PUBLIC SERVICE.

In closing his annual report the Secretary takes pleasure in bearing testimony to the general fidelity and ability of the officers and employés of this Department. As a rule they have by experience and attention to duty become almost indispensable to the public service. The larger portion of them have been in the Department more than ten years, and several have risen by their efficiency from the lowest-grade clerks to high positions. In some cases their duties are technical and difficult, requiring the utmost accuracy; in others, they must be trusted with great sums, where the slightest ground for suspicion would involve their ruin; in others, they must act judicially upon legal questions affecting large private and public interests, as to which their decisions are practically final. It is a just subject of congratulation that, during the last year, there has been among these officers no instance of fraud, defalcation, or gross neglect of duty. The Department is a wellorganized and well-conducted business office, depending mainly for its success upon the integrity and fidelity of the heads of bureaus and chiefs of divisions. The Secretary has therefore deemed it both wise and just to retain and reward the services of tried and faithful officers and clerks.

During the last twenty years the business of this Department has been greatly increased, and its efficiency and stability greatly improved. This improvement is due to the continuance during that period of the same general policy, and the consequent absence of sweeping changes in the public service; to the fostering of merit by the reten tion and promotion of trained and capable men; and to the growth of the wholesome conviction in all quarters that training, no less than intelligence, is indispensable to good service. Great harm would come to the public interests should the fruits of this experience be lost, by whatever means the loss occurred. To protect not only the public service, but the people from such a disaster, the Secretary renews the recommendation made in a former report, that provision be made for a tenure of office for a fixed period, for removal only for cause, and for some increase of pay for long and faithful service.

The several reports of the heads of offices and bureaus are herewith respectfully transmitted.

JOHN SHERMAN,

Secretary.

To Hon. S. J. RANDALL,

Speaker of the House of Representatives.

TABLES ACCOMPANYING THE REPORT.

TABLE E.-STATEMENT of OUTSTANDING PRINCIPAL of the PUBLIC
DEBT of the UNITED STATES on the 1st of January of each year from 1791 to 1843,
inclusive, and on the 1st of July of each year from 1844 to 1880, inclusive.

Amount.

$75, 463, 476 52
77, 227, 924 66

80, 352, 634 04

78, 427, 404 77

80, 747, 587 39

83, 762, 172 07

82, 064, 479 33
79, 228, 529 12
78, 408, 669 77
82,975, 294 35
83,038, 050 80
80,712, 632 25
77, 054, 686 30
86,427, 120 88
82, 312, 150 50
75, 723,270 66
69, 218, 398 64
65, 196, 317 97
57, 023, 192 09
53, 173, 217 52
48,005, 587 76
45, 209, 737 90
55,962, 827 57
81, 487, 846 24
99, 833, 660 15
127, 334, 933 74
123, 491, 965 16
103, 466, 633 83
95,529, 648 28
91, 015, 566 15
89,987, 427 66
93, 546, 676 98
90,875, 877 28
90, 269, 777 77
83, 788, 432 71
81, 054, 059 99
73, 987, 357 20
67, 475, 043 87
58,421, 413 67
48, 565, 406 50
39, 123, 191 68
24, 322,235 18
7, 001, 698 83
4,760, 082 08
37, 733 05
37, 513 05
336,957 83
3,308, 124 07
10,434, 221 14

3,573, 343 82

5, 250, 875 54

13, 594, 480 73
20, 601, 226 28
32, 742, 922 00
23, 461, 652 50
15,925, 303 01
15, 550, 202 97
38, 826, 534 77
47, 044, 862 23
63,061, 858 69
63,452, 773 55
68, 304, 796 02
66, 193, 341 71
59, 803, 117 70

42, 242, 222 42
35, 586, 956 56
31, 972, 537 90
28, 699, 831 85
44, 911, 881 03
58,496, 837 88
64, 842, 287 88
90, 580, 873 72
524, 176, 412 13
1, 119, 772, 138 63

TABLE E.-STATEMENT of OUTSTANDING PRINCIPAL of the PUBLIC DEBT, &c.-Continued.

In the amount here stated as the outstanding principal of the public debt are included the certifi cates of deposit outstanding on the 30th of June, issued under act of June 8, 1872, amounting to $31,730,000, in 1873; $58,760,000, in 1874; $58,415,000, in 1875; $32,840,000, in 1876; $54,960,000, in 1877; $46,755,000, in 1878; $30,370,000 in 1879, and $14,465,000, in 1880, for which a like amount in United States notes was on special deposit in the Treasury for their redemption, and added to the cash balance in the Treasury. These certificates, as a matter of accounts, are treated as a part of the public debt, but, being offset by notes held on deposit for their redemption should properly be deducted from the prin cipal of the public debt in making comparison with former years.

STATEMENT of the PUBLIC DEBT, including ACCRUED INTEREST thereon, less cash in the Treasury on the 1st day of July of each year, from July 1, 1869, to July 1, 1880, compiled from the published monthly debt-statements of those dates.

*It will be noticed that there is a difference in the amounts represented by these two statements as the principal of the debt July 1, 1869, and July 1, 1870. This difference is explained thus: In the prin cipal of the debt as shown by the monthly debt-statements of these dates, the bonds purchased for the sinking fund and paid for from money in the Treasury, were included as a part of the outstanding debt and were also treated in the cash as a cash item, or asset, for the reason that at that time there was no authority or law for deducting them from the outstanding debt. Congress, by the sixth section of the act of July 14, 1870, directed that these bonds should be canceled and destroyed and deducted from the amount of each class of the outstanding debt to which they respectively belonged, and such deductions were accordingly made on the books of the department and in the table of the debt in the annual report.

PAPERS

ACCOMPANYING

REPORT OF THE SECRETARY OF THE TREASURY.

REPORT OF THE COMMISSIONER OF INTERNAL REVENUE.

TREASURY DEPARTMENT,

OFFICE OF INTERNAL REVENUE,

Washington, November 24, 1880.

SIR: I have the honor to submit the report of the Bureau of Internal Revenue for the fiscal year ended June 30, 1880, with accompany. ing tables, exhibiting in detail the receipts from each specific source of revenue by years and collection districts, together with additional facts and figures, showing the operations of the bureau during the months of July, August, September, and October, being the first four months of the current fiscal year.

I am glad to be able to bring to your attention the fact that since my last annual report still further improvement has been made in the condition of the internal-revenue service.

The efforts of the past four years for the suppression of the illicit manufacture and sale of spirits and tobacco have been substantially crowned with success. The frauds upon the revenue and the resistance to authority still existing are confined to a few localities, and I am of opinion that the hearty co-operation of all officers charged with the enforcement of the laws will, before the close of the present administration, have established the authority of the government for the collection of the taxes and the equal enforcement of its laws in all parts of the country.

The discipline, efficiency, and fidelity to duty of the officers of internal revenue have steadily improved; the manner in which they have enforced the laws has promoted the relations of harmony which should subsist between the tax-payer and the government, and I take pleasure in noting the fact of an almost universal disposition on the part of taxpayers to observe the laws and see them faithfully executed.

REDUCTION OF TAXATION.

The receipts of internal revenue for the fiscal year 1879 were $113,449,621.38, showing an increase of $2,795,458.01 upon the previous year. The receipts for the fiscal year 1880, in the face of the reduction of the tax on tobacco, were $123,981,916.10, showing an increase of $10,532,294.72. The receipts for the first four months of the present fiscal year amount to $43,789,318.30, showing an increase over the corresponding period of last year of $3,658,213.48. I know of no reason why this increase should not be maintained during the fiscal year, so that the total collections for the year from internal revenue taxes at the present rates would be $135,000,000.

79

While the receipts from taxes are thus increasing in amount, the demands upon the Treasury are being lessened by the reduction of the public debt, and of the annual interest charge. It is probable, therefore, that Congress will be disposed to relieve the people from some of the internal-revenue taxes, and if such a reduction is to be made, I respectfully suggest the following list of taxes collected during the fiscal year 1880 for the consideration of the law-making power:

Bank checks

Friction matches

Patent medicines or preparations, perfumery, cosmetics, &c.

Bank deposits....

Savings-banks deposits.
Bank capital ...

Total

$2,270, 421 00 3,561,300 00 1,836, 673 22 2,347,568 07 163,207 36

811, 436 48

10,990, 606 13

In the event it is deemed advisable to take the tax off matches, patent medicines, perfumery, &c., due consideration should be had to the fact that large stocks of these articles, tax paid, are now in the hands of the trade, and that a very serious reduction in their value, especially of matches, would result if the tax were taken off suddenly, and articles manufactured free of tax were brought into competition with those upon which the existing taxes had been paid. In my opinion an act abolishing these taxes should not go into effect earlier than, say three months from its passage.

The same may be said in regard to check stamps. Considerable stocks of stamped checks are now in the hands of individuals, banks, and bankers, upon which the stamps have been imprinted. I think it would be wise that the operation of the repeal should be delayed at least three months, so as to give time for the use of these stamps.

Whenever the interests of the government will allow it, I think it will be wise to confine internal-revenue taxation to spirits, malt liquors, tobacco, snuff, cigars, and special taxes upon the manufacturers and dealers in these articles. I am of opinion that reliance can be placed upon receiving the sum of $124,000,000 annually from these sources, which sum would gradually increase with the increase of population, but which would probably be subjected to diminution upon a recurrence of hard times.

In considering the question of relieving patent medicines from internal revenue taxes, it should be understood that many of the articles put upon the market and taxed as medicinal bitters are used as a beverage. Persons engaged in the sale of such articles are not required to pay special taxes as retail dealers in liquors, so that if the articles were relieved from taxation medicinal bitters would be sold everywhere without paying any internal-revenue tax whatever.

In passing upon the right of these various medicated bitters to be taxed as such, and sold without payment of the special tax as retail liquor dealers, the office is often seriously embarrassed to find the exact line between a medicinal bitter liable to stamp tax and a compound liquor subject to be sold only as a beverage. In my opinion it would be wise to continue the stamp tax upon all medical bitters containing more than 20 per cent. of proof spirits.

The tax upon savings banks, in my judgment, should be removed, or the whole legislation upon the subject of taxing savings banks should be modified and made more equitable; and there would seem to be no just ground for continuing the tax upon the capital and deposits of banks and bankers if it is found that the revenues are sufficient without it.