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From the foregoing statement of actual receipts and expenditures for the first quarter of the current fiscal year, and the estimates of the same for the remaining three quarters, based upon appropriations already made, and also on the assumption that Congress will not increase the expenditures by deficiency or other appropriations, it will be seen that, in the judgment of the Department, the revenues will reach the sum of $297,456,145 14, and that the ordinary expenditures will amount to $268,447,543 76. This exhibit gives a surplus revenue of $29,008,601 38. Under existing laws it is estimated that $32,293,692 32 will be required to be provided for the sinking fund for this year. If the statement, as here submitted, shall prove to be approximately correct, the revenues will fall short by the amount of $3,285,090 94 of providing for the appropriations made by Congress.

ESTIMATES FOR THE FISCAL YEAR ENDING JUNE 30, 1877. It is estimated that the receipts for the fiscal year ending June 30, 1877, will beFrom customs..

$165, 000, 000 00 From internal revenue.

120, 000, 000 00 From sales of public lands.

1, 500, 000 00 From tax on circulation of national banks.

7, 200, 000 00 From reimbursement of interest by Pacific Railway Companies..

500, 000 00 From customs' fines, penalties, and forfeitures.

100, 000 00 From consular, letters-patent, and other fees.

1, 900, 000 00 From proceeds of sales of government property

800, 000 00 From miscellaneous sources.

7,000, 000 00 Total ordinary receipts..

304, 000, 000 00 It is estimated that the ordinary expenditures for the same period will beFor civil expenses..

$17, 500, 000 00 For foreign intercourse

1, 353, 000 00 For Indians...

7,000,000.00 For pensions..

29, 534, 000 00 For military establishment, including fortifications,

river and harbor improvements, and arsenals.... 40, 000 000 00 For naval establishment, including vessels and machinery and improvements at navy yards...

21,000,000 00 For civil miscellaneous, including public buildings,

and light-houses, collecting revenues, mail steamship service, deficiency in postal revenues, public printing, &c....

52,000,000 00 For interest on public debt.

97, 000, 000 00 For interest on Pacific Railway bonds.

3, 878, 000 00 Total estimated expenditures, exclusive of the

sinking-fund account and principal of the
public debt ...

269, 265, 000 00 It is expected that for this fiscal year the surplus revenues of the government will amount to $34,735,000. The estimated amount to be provided for the sinking fund is $34,063, 377 40. There is reason to hope, therefore, that the income of the government for this year will amply provide for all its obligations, including the sinking fund.

The estimates received from the several Executive Departments are as follows: Legislative establishment.

$2,865, 378 50 Executive establishment.

18, 717, 045 40 Judicial establishment...

3, 403, 450 00 Foreign intercourse...

1, 352, 485 00 Military establishment.

33, 697, 178 50 Naral establishment..

20,871, 666 40 Indian affairs.....

5,787, 795 64 Pensions ..

29, 533, 500 00 Public works : Treasury Department.

$6, 152, 846 86 War Department...

19, 888, 238 44 Nayy Department.

1, 725, 000 00 Interior Department.

800, 500 00 Department of Agriculture.

21, 825 00 Department of Justice..

3, 000 00

28, 591, 410 30 Postal service....

9, 281, 602 19 Miscellaneous

13, 881, 185 79 Permanent appropriations, including $34,063, 377 40 for sinking fund).

146, 629, 910 76

Total.

314, 612, 608 48

REDUCTION OF THE PUBLIC DEBT. By the monthly statement of the public debt issued June 30, 1875, the reduction of the debt during the year was shown to be $14,399,514 84, viz: Principal of the debt July 1, 1874.

$2, 251, 690, 468 43 Interest due and unpaid, and accrued interest to date, 38,939, 087 47 Total debt.....

2, 290, 629,555 90 Cash in the treasury.

147, 541, 314 74 Debt, less cash in the treasury ...... 2, 143, 088, 241 16 Principal of the debt July 1, 1875.

$2, 232, 284,531 95 Interest due and unpaid, and accrued interest to date, 38, 647, 556 19 Total debt.....

2, 270, 932, 088 14 Cash in the treasury

142, 243, 361 82

Debt, less cash in the treasury...... 2, 128,688, 726 32 Showing a reduction, as above stated, of.

$14, 399,514 84 It will be observed that the surplus revenues, exclusive of provision for the sinking fund, as shown in the statement of receipts and expenditures for the fiscal year, were $13,376,658 26, or $1,022,856 58 less than the amount of the reduction of the debt as shown by the monthly statement of the same.

The difference between these two statements arises from the difference of dates at which they are made up, as will be seen by a comparison of them as regards the cash in the treasury at the commencement and close of the fiscal year, and of the item of “interest due and unpaid, and accrued interest to date,” which, in the monthly debt statement, is treated as a liability of the Government, precisely as is the principal of the debt, but which is not so considered in the statement of receipts and expenditures. The cash in the treasury July 1, 1874, as shown by

the monthly debt statement of that date, and which embraced only the moneys officially reported to the Department at the time of its issue, was

$147, 541, 314 74 The cash in the treasury July 1, 1874, as shown by

the account of receipts and expenditures, (the books from which it is prepared usually being kept open for a period of forty-five days, so as to include at the date of closing the accountall the revenues deposited at the different places of deposit throughout the country within the period covered by the same, and which are unascertained at the time of the issue of the monthly statement,) was....

150, 731, 694 63

Showing a difference of....

3, 190, 379 89 The cash in the treasury July 1, 1875, as shown by

the monthly debt statement of that date, was.... $142, 243, 361 82 And as shown by the statement of the receipts and expenditures of same date....

144, 702, 416 41 Showing a difference of..

2, 459, 054 59 The difference in these two statements of cash reported

to the Treasury, as appears by the monthly statement, and as ascertained by the statement of receipts and expenditures at the commencement and close of the fiscal year, it will be seen, is..

$731, 325 30 To which add the reduction in the item of " Interest due and unpaid, and accrued interest to date”..... 291, 531 28 Making the sum of.

1, 022, 856 58

It will, therefore, be perceived that no difference exists in these two accounts, other than that which grows out of the manner of their preparation.

Frugality in administration is among the foremost and most important points of a sound financial policy. Faithful collection of the revenue and reduction of expenditures to the lowest point demanded by the necessities of government, constitute the first duty of those intrusted with making and administering the law. The obligation to adhere strictly to this duty has peculiar force while the public indebtedness is large and the industries of the country are suffering from financial depression. Rigid economy at such a time must lead to two important results; first, advancement of the credit of the government throughout the financial world, and hence ability to refund the debt at a lower rate of interest; second, aud by no means least in importance, greater willingness on the part of the people to bear the burden of taxation, when they see that their government, like themselves, is reducing expenditures to the lowest practicable point, and applying the rerenue received from them to its necessary and legitimate purposes. The general depression of business which followed the era of inflation and extravagance, through which we have just passed, has made it necessary that individuals, associations, and corporations should reduce their expenditures to the minimum; and, having done so, the taxpayers have a right to demand that the government shall do likewise. While the interest on the public debt, and all other national obligations, must be promptly met, there are many points at which it is believed that considerable reduction of appropriations can properly be made; and the Secretary invites critical examination of all the estimates submitted to Congress. Increase of public expenditures in time of great pros. perity and extravagance is accomplished by an easy process; but a corresponding reduction when the rererse comes can be brought about only by the closest vigilance and most determined resistance to every appeal for appropriations not required by the existing necessities of government.

No appropriation of money should be made without reference to the probable amount of revenue to accrue within the year in excess of existing obligations and liabilities.

THE SINKING FUND.

The fifth section of the act of February 25, 1862, sets apart as a special fund all duties on imported goods, and directs the application thereof

First. To the payment in coin of the interest on the bonds and notes of the United States.

Second. To the purchase or payment of one per centum of the entire debt of the United States, to be made within each fiscal year after the first day of July, 1862, which is to be set apart as a sinking fund, and the interest of which shall, in like manner, be applied to the purchase or payment of the public debt, as the Secretary of the Treasury shall from time to time direct.

Third. The residue thereof to be paid into the treasury of the United States.

Section six of the act of July 14, 1870, directs that the bonds theretofore purchased and then held in the treasury in accordance with the provisions of the act aforesaid, and all other bonds which had been purchased by the Secretary of the Treasury with surplus funds in the treasury, and any bonds thereafter applied to said sinking fund, with all others thereafter redeemed or paid, shall be recorded, cancelled, and destroyed, and that the amount of the bonds of each class so cancelled and destroyed shall be deducted, respectively, from the amount of each class of the outstanding debt of the United States. The lastnamed act also provides that, in addition to other amounts to be applied to the redemption or payment of the public debt, an amount equal to the interest on all bonds belonging to the aforesaid sinking fund shall be applied, as the Secretary of the Treasury shall from time to time direct, to the payment of the public debt, as provided for in section five of the act first above named, and appropriates from the receipts for duties on imports the amount so to be applied.

These acts are regarded by the Secretary as imposing upon him the imperative duty to take care of the sinking fund, as therein directed, out of the coin received from duties on imports. This requirement is secondary only to the payment of interest on the public debt. It takes precedence of all other appropriations, as, by the very terms of the legislation, only the residue of receipts from customs, after deducting interest on the public debt and providing for the sinking fund, goes into the treasury.

The statute imposes upon the Secretary a duty to be performed annually, the requirement being that the purchase, or payment, for and on account of the sinking fund shall be made within each fiscal year.

During the past fiscal year it was not practicable to purchase the amount of United States bonds required for the sinking fund, for the reason that such bonds could not be bought at par, and the Secretary was forbidden by law to pay more. But the eleventh section of the act of March 3, 1875, authorizes the Secretary, for the purpose of obtaining bonds for the sinking fund, to give notice that he will redeem, in coin at par, any bonds of the United States, bearing interest at the

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