Chapter 36

Severe commercial revulsions abroad have always heretofore operated to depress and often to affect disastrously almost every branch of American industry. The temporary depression of a portion of our manufacturing interests is the effect of foreign causes, and is far less severe than has prevailed on all former similar occasions.

It is believed that, looking to the great aggregate of all our interests, the whole country was never more prosperous than at the present period, and never more rapidly advancing in wealth and population. Neither the foreign war in which we have been involved, nor the loans which have absorbed so large a portion of our capital, nor the commercial revulsion in Great Britain in 1847, nor the paralysis of credit and commerce throughout Europe in 1848, have affected injuriously to any considerable extent any of the great interests of the country or arrested our onward march to greatness, wealth, and power.

Had the disturbances in Europe not occurred, our commerce would undoubtedly have been still more extended, and would have added still more to the national wealth and public prosperity. But notwithstanding these disturbances, the operations of the revenue system established by the tariff act of 1846 have been so generally beneficial to the Government and the business of the country that no change in its provisions is demanded by a wise public policy, and none is recommended.

The operations of the constitutional treasury established by the act of the 6th of August, 1846, in the receipt, custody, and disbursement of the public money have continued to be successful. Under this system the public finances have been carried through a foreign war, involving the necessity of loans and extraordinary expenditures and requiring distant transfers and disbursements, without embarrassment, and no loss has occurred of any of the public money deposited under its provisions. Whilst it has proved to be safe and useful to the Government, its effects have been most beneficial upon the business of the country. It has tended powerfully to secure an exemption from that inflation and fluctuation of the paper currency so injurious to domestic industry and rendering so uncertain the rewards of labor, and, it is believed, has largely contributed to preserve the whole country from a serious commercial revulsion, such as often occurred under the bank deposit system. In the year 1847 there was a revulsion in the business of Great Britain of great extent and intensity, which was followed by failures in that Kingdom unprecedented in number and amount of losses. This is believed to be the first instance when such disastrous bankruptcies, occurring in a country with which we have such extensive commerce, produced little or no injurious effect upon our trade or currency. We remained but little affected in our money market, and our business and industry were still prosperous and progressive.

During the present year nearly the whole continent of Europe has been convulsed by civil war and revolutions, attended by numerous bankruptcies, by an unprecedented fall in their public securities, and an almost universal paralysis of commerce and industry; and yet, although our trade and the prices of our products must have been somewhat unfavorably affected by these causes, we have escaped a revulsion, our money market is comparatively easy, and public and private credit have advanced and improved.

It is confidently believed that we have been saved from their effect by the salutary operation of the constitutional treasury. It is certain that if the twenty-four millions of specie imported into the country during the fiscal year ending on the 30th of June, 1847, had gone into the banks, as to a great extent it must have done, it would in the absence of this system have been made the basis of augmented bank paper issues, probably to an amount not less than $60,000,000 or $70,000,000, producing, as an inevitable consequence of an inflated currency, extravagant prices for a time and wild speculation, which must have been followed, on the reflux to Europe the succeeding year of so much of that specie, by the prostration of the business of the country, the suspension of the banks, and most extensive bankruptcies. Occurring, as this would have done, at a period when the country was engaged in a foreign war, when considerable loans of specie were required for distant disbursements, and when the banks, the fiscal agents of the Government and the depositories of its money, were suspended, the public credit must have sunk, and many millions of dollars, as was the case during the War of 1812, must have been sacrificed in discounts upon loans and upon the depreciated paper currency which the Government would have been compelled to use.

Under the operations of the constitutional treasury not a dollar has been lost by the depreciation of the currency. The loans required to prosecute the war with Mexico were negotiated by the Secretary of the Treasury above par, realizing a large premium to the Government. The restraining effect of the system upon the tendencies to excessive paper issues by banks has saved the Government from heavy losses and thousands of our business men from bankruptcy and ruin. The wisdom of the system has been tested by the experience of the last two years, and it is the dictate of sound policy that it should remain undisturbed. The modifications in some of the details of this measure, involving none of its essential principles, heretofore recommended, are again presented for your favorable consideration.

In my message of the 6th of July last, transmitting to Congress the ratified treaty of peace with Mexico, I recommended the adoption of measures for the speedy payment of the public debt. In reiterating that recommendation I refer you to the considerations presented in that message in its support. The public debt, including that authorized to be negotiated in pursuance of existing laws, and including Treasury notes, amounted at that time to $65,778,450.41.

Funded stock of the United States amounting to about half a million of dollars has been purchased, as authorized by law, since that period, and the public debt has thus been reduced, the details of which will be presented in the annual report of the Secretary of the Treasury.

The estimates of expenditures for the next fiscal year, submitted by the Secretary of the Treasury, it is believed will be ample for all necessary purposes. If the appropriations made by Congress shall not exceed the amount estimated, the means in the Treasury will be sufficient to defray all the expenses of the Government, to pay off the next installment of $3,000,000 to Mexico, which will fall due on the 30th of May next, and still a considerable surplus will remain, which should be applied to the further purchase of the public stock and reduction of the debt. Should enlarged appropriations be made, the necessary consequence will be to postpone the payment of the debt. Though our debt, as compared with that of most other nations, is small, it is our true policy, and in harmony with the genius of our institutions, that we should present to the world the rare spectacle of a great Republic, possessing vast resources and wealth, wholly exempt from public indebtedness. This would add still more to our strength, and give to us a still more commanding position among the nations of the earth.

The public expenditures should be economical, and be confined to such necessary objects as are clearly within the powers of Congress. All such as are not absolutely demanded should be postponed, and the payment of the public debt at the earliest practicable period should be a cardinal principle of our public policy.

For the reason assigned in my last annual message, I repeat the recommendation that a branch of the Mint of the United States be established at the city of New York. The importance of this measure is greatly increased by the acquisition of the rich mines of the precious metals in New Mexico and California, and especially in the latter.

I repeat the recommendation heretofore made in favor of the graduation and reduction of the price of such of the public lands as have been long offered in the market and have remained unsold, and in favor of extending the rights of preemption to actual settlers on the unsurveyed as well as the surveyed lands.

The condition and operations of the Army and the state of other branches of the public service under the supervision of the War Department are satisfactorily presented in the accompanying report of the Secretary of War.

On the return of peace our forces were withdrawn from Mexico, and the volunteers and that portion of the Regular Army engaged for the war were disbanded. Orders have been issued for stationing the forces of our permanent establishment at various positions in our extended country where troops may be required. Owing to the remoteness of some of these positions, the detachments have not yet reached their destination. Notwithstanding the extension of the limits of our country and the forces required in the new territories, it is confidently believed that our present military establishment is sufficient for all exigencies so long as our peaceful relations remain undisturbed.

Of the amount of military contributions collected in Mexico, the sum of $769,650 was applied toward the payment of the first installment due under the treaty with Mexico. The further sum of $346,369.30 has been paid into the Treasury, and unexpended balances still remain in the hands of disbursing officers and those who were engaged in the collection of these moneys. After the proclamation of peace no further disbursements were made of any unexpended moneys arising from this source. The balances on hand were directed to be paid into the Treasury, and individual claims on the fund will remain unadjusted until Congress shall authorize their settlement and payment. These claims are not considerable in number or amount.

I recommend to your favorable consideration the suggestions of the Secretary of War and the Secretary of the Navy in regard to legislation on this subject.

Our Indian relations are presented in a most favorable view in the report from the War Department. The wisdom of our policy in regard to the tribes within our limits is clearly manifested by their improved and rapidly improving condition.

A most important treaty with the Menomonies has been recently negotiated by the Commissioner of Indian Affairs in person, by which all their land in the State of Wisconsin--being about 4,000,000 acres--has been ceded to the United States. This treaty will be submitted to the Senate for ratification at an early period of your present session.

Within the last four years eight important treaties have been negotiated with different Indian tribes, and at a cost of $1,842,000; Indian lands to the amount of more than 18,500,000 acres have been ceded to the United States, and provision has been made for settling in the country west of the Mississippi the tribes which occupied this large extent of the public domain. The title to all the Indian lands within the several States of our Union, with the exception of a few small reservations, is now extinguished, and a vast region opened for settlement and cultivation.

The accompanying report of the Secretary of the Navy gives a satisfactory exhibit of the operations and condition of that branch of the public service.

A number of small vessels, suitable for entering the mouths of rivers, were judiciously purchased during the war, and gave great efficiency to the squadron in the Gulf of Mexico. On the return of peace, when no longer valuable for naval purposes, and liable to constant deterioration, they were sold and the money placed in the Treasury.

The number of men in the naval service authorized by law during the war has been reduced by discharges below the maximum fixed for the peace establishment. Adequate squadrons are maintained in the several quarters of the globe where experience has shown their services may be most usefully employed, and the naval service was never in a condition of higher discipline or greater efficiency.

I invite attention to the recommendation of the Secretary of the Navy on the subject of the Marine Corps. The reduction of the Corps at the end of the war required that four officers of each of the three lower grades should be dropped from the rolls. A board of officers made the selection, and those designated were necessarily dismissed, but without any alleged fault. I concur in opinion with the Secretary that the service would be improved by reducing the number of landsmen and increasing the marines. Such a measure would justify an increase of the number of officers to the extent of the reduction by dismissal, and still the Corps would have fewer officers than a corresponding number of men in the Army.

The contracts for the transportation of the mail in steamships, convertible into war steamers, promise to realize all the benefits to our commerce and to the Navy which were anticipated. The first steamer thus secured to the Government was launched in January, 1847. There are now seven, and in another year there will probably be not less than seventeen afloat. While this great national advantage is secured, our social and commercial intercourse is increased and promoted with Germany, Great Britain, and other parts of Europe, with all the countries on the west coast of our continent, especially with Oregon and California, and between the northern and southern sections of the United States. Considerable revenue may be expected from postages, but the connected line from New York to Chagres, and thence across the Isthmus to Oregon, can not fail to exert a beneficial influence, not now to be estimated, on the interests of the manufactures, commerce, navigation, and currency of the United States. As an important part of the system, I recommend to your favorable consideration the establishment of the proposed line of steamers between New Orleans and Vera Cruz. It promises the most happy results in cementing friendship between the two Republics and extending reciprocal benefits to the trade and manufactures of both.

The report of the Postmaster-General will make known to you the operations of that Department for the past year.

It is gratifying to find the revenues of the Department, under the rates of postage now established by law, so rapidly increasing. The gross amount of postages during the last fiscal year amounted to $4,371,077, exceeding the annual average received for the nine years immediately preceding the passage of the act of the 3d of March, 1845, by the sum of $6,453, and exceeding the amount received for the year ending the 30th of June, 1847, by the sum of $425,184.

The expenditures for the year, excluding the sum of $94,672, allowed by Congress at its last session to individual claimants, and including the sum of $100,500, paid for the services of the line of steamers between Bremen and New York, amounted to $4,198,845, which is less than the annual average for the nine years previous to the act of 1845 by $300,748.

The mail routes on the 30th day of June last were 163,208 miles in extent, being an increase during the last year of 9,390 miles. The mails were transported over them during the same time 41,012,579 miles, making an increase of transportation for the year of 2,124,680 miles, whilst the expense was less than that of the previous year by $4,235.

The increase in the mail transportation within the last three years has been 5,378,310 miles, whilst the expenses were reduced $456,738, making an increase of service at the rate of 15 per cent and a reduction in the expenses of more than 15 per cent.

During the past year there have been employed, under contracts with the Post-Office Department, two ocean steamers in conveying the mails monthly between New York and Bremen, and one, since October last, performing semimonthly service between Charleston and Havana; and a contract has been made for the transportation of the Pacific mails across the Isthmus from Chagres to Panama.

Under the authority given to the Secretary of the Navy, three ocean steamers have been constructed and sent to the Pacific, and are expected to enter upon the mail service between Panama and Oregon and the intermediate ports on the 1st of January next; and a fourth has been engaged by him for the service between Havana and Chagres, so that a regular monthly mail line will be kept up after that time between the United States and our territories on the Pacific.

Notwithstanding this great increase in the mail service, should the revenue continue to increase the present year as it did in the last, there will be received near $450,000 more than the expenditures.

These considerations have satisfied the Postmaster-General that, with certain modifications of the act of 1845, the revenue may be still further increased and a reduction of postages made to a uniform rate of 5 cents, without an interference with the principle, which has been constantly and properly enforced, of making that Department sustain itself.

A well-digested cheap-postage system is the best means of diffusing intelligence among the people, and is of so much importance in a country so extensive as that of the United States that I recommend to your favorable consideration the suggestions of the Postmaster-General for its improvement.

Nothing can retard the onward progress of our country and prevent us from assuming and maintaining the first rank among nations but a disregard of the experience of the past and a recurrence to an unwise public policy. We have just closed a foreign war by an honorable peace--a war rendered necessary and unavoidable in vindication of the national rights and honor. The present condition of the country is similar in some respects to that which existed immediately after the close of the war with Great Britain in 1815, and the occasion is deemed to be a proper one to take a retrospect of the measures of public policy which followed that war. There was at that period of our history a departure from our earlier policy. The enlargement of the powers of the Federal Government by _construction_, which obtained, was not warranted by any just interpretation of the Constitution. A few years after the close of that war a series of measures was adopted which, united and combined, constituted what was termed by their authors and advocates the "American system."

The introduction of the new policy was for a time favored by the condition of the country, by the heavy debt which had been contracted during the war, by the depression of the public credit, by the deranged state of the finances and the currency, and by the commercial and pecuniary embarrassment which extensively prevailed. These were not the only causes which led to its establishment. The events of the war with Great Britain and the embarrassments which had attended its prosecution had left on the minds of many of our statesmen the impression that our Government was not strong enough, and that to wield its resources successfully in great emergencies, and especially in war, more power should be concentrated in its hands. This increased power they did not seek to obtain by the legitimate and prescribed mode--an amendment of the Constitution--but by _construction_. They saw Governments in the Old World based upon different orders of society, and so constituted as to throw the whole power of nations into the hands of a few, who taxed and controlled the many without responsibility or restraint. In that arrangement they conceived the strength of nations in war consisted. There was also something fascinating in the ease, luxury, and display of the higher orders, who drew their wealth from the toil of the laboring millions. The authors of the system drew their ideas of political economy from what they had witnessed in Europe, and particularly in Great Britain. They had viewed the enormous wealth concentrated in few hands and had seen the splendor of the overgrown establishments of an aristocracy which was upheld by the restrictive policy. They forgot to look down upon the poorer classes of the English population, upon whose daily and yearly labor the great establishments they so much admired were sustained and supported. They failed to perceive that the scantily fed and half-clad operatives were not only in abject poverty, but were bound in chains of oppressive servitude for the benefit of favored classes, who were the exclusive objects of the care of the Government.

It was not possible to reconstruct society in the United States upon the European plan. Here there was a written Constitution, by which orders and titles were not recognized or tolerated. A system of measures was therefore devised, calculated, if not intended, to withdraw power gradually and silently from the States and the mass of the people, and by _construction_ to approximate our Government to the European models, substituting an aristocracy of wealth for that of orders and titles.

Without reflecting upon the dissimilarity of our institutions and of the condition of our people and those of Europe, they conceived the vain idea of building up in the United States a system similar to that which they admired abroad. Great Britain had a national bank of large capital, in whose hands was concentrated the controlling monetary and financial power of the nation--an institution wielding almost kingly power, and exerting vast influence upon all the operations of trade and upon the policy of the Government itself. Great Britain had an enormous public debt, and it had become a part of her public policy to regard this as a "public blessing." Great Britain had also a restrictive policy, which placed fetters and burdens on trade and trammeled the productive industry of the mass of the nation. By her combined system of policy the landlords and other property holders were protected and enriched by the enormous taxes which were levied upon the labor of the country for their advantage. Imitating this foreign policy, the first step in establishing the new system in the United States was the creation of a national bank. Not foreseeing the dangerous power and countless evils which such an institution might entail on the country, nor perceiving the connection which it was designed to form between the bank and the other branches of the miscalled "American system," but feeling the embarrassments of the Treasury and of the business of the country consequent upon the war, some of our statesmen who had held different and sounder views were induced to yield their scruples and, indeed, settled convictions of its unconstitutionality, and to give it their sanction as an expedient which they vainly hoped might produce relief. It was a most unfortunate error, as the subsequent history and final catastrophe of that dangerous and corrupt institution have abundantly proved. The bank, with its numerous branches ramified into the States, soon brought many of the active political and commercial men in different sections of the country into the relation of debtors to it and dependents upon it for pecuniary favors, thus diffusing throughout the mass of society a great number of individuals of power and influence to give tone to public opinion and to act in concert in cases of emergency. The corrupt power of such a political engine is no longer a matter of speculation, having been displayed in numerous instances, but most signally in the political struggles of 1832, 1833, and 1834 in opposition to the public will represented by a fearless and patriotic President.