Third. That all transactions in such states, which may be invalid by the non use of stamps, be legalized as far as it is in the power of Congress to legalize them. What action, if any, should be taken for the relief of persons in those States, whose property has been sold under the direct tax law, and is now held by the govern ment, it will be for Congress to determine. The Secretary is decidedly of the opinion that liberal le islation in regard to the taxes which accrued prior to the suppression of the rebellion will tend to promote harmony between the government and the peopie of those States, will ultimately increase the public revenues, and vindicate the humane policy of the government. RECIPROCITY TREATY. The reciprocity treaty with Great Britain will expire on the 17th of March next, and due notice of this fact has been given, by circulars, to the officers of customs on the northern frontier. There are grave doubts whether treaties of this character do not interfere with the legislative power of Congress, and especially with the constitutional power of the House of Representatives to originate revenue bills; and whether such treaties, if they yield anything not gran ed by our general revenue laws, are not in conflict with the spirit of the usual clause contained in most of our commercial treaties, to treat each nation on the same footing as the most favored nation, and not to grant, without an equivalent, any particular favor to one nation not conceded to another in respect to commerce and navigation. It appears to be well established that the advantages of this treaty have not been mutual, but have been in favor of the Canadas. Our markets have been strong, extensive, and valuable-theirs have been weak, limited, and generally far less profitable to our citizens. The people of the Canadas and Provinces have been sellers and we buyers of the same productions for which we are often forced to seek a foreign market. It is questionable, in fact, whether any actual reciprocity, embracing many of the articles now in the treaty can be maintained between the two countries. Even in regard to the fisheries, it is by no means certain that, instead of equivalents having been acquired under the treaty, more than equal advantages were not surrended by it But, whatever the facts may be. this subject, as well as that of intercommunication through rivers and lakes, and possibly canals and railroads, are proper subjects of negotiation, and their importance should secure early consideration. It is certain that, in the arrangement of our complex system of revenue through the tariff and internal duties, the treaty has been the cause of no little embarrassment. The subject of the revenue should not be embarrassed by treaty stipulations, but Congress should be left to act upon it freely and independently. Any arrangement between the United States and the Canadas and Provinces that may be consid ered mutually beneficial can as readily be perfected and carried out by reciprocal legislation as by any other means. No complaint would then arise as to subsequent. changes of laws, for each party would be free to act at all times, according to its discretion. However desirable stability may be, an irrepealable revenue law, even in ordinary times, is open to grave objections, and in any extraordinary crisis is likely to be pernicious. The people of the United States cannot consent to be taxed as producers while those outside of our boundaries, exempt from our burdens shall be permitted, as competitors to have free access to our markets. It is desirable to diminish the temptations now existing for smuggling, and if the course suggested of mutual legislation should be adopted, a revenue system, both internal and external, more in harmony with our own, might justly be anticipated from the action of our neighbors, by which this result would be most likely to be obtained. MINING LANDS. The attention of Congress is again called to the importance of early and definite action upon the subject of our mineral lands, in which subject are involved questions not only of revenue, but social questions of a most interesting character. Copartnership relations between the Government and miners will har ly be proposed, and a system of leasehold, (if it were within the constitutional authority of Congress to adopt it, and if it were consistent with the character and genius of our people.) after the lessons which have been taught of its practical results in the lead and copper districts, c nnot of course be recommended. After giving the subject as much examination as the constant pressure of official duties would permit, the Secretary has come to the conclusion that the best policy to be pursued with regard to these lands is the one which shall substitute an absolute title in fee for the indefinite possessory rights or claims now asserted by miners. The right to obtain a "fee simple to the soil" would invite to the mineral districts men of character and enterprise; by creating homes (which will not be found where title to property cannot be secured), it would give permanency to the settlements, and, by the stimulus which ownership always produces, it would result in a thorough and regular development of the mines. A bill for the subdivision and sale of the gold and silver lands of the United States was under consideration by the last Congress, to which attention is respectfully called. If the enactment of this bill should not be deemed expedient, and no satisfactory substitute can be reported for the sale of these lands to the highest bidder, on account of the possessory claims of miners, it will then be important that the policy of extending the principle of pre-emption to the mineral districts be considered. It is not material, perhaps, how the end shall be attained, but there can be no question that it is of the highest importance, in a financial and social point of view, that ownership of these lands, in limited quantities to each purchaser, should be within the reach of the people of the United States who may desire to explore aud develope them. In this connection it may be advisable for Congress to consider whether the prosperity of the treasure-producing districts would not be increased, and the convenience of miners greatly promoted, by the establishment of an assay office in every mining district from which an actual production of gold and silver amounting to ten millions of dollars is actually obtained. PREVENTION OF SMUGGLING. The attempts at smuggling, stimulated by the high rates of duties on imports, have engaged the attention of the department, and such arrangements have been made for its detection and prevention as seemed to be required by the circumstances, and available for that purpose. It is quite apparent, however, that, with our extensive seacoasts and inland frontier, it is impracticable entirely to prevent illicit traffic, though checks at the most exposed points have, doubtless, been put to such practices. In this connection, it may be remarked, that the revenue cutters are diligently and usefully employed in the preventive service, within cruising limits, so defined as to leave no point of sea and gulf coasts unvisited by an adequate force. A similar arrangement will be extended to the lakes on the re opening of navigation, the cutters built for that destination not having been completed in time to be put in commission before its close. The cutters are an important auxiliary to the regular customs authorities, in the collection and protection of the public revenue, by the examination of incoming vessels and their manifest of cargo; affording succor to vessels in distress; aiding in the enforcement of the regulations of harbor police, and otherwise preventing or detecting violations or evasions of law. A service of this description is unquestionably useful, if not indispensable, to the administration of the revenue system of a maritime and commercial country with such extensive sea, lake, and gulf coasts as our own. There are now in the service twenty-seven steamers and nine sailing vessels. Of the steamers, seven are of the average tonnage of 350 tons, and draw nine feet of water. These large vessels were constructed during the progress of the late rebellion, and were designed for the combined purpose of a naval force and a revenue coast guard. Their heavy armaments, large tonnage, and crews, however well fitted for such purposes, are not adapted for the revenue service in a time of peace. In conse quence of their great draft of water, they must be used mainly as sea going vessels, and are incapable of navigating the shallow waters of the coasts and their tributaries, which afford the most favorable opportunities for contraband trade. Independently of these considerations, they are so constructed as to be unable to carry a supply of fuel for more than three, or possibly four days, at the farthest. It is recommended, therefore, that this department be vested with authority to sell the vessels of this description, and expend the proceeds in the purchase of others of a different character and lighter draft, and on that account better fitted to accomplish the purposes of a preventive service, and which can be kept in commission at a cost more than one-third less than those of the former class. For example, the difference in the cost of running for twelve months the Mahoning, one of the first-named class, and the Nansemond, one of the latter class, is $27,606. VOL. LIV.NO. I. 5 The Mahoning, with twelve tons of coal per diem, can make but eight knots per hour, while the Nansemond, with eight tons of coal per diem, will make twelve knots per hour. The Nansemond, drawing but six feet nine inches, is enabled to cruise in waters entirely inaccessible to the Mahoning. To render the service effective and economical, cutters should be of light draft, manned by a small crew, and able to navigate the shoal waters and penetrate the inland bays rivers and creeks, with which our sea, lake, and gulf coasts abound, but of sufficient tonnage to enable them to perform efficiently and safely the duties of a coast guard at sea, and to furnish succor to vessels in distress; and at the same time to navigate the interior waters for the prevention of smuggling, and reach readily a port of refuge in the tempestuous weather prevailing at times along our coast, should they be forced to do so. NATIONAL BANKS AND THEIR CIRCULATION. By the report of the Comptroller of the Currency, it appears that sixteen hundred and one banks had been, on the 31st of October last, organized under the National Banking Act. Of these, six hundred and seventy-nine were original organizations, and nine hundred and twenty-two conversions from State institutions. The Comptroller recommends several amendments to the acts, which will arrest the attention of Congress. The National Banking system was designed not only to furnish the people with a sound circulation, but one of uniform value; and this is not likely to be fully accomplished until the banks by compulsion, or their own voluntary act, keep their notes at par in the principal money markets of the country. The establishment of the National Banking system is one of the great compensations of the war-one of the great achievements of this remarkable period. In about two years and a half from the organization of the first National Bank, the whole system of bauking under State laws has been superseded, and the people of the United States have been furnished with a circulation bearing upon it the seal of the Treasury Department as a guaranty of its solvency. It only remains that this circulation shall be a redeemal le circulation; redeemable not only at the counters of the banks, but at the commercial cities, to make the National Banking system of almost inconceivable benefit to the country. The present law limits the circulation of the National Banks to three hundred milljons of dollars; and it is not probable, when the businessof the country returns to a healthy basis, that a larger paper circulation than this will be required. Indeed it is doubtful whether a larger circulation can be maintained on a specie basis. Should an increase, however, be necessary, it can be provided for hereafter. It is, perhaps, unfortunate that a greater restriction had not been placed upon the circulation of the large banks already organized, in view of the wants of the Southern States. It is quite likely, however, that the anticipated withdrawal of a portion of the United States notes (not to speak of the effect of the restoration of specie payments) will so reduce the circulation of the northern banks as to afford to the South under the present limiration of the law, all the paper currency which will be required in that quarter. THE SEVEN-THIRTY LOAN. The Act of March 3, 1865, authorized the Secretary to borrow any sums not exceeding six hundred millions of dollars and to issue thereforbonds or Treasury notes of the United States in such form as he might prescribe. Under this act there was issued during the month of March $70,000,000 of notes payable three years after date, and bearing an interest, payable semi annually in currency at the rate of seven and three-tenths per cent per annum, and convertible at maturity, at the pleasure of the holders, into five-twenty gold-bearing bonds. Upon the capture of Richmand, and the surrender of the confederate armies, it be came apparent that there would be an early disbanding of the forces of the United States, and, consequently heavy requisition sfrom the War Department for transportation and payment of the army, including bounties. As it was important that these requisitions should be promptly met, and especially important that rot a soldier should remain in the service a single day for want of means to pay him, the Secretary perceived the necessity of realizing as speedily as possible the amount-$53,060, O~~~ still authorized to be borrowed under this act. The seven and three-tenths notes had proved to be a popular loan, and although a security on longer time and lower interest would have been more advantageous to the government, the Secretary considered it advisable, under the circumstances, to continue to offer these notes to the public, and to avail himself, as his immediate predecessor had done, of the services of Jay Cooke, Esq, in the sale of them. The result was in the highest degree satisfactory. By the admirable skill and energy of the agent, and the hearty co-operation of the National Banks, these notes were distributed in every part of the Northern, and some parts of the Southern States, and placed within the reach of every person desiring to invest in them. No loan ever offered in the United tates, not with standing the large amount of government securities previously taken by the people, was so promptly subscribed for as this. Before the first of August the entire amount of $550,000,000 had been taken, and the Secretary had the unexpected satisfaction of being able, with the receipts from customs and internal revenue and a small increase of the temporary loan, to meet all the requisitions upon the Treasury. On two hundred and thirty million of these notes the government has the option of paying the interest at the rate of six per cent in coin, instead of seven and three tenths in currency. The Secretary thought it advisable to reserve this option, bacause he indulged the hope that before their maturity specie payments would be restored, and because six per cent in coin is as high a rate of interest as the government should pay on any of its obligations. SALES OF GOLD. The receipts of coin have been for some months past so large that there have been constant accumulations beyond what has been required for the payment of the interest on the public debt. The Secretary has, therefore, deemed it to be his duty to sell, from time to time, a portion of the surplus for the purpose of supplying the wants of importers and furnishing the means for meeting the demands upon the Treasury for currency. The sales have been conducted by the Assistant Trearurer in New York in a manner entirely satisfacto ry to the Depar ment, and, it is believed, to the public. The sales, up to the first of November, amounted to $27.993,216 11, and the premium to $12,310.459 76; thus placing in the Treasury for current use, the sum of $40,303,675 87, without which there would have been a necessity for the further issue of iuterest-bearing notes. SINKING FUND. The necessities of the Treasury have been such that a compliance with the requirements of the act of February 25, 1862, for the creation of a sinking fund, has been impracticable. As long as it is necessary for the Government to borrow money, and to put its obligations upon the market for sale, the purchase of these obligations for the purpose of creating a sinking fund would hardly be judicious. After the expiration of the present year, the income of the Government will exceed itsexpenses; and it will then be practicable to carry into effect the provisions of the law. The Secretary is, however, of the opinion that the safe and simple way of sinking the national debt is to apply directly to its payment the excess of receipts over expenditures. He therefore respectfully recommends, that so much of the act of February 25, 1862, as requires the application of coin to the purchase or payment of one per cent of the entire debt of the United States to be set apart as a sinking fund, be repealed. GOID NOTES. By virtue of the authority conferred by the fifth section of the act of March 3, 1863, the Treasurer of the United States, and the Assistant Treasurer in New York have been instructed to receive deposits of coin and bullion, and to issue certificates therefor in denominations of not less than twenty dollars. Instructions were given for the issue of these certificates to promote the convenience of officers of customs and of the Treasurer and Assistant Treasurers, and for the accommodation of the public. Other considerations al o prompted the Secretary to avail himself of the authority referred to. It is expected that the credit of the Goveinment will be strengthened by the coin wl.ich will be thus brought into the Treasury, and that the effect of the measure will be to facilitate to some extent a return to specie payments. If the experiment should be satisfactory in New York, it will be extended to other commercial cities. THE UNITED STATES DEBT. WE give below the statement of the Public Debt, prepared from the reports of the Secretary of the Treasury for October and November, and January 1, 1866. DEBT BEARING INTEREST IN COIN. October 31. $9,415,250 $9,415,250 $9,415,250 6 do July 1, 1868.. January 1, 1874. 8,908,342 8,908,332 8,908,342 20,000,000 20,000,000 20,000,000 January 1, 1871. December 31, 1880. June 30, 1881. June 30, 1861, exch'ed for 7.30s 514,780,500 100,000 000 7,022,000 7,022,000 7,022,000 18,415,000 18,415,000 18,415,000 50,000,000 50,000,000 50,000,000 139,331,409 139,252,450 139,331,000 514,780,500 514,780,500 1,000,000,000 100,000,000 50,590,300 50,590,300 172,770,100 172,770,100 1,016,000 1,016,000 1,0:6,000 75,000,000 75,000,000 75,000,000 |