El Paso herald. (El Paso, Tex.) 1901-1931, 1918-08-23
u. s. UNREADY
FOR 1872. WAR
Finances at Low Ebb; Elk
pedients in Taxation Used
to Raise Revenue.

Washington, D. c. Aug. 2S.-The
United States has ever been non
militaristic nation, and no better evil
dence of that fact IS to be found than
in the conditions existing just prior
to the second war with England.
Although il had been known for
long time that another war was pos
sible, every effort was made to re-
duce the size Of the army and navy.
and preparedness measures were dis
Outraged. This course arose largely
from the influence Of secretary Gal
latin, who had succeeded Alexander
Hamilton as head Of the treasury
Gallatin needed to reduce the run
ming expenses Of the government
Gallatin succeeded in curtatling pup
lie expenses to such a degree that the
budget for 1902, 1893 and 1874 calleQ
for an expenditure OF only S4,OOO,OOD.
as compared with the S7,500,000 spent
in 1890.
Then came the purchase Of the
Louisiana territory, which cost slos-
100000, and TO meet TINS o9tlay ~
latin proposed the issue Of Sl1,25O,0OO
worth of new bonds bearing per
cent interest American commerce
was flourishing and prices were high
As a result. the success OF the loan
was far greater than had been ex-
More Taxes for Tripolitan War.
The brush with Tripoh, however.
made additional revenue matter OF
necessity. but instead of restoring the
excise duties which had formerly pre-
vailed. congress, on March IS, 1904
authorized an addition Of ~ per
cent on all imported articles subject
TO ad valOrem duty and an additional
10 per cent on all goods imported IN
foreign vessels. The proceeds OF TINS
act were known as the Mediterranean
fund and was used for the protection
of the commerce, and seamen OF the
United States against the Barbary
powers, and was TO be levied until
treaty was made
Preparing for War of 1872.
II was not until 1907, when war
threatened that president Jefferson.
much against his viii, agreed TO an
increase of expenditures for national
defence. At the same time he entered
upon the alternate policies OF nonim-
portation Of manufactured goods and
Of forbidding shipping 10 leave Amer
lean ports. This completely upset
the customs receipts which fell from
SIT. 100000 to 100000 and at the
same time expenditures for war in
creased from $500, 900 in 1907 to So
500 600 in 1909. Fertilization Of ports
and harbors was FASTENED, gun boats
were purchased and the regular army
was enlarged
Since affairs had reduced them !
selves to greatly decreased revenues I
and greatly increased expenditures I
secretary Gauatin confronted a DEF
cit in the budget which amounted 10 /
3. S00.0 900. This was provided for, |
however, by a balance which re-
NAMED on hand in the treasury. while /
IN 1909 the embargo act was repealed /
great vigor. IN 1910 the customs |
Yielded $500 900 and in 1911 this |
AMOUNT was increased to $4,000, 600 /
The appropriation for the army and /
navy was reduced and immediate IL |
lancial danger was safely tided over.
Collapse OF United States Bank.
The year 1911 was memorable in |
he financial history Of the United /
states, for IL marked the collapse Of /
the United States bank. The direc- ]
tors Of the institution petitioned con- !
yress for a renewal Of their charter.
Gauatin. reported in favor |
IF it. with certain Recommendation !
'or changes in the banks policy. /
Among them was that the bank be /
TO pay interest on all gov
ilso that IL should loan to the gov /
srnment at any time a sum not TO /
.Xceed so per cent OF its capital
Other influences were at work, how
.ver, and vigorous opposition 10 the /
enewal Of the banks charter was
manifested in congress. The consti-
utionality OF the bank was Ques-
Toned and It was denounced as an
political institution"
The bill for renewal Of its charter
vas lost.
II then became necessary for the
government to turn to local banks
or the custody Of its funds, and p
Z these institutions. located for the
most pare in the principal ports Of
ntrys were employed for this pur-
ose-
The trouble between England and
ne United States had been growing
II Of that time and despite lack Of
reparation on the part Of the new
ountry. war was declared in June.
So. and congress was again called
pom TO face extraordinary financial
emands.