The condition of the finances win claim your most diligent consideration. The vast expenditures incident to the military and naval operations required for the suppression of the rebellion have hitherto been met with a promptitude and certainty unusual in similar circumstances, and the public credit has been fully maintained. The continuance of the war, however, and the increased disbursements made necessary by the augmented forces now in the field demand your best reflections as to the best modes of providing the necessary revenue without injury to business and with the least possible burdens upon labor.
The suspension of specie payments by the banks soon after the commencement of your last session made large issues of United States notes unavoidable. In no other way could the payment of troops and the satisfaction of other just demands be so economically or so well provided for. The judicious legislation of Congress, securing the receivability of these notes for loans and internal duties and making them a legal tender for other debts, has made them an universal currency, and has satisfied, partially at least, and for the time, the long-felt want of an uniform circulating medium, saving thereby to the people immense sums in discounts and exchanges.
A return to specie payments, however, at the earliest period compatible with due regard to all interests concerned should ever be kept in view. Fluctuations in the value of currency are always injurious, and to reduce these fluctuations to the lowest possible point will always be a leading purpose in wise legislation.
Convertibility, prompt and certain convertibility, into coin is generally acknowledged to be the best and surest safeguard against them; and it is extremely doubtful whether a circulation of United States notes payable in coin and sufficiently large for the wants of the people can be permanently, usefully, and safely maintained.
Is there, then, any other mode in which the necessary provision for the public wants can be made and the great advantages of a safe and uniform currency secured?
I know of none which promises so certain results and is at the same time so unobjectionable as the organization of banking associations, under a general act of Congress, well guarded in its provisions. To such associations the government might furnish circulating notes, on the security of United States bonds deposited in the treasury.
These notes, prepared under the supervision of proper officers, being uniform in appearance and security and convertible always into coin, would at once protect labor against the evils of a vicious currency and facilitate commerce by cheap and safe exchanges.
A moderate reservation from the interest on the bonds would compensate the United States for the preparation and distribution of the notes and a general supervision of the system, and would lighten the burden of that part of the public debt employed as securities.
The public credit, moreover, would be greatly improved and the negotiation of new loans greatly facilitated by the steady market demand for government bonds which the adoption of the proposed system would create.
It is an additional recommendation of the measure, of considerable weight, in my judgment, that it would reconcile as far as possible all existing interests by the opportunity offered to existing institutions to reorganize under the act, substituting only the secured uniform national circulation for the local and various circulation, secured and unsecured, now issued by them.
The receipts into the treasury from all sources, including loans and balance from the preceding year, for the fiscal year ending on the 30th June, 1862, were $583,885,247.06, of which sum $49,056,397.62 were derived from customs; $1,795,331.73 from the direct tax; from public lands, $152,203.77; from miscellaneous sources, $931,787.64; from loans in all forms, $529,692,460.50. The remainder, $2,257,065.80, was the balance from last year.
The disbursements during the same period were: For congressional, executive, and judicial purposes, $5,939,009.29; for foreign intercourse, $1,339,710.35; for miscellaneous expenses, including the mints, loans, post-office deficiencies, collection of revenue, and other like charges, $14,129,771.50; for expenses under the Interior Department, $3,102,985.52; under the War Department, $394,368,407.36; under the Navy Department, $42,674,569.69; for interest on public debt, $13,190,324.45; and for payment of public debt, including reimbursement of temporary loan and redemptions, $96,096,922.09; making an aggregate of $570,841,700.25, and leaving a balance in the treasury on the 1st day of July, 1862, of $13,043,546.81.
It should be observed that the sum of $96,096,922.09, expended for reimbursements and redemption of public debt, being included also in the loans made, may be properly deducted both from receipts and expenditures, leaving the actual receipts for the year $487,788,324.97, and the expenditures $474,744,778.16.
Other information on the subject of the finances will be found in the report of the Secretary of the Treasury, to whose statements and views I invite your most candid and considerate attention.
The reports of the Secretaries of War and of the Navy are herewith transmitted. These reports, though lengthy, are scarcely more than brief abstracts of the very numerous and extensive transactions and operations conducted through those departments. Nor could I give a summary of them here upon any principle which would admit of its being much shorter than the reports themselves. I therefore content myself with laying the reports before you and asking your attention to them.
