The Portland daily press., 1888-12-05
UNCLE SANS STRONG BOX.
Secretary FaIrchiId's Report Of the
Nations Finances.
The Surplus and the Secretay's
Ideas on the Subject.
Bond Purchases-The Question OF
silver Coinage.


Secretary Fairchild says the revenues Of
the United States during the year ending
with June 30, 1888, amounted to 1876, ,266, ,074,
and the ordinary expenses to S259, 9,653.95S,
leaving a surplus revenue Of S119,6l2.1l6.
AS compared with the preceding year, the
receipts Of the government increased $780,
797, and the expenditures diminished 49,,
378.22i. The estimated surplus for the year
1889, under the operation Of existing laws, Is
S104, 100000.
The Secretary proceeds as follows:
SURPLUS REVENUE.
In the last annual report it was estimated
that the revenues for the year to end June 30
1888, would exceed the ordinary expenditures
not including the sinking fund, by $llS,oOO,-
900. II will be seen from the foregoing state
ment that such excess was in reality $ll9,-
6l2, l16.09, or $6,6l2, ,ll6.09 more than the de-
partment estimate. Ii was also estimated in
the same report that the like surplus for the
fiscal year to end June 80, 1889, would be
SlO4, ,3l3, ,365.64. Judging from the actual
expenditures for the first quarter Of this fiscal
year, and in the light Of receipts and expendi-
lures to the middle of November, it is proba-
BILE that this estimate will prove to have been
fairly accurate, and that the surplus will al
most eAhCtly tqud1 tuc pfcQlCtcQ SUM- Ac-
markable result since its factors were subject
to all the uncertainties of future revenues aud
of expenditures to be authorized by Con-
gress not yet assembled.
The accumulated surplus on September 20,
1888, was $96, ,444, ,845.84; the surplus reve-
nues from that date to June 80, 1889, as 'esti-
mated, are S75, ,365, POS .25, making the total
accumulation on June 80, 1889, which could
be used in the purchase of bonds, $l7l,8l0,-
054.09; however, between said September 20
and November %, $44,399, ,5O9.5O has been
paid for bonds; consequently if no more bonds
were bought between now and June 80 next
the surplus would then amount to $l27,0
900. Upon the basis of appropriations recon-
mended by the department and upon the as
sumption that the revenues Of the fiscal years
to end June 80, 1889 and 1890, will be equal,
the surplus revenues for the latter fiscal year
win be Sl0l, ,000, 900, which, with the surplus
revenues Of this year and the surplus already
accumulated, make a total of $22S, 900, 900,
which might be used during the next nineteen
months in the purchase of the interest bearing
debt, and which ought to be used for that pur
pose, unless the laws are so changed as to re-
duce the difference between expenditures and
revenue by nearly that sum.
About S18S, 900, 900 of the four and a half
per cent bonds are now outstanding; they are
payable September /, 1891. The total amount
Of interest which will accrue on them from now
until their maturity is, in round numbers $780,
000 900; consequently the present surplus
and the surplus which will probably accrue
before July /, 1890, will suffice to pay the
principal of those bonds and all the interest
which would accrue upon them should they be
permitted to remain unpaid until their maturity.
The principal Of the four per cent bonds is
now $3.50, 100000, and the interest which
-. al kA.t-
in 1907 is about $500, 900; a calculation
will show that the present surplus revenues, if
continued, would pay before 1900 all Of those
four per cent bonds and all Of this interest.
OF course all the money which is saved by
purchase of bonds at less than the prinripal
and the interest TO accrue but shortens the time
when all the bonds may be paid if the holders
will surrender them.
Nothing more is needed than the foregoing
statement to show the absolute necessity of a
readjustment of the public revenues at the
earliest possible date.
That il will be necessary to pay nearly the
whole of the interest which will accrue upon
the public debt If an attempt is made to invest
the present surplus revenues in il before its
maturity is evident from the fact that even
now the government is paying for the four
and a. half per cent bonds price which real
ICES only about one and a-half per cent annu-
ally, and receives but meagre offerings Of them
at that price.
To continue taxation with no other use for
its proceeds than such an investment is a cruel
waste of the peoples money.
PURCHASE OF BONDS.
Since the last annual report and after the
completion of the sinking fund requirements
for the year ended June 80, 1888, no bonds
were bought until there had been an express
sion of opinion by resolutions in both houses of
Congress, that it was lawful and proper to IN
vest the surplus in bonds at the premium
necessary to obtain them. Under the then
state of public opinion in many parts of the
country upon this question, both as TO its
legality and propriety, it seemed wise to seek
the CO. cooperation of the Congress in this i'm
portant matter. l am confident that the delay
in the purchase Of bonds while waiting tor
Congress to act resulted in no substantial
pecuniary loss to the government The pur-
chase was resumed under a circular OF April IL,
1888, and since that time nearly all the bonds
which have been offered for sale to the govern
ment have been bought by it, will appear
from an inspection of the bond purchase book.
of course many offerings of bonds have been
declined because the price was thought to be
too high, but finally, almost all Of the offered
bonds were bought at some price. An ex-
ample will show this more clearly. Certain
bonds of par value of only $326,000 were
offered so often that the offerings aggregated
over Sl9,700,000, but they were at last
secured nv the department. Ninetyfour mil
lions of d liars Of bonds have been secured
under thi, circular, and premium paid for
the privl ge Of buying them Of about
$4,000, ,00c; the net rate of interest realized
from this investment is only about two per
cent. and the saving in the total amount Of
interest which would have been paid had the
bonds been allowed to run to maturity, is
about $27 ,000, 900. Had taxation been re-
duced so as TO leave this money with the
people, and if it is worth in their business
per cent per annum, the total value Of the
money to them during the term which these
bonds had to run would be about $50, ,000, 900;
thus, there is resulting loss to the people of
$50, ,000, 900 upon this transaction alone; if
this over taxation is not stopped, and if the
government is forced to continue to be pur-
chaser Of its own bonds at the holders prices,
the loss TO the people, as could be shown by
like calculation must be hundreds Of millions
of dollars.
REDUCTION OF TAXATION.
cannot too strongly repeat my recon-
mendation Of last year to reduce taxation, and
as far as possible, without too sudden dis
turbance of existing interests, to make this
reduction in customs taxation, 10 the end that
the people may get the greatest possible benefit
from the reduction.
Besides the vexed economic question as to
whether country can make itself prosperous
by tariff; whether it can increase the relative
average comfort of its whole people by diver
ting a portion of its labor and capital from the
mployments which could be most proftably
followed under natural conditions, thereby
making certain of the necessaries Of life more
costly than they would be otherwise, there is
a higher moral question which may be asked,
and that is can government be kept pure
and free which, through the agency of its laws,
offers vast pecuniary temptation to some kinds
Of businesss
There are many indications that this ques-
ton must be answered in the negative. There
are many proofs that large classes Of our busi-
ness men have come to depend for success
upon their manipulating governmental agen-
ces rather than upon industry, intelligence,
and honorable competition.
Is il not possible that eagerness for the
money which men assume comes to them only
through government, may lead them to use an
ever growing proportion of their gains to pos
sess and influence the supposed source Of their
wealth.
And will not the endeavor to make men rich
soon become the chief function Of our govern
L n a. ~