FREE TRADE.

MAY 19, 1858.-Committed to the Committee of the Whole on the state of the Union.

Mr. BOYCE, from the Special Committee, submitted the following

REPORT.

The Special Committee, to whom were referred the following subjects: A reduction of the expenditures of the government; the navigation laws; the existing duties on imports; the expediency of a gradual repeal of all duties on imports, and a resort exclusively to internal taxation, respectfully submit the following report:

The expenditures for the fiscal year ending June 30, 1857, independent of the public debt, as appears from the report of the Secretary of the Treasury, are $65,032,597 76.

The first question is, whether those expenditures are greater than what they should be under an economical administration of the government. We think they are. The best mode of determining this question is to compare the present total expenditures of the government with the total expenditures of the government at some past period of our history, and, further, to compare some of the leading items of our expenditure now with the leading items of our expenditure then. With this view, we have compared the receipts and expenditures of 1857 with 1823, the result of which appears by the following statement:

10,606,540 $20,540,666 26 $1 93.66 $9,784, 154 59 $0 94.24 $3,096,924 43 $2,503,765 83 65,032,559 76 2 28.18 19,159, 150 87 12,651,694 61

1823

1857

28,500,000

68,969,212 57 1 41.99

Inc. of 1857

over 1823 17,893,460 48,428,546 31 48.33

55,248,405 17

1 33.94 16,062,226 44 10,147,928 78

If space would permit, the contrast might be carried into many other items of expenditure, and the results would be startling. But enough has been done to show that the ratio of expenditure is far in excess of the increase of population. The expenditures ought not, for very obvious reasons, to increase in proportion to the increase of

population. But conceding that it should, the expenditures of the government, in round numbers, should not exceed $28,000,000; whereas it is $65,032,559 76-an excess of $37,032,559 76. This result is sufficiently striking, but it is rendered much more so when we consider two important facts: 1st. That 6,196,000 acres of the public land were granted during the last fiscal year for railroad purposes, which may be valued at $15,490,000, being at the rate of $2 50 per acre. 2d. That appropriations to supply the deficiencies of the last fiscal year have been called for, amounting, in round numbers, to $10,000,000, making the total expenditures of the gov ernment, in round numbers, for the last fiscal year, $90,000,000!— an excess over the ratio of expenditures in 1823 of $62,000,000. The administration of the government in 1823 was not considered peculiarly economical; on the contrary, it was pronounced at the time by some as extravagant, and really was much more so than the first term of Mr. Jefferson's administration. For a further illustration of the increased expenditures of the government, see exhibit A, at the end of the report.

Considering as established the proposition that the expenditures of the government are far in excess of what they should be, we pass on to consider the remedy, if remedy there be, for this lavish waste of the public money.

What is the remedy for this vast and increasing expenditure? The only remedy likely, in any degree, to be effectual is to change the existing system of taxation. The regular increase of our expenditures shows that it is not attributable to any particular party or adminis tration, for this increase has gone on constantly under every party and every administration, with the regularity of a great principle. To make an individual a prodigal, you have only to supply him with an unlimited amount of money; to make a government extravagant, you have only to do the same thing. The first economical defect of our present system of taxation, by duties on imports, is, that it operates as a bounty to one, and that a very important class-the manufac

turers.

Under the operation of this first defect, the great manufacturing class, which represents a vast capital, which is intensely alive to its peculiar interest, which is vigilant, active, powerful, and capable of prompt and ready combination, is interested in increasing the taxation of the government; for the higher the taxes are, if laid on the principle of protecting their products, the better for them. Suppose the question were submitted to the cotton manufacturers, or the iron manufacturers, whether the duties on cotton and iron products should be increased or diminished, does any one doubt what their answer would be? So far as they are concerned, they consider high duties as bounties to them, and they would be in favor of them, if the revenues thereby derived were thrown into the sea. Under the present system of taxation by duties on imports, this great class are favorable to high taxation. To form some idea of the stupendous magnitude of this manufacturing interest, take the following statement, showing the value of the products of manufacture of the United States for the year 1850.-Financial Report, Executive Document, 3d sess. 34th Congress, vol. 2, 1856-'57, page 166.)

Statement showing the manufactures of the United States and Territories

for the year 1850.

This capital

This reference to the products of manufactures may give us some idea of the immense capital engaged in manufactures. may be estimated at $500,000,000.

This vast capital is all more or less interested in high duties-that is, in high taxation. The influence of the manufacturing class on taxation is not merely in proportion to the capital they represent, as compared with the capital engaged in other industrial pursuits; for, from very obvious reasons, some of which have already been incidently alluded to, it is far beyond this ratio. As an illustration of this influence, we would refer to the facts connected with the modification of the tariff during the last Congress. It is notorious that the only great interest represented here at that time by outside agents was the manufacturing interest. One of the first steps towards an economical administration of the government is to place that great and active interest permanently on the side of low taxation, and the only effectual mode of doing this is direct taxation; which necessarily implies the total abandonment of protective duties, which are but another name for bounties. When you have put all the great interests of capital on the side of low taxes, you have taken one of the most decided steps that you can possibly take in favor of low taxation, which is the neessary antecedent of economy.

The next prominent evil of the present system of taxation, is that, by its indirect operation, the people are ignorant of what they pay. They are ignorant of what they pay to the government, and equally ignorant of what they pay to the protected interests in the shape of bounties. If the object be to obtain from the people the largest amount possible without arousing them, then the indirect systemthe present system-is the best; but if the object be only to obtain from them the least amount that will suffice for the just wants of the government, then the direct system of taxation is the best. The happy ignorance of the people of the United States as to the amount of taxes they are paying is one great cause of their remaining so passive under the enormous increase of our expenditures which has been going on for years. If we desire an economical government, we must be candid with the people, and let each one know exactly

what

he pays. The people, ignorant of how much tax they are paying in the enhanced price of commodities, will tolerate an expenditure of $100,000,000 much more patiently than one of $50,000,000, when each one has to pay his ascertained share directly from his own pocket. Economy here must be preceded by vigilance among the constituency; as long as thec onstituency are indifferent on this subject, the representatives will be carried along unresisting in the vortex of extravagance.

Another objection to the present system is the large expenditure necessary in the present mode of collecting the revenue, in paying the army of employés engaged in the present revenue service, in building costly structures in various parts of the United States, and in maintaining custom-houses which do not pay their own expenses. Upon this point we would call attention to the following facts: The direct cost of collecting the revenue from customs for the last fiscal year, ending June 30, 1857, $64,171,034 05, was $3,552,359 50, employing three thousand and eighty-eight officers. This is independent of the cost of the custom-houses and revenue cutters, the interest upon which investment would largely increase this sum.

To see further the operation of the present system, take the following statement:

Amount of revenue collected, and expenditures at certain custom-houses, for the fiscal year ending June 30, 1857.

The total net revenue from the following eighteen custom-houses for last fiscal year, viz: Belfast, Bath, Bangor, Portland, Waldoboro' Wiscasset, Burlington, Barnstable, Gloucester, Bristol, Providence, Plattsburg, Wilmington, Del., Pittsburg, Cincinnati, Sandusky, Toledo, and San Francisco, was $1,769,163 43. The total cost of