Duke University Libraries 
 
 Report of the S 
 Conf Pam #385 
 
REPORT 
 
 OP THE 
 
 SECRETARY OF THE TREASURY. 
 
 Confederate States of AMRutcA, 
 
 Treasury Department 
 Richmond, December Ith, 1863 
 
 Hox. T. S. BococK, 
 
 Speaker of the House of Representatives : 
 
 ENT, > 
 
 3. S 
 
 Sir: — I have tlie lionor to submit the following report 
 of the condition oftliis Department : 
 
 RECEfPTS FROM JANUARY IST TO SEPTEMBER SOlII, 1863. 
 
 For eiglit per cent, stock, - - $107,292,900 70 
 seven " - - - 38,737.650 70 
 six " - - - (),810,0r)0 00 
 five *' call certificates, - 22,'J92.900 00 
 four " - - - 482.200 00 
 Cotton certificates, act April 21. 1862, 2,000,000 00 
 Interest on loans, - - - 140,210 11 
 War tax, - - . . 4.128,988 97 
 Treasury notes, - - - 391,623.5^0^)0 
 Sequestration, - - - - l,8(;2,.m0 21 
 Customs, - - . . 934,798 68 
 Export duty on cotton, - - - 8,101 78 
 Patent fu ml, - - " - - 10,794 04 
 Miscellaneous, including repayments by dis- 
 bursing officers, - - - 24,498,217 93 
 
 Total, - - - . $601,522,893 12 
 
EXPENDITURES DURING SAME PERIOD. 
 
 War Department, - - - ;]t7,988,244 00 
 
 IJrtvy " . . - - ;j8,437,r)(n 00 
 
 Civil, miscellaneons, &c., - - lL(')2y,278 00 
 
 Customs, . . - . 5H,(;3fi 00 
 
 Public Debf, - - . - - 82,212,290 00 
 
 Notes caiicelletl and redeemed, - 59,044,449 00 
 
 Total of expenditures, - - $519,308,559 00 
 
 Total of receipts, - - - 601,522,893 00 
 
 Balanre in Treasury, - - |82, 154,334 00 
 
 From which is to be deducted the amount 
 of treasury notes which have been 
 funded and brought in for cancella- 
 tion, but have not yet been regularly 
 audited, estimated at, - - 05,000,000 00 
 
 Total, ... - $17,154,334 00 
 
 The public debt (exclusive of the foreign loan) at the same 
 period, was as follows : 
 
 FUNDED. 
 
 Eight per cents, - - - |207, 128,750 00 
 
 Seven " " - . - 42.745,(^00 00 
 
 Six *< «« . - - - 41.006,270 00 
 
 Six " cotton interest bonds, - 2,035,000 00 
 
 Total, ... - $292,915,020 00 
 
 UNFUNDED. 
 
 Treasury notes : 
 
 General currency, - - - $603,032,798 50 
 
 Two Year notes, - - - 8,477,975 00 
 
 Interest notes at 3.65, - - - 627,450 00 
 
 *' " 7 30 - - - 122,582,200 00 
 
 Under $5, .... 4,887,095 50 
 
 Five per cent, call certificates, - - 26,240,000 00 
 
 Total, .... $766,447,519 00 
 
 Deduct amount of treasury notes funded and "^ 
 
 cancelled, above referred to - 65,000,000 00 
 
 $701,447,519 00 
 
In order to estimate the amount of Treasury notes in cir- 
 culation at the date of this report, there must be added the 
 ftirtlier sum of one hundred millions for the two months 
 which have eUnDscd since the date of the above schedules. 
 
 Tlie balances of appropriations already made by Congress, 
 and not drawn on 30th September, stood as follows: 
 
 War Department, - - - $395,502,698 00 
 
 Navy, - - - . . 24,413,045 00 
 
 Oivil. miscellaneous, &c., - - 56,240,996 00 
 
 Customs, . - _ . 294'460 00 
 
 Total, $476,451,799 00 
 
 The estimates submitted by the various Departments for 
 the support of the Government, are made to 1st July, 1864 
 the end of the fiscal year, and are as follows : 
 
 Legislative Department, - - . 309,005 00 
 
 Executive ♦'--.. 52^359 qq 
 
 Treasury '" , - . 25,583,359 00 
 
 ^■^''^r, '^ . _ . 438,078,870 00 
 
 Nuvy " - • - . 13,624.945 00 
 
 State '' - > . 544,409 00 
 
 •J»'«t'ce " - - - . - 222,587 00 
 
 Post Office " - . - _ 82,968 00 
 
 Total, $475,498,493 00 
 
 If these estimates be extended to embrace the rcmaiuinf^ 
 six months of the calendar year, they must be doubled and 
 that sum added to the undrawn appropriations would make 
 an aggregate ot $1,427,448,778, which Congress is formally 
 called upon to provide. It is obvious, however, that the 
 amounts to the credit of undrawn appropriations cannot be 
 called for, inasmuch as there remain but three months of 
 the present calender year to be provided for, and the expen- 
 ditures are limited to fifty millions per mouth. So too as to 
 the estimates. Any measures which will promptly reduce the 
 currency will act upon prices and thereby materially re- 
 duce t-he estimates. But the larger figures exhibit to us in 
 a distinct and tangible form the problem which we are now 
 
required to solve. The currency has, by this time, attained 
 dimensions of five times its proper size. The estimates are 
 based upon prices fixed by this condition [of the currency. 
 If these estimates are to be supplied by new issues of cur- 
 rency, prices must agaitj increase and large editions must 
 be made to the figures which represent both currency and 
 estimates. It is obviors, therefere, that some other mode of 
 raising supplies must bo devised ; and the necessity is eqiial- 
 ly obvious of reducing the currency. We are thus dis- 
 tinctly presented with these two conditions, as necessary 
 elements of the problem to be solved, namely: reduction of the 
 existing currency, and a supply of means from some source 
 other than Treasury notes. 
 
 In a former re[»ort, it was shown that 150 million of dol- 
 lars was ])rt)l)ably the amount of currency which could be 
 put in circulation tinder existing circumstances, in the Con- 
 federate States, without material derangement of values. 
 The cuirency in circulation when the estimates for tb.e en- 
 suing year were made up, was about four times that amount ; 
 and it may be fairly assumed that the prices were then 
 nearly four times what they Avould have been if the curren- 
 cy had been restored to its original condition. A reduction 
 of the currency should, therefore, be a preliminary measure. 
 It is substantially the most efiicient means of raising sup- 
 plies ; far more so than cither taxes or loans. These last 
 serve only to provide the amount which they nominally raise, 
 but a reduction of the currency by reducing prices furnishes 
 three or four times the amount of such reduction. It may 
 be fairly assumed that a reduction of the currency to 200 
 millions would enable the government to sustain itself with 
 an expenditure of only 400 millions in money, and if our 
 problem be then stated in figures, it requires the apparently 
 opposite conditions of raising 400 millions of supplies and of 
 retiring an equal amount of currency. 
 
 But there is also one further condition, involved. The 
 support of the government requires continued supplies. 
 Any delay in the action of measures to relieve the currency, 
 
aggravates all tlie difficulties. In the interval, other issues 
 must he made, and those issues re-act on prices and increase 
 the Government'expenditure. Promptness and certainty in 
 the reduction are, therefore, as im[)ortant as the reduction 
 itself. Thus are we fairly confronted with the three diffi- 
 culties to be surmounted. 
 
 1. The currency must be reduced. 
 
 2. The supplies must be raised. 
 
 3. The measures to attain these ends must be prompt and 
 certain. 
 
 1. The currency must be reduced. 
 
 In the present expanded state of tlic currency it would 
 not be expedient to reduce the circulation to its proper nor- 
 mal standard. In order to effect the results demanded by 
 the public interests the contraction must, of necessity, be 
 great and sudden. But it is presumed that a reduction of 
 the entire volume to 200 nullions will be sufficient. After 
 the war, measures may be adopted for such further reduc- 
 tion as may then be piO[)Gr. The excess of currency over 
 this i)rnposed stanilard is now about 500 millions. The re- 
 duction of prices which would follow the retiring of this ex- 
 cess would in all probability, so reduce the expenses of the 
 Government, that 400 millions of money would be a suffi- 
 cient supply. Thus we have before us a demand for 900 
 millicJns in the course of the ensuing year. 
 
 In the present state of the country, it is manifestly im- 
 possible to raise this laige sum by taxes alone, and we are, 
 therefore, compelled to resort to the only other resource 
 presented by experience, namely : a loan. 
 
 In the voluntary form, loans have already been tried by 
 the Government, and have succeeded to the extent of up- 
 wards of 300 millions, since the commencement of the war 
 For an agricultural country like ours, this, under the unex- 
 pected pressure upon our people, would justly be deemed a 
 large contribution. At the commencement of the war no on& 
 foresaw the extent to which it would be carried. It was not 
 expected that we would be called upon to ciieck the advHDce 
 
6 
 
 erf half a million of men, supported by the whole outer ^vo^lcl, 
 while we were shut into our own soil and resources. Our 
 products were thought essential to the rest- of mankind, and 
 it was believed tliat tliey would come and buy them. Our 
 financial measures were commenced with these views and 
 were founded upon the basis of specie values. We issued 
 treasury notes without interest, and then oftered to exchange 
 them for bonds whose interest was paid in coin. This in- 
 terest was made as high as eight per cent, because the legal 
 rate of inlerest in the greater number of the original Con- 
 federate States was at and over seven per cent.' 
 
 This system was based upon sound principles, and if we 
 could have exported our produce and thereby have procured 
 specie, or its equivalent, the plan would liave effected the 
 objects intended. Unfortunately the blockade Avas accepted 
 by neutral powers, and our just expectations were disap" 
 pointed. The specie of the world could not flow in upon 
 us, and, when ours was exhausted, we were compelled to pay 
 interest on our bonds in treasury notes. The foundation of 
 the system was thus lost. Paper money rested on other pa- 
 per, and as both accumulated, they acted and re-acted on 
 each other, until both have been reduced to the rate at 
 which tliey now stand. 
 
 The obvious mode of recovery is to restore the specie foun- 
 dation, or to obtain a substitute approaching specie values. 
 This was attempted at the last session of Congress by tho 
 issue of cotton interest bonds, and by the proposal to obtain 
 the guaranty of the States on the bonds of the Confederate 
 States. These bonds, if negotiated in Europe, it was ex- 
 pected, would provide funds for the redemption of the cur- 
 rency, and thus replace it upon a firm foundation. As late 
 as the fall of Vicksburg, the credit of the Confederacy wa.s 
 so good in Europe that it is believed that bonds with such a 
 guaranty could have been negotiated at a rate which would 
 have enabled the Secretary of the Treasury to control both 
 the currency and the foreign exchanges. Unfortunately^ 
 sorae of the States refused their concurrence, and the mea- 
 
sure failed. While these various measures were in progress, 
 eflforts were made by the government to put in action the 
 only other mode of raising money, namely: taxes. The 
 first tax was laid in August, 18G1, and although not collected 
 until 1862, yet so little were the people prepare I to respond, 
 that the tax was actually collected from them in only three 
 States. In the rest, thi States themselves advanced the 
 amount due by th vr citizens, and aggravated existing evils 
 by issues of their own notes and bonds. 
 
 The small avails of this tax left the Government no re- 
 sourse but to continue the issue of treasury notes, and to 
 sustain them, as far as possible, by funding them in bonds. 
 Efiforts were made by inducements and limitation of privi- 
 leges, to promote funding. These efforts added to those 
 which had preceded them, led to the funding of upwards of 
 three hundred millions as already stated — a sum which 
 would have been deemed satisfactory in any ordinary war, 
 but which is wholly inadequate for the present. 
 
 At the last session, Congress passed another tax bill, 
 ■which is now in the course of being executed. But the 
 large increase in prices, and the consequent increase of de- 
 mands on the government clearly show already that the tax, 
 if even now realized, would be wholly inadequate to sup- 
 ply these demands. A further issue of treasury notes is, 
 indeed, a necessity, until other measures can be adopted ; 
 but the public mind has at last become awakened to the 
 stronger necessity of devising such measures, and seems 
 prepared to adopt any remedy, however sharp, if it can be 
 satisfied that such a remedy will be effective. 
 
 I have already stated that there arc but two legitimate 
 sources of supidy, to wit : taxes and loans. No nation en- 
 gaged in a war like the present has ever been able to sus- 
 tain itself by taxes alone. Loans, also, are necessary ; but 
 in order to negot ate them, an assurance must be given 
 that the interest will be paid in a medium of certain value. 
 The departure from this principle has undermined our 
 credit, and our first effort should be to recover our first po- 
 
8 
 
 sition. We must make tlie interest of any l<jan, which is 
 to be offered, payable in specie or its equivalent. 
 
 The fifteen million loan has taught us a mode of effect- 
 ing, at least in part, this desirable result. A duty, payable 
 in coin, is allowed to be discharged by the coupons of this 
 loan, and the result is that the bonds have maintained a 
 isteady value — their market price being nearly twice that of 
 other public securities. If, tlicn, a loan were established, 
 the interest coupons of which would be available to pay 
 specie dues, a foundation in the nature of a si)ecie value 
 would be secured, and upon it might be reconstructed the 
 sound financial policy with which we started. To effect 
 this, it is only necessary to levy a tax payable in coin, and 
 as such a tax would not be required to pay more than the 
 interest, its amount would obviously be within the power of 
 the Government to collect. A loan of five hundred mil- 
 lions would be sufiicient to reduce the currency to two 
 hundred millions, and would require a tax of not more 
 than thirty millions annually. Such a tax could be readily 
 borne by the country, and if this were all that is required, 
 the remedy would be easy. But a simple reduction .of the 
 currenc3', while it would abate the existing evils, would not 
 preserve the country from their recurrence. In twelve 
 months the currency would again become redundant. It is 
 necessary, therefore, that an absolute limitation shall be 
 fixed upon issues. A guaranty must be given that the 
 two hundred millions left in circulation shall in no event be 
 increased ; or, in other words, that w'hatever supplies may 
 be necessary, shall be raised by other means than by issues 
 of treasury notes. 
 
 2. And this brings us to the consideration of the second 
 point of our enquiry, to wit : the raising of the necessary 
 supplies. 
 
 It has already been stated that, if the currency could be 
 reduced to two hundred millions, the annual money expend- 
 iture of the Government could probably also be reduced to 
 four hundred millions. This amount is proposed to be 
 
& 
 
 raised partly "by taxes, and the remainder by an extension 
 of the loan already proposed, say one hundred millions by 
 taxes, and three hundred millions by the loan. The re- 
 turns to the tax act of August, 1861, have been completed 
 for nine States ; two more have been partly completed and 
 can be estimated. The total values of property in these 
 eleven States amount to four thousand two hundred aiM 
 twenty millions of dollars. If we deduct from these values 
 the conjectural value of property lost and in possession of 
 the enemy, and add tlie increased rate of present prices, 
 the valuation upon which a tax could be rated may be 
 fairly set down at three thousand millions. A tax, ad 
 valorem, of five per cent, on this value would nominally pro- 
 duce one hundred and fifty millions. Allowing an abate- 
 ment of twenty per cent, lor evasions, failures to make re- 
 turns, expenses and contingencies, there would remain 
 one hundred and twenty millions. A loan of one thous- 
 and millions would be sufficient to absorb the currency, and 
 to furnish three hundred millions for supplies ; and the in- 
 terest of this loan would require one-halt of the amount 
 raised by the tax. This would leave the other half, or sixty 
 millions, for the supplies ; and to this would be added the 
 proceeds of the income and profit tax, payable after 1st 
 January. A tax of this kind is so uncertain and so easily 
 evaded that it cannot be estimated beforehand. It will, in 
 no event, however, be sufficient to induce any change of 
 other measures ; and, therefore, we must rely for any de- 
 ficiency upon that portion of the treasury notes which will 
 be substituted for the old issues. The sixty millions, or one- 
 half, which is to support the loan, if made payable in coin, 
 or in the interest coupons of the loan, will furnish the 
 means as well for the interest for the seven hundred mil- 
 lions required for the currency, as of the three hundred 
 millions to be applied for expenditure. In the same man- 
 ner, by making further additions to the tax, the loan can 
 be increased from time to time so as to consolidate the 
 whole public debt; or, as the war continues, to obtain fur- 
 2 
 
10 
 
 tber supplies for carrying it on. By these means the credit 
 of the Government will be firmly estaalished, confidence 
 will be restored, and the embarrassments which now oppress 
 us will be removed. 
 
 But, thirdly. The measures to be adopted must be 
 prompt and certain. 
 
 %Delay in retiring the currency would aggravate all the 
 evils which are in existence, by adding new i.ssues to the 
 mass already in circulation. Uncertaint_Y as to the effect of 
 the measures in withdrawing the excess, would be equally 
 injurious. No one would be willing to accept a loan which 
 might again be depreciated by a redundant currency. Even 
 with all the inducements which may be offered, and the 
 caution which may be observed, the loan itself may not be 
 taken in sufficient portions to secure the result. Voluntary 
 loans have already been offered and have not been taken. 
 It is, therefore, necessary to provide some mode which will 
 absolutely secure the final result in any event ; and this 
 can only be done by providing compulsory measures for use 
 as a last resort. The measures may be adjusted so as not to 
 press upon the willing, while they merely compel the un- 
 willing to take their just portion of the burthen. With 
 these explanations, I respectfully submit the following 
 measures as those which I would recommend for adoption : 
 
 SCHEME PROPOSED. 
 
 1. That Congress forthwith authorize a loan of one thous- 
 and millions in six per cent, bonds, the principal payable 
 in twenty years, the interest semi-annually ; to be extended 
 hereafter, from time to time, so as to consolidate the whole 
 public debt. 
 
 2. That the Secretary of the Treasury be authorized to 
 sell at par as many of the said bonds as will be sufficient to 
 take up the outstanding currency, and to pay the appropri- 
 ations made by Congress. 
 
 3. That deposits of Treasury notes on account of the said 
 loan may be received at the Treasury or any of its deposi- 
 tories, or by commissioners to be appointed; said deposits to be 
 
n 
 
 in sums of one hundred dollars, or of which one hundred is 
 a perfect divisor. 
 
 4. Certificat€s shall be issued for such deposits, which 
 shall entitle the holder to bonds for the amount, with inter- 
 est from the date of deposit. If the deposit be made in the 
 month of January, the bonds issued for the same shall be ex- 
 empt from tlie tax of five per cent, for the present year, herein- 
 after mentioned ; if made in the month of February, they 
 shall be exempt from one-half of the tax, and if made ia 
 the month of March, they shall be exempt from one-fourth 
 of the tax. Officers, soldiers, and seamen, in service, shall 
 be entitled to exemptions from the whole tax for sums paid 
 at any time before the 1st of April, 1864. 
 
 5. A tax of five per cent, shall be imposed on all property 
 and credits, (other tlian the new issue of notes hereinafter 
 mentioned,) which may be held on the 1st April next, to be 
 paid on the 1st July, one-half in Treasury notes, and one- 
 half in coin or in the coupons of the bonds issued for this 
 loan. 
 
 6. In case the coupons should advance in the market to a 
 premium exceeding 25 per cent., any tax payer shall be 
 permitted to pay his tax in Treasury notes of the new issue, 
 with 25 per cent, added. 
 
 7. Within six months a new and improved issue shall be 
 made of two hundred millions of Treasury notes in substi- 
 tution for that amount of old issues, and all the old issues 
 shall be cancelled, and the faith of the Government is 
 pledged not to increase said issues. 
 
 8. Notice shall be given to the holders of Treasury notes, 
 (other than the said two hundred millions,) requiring them 
 to present their notes at the Treasury, or at some of its de- 
 positories, on or before the 1st day of April next, and receive 
 payment thereof in bonds of the said consolidated loan, or in 
 default thereof, the notes not so brought in shall cease to be 
 current or receivable at the Treasury for dues ; but shall re- 
 main evidences of debt, payable by the Confederate States 
 according to their tenor. 
 
12 
 
 9. In the States beyond the Mississippi, the time men- 
 tioned in the last clause shall be extended until the 1st day 
 of July. 
 
 10. Six months more shall be allowed all holders of 
 Treasur}'- notes to come in and register and verify their 
 notes as demands against the Treasury, and exchange 
 the same for a certificate of debt ; or, if they prefer to 
 keep the notes, the name of the holder shall be endorsed 
 thereon, after which the said notes shall be negotiable only 
 by special assignment ; 'and all notes not so registered with- 
 in the said time shall be barred from any further claim on 
 the Government. 
 
 11. Any holder of a bond of the Confederate States may 
 convert the same into one of the bonds under this loan ; the 
 eight per cent, bonds at par, and the others at a proportion- 
 ate rate ; and the loan shall be extended so as to absorb all 
 bonds which may be offered in exchange. 
 
 12. The interest coupons of this loan shall be held equiv- 
 alent to specie in all future dealings of the Government, 
 and shall be accepted in payment of any tax hereafter made 
 payable in coin. 
 
 13. The faith of the Government is pledged to make ad- 
 equate provision for the payment of the principal and in- 
 terest of the said loan, by the continuance of the tax men- 
 tioned in article five, until a census shall be taken, after 
 which, like provision shall be made by direct taxes or by 
 duties on imports and exports. 
 
 14. The notes of denominations under five dollars shall 
 not be affected by the provisions o( this scheme. 
 
 It will be perceived that the measures proposed naturally 
 divide themselves into two distinct characters, the one vol- 
 untary, the others involuntary. The former are deemed 
 adequate to induce the voluntary aid of every good citizen. 
 It cannot be considered a just objection that the others are 
 added when such addition merely gives unity to the plan, 
 and like a tax execution, affects only those who are negli- 
 gent or delinquent in performing a public duty. 
 
13 
 
 "The first class of measures, or those which induce volun- 
 tary action are the following : 
 
 1. The offer of a loan on bonds, with interest coupons, 
 receivable as coin or its equivalent. 
 
 2. The means by which this is effected, namely : a tax 
 upon all values to be paid in coin or in the interest coupons 
 of the said bonds. 
 
 3. The exemption of the bonds from the tax for one year 
 in consideration of a prompt advance of the purchase mon- 
 ey in anticipation of their delivery. 
 
 4. The reduction of the prices of all articles of subsist- 
 ence, and the permanent restriction of the volume of the 
 currency. 
 
 The measures which are involuntary are chiefly two, 
 which will be considered under the following heads: 
 
 5. A limitation of time beyond which Treasury notes 
 now in circulation, shall cease to be receivable as currency 
 and for public dues. 
 
 6. The registration of the notes as evidences of public 
 debt. 
 
 1. And first, as to the character of the proposed loan. 
 It is intended to consolidate all the various forms of public 
 ilebt. Every holder of a bond, call certificate, or Treasury 
 note, may exchange his security for bonds under this loan. 
 The Treasury note holder, for reasons applicable only to 
 that kind of security, is required to make the exchange 
 within three months from the 1st January. The bond hold- 
 ers are allowed their own time, or if preferred, they may 
 retain their own securities. It is hoped that the induce- 
 ments offered will bring them all in. 
 
 Tlie necessity, which will be on each tax payer, to find 
 specie or the coupons of these bonds, will induce him to in- 
 vest part of his means in them. And the fact that the 
 whole of the coupons will be required to pay the tax will 
 create a demand which will impart to them a fixed value 
 ^approximating to specie. 
 
 2. The means adopted to effect this result are the laying 
 
14 
 
 a tax upou all values, to be paid in coin or iu the interest 
 coupons of the said bonds. 
 
 A loan of 1,000 millions would require a tax of sixty 
 millions to pay the interest, and if such loan could be re- 
 lied on to supply all demands for money for the current 
 year, no larger tax need be imposed. But it will be found 
 that at least sixtv millions more, in addition to the existing 
 taxes, will be required. It is therefore proposed to levy a 
 tax of one hundred and twenty millions, and to allow ono 
 half to be paid in treasury notes, while the other half is 
 made payable in coin or in the coupons of the said bonds. 
 To raise this amount, it has already been shown that a tax of 
 five per cent, on all values will be required. This tax is 
 laid at a date just twelve months subsequent to the tax of 
 the present year. It is proposed to lay the tax equally upon 
 every object of value, so that each person will contribute in 
 exact proportion to his means. 
 
 The existing taxes, it is assumed, have been enacted with 
 just relation to the income arising from real and personal 
 property. The new tax, therefore, imposes a uniform duty 
 ad valorem, on all property. In doing so, it encounters the 
 objections which have been raised under the provisions of 
 the permanent constitution against such a tax upon lands 
 and negroes. It is contended that the provision which de- 
 clares that no direct or capitation tax shall be laid unless in 
 conformity with an enumeration which, by a previous 
 clause, is directed to be actually paid within three years, 
 prevents the imposition of any tax upon lands and negroes 
 until the enumeration shall be made. The land and ne- 
 groes in the Confederate States constitute two-thirds of tax- 
 able values ; and if this objection prevail, it would establish 
 the surprising conclusion, that all the States which ratified 
 the constitution, while engaged in war which put at hazard 
 the lives and fortunes of all their citizens and their own in- 
 dependence, excepted from the contribution to maintain that 
 war, the very property for which they were contending. Such 
 a construction is manifestly erroneous, and could never have 
 
15 
 
 been intended. The more consistent interpretation is, that 
 a principle was established which should operate as soon as 
 the basis for its action was obtained. As soon as the enu- 
 meration could be taken, there was to be an apportionment. 
 But it' an enumeration became impossible, then the tax must 
 he laid according to the other rule of uniformity declared by 
 the constitution. There is a general power to lay taxe** 
 wiiich becomes suljject to a special limitation as soon as an 
 enumeration can be had. That enumeration is ordered to 
 be taken within three years, but it is prevented from being 
 taken by the presence of the public enemy. Under such a 
 state of things, the liniitation must he considered as in sus- 
 pense, and the general power may be exercised. It aeems 
 to me, tlierefoi'e, that tlie ad valorem tax is no infringement 
 of the constitution. 
 
 In the present condition of the country, sucli a tax is more 
 equitable and beneficial than any apportioned tax would be. 
 The occupation of large portions of the States by the ene- 
 my would cast the whole quota of any State upon the unoc- 
 cupied portions. The States which are in this condition 
 \yould have the largest quotas to pay on account of 
 their larger representation, and thus the burden of the tax 
 at present would be inverted. The greatest sufierers would 
 be required to boar the heaviest burden. In either view, 
 then, the ad valorem tax is greatly to be preferred. 
 
 The requirement to pay one half the tax in coin or in the 
 coupons of the consolidated loan will create in every tax 
 payer a desire to possess these bonds. Just in proportion 
 to the extent of his property will he have occasion for the 
 bonds, and universal demand for them will be created by 
 making the tax universal. Those who have small amounts 
 to pay will purchase the coupons, as is now done with the 
 fifteen million loan. And an exemption being given to 
 small property holders, there is but little danger from spe- 
 culation or inability to procure a supply. All uncertainty 
 on this point, however, is removed by the provision which 
 authorizes payment in treasury notes, if the market price of 
 
16 
 
 the coupons should advance twenty-five per cent, premlunr. 
 It is necessary to allow some advance in order to furnish in- 
 ducement to purchasers of the bonds. It is believed that 
 the range proposed will secure this object, while it affords 
 sufficient protection to the tax payer from any combination 
 of capital. The tux, therefore, while it induces large pur- 
 chases of bonds by large property holders, is adjusted to the 
 wants of those who are unable to purchase the bonds. It 
 also offers the strongest inducements to holders of commodi- 
 ties to offer them for sale instead of hoarding for higher 
 prices. They will perceive that, if they retain their commo- 
 dities until the currency becomes contracted, it will require 
 a much larger quantity of them to be afterwards sold in or- 
 der to pay their quota of the tax. 
 
 3. The next subject of consideration is the exemption of- 
 fered for an advance of the purchase money of the bonds. 
 
 The five per cent, tax is proposed to be laid upon all 
 values held on 1st July, 1864, excepting the two hundred 
 millions of new currency. The bonds to be issued for the 
 consolidated loan are, therefore, included with all other 
 bonds and securities. But the advantage to the public is so 
 great from retiring the circulation promptly, that an offer 
 of exemption for one year from the whole tax on these bonds, 
 is made to any person who will jDay in treasury notes on ac- 
 count of the loan in the month of January ; an exemption 
 of one half is offered those who will make such payment in 
 the month of February, and of one fourth-to those who will 
 pay in the month of March. It will not be practicable- to 
 deliver so large an issue of bonds within this period of 
 time, and the exemption, therefore, not only compensates 
 for the advance, but for the delay in furnishing the bonds. 
 The officers and soldiers in the army being prevented by 
 their duties from attending promptly to their private busi- 
 ness, are allowed the privilege of the entire three months 
 for profiting by the exemption. Any payment made by them 
 before the Ist of April will entitle them to exemptio-n from 
 the tax on the bonds thereby purchased. On the 1st of 
 
April the privilege of conversiou is taken away on this side 
 the Mississippi liver, but it continues for three months more 
 on the other side. 
 
 These measures, it is believed, will be sufficient to pro" 
 cure a prompt and active reduction of the currency. Each 
 person in the possession of currency will thus be enabled to 
 convert into bonds, based on specie values, notes which, at 
 the time, cannot command more tlian one-fourth of those 
 values. Those who hold commodities are in a still better 
 condition to profit by the loan. A farmer may sell his 
 grain for five times the ordinary price, and invest the whole 
 amount in a bond payable, in twenty years, in specie, the 
 interest coupons of which are available to discharge a lia- 
 bility to pay in coin. 
 
 4. There remains one other inducement to voluntarv sub- 
 scription yet to be considered, namely : the reduction of 
 the price of subsistence, and the permanent restriction of 
 issues of Treasury notes. 
 
 The parties who are most likely to be the largest contrib- 
 utors to the loan are bunks, manufacturers, railroad compa- 
 nies, and persons of capital. To all these in an esfjccial de- 
 gree, the establishment of the currency upon a permanent 
 footing, is of the utmost value. No such permanence can 
 be had if new issues are continued. A restriction which 
 keeps the currency within just bounds increases the value of 
 every railroad fare ; adds to the rate of interest ; reduces 
 the price of all labor and subsistence, and restores confidence 
 and stability to all transactions. The amount at which the 
 currency is to stand is set down at two hundred millions. 
 This is about twice the amount required before the war. It is 
 supposed that the lai'go amounts which are suspended in 
 the hands of public ofticers and in transit, will call for a 
 much larger amount of circulation than in time of peace. 
 Moreover, after so large an expansion, it would be unwise 
 to contract the currency in a compass as small as its natural 
 hounds. In order, also, to prevent the evils incident to too 
 rapid a contraction, it is proposed that the two hundred 
 
18 
 
 millions of new currency shall be issued from time to time 
 during the period of contraction, and only in substitution 
 of that called in ; so that when the 1st of April shall ar- 
 rive, atwhicli time t!ie old circulatiod shall become uucur- 
 rent, there may be a new currency to take its place. It 
 may be added, that if the contraction should become. too 
 stringent, the banks will be able, and will probably find it 
 expedient to relieve the pressure by the reissue of their own 
 notes. 
 
 Such are the inducements which are offered to recommend 
 the consolidated loan to public favor. They are so large and 
 beneficial that they will, in all probability, secure its suc- 
 cess. Unfortunately the conseqwetices of failure are so peril- 
 ous to the public welfare that nothing can be left at risk. 
 Even the time which will be consimied in the effort to pro- 
 cure volunfaiy subscription cannot be recovered in case of 
 failure. The measures of prevention must therefore, accom- 
 pany the invi ration to voluntary action. They will be 
 harniless and inoperative if not required ; absence of them 
 would be ruinous, if the occasion for them should arise. 
 
 5. We come, therefore, next to consider the measure 
 which limits the time within which the notes must be 
 brought in for redemption, or be debarred the privilege of 
 being circulated as currency or received for public dues. 
 
 It cannot be denied that this provision infringes upon two 
 of the rights which are created by the contract. The note 
 itself is a simi)le promise to pay a sum of money two years 
 after a ratification of a treaty of peace. The promise 
 being to bearer, the note, by operation of law, became 
 negotiable by mere delivery. Its currency as money is 
 therefore, not a part of the express contract, though it 
 was clearly implied ; and Congress has constantly refused 
 to make the currency of the notes obligatory by rejecting 
 every proposal to make them a legal tender. Interference, 
 therefore, with this portion of the contract, affects no right 
 of the people as between each other ; it is, without doubt, 
 however, a direct interfereuce with the contract implied be- 
 
w ^ 
 
 tween the Government and the holder, ■when the note was 
 taken. Besides thib, there is a direct inlVingemeiit of the 
 express contract of .'he Government to receive the notes in 
 payment of pnhlic dies. 
 
 These positions being clear npon what grounds is it justi- 
 fiable to puss them by ? 
 
 Let us consider the measure which it is proposed to adopt. 
 The Government hf^.s provided a fu.Md as nearly equal to 
 specie as is within its power. It advertises that it will pay 
 every treasury note from this fund, if presented within 
 Dinetj days ; antl it is only in case «. f default, that it post- 
 pones the acceptance of the notes until after tlie war. Test 
 the principle by supposing the paym :nt was actually to be 
 made in coin. Supj :)se tlie Governm mt should advertise in 
 the same form, and should actually pay every holder who 
 came in. Would it be deemed unjast to postpone those 
 who refused to come in and accept ])ayment? Could the 
 Government, in such case, be justly charged with the want 
 of g(»od faith? and, if not, theii the question becomes one 
 not of good faith, but of the difference of value between 
 bonds payable in specie with interest coupons received as 
 specie, and specie itself. In the worst possible view, it is 
 only an offer by a debtor, to pay down his debt in the best 
 securities he has, or to postpone the actual i)ayment until 
 better times; and such an offer has never been deemed in- 
 consistent with justice or honesty. 
 
 The reasons which induce the measures proposed, will, 
 it is believed, present a complete justification of them. 
 
 1. The first which will be considered is that unless the 
 action proposed or something similar to it be immediately 
 taken, the value of the notes will be extinguished. The 
 country is engaged in a war which involves the security of 
 all property and the safety of every family. To carry it on 
 it has been obliged to issue notes, and unless a substitute is 
 immediately found, the continuance ir> this course will de- 
 stroy the value of every note already issued. The measures 
 proposed are intended to save the notes, and nothing short 
 
10 
 
 of them will have that effect. If some other mode conld be 
 devised, if a tax. or an)'^ other means of relief could he found, 
 it would he preferred. But they are all inadequate, and the 
 Government finds itself unahle to comply with the letter of 
 it.s engagement. It endeavors, the'n, to cnnijily with its 
 spirit. It tenders the creditor payment of its deht hefore it 
 is due in a security of greater value. It gives him time to 
 accept the payment, and, if he should prefer to retain the obli- 
 gation, it allows the alternative upon the simple condition 
 that he shall forego thepi'ivilege of demanding payment until 
 after the war. It does exactly what an honest debtor in dis- 
 tress is hound to do. it recognizes its deht, oifers the best secu- 
 rity for payment in its power, and asks for time. This, in 
 plain terms, is the projiosal of the Government ; and if it 
 were the case of an individual, his creditors would meet, and, 
 as a body, would accept his offer. In the case of the i)ublic 
 the creditoi's cannot meet. But tliey have rcpreseY)tatives 
 who can. The Congress represents tlie people as well as 
 the Government, and, althougli it may be difficult to act 
 for both parties, yet it is not difficult to ascertain the claims 
 of justice, and Congress is the proper tribunal to adjust them. 
 Their judgment in the matter should stand as a com])Osition 
 between the parties. 
 
 2. The next reason which will be considered is, that the 
 continuance of the notes as a circulating medium to their 
 present extent, involves the ruin of public and piivate credit, 
 and will deprive the government of the means of defending 
 the lives and property of its citizens. If the currency re- 
 mains in its present expanded state, no measure of relief 
 can be made effectual. Prices must advance, and the means 
 of the government to pay these prices must daily loose effi- 
 ciency. Taxes beconie fruitless, by reason of the deprecia- 
 tion of the money. The army can neither be paid, clothed 
 nor fed ; arms and munitions of war can no longer be sup- 
 plied ; the officers of the government cannot be supported, 
 and the country must succumb. Calamities so disastrous 
 must certainly be averted by every means within the power 
 
21 
 
 of the government. No contract, however solemn, can re- 
 quire national ruin ; and, in such case, the maxim must 
 prevail that the public safety is the supreme law. 
 
 The objection to these _measures of compulsion is greatly 
 raotlificcl by the certainty that but a small portion of the 
 notes will be brought under their influence. The induce- 
 ments to the loan are so many that the greater part of the 
 currency will be voluntarily converted ; and the true question 
 is, whether the fraction which remains shall be permitted to 
 gain an undue advantage over the rest, and to defeat the 
 great public interests, which are involved in the withdrawal 
 of the entire amount. 
 
 These measures, it v.-ill be perceived, contemplate a per- 
 manent financial policy, capable of expanding to suit the 
 future vrants of the Government. It is obviously, there- 
 fore, of the utmost importance that the ultimate payment of 
 the bonds now issued, and of those which may be added, 
 should be completely secured. Confidence is one of the 
 largest elements which enter into public credit, and in this 
 case the means are at hand to secure it. The South is in 
 possession of products which are desired by the whole 
 world. 
 
 For at least five years after peace, the demands for these 
 products will probably so far exceed the supply, that a duty 
 on exports would full upon the consumer. For the five 
 years following, the usual contest between producer and 
 consumer will possibly divide the burthen ; but the necessi- 
 ties of the country ofier a controlling reason for the contin- 
 uance of the duty. To this may be added a certain portion 
 of the duties on imports; and the two together, if now 
 pledged to a sufiicient extent, would provide an adequate 
 security for the payment of the debt. Assuming that, when, 
 trade is re-established, we shall have the same products to 
 export, and, in a few years fhereafter, the same quantity to 
 sell, our exports and imports may each" be set down at three 
 hundred nuliions. Any export duty of ten per cent, on all 
 products of the field and forest would, upon this assumption, 
 
22 
 
 produce thirty millions annually ; anfl, if an equal poHiora 
 of the duties on imports be added, the ajjgregate would be 
 sufficient (o pay the wliole interest of the debt. If Congress 
 would now pass a law to tliis effect, as it is perfectly cou)pe- 
 tent to do, the public credit would instantly revive, and 
 probably to such a degree as to render inoperative the mea- 
 sures of constraint which have been recommended. 
 
 The guaranty which it would afford to the bonds of the 
 consolidated loan, would induce a prompt exchange for 
 thera of all other securities, except, probably, the tifteeii 
 million loan, which is already protected by a simihir pledge. 
 An exchange of the one hundred million \oi\i\ will, of itseU!, 
 cause an annual saving of §2,000,000, and., if to this be ad- 
 ded the saving which, would be made on other portions of 
 the public debt, the sum total will be about five and a half 
 millions. The annual saving of this sum certainly pre- 
 sents another strong inducement to the immediate enact- 
 ment of the proposed law. 
 
 Such a law would still leave unpledged such other taxes 
 and import duties as it may be found ex[)cdient to levy,: 
 and which will furnish a sufficient and apjjropriatc means 
 of supporting the Government, and of discharging the prin- 
 cipal of the public debt. 
 
 Thus a system of properly adjusted measures would be set 
 in action, which would secure the public credit, and enable 
 us to carry on the war with energy and success. 
 
 In case, however, there should be any doubt as to the effi- 
 ciency of the {»lan in raising the supplies required for the 
 ensuing year, two further measures of relief may be added. 
 It is possible that the severe contraction attending a redac- 
 tion of the currency to two hundred millions, may limit the 
 sale of the bonds after the efftct of such contraction shall be 
 fully felt. It may, on that account, be necessary, for a 
 time, to sell the bonds below par, to supply any deficiency 
 in the means of the Treasury. I would, therefore, suggest 
 as a measure of precaution, that such a power should bo 
 granted to the Secretary of the Treasury. Another measure 
 
23 
 
 of similar cliaracter could be provided by authorizing certi- 
 ficates of indebtedness, payable after the war, to be issued ia 
 part payment of supplies necessary for the array. It is not 
 probable that either of these measures will be required. 
 Still it is a wise precaution that they should be provided for 
 .iny case of necessity. 
 
 The large issue of bonds which is called for by these mea- 
 sures, together with the new issue of treasury notes, present 
 •a field of labor amjjly sufiicient to occupy the attention of 
 ■nnother bureau officer. I would respectfully renew the re- 
 commendation heretofore made, of establishing a separate 
 bureau for t!ie issue of bonds and notcis, and for taking 
 charge of all the arrangements connected with sucli issues. 
 
 The number of coupons which will be required is so great 
 that unless they are allowed to be prepared by machinery, 
 the delay in getting out the bonds will be very great. The 
 same difficulty attends the notes isued as currency. The 
 number of persons who are necessarily employed to sign 
 notes renders the signatures of no value in detecting coun- 
 terfeit.s. No one can become acquainted with all the signa- 
 tures, and but few of the officers know even the names of 
 the signers. The genuineness of each note must be deter- 
 mine I by the plate and not the signatures. I reaew, there- 
 f.jre, my recommendation that the notes and coupons may 
 be ii-sued with engraved signatures, under such precaution 
 as experience may advise. 
 
 In connection with this subject, I would respectfully bring 
 to the attention of Congress the inequality which has arisen 
 between the bonds and registered stock of the fifteen million 
 loan. An export duty on cotton was imposed to pay the 
 principal and interest of this loan, and the coupons of the 
 bonds were authorized to be received in payment of that duty- 
 T (• registered stock, having no coupons, did not enjoy this 
 advantage, and the result has been a difierence of as much as 
 fifty per cent, between the two portions of the same loan. 
 This inequality can be remedied by authorizing the Secreta- 
 ry of the Treasury to cause checks to be issutd fur the iuter- 
 
24 
 
 est, as it accrues, Remi-aunu.'illy uixm the stock, and allowing 
 these checks to be received i'or the duty in the same manner 
 as the coupons. It uill be necessary to add a iew precau- 
 tions for preventing the iVands and ibrgcries to which such 
 checks would be exposed, all of which could be adjusted by 
 regulations of this department. 
 
 The report of tlie commissioner of Taxes, herewith sub- 
 mitted, will cxinbit the details of the war tax of August, 
 1861, and of the taxes the present year, as far as progress 
 has been made. The tax of 1861 had been actually collect- 
 ed from the people in only three States — South Caroliiia, 
 Mississippi and Texas. In the other States the tax was 
 paid by the State Governments. Assessments were actually 
 made in only ten of the States, and the results are exhibi- 
 ted in the schedules annexed to the report. The total value 
 of the property assessed is four thousand two hundred and 
 twenty millions, of which, real estate is set down at one thou- 
 sand three hundred and ninety-three millions, and slaves at 
 one thousand four hundred and eighty millions. The total 
 amount of the tax assessed is $21,142,662, of which, $19,- 
 418,393 have been collected ; leaving a balance uncollected of 
 $2,044,275 ; of this balance $705,233 is absorbed by an un- 
 adjusted difference in assessment claimed by the State of 
 Tennessee ; and a large portion of the remainder is due in 
 counties overrun by. the public enemy. The amounts actu- 
 ally collected have been paid over by the collectors with 
 commendable exactness and punctuality. 
 
 .The tax imposed at the last session of Congress is now 
 being rapidly collected. From present appearances, the 
 commissioner estimates its probable collections at one hun- 
 dred millions in money, and he reports that it is paid Avith 
 general cheerfulness and alacrity. The novelty of many 
 of the provisions of the law has given rise to questions 
 which are presented in detail in the report of the commis- 
 sioner, to which I respectfully invite your attention. 
 
 The report of the chief clerk for the produce loan and 
 
25 
 
 agency for the purchase of cotton and tobacco, herewith 
 submitted, will exhibit the details of that branch of the De- 
 partment. 
 
 The general results are, that the whole amount of sub- 
 scriptions realized from the produce loan is $32,758,875, 
 and that there yet remains uncollected about $12,?<68,080. 
 This is a large i)roportion of the whole amount, and the 
 greater part is prt)baltly due from persons whom thecalami- 
 ties of war and the destruction of pioperty have deprived of 
 the means of" meeting their engagements. There are many 
 others, however, who may have been tempted by the high 
 prices to neglect their engagements, and to reach these it 
 is proposed by the chief clerk to publish the lists in the 
 neighborhoods where they were subsciibed. The measure 
 is submitted for the consideration of Congress. 
 
 The |)urcliases of cotton made under the act of April 30th, 
 1863, amount to 3'J'J,753 bales at the date of the reports last 
 received, at a cost of' $30,3 14,769. The average price paid 
 was $16 85 per pound, exclusive of Sea Island cotton; the 
 lowest price being 6^ and the highest 36^ ; and five-sixths 
 of the entire purchase money have been paid in bonds. 
 The difficulty of procuring reports in detail from the agents 
 in Louisiana, Mississippi, Arkansas and Texas, has prevented 
 a precise return of the cotton which has been destroyed ; but 
 from the estimates made by each of them it may be assumed 
 that the entire loss is not more than 30,000 bales. To this 
 must be added several thousand bales used for military and 
 naval defences ; and also several thousand more turned over 
 to the ordnance and quartermaster's departments to fulfil 
 contracts for supplies, and also for shipments made by the 
 Treasury Department. The whole of these deductionsrfnay 
 be set down at 70,202 bales, leaving on hand an aggregate 
 of about 329,500 bales. Of this amount about 30,000 bales 
 are stored in warehouses in cities, and the remainder in cotton 
 houses on the plantations where they have been purchased. 
 
 The time which has elapsed since much of this cotton was 
 purchased has damaged the rope and bagging of a portion 
 
26 
 
 thereof; and the aid of Congress is asked in procuring the 
 means of renewing it I had hoped that the skill of our 
 people would discover a substitute for i-ope and bag^Mug, and 
 probably an ofi'er of a reward for the best phm would pro- 
 duce beneficial results. It' resort must be had to foreign 
 supplies, the plan, wliich may be aibipted to ship the cot- 
 ton, will furnish the nicaiis ol importing the rope and bag- 
 ging, and in either view, it will be necessary to make an 
 appropriation to cover the expense. 
 
 The amount of tobacco purchased is two thousaud and 
 ninety hogsheads, costing $772,846, at an average of twen- 
 ty-nine cents per pound. These vari()us purchases have 
 nearly exhausted the appropriation of thirty-five mlllious 
 made by the act of 20th April, 18lJ3. In order to meet the 
 objects stated in other reports, if these objects are ap[)roved, 
 it will be necessary to increase the stock in the hands of the 
 Government, by an additional appropriation of at least the 
 same amount heretofore appropriated. 
 
 The collection of the tax in kind on cotton and tobacco 
 has been deemed so germain to the business of this l)ranch 
 of the Department, that I have made arrangements for 
 uniting them. Wherever cotton is collected, it is to be 
 turned over to the chief agents already app;)inted in each of 
 the cotton States. The same plan is pursued with tobacco, 
 and I have appointed chief agents in the States of Virginia 
 and North Carolina, at a commission with a maximum limit 
 of four thousand dollars per annum. These ageuts are to 
 appoint subordinate agents in each county for the purpose 
 of receiving, sorting, prizing and preparing the satne for 
 market. The details of these processes require much care 
 and attention, and the constant supervision of a competent 
 officer. It appears also that the parcels should, not be de- 
 livered as early as the month of March, as now required by 
 law, and it will be, therefore, proper to extend this period. 
 The compensation of these subordinate agents has not yet 
 been adjusted, owing to the Department not having suffi- 
 cient information as to their duties. 
 
27 
 
 The cotton interest honrls will naturally fall within the 
 raanagetnent of this division of the Treasury Department, 
 and it is proposed that they shall take that course. It is 
 not clear what was the design of Congress in authorizing 
 these honds. The iirst law passed was in connection with 
 the funtling act, and the coupons were thereby made payable 
 at the option of the holder of the bond in coin, or cutt^m 
 valued at eight pence sterling pei' pound. The object of 
 this law was obviouly to provide moans of raising money 
 abroad ; and after it WdS passed I recommended that the 
 rate, at whicli the cotton was to lie taken, should be reduced 
 to six pence, or t!ie averai^o [nice at Liverpool before the 
 war. At this rate purchasers could have been [)rocured at 
 any time belbrc the fall of Vicksburg. 
 
 The amendment which was uuide to tlie law by Congress 
 reduced the price as proposed, but shifting the option of be- 
 ing paid in cotton from the purchaser to the Government. 
 This converted the bond in the view of a European purcha- 
 ser into a simple six per cent, money bond, with the interest 
 ])ayal)le here. The ahseuce of the right to require cotton 
 for the bonds took away tiieir availahleness in the foreign 
 market. -On the other hand, the option which they allowed 
 the holder to receive cotton at six pence when it was selling 
 at three or four times that price, made the operation very 
 unfavorable for the Government, unless the bonds were sold 
 at a large advance. For this reason, I deemed it my duty, 
 after due explanation ef the nature of the bonds, to adver- 
 tise for bids ; and as an experiment I accordingly offered 
 five millions. The bids ranged at various rates from par up 
 to one hundred per cent. 
 
 I accepted all the bids at and over fifty percent, premium, 
 and issued a second advertisement. The bids which were 
 offered in both cases, were far below the amount of bonds 
 offered for sale. Bnt those bids which came from persons of 
 known intelligence and patriotism, indicated that fifty pes 
 cent, was the probable value of the bonds. I, therefore, adopt- 
 ed that rate, and authorized sales* to be made accordingly. 
 
28 
 
 These sales have been made to a very limited extent, chiefly 
 because it was belit'ved that the blockade would j)ieveiit the 
 shipment of any cotton to be received in payment. This 
 impediment was so 8erit)iis, tliut, in tiie judj^ment of men 
 of business, even a reduction of the price of bonds to par 
 would not induce larj^e sales. 
 
 The scheme of finance hereinbefore proposed, will, if 
 adoi)ted, render unnecessary any other elToit to call in the 
 currency. These cotton bonds will tlieiel'ore not be required 
 for that purpose, and, as they are not available to raise funds 
 abroad, I recommend that the law authorizing their issue 
 be repealed, 
 
 I must again ask your attention to the necessity of in- 
 creasing tlie compensation of the treasurer, assistant treasu- 
 rers, depositaries, and clerks attached to each of them. 
 Each of these officers discharge the duties of a bank, and its 
 officers must have qualifications wliich wonhl fit them to 
 discharge like ofBces in banks. Such qualifications cannot 
 be commanded, unless at the same rate of compensation paid 
 by banks. Congress has limited the salary of a teller in 
 these offices to $1,200, where $3,500 is paid for like services- 
 The result is, that the Government cannot procure compe- 
 tent men to do its work. With the higher officers the diffi- 
 culties are greater. Several of those in office desire to re- 
 tire, and it has been found impracticable to procure com- 
 petent successors. These embarrassments are greatly in- 
 creased, when we come down to the rank and file of the 
 clerks. The amount of their salaries does not furnish them 
 •with support, and it is distressing to know the suffering 
 which some of them encounter. I trust that the measures 
 recommended for the relief of the currency will remedy the 
 evil ; but, until these measures can be brought into action, 
 these clerks will be sadly straightened to support themselves 
 and their families. I would, therefore, respectfully recom- 
 mend, as a temporary means of relief, that they be allowed 
 to draw from the commissary's stores in the same manner 
 as if they were detailed ou duty in the army. 
 
29 
 
 The various estimates and schedules, which contain de- 
 tails of the general statements above made, are hereunto ap- 
 pended, together with a report of the proceedings of a con- 
 vention of banks, at Augusta, Georgia, which I have been 
 requested by it to submit to your consideration. 
 All of which is resjiectfully submitted. 
 
 C. G. MEMMINGER, 
 Secretary of Treasury. 
 
penmAliF€« 
 
 pH8.5