CHAPTER IV.: Principal Sources of Revenue.

The startling fact which appears upon the first analysis of the sources of the national revenue is that what are known as the miscellaneous permanent receipts of the government which are derived from other sources than the ordinary internal and customs taxes, averaging twenty-five million dollars a year, when combined with the revenue from domestic and imported liquors and tobacco, sufficed to cover, within a small fraction, all the expenditures of the government of every name and nature except the disbursements for pensions in the fiscal year ending June 30, 1891, and will more than suffice for the same purposes in the present fiscal year which will terminate June 30, 1892.

In other words the revenue now derived from miscellaneous permanent receipts is now in excess of the interest on the public debt and the revenue from liquors and tobacco is now in excess of the disbursements for the civil service,—the judiciary, the army, the navy, public buildings, fortifications, the construction of naval vessels, rivers, harbors, the support of Indians and even the probably unconstitutional and wholly unlawful misappropriation of the revenue to bounties to sugar planters and maple-tree tappers.

In dealing with the figures of this account we may first put down what are called the miscellaneous permanent Edition: current; Page: [18] receipts. They consist of the sales of public lands, consular fees, interest in part recovered, and contributions to the sinking fund of the Pacific Railways, incomes from trust funds for soldiers’ homes, sales of government property, taxes on property in the District of Columbia, profits on coinage, and some other small matters; to which may be added bank taxes, taxes on oleomargarine, and other internal revenue receipts distinct from liquors and tobacco; all of which amounted in the fiscal year ending June 30, 1891,

To	$28,392,877 55

The revenue attributable to liquors and tobacco in the same fiscal year was as follows:

Internal Revenue, spirits	$ 83,335,963 64
Customs Revenue, spirits	3,437,571 00
Customs Revenue, wine	5,229,833 00
Internal Revenue, beer	28,565,129 92
Customs Revenue, beer	835,922 00
Internal Revenue, tobacco	32,796,270 97
Customs Revenue, tobacco	16,172,277 00
Total revenue from liquors and tobacco	$170,372,967 53
Total with permanent receipts	$198,765,845 08

By reference to the previous statement of expenditures in Chapter III., it will be observed that the normal expenditures of the government in the same year were

Cost of government, rivers, harbors, naval vessels, Indians, interest on debt, and all other disbursements of a recurrent kind except for pensions	$201,554,850 50
The deficiency of revenue from liquors and tobacco and permanent sources was only	2,789,005 42

The miscellaneous permanent receipts have not varied greatly for many years. The average revenue from liquor and tobacco—

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From 1871 to 1880, was	$112,000,000 00
From 1881 to 1890, was	142,000,000 00
In the fiscal year ending June 30, 1889, it was	148,883,778 00
In the fiscal year ending June 30, 1890, it was	163,490,778 00
In the fiscal year ending June 30, 1891, it was	170,372,967 00

It comes to between $2.60 and $2.70 per head.

On this basis the revenue from liquors and tobacco for the fiscal year ending June 30, 1892, will probably exceed	$180,000,000 00
The permanent receipts may be computed at	25,000,000 00
Total	$205,000,000 00

On the other hand, the interest account has been reduced about $5,000,000, so that if the present Congress shall not exceed the appropriations of the last, these sources of revenue, liquors, tobacco, and miscellaneous permanent revenues, will yield at least $15,000,000 in excess of all charges except pensions. This sum will more than cover bounties on sugar, if the Supreme Court permits such bounties to be paid.

The revenue from customs after deducting that derived from liquors and tobacco may therefore be dealt with as the source from which pensions are to be paid.

In the fiscal year ending June 30, 1891, the total revenue from customs was		$220,488,327 05
Amount returned in rebates and drawbacks		11,937,408 79
True customs revenue		$208,550,918 26
Already set off against normal expense the customs revenue from liquors and tobacco		25,675,603 00
		$182,875,315 26
Duties removed under last tariff bill:
Sugar	$32,468,339 00
Some other petty articles, which have been added to the free list, make the probable reduction of revenue through the remission of taxes		35,000,000 00
Balance		$147,875,315 26

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On the other hand, the customs revenue may be computed for the fiscal year ending June 30, 1892, upon the supposition that the increased revenue now accruing from the advance in rates on tin-plates, wool and machinery, of which the imports are increasing, will more than offset the reduction of revenue due to the advance in rates upon other goods. The revenue from customs on other articles than liquors and tobacco for the present fiscal year may therefore be estimated at $160,000,000, which would correspond to the estimate of the Secretary of the Treasury.

Estimate of pensions as given by the Secretary of the Treasury	$125,000,000 00
Excess of customs revenue	$ 35,000,000 00

This excess may be applied to additions to the free lists, as we are far in advance of the requirements of the sinking fund for reduction of debt.

In dealing with the government account, the simplest way is to pay no regard to what are called the requirements of the sinking-fund act. It provides for nothing but a sort of hocus-pocus or juggle in bookkeeping, or in the method of keeping the national accounts. As a matter of fact the framers of the act never dreamed of the rapid payment of our debt; the liquidation is already far in advance of what they wished to secure.

In dealing with this excess, consideration may be given to the classification of dutiable imports with reference to their use, and for this purpose we may reverse the customary order, placing the articles which may be rightly subject to revenue duties at the head.

The following table gives the revenue from customs in the fiscal year ending June 30, 1891, omitting sugar, sisal, and other vegetable fibres, now on the free list; also omitting liquors and tobacco:

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Class E—Articles of voluntary use, luxuries, etc., etc	$31,386,772 00
Class D—Manufactured goods, ready for consumption	74,397,070 00
	$105,783,842 00
These two classes more than cover the annual pension roll computed separately from arrears or first payments.)
Class C—Materials partly manufactured, which are used in domestic industry, including tin-plates	$25,139,483 00
Class B—Articles in a crude condition, commonly called raw materials	12,948,160 00
Class A—Articles of food and live animals	13,078,035 00
Fines, Penalties and miscellaneous	3,731,599 23
Total	$160,681,039 23
Pensions estimated by the Secretary of the Treasury	125,000,000 00
Excess	$ 35,681,039 23
On the basis of the treasury estimates the excess could be appropriated to the abatement of duties on all articles of food, omitting fruits and nuts by which remission the reduction of revenue would be	$9,000,000 00
All articles in a crude condition could then be added to the free list	13,000,000 00
Abatement of taxes on tin-plates	11,000,000 00
	$33,000,000 00

and yet the excess would not be exhausted.

I am aware that this estimate of surplus differs in slight measure from the computations submitted by the Secretary of the Treasury. It may be remarked, however, that the conservative estimates of prospective revenue submitted by the executive officers of the Treasury for very many years have almost invariably been exceeded and that it is now apparent that even the estimates which I have taken in the present computations are already certain to be exceeded, even in the present fiscal year.

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