In the performance of the serious duty which the Congress has imposed upon me, and in the exercise upon just occasion of the power conferred under the act referred to, I shall deem myself bound to inflict no unnecessary damage or injury upon any portion of our people; but I shall, nevertheless, be unflinchingly guided by a sense of what the selfrespect and dignity of the nation demand. In the maintenance of these and in the support of the honor of the government beneath which every citizen may repose in safety, no sacrifice of personal or private interests shall be considered as against the general welfare. Yours, very truly, GROVER CLEVELAND. PRACTICAL WORKINGS OF THE DEPARTMENT. Under the Cleveland administration, the service of the Department has been brought up to a high state of efficiency. A committee of the Senate, engaged in investigating the manner in which the Department business is at present conducted, has lately made a report in which no criticism was offered. Much attention has been given to the consular branch of our foreign service. Its condition has been greatly improved, and among the things sought to be accomplished through it, is the prevention of frauds upon our customs laws by undervaluations. CHAPTER XV. THE ADMINISTRATION OF THE TREASURY. ADMINISTERED FOR HOW THIS GREAT DEPARTMENT HAS BEEN THE BENEFIT OF THE COUNTRY. Under Democratic Management the Debt Has Been Paid Rapidly and Business Interests Promoted. I. The most important work of this Department obviously consists of the collection of the revenues and the management of the national finances. In the matter of the collection of the revenue, which is mainly derived from receipts for customs dues and from internal taxes, there has been a steady and decided increase of revenue, and a steady and decided decrease of the cost of collection under the present Administration. The fiscal year ends on the 30th day of June, and the present year, therefore, completes three full fiscal years of this administration of the Department; and, beginning with the fiscal year 1884, which was the first year after the tariff law of 1883 went into effect, it will be found that the receipts from customs for that year were, in round numbers, one hundred and ninety-five millions of dollars; for 1885, one hundred and eighty-one millions of dollars; for 1886, one hundred and ninety three millions of dollars-being the first year of this administration—an increase of twelve millions of dollars; and in 1887 they were two hundred and seventeen millions of dollars, a further increase of twenty-five millions; and for 1888, two hundred and twenty millions of dollars, a further increase of three millions, making a total increase during the three years of over forty millions of dollars, while the cost of collection for 1884 was 03.44 per cent.; 1885, 03.77; 1886, 03.30; 1887, 03.16; CARE IN THE TRANSACTION OF BUSINESS. The same results are shown in the receipts from internal revenue and the expenditures in that branch of the service, the collections for the fiscal year 1885 being, in round numbers, one hundred and twelve millions; 1886, one hundred and seventeen millions; 1887, one hundred and nineteen millions; 1888, one hundred and twenty-five millions, a total increase of thirteen millions of dollars, while the cost of collection has decreased from 3.963 per cent. for 1885 to 3.02 per cent. in 1888. This has been accomplished notwithstanding the work of collecting the tax upon oleomargarine and the enforcement of the law against the illicit production and traffic in that article has during this period devolved upon the Internal Revenue Bureau. In both the customs and internal revenue service great vigilance has been displayed in the detection and suppression of frauds upon the revenue. In the customs department especial attention has been given to the subject of undervaluations, which had grown to be so great an abuse that loud complaints were constantly made by the domestic manufacturer and the honest importer that their business was seriously imperiled in consequence of it. The result has been that this abuse has been practically eradicated, and save in rare instances are complaints now made either to the Department or in the public press on that account. Greater promptness in the transaction of customs business has also been secured. Two-thirds of the revenue from customs are collected at the port of New York, and two years ago the work of the Liquidating Division at that port was over two years behind, and the Division of Protests and Appeals was equally in arrears, but at the present time the work of both divisions has been so far advanced that by the end of this calendar year all arrears of business will have been disposed of, and the work will be up to current date. II. BUYING BONDS FOR THE SINKING FUND. EFFORTS TO REDUCE THE SURPLUS BY RELEASING PUBLIC MONEY TO THE COUNTRY FOR THE PURPOSES OF BUSINESS. In the matter of the management of the national finances, a brief review of some of the difficulties which had to be encountered, and of the dangers which threatened the country, and of the manner in which they have been avoided and averted, will satisfy every candid and impartial mind that this branch of the public service was never more ably or more faithfully administered. On the 30th of June, 1887, the surplus in the Treasury, according to the Treasurer's statement of assets and liabilities, was $45,698,594.15. The expenditures, actual and estimated, including the Sinking Fund, for the fiscal year 1888 were $316,817,785.48, and the revenues of the Government for the same period under existing tariff and revenue laws were estimated to be approximately $383,000,000. Thus an addition to the surplus during the fiscal year of $66,182,214.52 was expected, making the total surplus on the 30th of June, 1888, $111,880,808.67. This was the situation as it appeared one year ago. It will be seen from what follows that the estimate was far below the reality. Early in August, 1887, it became apparent that the rapid accumulation of money in the Treasury, which had already created a feeling of great anxiety and uneasiness in business centres, would soon cause severe stringency in the money markets. The time was approaching when the annual shipments of money to the West for the purpose of moving the crops would deplete the reserves in the great cities. This depletion, which in good years is always great enough to increase the loaning rate to 7 per cent. and upward, threatened to be so great as to cripple the movement of money so necessary to the welfare of the country, particularly of the great grain-raising sections of the West, and the constantly increasing surplus in the Treasury was daily adding to the gravity of the situation. At this juncture the Secretary of the Treasury wisely determined that, instead of distributing the purchases for the Sinking Fund over the whole fiscal year, as he would do in ordinary circumstances, he would invest the entire amount, nearly twenty-eight millions, at once, or as rapidly as possible, hoping thereby to so far relieve the impending distress as to tide over the period of moving the crops, and so prevent business disturbances during that critical time. To this end he published the circular of August, 1887, and later the circular of September, 1887, for the purchase of bonds for the Sinking Fund. The first circular proposed to receive offers weekly at prices to be named by the owners, and when all which were offered at fair prices had been obtained by that method, the second circular was published fixing a price at which they would be received. Under these two circulars the Secretary purchased $24,844,650 bonds at a cost of $27,842,237.10. No comment is needed to emphasize the importance and vast benefit of this operation. The Secretary placed in the hands of the people nearly twenty eight millions of money with which to carry on the most important business transactions of the year. The wisdom and success of this measure is best shown by the fact that throughout the period when the greatest trouble has heretofore occurred, not the slightest disturbance of business was recorded, and the average rate paid for money on call in New York, the great banking centre of the country, was never lower. Upon completing the purchase of bonds for the Sinking Fund, the question of disposing of the further additions to the surplus was carefully considered. The authority to purchase bonds in addition to the Sinking Fund requirements was not considered to be so clear and unequivocal as to justify the Secretary in making purchases. DISTRIBUTING GOVERNMENT MONEY THROUGH THE BANKS. The authority to do this, such as it was, was contained in a paragraph in the Legislative Appropriation Bill, approved March 3, 1881, and after a careful survey of all the circumstances it was decided that doubt existed and that all other lawful means should first be exhausted before resorting to other purchases. The only resource left appeared to be in the Secretary's authority to use National Banks as depositories of public money. Prior to this time the deposits in National Banks had been somewhat restricted by the unprofitable nature of the terms offered to the banks. They were limited to a deposit of 90 per cent. of the par value of the bonds deposited by them as security, so that from 18 to 36 per cent. of the value of the bonds was practically locked up. In view of the high premium which these bonds commanded as an investment, it was decided to allow a deposit of the par value of 4 per cent. bonds held as security and a deposit of 110 per cent. against 4 per cent. bonds held. The result is best shown by the following statement. On the 1st of July, 1885, there were 141 National Banks whose designations as depositories were in force and the deposits of public moneys in their hands amounted to $12,928,264.47. On the 1st of July, 1888, there were 294 banks, holding public deposits of $59,979,039.63. This is an increase of 153 banks and an increase of deposits in their hands of $47,050,775.16. In other words, there are more than twice as many banks now acting as depositories as there were three years ago, and they hold nearly five times as much public money as they did three years ago. This great sum of forty-seven millions of dollars is now in the hands of the people as the result of the wise and liberal policy of the Secretary, instead of remaining locked up in the Treasury, as it would have remained under the policy formerly in operation, and the security held for the safe return to the Treasury of the money deposited, is at times ample, for the 4 per cent. bonds held by the Treasury have at all times been worth at least seven per cent. more than the deposit, and the 4 per cent. at least 15 per cent. more. Either class of bonds can be sold at a day's notice, so that no possible contingency could result in loss to the Government. DISTRIBUTION OF PUBLIC MONEY BY SECTIONS. The total amount of public deposits in depository banks June 30, 1888, exclusive of sums to the credit of disbursing officers, was $54,950,501.15. More than five times the amount held June 30, 1885, when the balances were $10,924,418.64. These amounts were distributed as follows: Eastern Division, comprising the New England States, New York, New Jersey, Pennsylvania and Delaware: June 30, 1885.. June 30, 1888.. .$ 3,164,405.06 Central Division, comprising Michigan, Ohio, Indiana, Illinois, and Kentucky: June 30, 1885. ..... June 30, 1888... .... .$4,351,650.34 Northwestern Division, comprising Colorado, Montana, Kansas, Dakota, Nebraska, Missouri, Wisconsin, Minnesota, and Iowa: June 30, 1885..... Jane 30, 1888... .$1,920,220.12 5,958,770.63 Southern Division, comprising New Mexico, Alabama, Louisiana, Texas, Georgia, &c., &c. : June 30, 1885...... June 30, 1883... ..$1,201,562.66 .$ 285,570.46 Pacific Slope, comprising Utah, Idaho, Washington, Nevada, California, and Oregon : June 30, 1885. June 30, 1889. NO CONTRACTION OF THE CIRCULATING MEDIUM. There has prevailed the belief that the accumulation of the surplus revenues in the Treasury and the retirement of National Bank Notes by banks reducing circulation must result in contraction of the circulation of the country. So far the wise, prudent, and skillful management of the Government finances by the Secretary of the Treasury has averted all trouble from this source. Indeed, the amount of money in circulation among the people to-day is greater than it was two years ago. |
