Mr. KELLEY. Mr. Chairman, within an hour of the opening of the present session I introduced the following resolution, which was. adopted without dissent: “That the ComWays&Means be instructed to inquire into the expediency of ately repealing immedi the provisions of the internalrevenue law whereby a tax of 5% is imposed on the uets of the mechanical and manufacturing in of the country.” g in On the succeeding Monday, having in the mean time examined the report of the SecyTreasury, I submitted the following: I?esolved.That the } that the war debt of the country should be extinguished by the generation that contracted it is not sanctioned by principles sound of national ceonoluy and, does not incet the approval of this House. I hoped that this resolution would also receive the immediate assent of the House, but it thought proper to refer it to the ComWays&Means. I am, however, not without an assured hope that with the sanction of that committee it will at an early day meet the approval of the House and relieve the country from the profound anxiety and depression cre ated by the unprecedented propositions of the Secretary. With these resolutions in view I propose, Mr. Chairman, to detain the committee for a little while by an examination of that budget of inaptitudes, incongruities, and mon sequiturs the report of the SecyTreasury. This report is indeed a noticeable document. It abounds in phrases and propositions of doubtful meaning; its abstract propositions, many of which as mere abstractions are true, and should be considered by the founder of a new and independent community, are not only inapplicable but are contravened by the inexorable peculiarities of our condition; its abounding facts, do not sustain but with emphasis gainsay the conclusions they are marshaled to support; and the means by which it proposes to return to specie payments and extinguish the national debt within given periods would, by virtue of laws as fixed as that of gravitation, produce bankruptcy, individual, corporate, State, and national, and postpone the permanent resumption of specie payments for a quarter of a century. There is nothing in this report to gratify one's national pride. As we read it we seek excuses for its author and hope we may be able to say for him that he confided its preparation to a subordinate who dealt unfairly by him. It may, however, be that Mr. McCulloch, like an oarsman, rowed one way and looked another, and was too mod est to announce his real purpose. He may have improved the occasion to repair a neglect in the education of the people; for IRev. Mr. Nasby tells us that the owas present at the Cabinet meeting convened to consider the “onparallelled loosenin uv the Nashnel Union Johnson Dimekratic party in the various States wich held elections on the 9th uv October last, ” and that he attributed it “to the limited knowledge the masses hed uv ‘In geany bankin.'" But, be this as it may, I am sure the country will sustain the assertion that whatever commendation the report may deserve or receive from “Ingcany” or other bankers it is marked by no leading suggestion adapted to the existing exigencies of our country. The Secretary's wisdom is that of a man owning 1000fertile acres, who by the aid of a loan on mortgage had fenced them in and built barns and all requisite outbuildings, and gathered live stock and the many imple.ments by which genius has lightened the labors and increased the profits of the farmer, and who withal had able bodied sons to share his labors; and of these agencies was accumulat:ing a fund with which in a few years he could extinguish his indebtedness; but who when a fire consumed his barns and implements and choice stock would not use his savings to renew his stock and implements, but though his creditor was not anxious for his mone would sell his interest bearing bonds and i. over the proceeds, his working capital, as part payment of the mortgage debt. e who under such circumstances would come to such a conclusion and execute it would find but little sympathy among his neighbors. Eager as they might be to repair his losses they would not be likely to make him county treasurer or confide the township funds to his adminis. tration. They would probably deem him inadequate to the management of his own property and feel that their neighborhood was well rid of one who could thus stupidly sacrifice his resources and doom his sons to idleness or to earn laborers' wages on the land of strangers. Yet, disavowing all disposition to exaggeration or caricature, I present such an one as the prototype of our Finance Minister, as he discloses himself in this report. Witness the exultation with which he al, nounces that during the brief period of 14 months, namely, from August 31, 1865, to October 31, 1866, the principal of our debt was reduced $206,379,565 71. I wonder whether in his exultation Mr. McCulloch remembered that this immense sum of more than $206,000,000 had been added to the cost and market price of the product of but 14 months of American labor and that by its addition to the cost and price of our home productions those of the underpaid labor of Europe had been given the advantage over the American laborer in our own markets and those of the world. I wonder whether in his pride he perceived that he was announcing the needless abstraction of more than 26 millions of active working capital from the business men of this country, many of whom were struggling to maintain infant industries which had been called into existence by the war and needed the fostering care of the Government to give them prosperity and permanence. Unfamiliar as he appears to be with the laws of social science and the history of their development, it is possible he did not know the advantage he was giving to British monopoly over competing American enterprise and industry by recommending the continuance of the excess ive taxation which enabled him to pay those 100s of millions. England is the foe of the laborer in every land. To maintain her monopoly she must undersell other nations in their own markets, and to effect this must depress the wages of labor to the lowest possible point and use shoddy or other base mate rialo: it can be done without immediate detection. Her capitalists are, we are assured, accumulating 100,000,000 or $500,000,000 surplus capital per annum; and for more than a century it has been their policy to apply a portion of this surplus to the destruction of the industries of other nations by underselling them, though for a time it involved loss on certain kinds of goods. We have often been the victims of this unscrupulous policy, and if the suggestions of the Secretary prevail it will again prostrate us. The war of 1812 developed our productive power very considerably; but in 2 years after the war closed the capitalists of England, by the express advice of her leading statesmen and in pursuance of a deliberate combination, swept our young manufactures out of existence. In the course of a speech in Parliament in 1815, Henry Brougham, exulting over our wide spread bankruptcy, said: “It is well worth while to incur a loss upon the 1st exportation in order by the glut to stifle in the cradle those rising manufactures in the U.S. which the war has forced into existence.” History, so far as that chapter is concerned, is repeating itself, and our market is glutted with British woolen goods which until our fac tories shall discharge their work people and suspend operations will be sold at less than cost. The assessment of extraordinary taxes for the extinguishment of the war debt while such a contest is waging will make the victory of our enemy an easy one. The policy is suicidal, and will prove fatal to onr revenues by paralyzing the productive, power of the country and diminishing the ability of the people to consume either dutiable or taxable commodities. This is not the language of declamation. It has high official sanction, among which is that of. revenue commission appointed by the Secretary himself, as will appear by the following extract from the last annual report of the SecyNational Association of Wool Growers. Before presenting this extract I should remark that the tax on manufactures has been reduced from 6 to 5%. since the preparation of the official reports to which it refers: “The internalrevenue tax paid in the year 1865 upon woolen, fabrics and all manufactures of woof amounted to $7, 947,094b, being 3.79%. the whole of the internalrevenue collected. How heavily this tax bears upon our manufactures is shown by facts presented in the report of the secretary of the State of Massachusetts upon the industrial statistics of the State for the year 1865. The capital invested in woolens proper is shown to have been $14, 775, 830, and 3th0e, 6v7a1lu. Seixofptehre woolen product to have been cent. upon the latter sum, the amount of the revenue tax, is $2, 905, 846b, being 19.66%., or in round numbers 20%. upon the capital invested in woolens. This tax has been paid cheerfully under the imo of patriotism. But it scpaencnioatl breepboortrsne long. In the languageof one of the of the revenue commission. ‘It has no parallel, probably, in the fiscal regulations of any civilized nation. It would utterly destroy in ten years 2/3rds of the various kinds of production subject to its operations.’” Gentlemen will not fail to observe how perfectly the views of the commission are supported by the facts above cited in relation to the woolen manufactures of Massachusetts. But I recur to the revenue report: A very large portion of the manufacturinges tablishments in the U.S. sell products year ly to 2 or 3 times the amount of their invested capital; and in many depts of production their safes yearly amount to more than 3 times the cost of their establishments. If the capital invested be $100,000thesalesmay amount to 2 or 300,000 dollars, and the tax on that business will range from 12 to 18,000 dollars; that is, from 12 to 18%. on the cost of the manufacturing establishment.” And again: “In every Fo: of view in which it is presented it seemsclear that the 6%. tax upon manufactures will destroy productive power in an joi increasing that it will in a fewyears, if not removed, rnish a sad monument to perpetuate the memory of a great mistake.” The Secretary's time and attention have probably been so absorbed by his official guillo tine that he has not been able to examine the reports submitted to him by the revenue commission. I will, in the hope of.them to his attention, add to the foregoing the following brief extract from their preliminary report of last year, submitted to him by Mr. Commissioner Wells: po“iTntheed remedy, therefore, for the difficulties above out and illustrated, save in a few striking in stanceswhich have probably resulted from oversight in the framing of the law, must, in the opinion of the commission, be sought for in such a revision of present the internalrevenue system as will look to an entire exemption of the manufacturing industry, of the U.S. from all direct taxation, (distilled and fermented liquors, tobacco, and possibly a few outnhheersaitratitcinlegsly except aerde.d) This the commissionersare to recommend.” These grave considerations, though specially reported to him by his own agents, do not seem to have attracted the attention of Mr. McCul loch; for while exulting over the rapid payment of the debt, without seeming to detect the cause of the popular emotion, he says: “Nothing in our history has created so much surprise, both at home and abroad, as the reduction of our national debt. The wonder, excited by the ra pidity with which it was created is exceededby the admiration of the resolution of selves that the tax payers them it shall be speedily extinguished.” It is true, Mr. Chairman, that surprise and wonder agitate the practical men of the country. These emotions are not, however, excited by the fact that we were able to bear extraordinary taxation while the development of our boundless productive power was stimulated by the exigencies of the war, and our own market was secured to purown producers by the difference between our lawful currency and gold, in which payment of duties on imports was required. The taxes under which those 100s of millions accumulated were assessed while war was raging and for war purposes, and could have been borne as long as the conditions I have indicated were maintained. Wise men know this, and that the war terminated abruptly and earlier than was expected, and do not hold the Secretary accountable for the results of this contingency. No matter what sacrifices, it involved, the people would have cheerfully borne them, rather than yield the questions o at issue by the war. But these questions have been happily settled by war's arbitrament. Peace is restored, our currency approximates the specie standard, and it is discoveredments which, in this report he depicts as that by aid of our ine rdinate internal taxes foreign manufacturers are monopolizing our home market. Our. ". buy their paper and print and bind their books in England or Belgium; our umbrella makers have transferred their workshops to English towns; our woolen and worsted mills are closed or closing, and the laborers in these branches are not only wasting their capital, which consists in their skill and industry, but drawing from the savings banks or selling the Government bonds in which they had invested their small accu mulations to maintain their families during the winter; and our enlarged importations of foreign goods are swelling the balance of trade against us and preparing us for general bankruptcy. The surprise of which Mr. McCulloch speaks is excited by the fact that in view of this condition of things the SecyTreasury should urge the maintenance of extraordinary taxes sufficient to enable him to apply not less than $50,000,000 per annum to the extinguishment of our debt by the rapid absorption of the only portion of that debt which bears no interest. Wonder amounting almost to awe does possess our people, and it is excited as was that of the iodsailor who, in the midst of an exhibition of magical illusions, was blown into the air by the accidental explosion of powder, and in his damaged condition wondered what would come next in the order of exercises. That the tax payers have resolved that the principal of our debt “shall be speedily extinguished” I deny. They regard the attempt as Quixotic, as destructive of our industrial interests, and beneficial only to money lenders, speculators in Government securities, and foreign manufacturers. Sir, if the Secretary is accessible to the voice of remonstrance he must by this time be satisfied that there is no tax payer in the country who is not engaged in importing foreign goods or in shaving notes, or who, having bought bonds at low rates in a depreciated currency, hopes to have them redeemed at an early day in specie, who does not dissent from the assessment of extraordinary taxes for the extinguishment by the generation which created it, of a debt, the security of which is undoubted and which was incurred for the benefit of pos terity. The opinion of the people on this question is modestly expressed by the editor of the ablest and most instructive of our industrial journals, the Iron Age. He says: “We are glad to see that aresolution for the entire removal of the manufacturers’ tax of 5%. has been introduced, and hope it will be adopted. As an independent proposition, outside of any other amendment of the tax or tariff laws, this will com: mend itself to the good senseof the country as one so manifestly just that we should expect there would be a very general expression of public feeling in its favor. All classescan heartily unite in this effort to untrammel the industry of the country and to cheapen production. The free trader and protectionist can at east here agree; the workman is quite as directly interested in this matter as the employer, for the effect of the tax is only to restrict the demand for the products of his labor. As a ully accepted war necessitywe cheer this burden which the manufacturers of the country have borne with such uncomplaining loyalty; but now that the necessity is past, and that the national exchequer is in such a condition that it can easily and safely dispense with the revenue it produced, we think we are entitled, on behalf of manufacturers and their workmen, to demand its repeal. England, with all her load of taxes, has no such impost as this; her uniform policy is in every way possible to cheapenthe production of her wares, in the unequal contest which we are called to wage with her it is in the last degree unwise to o put under this additional and unnecessary disability. Sir, this generation embraces the widows, orphans, and maimed soldiers of the contending parties in a civilWar, each of which parties had armies numbering more than a million men in the field. They at least are in no condition to welcome excessive taxation, especially those of the South, who are without even the poor pittance we give to ours as pensions. The folly of the dull farmer I have supposed a case of stupidity scarcely probable, though possible within the range of human dullness is the wisdom by which the Seeretary proposes to guide the finances of this country and extricate them from embarrass inces than in almost overwhelming. Let us hear him. He says that “He has been clear in his convictions that specie payments are not to be restored by an accumulation of coin in the Treasury to be paid out at a future day in the redemption of Government obligations; but rather, by quickened industry, increased production, and lower prices, which can alone make the U.S. what they ought to be a creditor and not a debtor nation.” And as if to illustrate his want of sincerity, or the confusion of his ideas, proceeds to speak of “certain branches of industry that are now languishing under the burdens which have been imposed on them;” and to tell us that though “the people of the U.S. are naturally a commercial and maritime people, fond of adventure bold, enterprising, persist ent” “The disagreeable fact must be admitted, that, with unequaled facilities for obtaining the materials, and with acknowledged skill in ship building, with1,000s, of miles, of sea coast, indented with the finest harbors in the world, with surplus products that require in their exportation a large and increasing tonnage, we can neither profitably build ships nor successfully compete with English ships in transportation the of years ago Qur own productions. 20 it was anticipated that ere this the U.S. would be the 1st maritime Power in the world. Contrary to our anticipations, our foreign cthoemlmasetrsciexhyaesadrse.c”lined nearly 50%. within And as if to impress us more profoundly with our present inability to bear excessive taxation, he sets forth the following statistics: “The tonnage of American vesselsengaged in foreign carrying trade which entered U.S. ports was In 1860. 5, 921, 285tons. In 1865 “The tonnage of such vessels which were cleared from the U.S. was– In 1860. 6, 165, 924tons. In 1865 In 1866. “The tonnage of foreign vesselswhich entered our ports was– In 1860. 2, 353.911tons. In 1865 “ In 1866.4, 410, 424 “ “The tonnage of foreign vesselswhich were cleared was In 1860. 2, 624,005tons. In 1865 3, 535, 123 “ In 1866. 4, 438, 384 “ While admitting that something of the dim inution of our shipping must be attributed to the effects of the war, the Secretary, as if to prove that high taxes have been more destruct. ive than war, says: “The scarcity of American vessels ought to have produced, and but for a redundant currency and high taxeswould have produced, activity in our ship yards and a rapid increase of tonnage; but this has not been the case. The prices of labor and materials are so high that ship building cannot be made profitable in the U.S., and many of being practically our ship yards are transferred to the British Provinces. It is only a sought few years since American ships, were afteron account of their superiority and cheapness; and large numbers of vessels were built in Maine and r States on foreign account or sold to foreigners, while at cantile marine was betinhge sraapmidelytimiencoruear soewdn.’ mer: ” T “It is an important truth that vessels can be built very much cheaper in the British Prov Maine, Nay, further, that timber can be taken from Virginia, to the Proyinces, and from these Provinces to England, and there, made into ships which can be sold at a profit; while the same kind of vesselscan only be built in NewEngland at a loss by the most skillful and economical builders.”:: “The same causes aredundant currency and high taxes that prevent ship building tend to, prevent the building of houses and even of manufactories. So high are prices of every description that men hesitate to build dwellings as fast as they are required, and thus rents are so advanced as to be oppressive to lessees, and the healthy growth of towns and cities is retarded. So it is in regard to manufactories. Mills which were built before the war can be run profitably, but so expensive are labor, and materials that new mills cannot be erected and put into operation with any prospect of fair returns upon the investment, unless upon the expectation that taxes will remain as they are and prices be sustained, if they are not advanced. The same causes are injuriously affecting agriculture and other interestswhich it is not necessary to particularize. It is everywhere observed that existing high prices are not only oppressingthe masses of.checking the development pegorpolew, tbhu, taanrde prosperity of the country.” What remedies does our sagacious Secretary propose for the evils he so truthfully depicts? One, and apparently in his judgment the most efficacious, is that which I have been considering, namely, to add not less than 4 or 5 million dollars per month to the price of American products by taxing them to that amount for the express purpose of extinguishing so much of our national debt! If gentlemen doubt my statement I beg them to give the report an attentive reading. This mad policy pervades all its suggestions. Nor is it to be temporary. It is to be the fixed policy of the Government, and he says our debt which, according to his statement, was on the 31st of October last $2, 551, 424, 121 20, “can be paid by the generation that created it.” Sir, if my suspicion that the preparation of the Secretary's report was committed to a treach erous subordinate be correct gentlemen will be able to estimate the wantonness of that person's cruelty by the fact that in further illustration of the absurdity of its leading proposition he proceeds to tell us that “between the years 1848 and the 1st of July, 1860, the product of the gold and silver mines of the U.S. was about $1, 100,000,000, ” but that “it is not probable that the amount of gold and silver now in the U.S. is very much larger than it was 18 years ago.” And as if to give greater effect to what, were it not gravely trifling with the prosperity of the American people, might be regarded as a huge joke, adds the fact that beside exporting all our bullion we have, in exchange for perishable, foreign commodities which we might have fabricated from our own raw materials, given to foreign capitalists, who now hold them, interest bearing evidences of debt to the amount of $600,000,000, as follows: U.S. bonds. stateand municipaf bonds. ailroad and other stocks and bonds. 100,000,000 Total. $600,000,000 Nor does he yet stay his hand in presenting reasons why we should not adopt his proposition, for he informs us that the reports of the customhouses show that though we exported specie during the fiscal year which ended June 30, 1866, to the amount of $82, 643, 374, the balance of trade, as shown by those reports, was still against us in gold values $8,009, 577. And with a measure of candor for which I award him full credit, adds: “But these figures, taken from the reports of the customhouses, do. not present the whole truth. For there has been a systematic undervaluation of foreign merchandiseimported into the U.S., and large amounts have been smuggled into the oalong our extended sea coasts an frontiers. To make up for, undervaluations, an smuggling, and for, cost of transportation paid to foreign shipowners, 20%. at least should be added to balance, the imports, which would make the , for the past year against the U.S.,000,000. It is have been largely against the U.S. bfoarlasnocmese cars past, whatever may have been the custom house returns.” Mr. Chairman, I confess my ignorance of “Ingeany bankin', “ and will proclaim my gratitude to any of its disciples who will so far admit me to its mysteries as to enable me to reconcile the Secretary's premises and conclu slons. Meanwhile I ask who but he, unless it be bankers and shavers of notes, importers of foreign goods, and holders of our bonds who desire to get 2 dollars for every one they in vested in them, who but these does not see in this fearful array of evidences of our tend ency to universal bankruptcy a necessity for developing our productive power by diminishing the internal taxes of the country to the lowest possible amount consistent with an economical administration of the Government? And who but these does not see that by continuing the course we are pursuing we are retarding the permanent resumption of specie payments and postponing the day when we shall be able to enter judiciously upon the extinguishment of our debt? Mr. McCulloch does not seem to perceive that this fearful array of facts is but so many concurrent items of evidence that notwithstanding our freedom, enterprise, and o and our infinitely diverse, easily accessible, and inexhaustible stores of natural wealth, our extended sea coast, fine harbors, broad lakes, and far rolling rivers, which invite us to manufacturing and maritime effort and precminence, we are but a mere commercial dependency: Like all other debtors we are at the mercy of our creditors. Though richer in natural resources than all of them combined the continuance of our prosperity is dependent upon the caprices or necessities of England and the nations of Europe, which, by protecting their industry and importing only raw material or commodities but slightly wrought and exporting products as much manufactured as possible, practice economies unknown to us, and by diversifying their industry provide remunerative employment for all their people. Manufactures and agriculture are each the handmaid of the other, and the successful practice of both is prerequisite to profitable and sustained commerce. That sea board nation which most diversifies its productions and best protects its skilled labor against unequal competition will ever be foremost in the race for conntnerce. No, sir; the Secretary does not see the proper application of the facts he cites, and while di. lating upon themillustrates his profound ignorance of the progress social science has made by reiterating trite maxims from English hand books of political economy to prove that international trade balances are settled with gold and silver and that the flow of specie “indicates the condition and results of trade between different nations.” In the light of these laws I point him and the country to the fact that the trade between us and foreign nations has car ried them our cotton and wool, our beef, pork, grain, and other staples, and $1, 100,000,000 of our bullion with $600,000,000 of our bonds to pay for wines, silks, places, cloths, &c., and iron rails to stretch across the coal and iron beds which underlie our country from the Atlan tic coast to the Pacific and from the lakes to the Gulf, and ask them if the facts do not indicate bankruptcy as the “result” if the present and past “condition” of that trade be main tained. And whether, when as now we are compelled to look to our internal taxes for the bulk of our receipts, when duties on foreign imports could under no possible system provide us with adequate income, it would not be well as a pure question of revenue to so adjust our taxes as to relieve American labor and land from every possible exaction and by every possible device to stimulate the development of our productive power and the immigration of skilled laborers into the country? Thus, and thus alone, can we check the flow of specie and bonds to Europe and retain among us as capital the production of our gold and silver mines with which to redeem the $600,000,000 of bonds now held by foreigners. This the Secretary professes to desire, but how the extraordinary taxes upon our industry to the amount of $50,000,000 per annum is to promote it he has not condescended to inform us. The scheme of the Secretary is as unprecedented as it is unwise. It is without a single historical example. The 1st Federal debt was funded in 1791, and for 16 years no effort was made to reduce it. In 1807 the receipts of the Government from ordinary sources were in excess of current expenses, and the surplus was applied to the debt. This easy and natural process of extinguishment continued till 1812. The average rate of payment per annum from 1807 to 1812 was about $6,000,000, and at the breaking out of the war with GreatBritain the debt had been reduced from $75,000,000 to $45,000,000. It was swollen by that war to $127,000,000; but no extraordinary taxes were imposed for its redemption. The revenues of the Government were derived from ordinary sources, and such balances as remained after paying current expenses were applied to its absorption. No statesman of either period proposed to cripple industry and retard the development of the country by the imposition of extraordinary taxes as a means of extinguishing its debt. They wisely stimulated both by imposing higher duties upon foreign importations, and under the avowedly protective tariffs of 1824 and 1828 paid it off. such a spectacle had never been witnessed before, for no other nation had ever liquidated its entire debt. he American people will rather follow the successful example of the statesmen of those days and foster our industry than accept the crotchets of our present SecyTreasury and cripple labor and diminish production by extraordinary taxation. They freely lent their substance to the Government jhold more than 80%. of our national securities, and none of them are demanding payment. Nor need we be specially anxious about that part of our bonds that are held in Europe. They who hold them bought them as investments or as matter of speculation. As investments they pay better interest than the holders can elsewhere obtain with equal security, and we are not required to prostrate our industry by a vain attempt to hasten the day on which foreign speculators shall realize anticipated profits. England has never been guilty of such stupidity. When the Napoleonic wars closed the governing class of England held her bonds, and like the money changers and “Ingeany” bankers of our country clamored for the resumption of.. that they might get parfor the bonds which they had bought during those wars at such prices as our own sold for and in paper as irredeemable and depreciated as ours has been. By this operation they would have made an average of 100%. on their investments. But governing class as they were, it was not until 7 years after the close of the war that the states men who controlled the financial affairs of GreatBritain attempted the experiment of a resumption, or till the suspension had endured for well nigh a quarter of a century. And only within a few years I think I may say within the present decade has England made serious effort to reduce the principal of her debt, nor has she yet imposed an extraordinary tax for the purpose. Her statesmen knew that her population was increasing and her productive power in process of rapid development, and they know also that so long as the interest is ready at maturity and the creditors of the nation see that its taxes are steadily diminishing and its population and resources increasing, they will regard the investment as safe.. Thus has England, while permitting her debt to increase, by showing her steady ability to diminish the taxes upon her people and provide for interest and current expenditures been able to reduce the interest on her debt from war rates to the low rates at which she now holds it; and that debt which by its immense volume seemed to overshadow her whole future, is now not in the proportion often%. per man, per dollar, and per acre to what it was at the date of the treaty of Paris. So will it be with us if we shun the nostrums of the SecyTreasury. The estimated wealth of the loyal States at this time is $17, 428,000,0their annual product $4, 685,000,000. But 30 years hence, if the progress of our growth is not retarded by financial charlatanism, the yealth of those States will be $90,000,000,000, and the annual product amount to $23,000,000,000, and the now prostrate but naturally richer South will then rival the people of the North in prosperity and tax paying power. Let me, Mr. Chairman, as it is due to the Secretary I should say, that he does not rest this urgent demand for the speedy extinguishment of the debt upon onef. of social science or national economy. In this matter his head yields to his heart. He is guided by a sentiment. He prides himself upon his mag nanimity, and would ruin the industry of the North and retard the development of our country for a century if need be rather than wound the sensibilities of our “erring southern brethren.” Thus, after indulging in some trite reflections upon the evil of public debt in general, he tells us that “To the perpetuation of the existing debt of the U.S. there are also, it may be proper to serious objections growing out of the circumstances under which it was created. Although incurred in a great struggle for the preservation of the Government, and therefore especially sacred in its character, its burdens are to be shared by those to whom it is a reminder of humiliation and defeat. Ictf ihseeaxrte ebeudrinnignlgysdeasnidraabllieenthaatitotnh, iss, hwouitlhdobteherermcaouv seeds as rapidly as possible, and that all should disappear with the present generation, so that there may be fneoetlhiningg in the future to prevent that unity and good between the sections which are necessary for true national prosperity.” To others than the Secretary it is known that the country is no longer divided into hostile sections. That which made the South sectional was slavery and pride of caste. Slavery thank God, has been forever abolished and pride of caste is vanishing. Yes, sir, the decree, sustained by a majority of nearly half a million of the voters of the northern States and enduring as the fiat of Heaven, that pride of caste must disappear from American polities has gone forth. Henceforth he who breathes the air of our country, let his color or father land be what or where it may, may by his own volition invest himself with the attributes of American citizenship. Everyone born on the soil is a citizen, and our naturalization laws are henceforth of universal application. I fear the southern people after reading the Secretary's report will regard him rather as a man of sentiment than of affairs.. They may applaud the delicacy of his sensibilities, but while doing so will probably wish that a well. informed statesman presided over his Dept. Destructive to our interests as the attempt to provide for the o.of our debt by extraordinary taxes on this generation would be, the southern people are less able than we to endure the madexperiment. Among them are as I have said, the widows, orphans, and maime soldiers of their armies, whose poverty is not relieved even by the pittance we give aspensions to the same classes; their industrial system has been overthrown and is not yet reorganized; their cities and towns by their dilapidation tell how their trade and commerce have suffered, and their lands to a great extent lie waste; their banks, insurance companies, and other moneyed institutions have gone into liquidation; their railroads are in ruins and almost bare of rolling stock; and they are making daily appeals to the people of the North, whose presence among them the baser sort of Southrons will not permit, for capital with which to open and work mines 'of gold, silver, copper, lead, iron, and coal, in which their land abounds. Scourged by the results of their own folly they are awakening to a knowledge of the value of their possessions, and are proposing to make them avail able. They desire if they can obtain the requisite capital to locate the factory near the cotton field and the forge and furnace near the mine and ore bed. A brief extract or 2 from southern papers of very recent date will show how cruel Mr. McCulloch is to those to whom he wishes to be so kind. Says the Petersburg Index: “The variety of schemes devised for the relief of that numerous and unfortunate class of persons who aerveincneosw the labnoercinesgsity under pecuniary, embarrassment as well as the difficulty, of providing an adequate remedy for the mischief sought to be prevented. A further extension of the stay law, a total or partial repudiation of private indebtedness, and the exemption of specified property from involuntary alienation are some of the expedients now brought forward to meet the pressing exigencies of the occasion.” The Nationalist, Mobile, Alabama, says: “Reliable planters from Mio say that not 1/2 dozen, on an average, in each county in State, can that their debts. Large tracts of land are selling at nominal rates.” valuable And the Richmond Times says: “If the tide of immigration continues to flow by us, and we make no energetic and intelligent effort to secure it, taxation will speedily devour what little the war left, and a persimmon, and ftehwe Syaesasrasfhraeshnacevewmheande the pine, the a wilderness of many, a picious daybroad and once fertiis field, someinaus. the tax gatherer or the sheriff will hang out his red flag over the ruins of the old family mansion, and then, alas for the paternal acres, and the dear, sacred old homes, of our boyhood! for every thing, even the dear old graveyard, where repose the honored dust, of our forefathers and the bones of many a noble 'soldier, ' 'son, ’ and fair daughter will passinto the hands of somecodfish eating Puritan from Boston or Nantucket.” " How incapable the people of NCarolina are of enduring extraordinary taxation is shown by reference to facts which occurred anterior to the war by a writer in the Newbern Times of $o 8. After saying with truth that “the old North State is inferior to none of her sisters in the combined advantages of situation, climate, agricultural and mineral riches, ” he proceeds to make the following exhibit: “In 1860NCarolina ranked as 12th among the States, containine population of 92, 622o, f whom 331,059were slaves., The free population are distrib uted according to places of birth, as follows: Born in NCarolina. Born in other southern States Born in northern States. 2, 399 Born in foreign countries: 3, 239 Born at sea and not classified. 201 “While NCarolina was thus receiving from without her limits about 27,000 immigrants, she sent as emigrants to than 272, 606of her free born offspring rwSthaoteasrneose leasts tered throughout the western and southwestern States, of whom Tennessee received 55,000, Georgia 29,000, Indiana 27,000 Alabama 23,000 A rkansas 18,000. “She was 9th to the States in her contribution to the population of the Union: 7th in contributing to the population of other States; behind all, save little Delaware and SCarolina, which ranks last of all, in the reception of citizens from other States. “Of the vast foreign immigration, numbering up ward of factures afonudr tmheilliine tnesr, nawlhiimchprhoavsembueilnttsuopf the mnoanrtuh ern and western States she receivedonly about 3,000. standing in in the Union and behitnhdatthrrees epeocf the Tinedrrietvoerireys State But how capable the future people of NCarolina will be is well shown by the editor of the Old North State, published at Salisbury. In an article entitled “The Future of NCarolina, ” he says: “The questions present themselves, how is all this to be done, and can the Government promote the great object by a proper policy? We shall endeavor to answer these questions to the best of our poor ability. “The abolition of slavery has, in changed the destiny of the State. The onuergroopeiannionno, t be entirely relied upon as a laborer, and he must be assisted by or his place be supplied with white laborers sooner or later. These, except in a small portion of the State, cannot be profitably employed in agri cpurol tmurianlenptulyrsuits until other interests are Hi! forward and partially developed. This. be done without an influx of capital from aloroad. “The greatest of these interests, and those which we shall notice on manufacturing this occasion, are the mining and interests. It is perfectly useless for us to speak of the vastmineral wealth of NCarolina; it is known to all, the world to be inferior to that of no country on the globe, both in quantity, quality and variety of minerals, but we have no capital to render them available. “And to the capitalist who desires to engage in manufacturing, no country in the world, presents more inducements than NCarolina. Her water power is unsurpassed. As a general thing steam is useless in the State formanufacturing purposes; for the face of the country is intersected by, water coursessuch as abound in few other lands. If we look at the map we shall see that there is a perfect net work of streams, showing that it is one of the best watered portions of the earth, and the structure of the country is such that every one of these streamscan be made to drive machinery, All this magnificent provision of nature has thus far been permitted to waste, in a great measure at “It least is scarcely necessary to refer to thesefacilities more in detail. Every reader knows the vast capacity of our larger rivers for these purposes. That of the RoAainkoinke,, the Neuse, the Haw, the Deep, the Main the south Yadkin, the Little Yadkin, the Catawba and other rivers of the State for driving machinery is scarcely equaled by any in the world, while we have many other smaller streams of very great capacity. “And when all this water power is turned to account for manufacturing purposes, as it will be at no great distance of time, when we have 1000s of furnaces in full blast turning the ores from the bowels of earth into the richest marketable commodities, atnhde when qur vast deposits of coal shall be and other purposesfor which nature inutesneddefodr the mse, what a country we will have l hat vast amounts of wealth must then flow into our laps. Our State will then be dotted over with the most flourishing manufacturing townsand villages and our nowbarren fields willteem with the richest verdure. “This, must necessarily be so. We stated at the outset that until the mining and manufacturin interests were at least partially developed importe white labor could not be profitably employed in agricultural pursuits. But when these interests become to be a power, in the State the thing All the 1,000s, if not100s of 1000s, offactory operatives and miners must find a support, and the result will be that vast home marketswill be created. The soil will be heavily taxed for their sustenance and consequentlyvast improvements will be made in our system of agriculture and nothing needs improvement more. But we will not pursue this line of remark further we have presented the general ouftlines, and we leave it to the imagination of our readers to fill up the picture. In the course of time the farms of our State will rival those of the Dutch Pennsylvanians; our lands will becomeequally productive, while our system of internal improvements will becomeequal to theirs.” More gladly, sir, than the people of the North will those of the South welcome release from every dollar of taxation from which sagacity can exempt them. And I assure the Secre.tary that the people of no part of the country have shared so o, as those of the Sout the surprise and wonder to which he alludes. Mr. McCulloch says: “We have but touched the surface of our resourees: the great mines of our national wealth are yet to developed.” be This is specially true as to the southern portion of our country, and in the name of the impov erished people of that section I ask, is it well to tax a generation the surface of whose resources has not been touched by the transmuting hand of labor, and the mines of whose wealth are yet to be developed, in order to pay the principal of a mortgage the holder of whic.needs nor desires his money? and would not wisdom or state craft suggest the propriet of enabling the owners of these mines of. to accumulate the capital with which to work them and by the magic touch of labor to convert them into current gold? The taxing process maintains our exhausting dependence on foreign nations, while the developing process would make us as free j;as we are politically; and enable us, by our example of liberal wages and freedom from their exhausting hours of toil, to influence the commercial and manufacturing usages of European States, as our political example is influencing their political and social institutions. The Secretary, however, has other prescriptions than that of excessive taxation by which to restore the country. In his opening para graphs he says: “With proper economy in all the Depts of the Government, the debt can be paid by the generation that created it, if wise and equal revenue laws shall be enacted and continued by Congress, and these laws are faithfully enforced by the officers charged with their execution.” Again, he tells us that he “has mainly directed his attention to measures looking to an increase of efficiency in the collection of revenues, to the conversion of interest bearing notes into 5 20 bonds, and to a reduction of the public debt.” “Efficiency in the collection of revenues, ” forsooth ! “The faithful enforcement of laws by the officers charged with their execution 1” These are brave words to fall from the lips of one whose faithless exercise of official functions in this very matter has during the past year cost the Government more than $50,000,000. Brave words, indeed, are these from one who in a wicked attempt to subvert the popular will by the corrupt use of official o: has removed 100s of well tried, capable, and experienced officers of the revenue and customs depts and substituted for them men deficient alike in capacity, experience, and character. There is not a congressional district in the country whose people are not grieving over the fact that the SecyTreasury, who embodies in his report reiterations of these fin phrases, has wantonly and wickedly aggravate the onerous taxation under which they groan. Let who will speak of the necessity of a faithful administration and due enforcement of the revenue laws, for which every patriot will pray, becoming modesty would constrain the SecyTreasury to avoid the topic. This is a matter on which Congress should take early action; and if it means that the customs and internalrevenue laws shall be faithfully and impartially enforced it must see that another than the author of the report I am considering shall have the selection of officers for their enforcement. Some of the Secretary's suggestions are embodied in distinct no, not in distinct, but in numerical propositions. To one of these I invite the attention of the committee. It is as follow. 3: “2. That the duties, upon imported, commodities should correspond and harmonize with the taxes upon home productions; and that theseduties should not be so high as to be prohibitory, nor to build up home nor to prevent that free exchange of commodities which is the life of commerce. Nor, on the other hand, should they be so low as to seriously impair the revenues, nor to subject the home manufacturers, burdened with heavy internal taxes, to a competition with cheaper labor and larger capital which they may be unable to sustain.” “There's wisdom for you!” I venture to assert that Jack Bunsby throughout his intellectual career never uttered a more character istic proposition than that; and all will agree that in the coated Kan'ictor of Jämes K. Polk our political literature has embodied no utterance more shrewdlydelphic. Thisingeniously inexpressive proposition does not embody the Secretary's only allusion to “home monopolies.” He seems to hold them in special dread; and it is to be deeply regretted that he has not indicated the argument by which his apprehensions are sustained, as they are not to be found in the works of the i. of any school of political economy or social science. The teachers of free trade do not agree with him in believing that high duties “build up home monopolies.” They assert that protection secures undue profits to certain branches of production and tempts capitalists to ruin themselves by so overdoing the business as to glut the market and have to sell their goods at small profits or at a loss. Their theory proceeds upon the want of judgment in capitalists and business men but by asserting that high duties beget undue domestic competition denies that they promote local monopolies. Nor does Mr. McCulloch agree with the school of protectionists, for they say that assured protection against unequal competition gives capitalists confidence and induces them to open mines and build furnaces, forges, and factories, whereby constant employment and ample wages are secured to the otherwise idle people of the country. This theory proceeds on the assumption that the American manufacturer is competent to measure the contin gencies of our own markets and of the natural course of foreign trade, but is not competent to resist the gigantic efforts which were commended by Lord Brougham, and one of which is now making by the Croesus like capitalists of England “to stifle in the cradle those rising manufactures in the U.S. which the war has forced into existence.” Our present condition resembles very closely that of the States of Europe at the close of Napoleon's wars, and the following passage from the admirable address of John L. Hayes, Esq., entitled “The Fleece and the Loom, ” embodies illustrations of fixed laws applicable enough to dispel even the Secretary's. of “home monopolies:” “What would have beenthe future industrial condition of continental Europe if at the time when eacerestored the nations to labor the textile manu actures had been left to their own free course and no legislation had intervened to regulate their proto. Can there be any doubt that they would have become the exclusive occupation of o Alone in the possession of steam power and machinery; alone provided with ships and means of transport:. capital endowed, through her staple legislation, with to vivify her natural wealth, she had absolute command of the markets of the Continent. The question was [.] to the continental nations whether they should accept the cheap tissues of England, or at somes acrifices repel them, to appropriate to themselvesthe labor and profito; The latter coursewas successively adopted, with some modifications, by each of the continental nations; and with what results to their own wealth and the industrial progress and comfort of the world?. In stead of a single workshop Europe has the workshops of France, Russia, Austria, Prussia, Belgium, Swo den, Denmark, Spain, each clothing its own people with substantial fabrics; each developing its own ctrriebauttiivneg genius and peculiar resources; each conto substitute the excellence of competition for the mediocrity of monopoly; each adding to the progress of the arts and the wealth and comfort of ruankind.” The 5th of the Secretary's propositions is “the rehabilitation of the States recently in insurrection.” Referring to the conquered territories, which notwithstanding the President's usurpations await the action of the lawmaking power, Mr. McCulloch says: “Embracing as they do 1/3rd part of the richest lands of the country, and producing articles of great value for home use and for exportation to countries, other their position with regard, to the General Government cannot remain unsettled, and their industrial pursuits cannot continue to be seriously disturbed, without causing such, a diminution of production the of their great staples as must necessarily faaffcetoctryour revenues, and render still more unsatis Europe.”than they now are our trade relations with. There will be no real prosperity in these States, and consequently no real prosperity in 1/3rd part of the U.S., until all possessagain equal privileges under the Constitution.” If it be true, as it undoubtedly is, that “1/3rd part of the richest lands of the country” are by reason of temporary causes not producing “articles of great value for home use and for exportation to other countries” would it not seem to suggest the idea that this unhappy state of affairs should be permitted to pass away and these lands be made productive before they should be burdened with taxes not demanded by imperious necessity? And whether before these lands shall be able to bear taxation for that purpose the people of the North, whose sacrifices during the war saved the integrity of the Union, should be called upon to extinguish the debt created by the crimes of the possessors of this broad and rich territory? The people of the northern States have certainly arrived at this conclusion, and I have shown that schooled by suffering the people of the South, while antagonizing them on many points, agree with them on this. Pursuing this branch of his subject, Mr. McCulloch asks, “Can the nation be regarded as in a healthy condition when the industry of so large a portion of it is deranged?”. And the people, North and South, answer “No; and in our enfeebled condition we pray you not to rob us of our working capital in order to extinguish a debt which was contracted for the benefit of mankind and future ages.” He asks again, “And can the labor question at the South be settled as long as the political status of the South is unsettled?” And the country answers “yes, there is no inseparable connection between the labor question and the political status of the conquered territories;” and adds that the “political status” of the South cannot be settled until its rebellious leaders discover that the loyal people of the country are able to defend its institutions against the usurpations of AndrewJohnson, accept the constitutional amendments already adopted and which are in process of adoption by 3/4ths of the States which now constitute the Union, and submit to Congress constitutions republican in form upon which the o:shall have set the seal of their approval. he people of the loyal North cannot restore those of the conquered territories to their “political status.” We can only consent to their restoration when they ji be willing that it shall take place on terms which will render the future peace of the country secure, and for this we are and have been ready. The leaders of the South not we are the dog in the manger. It is they who by refusing to abandon the dogmas that evoked the war and the oli garchic institutions that sustained it resist the influx of the tide of immigration that would fertilize their lands and republicanize their institutions. The imminent want of the people of the South is not “political status.” That would not enable them to settle the “labor question.” What they want is capital and currency and a willingness to permit loyal men, whether white or black, native or foreign, to dwell among them, and by their labor quicken into commercial value the boundless and varied natural wealth of the land they occupy, but which they will neither work themselves nor permit others to work in fo and safety. When in obedience to a healthy national sentiment or the promptings of their own interests they will make capital secure, opinion free, and give peaceful scope to enterprise within their borders, the immense deposits which profitless to their owners now lie in bank, because under the hammering process of the SecyTreasury judicious men are afraid to embark in new enterprises will be transferred to the South to develop her productive and taxable power, and make her pop ulous and prosperous beyond the wildest dream of the visionary theorists who involved her in a war as causeless as it was disastrous. Mr. Chairman, time will not permit me to answer all the Secretary's interrogatories or examine each of his numerical propositions. But his friends may complain that I have not alluded to that which !.regard as his chief specific. It is set forth in the 2nd of another series of propositions as follows: “a curtailment of the currency to the amount required by legitimate and healthful trade.” On this point, though not condescending to indicate what amount of currency is in his judgment required by “legitimate and health ul trade” in the present abnormal condition of the country, the Secretary is peculiarly coherent and lumine us. He is clearly a disciple of Dr. Sangrado. He recognizes the circulating medium as the life blood of commerce, and as Sangrado attempted to restore his patients by withdrawing blood and injecting warm water into their veins he proposes to assist extraordinary taxation in the work of rehabilitating the southern States, whose great want is currency and working capital, and in invigorating the languishing interests of the North by contracting the currency, and especi: ally by withdrawing that owhich is of equal and unquestioned value in every part of the country the U.S. notes, commonly called “greenbacks.” He says: “He regards a redundant legal tender currency as the prime cause of our financial difficulties and a curtailment thereof indispensable to an increase of labor and a reduction of prices to an augmentation of exports and a diminution of imports, which alone will place the trade between States and other nations on an equal and satisfactory footing.” And that “He is of opinion that the national banks should be usnutsrtyained, and that the paper circulation of the should be reduced, not by compelling them to retire their notes, but by the withdrawal of the U.S. notes.” Mr. Chairman, had I been properly instructed in the mysteries of “Injeany bank in’” I might be able to comprehend and appreciate these suggestions; but in the blindness of my ignorance I cannot see what there is to commend his theory to the Finance minister of our country. The greenbacks are, it is true, part of our debt, and must therefore at some day be redeemed; but they are the only part of our immense debt which bears no interest; and while there are outstanding, as the Secretary's statement of December 1, 1866, shows, $147, 387, 140 of compound interest notes which are currency and used as such by the national banks, and $699, 933, 750 of 3 years' notes bearing 7 and 3 10th s%. interest, all of which were purchased in a eatly depreciated currency, I cannot compreend the philosophy which proposes to let the interest on these run, while absorbing a noninterest bearing loan which the people cherish as furnishing. best currency except specie they have ever had. The experiment if attempted as a means of hastening specie payments will prove a failure, but not a harmless one. It.]". fatal to the prospects of a majority of the business men of this generation and strip the frugal, laboring people of the country of the small but hard earned sums they have deposited in savin banks or invested in Government securities. It will make money scarce and o:un certain. Its object is to reduce the amount of that which in every part of our country and for the 100s of 1000s of millions of dollars of domestic trade is money and to increase its purchasing power; and by unsettling values it will paralyze trade, suspend production, and deprive industry of employment. It will make the money of the rich man more valuable and deprive the r man of his entire capital, the value of his labor, by depriving him of employment. Its 1st effect will be to increase the rate of interest and diminish the rate of wages, and its final effect wide spread bank and a more protracted suspension of specie payments. Anxious as the i. are to relieve the country of the evils entailed upon it by the war, and willing as they have proven themselves to be to endure any privations or make any sacrifices required by the exigencies of the country, they will not consent to an experiment involving such terrible consequences for the purpose of oing the “Inge any” and other banks which hold and use as part of their reserve our compound interest notes 2 dollars for every one they invested in this interest bearing portion of our “lawful money.” Much as banks, bankers, and spec ulators in Government securities may approve this policy, the people earnestly and indignantly protest against it. Does Mr. McCulloch forget that the compound interest bearing notes are part of the ‘legal tender currency” against which he declaims, and that by absorbing them he will be contracting the currency and reducing the volume of interest that is compounding against the Government? the are required, those of certain cities, to maintain a reserve of “lawful money” equal to 25%. of their circulation and deposits, and the balance of them a like reserve of 15% and as he well knows they have absorbed an hold not greenbacks; but compound interest notes as that reserve. He should keep his non-interest bearing notes afloat till these are redeemed. They will mature in 1867 and 1868, and by redeeming them he will contract the currency at the rate of $6,000,000 per month and relieve the Government of one of its most o;interest accounts. By this process he will keep 5 twenties above parand promote the conversion into them of 7 thirties, and reduce the interest on that portion of our debt from 7 and 3 10thsto 6%. But by his process of contracting the volume of greenbacks and imposing extraordinary taxes on our industry he j delay the redemption of the one and the conversion of the other, and may deprive us of the ability to redeem either the 7 thirties or compound interest notes at maturity. The people do not regard greenbacks and the notes of national banks with equal favor, but have a well grounded preference for the former. They know that the ultimate redemption of the bank notes is secured by deposits of Government securities and the maintenance of a reserve of greenbacks; and as the substance is more solid than its shadow, they prefer that which secures to that which requires to be secured. Several national banks have failed; and though the ultimate redemption of the notes was secured, there was no provision for their immediate redemption, and the laboring people who held them had to sell them at great oss to “Injeany” or other bankers, who could afford to hold them till the Government was ready to redeem them. Having sustained no such losses by greenbacks they naturally prefer them., Adequate as these reasons are for the popular preference, there are others which I will state, in the language of the Secretary's report.