xpenses largely, thus, after funding, justifying a greater reduction
of taxation than would be now expedient, I suggest postponement of this
question until the next meeting of Congress.

It may be advisable to modify taxation and tariff in instances where
unjust or burdensome discriminations are made by the present laws, but
a general revision of the laws regulating this subject I recommend the
postponement of for the present. I also suggest the renewal of the tax
on incomes, but at a reduced rate, say of 3 per cent, and this tax to
expire in three years.

With the funding of the national debt, as here suggested, I feel safe in
saying that taxes and the revenue from imports may be reduced safely
from sixty to eighty millions per annum at once, and may be still
further reduced from year to year, as the resources of the country are
developed.

The report of the Secretary of the Treasury shows the receipts of the
Government for the fiscal year ending June 30, 1869, to be $370,943,747,
and the expenditures, including interest, bounties, etc., to be
$321,490,597. The estimates for the ensuing year are more favorable to
the Government, and will no doubt show a much larger decrease of the
public debt.

The receipts in the Treasury beyond expenditures have exceeded
the amount necessary to place to the credit of the sinking fund, as
provided by law. To lock up the surplus in the Treasury and withhold it
from circulation would lead to such a contraction of the currency as to
cripple trade and seriously affect the prosperity of the country. Under
these circumstances the Secretary of the Treasury and myself heartily
concurred in the propriety of using all the surplus currency in the
Treasury in the purchase of Government bonds, thus reducing the
interest-bearing indebtedness of the country, and of submitting to
Congress the question of the disposition to be made of the bonds
so purchased. The bonds now held by the Treasury amount to about
seventy-five millions, including those belonging to the sinking fund.
I recommend that the whole be placed to the credit of the sinking fund.

Your attention is respectfully invited to the recommendations of the
Secretary of the Treasury for the creation of the office of commissioner
of customs revenue; for the increase of salaries to certain classes of
officials; the substitution of increased national-bank circulation to
replace the outstanding 3 per cent certificates; and most especially to