Mr. Motley to Mr. Seward.
Sir: I have had the honor to receive your despatches Nos. 211, 212 and 213, of dates November 30th and December 12th, 1866, in answer to sundry despatches of my own.
I send herewith the official Gazette of Vienna, of December 31st, 1866. It contains: 1. An imperial decree upon the basis of the patent of September 20th, 1865, (by which the Reichsrath was suspended,) establishing a finance law or budget for the year 1867. 2. The detailed estimates of receipts and expenditures for the years 1867 and 1868. 3. A report from the finance minister, Count Larisch Monnich, addressed to the Emperor. As the document may have interest for the honorable Secretary of the United States Treasury, I beg respectfully that it may be handed to him. It will be seen that the expenses for the year 1867 are estimated at 433,896,000 florins; the receipts are estimated at 407,297,000 florins. The deficit for 1867 is, therefore, assumed to be 26,599,000. To this is to be added the deficit of the previous year, viz: 51,034,000 florins, making a total deficit of 77,633,000 florins.
On the other hand, there remains at the disposition of the minister, in funds to be realized from extraordinary resources, under the laws of May 5th and August 21st, 1866, a sum of 79,495,000 florins.
These figures show a much less formidable deficit than in previous years, while, according to the statement, there will be at the end of the year 1867 a balance of 1,862,000 florins to the credit of the government, after covering the regular liabilities of the past and current years. There will thus remain only the deficit to be met, which appears very moderate after the late disastrous war.
The emission of notes has been limited to a certain extent by having recourse to other means.
This was done, says the minister, by issuing the new five per cent, loan under the law of August 25th, 1866, and by the raising of the 30,000,000 florins for war expenses paid to the Prussian government.
To raise these 30,000,000, being payable in silver, by means of notes was not advisable, because the purchase of silver, or of exchange, would have enormously raised the premium on specie. An arrangement was accordingly made with an association of bankers and credit institutions here, who, upon a deposit of securities, pledged their private credit with the national bank for the cash payment of the required 30,000,000 of florins, and were reimbursed by the successive receipts of the indemnification sum of 35,000,000 of florins, stipulated by treaty, from the kingdom of Italy.
The operation will be completed in the course of the year 1868, without being brought into the regular estimates, and there will remain a balance of 5,000,000, which your Majesty has decided to employ for defraying the expenses of extraordinary works of fortifications.
The minister continues :
The emission of five per cent, tax, free of state obligations, for the sake of producing an effective amount of 50,000,000 florins, was resorted to, because it is by no means indifferent whether the non-circulation amounts to 50,000,000, more or less; because, further, a channel ought to be provided for carrying off the superfluity of money certificates; and because, lastly, through the successive sale of obligations, the placing of a portion of them abroad may be reckoned upon, by which an inflow of specie must result, and a counter-check be established to the rise of the specie premium.
The somewhat favorable condition of the finances, as compared with what might have been expected, is ascribed to the brief duration of the war, and to the subsequent and rapid increase in trade, especially of export trade. A great reduction of expenses in all departments is insisted upon and expected by the minister.
After exclusion of the receipts and expenses of the Lombardo-Venetian kingdom, the state, expenses for 1866 amount to 507,921,000 florins; those for 1867 to 433,896,000; hence, there is a diminution of 74,025,000 florins, and it is superfluous to call your attention to the fact that, on the correctness of these [Page 555] calculations and previsions must depend that disappearance of the deficit at the end of 1868 on which the minister reckons, in case there should, meantime, be no foreign war.
The power to emit paper currency has been used up to the extreme limit allowed by law, viz: 400,000,000 florins, in order to provide for the exigencies of 1867. The minister, far from wishing, however, an extension of this limit, expresses a strong desire and intention of gradually reducing the currency and of taking every means for moderating, beforehand, those convulsions and sacrifices usually caused by a return to specie payments after a long period of inconvertible currency.
The extraordinary credits opened for the war department since May, 1866, over and above the estimates in the budget, at the beginning of the year, amount to 164,551,000 florins. This sum was chiefly met by the emission of paper money.
Within the limits of this despatch, it would hardly be in my power to go any further into details. The accompanying official report gives every item of receipts and expenditures. The report is severely criticised, in the absence of any legislative body, by the journals opposed to the government, and much doubt is expressed in regard to the retrenchments in almost every branch of administration, on which the minister relies. Only the very sanguine, I should think, have great confidence that, for instance, the total army and navy expenditures for the year 1867 will be kept within the present estimates of 81,158,000 florins.
These figures, as compared with the expenditures not only of the year just ended, but with those of many previous years, seem extremely moderate. On the other hand, the perfectly straightforward and honorable character of the finance minister does not permit a doubt as to his sincerity in making up his general budget.
The sum total of the public debt has not been again reported since my last despatch in regard to that subject. I find in the present report of the finance minister the estimates of interest to be paid on the debt, funded and floating, stated at 120,812,000 florins. This, of course, does not include the “Grundentlastungs obligationen.”
I have the honor to remain, sir, your obedient servant,
Hon. William H. Seward, Secretary of State, Washington, D. C.