1. Customs duties.
2. Excise or internal revenue duties.
Of these, much the greater sum is raised from customs duties. For the year 1889,[1] the total net receipts were $387,050,058. Of this $223,832,741 was derived from customs, and $130,894,434 from the internal revenue duties. The sale of public lands yielded in that year $8,038,651. The miscellaneous revenues amounted to $24,297,151.
[Footnote 1: For fiscal purposes the year begins July 1st.]
Customs or tariff duties are taxes which have to be paid on a large cla.s.s of goods imported into this country from foreign countries. These charges are collected by Government collectors, stationed in all our princ.i.p.al seaport cities, who inspect all incoming vessels and determine the amount to be paid, according to the rate determined by Congress.
This system const.i.tutes the so-called protective tariff policy of our country. Those commodities not so taxed are said to be on the "free list." How much, and on what articles these duties shall be levied, is the question upon which the Republican and Democratic parties differ; the former favoring high, and the latter low rates, that is to say merely enough to support the Government, or, as it is termed, "a tariff for revenue only."
Internal revenue duties are those taxes collected by the government from its own citizens upon a small cla.s.s of articles produced in this country. The chief items of this cla.s.s are distilled liquors, tobacco, and oleomargarine. In 1889, out of the $130,894,434 received from internal revenue, there was derived from spirits and fermented liquor $98,036,041; tobacco, $31,866,861; oleomargarine and miscellaneous, $991,532. These duties are collected by Government collectors stationed in every United States district, who visit the distilleries, collect the taxes, and see that the law is enforced. In several Southern States attempts to evade the law are very frequent and difficult of detection.
The expenses of the vast postal system conducted by the Federal Government are very nearly defrayed by the charges made for postage, and the amount received by fees more than equals the expense of the Patent Office.
_#The State and Local Taxes#_ are generally, for convenience, collected at the same time, and by the same officials, but independently of the Federal government. The Const.i.tution of the United States forbids the States to derive a revenue from duty upon goods imported or exported.
The States are, therefore, for the most part, restricted to a direct tax on property for the support of their governments.
The general method for raising this tax is as follows: The legislature of the State, having determined what income is needed, apportion this sum among the counties, or, in New England, directly among the townships, in proportion to the value of the property situated within them, or establish a certain percentage tax on all property, to be collected in the same manner. So, similarly, the counties apportion among the cities and townships within their areas, in proportion to the value of their taxable property, not only what they have to pay to the State, but also the sums they have to raise for county purposes. Thus when the township or city authorities a.s.sess and collect taxes from the individual citizens, they collect at one and the same time three distinct taxes--the State tax, the county tax, and the city or township tax. Retaining the last for local purposes, they hand on the two former to the county authorities, who, in turn, retain the county tax, handing on to the State what it requires. Thus trouble and expense are saved in the process of collection, and the citizen sees on one tax paper all that he has to pay. The chief tax is the property tax, based on a valuation of property, and generally of all property, real and personal.
Of this, by far the greater sum is realized from the tax on real property, (land and buildings on it). Cities and other local subdivisions, as has been stated, are raising their revenues more and more from the sale, taxation, or operation of such public franchises and rights as street-car lines, gas and waterworks. Those who fix the value of taxable property and thus determine the amount the owners are to pay, are called a.s.sessors. Those collecting taxes are called collectors. The revenue of the States is seldom large in proportion to the wealth and number of the inhabitants, because the chief burden of administration is borne not by the States, but by the Federal government, on the one hand, and the local subdivisions of the States on the other. The total revenue of all the States is barely one-third that of the Federal government.
_#The Expenditures#_ of all the governing bodies, Federal, State, and local, are kept entirely independent of each other. Those of the Federal government are for the benefit of all the States, while those of the other bodies are only for their own individual benefit. The Federal government receives much more than it expends, and has yearly a surplus on hand in the Treasury. The States and local bodies have in the past expended more than their revenues, making up their deficiency by loans on their credit.
The chief objects of Federal expenditure (in addition to the postal system already considered and for the most part supported by its own revenue) are: 1st, interest on the public debt; 2d, pensions to disabled soldiers; 3d, for the support of the civil branch of the government; 4th, war and naval expenditures.
Total expenditures for the year 1889 were $299,288,988. The chief items were:
1. Interest on the public debt, $41,000,484 2. Pensions, 87,624,779 3. Civil service, 80,664,064 4. War and Navy, 65,815,079 5. Indians, 6,892,207
Money can be expended by the government only after it has been appropriated by Congress in its annual appropriation bills. The appropriation of supplies by Congress is the most important business that it transacts. Every year the heads of all the different departments frame estimates of the amounts of money needed to support their departments during the following year, which estimates they send to the Secretary of the Treasury, who, after considering and revising them, transmits them to Congress in his "Annual Letter." This letter is considered by the Appropriation Committee, whose duty it is to consider and frame bills for the appropriation of moneys. Though guided by these estimates, supplies frequently depart widely from them. After being reported to the House and pa.s.sed, money bills are sent to the Senate, where they are invariably amended by increasing the appropriations and are returned to the House. A conference committee is then appointed from the House and Senate Committees on Appropriations, who, after mutual concessions, agree upon such appropriations as will be pa.s.sed by both houses. The House then amends the bill as agreed upon, pa.s.ses it, and sends it to the Senate again, which in turn pa.s.ses it, and sends it to the President for his signature. All bills for raising money must, by the Const.i.tution, originate in the House. Besides the appropriations for the expenses of government there is annually authorized a large expenditure for improvement of rivers and harbors. Many of the expenditures authorized by these bills are undoubtedly unnecessary, but they are pa.s.sed by general consent of the members, each of whom desires to increase his popularity at home by getting public money spent in his district.
The expenses of the State governments are not heavy, and are devoted to but few objects. The chief expenditures are for:--(1) the salaries of officials; (2) judicial expenditures; (3) the State volunteer militia; (4) grants to public schools; (5) public charities and inst.i.tutions, as prisons, insane asylums, etc., (6) interest on State debts; (7) internal improvements and public buildings.
The methods of appropriations are similar to those employed by the Federal government.
The expenditures of the local bodies, and particularly cities, are much larger, in proportion to their population, than those of the States, and are increasing at a greater rate than the increase of population. The objects of expenditure are numerous and very important. The chief ones are: (1) Interest on local debts; (2) maintenance and care of the streets and roads; (3) lighting of streets; (4) police; (5) salaries of officials.
The following are outlines of the receipts and expenditures of the State of Maryland for 1888, and for the City of Baltimore for 1887. These figures are given not because they of themselves possess any especial importance, but because from them can be obtained an idea of the activity of a typical State and city.
_#Maryland.#_[1]--The total receipts from all sources were $2,542,130; and there was paid out $2,016,060. The chief receipts were from:
General Taxes, $793,301 Licenses, 487,969 Corporation Tax, 73,553 Railroad Tax, 58,455 Inheritance Tax, 57,767 Income from Stocks and Bonds owned, 206,175 Fees, 17,585
_#Baltimore.#_[2]--The gross receipts into the treasury for the year ending December 31, 1887, were $8,446,439, and were chiefly from the following sources:
Taxes, $4,210,112 Public schools, tuition fees, etc., 6,766 Market houses, rent of stalls, 58,287 Wharf.a.ge and rent of wharves, 33,561 General licenses, 44,609 Auction duties, 7,431 Dividends on stock in B. & O. R.R., 130,000 Water rents, 745,446 Pa.s.senger railway companies, 132,167 From the State for public schools, 147,403 Temporary loan, 1,510,000 Receipts to pay interest on loans, 896,704 Sale of stock, 243,285
The total disburs.e.m.e.nts were $8,403,930. Of this $4,541,357 was spent on account of expenses of city government, the following being the princ.i.p.al items of expense:
Interest on the public debt, $915,987 Expenses of law courts, 118,906 Expenses of jail, magistrates, &c., . . 103,587 Public schools (less amount paid by State), 594,089 Expenses of poor, 210,739 Police department, 702,882 Street-cleaning department, 263,934 Fire department, 214,226 Street lighting, 221,203 Parks, &c., 52,080 Salaries, 72,624 City council, 52,925
[Footnote 1: Finance Statistics of the American Commonwealths: E.E.
Seligman. Publications of Am. Statistical a.s.so., Dec., 1889.]
[Footnote 2: R.T. Ely, _Taxation in Am. States and Cities_.]
Nearly all of our State and local governments, as well as the national government, have contracted large public debts, the interest payments upon which const.i.tute one of the chief items in their lists of expenditures. The present debt of the Federal Government is largely the result of the enormous expenditures occasioned by the Civil War. In 1865, August 31, it reached its highest point $2,381,530,294, with an annual interest charge of $150,977,697. Since then it has been steadily reduced until in 1889 the total interest-bearing debt was but $829,853,990, with an annual interest charge of $33,752,354. The princ.i.p.al of the national debt is mainly in the form of interest-bearing bonds held by the National banks and private individuals. These bonds are of various denominations and are promises of the government to pay the sums named on their face, at the expiration of a certain period. The bonds at present unpaid, and as such const.i.tuting the major portion of our national debt, are princ.i.p.ally of two kinds; those bearing four and one-half per cent, annual interest and falling due in 1891, and those bearing four per cent, interest and falling due in 1907.
The debts of most of the States were contracted by ill-advised and untimely systems of internal improvements. The total state indebtedness June I, 1890, as shown by the Eleventh Census, was $238,396,590, a decrease of slightly over $58,000,000 in ten years. The tendency now seems to be for States to withdraw from the money market as borrowers, and for the county and city governments to take their place.
The local debts are very large, and have shown a marked increase during the last twenty years. They have been for the most part incurred in improvements and construction of public works, which have in most instances well repaid the debts incurred.
CHAPTER XVIII.
Money.[1]
No man by himself produces everything he wants to use, but devotes his time to the production of some few things, and the surplus that he does not use, he exchanges for other things made by other men. In rude stages of society this is done by a direct exchange of one commodity for another, _e.g._ so much wheat or corn for a gun or plow. This is a very imperfect and c.u.mbersome method, which cannot be employed in our present complicated transactions of buying and selling. There thus early developed the use of money, or the practice of referring the value of all things to one standard, usually the precious metals: so that, instead of trading 20 bushels of corn for a plow, where it would be necessary to go to the great trouble of finding a man who had a plow, and also wanted your corn, you sell it for so much money, and with this money you buy a plow. Money is thus but a medium of exchange and a standard of value.
In the United States, as in most nations, money has always been made by the Government, and the Government alone, so that one certain fixed system may prevail. For the sake of convenience, money is made of various kinds and denominations, and United States money may conveniently be regarded under the five following divisions: 1. _#Gold Coin, Gold Bullion, and Gold Certificates.#_--There are six gold coins: (1) the eagle, $10 piece; (2) the double eagle, $20 piece; (3) the half eagle, $5; (4) the quarter eagle, $2.50; (5) the $3 piece, and (6) the $1 piece. The three last are but little used. The gold bullion, or gold in bars and blocks uncoined, is for all practical purposes as good as the coin, and in foreign trade is much used, it being more convenient to handle. Besides the gold coin and bullion there are in circulation gold certificates. These are paper, the same in general appearance as the ordinary bank-note, and certify that an equivalent amount of gold has been deposited with the Treasurer of the United States, and that the holder of the certificate has the right to obtain the gold for it at any time. This does not increase the amount of money in circulation, as for every one issued just so much coin is withdrawn and stowed away in the Treasury. The certificates are used simply for convenience, and in order to avoid the necessary wear of the coin if in constant use. These certificates are of the denomination of $20.
2. #_Silver Dollars and Silver Certificates_#.--There is no silver bullion circulating as money, for a silver dollar does not contain a dollar"s worth of silver, as the gold dollar does of gold, and the silver bullion is thus of different value (less value), according to weight, than the silver dollar. The silver certificates are similar to the gold certificates, already described, and certify that an equivalent amount of silver has been deposited in the Treasury.
3. _#Subsidiary and Minor Coins.#_--All coins of a lower denomination than $1 belong to one or the other of these two cla.s.ses. There are three subsidiary coins, the fifty cent, the twenty-five cent, and the ten cent pieces. The three cent piece is no longer coined. All other coins are minor coins. The peculiarity of the subsidiary and minor coins is that they are, as compared with the standard coins (gold and silver dollars), of a greater value than the value of the metal they contain. The subsidiary coins are legal-tender to the amount of $10, the minor to the extent of twenty-five cents. By legal-tender is meant that the government has ordered that it must be received in payment of all debts and articles bought. Gold coin and the silver dollars and certificates are legal-tender to any amount.
4. _#Treasury Notes.#_--Under this head are included that form of money ordinarily known as "greenbacks," from the color of their backs. They were originally issued during the civil war, and are promissory notes on the part of the government, and as such const.i.tute a portion of the debt of the government. They are paper, which of itself is of no value, and no coin is deposited in the Treasury which they represent, as in the case of the gold and silver certificates. They thus cost the government nothing, and, as they are made legal-tender, and paid out by the government, they were just so much clear gain to it. At first they were not redeemable, i.e., exchangeable for coin at the Treasury, but since 1879 they are, and are therefore just as valuable now as any other form of money, though formerly worth much less than their face value. One hundred million dollars in gold is kept on deposit in the Treasury for their redemption.
5. _#Notes of National Banks.#_--This is the one form of money that is not issued directly by the Federal government, but through the agency of what is called our "National Banking System," which may be thus described: A national bank can be organized by any number of men, provided the capital stock of the bank is at least $100,000. One-third of the capital must then be invested in government bonds and deposited in the United States Treasury. The bank may then issue notes to the extent of 90 per cent, of such deposit. Such notes are thus amply secured by the deposits with the government. The government guarantees their payment, and so they circulate as well as the certificates issued directly by the government. Thus a great deal of the paper money in circulation is issued by the national banks, which must, on demand, be redeemed with coin, and, in case of failure of the banks, are paid by the government, which reimburses itself from the deposits. A bank-note differs from a Treasury note in two particulars. The Treasury note or "greenback" is a promise of the government, and is legal-tender in payment of all private debts; the bank-note is the promise of a private company, and is not legal-tender. A bank-note is said to be paid when the bank gives a greenback or coin for it. A greenback is said to be paid or redeemed when the government gives gold for it.
The following figures, taken from the report of the Secretary of the Treasury for 1889, give the amounts of the various sorts of money described in the foregoing, which were then in the Treasury, in the banks, and in the hands of the people:
Gold coin and gold bullion, $680,063,505 Silver coin and silver bullion, 343,947,093 U.S. Treasury notes, 346,681,000 National Bank-notes, 211,378,963 Subsidiary coins, 76,601,836
It will be noticed that gold and silver certificates are not included, for, as explained, they merely represent an equal amount of coin or bullion on deposit.
The total amount of money is thus approximately $1,660,000,000, which, divided by the total population, gives about $27 per capita. It should be borne in mind in connection with these figures that other devices, such as checks, drafts, bills of exchange, and other forms of credit, are used side by side with money in carrying on trade and serving the same purposes.
By the Compromise Silver Bill of July 14, 1890, provision was made for a new kind of paper money. By this act the Secretary of the Treasury was directed to purchase, from time to time, silver bullion to the amount of 4,500,000 ounces each month, and to issue in payment for such purchases Treasury notes; these notes so issued to be redeemable on demand in coin, and to be a legal tender in payment of all debts, public and private, except where otherwise expressly stipulated.
[Footnote 1: In the preparation of this article, much a.s.sistance has been derived from an article by H.C. Adams contributed to the _Chautauquan_.]
CHAPTER XIX.
Public Lands of the United States.