SPECIAL REPORT.
have been submitted, and it is now the duty of this Depart¬
ment to present to Congress its views as to the supplies
which are required. Congress has already made large ap¬
propriations for the current year. These must be consider¬
ed in connection with further appropriations, because they
must all be supplied' by loans.
The appropriations already made at the first and second
sessions of Congress amount to $61,759,704
Of Avhich there has been expended, up to the
Leaving a balance yet to be expended, of 49,419,567
If this balance were in the Treasury, it might be dis¬
missed from f urther consideration; but it has yet to be raised,
and must enter into any scheme for raising further supplies.
The plan which Congress adopted to provide this balance
consisted of three loans :
1. A loan of fifteen millions, sustained by an export duty
on cotton.
2. A loan of one million on Treasury Notes.
3. A loan of fifty millions, partly in Treasury Notes,
partly in Bonds, to be sustained by a direct tax.
Upon the first of these there has been realized up to date
24th July inst., the sum of,
12,340,137
of my report,
Upon the second,
$ 8,920,232
1,135,900
Upon the third an advance has been received
from the Banks of,
1,881,536
Total,
2
And the whole of this amount has been applied, as already
stated, to the former appropriations made by Congress, leav¬
ing still due on those appropriations $49,419,567.
We must, therefore, add to this amount such further esti¬
mates for expenditure for the current year as Congress may
sanction, and we have then the figures of the supplies which
are to he provided.
The War Department has submitted estimates for troops
and munitions upon the largest scale to which the war may
be extended. The estimates made at the last session of Con¬
gress provide for an army of 100 regiments; and when it is
considered that every increase of an army requires much
time before it will call for its full development of expense,
it may not be deemed necessary to provide immediately for
the maximum scale,ynore especially as Congress is always at
hand to make increased provision.
I assume, therefore, that if the army expenditures be rated
at twice the amount already estimated for, it will cover as
much ground as may be necessary for the Treasury to pro¬
vide under existing circumstances. The total appropriated
for the War Department is $ 53,302,892
Twice that amount is 106,605,784
Estimated amount required for Ordnance,... 4,000,000
To which add the amounts heretofore appropri¬
ated for other Departments, 8,456,812
Also additional appropriations that will be re¬
quired for other Departments, viz.
Contingent and telegraphic expenses of the
Executive Office, 2,500
Treasury and interest on public debt, 285,366
Navy, 348,223
State, Nothing.
Justice, 34,500
Total, 119,733,185
From which deduct already expended, 12,340,137
Amount required, $ 107,393,048
The means provided by existing laws to defray these ex¬
penditures are: *
1. The balance of the fifteen million loan, say about six
millions of bonds.
2. The fifty million loan, consisting partly of Treasury
Notes, partly of Bonds.
3
The fact that so much of the first loan remains undisposed
of, proves that Bonds cannot be relied on as a resource im¬
mediately available.
In anticipation of this result, a scheme has been put in
operation whereby the growing crop is made an instrument
to dispose of the Bonds. Proposals have been issued for
the exchange of provisions at market rates for the Bonds ;
and subscriptions have been extensively made of the net
proceeds of crops for the Bonds. It is expected that from
these sources about fifty millions of dollars may eventually
be raised. But, inasmuch as these proceeds cannot be re¬
alized until the ensuing spring, it is obvious that they can¬
not be made available in that form for present use. More¬
over, it is possible that the blockade may prevent the sale of
the crop, and in that event, its proceeds would be still less
available.
It will, therefore, be necessary to have recourse to Trea¬
sury Notes. This necessity has also been anticipated, and,
at the instance of this Department, the banking institutions
of our country, with the exception of those at Mobile and
New Orleans, (which last mentioned banks have been con¬
trolled by reasons not affecting their patriotism,) have, with
a patriotic spirit which entitles them to the gratitude of the
country, agreed to accept as currency the Treasury Notes of
the Government. This affords the Government an imme¬
diate credit equal to the entire circulation of the country.
In my former Report, it was shown that this circulation
may be estimated at eighty-five millions and a half. It
would be neither judicious nor just to attempt to occupy
the whole field of circulation by driving in the currency of
the banks. I propose, therefore, to divide the field with
them and to issue as currency about forty-three millions of
Treasury Notes without interest. I further propose that to
the supposed extent of the crop subscriptions, Treasury
Notes be also issued, making say ninety-three millions in
all. I had intended to propose that these Notes should be
made expressly redeemable from the proceeds of this sub¬
scription ; but I have been assured by the Delegates of the
Bank Convention, now in Richmond, that their constituents,
the Banks, will accept the Notes without any such specific
pledge. While, therefore, I would recommend that the
Government .should still look to the proceeds of the cotton
subscription as the appropriate fund to pay the Treasury
Notes, yet it would be wise to leave that matter open, and
4
retain the power to use the proceeds of the crop for any
purpose that may be desired.
In order to remove these Notes from the circulation, two
plans may be adopted. The first would be to allow the
Notes to be funded in 8 per cent, bonds; the second, to give
interest on the Notes of fifty dollars and higher denomina¬
tions. I prefer the second plan chiefly because in an agri¬
cultural community there are many persons who would
hoard up Notes which bore interest, who would not under¬
take the trouble of exchanging them for Bonds; and secondly,
because the Banks themselves and all the moneyed capital
usually employed in short loans would absorb these Notes.
I -would, therefore, recommend that Notes be issued for the
amount of fifty millions at two or three years, bearing an
interest at two cents per day on each hundred dollars. And,
in order to give the greatest possible convenience to these
Notes, it would be well to adopt the plan recommended by
the Bank Convention of having them all bear the same
date, and let the interest pass by calculation on the back
with the principal.
We come now to consider the foundation of the whole
scheme, namely, the Direct Tax which is to sustain the
credit of the Bonds and of the Treasury Notes. What shall
be its amount ?
The amount assumed for the appropriations has been set
down, as above stated, at. $107,733,185
The two loans proposed are 93,000,000
Leaving a balance of ...$14,733,185
From this amount might be deducted the balance of the
fifteen million loan, say about $5,000,000., which would
leave the sum of $9,733,185 to be provided for.
The objects >to be met by the Direct Tax are, therefore,
1. Balance above $9,733,185
2. Balance of interest on the loan of fifty
millions . 3,750,000
3. Fund to be raised to pay 1st and 2d issue
of Treasury Notes, say 1-4,....... 11,000,000
$24,483,185
The third item, it seems to me, may be greatly reduced.
The first issue of Treasury Notes of one million must be
provided for. But, inasmuch as the option is given any
5
holder to fund the second issue of forty-three millions, it
is probable that much of it will be disposed of in that way.
This would reduce in proportion the amount to be redeemed.
Moreover, in case of need, a re-issue of them as currency
might be authorized. These considerations exhibit the
practicability of reducing the third item, at least, one half;
and ft seems to me that, under existing circumstances, such
reduction would be advisable. In that case, a direct tax of
twenty millions would be sufficient.
In another report I have presented such information as I
could collect in relation to taxes, and, in the absence of es¬
timates, I estimated for a conjectural sum of twenty-five
millions. If the results arrived at in the present report are
satisfactory, a less amount will be sufficient. To raise
twenty millions by assessment upon the items of pro¬
perty recommended in my former report would require the
assessment of about 44 cents upon each hundred dollars of
value ; and, if assessed upon the whole value of property
in the Confederate States, would require but 38 cents on
each hundred dollars. If Congress should see fit to dis¬
criminate in favor of small proprietors, a proportional in¬
crease must be laid on the rest, to make good the deficiency.
Having thus presented the scheme which appears to me
snost advisable for raising the necessary supplies, it only re-
imains to indicate what further legislation is required.
1. It will be necessary to authorize Treasury Notes to be
issued to the extent of forty-three millions, without interest
fundable in Bonds, as already authorized by law.
2. To authorize the issue of an additional amount of
Bonds to pay for all crop subscriptions. The issue of Bonds
already authorized, in which Treasury Notes may be funded,
is fifty millions. If the forty-three millions of Treasury
Notes be funded, only seven millions of this issue would re¬
main to pay for the crops subscribed. It will be necessary,
therefore, to increase the Bond issue to at least fifty millions
more, the presumed amount of these subscriptions.
3. To authorize the issue of Treasury Notes of fifty dol¬
lars and upwards, bearing interest at two cents per day on
each hundred dollai% payable in two or three years, or
sooner at the pleasure of the Government; the amount to
be equal to the value of the crop subscriptions, and in anti¬
cipation of them.
4. To pass an act directing an assessment of the property
6
in the Confederate States, and the collection of an ad valorem,
tax.
5. To make the following additional appropriations :
For the War Department $53,302,892
Estimated amount required for Ordnance 4,000,000
Contingent and telegraphic expenses o<f Execu¬
tive Office 2,500
Treasury Department and interest o>n Public
Debt 285,366
Navy 348,223
Department of Justice 34,500
Total amount of appropriations required. .. $57,973,481
All of which is respectfully submitted.
C. G. MEMMINGER,
Secretary of Treasury „
Hon. Howell Cobb,
President of Congress,
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