History of Buchanan County, Iowa, with illustrations and biographical sketches, Part 131

Author: Williams bros., Cleveland, pub. [from old catalog]; Riddle, A. G. (Albert Gallatin), 1816-1902
Publication date: 1881
Publisher: Cleveland, Williams brothers
Number of Pages: 574

USA > Iowa > Buchanan County > History of Buchanan County, Iowa, with illustrations and biographical sketches > Part 131

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It is interesting to inquire how far we may reasonably expect to go in the descending scale before we reach the new level of peace. We have already seen that it took England twenty years after Waterloo before she reached such a level. Our own experience has been pecu- liar in this, that our people have been impatient of debt, and have always determinedly set about the work of reducing it.

Here followed a valuable and carefully prepared table. DURATION OF WAR EXPENDITURES,

Throughout our history there may be seen a curious uniformity in the movement of the annual expenditures for the years immediately following a war. We have not the data to determine how long it was, after the war of independence, before the expenditures ceased to de- crease ; that is, before they reached the point where their natural growth more than balanced the tendency to reduction of war expenditure ; but in the years immediately following all our subsequent wars, the de- crease has continued for a period almost exactly twice the length of the war itself.

After the war of 1812-15, the expenditures continued to decline for eight years, reaching the lowest point in 1823.

After the Seminole war, which ran through three years, 1836, 1837, and 1838, the new level was not reached until 1844, six years after its close.

After the Mexican war, which lasted two years, it took four years, until 1852, to reach the new level of peace.

WHEN SHALL WE REACH OUR NEW LEVEL OF EXPENDITURES?

It is perhaps unsafe to base our calculations for the future on these analogies ; but the wars already referred to have been of such varied character, and their financial effects have been so uniform, as to make it not unreasonable to expect that a similar result will follow our late war. If so, the decrease of our ordinary expenditures, exclusive cf the principal and interest of the public debt, will continue until 1875 or 1876.

It will be seen by an analysis of our expenditures, that, exclusive of charges on the public debt, nearly fifty million dollars are expenditures directly for the late war. Many of these expenditures will not again appear, such as the bounty and back pay of volunteer soldiers, and payment of illegal captures of British vessels and cargoes. We may reasonably expect that the expenditures for pensions will hereafter steadily decrease, unless our legislation should be unwarrantably ex- travagant. We may also expect a large decrease in expenditures for the internal revenue department. Possibly, we may ultimately be able to abolish the department altogether. In the accounting and disburs- ing bureaus of the treasury department we may also expect a further reduction of the force now employed in settling war claims.

We cannot expect so rapid a reduction of the public debt and its burden of interest as we have witnessed for the last three years; but

the reduction will doubtless continue, and burden of interest will con- stantly decrease. 1 know it is not safe to attempt to forecast the future; but I venture to express the belief that if peace continues the year 1876 will witness our ordinary expenditures reduced to one hun- dred and twenty-five million dollars, and the interest on our public debt to ninety-five million dollars; making our total expenditures, ex- clusive of payment on the principal of the public debt, two hundred and thirty million dollars. Judging from our own experience and from that of other nations, we may not hope thereafter to reach a lower fig- ure. In making this estimate I have assumed that there will be a con- siderable reduction of the burdens of taxation, and a revenue not nearly so great in excess of the expenditures as we now collect.

This is the presentation of general principles and shows the breadth and grasp of Garfield's mind.

This rapid reduction of the principal and interest of our public debt tends also to strengthen the hope that for three or four years to come our expenditures may continue to decrease. It would be cheering, indeed, if we might also hope that when the Nation again begins the ascent it will be up the beautiful slope where no sign of war shall come for many long years. If so, the ascent will be gradual and gentle, and will mark the course of that highway along which the Nation shall move upward and forever upward in its grand career of prosperity. But let it forever be borne in mind that the day which witnesses a new war increases more and more heavily than ever the calamities of the past. For the burdens ot the past are mainly the burdens of war, and there is a point to which a national debt may rise when its people lose heart and grow hopeless under the burden.

NECESSITY OF REDUCING OUR PUBLIC DEBT.

Conceding to England all her wealth, all her greatness, and all her glory, still one fact in her history is so full of gloomy portent that I have never been able to understand how her statesmen could look upon it without the profoundest alarm. It would seem that all hope of pay- ing off, or even of considerably reducing her public debt, is extin- guished in the minds of her people. The last attempt in that direction was made by the chancellor of the exchequer, Mr. Gladstone, in his speech on the budget of 1866. After affirming that nine leading nations of Europe had incurred a debt of no less than one billion five hundred million pounds sterling during the last twenty-five years, and that, too, in a time of very general peace, he said that America was the only great nation-of the world that was now considerably reducing her debt. Then referring to the British debt, he said :

"At the close of war against France in 1815, the British debt was nine hundred and two million two hundred and sixty-four thousand pounds. On the fifth of January 1854, it was eight hut dred million five hundred and fifteen thousand pounds. From 1815 to 135 .; there were nearly forty years of the most profound tranquility ever known in this * country.' " * * *

"The rate of decrease during that period was two million six hundred and nine thousand pounds per annum." * * *

* " I do not believe if we take the whole years of peace since 1815, that the average reduction would reach three million pounds. If ever we should become involved in any great and protracted war, we must expect to see the debt increase at about ten times the annual rate by which we reduce it in time of peace."

A steady though not extravagant reduction of our debt should be the fixed policy of the Nation.

Here followed a luminous exposition of the treasury reports of receipts and expenditures, with illustrative tables. An examination of the present and of the next year's estimates which were compared with those of Great Britain, concludes thus :

LIFE OF JAMES A. GARFIELD.

I may venture to say for the committee on appropriations, that while they have endeavored to follow the line of rigid and reasonable econ- omy, they have not forgotten the vastness and variety of the functions of government, whose operations should be maintained vigorously and generously. It would be a mistake to cut down expenditures in any de- partment, so as to eripple any work which must be accomplished, and which can better be done at once and ended, by a liberal appropriation than to let it drag on through a series of years by reason of insufficient appropriations. It is better to make a reduction of whole groups, when that can be done, than merely to cut down individual items.

But I hope that members of the house will bear in mind that in many of our civil departments we have large forces of employes, which the settlement of war accounts made necessary, and which, when their work is done, it will require no little courage and effort to reduce to a peace basis. In doing so, it would be well for us to adopt the sentiment recently expressed by Mr. Gladstone, in the house of commons, that-

"The true way to save is not the cutting down of single items, but a more complete organization of our departments, and the determina- tion, that for whatever the country spends, it shall have full value in labor, talent, or materials."

In conclusion, Mr. Chairman, I thank the members of the house for the patience with which they have listened to these dry details, and for the kind attention with which they have honored me. I yield the floor for any remarks which other gentlemen may desire to make, and then I shall submit the bill to the judgment of the committee of the whole.

As a general unfolding and discussion of elementary principles, also an exposition of that portion of a budget which deals with expenditure, this stands as the first and ablest in the house. It opened a new era.

The legislative bill became, in Mr. Garfield's hands, the budget bill of the house. On its introduction at the first session of the Forty-third congress, he again made an elaborate presentation of his views generally. I repro- duce some of its leading propositions to be taken with the speech just quoted from :

The bill now pending before the committee of the whole is the best gauge by which to measure the magnitude and cost of the National government. Its provisions extend to every leading function of the government in the three great departments-legislative, executive and judicial-and includes the civil functions of the military and naval es- tablishments. It appropriates for all the salaries and contingent ex- penses of all the officers and employes of the civil service. If its pro- visions could be thrown upon canvas, they would form an outline map exhibiting the character and the magnitude of the government of the United States.

This is the proper standpoint from which to study the public expen- ditures, to examine the relation of expenditures to taxation, and of both to the prosperity and well-being of the Nation. * * *

The necessary expenditures of the government form the base line from which we measure the amount of our taxation required, and on which we base our system of finance. We have frequently heard it remarked, since the session began, that we should make our expendi- tures come within our revenues-that we should "cut our garment ac- cording to our cloth." This theory may be correct when applied to private affairs, but it is not applicable to the wants of nations. Our national expenditures should be measured by the real necessities and the proper needs of the government. We should cut our garment so as to fit the person to be clothed. If he be a giant, we must provide cloth sufficient for a fitting garment.

The committee on appropriations are seeking earnestly to reduce the expenditures of the government ; but they reject the doctrine that they should at all hazards reduce the expenditures to the level of the rev- e Ques, however small those revenues may be. They have attempted rather to ascertain what are the real and vital necessities of the govern- ment ; to find what amount of money will suffice to meet all its honor- able obligations, to carry on all its necessary and essential functions, and to keep alive those public enterprises which the country desires its government to undertake and accomplish. When the amount of ex- penses necessary to meet these objects is ascertained, that amount should be appropriated; and ways and means for procuring that amount should be provided.

There are some advantages in the British system of managing their finances. In the annual budget reported to the house of commons, ex- penditures and taxation are harnessed together. If appropriations are increased, taxes are correspondingly increased. If appropriations are r duced, a reduction of taxes accompanies the reduction.

On some accounts, it is unfortunate that our work of appropriations is not connected directly with the work of taxation. If this were so, the necessity of taxation would be a constant check upon extravagance, and the practice of economy would promise, as its immediate result, the pleasure of reducing taxation.

SURPLUS AND DEFICIT.

Revenues and expenditures may be considered from two points of view ; in relation to the people and their industries, and in relation to the government and the effective working of its machinery. So far as the people are concerned, they willingly bear the burdens of taxation, when they see that their contributions are honestly and wisely ex- pended to maintain the government of their choice, and to accomplish those objects which they consider necessary for the general welfare. So far as the government is concerned, the soundness of its financial affairs depends upon the annual surplus of the revenue over expendi- tures. A steady and constant revenue drawn from sources that repre- sent the prosperity of the Nation-a revenue that grows with the growth of national wealth, and is so adjusted to the expenditures that a constant and considerable surplus is annually left in the treasury above all the necessary current demands; a surplus that keeps the treasury strong, that holds it above the fear of a sudden panic; that makes it impregnable against all private combinations ; that makes it a terror to all stock-jobbing and gold-gambling-this is financial health. This is the situation that wise statesmanship should endeavor to sup- port and maintain.

Of course in this discussion I leave out the collateral though impor- tant subject of banking and currency. The surplus, then, is the key to our financial situation. Every act of legislation should be studied in view of its effects upon the surplus. Two sets of forces are constantly acting upon the surplus. It is increased by the growth of the revenue and by the decrease of expenditure. It is decreased by the repeal or reduction of taxation, and by the increase of expenditures. When both forces conspire against it, when taxes are diminished and expenditures are increased, the surplus disappears.

With the disappearance of the surplus comes disaster-disaster to the treasury, disaster to the public credit, disaster to all the public in- terests. In times of peace, when no sudden emergency has made a great and imperious demand upon the treasury, a deficit cannot occur except as the result of unwise legislation or reckless and unwarranted administration. That legislation may consist in too great an increase of appropriations, or in too great a reduction of taxation, or in both combined.

HISTORY AND CAUSE OF DEFICITS. 1

Twice in the history of this Nation a deficit has occurred in time of peace. In both instances it has occurred because congress went too far

GARFIELD AS A FINANCIER.

in the reduction of taxation-so far as to cripple the revenues and de- plete the treasury. It may be worth our while to study those periods of our history in which deficits have thus occurred.

I do not speak of periods of war, for then the surplus is always maintained by the aid of loans; but I speak of deficits occurring in times of peace. From the close of the last war with England, in 1815, our revenues maintained a healthy and steady growth, interrupted only by years of financial crisis. A constant surplus was maintained suffi- cient to keep the treasury steady and diminish the public debt, and finally complete its payment. But in 1833, the great financial discussion, which at one time threatened to dissolve the Union, was ended by the passage of the compromise tariff of 1833-a law that provided for the scaling down of the rates of taxation on imports in each alternate year until 1842, when all should be reduced to the uniform rate of twenty per cent. ad valorem.

By this measure the revenues were steadily decreased, and in 1840 the treasury was empty. During the nine preceding years the receipts into the treasury had averaged thirty-two millions a year; but in 1840 they had fallen to nineteen and a half millions, and in 1841 to less than seventeen millions. True, the expenditures had grown with the growth of the country; but no large or sudden expenditure appeared in any of those years. The deficit appeared, and it was unquestionably due to too great a reduction of taxation. This deficit brought political and financial disaster. To meet it a special session of congress was con- vened in June, 1841, and President Tyler sent in his message, in which he declared that by the end of the fiscal year of March 4, 1842, there would be a deficit of eleven million four hundred and six thousand one hundred and thirty-two dollars and ninety-eight cents, and a fur- ther deficit by September, 1842, of four million eight hundred and forty- five thousand dollars.

In his message of December 7, 1841, he reported a still further de- ficit, and declared that these accumulated deficits were the results of the too great reduction of taxation by the legislation of 1833. These accumulated deficits amounted to more than all the receipts for that year. They were to that time what a deficit of three hundred millions would be to us to-day.

I understood the gentleman from Massachusetts [Mr. Dawes] to de- clare that congress had never increased taxation in time of peace. Our history does not bear him out in this assertion.

The congress of 1841-42 was called upon to repair the wasted reve- nues by an increase of taxation. The debates of that body show that the bill they passed was treated wholly as a necessity of the revenue. The bill itself was entitled "An act to provide revenue for the govern- ment." It became a law in 1842, and under its influence the revenues revived. 1n 1843 the surplus reappeared, and again the revenues con- tinued to grow with the growth of the country.

Excepting the period of the Mexican war, which, like all other mod- ern wars, was supported by the aid of loans, the surplus continued down to and including the first year of Buchanan's administration. During the four years of Pierce's administration, the revenues had ex- ceeded seventy millions a year; but in the first year of Buchanan's term, an act was passed so largely reducing the duties on imports that the revenues dropped to forty-six and a half millions in 1858, and a deficit appeared which continued and accumulated until the coming in of Lincoln's administration.

Let us notice the growth of that deficit. On the first day of July, 1857, the public debt, less cash in the treasury, was eleven millions three hundred and fifty thousand two hundred and seventy dollars and sixty- three cents; on the first day of July, 1860, the account stood, total debt, less cash in the treasury, sixty-one million one hundred and forty-seven thousand four hundred and ninety-seven dollars, showing a deficit of fifty millions in the space of three years. When Mr. Lincoln was in- augurated, in 1861, the debt had increased to nearly ninety millions

and there had accumulated a deficit of more than seventy millions, and those four years of Buchanan's administration were not years of extraordinary expenditures. Indeed, during those four years, the ex- penditures had not averaged so greatas in the last year of the adminis- tration of Mr. Pierce. The deficit then did not arise from an increase of expenditure, but from a decrease of revenue. For four years the government had been paying its ordinary expenses by the aid of loans at ruinous rates, and by forced loans in the form of treasury notes. Here, as in the former case, the final remedy for the deficit was taxa- tion.

The first act of the last session of congress in Buchanan's term was an act to authorize the issue of treasury notes to meet the expenditures of the government; and almost the last act of that session was the act of March 2, 1861, to provide for the payment of outstanding treasury notes, and to meet the expenditures of the government by increasing the duties on imports. This act was passed by a Republican congress, and was reluctantly approved by a President whose policy and whose party had produced the deficit, and brought financial distress upon the country by cutting too deeply and too recklessly into the public reve- nues.

RECENT CONDITION OF THE TREASURY.

Mr. Chairman, when the house convened in December last, we were startled by the declaration that another deficit was about to appear. We were informed that we might look for a deficit of forty-two millions by the end of the current fiscal year. This announcement was indeed the signal for alarm throughout the country; and it became the imper- ative duty of congress to inquire as to whether there would be a deficit, and if so, to ascertain its cause and provide the remedy.

In this instance, to the ordinary causes that produce a deficit, there had been superadded the disastrous financial calamity that visited a portion of the business interests of this country in September last; a panic that fell with unparalleled weight and suddenness, and swept like a tornado, leaving destruction in its track. We have not yet suffi- ciently recovered from the shock to be able to measure with accuracy the magnitude of its effects. We cannot yet tell how soon and how completely the revenues of the country will recover from the shock. But we have sufficient data to ascertain, with some degree of accuracy, the part that the legislation of congress has played in producing the situation in which we now find ourselves.

That we may more clearly trace the legislative steps by which we have reached our present position, I invite your attention to the condi- tion of our finances at the close of the war. Leaving out of view the fiscal year ending June 30, 1865, in which there were paid over the counter of the treasury the enormous sum of one billion two hundred and ninety million dollars, the accumulated products of taxation and of loans, we begin our examination with the year that followed the close of the war, the fiscal year ending June 30, 1866. In that year, our aggregate revenues, from all sources, exclusive of loans, amounted to five hundred and fifty-eight million dollars, and our expenditures to nearly five hundred and twenty-one million dollars, leaving us a clear surplus of thirty-seven million dollars. These were the gigantic propor- tions of our income and our payments. From these as a base line we sketch the subsequent history of our finances. From these vast totals the work of triple reduction began-reduction of the revenue by the re- peal of taxes, reduction of ordinary payments by the decrease of expendi- tures, reduction of the public debt by applying toit the annual surplus.

Then follows a history of surplus and reduction of taxation, since the war, with tables and results, after which he mildly solaces himself and warns others, thus:

Mr. Chairman, it is a grateful task to remove burdens from the in- dustries and the earnings of the American people. No more grateful work can an American congress be called upon to perform. But while

LIFE OF JAMES A. GARFIELD.

we are relieving the people from the burdens of taxation, it should al- ways be borne in mind that we are in danger of so crippling the rev- enues as to embarrass the government and endanger the public credit. It is a great thing to remove all burdensome taxes; but there is danger that while congress may imitate Tennyson's Godiva, who-

Took away the tax,

And built herself an everlasting name,-

yet in so doing, it may cause the public credit to go forth from a de- spoiled treasury, and, like the Lady Godiva, ride naked in the streets of the world. We have had abounding faith in the elasticity of our revenues. We have found that even reduction of rates frequently brings us increased revenues; that the buoyant and almost immortal life of our industries will make the tree of our revenues bloom again, how oftensoever we may pluck its flowers and its fruits. We think of it as the fabled tree which Virgil's hero found in the grove of Avernus. Whenever the bough of gold was plucked away, another sprang out in its place:

Primo avulso non deficit alter Aureus; et simili frondescit virga metallo.

But, sir, we may pluck the golden bough once too often. We may pluck away with it the living forces of the tree itself.

Thus refreshed, he continues the broad discussion of surplus and deficit, with apt reference to our own ex- perience. Then he takes up our recent expenditure, which called up Mr. Dawes, his predecessor. The whole is illustrated by carefully prepared tables and figures. This only brings us through the first third of this very statesman like performance.

The conference report on the tariff bill being before the house on the twenty-third of the following June, which gave scope for the counterpart of his budget, he submitted to the house a clear and forcible presentation of it, supplementing the effort just brought to our notice.

The reader is now in possession of the means of form- ing an estimate of the views of Mr. Garfield upon the great subjects of money, the currency, taxation and ex- penditure, with so much of his reasoning as enables him to see the grounds on which they rest; and it is not my -

purpose to return to either of them, though six years of congressional life remain to be glanced at. I turn back to refer to an episode.

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History of Buchanan County, Iowa, with illustrations and biographical sketches, Part 131

Author: Williams bros., Cleveland, pub. [from old catalog]; Riddle, A. G. (Albert Gallatin), 1816-1902 Publication date: 1881 Publisher: Cleveland, Williams brothers Number of Pages: 574

Author: Williams bros., Cleveland, pub. [from old catalog]; Riddle, A. G. (Albert Gallatin), 1816-1902
Publication date: 1881
Publisher: Cleveland, Williams brothers
Number of Pages: 574