The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-12-17
There Has Been a Growing De-
fciency in the Nations
Finances.
INTERNALREvENUE DECREASES
Had the Income-Tax Law Held the
Deficiency Would Not Have
Been So Great.

WASHINGTON, D. c., Dec. 16.-The an
nual report of Hon. John G. Carlisle, Sec
rotary of the Treasury, was sent to Con-
gress to-day. 1t was, of course, a long and
important document, but that portion of
it which referred to National finances was
as follows:
"At the beginning of the last fiscal year,
July 1, 1894, the cash balance in the treas
ury, excluding all current liabilities. but
including gold reserve of $64, S73, 024 o.
was Sill .5S4, 436 Is, and at the close of the
year June 80, 1895, the cash balance, ex-
Guiding all current liabilities, but includ-
ing a gold reserve of 500, 900, 900, was
S195, 240, 153 81, showing an increase of
ST, 657, III "A. The excess of expenditures
over receipts during the year was $42, $685.
223 IS, as against a deficiency of $69, $685.
260 So during the fiscal year 1894.
THE total receipts during the fiscal year
1895 were S15, sos, 055 Sc greater than the
receipts during the fiscal year 1894, and
the expenditures were $11, 329. 9S1 81 less
than during the year 1894. The revenue
derived from customs during the fiscal
year 1895 exceeded the revenue derived
from the same source in 1894 by the sum
of $50, $40, 0S6 SO, but the receipts under the
internal revenue laws and from some
other sources were less than during the
previous year, so that the net increase of
revenue was SIS, 668, 055 Sc, as above stated.
If the income-tax provision contained
IN the act of August %, 1894, had been
sustained by the courts, it is believed that
the deficiency for the year would not have
exceeded the amount estimated in my last
annual report. In that report the opinion
was expressed that the laws then in force
would not only yield an ample revenue
during the fiscal year 1896, but that there
would be surplus of nearly $29OOO,OO0
This opinion was based upon the suppo-
sition, which then seemed to be well
founded, that all the sources of revenue
provided in the act of August %, 1894,
would be available and that, owing to the
higher rate of taxation imposed upon dis
titled spirits and some other articles, the
receipts under the internal revenue laws
would be very considerably increased; but
the decision CT the Supreme Court holding
the income-taX provision of the act to be
unconstitutional, and the fact that the
receipts from internal revenue did not
increase as anticipated, but actually fell
off So, $50, $50 70 during the fiscal year 1895,
as compared with the previous year, not
withstanding the higher rate imposed on
spirits and other articles, have greatly
altered the situation aud am now OF the
opinion that there will be deficiency of
about 81 100000 during the current fiscal
year"
Discussing the "endless-chain" theory
of the deficien cy, the Secretary says:
1.-THE total excess of expenditures over
receipts from July 1, 1893, to December 1,
1895, was $50, 221 ,023 and of this sum
$50. 462, 800 SO was paid out of the balance
on hand at this date in excess of $780,
100000, and the remainder has been sup
piled by the use of United States notes
and treasury notes presented for re-
demption and thus received into the
Treasury in exchange for gold coin. The
act of May 81, 1873, provided that when
any United States note may be redeemed
or be received into the treasury under any
law from any source whatever. and shall
belong to the United States, it shall
not be retired, cancelled or destroyed, but
shall be reissued and paid out again and
kept in circulation
at is clear that when any of these notes
have been redeemed they do not constitute
a part of the reserve fund, but become a
part of the general cash assets of the
treasury to be used in the same manner as
other money belonging to the Government.
Whenever they could, by exchanges, be
used to procure gold for the replenishment
of the reserve, they have been SO applied,
but when this could not be done. they have
been treated as available funds in the
treasury and reissued in payment OF pub
lie expenses None of my predecessors in
Office have ever made any distinction be-
tween the notes received in payment of
the ordinary revenue notes presented by
the holders and redeemed in coin, but
such notes have been used indiscriminate-
ly as the exigencies of the public service
required"
Secretary Carlisle quotes in support of
this proposition the report of Secretary
Sherman for 1877 which led to the law of
Congress, enacted May 81, 1S7S making it
mandatory upon the Secretary of the
Treasury to reissue the notes. Referring
to the prospect of revenue and expendi-
lures coming together in the future the
Secretary says
''The cash balance in the treasury on the
first day of Decemb Der, 1885, was S177, 4O6.-
1856, being sos, 072, 40 in excess of the act
ual gold reserve on that day, and $77, 406,-
1856 in excess of any sum that it would be
necessary to use for replenishing that fund
in case the Secretary should at any time
be able to exchange currency for gold.
There is, therefore, no reason to doubt the
ability of the Government to discharge all
its current obligations during the present
fiscal year and have large cash balance
at its close without imposing additional
taxation in any form upon the people; but
] adhere TO the opinion heretofore ex-
pressed that the Secretary of the Treas
ury ought always to have authority to
issue and sell, or use in the payment of ex-
penses, short-time bonds, bearing low
rate of interest, to supply casual defcien-
cies in the revenue.
while the situation does not require
any legislation for raising additional rev.
enue by taxation at this time, it is such as
to require the strictest economy in appro-
priations and public expenditures. Nearly
everys appropriation is in terms or by
necessary implication direction to the
i