal provision to aid in completing them, is, that a sum equal to the revenue probably accruing, and a large portion of these deposites, had, before they were payable, been expressly appropriated by congress to other objects. When looking to the rapid decrease in our receipts, to the expected deficiency in the course of the year, and the great amount of outstanding appropriations, which, at the close of it, will be left unpaid, much of that whole instalment seeins likely to be needed at an early day. By either of the first two measures, the money could, according to its original destination, be applied to the necessary wants of the general government, as soon as it can be drawn from the banks in legal funds. In that way, so desirable an object would also be accomplished, without the expense and delay of the money being first paid over to the States, and then subjected By the general suspension of specie payments, and to an early recall. On the other hand, several of the the consequent necessity, under the deposite act, to states might, in the present posture of their affairs, exdiscontinue most of the public depositories, the trans-perience considerable inconvenience, either by not refers from the banks in the west and south-west to the ceiving it, or by soon refunding a large portion of its seaboard, which were necessary to place much of the amount; and many of the banks which hold it might money in a position to be conveniently lodged with the be able more satisfactorily to pay it to the states than states in October, have, in several instances, been de- to the treasury. But though the subject is one of feated. They had, as in case of the former instalinents, much delicacy and difficulty, and peculiarly proper for been ordered seasonably, though, as a general rule, the final action of congress, it may be expected that only where rendered proper, in consequence of great this department should express some opinion as to accumulation of public funds in an unfavourable situa- which course appears most eligible in the present contion, on account of the course of trade and exchanges, dition of the finances. It is, therefore, with deference to be paid directly to the respective states. But, in the suggested, that when regarding their condition and the troubled condition of the money market, they had not importance of meeting with efficiency and good faith been injuriously hastened as to the time of payment, all the obligations of the government to the public creand, consequently, falling due in the course of the sum-ditors, it would be most judicious to apply the whole mer and early in autumn, near two-thirds of the whole instalment, as fast as it is wanted and can be collected, amount of these funds still on hand have been detained to the prompt discharge of these obligations; and that in the west and southwest, where they had so unusu- the last deposites with the states, not being a debt, but ally augmented from the large sales of public lands. a mere temporary disposal of a surplus, should be postHence, if the last deposite with the states was, in this poned until congress, in some different state of the position of the money, to be attempted, the orders finances, when such an available surplus may exist, directing it must, in many cases, be made on places re- shall see a manifest propriety and ability in completing mote, and very inconvenient to some of the receiving the deposite, and shall give directions to that effect. states, on account of the unfavorable balance of trade, Consequently, no further steps will be taken as to the or the rates of exchange; and must be met, if at all, deposite of any part of that instalment till congress has in a currency unacceptable and greatly depreciated. had an opportunity to act upon the subject in such Transfers of portions of the July instalment could not, manner as, in the present posture of affairs, its superior from the same cause, be effected in the precise mode wisdoin may consider preferable. intended, nor from the banks most desirable, though much of it had reached the appropriate points, to ren der the operation easy, before the suspension of specie payments. In all cases in which they were not offered to be paid in a currency satisfactory to the states, their agents were requested to return the orders of transfers till congress could make new and suitable provisions on the subject.

But this request has not always been complied with. About $1,165,575 of that instalment has not yet been receipted for by the states or the treasury, nor the orders returned. On the contrary, the United States Bank, chartered by the state of Pennsylvania, has lately become the purchaser of several of these orders, though not given for any debt, but merely directing a

IV.-DIFFICULTY IN PAYINg the approPRIATIONS, AND ON
THE ISSUE OF TREASURY NOTES.

Some further obstacles exist in the way of discharg ing satisfactorily all the appropriations which have been made by congress.

The effects which may be produced upon the accruing revenue, by granting or withdrawing further delays on bonds for duties, have already been explained.

In addition to these, there is a likelihood, in the present pressure, that the payment of cash duties, to the extent of one million of dollars more than usual, will be unavoidably deferred to another year, as the importers under the existing laws are entitled to cer

tain delays, by keeping in store the woollen goods which pay such duties.

This circumstance, in connection with the difficulty of collecting the bonds, whether longer postponed or not, will sensibly increase the embarrassments which have been specially pointed out, and otherwise exist in paying with promptitude and in a legal manner, the large appropriations chargeable upon the residue of the current year.

Hence, after a considerable deficiency in the avail. able means became highly probable, it was deemed expedient to adopt any judicious and lawful measure to remedy it, which was within the power of the de*partment. Accordingly, though large quantities of public lands were still in market unsold, and though the receipts from this source during the year would be higher than anticipated, in consequence, among other things, of a construction put on the pre-emption laws, admitting a large class of settlers to entries, it was supposed that some further tracts, in places much desired by the new states, might prudently be offered. A few such have been advertised; but sufficient time, after duc notice, have not yet elapsed to realise any thing from them.

One mode would be to authorise the issue of treasury notes, receivable for all public dues, but without interest. These would differ from the drafts or checks now in use, only as the latter are given for immediate payment, and drawn on persons and banks having public money sufficient to meet them; and, consequently, the holders must be exposed to the trouble and expense of presenting them at the places where payable. Still they are nearly on a par with specie. In the present deranged state of bank paper and exchanges, and in the favourable condition of the general government, by its ample resources and exemption from pecuniary liabilities, to impart the greatest confidence in respect to the redemption of their notes, it is probable that they would readily be taken at par by most of the public creditors. Especially would this be likely to happen, provided they were issued in denomi nations as low as twenty, fifty, and one hundred dollars; and not in too large quantities, but used only in anticipation of the accruing revenue on occasional emergencies, and to a limited amount.

Contrary to expectation, should the department, during the present delinquency of many of the public debtors, be exposed to such very large calls, and collect so little revenue, as not to be able, by both the above notes and drafts, to meet all its engagements in a satisfactory manner, it would be desirable that the president should possess a contingent authority to cause treasury notes to be issued, bearing an interest not to exceed six per cent.

Specie could always be raised on these for the public creditor, when he preferred it. But as notes bearing much interest would soon cease to be used in circulation, (and if they should not, would, as a currency, be troublesome in the computation of interest, and too strongly tend to exclude specie from the country,) it might be advisable not to make them receivable, at first, for any public dues, but only to resort to that measure afterwards when it should be found convenient for redeeming them.

If the fourth instalment of the deposites with the states be preferred, and the difficulty in seasonably transferring it be thus removed, yet, being chiefly in the custody of banks not paying specie, it is manifest that it cannot be immediately realised in funds suitable to meet the existing appropriations. If it be not deferred, some further provision will be still more indispensable to enable the treasury not only to place it with the states, but to pay all the public creditors and officers in a satisfactory manner, until the duties now due from the merchants, and the funds now in the discontinued deposite banks, can be collected. It is true, that a resort to the states for refunding portions of the large sums already deposited with them, would also remain by law; but under the limitations of the act of June, 1836, it would be very slow in its operation, and, if complied with, would prove entirely insuf In connection with the issue of any treasury notes, ficient to answer such an urgent occasion as the pre- it is believed to be wise to make ample provision for sent. During the ensuing quarter, the whole amount their early and final redemption. This could be acthat could be legally recalled would not exceed six complished by enacting, that when the money on hand hundred and fifty thousand dollars. Hence it seems in the treasury and the mint, available for public purexpedient, either in aid or exclusion of a requisition on poses, may exceed a given amount of four or five milthe states, as may be deemed most suitable by congress, lions, it shall be the duty of the secretary of the treato provide some temporary resource until enough of sury to cause these notes (securing priority to any on the fourth instalment, or other means in the treasury, interest) to be redeemed to such an extent as the surcan be rendered available to discharge all the public plus may exceed that sum, and what will probably be engagements. It need not be a loan, or an increase needed to defray current expenses. It being believed of taxes of any kind; as the general government, in that a reduction of the tariff, and suitable regulations respect to its finances, whatever temporary embarrass-eoncerning the sales of public land, ought at a proper ment the recent convulsions in commerce and banking time to be put in force, so as to prevent any large and may have created, is far from having any just cause of regular accumulation in the treasury, the department despondency. It is neither overwhelmed with a na- would respectfully propose that, in case of any unextional debt, nor destitute of large pecuniary resources pected excess beyond the sums above specified, it should on hand; but, entirely free from the former, it is so merely be invested in a temporary manner, in safe amply supplied with the latter as to have in the trea- state stocks, at their market rate, subject to be sold sury over forty millions of dollars, and eight or ten again whenever the proceeds shall be wanted to dismillions more in bonds, which will soon become pay- charge existing appropriations. able. But a large portion being in deposite with the states, and the residue chiefly in banks and the hands of merchants, under the difficulties before named, in procuring promptly, and in a legal currency, the amounts of money which are needed, some collateral aid for a short period, till a sufficiency can be collected, appears to be judicious, if not indispensable.

It is fortunate that the energics of the country generally are not paralysed, nor its prospects clouded by any great physical calamities; and hence its immediate wants can, without doubt, be provided for in various ways.

An additional consideration in favour of these measures is, that since the payment of the public debt, which absorbed any occasional surplus of receipts, it is impossible, according to the views expressed in some previous reports from the undersigned, that, with sources of revenue so fluctuating as ours, and so dependent on commercial prosperity, any fiscal operations should be long continued with ease, vigour, and uniformity, without some such regulator as a power to issue and redeem treasury notes, or to invest and sell the investment of surpluses. By any other course we shall constantly be exposed to great deficiencies, or ex