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The Commoner
VOL. 15, NO. 12
14
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which wo wish to make good, now and always,
our right to lead in enterprises of peace and
good will and economic and political freedom.
The plans for the armed forces of the nation
which I have outlined, and for the general pol
icy of adequate preparation for mobilization and
dofenso, involve of courso very large additional
expenditures of money, expenditures which will
considerably exceed tho estimated revenues of
the government. It is made my duty by law,
whenever tho estimates of expenditure ex
ceed tho estimates of revenue, to call tho at
tention of the congress to the fact and suggest
any means of meeting the deficiency that it may
bo wise or possible for mo to suggest. I am
ready to believe that it would bo my duty to do
bo in any case; and I feel particularly bound to
speak of tho matter when it appears that the
deficiency will arise directly out of the adoption
by the Congress of measures which I myself urge
It to adopt. Allow mo, therefore, to speak briefly
of tho present state of tho Treasury and of the
fiscal problems which the next year will prob
ably disclose.
STATE OF TREASURY AND NEW TAXES
RECOMMENDED TO SUPPTjY REVENUES
FOR DEFENSE
On tho thirtieth of Juno last there was an
available balance in the general fund of the
Treasury of $104,170,105.78. The total esti
mated receipts for the year 1916, on the asi
sumption that the emergency revenue measure
passed by tho last Congress will not be extended
beyond its present limit, the. thirty-first of De
cember, 1916, and that the present duty of one
cent per pound on sugar will be discontinued
after the first of May, 1916, will be $670,365,
500. The balance of Juno last and these esti
mated revenues come, therefore, to a grand total
of $774,535,605.78. Tho total estimated dis
bursements for the present fiscal year, including
twenty-five millions for the Panama Canal,
.twelve millions for probable deficiency appro
priations, and fifty thousand dollars for miscel
laneous debt redemptions, will be $753,891,000;
and the balance in the general fund of the Treas
ury will bo reduced to $20,644,605.78. Tho
emergency revenue act, if continued beyond its
present time limitation, would produce, during
the half year then remaining, about forty-one
millions. Tho duty of one cent per pound on
sugar, if continued, would produce during the
two months of the fiscal year remaining after
the first of May, about fifteen millions. These
two sums, amounting together to fifty-six mil
lions, if added to the revenues of the second
half of the fiscal year, would yield the Treasury
at 4the end of the year an available balance of
$76,644,605.78
The additional revenues required to carry out
the programme of military and naval prepara
tion of which I have spoken, would, as at pres
ent estimated, be for tho fiscal year 1917,
$93,800,000. Those figures, taken with the fig
ures for the present fiscal year which I have al
ready given, disclose our financial' problem for
the year 1917. Assuming that tho taxes im
posed by tho emergency revenue act and the
present duty on sugar are to bo discontinued,
and that the balance at the close of the present
fiscal year will be only $20,644,605.78, that the
disbursements for the Panama Canal will again
be about twenty-five millions, and that the ad
ditional expenditures for the army and navy are
authorized by Congress, tho deficit in tho gen
eral fund of the Treasury on the thirtieth of
Juno, 1917, will be nearly two hundred and
thirty-five millions. To this sum at least fifty
millions should, bo added to represent a safe
working balance for the Treasury, and twelve
millions to include tho usual deficiency estimates
In 1917; and these additions would make a total
deficit of some two hundred and ninety-seven
millions. If the present taxes should be contin
ued throughout this year and the next, however,
there would be a balance in the Treasury of
gome seventy-six and a half millions at the end
of the present fiscal year, and a deficit at tho end
of the next year of only some fifty millions, or,
.reckoning in sixty-two millions for deficiency
appropriations and a safe Treasury balance at
the end of tho year, a total deficit of some one
hundred and twelvo millions. The obvious moral
o'f the figures Is that it is a plain counsel of pru
dence to continue all of the present taxes or
their equivalents, and confine ourselves to the
problem of providing one hundred and twelve
nilltons of new revenue rather than two hun-
- dred and ninety-seven millions.
r How shall we obtain the new revenue? Wo
- arfc . frequently reminded that . there are many
millions of bonds which the Treasury, is author
ized under existing law to soil to reimburse tho
sums paid out of current revenues for the con
struction of tho Panama Canal; and It ia true
that bonds to tho amount of approximately
$222,000,000 aro now available for that pur
pose. Prior to 1913 $134,631,980 of these bonds
had actually been sold to recoup the expendi
tures at tho Isthmus; and now constitute a con
siderable item of public debt But I, for one,
do not believe that the people of this country ap
prove of postponing the payment of their bills.
Borrowing money is short-sighted finance. It
can bo justified only when permanent things are
to be accomplished which many generations will
certainly benefit by and which it seems hardly
fair that a single generation should pay for. Tho
objects we are now proposing to spend money
for can not be so classified, except In tho sense
that everything wisely done 'may be said to bo
done in the interest of posterity as well as in our
own. It seems to me a clear dictate of prudent
statesmanship and frank finance that In what
we are now, I hope, about to undertake we
should pay as wo go. Tho people of tho country
are entitled to know just what burdens of taxa
tion they are to carry, and to know! from the
outset, now. Tho new bills should be paid by in
ternal taxation.
To what sources, then, shall wo turn? This
Is so peculiarly a question which the gentlemen
of tho House of Representatives are expected
under the Constitution to propose an answer to
that you will hardly expect me to do more than
discuss it in very general terms. We should'bo
following an almost universal example of mod
ern governments if we were to draw the greater
part or even the whole of the revenues wo need
from the income taxes. By somewhat lowering
the present limits of exemption and the figure
at which the surtax shall begin to be imposed,
and by increasing, step by step throughout the
present graduation, the surtax itself, the income
taxes as at present apportioned would yield
sums sufficient to balance the books of the
treasury at the end of the fiscal year 1917 with
out anywhere making the burden unreasonably
or oppressively heavy. The precise reckonings
are fully and accurately set out In the report of
the Secretary of the Treasury which will be im
mediately laid before you.
And there are many additional sources of rev
enue which can justly be resorted to without
hampering the Industries of tho country or put
ting any too great charge upon individual ex
penditure. A tax of one cent per gallon on
gasoline and naptha would yield, at the present
estimated production, $10,000,000; a tax of
fifty cents per horso power on automobiles and
Internal explosion engines, $15,000,000; a stamp .
tax on bank cheques, probably $18,000,000; a
tax of twenty-five cents per ton on pig iron,
$10,000,000; a tax of twenty-five cents per ton
on fabricated iron and steel, probably $10,000,
000. In a country of great industries like this -it
ought to be easy to distribute the burdens of
taxation without making th m anywhere bear
too heavily or too exclusively upon any one set
of persons or undertakings. What Is clear is,
that tho industry of this generation should pay
the bills of this generation.
AT PEACE WTTH WORLD RUT GRAVEST
DANGERS TO PEACE WTTH1N
OUR OWN BORDERS
I have spoken to you today, Gentlemen, upon
a single theme, the thorough preparation of the
nation to care for its own security and to make
sure of entire freedom to play the impartial role
? f. hem,sPnore and in tho world which we
all believe to have been providentially assigned
to It. I have had In my mind no thought of anv
immediate or particular danger arising out of
our relations with other nations. We are at peace
with all the nations of tho world, .and thoro is
reason to hope that no question in controversy
between, this and other governments will lead
to any serious breach of amicable relations
grave as some differences of attitudo and nolicv
have been and may yet turn out to bo. I am
sorry to say that the gravest threats against our
national peace and safety have been uttered
within our own borders. There are citizens of
tho United States, I blush to admit, born under
. other flags but welcomed under our generoua
naturalization laws to the full freedom ami op
portunity of America, w,ho have poured the
poison of disloyalty into the very arteries of our
national life; who have, sought to bring the au-
rnntindESdame,o our Eernment Into,
contempt, to destroy our industries Vherever
they thought it effective for their vindictive pur
poses to strike at them, and to debase our nol"
Itics to the uses of foreign intrigue. Their num"
ber la not great as compared with the whole
number of those sturdy hosts by which our na
tion has been enriched in recent generations out
of virile foreign stocks; but it is great enough to
have brought deep disgrace upon us and to havo
made It necessary that we should promptly make
use of processes of law by which we may be
purged of their corrupt distempers. America
never witnessed anything like, this before it
never dreamed it possible that men sworn into
its own citizenship, men drawn out of great free
Btocks Buch as supplied some of the best and
etrongest elements of that little, but how heroic
nation that in a high day of old staked its very
life to free itself from every entanglement that
had darkened the fortunes of the older nations
and set up a new standard here, that men of
such origins and such free choices of allegiance
would ever turn in malign reaction against the
government and people who had welcomed and
nurtured them and seek to make this proud
country once more a hotbed of European pas
sion. A little while ago such a thing would have
seemed incredible. Because it was incredible wo
made no preparation for it. We would have been
almost ashamed to prepare for it, as if we were
suspiciouB of ourselves, our own comrades and
neighbors! But the ugly and incredible thing
has actually come about and we are without ad
equate federal laws to deal with it. I urge you
to enact such laws at the earliest possible mo
ment and feel that in doing so I am urging you
to do nothing less than save the honor and self
respect of tho nation. Such creatures of passion,
disloyalty, and anarchy must be crushed out.
They are not many, but they are infinitely malig
nant, and the hand of our power should closo
over them at once. They have formed plots to
destroy property, they have entered into con
spiracies against the neutrality of the govern
ment, they have sought to pry into every confi
dential transaction of the government in order
to servo interests alien to our own. It is pos
sible to deal with these things very effectually.
I need not suggest the terms in which thev may
be dealt with.
I wish that it could be said, that only a few
men, misled by mistaken sentiments of allegi
ance to the governments under which they were
born, had been guilty of disturbing tho self
possession and misrepresenting tlu temper and
principles of the country during these days of
terrible war, when it would, seem that every man
who was truly an American would instinctively
make it his duty and his pride to keep the scales
of judgment even and prove himself a partisan
of no nation but his own. But it can not. There
are some men among us, and many resident
abroad who, though born and bred in the United
States and calling themselves Americans, havo
so forgotten themselves and their honor as cit
cltizens as to put their passionate sympathy with
one or the other side in the great European con
flict above their regard for the peace and dignity
of the United States. They also preach and
practice disloyalty. No laws, I suppose, can
reach corruptions of the mind and heart; but I
should not speak of others without also speak
ing of these and expressing the even deeper hu
miliation and scorn which every self-possessed
and thoughtfully patriotic American must feel
when he thinks of them and of the discredit they
are daily bringing upon us.
Whild we speak of the preparation of the na
tion to make sure of her security and her ef
fective pqwer we must not fall into the patent
errorsof supposing that her Teal strength conies
from armaments and mere safeguards of written
law. It comes, of course, from her people, their
energy, their success in their undertakings, their
free opportunity to use the natural resources of
our great home land and of the lands outside
our continental borders which look to us for pro
tection, for encouragement, and for assistance
in their development; from the organization and
freedom and vitality of our economic life. The
domestic questions which engaged the attention
of the last Congress are more vital to the nat'on
in this its time of test than at any other time.
We cap not adequately make ready for any trial
of our strength unless we wisely and promptly
direct the force of our laws into these all-important
fields of domestic action. A matter
Which it seems to me we should have very much
at heart is tho creation of the right instrument
alities by which to mobilize our economic re
E,purces in any time of national necessity. I taKe
Itfor.granted that I do not need your authority
to. calUntb' systematic .consultation with the ai-
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