Department; and as such, stated the public debt from 1789 to 1870, when the Secretary of the Treasury began to make up a public-debt statement, and ordered its adoption by the Register; which changed the amount of the debt statement for nearly every year from 1833 to 1870, and in the end increased the amount of the public debt, as stated in the official reports.

The same witness, Guilford, further testified (see testimony, p. 37):

Q. Now, do I understand that the public debt as stated to us is from the books or not?-A. It is a synopsis of the books, with the exception of those notes, a, b, c, and d, on Statement No. 2.

Q. With the exception of the $6,293,827.79 not on your books as public debt?—A. Yes, sir.

Q. Will you state briefly the difference between making a statement from receipts and expenditures and one from issues and redemptions?-A. The difference between them is that one is a statement of a loan issued but not negotiated, and the other of a loan which has not only been issued but has been negotiated.

Q. In making a public-debt statement from receipts and expenditures do you take into consideration the moneys received and paid for all expenditures of the government?-A. No, sir; only those on account of the loans and bonds.

Q. How many months are there between the end of your fiscal year and the time you make your statement to Congress as to the public debt?-A. We generally make our statement to Congress of the public debt in the Finance Report, which is sent in at the assembling of Congress; that is, five months after the close of the fiscal year. Q. You have from the end of the fiscal year to the assembling of Congress, five months, to make up the statement and see that it is correct?-A. Yes, sir; and also to close up our year. The fiscal year does not practically close for a month or two.

Here Mr. Guilford reiterates his statement that three items, amounting to $6,293,827.79, are not on the public-debt books, and yet they are added to make the statements agree.

ORGANIZATION OF THE WARRANT DIVISION AS IT NOW EXISTS.

Maj. J. T. Power, now chief clerk of the Treasury Department, and formerly chief of the Division of Warrants, Estimates, and Appropriations in the Treasury Department, testified (see testimony, p. 61): By the CHAIRMAN:

Q. When was the office you now hold created by law?-A. Since the organization of the department under Mr. Boutwell the Warrant Division has existed as at present; but the act of March 3, 1875, commonly known as the Kellogg bill, that fixed by law the organization of the Warrant Division as it now exists

Q. In what office, and how, was the branch of service that you now are engaged at attended to previous to 1870?-A. Previous to 1870 the duties now assigned to this division were performed by two divisions, the organization of the department then recognizing more divisions and subdivisions than at present. In 1870 Secretary Boutwell consolidated the different divisions and branches of his office in an organization about as it now stands. There have been some slight changes since. Q. And in 1875 this was recognized by law ?-A. Yes, sir.

From the above we see the Division of Warrants was organized in 1870 by the then Secretary of the Treasury, but was not known in law until 1875; yet, from this office, in 1870, the statement. was made upon which the Register was ordered to make changes in his statements of Receipts, Expenditures, and Public Debt, as reported to Congress in official Finance Reports in previous years.

And again (see testimony, p. 66):

By the CHAIRMAN:

Q. Take the statement marked "F" in the testimony before this committee and say whether the changes and difference between the figures are correctly stated in that statement from the Secretary and the Register, as they appear in the reports of 1870

S. Rep. 539-II

and 1871?-A. In this statement I see the first column of the Finance Report of the Secretary for 1870 at page 25 represents the outstanding debt at the end of each year from 1832-33 to 1870, inclusive. The second column shows the outstanding at the end of each year as taken from the Register's statement in the Finance Report of 1870 at page 276. The next two columns represent the Secretary's compared with the Register's, the first column showing the increase and the second the decrease. That increase represents the amount outstanding in one report in excess of the other report, and appears to be correctly taken from those Finance Reports.

Q. Was the Register's report changed between 1870 and 1871, as represented upon the right-hand column?-A. The Register's report for 1871 makes a different statement, showing a different amount outstanding for those years.

By Mr. DAWES:

Q. Different from what?-A. Different from the statement in the report of the year before.

By the CHAIRMAN:

Q. Was this different statement the result of the letter received from the Secretary's office?-A. It was.

Q. Are the amounts set forth in the increase and decrease columns of this table F the true amounts as to each year?-A. They appear to be the true amounts of the increase of one report over the other.

Thus Major Power certifies to the correctness of "Statement F," which shows changes in the debt statements for the years before mentioned, and to the fact that the changes were made between 1870 and 1871.

MANNER OF KEEPING THE ACCOUNTS.

In another portion of Major Power's testimony we find the following (see testimony, pp. 70, 83, and 84):

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By the CHAIRMAN:

Q. You have stated that if the accounts were kept with a view to keeping them by Receipts and Expenditures, they would be as true as if kept by Issues and Redemptions-A. Yes, sir.

Q. Were the accounts kept at that time in that way?-A. They were not so kept prior to 1870.

Q. Then they were kept by Issues and Redemptions?-A. Yes, sir.

Q. Did not the Issues and Redemptions show the true amount of the indebtedness of the government?-A. I believe so, in all cases except where errors crept into the statement, as they are liable to in any class of accounts.

Q But as to the system of keeping the books prior to 1870, could not the true amount have been stated by Issues and Redemptions of the public debt at any time?— A. Yes, sir; just as well.

Q. Cannot a correct debt statement be made from Issues and Redemptions exclusively for the years 1860 to 1870, inclusive ?-A. A correct statement of all Issues and Redemptions can be made, no doubt, between those two periods by accurate and careful accountants.

Q. Could a correct statement of the public debt be made up for each year, beginning with the organization of the government and coming down to 1870, from the Issues and Redemptions alone?-A. Yes, sir.

Q. If the debt was kept by Receipts and Expenditures alone, how could you manage with such items as the Revolutionary debt, Mississippi, Louisiana, Texas, Massachusetts, Eads' jetties, &c., where no receipts come into the Treasury?-A. By making a bookkeeper's entry under a title as “public debt for which no receipts come into the Treasury."

This statement of Major Power shows that the accounts could be kept just as well and accurately by Issues and Redemptions as by Receipts and Expenditures. In fact, they were from the beginning of the government to 1870 kept by Issues and Redemptions, and, as all agree, correctly and well kept.

The committee call attention to this portion of the testimony of Major Power (see testimony, pp. 71 and 72):

Q. Is it a fact, or not, that previous to 1869 the Secretary and Register, in report

ing the amount of the debt, substantially agree?-A. I believe they do. That is, I believe the Secretary's detailed report and the Register's tabulated statement substantially agreed in all previous years.

Q. Since 1870, do the Secretary and Register substantially agree as to the amount of the outstanding public debt?-A. Yes, sir; with the exception of a very small amount of $250, I believe.

Q. They agree, then, exactly except as to $250?-A. They do.

Q. Then the changes and alterations that appear in the public debt were made between 1869 and 1871?-A. Yes, sir. You say "changes in the public debt." They were changes in the reports, not in the public debt.

Q. Were or were not the figures as previously stated in the different Finance Reports from 1833 to 1870 stated in a different way in the Report of 1870 by the Secretary-A. They were.

Q. For each of those years?-A. The Secretaries differ in their reports. The Secretary for the year 1869 states the outstanding public debt of each year at a certain amount, and the Secretary at the time in his report stated the debt outstanding at the end of the same years somewhat differently.

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This is merely corroborative of the statement already made, that previous to 1870 and since 1871 no substantial differences appear between the Secretary and the Register in the statement of the public debt.

PACIFIC RAILROAD DEBT.

Attention is asked to the following extracts from the testimony of Major Power (see testimony, pp. 74 and 75):

By the CHAIRMAN:

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Q. You spoke a short time ago of the Pacific Railroad debt in 1869. Was the Pacific Railroad debt considered a part of the public indebtedness in 1869?-A. It is so reported in that report, under the head of "Statement of the indebtedness of the United States, June 30, 1869." On page 22 of the Finance Report for 1869 the item "Pacific Railroad Companies' bonds, $58,638,320," is included.

Q. In 1869, in the detailed statement of the Secretary, he includes in the public indebtedness of the country the Pacific Railroad debt, which amounts to the sum just named?-A. Yes, sir.

Q. In the report of 1870 does he also include it?-A. It is not included in the report of 1870.

Q. It is dropped?-A. It is dropped.

Q. Ought or ought not that to have reduced the public indebtedness by the amount of the Pacific Railroad debt when it was dropped?-A. It would have reduced the aggregate of the report of the outstanding indebtedness.

Q. The aggregate of the amount given to the public in the report?-A. Yes, sir.

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Q. There is an increase of the Secretary's statement over the Register's of $94,000,000; add the $58,000,000, and the increase would have been $152,000,000, would it not?-A. Yes, sir; about that.

Q. That being so, if the Pacific Railroad debt had not dropped out, but had been kept in the statement as it appeared in 1869, the increase in the debt of 1870, as stated by the Secretary, would have been about $152,000,000 instead of $94,000,000, would it not?-A. I believe that is correct.

In the official Finance Reports of 1869 and previous years, the bonds issued to the Pacific Railroad Companies were treated as part of the public debt, amounting, in 1869, to $58,638,320; but in 1870 this item was dropped from the public debt statement, and treated as a separate debt; and yet instead of the aggregate of the debt for the year 1869 being thereby reduced 58 millions, there was an apparent increase in the total of $99,000,000; and adding the 58 millions, the Secretary's statement showed an increase of $157,000,000 in the public debt over the amount of it as stated by the Register.

COMPARISON OF ACCOUNTS BY THE DIFFERENT BUREAUS.

Reference is made to the following testimony of Major Power (see testimony, pp. 76 and 77):

Q. Do your different bureaus or divisions in the department at stated periods make comparisons to see whether their accounts agree or not?-A. Every month a comparison is made by the three offices.

Q. What three?-A. The Register's, Comptroller's, and Secretary's. The different bookkeepers in these offices compare one with the other. They do not each compare with both the other offices; but the comparison is made by the Register's with the Comptroller's, and the Comptroller's with the Secretary's. In that way we have a comparison as well as a balance of each of the books every month, and these are compared with the aggregates on the Treasurer's books, and at the end of every quarter a complete balance of all the transactions for the quarter is made, which agrees to a cent in all branches of the department.

Q. That being so, how do you account for your being able in 1870 to go back to 1833 and make these different statements in amounts ?-A. In reply to that I should have to explain how the discrepancies arise, how this occurred.

Here it is shown, by a prominent and experienced official of the Treasury-one to whom the committee was specially referred by the Secretary for information on all points connected with the operations of the department-that the different bureaus or divisions of the Treasury at the end of each month, quarter, and year, compare books with each other, and if there are errors they are looked into and corrected. This, the committee are assured, has been the monthly, quarterly, and annual.practice of the offices of the Secretary, Comptroller, and Register from the organization of the government; and not only this, but the Treasurer's cash has always been counted quarterly and the warrants checked. Notwithstanding all this, in 1870, by an order of the Secretary to the Register, that officer, in 1871, made many changes in the statements of the public indebtedness from 1833 to 1870, and also made many changes in his report of the Receipts and Expenditures.

During the examination of Mr. Power, the following facts were elicited (see testimony, p. 79):

By the CHAIRMAN:

Q. I simply ask whether the debt, as it now appears on the 1st of July for the previous fiscal year, is made up in the Secretary's or the Register's office?-A. In the Secretary's office.

Q. Not in the Register's office?-A. Not in the Register's office.

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Q. From the first days of the government, from the time of Alexander Hamilton, were the debt statements made up by Issues and Redemptions?-A. By Issues and Redemptions.

Q. From the days of Hamilton, as Secretary, down to Mr. Boutwell's administration, they were made up by Issues and Redemptions solely ?-A. Yes, sir.

Q. All the Secretaries between Hamilton and Boutwell made them up by Issues and Redemptions, and there was no break in the form of making up those public-debt statements, was there?—A. I believe not; I believe they were uniformly made from Issues and Redemptions.

(See testimony, pp. 80 and 81.)

Q. The issue of bonds is not the question; it is keeping the debt now by Receipts and Expenditures. The law might authorize $5,000,000 of bonds to be issued and only $2,000,000 be issued; therefore you cannot take the law always.-A. The present system, adopted in 1870, would require the accounting officers to state an account for

the amount authorized by the law, which would pass into the Treasury as a receipt and be credited to the loan as a subscription.

Q. But that is assuming something; that is giving the accounting officers a discretion to assume. If Receipts and Expenditures were the true way to keep the public debt, why would not this statement show the true amount of the public debt?-A. Referring to my former answer, this is an evidence of the fact I stated, that keeping the accounts by Receipts and Expenditures only is the most unreliable form, and that by Issues and Redemptions the better; but to join the two together, so that one will correct and check the other, is the best system.

This officer says that "keeping the accounts by Receipts and Expenditures only is the most unreliable form, and that by Issues and Redemptions the better."

Previous to 1870 the public-debt statement and the statement of Receipts and Expenditures were both made up each and every year in the Register's Office, and there by right and by law the duty belongs. The bureau in the Secretary's office from which emanate the statements of the public debt was not known in law until 1875. From the organization of the government, when Alexander Hamilton was Secretary of the Treasury, to 1870, the public-debt statement was made on the basis of "Issues and Redemptions," and it appeared to be free from error. In 1870 this mode was changed and the statement made on the basis of "Receipts and Expenditures." For over three-quarters of a century down to 1870 one system had worked well and satisfactorily; it had been approved by successive administrations of various parties. But in 1870 a new statement was made, going back nearly forty years and changing the amounts reported for almost every one of the intervening years, thereby apparently increasing the amount of the public-debt statement and of the Expenditures statement by almost a hundred million dollars in a single year.

DIFFERENCE BETWEEN RECEIPTS AND EXPENDITURES.

Major Power testifies (see testimony, pp. 80 and 81):

By the CHAIRMAN:

Q. Look at the report of 1871, at page 20, and state what the total receipts of the government up to June 20, 1871, were.-A. The total receipts received into the Treasury on account of loans were $7,094,541,041.38.

Q. The net expenditures?-A. $4,857,434,540.51, leaving a balance of $2,237,106,500.87. Q. State what the difference is between that and the actual amount of the public debt at that time.-A. The actual public debt was $2,353,211,332.32.

Q. What is the difference between the actual debt and what it would appear to be on the basis of Receipts and Expenditures?-A. $116,104,831.45.

Q. If Receipts and Expenditures were the true way to keep the public debt, ought not the difference between Receipts and Expenditures to have shown the actual amount of the public debt?-A. It should have shown the actual amount of the public debt plus the amount of loans or bonds issued for which no receipts came into the Treasury. Q. You have said that it does not state the true amount of the public debt by $116,000,000, in round numbers. What is the reason why it does not show the true amount?-A. On account of the loans that were issued and redeemed afterwards, for which no receipts came into the Treasury, and various items of discounts, premiums, and interest charged as principal.

Q. If that be so, Receipts and Expenditures alone would not show the actual public debt?-A. Not unless you add these items for which no receipts were received.

Mr. Bayley, of the Secretary's office, testifies (see testimony, p. 121): By Mr. DAWES:

Q. When did this $116,000,000 first appear in the Finance Report?-A. The first note is in 1871.

Q. When did this $116,000,000 first appear; what is it a discrepancy between?-A. The discrepancy is between the amount received on account of loans and Treasury

notes.