On the second, some observations were made, chiefly expressive of a wish to have the provision for a new census separate from the present subject; after which the question was put upon it, and carried, 39 to 29.
The committee then rose, and reported the amendments to the resolutions as agreed to; which being confirmed by the House,
Mr. D. Foster moved to strike out the word "annually" in the first resolution.
Mr. Gallatin was in favor of the motion. It was his intention to have made some general observations on this subject whilst under consideration in the Committee of the Whole; but whilst he was putting down some figures on paper, the question was taken; as they would be equally applicable, he should now make them. They would go to show that this tax was not wanted as a permanent revenue, but solely to meet the present exigencies. He should show that the present revenues of the Union are sufficient to meet the current expenses, and to meet the instalments of deferred and Dutch debt due after the year 1801.
The report of the Secretary of the Treasury states that it is probable there will be a deficiency of $1,796,705; but supposing that, from the present situation of the country, our expenses may be greatly increased, and our revenue defalcate, the certainty of a great augmentation in the ordinary expenses by the deferred debt, and the increasing instalments of the foreign debt, the Committee of Ways and Means do not think it safe to contemplate an additional revenue from permanent sources of taxation to a less amount than two millions of dollars.
In looking into the statements of the Secretary of the Treasury, it would be found that most of the objects of expense brought forward to show the necessity of a permanent tax are of a temporary nature. He has estimated the expenditures for the year 1798 to be $6,926,460; in order to ascertain what will be the permanent expenditures of the Union after the year 1800, it is necessary in the first place to deduct from the sum those items which are not of a permanent nature; and, as he would add a sum for the Dutch debt due after 1801, Mr. G. said he would also deduct the instalment of $80,030 due for the present year. The first item of a temporary nature was a sum reported for deficiencies in the Military Establishment of $164,000. Every gentleman who had attended to this subject, when it was lately before the House, must be convinced that sufficient sums had been appropriated under this head, and that deficiencies must be considered as extraordinaries not likely again to occur. Second, $103,000 were set down for diplomatic expenses; the permanent establishment was now fixed at $63,000, and $40,000, therefore, were a temporary expense. Finally, the following items were stated by the Secretary himself as temporary, viz: for light-houses, in addition to the usual appropriation, for expenses incident to the treaties with Great Britain and Spain, and for reimbursing the unfunded and registered debts, and for the payment of old accounts, a sum of $546,000. The last item not yet agreed to by this House. These several articles amount to about $830,000, which, deducted from the expense of 1798, as calculated by the Secretary of the Treasury, will leave a balance of about $6,100,000 for the permanent ordinary expenses, civil, military, contingent, and relative to the present debt. To this must be added $1,146,370 for the interest and extinguishing annuity of the deferred debt, payable in 1801, and also the sum necessary to pay the principal of the Dutch debt after that year. The Committee of Ways and Means have reported the foreign debt which will become due in 1802, 1803 and 1804; but, by taking the aggregate of all the years, it will be found that an average sum of $800,000 a year will pay the whole of that debt in twelve years. This last item, the $1,146,000 for the deferred debt, and the $6,100,000 for ordinary expenses, makes the aggregate of $8,046,000 for the permanent expenditures of the Union after the year 1801, including provision for paying the whole of the principal of the foreign six per cent, and deferred debt according to contract.
This, in time of peace, would be the extent of our expenses, especially as there are a number of items which might be reduced, and in that calculation no reduction is introduced in the Naval, Military, or Diplomatic Departments, or in the Civil List. If the current revenue be examined, it will be found to exceed this amount. The amount of revenue, as calculated by the Secretary of the Treasury, for the present year, is $8,011,897. But to this must be added the deduction of $549,649, which he has made from the duties on imposts and tonnage, from an apprehension of a defalcation in this part of the revenue, on account of capture, and which was of course to be considered as temporary. To this there should also be added the duty on salt, laid at the last session, which could not make any part of this estimate. That duty was eight cents per bushel, and calculating the quantity of salt imported at three millions of bushels, it will amount to about $250,000. There was also a number of additional duties, laid during the last session of the last Congress, which would not raise less than $350,000, viz: two and-a-half per cent, on all white cotton goods imported, and an additional duty on tea, brown sugar, and molasses. These two sums make $600,000, and added to the above $500,000, deducted this year on account of captures, would make the permanent revenue, in time of peace, equal to $9,111,897, which would exceed our expenses by $1,000,000. This is clear from the papers before the committee. It was suggested that some of his deductions for expenses were improper, or that he might be mistaken in his expectations of revenue on some items, yet this surplus million, which was equal to one-eighth of the whole expenditure, would certainly cover any mistakes of that kind. Besides, there is every reason to believe some of the branches of the revenue will be more productive, on account of the increase of population in 1801, than now. Mr. G., therefore, agreed with the gentleman from Massachusetts (Mr. Varnum) that the present revenues of the nation are equal to all its expenditures, including therein the redemption of the public debt, except in case of war. The gentleman from Maryland (Mr. Smith) seemed to be of the same opinion, and, indeed, the Chairman of the Committee of Ways and Means had formerly made a similar declaration. It would, therefore, be improper to vote a permanent tax, when the objects for which it was wanted were not of a permanent nature.
Two years ago, Mr. G. said, he was in favor of a permanent land tax, as he then thought it would be wanted to meet the demands which would come against the Government in the year 1801. He was of that opinion, because he did not wish to see the list of indirect taxes swelled beyond what it was; but Congress were of a different opinion, and had, since that time, laid indirect taxes on salt, sugar, stamps, &c., to the amount of $800,000 a year, and have so far diminished the necessity of a direct tax.
There was another thing in which he had been agreeably disappointed. The mistake was common to almost every individual, as well as to himself. It was in relation to the amount of duties which would probably arise from imposts and tonnage, and which were productive beyond the most sanguine expectations. The estimates of the Secretary of the Treasury then fell short of the real amount by upwards of a million of dollars, and the same thing had taken place last year. If, however, in the year 1801, a diminution should take place in the product of those duties, the land tax might then be made permanent.
Mr. G. concluded by saying the tax of two millions was already agreed to for one year, though he thought it too large a sum. He could see no objection to its being made an annual tax as in Great Britain, as it could not be doubted that if the money was wanted for another year, the act would be annually renewed.