Birmingham state herald., 1895-12-17
MIR CARL|SLE'S REPORT Shows a Deficit of Forty-twO MlI-
 lion Dollars FOR THE LAST FISCAL YEAR The Deficit for This Year Is Estimated at
 Only S11oOO,OOo. HE PREDICTS A SURPLUS FOR 1907 The Present Revenue Laws Will Yield Ann pie Revenue if Rigid Economy Is En- forced-The Bond Deal Defended.
 He Suggests a Remedy.
HE PREDICTS A SURPLUS FOR 1907

Washington, Dec 16.-The annual re- port of Hon. John G. Carlisle, secretary of the treasury, presented to congress to- day is a document of some S50OO words. The greater part of this space, however, is devoted to a recapitulation of reports of the numerous bureaus of the depart ment over which MT. Carlisle presides, and to statistical matter already made public.
 Passing over these and coming to the secretary's discussion of the condition of the treasury and the currency the re- port says:
 At the beginning of the last fiscal year, July 1, 1884, the cash balance in the treas ury, excluding all current liabilities, but including a gold reserve of $64,S79,o24, was $117, ,5s4,436, and at the close of the year. June 30, 1885, the cash balance, ex- cluding all current liabilities, but includ- inga gold reserve of $100,000000 was $195,- 240. .153, showing an increase of $7l,65i,HI. The excess of expenditures over receipts during the year was $42, S05, ,233, as against a deficiency of $69,S03,260 during the fiscal year of 1894. The total receipts during the fiscal year 1895 were $15,66S,055 greater than the receipts during the fiscal year 1894 and the expenditures were $11, ,329,9S1 less than during the year 1894. The rev enue derived from customs during the year 1895 exceeded the revenue derived from the same source in 1894 by the sum of $20, 086 but the receipts under the internal revenue laws and from other sources were less than during the pre- vious year; the net increase of revenue was $15,S6S, ,055, as above stated.
 If the income tax provision contained in the act of August 28, 1894, had been sustained by the courts it is believed that the deficiency for the year would not have exceeded the amount in my last an nual report. In that report the opinion was expressed that the law then in force would not only yield an ample revenue during the fiscal year 1S96 but there would be a surplus of nearly 29,O00, 900. 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 28, 1894, would be available, and that owing to the. higher rate of taxation imposed upon distilled spirits and some other articles the receipts under the internal revenue laws would be very considerably in- creased; but the decision of the supreme court holding the income tax provisions of the act to be unconstitutional and the fact that the receipts from internal rev. enue did not increase as anticipated, but actually fell off s3,6S9,560 during the fiscal year 1895 as compared with the
 
 CT rate imposed on spirits and other ar ticles, have greatly altered the situation, and I am now of the opinion that there will be a deficiency of about $17, 900, 900 during the current fiscal year.
 Treasury Notes.
 The total excess of expenditures over receipts from July l, 1893, to December l, 1885, was $130, 0,221, ,024. and of this sum $22, 462, 290 was paid out of the balance on hand at this date in excess of $100,0OO,000, and the remainder has been supplied by the use of United States notes and treas ury notes presented for redemption, and thus received into the treasury in ex- change for gold coin. The act of May 31, 1S7S provided that when any United States note may be redeemed or be re- ceived Into the treasury under any law from any source whatever. and shall be- long to the United States, they shall not be retired, canceled or destroyed, but they shall be reissued and paid out again and kept in circulation" and the act of July IA, 1S90 provided that the treasury notes, when redeemed, may be reissued, but that mo greater or less amount of such notes shall be outstanding at any time than the cost of the silver bullion and the standard silver dollars coined therefrom then held in the treasury pur- chased by such notes."
 It is clear that when any of these notes have been redeemed they do not const- tute part of the reserve fund.- but be- come 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 re- issued in payment of public expenses. None of my predecessors in office have ever made any distinction between the notes received in payment of the ordinary revenue and notes presented by the hold CTS and redeemed in coin. but such notes have been used indiscriminately, as the exigencies of the public service required.
 Secretary Sherman called attention to this question in his annual report for 1S77 The result was that congress passed the act of May 31, 1878. making it manda- tory upon the secretary of the treasury to reissue the notes. Since that act the right and duty of the secretary of the treasury to reissue the old legal tender notes, no matter how received into the treasury, provided they belong to the United States, has never been questioned in any quarter, and as to the treasury notes issued under the silver purchasing act, they must be reissued when re- deemed in gold, or. if canceled, standard silver dollars must be issued in their place, for if this were not done there would be a smaller amount of such notes outstanding than the cost of the silver bullion and the standard silver dollars coined therefrom and held in the treas ury, and this condition is expressly pro- hibited by the statute under which the notes were issued. Whether these notes are reissued or destroyed and standard silver dollars substituted for them, the practical result is the same. for in both cases the secretary would be using notes redeemed in gold for the payment of the ordinary expenses of the government: in one case. by paying out the notes them selves, and in the other by drawing silver from reserve fund on account of their cancellation, and then paying out the silver.
 Cash Balance.
 , The cash balance in the treasury on