The Spanish War
AT the time of the declaration of war with Spain the finances of the Government were in excellent condition and the taxing machinery was in good working operation. Congress for the first time planned for war expenses on a really scientific basis by providing for an adequate scheme of taxation in connection with an issue of bonds. As far as taxes were concerned, reliance was placed almost wholly upon new internal revenue duties. For the first time a Federal tax was laid on legacies. An issue of $200,000,000 3% ten-twenty year bonds was authorized. These bonds were sold at par and almost immediately thereafter were quoted at a premium.
Upon the cessation of the war with Spain the Government found itself embarrassed by large surplus revenues and the process of debt paying began again. As there were no bonds subject to call, it was necessary for the Secretary of the Treasury to endeavor to buy bonds. He therefore in November, 1899, offered to purchase $25,000,000 4s of 1907 or 5s of 1904, but succeeded in obtaining something less than $20,000,000 bonds.
In 1900, upon the advice of Secretary Gage, Congress passed an act providing for the refunding of the Threes, the