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Direct Taxes.

the importance and complexity of the subject, more time and leisure would have been desirable, yet, in obedience to the said resolution. he most respectfully submits the following report: The duty enjoined is to "report a plan for lay

3. The completion of all the returns and abstracts relative to the distillation from domestic materials, in places other than cities, towns, and villages, and to stills, as far as the same can, by every exertion in your power, be completed. From the first day of July, 1791, to the last day of De-ing and collecting direct taxes by apportionment cember, 1794, they should be made up by the close of the current quarter, the 30th of June next. These, also, should be immediately sent forward, as each shall be completed. I recommend, too, such exertion as will possess the Treasury of the abstract, relative to the half year, now current, by the close of the year 1795.

among the several States, agreeably to the rule prescribed by the Constitution; adapting the same, as nearly as may be, to such objects of direct taxation, and such modes of collection, as may ap pear by the laws and practice of the States, respectively, to be most eligible in each."

The amount of the proposed tax not being specified in the resolution, the Secretary presumes it to have been the intention of the House that the sum to be apportioned should be sufficient to consummate the system which was established in March, 1795, for the reduction of the present debt of the United States, and commensurate to

4. The completion of the quarterly accounts current, with the proper accompaniments, from July 1, 1791, to the 30th day of September, 1795, and the transmission of each of them, which is, at this time, incomplete, as soon as it shall be made up. 5. A complete list of all the inspectors of sur-the probable exigencies of the Government. veys, inspectors of the revenue for the ports, col- This construction has appeared the more realectors of the revenue, auxiliary officers, and sonable, because necessary to prevent the meadeputies of the inspectors of the revenue for the sures then adopted, from producing effects in some ports, as the same shall stand in the month of degree opposite to what were intended. The pubJune, 1795, exhibiting the salary allowed to each, lic faith having been pledged to reimburse a great and an estimate of the commissions, fees for mark- portion of the debt, which lately rested in permaing stills, &c.; also, the surveys, divisions, and coun-nent loans, sufficient revenues for this object, and ties. To these you will prefix a similar exhibition of all the emoluments of the supervisors. Should anything further occur likely, in your opinion, to give to the Legislature a perfect view of the revenue service, and of its results, you will be pleased to add such information.

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all necessary expenses of Government, must be provided, or recourse had to a continued system of borrowing. If this last expedient should be resorted to, the public burdens, though the debts may change their form, will remain substantially the same. The Government will, moreover, be liable to certain risks and expenses, which inevitably attend extensive contracts; and unless it shall be found practicable to obtain new loans on terms at least as favorable as those to be extinguished, the public debts will be somewhat increased by the inefficacy of the measures which

were intended to reduce them.

It will not escape the attention of the House, that the causes which at present most favor the prosperity of the United States, and, consequently, increase the ability of the people to pay taxes. are such as oppose obstacles to the negotiation of new loans, or, at least, render their terms peculiarly burdensome and expensive. But, while it that the affairs of this extensive and enterprising would be improper to encourage an expectation occasional application to this resource, it ought to country can be successfully conducted without an be a fixed principle to establish a permanent revenue, adequate to every permanent expense, and loans arising from extraordinary and unforeseen sufficient to discharge, in a reasonable time, all contingencies. This principle has already been recognised by the act of March 3d, 1795, which has solemnly pledged the public faith for the reimbursement of the debt now existing; it, therefore, only remains to embrace the present period, as the most auspicious which has yet occurred. and as favorable as any which may be expected. for establishing and maturing such systems as will efficaciously fulfil the intentions of the Legislature.

As necessarily connected with the question.

Direct Taxes.

3d.

interest will accrue after the
year 1800

how far additional revenues are requisite, the Se-2d. Six per cent. stock, on which
cretary has deemed it proper, though not enjoin-
ed by the resolution of the House, to present a
concise statement of the finances. The period
selected for this purpose is the first day of July,
of the present year, at which time the debts of
the United States were of the following descrip-
tions and amounts:

1st. The foreign debt, consisting of loans obtained
by the late and present Government in Amster-
dam and Antwerp, amounting to twenty-nine
millions five hundred thousand
guilders; equal, at forty cents
per guilder, to

2d. The six per cent. domestic
stock, now in course of reim-
bursement

3d. The six per cent. domestic stock, upon which reimbursements are to commence in the year 1801

.

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4th. The three per cent. domestic stock

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5th. The five and a half per cent.
domestic stock
6th. The four and a half per cent.
domestic stock -
7th. The unfunded registered
debt, exclusive of arrearages of
interest prior to the year 1791 -
8th. The debts due to the Bank
of the United States and the
Bank of New York

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$11,800,000 00

Three per cent. stock, also pur-
chased or redeemed

4th. Stock of the Bank of the Uni-
ted States, sold by the United
States, estimated at par

5th. The sum reimbursed at the
close of the year 1795, on the
six per cent. stock

Amounting, in the whole, to

930,753 91

610.757 94

2,000,000 00

544,066 54

5,255,810 52

The particulars and amount of expenditure required by the public contracts, in relation to the 29,344,752 98 capitals first enumerated, calculated on an average of the respective years for which each description of debt is to continue, are as follows:

14,578,882 39

19,597,545 93

1,848,900 00

1st. The debts due in Amsterdam and Antwerp, as before stated, amount to eleven millions eight hundred thousand dollars. The contracts respecting them require annual reimbursements in unequal portions, until the year 1809, when the last payment is to be made. The whole sum required for principal and interest, on an accurate calculation, and supposing the utmost punctuality to be maintained on the part of the United States, is sixteen millions seven hundred and seventy 179,953 16 thousand four hundred and forty-four dollars. The average sum which will be required, during the fourteen years 6,200,000 00 which this debt is to continue, is,

176,000 00

83,726,034 46

1,124,404 24

84,850,438 70

To reconcile this representation with reports heretofore made from the Treasury, and to prevent erroneous opinions from being entertained respecting the real amount of the public debt, it appears proper to represent that the following sums are indisputable off-sets against the capitals before enumerated:

1st. Six per cent. stock, bearing

a present interest, already purchased or redeemed, and vested in the Commissioners of the Sinking Fund

4th CoN.-85

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This calculation, however, supposes the practicability of such a punctual provision for the payment of interest and principal, as will entirely supersede the use of temporary credits in Europe; and it moreover supposes that remittances can be uniformly made at the par of exchange. Ás neither of these suppositions will be, in fact, realized, there is to be added to the foregoing sum the estimated expense of remittances above par, and for interest on temporary advances to the United States, to insure punctuality; this expense will not, probably, be less than five per centum on the annual payments, and being calculated on the average annual demand above stated, will, at this rate, amount to

$1,197,888 84

59,537 30 1,257,426 14

Upon the principles herein assumed, the average sum to be provided, until the year 1809, inclusive, for the extinguishment of the Dutch debt, will be one million two hundred and fiftyseven thousand four hundred and twenty-six dollars and fourteen cents.

It is proper, however, to state that the foregoing $1,170,232 13 estimate is founded on a presumption that some

Direct Taxes.

systematical plan will be adopted for satisfying the existing contracts, by direct payments from the Treasury. In every degree in which recourse may be had to new loans, the expense of reimbursement will be finally increased by at least the charges of negotiation; these, upon such loans as may be hereafter obtained in Holland, cannot be estimated at less than six or seven per centum upon the capitals which may be borrowed.

2d. The six per cent. stock now in course of reimbursement, exclusive of the sum passed to the credit of the Sinking Fund, is twenty-eight millions one hundred and seventy-four thousand five hundred and twenty dollars and eighty-five cents, upon which the annuity of eight per centum $2,253,961 66

amounts to

The capital passed to the credit of the Sinking Fund is one million one hundred and seventy thousand two hundred and thirtytwo dollars and thirteen cents; upon which the accruing interest of six per centum per annum, is Amounting to

The duration of this annuity may be considered as indefinite; for, though funds for the redemp tion of the capital stock are eventually appropriated by the act, entitled "An act making further provision for the support of public credit and for the redemption of the public debt," yet, by a proviso to the twelfth section of the said act, the power of diverting the appropriation to other objects, is reserved to the Government.

5th. The interest on the stock bearing interest at five and a half per centum per annum, (being one million eight hundred and forty-eight thousand nine hundred dollars) will require one hundred and one thousand six hundred and eightynine dollars and fifty cents.

6th. The interest on the stock bearing interest at four and a half per centum, being one hundred and seventy-six thousand dollars, will be annually seven thousand nine hundred and twenty dollars. 7th the unfunded debt is of two descriptions, viz: That which is registered, being $179,953 16 And that not registered, esti

70,213 92 mated at

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1,124,404 24

1,304,357 40

This sum, last mentioned, will be annually re- For this debt no provision has been made by quired until the close of the year 1817. During law, except a partial grant from year to year, on the year 1818, the demand for the object will de- account of interest. So far as the debt has been cline to about one million eight hundred and six-liquidated, the public are bound by contract to ty-five thousand dollars, and will then cease by the extinguishment of the debt.

3d. The six per cent. stock, on which reimbursements will commence in the year 1801, amounted, on the first day of July, 1796, to thirteen millions six hundred and forty-eight thousand one hundred and twenty-eight dollars and fortyeight cents, exclusive of nine hundred and thirty thousand seven hundred and fifty-three dollars and ninety-one cents, passed to the credit of the Sinking Fund. The annuity on the first sum, at eight per centum, amounts to $1,091,850 28 And on the latter sum, at six per centum, to

55,845 23

1,147,695 51

Being, together, Which last sum will be required, from the year 1801 to the year 1823, inclusive. During the year 1824, the charge will be reduced to about nine hundred and twenty-five thousand dollars; and, after that period, will wholly cease, with the reimbursements of the debt.

4th. The funded three per cent. stock, exclusive of the credit to the Sinking Fund, amounts to eighteen millions nine hundred and eighty-six thousand seven hundred and eighty-seven dollars and ninety-nine cents; on which the annual interest is

The stock of the Sinking Fund is six hundred and ten thousand seven hundred and fifty-seven dollars and ninety-four cents; and the interest thereon

Amounting to

569,603 63

18,322 73

587,926 36

pay an interest of six per centum per annum. Similar engagements will be expressed in the certificates hereafter to be issued; to discharge which interest there will be annually required the sum of seventy-eight thousand two hundred and sixty-one dollars and forty-one cents.

8th. The debts due to the Bank of the United States and Bank of New York amount to six millions two hundred thousand dollars; though a part of this sum was borrowed at five per centum per annum, yet, as the existing contracts are expected to be satisfied from the proceeds of new loans at six per centum, the annuity chargeable upon the revenue is calculated upon this last rate, being three hundred and seventy-two thousand dollars.

The annuities before recited comprise all the demands which will be made upon the Treasury. in consequence of the present debt of the United States; and being reduced to aggregate sums, and classed according to the epochas for which the said annuities are to continue, they will require a provision of revenue as follows:

1. From the year 1796 until the end of the year 1800, when the annuity on the deferred six per cent. stock will begin to accrue, four millions seven hundred and twenty-nine thousand three hundred and ninety-eight dollars and ninety-nine cents.

2. From the year 1801 to the year 1809, inclusive, when the present foreign debt will be extinguished, five milions eight hundred and seventy-seven thousand ninety-four dollars and fifty cents.

3. From the year 1810 to the year 1818, inclusive. when the annuity on the six per cent. stock.

Direct Taxes.

bearing a present interest, will be extinguished, four millions six hundred and nineteen thousand six hundred and sixty-eight dollars and thirty-six

cents.

4. From the year 1819 to the year 1824, inclusive, when the annuity on the deferred six per cent. stock will be extinguished, two millions two hundred and ninety-five thousand four hundred and ninety-two dollars and seventy-eight cents.

5. After the year 1824, supposing the debt above mentioned to be extinguished, and the other debts of the United States to remain in their present situation, one million one hundred and forty-seven thousand seven hundred and ninety-seven dollars and twenty-seven cents.

By the establishment of a revenue adequate to the current expenses of the Government, in addition to the foregoing estimate, during the periods above recited, the following reductions of debt might be effected:

I. At the close of the year 1809, the entire amount of the present foreign debt, being

2. At the close of the year 1818, the six per cent. stock, bearing a present interest

3. At the close of the year 1824, the deferred six per cent. stock

Amounting, together, to

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$11,800,000 00

29,344,752 98

14,578,882 39

55,723,635 37

$19,597,545 93

1,848,900.00

176,000 00

1,304,356 97

6,200,000 00

Amounting, in the whole, to 29,126,802 90

If, however, the United States can establish a revenue equal to the scale of expenditure which will be necessary in the year 1801, the whole debt may be extinguished by payment or purchase, on or before the end of the year 1824; as, also, a considerable additional debt, if such should accrue from future contingencies.

The foregoing calculations being founded on existing contracts, are liable to but little uncertainty; it is necessary, however, to form an estimate of the probable expenses of those establishments which the United States must at all times maintain. On this subject there exists no data, from past experience, which afford a satisfactory ground for an opinion; it is believed, however, that it will be unsafe and deceptive to calculate the current expenses of Government at less than the following estimate:

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If it shall be found that the expenses of the military and naval departments cannot be reduced below the above estimate, which, though much to be desired, is far from certain, the foregoing calculation will fall short of the real expense; it being morally certain that the expenses of civil government will, hereafter, considerably increase.

Assuming it, however, as a principle, that the expenses of the public establishments will amount to two millions seven hundred thousand dollars, and no more, it follows that, to preserve the United States from the necessity of recurring to future loans, it is requisite to establish a revenue to continue until the close of the year 1800, of seven millions four hundred and twenty-nine thousand three hundred and ninety-eight dollars and ninetynine cents. And from the year 1801 to the year 1809, inclusive, a revenue of eight millions five hundred and seventy-seven thousand ninety-four dollars and fifty cents.

It is a further consequence of the foregoing data that, though a revenue upon this last scale would be more than sufficient to discharge the whole public debt, on or before the year 1824, yet, that the absolute engagements of the United States will not require, after the year 1809, more than seven millions three hundred and nineteen thousand six hundred and sixty-eight dollars and thirty-six cents; which last sum is less than the annual expenditure required by existing contracts and arrangements.

Having thus presented a view of the probable expenditures of the United States, it remains to show how far the revenues already established afford an adequate resource; the particulars and amount of these revenues are as follows: Duties arising on imports and ton

nage, calculated upon the actual

receipts during the year 1795 - $5,588,961 26 Duties on domestic distilled spirits and on stills, on refined sugar, sales at auction, licenses to retail spirits and wines, and on carriages for the conveyance of persons, calculated upon the receipts of 1795

Revenue from the Post Office
Dividends on bank stock, calculat-

ed with reference to certain
sales, the proceeds of which will
be applied to the payment of

337,255 36 35,000 00

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part of the debt due the Bank of the United States Interest on stock purchased and redeemed, and vested in the Sinking Fund

Duties on patents and contingent receipts (uncertain)

Estimated annual current revenue

Direct Taxes.

746 73

6.200,600-00

The revenue from imports and tonnage was, in the beginning of the year 1795, calculated at $5,679,418 58, being about $90,000 more than the present estimate. Fluctuations in the amount of this revenue are to be expected; what the product of the present year will be cannot be yet known, although it is certain that it will exceed, considerably, that of the year 1795.

not greatly enhanced by the establishment of new 150,000 00 post roads. In respect to the income from bank stock held by the United States, it is proper to observe, that 88,635 65 dividends have been for some time declared at the rate of eight per centum per annum; on the supposition that the stock would not be alienated. it has been customary to estimate this item of revenue at $160,000. In consequence of the authority contained in an act of the last session, sales have, however, been commenced for the purpose of reimbursing a part of the debt due to the bank. To extinguish an annuity due to the bank, equivalent to that received from the dividends, it would have been necessary to sell the bank stock at an advance of thirty-three and one-third per centum upon the original capital. This, however, was not practicable; the best terms which could be obtained were twenty-five per centum. With As the present design is to ascertain, as accu- reference to the effect which sales, at this rate, rately as possible, the extent in which confidence will have upon the statement of revenue and exmay be reposed in the existing revenues, it be- penditure, now presented, the proceeds of the comes interesting to consider what effects a ter-bank dividends are calculated at $150,000. mination of the present war in Europe is likely to The fund arising from stock purchased or reproduce. A consideration of all the causes which deemed will be increased by the interest on such may contract or extend the future commerce of sums of stock as may hereafter accrue to the the United States would be evidently premature Sinking Fund, but will, in no event, be diminishand unprofitable; it may, however, be safely af-ed. Though this income is vested in the Comfirmed that the unexampled prices which the ex-missioners of the Sinking Fund, it has been ports of the United States have lately borne, must thought proper to present it as an object of public have stimulated the demand for, and consumption revenue, being, with other funds, appropriated for of, foreign manufactures and productions. A cer- the redemption of the Public Debt. tain proportion of this demand will cease when the temporary causes by which it has been produced are removed. Whatever cause diminishes the consumption of imported articles will produce a corresponding decrease of the revenue from foreign commerce. There is ground, however, to hope that the unfavorable effects in regard to revenue which are to be expected from a depression of the present prices of some of our articles of export, will be counterbalanced by an increase of their quantities; by the superior value which others of them are daily acquiring, in consequence of improvements in their manufacture; by the extension of our commerce to new markets, and by the increasing demand for imported articles, which must result from progressive wealth and population.

It results, from what has been stated, that the following sums must be provided by the United States, in addition to the revenue already established:

1st. From the present time until and during the year 1800, $1,228,798 99. $2,376,494 50. 2d. From the year 1801 to 1809, inclusive.

time when the present debt may be extinguished, 3d. From and after the year 1809, until the which will be before the year 1824, $1,119,068 36.

To provide the sums annually required unti the year 1801, without imposing an inconvenient burden on the people, is evidently within the power of the United States; to reimburse the whole of the Foreign Debt before the year 1809, by direct payments from the proceeds of revenue. may be practicable. It is, however, most probable that occasional loans, with a view of postponing the final reimbursement of the whole or some part of the said debt until after the year 1818 will be judged advisable.

The sum stated as the product of the internal revenues will also be considerably exceeded by the receipts of the present year, and is believed to be much below what might be obtained under a different modification of the act imposing duties on distilled spirits and stills, aided by provisions for insuring a more energetic and punctual col- From a general view of the operation of the lection in some districts. It may also be remark-systems of taxation established in the severi ed, that some of the causes which may diminish States, it appears that, in apportioning a direct the revenue from importations will tend to in-tax, to be collected under the authority of the crease that derived from internal objects. It appears, therefore, to be safe to calculate permanently upon the collective amount of the sums which have been stated as the probable future product of both branches.

The revenue from the Post Office is likely to increase, if the expenses of that institution are

United States, an allowance ought to be made for a defalcation of fifteen per centum, on account of abatements to indigent and unfortunate persons for erroneous assessments or calculations, and for charges and expenses of collection.

Assuming these data, it is proposed that there be laid upon the United States a direct tax of

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