First-That the fewest number of articles, consistent with the amount of the revenue to be raised, should be subjected to internal taxes, in order that the system may be simple in its execution, and as little offensive and annoying as possible to the tax payers. Second-That the duties upon imported commodities should correspond and harmonize with the taxes upon home productions; and that these duties should not be so high as to be prohibitory, nor to build up home monopolies, nor to prevent that free exchange of commodities which is the life of commerce. Nor, on the other hand, should they be so low as to seriously impair the revenues, nor to subject the home manufacturers, burdened with heavy internal taxes, to a competition with cheaper labor and larger capital which they may be unable to sustain. Third-That the raw materials used in building and mauufacturing, and which are to be largely enhanced in value by the labor which is to be expended upon them, should be exempted from taxation, or that the taxes upon them should be low in comparison with the taxes upon other articles. This is the policy of other enlightened nations, and it is believed that the diminution of direct revenue which it would involve, if adopted by the United States, would be more than made up by the augmented value which it would give to labor, and by the increase of productions and of exports which would be sure to result from it. It should be constantly borne in min, that taxes upon raw materials directly increase the cost of production, and thus tend either to reduce the product of labor or to prevent exportations to foreign markets. Fourth-That the burdens of taxes should fall chiefly upon those whose interests are protected by taxation, and upon those to whom the public debt is a source of wealth and profit, and lightly upon the laboring classes, to whom. taxation and the debt are without many compensatory advantages. The next of the series of proposed remedies is an issue of bonds, bearing in terest at the rate of not exceeding five per cent. and payable in Europe, to an amount sufficient to absorb the six per cent, bonds in foreign hands, and supply the European demand for United States securities for permanent investment. No one regrets more than the Secretary, the fact that so large an amount of our bonds is held abroad, or the unfortunate condition of our trade that has transferred them thither. The opinion that the country has been benefitted by the exportation of its securities, is founded upon the supposition that we have received real capital in exchange for them. This supposition is, to a great extent, unfounded. Our bonds have gone abroad to pay for goods, which, with-out them, might not have been purchased. Not only have we exported the surplus products of our mines and our fields, with no small amount of our manufactures, but a large amount of securities also, to pay for the articles which we have purchased from other countries. That these purchases have been stimulated and increased by the facility of paying for them in bonds, can hardly be doubted. Our importation of goods have been increased by nearly the amount of the bonds which have been exported. Not one dollar in five of the amount of the five-twenties now held in England and upon the continent, has been returned to the United States in the form of real capital. But if this were not a true statement of the case, the fact exists, as has been already stated, that some three hundred and fifty millions of Government bonds not to mention State and railroad bonds and other securities-are in the hands of the citizens of other countries, which may be returned at any time for sale in the United States, and which, being so held may seriously embarrass our efforts to return to specie payments. After giving the subject careful consideration, the Secretary has concluded that it is advisable that he should be authorized to issue bonds not hav ing more than twenty years to run, and bearing a low rate of interest, payable in England or Germany, to be used in taking up the six per cents. now held abroad, and in meeting any foreign demand for investment that may exist. The question now to be considered is not how shall our bonds be prevented from going abroad, for a large amount has already gone, and others will follow as The long as our credit is good and we continue to buy more than we can pay for in any other way, but how shall they be prevented from being thrown upon the home market, to thwart our efforts in restoring the specie standard. Secretary sees no practical method of doing this at an early day, but by substituting for them bonds which. being payable principal and interest in Europe, will be less likely to be returned when their return is the least desired The holders of our securities in Europe are now subject to great inconvenience and not a little expense in collecting their coupons, and it is supposed that five per cent. or perhaps four and a half per cent. bonds, payable in London or Frankfort, could be substituted for our six per cents. without any other expense to the United States than the trifling commissions to the agents through who.n the exchanges might be made. The saving of interest to be thus effected would be no inconsiderable item; and the advantages of having our bonds in Europe placed in the hands of actual investors is too important to be disregarded Fifth-The fifth and last remedy suggested is, the rehabilitation of the States recently in insurrection. In alluding to this subject, the Secretary feels that he steps upon dangerous ground, and that he may be charged with introducing a political topic in a financial report; but, in his opinion there is no question now before the country more important in its bearings upon our finances than the political and consequently industrial status of the Southern States. Embracing, as they do, one-third part of the richest lands of the country, and producing articles of great value for home use and for exportation to other countries, their position with regard to the General Government cannot remain unsettled, and their industrial pursuits cannot continue to be seriously disturbed, without causing such a diminution of the production of their great staples as must necessarily affect our revenues, and render still more unsatisfactory than they now are, our trade relations with Europe. As long as the present anomalous condition of these States continues as long as they have no participation in the Government, to the sup port of which they are compelled to contribute-it is idle to expect that their industry will be restored or their productions increased. On the contrary, there is reason to apprehend that until harmonious relations again exist between the Federal Government and these States, the condition of their industrial interests will become day by day more uncertain and unsatisfactory. There will be no real prosperity in these States, and consequently no real prosperity in one-third part of the United States. until all possess again equal privileges under the Constitution. Can the nation be regarded as in a healthy condition when the industry of so large a portion of it is deranged? And can the labor question at the South be settled as long as the political status of the South is unsectied? Can the rational credit be elevated and the public debt be rapidly reduce unless the Southern States shall largely contribute to the public revenues, and can such contr.butions be relied upon as Ing as they remain in their present disfranchised condition? Will the tax-payers of the North continue to be patient, unless their burden of taxation can be lessened by being equally shared by the people of the South? Regarded thus as a purely financial question, the relation of these States to the Federal Union is an exceedingly interesting and important one, and as such it demands the calm and careful consideration of Congress The Secretary has thus presented in such manner as his pressing official duties would permit, his views of the financial condition of the country, the causes of trouble, present and prospective, and the remedies for the same. If these remedial measures shall be approved by Congress, and enforced by appropriate legislation, he is confident that specie payments may be resumed by the time our interestbearing notes are retired, which must be done in less than two years, and probably will be in a much shorter period. These measures look to an increase of labor, and consequently of production— to a fulfilment of obligations by the Government and the Banks--to a reduction of the public debt at the same time that taxes are being equalized and lessened to lower prices, and apparently harder, but really more prosperous times—to a restoration of specie payments without the financial troubles which usually precede a resumption after a long period of suspension and inflation. The Secretary does not mean to assert that the adoption of all these measures (although he regards each as important) is absolutely necessary to return to specie payments, nor that other remedies may not be adopted by Congress to rescue the country from impending financial troubles. He presents, as he considers it to be his duty to do, his own views, and asks that they may receive careful consideration. and be adopted if they commend themselves to the wisdom of Congress, and rejected if measures better calculated to secure the desired end can be devised. The most sanguine and hopeful must perceive that the business of the country cannot for a much longer time be run upon the present high level with safety. The speculative interest, large and powerful in itself, is receiving daily new ac cessions of strength by the increase of individual credits; and when speculators and debtors control the financial policy of the country, a financial collapse is inevitable. These untoward and dangerous influences can now be resisted, and the true interests of the people require that they should be resisted promptly and decisively. Unsatisfactory as is, in many respects, our condition, there is cause for congratulation that we have thus far escaped those severe financial troubles which usually befall nations at the close of expensive and protracted wars. With our vast resources and the buoyant and persistent energy of a free people, it will be our own fault if we do not escape them altogether. The Secretary has pointed out the financial dangers around and before us, in order that they may be considered and avoided before they culminate i general disaster. Strong as is his conviction that we have been for some time, and still are, moving in the wrong direction, and that much of our prosperity is unend unreliable, his confidence in the ability of the country to right itself speedily is unshaken. We bave but touched the surface of our resources--the great miles of our national wealth are yet to be developed. The experiences of the past four years have only assured us of our strength. It is only necessary that our true situation be understood in order that the proper remedies may be applied. There is no insurmountable obstacle in the way of restoration to perfect onancial health, without the painful trials to which it is apprehended we must first be subjected. To be a co-worker with Congress and the people in effecting this most desirable result has been, and will continue to be, the highest aim of the Secretary. After a careful survey of the whole field, the Secretary is of the opinion t't specie payments may be resumed, and ought to be resumed, as early as the first day of July, 1868, while he indulges the hope that such will be the character of future legislation, and such the condition of our productive industry, that this most desirable event may be brought about at a still earlier day. The following is a statement of the public debt, June 30, and October 31, 1866, exclusive of cash in Treasury: Leaving a surplus of estimated receipts over estimated expenditures of.... 79,330,856 40 The receipts for the next fiscal year ending June 30, 1868, are estimated as follows: From customs. From nternal revenue.. From lands.... From miscellaneous sources.. The expenditures are estimated as follows: For the civil service... For pensions and Indians.. $145,000,000 00 1,000,000 00 25,000,000 00- $436,000,000 00 $50,067,342 08 25,388,489 09 30,251,605 26 For the War Department including $64,000,000 for bounties... 110,861,961 89 133,678,243 00-$359,247,641 39 $85,752,358 68 Leaving a surplus of estimated receipts over estimated expenditures of... In regard to the commercial intercourse between the United States and British America, the Secretary adheres to the general opinion expressed in his report of 1865, that until our revenue system is fully revised and adjusted to the fiuancial situation of the country. this subject should not to be placed beyond the control of Congress, but should be left to concurrent legislation and such regulations as the Treasury Department may be authorized by law to prescribe. Another reason for arrangements thus flexible is presented by the uncertainty of the political situation of British America. The scheme of confederation, which proposes to transfer questions of revenue and external trade to a single central authority, has not been adopted, and the opposition to the measure may prevail with the new ministry of England, either to modify materially the terms of the Quebec convention, or to subject the whole measure to the hazards of a popular vote in the Provinces. However the political problem may be solved, it is not unlikely that when the United States shall have simplified existing methods, and reduced existing rates of taxation, so as to receive the largest amount of revenue with the least burden to industry, British America will be prepared to undertake a system of public improvements along the channel of the St. Lawrence and through Northwest British America to the Pacific coast, which, by the financial necessities attending its adoption and the administration of a federal government, will suggest a Zollverein, or a complete assimilation of excise and custom duties on each side of the northern frontier. At present, inaction upon this subject would appear to be the true policy of the United States. * * Department Reports. 461 The Secretary is under obligations to the officers and clerks of the Department for the very satisfactory manner in which, with few exceptions, they have during the past year performed their important and responsible duties. HUGH MCCULLOCH, Secretary. Hon. Schuyler Colfax. Speaker of the House of Representatives. REPORT OF THE COMPTROLLER OF THE CURRENCY. OFFICE OF THE COMPTROLLER OF THE CURRENCY, WASHINGTON, 1866. SIR: In compliance with the provisions of section 61 of the National Currency act. I have the honor to present through you to the Congress of the United States the following report: Since the last annual repo t sixty-two (62) National Banks have been organized, of which fifty-oue (51) are new associations, and eleven (11) are conversions of existing State Banks to the national system, making the total number organ ized up to October 1, one thousand six hundred and sixty three, (1.663) The following table will exhibit the number of banks, with the amount of capital and circulation in each State and Territory: States and Territories. Or- Clos'g 61 61 89 39 4,715,118. 07 4,727,000 4,121,253 39 39 6,310,012 50 6,411,000 5,676,800 Massachusetts. Connecticut............. 20,354,800 00 14,144,6. 0 12,369,850 208 207 7,932,000 00 64,270,300 56,740,570 82 24,584,220 09 19,471 500 17,177,450 313 New Jersey. 116,267,941 00 75,970,400 67, 35,485 54 54 Pennsylvania 11.233,350 00 10.324,150 9,030,745 201 Maryland. 49,200,765 00 43,824,350 38,095,640 32 22 Delaware 12,590,202 50 10,052,750 8,745,450 11 District of Columbia. 11 1,428,185 00 1,348.200 1,179,300 Virginia 5 1,550,000 00 1,412,000 1,276,500 West Virginia... 20 20 2,500,000 00 2,397,000 2,014,900 15 15 Ohio 2,216,400 00 2,236,750 1,980,650 136 1.5 Indiana. $1,804.700 00 20,771,900 18,375,230 Illinois.. 71 12,86,000 00 12,400,850 10,888,280 Michigan 11,570,000 CO 10,818,400 9,448,415 Wisconsin 42 4,985,010 00 4,313,600 3,778,900 37 Iowa 87 2,935,000 00 2,846,750 2,512,750 46 45 Minnesota 3,697,00 09 3,681,150 3,204,395 15 Kansas......... 15 1,660,000 00 1,682.200 1,484,000 4 Mis-ouri... 4 325,000 00 332.000 269,000 Kentucky. 15 4,079,000 00 2,903,100 2,712,490 15 Tennessee Louisiana... Nebraska 15 2,840,000 00 2,645,000 10 2,311,270 10 1,700,000 00 1,306,200 1,096,790 1,800,000 00 853,000 727.000 Colorado 3 200,000 00 180,00 150,000 Mississippi 3 3 350 000 00 134 0 0 59.00 2 Georgia. 2 150,000 00 75,000 €5,500 North Carolina... 9 1,700,000 CO 1,205,500 5 1,124,000 South Carolina 370,750 00 309,000 228,600 2 Arkangas 500,000 00 140,000 126,000 2 Alabama.. 20,000 00 2 0,000 179,500 Utah 500,000 CO 204,000 262,500 150,000 00 5,00 44,970 1 100,000 60 100, 00 88,500 548,700 00 403,500 337,750 2 235,000 00 195,000 166,000 1,663 From the number of banks organized, heretofore stated to be sixteen hundred and sixty three, should be deducted sixteen, leaving the number in active operation sixteen hundred and forty seven. 16 1,647 $417,243,154 07 $332,467,700 $292,671,758 The banks to be deducted are the following: |