The San Francisco call., 1898-04-27
TO DEFRAY THE COSTS OF " AR Report of the Ways and Means Com mittee Of
 the House. Democratic Income Tax Propo- sition Defeated by a
 Party Vote. Secretary of the Treasury Auth orized to Issue and Sell S5OO,oOO,OOo
 of Bonds
Special Dispatch to The Call.
Call Office, Riggs House,

Call Office, Riggs House,
 Washington, April 26.
 At the meeting of the Ways and Means Committee to-day MT. Bailey on behalf of the Democratic minority, of- fered the substitute agreed upon by them authorizing the issue of So00, ,oOo coin bonds. It provided for an income tax of per cent on incomes from all sources in excess of S20e0. State, county and municipal bonds, however, were excepted from its provision to meet the unanimous decision of the Supreme Court in this respect. The minority es- inmates that such income would realize $100, 100000 Coupled with it was the proposition to coin the silver seignior- age, which at present amounts to S42,- 0O0,OO The substitute was voted down by a strict party vote. No amendments were offered to other provisions of the bill, owing to the lack of time.
 In it's report the committee says that the apparent cash balance in the treas ury when the joint resolution appro- priating $5O,0O0,0O0 for National defense was passed was about $225. .0O0, 900, in- cluding the s100, ,O00,000 redemption fund, or $125. 5.000,000 excluding that fund.
 But this balance was only apparent, inasmuch as S13 1000, 900 consisted of fractional silver, largely uncurrent and minor coins, leaving only SIP, 2,000, 000 Of this amount S14,000,O00 con- sisted of receipts from the sale of the Pacific railroads. held in the Treasury for the payment of that amount of Pacific Railroad bonds due January l next, and S33, 000,0 900 of the bank re- demption fund held for the vment of the notes of national banks failed and in liquidation or reducing circula- tion. Deducting these amounts and the actual available cash in the treas ury at that time belonging to the Government, exclusive of the green back redemption fund, was only S65,- 900 900.
 Inasmuch as a working balance of about S40,000,000 is required to properly carry on the operations of the Govern ment, there remained only S25, GOO. 900 belonging to the Government avail able in meeting the s50.00O0 900 appro- priation. It will be necessary to meet all the expenditures under the $50- 100000 appropriation-all of which has been expended within a few weeks to use s25.000,000 of the bank redemp tion fund, a part of which must be re- placed before the close of the present calendar year.
 Inasmuch as the difficulties with Spain have plunged the country into a war, whose magnitude and length can not now be intelligently sforetold, it is necessary that measures should imme- diately be taken to provide ways and means to carry on naval and military operations on a scale and with a promptness which will exert an impor- tant influence in shortening the con flict.
 As the expenses of the preparations or T afa hot how f1,. nearly two months are at the rate of $25,000,000 per month, or $300,000,000 per annum, and the expenses of actual war will be much more, the committee is of the opinion that the necessities of the country yvau ~r +No e~-'-- e,loooee,- full conclusion of the war, call for ample ploNiaiUn DOtu Dy tstAee-U4. e.4I4 e-e-~..O4- ity to make loans for means to carry on naval and military operations as will impress the great powers of Eur ope as well as Spain with the convic- ton that the people of the United States are united in the determination to prosecute the war on a scale and with a vigOr that will make prolonga- tion of hostilities useless.
 With this object in view the commit tee recommends the levying of internal revenue taxes, either on articles of vol untary consumption on objects that will make such taxes fall mainly on
  tional defense, which will in the aggre gate yield from $90 GOO, 900 to s100.00 900 in addition to the present revenues.
 The report then enumerates the diff ferent articles to be taxed and the esti mates heretofore published. It con- tinueS:
 These are all taxes on objects which were assessed during or subsequent to the civil war, with one exception, and, there fore, open up no new and untried system of internal nue war taxes that can be collected by the existing internal revenue officials, slightly pense and with the minimum disturbance of trade, although they are all taxes which are unwelcome, and which 1t would not have been necessary to impose if war had been avoided.
 While all of the additional taxes are war taxes which would be naturally re- pealed, modified when the necessities of war and the payment or war expenses have ceased, yet 1t is impossible now to place limit on them, not only for the reason that no one can intelligently fore cast the length of the war, but also for the reason that war always brings train of extraordinary expenditures which do not terminate with the close of actual hostlitieS-
 1t is evident that it will be necessary, in order to maintain the public credit, not only to raise the additional revenue pro to authorize the Secretary or the Treas ury to borrow on the credit of the Gov ernment from time to time as the public necessities will require.
 We have given, therefore, authority to issue and sell not exceeding $500 ,000,0 900 of ten-twenty three per cent coin bonds, to be offered as a popular loan, believing, as we do, that such bond will be taken from time to time by the masses of the people We have fixed the following years as the period in which the bonds issued may be redeemed at the pleasure of the United States, not only because we re- gard it necessary to do this in order to secure subscriptions at par for the latter issue but also because the fact that the one hundred million five per cent loan of 1904 and the large four per cent loan of 1907 would inevitably be paid or refunded by the Government before a three per cent bond would be redeemed. makes bond that can be redeemed at the end of ten years as desirable to issue as one that can be redeemed at the end of five years.
 In view of the fact that it will be nec- essary in a few weeks. before the pro- posed war taxes can bring results and before the loan authorized can be placed to provide means to meet the rapidly augmenting war expenditures, authority is given the Secretary of the Treasury to temporarily borrow money, in no case ex- ceedng one year, by the issue of three per cent certificates of indebtedness Ii