A Compilation of the Messages and Papers of the Presidents. Volume 3, part 2: Martin Van Buren

by Unknown

This suspension and the excesses in banking and commerce out of which it arose, and which were greatly aggravated by its occurrence, made to a great extent unavailable the principal part of the public money then on hand, suspended the collection of many millions accruing on merchants' bonds, and greatly reduced the revenue arising from customs and the public lands. These effects have continued to operate in various degrees to the present period, and in addition to the decrease in the revenue thus produced two and a half millions of duties have been relinquished by two biennial reductions under the act of 1833, and probably as much more upon the importation of iron for railroads by special legislation.

Whilst such has been our condition for the last four years in relation to revenue, we have during the same period been subjected to an unavoidable continuance of large extraordinary expenses necessarily growing out of past transactions, and which could not be immediately arrested without great prejudice to the public interest. Of these, the charge upon the Treasury in consequence of the Cherokee treaty alone, without adverting to others arising out of Indian treaties, has already exceeded $5,000,000; that for the prosecution of measures for the removal of the Seminole Indians, which were found in progress, has been nearly fourteen millions, and the public buildings have required the unusual sum of nearly three millions.

It affords me, however, great pleasure to be able to say that from the commencement of this period to the present day every demand upon the Government, at home or abroad, has been promptly met. This has been done not only without creating a permanent debt or a resort to additional taxation in any form, but in the midst of a steadily progressive reduction of existing burdens upon the people, leaving still a considerable balance of available funds which will remain in the Treasury at the end of the year. The small amount of Treasury notes, not exceeding $4,500,000, still outstanding, and less by twenty-three millions than the United States have in deposit with the States, is composed of such only as are not yet due or have not been presented for payment. They may be redeemed out of the accruing revenue if the expenditures do not exceed the amount within which they may, it is thought, be kept without prejudice to the public interest, and the revenue shall prove to be as large as may justly be anticipated.

Among the reflections arising from the contemplation of these circumstances, one, not the least gratifying, is the consciousness that the Government had the resolution and the ability to adhere in every emergency to the sacred obligations of law, to execute all its contracts according to the requirements of the Constitution, and thus to present when most needed a rallying point by which the business of the whole country might be brought back to a safe and unvarying standard—a result vitally important as well to the interests as to the morals of the people. There can surely now be no difference of opinion in regard to the incalculable evils that would have arisen if the Government at that critical moment had suffered itself to be deterred from upholding the only true standard of value, either by the pressure of adverse circumstances or the violence of unmerited denunciation. The manner in which the people sustained the performance of this duty was highly honorable to their fortitude and patriotism. It can not fail to stimulate their agents to adhere under all circumstances to the line of duty and to satisfy them of the safety with which a course really right and demanded by a financial crisis may in a community like ours be pursued, however apparently severe its immediate operation.

The policy of the Federal Government in extinguishing as rapidly as possible the national debt, and subsequently in resisting every temptation to create a new one, deserves to be regarded in the same favorable light. Among the many objections to a national debt, the certain tendency of public securities to concentrate ultimately in the coffers of foreign stockholders is one which is every day gathering strength. Already have the resources of many of the States and the future industry of their citizens been indefinitely mortgaged to the subjects of European Governments to the amount of twelve millions annually to pay the constantly accruing interest on borrowed money—a sum exceeding half the ordinary revenues of the whole United States. The pretext which this relation affords to foreigners to scrutinize the management of our domestic affairs, if not actually to intermeddle with them, presents a subject for earnest attention, not to say of serious alarm. Fortunately, the Federal Government, with the exception of an obligation entered into in behalf of the District of Columbia, which must soon be discharged, is wholly exempt from any such embarrassment. It is also, as is believed, the only Government which, having fully and faithfully paid all its creditors, has also relieved itself entirely from debt. To maintain a distinction so desirable and so honorable to our national character should be an object of earnest solicitude. Never should a free people, if it be possible to avoid it, expose themselves to the necessity of having to treat of the peace, the honor, or the safety of the Republic with the governments of foreign creditors, who, however well disposed they may be to cultivate with us in general friendly relations, are nevertheless by the law of their own condition made hostile to the success and permanency of political institutions like ours. Most humiliating may be the embarrassments consequent upon such a condition. Another objection, scarcely less formidable, to the commencement of a new debt is its inevitable tendency to increase in magnitude and to foster national extravagance. He has been an unprofitable observer of events who needs at this day to be admonished of the difficulties which a government habitually dependent on loans to sustain its ordinary expenditures has to encounter in resisting the influences constantly exerted in favor of additional loans; by capitalists, who enrich themselves by government securities for amounts much exceeding the money they actually advance—a prolific source of individual aggrandizement in all borrowing countries; by stockholders, who seek their gains in the rise and fall of public stocks; and by the selfish importunities of applicants for appropriations for works avowedly for the accommodation of the public, but the real objects of which are too frequently the advancement of private interests. The known necessity which so many of the States will be under to impose taxes for the payment of the interest on their debts furnishes an additional and very cogent reason why the Federal Government should refrain from creating a national debt, by which the people would be exposed to double taxation for a similar object. We possess within ourselves ample resources for every emergency, and we may be quite sure that our citizens in no future exigency will be unwilling to supply the Government with all the means asked for the defense of the country. In time of peace there can, at all events, be no justification for the creation of a permanent debt by the Federal Government. Its limited range of constitutional duties may certainly under such circumstances be performed without such a resort. It has, it is seen, been avoided during four years of greater fiscal difficulties than have existed in a similar period since the adoption of the Constitution, and one also remarkable for the occurrence of extraordinary causes of expenditures.

But to accomplish so desirable an object two things are indispensable: First, that the action of the Federal Government be kept within the boundaries prescribed by its founders, and, secondly, that all appropriations for objects admitted to be constitutional, and the expenditure of them also, be subjected to a standard of rigid but well-considered and practical economy. The first depends chiefly on the people themselves—the opinions they form of the true construction of the Constitution and the confidence they repose in the political sentiments of those they select as their representatives in the Federal Legislature; the second rests upon the fidelity with which their more immediate representatives and other public functionaries discharge the trusts committed to them. The duty of economizing the expenses of the public service is admitted on all hands; yet there are few subjects upon which there exists a wider difference of opinion than is constantly manifested in regard to the fidelity with which that duty is discharged. Neither diversity of sentiment nor even mutual recriminations upon a point in respect to which the public mind is so justly sensitive can well be entirely avoided, and least so at periods of great political excitement. An intelligent people, however, seldom fail to arrive in the end at correct conclusions in such a matter. Practical economy in the management of public affairs can have no adverse influence to contend with more powerful than a large surplus revenue, and the unusually large appropriations for 1837 may without doubt, independently of the extraordinary requisitions for the public service growing out of the state of our Indian relations, be in no inconsiderable degree traced to this source. The sudden and rapid distribution of the large surplus then in the Treasury and the equally sudden and unprecedentedly severe revulsion in the commerce and business of the country, pointing with unerring certainty to a great and protracted reduction of the revenue, strengthened the propriety of the earliest practicable reduction of the public expenditures.

But to change a system operating upon so large a surface and applicable to such numerous and diversified interests and objects was more than the work of a day. The attention of every department of the Government was immediately and in good faith directed to that end, and has been so continued to the present moment. The estimates and appropriations for the year 1838 (the first over which I had any control) were somewhat diminished. The expenditures of 1839 were reduced $6,000,000. Those of 1840, exclusive of disbursements for public debt and trust claims, will probably not exceed twenty-two and a half millions, being between two and three millions less than those of the preceding year and nine or ten millions less than those of 1837. Nor has it been found necessary in order to produce this result to resort to the power conferred by Congress of postponing certain classes of the public works, except by deferring expenditures for a short period upon a limited portion of them, and which postponement terminated some time since—at the moment the Treasury Department by further receipts from the indebted banks became fully assured of its ability to meet them without prejudice to the public service in other respects. Causes are in operation which will, it is believed, justify a still further reduction, without injury to any important national interest. The expenses of sustaining the troops employed in Florida have been gradually and greatly reduced through the persevering efforts of the War Department, and a reasonable hope may be entertained that the necessity for military operations in that quarter will soon cease. The removal of the Indians from within our settled borders is nearly completed. The pension list, one of the heaviest charges upon the Treasury, is rapidly diminishing by death. The most costly of our public buildings are either finished or nearly so, and we may, I think, safely promise ourselves a continued exemption from border difficulties.

The available balance in the Treasury on the 1st of January next is estimated at $1,500,000. This sum, with the expected receipts from all sources during the next year, will, it is believed, be sufficient to enable the Government to meet every engagement and have a suitable balance in the Treasury at the end of the year, if the remedial measures connected with the customs and the public lands heretofore recommended are adopted and the new appropriations by Congress shall not carry the expenditures beyond the official estimates.

The new system established by Congress for the safe-keeping of the public money, prescribing the kind of currency to be received for the public revenue and providing additional guards and securities against losses, has now been several months in operation. Although it might be premature upon an experience of such limited duration to form a definite opinion in regard to the extent of its influences in correcting many evils under which the Federal Government and the country have hitherto suffered, especially those that have grown out of banking expansions, a depreciated currency, and official defalcations, yet it is but right to say that nothing has occurred in the practical operation of the system to weaken in the slightest degree, but much to strengthen, the confident anticipations of its friends. The grounds of these have been heretofore so fully explained as to require no recapitulation. In respect to the facility and convenience it affords in conducting the public service, and the ability of the Government to discharge through its agency every duty attendant on the collection, transfer, and disbursement of the public money with promptitude and success, I can say with confidence that the apprehensions of those who felt it to be their duty to oppose its adoption have proved to be unfounded. On the contrary, this branch of the fiscal affairs of the Government has been, and it is believed may always be, thus carried on with every desirable facility and security. A few changes and improvements in the details of the system, without affecting any principles involved in it, will be submitted to you by the Secretary of the Treasury, and will, I am sure, receive at your hands that attention to which they may on examination be found to be entitled.

I have deemed this brief summary of our fiscal affairs necessary to the due performance of a duty specially enjoined upon me by the Constitution. It will serve also to illustrate more fully the principles by which I have been guided in reference to two contested points in our public policy which were earliest in their development and have been more important in their consequences than any that have arisen under our complicated and difficult, yet admirable, system of government. I allude to a national debt and a national bank. It was in these that the political contests by which the country has been agitated ever since the adoption of the Constitution in a great measure originated, and there is too much reason to apprehend that the conflicting interests and opposing principles thus marshaled will continue as heretofore to produce similar if not aggravated consequences.