FISCAL YEAR 1879. For the present fiscal year the revenue, actual and estimated, will be as follows: The expenditures for the same period, actual and estimated, will be Applicable to the sinking-fund, which is estimated for the year at $264, 500, 000 240, 100, 000 24, 400, 000 $36, 954, 607 87. FISCAL YEAR 1880. The revenues of the fiscal year ending June 30, 1880, estimated upon existing laws, will be From sales of public lands.... From tax on circulation and deposits of national banks From repayment of interest by Pacific Railway Companies.... From customs' fees, fines, penalties, &c. From fees-consular, letters-patent, and lands.... From miscellaneous sources.. Total ordinary receipts........... $133, 000, 000 00 115, 000, 000 00 1, 000, 000 00 6,750,000 00 1,400, 000 00 1,100, 000 00 2, 000, 000 00 250,000 00 1,600, 000 00 2,400, 000 00 264, 500, 000 00 • The estimate of expenditures for the same period, received from the several Executive Departments, are as follows: Refunding-customs, internal revenue, lands, &c.. Miscellaneous.... Total estimated expenditures, including sink- Or an estimated deficit of....... $4,675,900 00 5, 800, 000 00 1,661,200 00 275, 137, 250 94 $10,637, 250 94 Excluding the sinking-fund, the estimated expenditures will be $236,334,912 68, showing a surplus of $28,165,087 32. By direction of the President, the estimated expenditures for the next fiscal year have been based upon the appropriations made by Congress for the present fiscal year. The rule has been departed from only as to those branches of the public service belonging to Departments the heads of which deem the estimated increase indispensable, or where existing law demands a greater sum than was appropriated. Such increase is estimated for as follows: Earnestly desirous of co-operating with Congress in the reduction of expenditures to the lowest sum consistent with the proper execution of the law, the Secretary has reduced the expenses of the customs service, during the last fiscal year, compared with the previous year, in the sum of $778,492 25, and herein recommends changes of the law which will enable him to make further reductions therein. The great body of expenditures is fixed by laws which leave no discretion to executive officers. The reduction of appropriations does not reduce expenditures when the law requires the service to be performed, or fixes the salary and number of employés. It must be accompanied by a careful revision of the laws, reducing the objects of expenditure or the number or compensation of employés. It is believed that, by such a revision, especially of the postal laws, and by a limitation of the amount of appropriations for public works in progress, by the postponement of new works not indispensable for the public service, and by judicious scrutiny of disbursements, that the expenditures for the next fiscal year need not, in the aggregate, exceed the appropriations for the present fiscal year. The estimate of revenue, based upon existing law, is $6,736,121 30 more than the actual revenue of the past year. This estimate can only be realized by strict and impartial enforcement of the revenue laws. This is not only a legal duty of revenue officers, but is the right of every honest tax-payer. The enforcement of the tax on spirits and tobacco has, in some places, been resisted by formidable combinations too powerful for the Department, with the forces at its command, to overcome. The customs duties, in many cases, have been evaded by smuggling, fraud, undervaluation, and false claims for drawbacks and damage-allowance. Some of these obstructions are incident to the execution of any tax law, but many of them may be overcome by such modifications of the laws as are hereinafter recommended. It is manifest, from these estimates, that, however desirable it may be to reduce existing taxes, it ought not now to be done except by supplying the reductions from other sources of revenue. Stability and certainty in the rate and subject of taxation are of great importance, and, therefore, the Secretary recommends that no change be made in them during the present session, except to convert certain ad-valorem duties, hereinafter stated, into specific duties. RESUMPTION OF SPECIE PAYMENTS. The important duty imposed on this Department by the resumption act, approved January 14, 1875, has been steadily pursued during the past year. The plain purpose of the act is to secure to all interests and all classes the benefits of a sound currency, redeemable in coin, with the least possible disturbance of existing rights and contracts. Three of its provisions have been substantially carried into execution by the gradual substitution of fractional coin for fractional currency, by the free coinage of gold, and by free banking. There remains only the completion of preparations for resumption in coin on the 1st day of January, 1879, and its maintenance thereafter upon the basis of existing law. At the date of my annual report to Congress in December, 1877, it was deemed necessary as a preparation for resumption to accumulate in the Treasury a coin reserve of at least forty per cent. of the amount of United States notes outstanding. At that time it was anticipated that under the provisions of the resumption act the volume of United States notes would be reduced to $300,000,000 by the 1st day of January, 1879, or soon thereafter, and that a reserve in coin of $120,000,000 would then be sufficient. Congress, however, in view of the strong popular feeling against a contraction of the currency, by the act approved May 31, 1878, forbade the retirement of any United States notes after that date, leaving the amount in circulation $346,681,016. Upon the principle of safety upon which the Department was acting, that forty per cent. of coin was the smallest reserve upon which resumption could prudently be commenced, it became necessary to increase the coin reserve to $138,000,000. At the close of the year 1877 this coin reserve, in excess of coin liabilities, amounted to $63,016,050 96, of which $15,000,000 were obtained by the sale of four and a half per cent., and $25,000,000 by the sale of four per cent. bonds, the residue being surplus revenue. Subsequently, on the 11th day of April, 1878, the Secretary entered into a contract with certain bankers in New York and London-the parties to the previous contract of June 9, 1877, already communicated to Congress-for the sale of $50,000,000 four and a half per cent. bonds for resumption purposes. The bonds were sold at a premium of one and a half per cent. and accrued interest, less a commission of one-half of one per cent. The contract has been fulfilled, and the net proceeds, $50,500,000, have been paid into the Treasury in gold coin. The $5,500,000 coin paid on the Halifax award have been replaced by the sale of that amount of four per cent. bonds sold for resumption purposes, making the aggregate amount of bonds sold for these purposes, $95,500,000, of which $65,000,000 were four and a half per cent. bonds, and $30,500,000 four per cent. bonds. To this has been added the surplus revenue from time to time. The amount of coin held in the Treasury on the 23d day of November last, in excess of coin sufficient to pay all accrued coin liabilities, was $141,888,100, and constitutes the coin reserve prepared for resumption purposes. This sum will be diminished somewhat on the 1st of January next by reason of the large amount of interest accruing on that day in excess of the coin revenue received meanwhile. In anticipation of resumption, and in view of the fact that the redemption of United States notes is mandatory only at the office of the assistant treasurer in the city of New York, it was deemed important to secure the co-operation of the associated banks of that city in the ready collection of drafts on those banks and in the payment of |