REPORT ON THE FINANCES.

NOVEMBER, 1807.

In obedience to the directions of the act supplementary to the act, entitled "An act to establish the Treasury Department," the Secretary of the Treasury respectfully submits the following report and estimates.

REVENUE AND RECEIPTS.

The nett revenue arising from duties on merchandise and tonnage, which accrued during the year 1805, amounted to $14,135,138

And that which accrued during the year 1806, amounted, as will appear by the statement (A.) to

The same revenue, after deducting that portion which arose from the duty on salt, and from the additional duties constituting the Mediterranean Fund, amounted, during the year 1805, to

And during the year 1806, to

$ 16,576,454

12,520,532 14,809,758

It is ascertained that the nett revenue, which has accrued during the three first quarters of the year 1807, exceeds that of the corresponding quarters of the year 1806; and that branch of the revenue may, exclusively of the duty on salt, and of the Mediterranean Fund, both of which expire on the first day of January next, be safely estimated for the present, and if no change takes place in the relations of the United States with foreign nations, at fourteen millions of dollars.

The statement (B.) exhibits in detail the several species of merchandise, and other sources, from which that revenue was collected during the year

1806.

It appears by the statement (C.) that the sales of the public lands have, during the year ending on the 30th September, 1807, excceded 284,000 acres. Some returns are not yet received; and the proceeds of sales in the Mississippi Territory, being, after deducting the surveying and other incidental expenses, appropriated in the first place to the payment of a sum of 1,250,000 dollars to the State of Georgia, have not been included, but are distinctly stated. The actual payments by purchasers, have, during the same period, exceeded 680,000 dollars; and the receipts into the Treasury from that source, may, after deducting charges, and the five per cent. reserved for roads, be estimated for the ensuing year at five hundred thousand dollars.

The receipts arising from the permanent revenue of the United States, may, therefore, without including the duties on postage, and other incidental branches, be computed, for the year 1808, at $14,500,000

And the payments into the Treasury during the same year, on account of the salt and Mediterranean duties previously accrued, are estimated at

Making in the whole an aggregate of

LAST QUARTER OF THE YEAR 1807.

The balance in the Treasury, which, on the 30th day of September, 1806, amounted to $ 5,496,969 77 cents, did, on the 30th day of September, 1807,

8,530,000

4,000,000

$12,530,000

The expenses during the same period, for all objects whatever, the public debt excepted, and including 686,076 dollars for the extraordinary expenditures of the Navy Department, of which the estimate has been transmitted, are estimated at

1,700,000

amount to

The receipts into the Treasury from the 1st of October, to the 31st of December, 1807, are estimated at

The ordinary payments on account of the public debt, including the provision for the interest on the Louisiana and Dutch debt, to the 1st July, 1808, are estimated at

A farther sum of about 1,500,000 dollars, should also be paid during this quarter, in order to complete the annual appropriation of 8,000,000 of dollars. If the whole of this sum which is applicable to the purchase of the eight per cent. stock cannot be expended this year, the unexpended balance will form an additional expenditure for the year 1808; charging, however, the whole to this quarter,

Makes an aggregate.of

And will leave in the Treasury at the close of the year, a balance of about seven millions, six hundred thousand dollars.

1,300,000

$ 15,800,000

1st. For the Civil Department, and all domestic expenses of a civil nature, including invalid pensions, the light-house and mint establishments, the expenses of surveying public lands and the sea coast, the fifth instalment of the loan due to Maryland, and a sum of 100,000 dollars, to meet such miscellaneous appropriations not included in the estimates, as may be made by Congress,

1,700,000

1,500,000

$ 4,900,000

7,630,000

$ 12,530,000

EXPENDITURES OF THE YEAR 1808.

The permanent expenses, calculated on a peace establishment, are estimated at 11,600,000 dollars, and consist of the following items, viz:

1,100,000

2d. For expenses incident to the intercourse with foreign nations, including the permanent appropriation for Algiers,

3d. For the Military and Indian Department, including trading houses, and the permanent appropriations for certain Indian tribes,

4th. For the Naval establishment,

5th. The annual appropriation of eight millions of dollars, for the payment of the principal and interest of the Public Debt, of which sum not more than 3,400,000 dollars will for the year 1808, be applicable to the payment of interest,

To the permanent expenses must be added for the year 1808, a sum of about 800,000 dollars, necessary. in addition to the annual appropriation of eight millions of dollars, to complete, on the 1st January, 1809, the reimbursement of the eight per cent. stock,

And for paying the balance of American claims assumed by the French convention,

Making altogether, for the expenses of that year The receipts of that year having been estimated at

15,800,000

And the probable balance in the Treasury on the 1st January next, at

7,630,000

Making altogether,

$23,430,000

Would therefore, probably, leave in the Treasury on the 1st January, 1809, a balance of near eleven millions of dollars.

$ 200,000

1,280,000 1,020,000

8,000,000

$ 11,600,000

800,000

200,000

$ 12,600,000

10,830,000

$23,430,000

PUBLIC DEBT.

It appears by the statement (D.) that the payments on account of the principal of the public debt have, during the year ending on the 30th day of September, 1807, exceeded four millions six hundred thousand dollars; making the total of public debt reimbursed from the 1st of April, 1801, to the 1st of October, 1807, about twenty-five millions eight hundred and eighty thousand dollars, exclusively of more than six millions which have been paid during the same period in conformity with the provisions of the treaty and convention with Great Britain, and of the Louisiana convention.

Of the twelve millions of dollars, which, according to the preceding estimates, may be paid on account of the public debt between the 30th September, 1807, and the 1st January, 1809, about eight millions will be on account of the principal. It must, however, be observed, that the unaseertained result of the proposition made to the public creditors for a modification of the debt, may affect the amount payable during the year 1808, on account of both principal and interest.

On the first day of January, 1809, the principal of the debt will, if the proposed modification be not assented to by the public creditors, amount to near fifty-seven millions and five hundred thousand dollars: the subsequent annual payments thereon, on account of principal and interest, will not, exclusively of occasional purchases, exceed 4,600,000 dollars; and the whole of the debt, the nineteen millions three per cent. stock only excepted, will be reimbursed in sixteen years.

A general subscription would reduce the capital to about fifty-one millions of dollars; the payments would amount to eight millions of dollars annually, during six years, and average less than three millions during the seven following; at the end of which period the whole debt would be extinguished.

An annual unappropriated surplus of at least three millions of dollars may henceforth be relied upon with great confidence. The receipts of the year 1808 have been estimated at 15,800,000, and the expenses at 12,600,000 dollars. The permanent revenue has been computed at 14,500,000 dollars; and the permanent expenses predicated on an annual payment of eight millions of dollars on account of the debt, have been stated at 11,600,000 dollars. And as these would, if no modification of the debt shall take place, be reduced to less than 8,500,000, the annual surplus would then amount to six millions of dollars. Nor are the seven millions and a half of dollars which will remain in the Treasury at the end of the present year, included in the calculation.

What portion of that surplus may be wanted for necessary measures of security and defence; what portion should be applied to internal improvements, which, while increasing and diffusing the national wealth, will strengthen the bonds of union; are subjects which do not fall within the province of the Treasury Department. But it is not improbable that, after making ample provision for both those objects, considerable surplusses, and which can no longer be applied to the redemption of the debt, may still accumulate in the Treasury.

A previous accumulation of treasure in time of peace, might, in a great degree, defray the extraordinary expenses of war, and diminish the necessity of either loans or additional taxes. It would provide, during periods of prosperity, for those adverse events to which every nation is exposed, instead of increasing the burthens of the people at a time when they are least able to bear them, or of impairing by anticipations the resources of ensuing generations. And the public moneys of the United States not being locked up and withdrawn from the general circulation, but, on the contrary, deposited in banks, and continuing to form a part of the circulating medium; the most formidable objection to that system, which has nevertheless been at times adopted with considerable success in other countries, is thereby altogether removed. It is also believed that the renewal of the charter of the Bank of the United States, may, amongst other advantages, afford to government an opportunity of obtaining interest on the public deposites whenever they shall exceed a certain amount. Should the United States, contrary to their expectation and desire, be involved in a war, it is believed that the receipts of the year 1808 will not be materially affectedeby the event, inasmuch as they will principally arise from the revenue accrued during the present year. The amount of outstanding bonds due by importers, after deducting the debentures issued on account of re-exportations, exceeds at this time sixteen millions of dollars. The deductions to be made from these on account of subsequent re-exportations, would, in case

of war, be less than usual; for exportations will then be checked as well as importations; and, in proportion as these will decrease, a greater home demand will be created for the stock on hand, and the necessity of re-exporting be diminished.

It has already been stated that the specie in the Treasury at the end of this year, together with the surplus of the year 1808, will amount to near eleven millions of dollars: a sum probably adequate to meet the extraordinary expenses of a war for that year. It will also be recollected, that, in the estimated expenses of the year 1808, a reimbursement of near five millions and a half of the principal of the debt is included. The only provision, therefore, which may, under any contingency, be necessary for the extraordinary service of that year, in order to cover any deficiency of revenue or increase of expenditure beyond what has been estimated, will be an authority to borrow a sum equal to that reimbursement.

That the revenue of the United States will, in subsequent years, be considerably impaired by a war, neither can, or ought to be concealed. It is, on the contrary, necessary, in order to be prepared for the crisis, to take an early view of the subject, and to examine the resources which should be selected for supplying the deficiency and defraying the extraordinary expenses.

There are no data from which the extent of the defalcation can at this moment be calculated, or even estimated. It will be sufficient to state, 1st. That it appears necessary to provide a revenue at least equal to the annual expenses on a peace establishment, the interest of the existing debt, and the interest on the loans which may be raised. 2dly. That those expenses, together with the interest of the debt, will, after the year 1808, amount to a sum less than seven millions of dollars; and, therefore, that if the present revenue of 14,500,000 dollars shall not be diminished more than one half by a war, it will still be adequate to that object, leaving only the interest of war-loans to be provided for.

Whether taxes should be raised to a greater amount, or loans be altogether relied on for defraying the expenses of the war, is the next subject of consideration.

Taxes are paid by the great mass of the citizens, and immediately affect almost every individual of the community: Loans are supplied by capitals previously accumulated by a few individuals. In a country where the resources of individuals are not generally and materially affected by the war, it is practicable and wise to raise by taxes the greater part at least of the annual supplies. The credit of a nation may also, from various circumstances, be at times so far impaired as to leave no resource but taxation. In both respects the situation of the United States is totally dissimilar.

A maritime war will, in the United States, generally and deeply affect, whilst it continues, the resources of individuals; as not only commercial profits will be curtailed, but principally because a great portion of the surplus of agricultural produce necessarily requires a foreign market. The reduced price of the principal articles exported from the United States, will operate more heavily than any contemplated tax. And without inquiring whether a similar cause may not still more deeply and permanently affect a nation at war with the United States, it seems to follow, that so far as relates to America, the losses and privations caused by the war should not be aggravated by taxes beyond what is strictly necessary. An addition to the debt is doubtless an evil; but experience having now shown with what rapid