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Here it appears from the testimony of Mr. Saville that the system was changed in 1870, and he gives the figures which show that in 1862 the statement of the public debt was apparently increased nearly $10,000,000; in 1863 $20,000,000, and in 1864 $75,000,000.

In speaking of keeping the account of the Public Debt by Issues and Redemptions, or by Receipts and Expenditures, Mr. Saville says (see testimony, p. 214):

Q. Suppose it had not made an appropriation; suppose, as in the Eads jetty matter or as in the Revolutionary Debt, there was an act directing so many bonds to be issued to pay a certain debt, how would you manage if there was no appropriation made ?A. You have in the statement of the Public Debt an exact case like that, the Oregon war debt. There was no appropriation made, but bonds were issued directly to the claimants in payment of money, but no money ever came into the Treasury.

Q. How did you manage that?-A. The entry could not be correctly and legally inade without a change in the law so as to authorize the accounts to be kept in the way I have suggested; but I did not prepare a bill with that end in view.

Q. But no such law has ever been passed ?-A. No, sir.
Q. And yet the entries were all made ?-A. You mean the entries are all made in the

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Q. Yes?-A. Certainly.

Q. Then they were made without law, but believed to be correct?-A. The entries are not made by Receipts and Expenditures.

Q. Of course not!-A. They are made by issues.

Q. That is just my point, that you cannot make them by Receipts and Expenditures and must do it by issues!--A. The only account since the 1st of July, 1871, that I recall in which that condition of things occurs is in that northeast boundary case I have just spoken of. I know of no other except the Eads jetty issue, and I have no idea of how they did about that.

Thus Mr. Saville shows that in order to state the Public Debt by Receipts and Expenditures it would be necessary to make entries for which there is no warrant of law. No good and substantial reason has yet been given for changing the Hamilton system of keeping and stating the Pub. lic Debt by “Issues and Redemptions.” On this point Mr. Sherman, the present Secretary, said in the Senate in 1876:

I have often heard it complained that the system of keeping accounts in some branches of the service ought to be changed, but it is a very difficult and a very dangerous process, and I invite the careful scrutiny of any man who undertakes to improve on the work of Alexander Hamilton and Albert Gallatin and all the great men who have filled the office of Secretary of the Treasury, and to devise a better system of accounting than they with their mature minds and long experience established, and which has been enlarged with the gradual growth of our government. Their system has been the frame-work of our finances for more than eighty years. The gradual additions to the mode of accounting that have been made by law have probably made as perfect a system as can be devised. But he must be a bold man and a wise man who will undertake, without study and experience, to step in and devise a better system than this. If we had such a man, if there is such a one who is willing to undertake the task, I shall be very glad to co-operate with him. I doubt very much the propriety of any tinkering with so complicated a machine as the Treasury Department.

On page 216 of the testimony will be found the following statement by Mr. Saville concerning the dropping from the statement of the Public Debt of the Pacific Railroad bonds :

By the CIIAIRMAN:

Q. Have you any recollection, in making up your debt statement, of what is known as the Pacific Railroad bonds, a debt of about $38,000,000 in round numbers 1-A. Yes, sir.

Q. Do yon recollect whether or not these bonds had been in the Public-Debt statement and treated as a part of the Public Debt up to 1869 1-A. I think these bonds were treated as part of the Public Debt prior to the time of Mr. Boutwell taking charge of the department.

Q. When was that item dropped from the Public Debt of the United States and treated as a separate Pacific Railroad debt?-A. I think it was in March or April, 1869. When Mr. Boutwell took charge of the department one of the first acts of his adininistration was to take it out of the body of the debt, if my memory serves me, and put it by itself as a Pacific Railroad debt.

Q. Qught that, or not, to have reduced the total amount of the public debt the exact amount of what was known as the Pacific Railroad debt?-A. It should have reduced the principal of the debt by the amount taken out, of course.

Q. That amount was abont fifty-eight million dollars 1-A. $58,638,320 on the 1st of July, 1369, but on the 30th of June, 1868, the amount was only $29,089,000.

Mr. Saville here says that the Pacific Railroad debt, amounting then to over $58,000,000, was dropped or taken from the statement of the government debt in 1869, when previously it had been included in the debt statement as part of the public debt of the United States. He also says that this withdrawal of the Pacific Railroad debt ought to have reduced the total of the public debt statement $58,638,320.

Mr. Saville also says (see testimony, p. 217):

Q. Do you recollect a letter written by you as chief clerk, for the Secretary, in 1871, to Mr. Allison, Register, in regard to some change that you wished in the manner of reporting the public debt!-A. Yes, sir. I think, perhaps, it covers more than that. I have not seen the letter for many years, but I think it probably covers all classes of accounts.

Q. (Exhibiting letter of November 24, 1871, of Mr. Saville to the Register of the Treasury, published on page 5 of this testimony.) Did you consult Mr. Boutwell before you wrote that letter 1-A. I think I did.

This only confirms what several witnesses say, that the letter to Register Allison to make changes in the official Finance Report of 1871 was with the full knowledge of the then Secretary of the Treasury, and that it was meant to be and was treated as an official order by that officer.

Mr. Saville further testifies (see testimony, p. 218):

Q. The fiscal year ends in June?-A. On the 30th of June of the same year, five months prior.

Q. Was not that time enough to collect and include any warrant that might have been out?-A. Yes, sir; sixty days is time enough to have all the moneys deposited covered in.

Q. There is for that one year an actual difference between the 1869 report and the 1871 report, as changed by yourself, of nine million dollars in round numbers 1-A. There is an actual difference of nine millions and more.

Q. And the statement made in 1871 by yourself increases the amount of the public debt for 1862 nine millions ?-A. Yes, sir.

This is but a repetition of what has heretofore been testified to, that as the fiscal year ends on the 30th of June, months elapse before all the accounts are in fact closed, and reports of their condition made to Congress; that sixty days is time enough to have all moneys deposited cov. ered into the Treasury, and that the statement made in 1871 did apparently increase the debt for 1862 $9,000,000.

In reference to erasures, &c., Mr. Saville testifies (see testimony, pp. 220 and 221):

Q. Are you speaking now of the day-books and journals, or of the ledgers I-A. The day-books, journals, and ledgers, but mainly the registers, or day-books, as they might properly be called.

Q. Do you think it would be good bookkeeping to carry erasures into the ledger? Of course a ledger is made up from the day-books and journals, and do you think it would be good bookkeeping to make “lots” of erasures and alterations, as you expressed it, in the ledgers ?-A. I should not call it good bookkeeping. I would not employ a bookkeeper who did much of it.

Q. Is there authority, to your knowledge, anywhere that will permit any person to alter a warrant after it has been signed by the Secretary 1-A. No; I think there is

no written authority to that effect, no authority of law. Custom is the only authority.

Q. Do you say it is customary to alter warrants ?-A. No; I say custom would be the only authority.

Q. Have you ever altered a warrant!-A. I presume I have; but I do not know. If I ever did alter a warrant, it was with the authority of the officer who signed it. I never altered a warrant without the authority of the Secretary of the Treasury to do it.

Q. If the Secretary of the Treasury was there to give you anthority, could you not make a new warrant ?-A. A new warrant could have been made to take the place of the old one.

Q. Would not that have been the proper way?-A. I think it would have been mnch the best way.

Q. Would you, as chief of the Warrant Division, have sent an appropriation warrant, for example, to the Secretary of the Treasury with erasures on it?-A. An appropriation warrant would not necessarily be altered, and probably never was altered. It would hardly ever be necessary to alter appropriation warrants, because they are based on the acts of Congress appropriating money.

Q. Suppose it is a permanent or indefinite warrant ?- A. That would not be altered in any material matter; if it was altered in figures or language, or anything of that kind, the Comptroller would refuse to sign it, and the Register would refuse to record it, if there was an alteration or an erasure on it that was not self-evidently proper.

Mr. Saville says he would not call it good bookkeeping to make erasures in the ledgers, and would not employ a bookkeeper who did much of it; and yet thousands of erasures and alterations on the ledgers of the Treasury Department appear between 1860 and 1870. This witness says he never altered a warrant without authority of the Secretary of the Treasury to do it," and that much the better way would have been to prepare a new warrant, and that appropriation warrants especially ought not to be altered. And yet it is shown that the large permanent appropriation warrant for 1869 las several apparent alterations upon it, and it may be that those that cannot be found are in like condition.

On page 225 of the testimony Mr. Saville, when asked if the books of the various other departments ought not to agree with those of the Treasury as to the amounts of money received and expended by those departments, replied: "They ought to agree every time." But it has been heretofore shown that there are large differences between some of the other departments and the Treasury when their books are compared.

Attention is called to the following extracts from the “Report of the Joint Select Committee on Retrenchment,” made to the Senate, March 3, 1869, by Senator Edmunds, chairman.

It shows that a large amount of notes and bonds at that time were unaccounted for; that the methods of accountability and comparison between the various bureaus in the Treasury Department have been, since the war, quite imperfect and deficient and grossly careless; that bonds were duplicated, and that the signatures of the Register and Treasurer were engraved and printed from the same plates as the notes themselves; that the books and accounts between the various subdivisions of the printing establishment have been until recently (to say nothing of the defects still existing) so irregularly kept, and contain, many of them, on examination, so many erasures and alterations as considerably to diminish confidence in the accuracy of results derived from such sources. That, to put the best face on it, it is evident that the course of things there has not been such as to merit commendation in many respects; there has been inexcusable neglect and carelessness in the methods and operations of the bureau which furnished abundant opportunities of and temptations to fraud and crime by the persons connected with it.

S. Rep. 539— IV

A condensed statement of bond and note account compiled from Senator Edmunds's report of

the Joint Select Committee on Retrenchment, made to the Senate March 3, 1869.-(S. Rep. No. 273, 40th Cong., 3d Sess.)

DEFICIT.

Page 5 1 bond, 000, unaccounted for....
Page 26 26 bonds, 50s, not satisfactorily accounted for ....
Page 267, 072 bonds, 1009, not satisfactorily accounted for ...
Page 261, 037 bonds, 500s, not satisfactorily accounted for ..
Page 26 368 bonds, 1, 000s, not satisfactorily accounted for.
Page 29 4 bonds, 1, 000s, unaccounted for.....

$1,000 00

1, 300 00 707, 200 00 518, 500 00 368, 000 00

4, 000 00

1, 600, 000 00

Total deficit in bonds........
Page 8 2 Treasury notes, 1861, $500s, unaccounted for .......
Page 16 283 7-30 coupon Treasury notes, $50s, unaccounted for.....
Page 16 73 7-30 coupon Treasury notes, 100s, unaccounted for....
Page 16 50 7-30 coupon Treasury notes, 1, 0008, unaccounted for.....
Page 16 79 7-30 coupon Treasury notes, 5, 000s, unaccounted for...
Page 64 36 2-year 5 per cent. Treasury notes, $50s, unaccounted for...
Page 64 3,456 2-year 5 per cent. Treasury notes, 100s, unaccounted for.
Page 64 104 2-year 5 per cent. Treasury notes, 500s, unaccounted for..
Page 64 4,968 2-year 5 per cent. Treasury notes, 1, 000s, unaccounted for..
Page 69 1 476 gold certificates, $5,000s, unaccounted for....
Page 82 840 legal-tender notes, 10s, unaccounted for....
Page 84 Postage currency, 58, unaccounted for ..
Page 84 | Postage currency, 108, unaccounted for ...
Page 84 Postage currency, 258, unaccounted for ....
Page 84 | Postage currency, 50s, unaccounted for ..
Page 84 Fractional currency, 5s, unaccounted for..
Page 85 Fractional currency, 25s, unaccounted for.
Page 86 Fractional currency, new issue, 508, unaccounted for.
Page 90 900 certificates of indebtedness, $1,000s, unaccounted for ..
Page 91 | 9, 800 certificates of indebtedness, 5, 000s, partially accounted for.

1. 000 00 14, 150 00

7, 300 00 50, 000 00 395, 000 00

1, 800 00 345, 600 00

52, 000 00 4, 968, 000 00 2,380,000 00

8, 400 00

654 00 308 00

900 00 1, 832 00 17,528 00 40, 002 50 36,007 50

900, 000 00 49,000,000 00

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58, 220, 482 00 1, 600, 000 00

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EXCESS.

Page 65 1 32 2-year 5 per cent. Treasury notes, $50s, unaccounted for......
Page 66 3,456 2-year 5 per cent. Treasury notes, 100s, unaccounted for.......
Page 84 | Fractional currency, 108, unaccounted for ............................
Page 85 Fractional currency, 50s, unaccounted for......
Page 86 Fractional currency, new issue, 25s, unaccounted for .....

$1, 600 00 345, 600 00 57. 305 00

6,005 00 30, 303 00

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Extracts taken from Senator Edmunds's report of the Joint Select Committee on Retrenchment

made to the Senate, March 3, 1869. (8. report No. 273, 40th Congress, 3d session.)

Page 86. In regard to the discrepancies in fractional currency, the committee remark:

“It is suggested that these enormous discrepancies are to be accounted for by a confusion of issues and denominations, and they might have occurred in that way without any criminal misconduct on the part of anybody. Whether they did, in fact, occur in that way, the committee are unable certainly to ascertain."

Page 91. In explaining the difference of $49,000,000 in the certificates of deposit, the committee say:

"The committee believe this to be a fact, but feel bound to make the same observation as before touching such carelessness in keeping accounts."

Page 97. The committee say:

“ The methods of accountability and comparison between the various bureaus in the Treasury Department, as well as their own operations, have been, since the war began, as it seems to us, quite imperfect and deficient, and in some respects grossly careless."

Page 99. In respect to the duplications of the third series of the 5.20s of 1862, the committee observe:

66 But the committee are entirely satisfied that the duplicates in question were duplicated in the Treasury and not out of it. By a careful comparison with the genuine bonds and coupons in the Treasury, it seems to the committee certain that these duplicates were printed, both faces and backs, in the Treasury, and sealed and numbered in the Treasury."

Page 100. “As to the 7.30s of 1864, nothing was required to make the notes themselves perfect for issue after they left the Printing Bureau and the sealing department attached thereto, where the red seal was imprinted upon them, as they did not bear the seal of the Treasury proper, and the signatures of the Register and Treasurer were engraved and printed from the same plate as the notes themselves. The committee find that a considerable number and amount of those appear to have been duplicated originally, and it is impossible, as is said in respect to the coupons, to know certainly at this time whether these duplications are mere innocent mistakes or are fraudulent."

Page 101. In regard to the issuing of notes and bonds the committee remark:

"All these circumstances have satisfied the committee that the methods of printing, numbering, sealing, and issuing of the securities of the United States ought to be adopted which will approach the nearest to being absolutely secure against error and fraud, even if such methods should be much more expensive than others having less guarantees of protection. And it is obvious to the committee that the highest safety is to be attained by so conducting the work that no one or even two departments should have it in their power to finish any note, bond, or coupon, but that one part of the engraving on the securities should be printed by one establishment, and a succeeding part by another department, entirely distinct and separate from the first, and that the final process of sealing and signing should be done by still another distinct and separate department and in the Treasury.”

Page 102. In respect to the books and accounts the committee remark:

“The books and accounts between the various subdivisions of the printing establishment have been, until recently (to say nothing of defects still existing), so irregularly kept, and contain, many of them, on examination so many erasures and alterations, as considerably to diminish confidence in the accuracy of results derived from such sources."

Of the discrepancies and difficulties in the operations of the bureau the committee say:

* To put the best face on it, it is evident that the course of things there has not been such as to merit commendation in many respects, as will be seen from the evi. dence herewith returned. Many things have been done which, although perhaps innocent in themselves, could but have a demoralizing tendency, and to suggest opportunities and methods of fraud to employés.

“The committee have inspected the operations of the bureau as thoroughly as possible, and have examined many witnesses in relation to it, whose testimony is returned herewith; and they have also informally conferred with and examined many others. The result is, that while we cannot find that the persons in chief charge have been guilty of any crime or intentional wrong towards the government, there has been inexcusable neglect and carelessness in the methods and operations of the bureau, which furnished abundant opportunities of and temptations to fraud and crime by the persons connected with it. How it will turn out remains to be determined whenl oans are withdrawn. But as to fractional currency particularly, if any fraud has occurred it can never be ascertained from redemptions unless the frauds have been enormous in amount.”.

We have reviewed Mr. Saville's testimony by itself, owing to the fact that he was chief clerk in the Treasury Department in 1870 when most of the apparent changes and alterations were made; and is the only person not now in the employ of the Treasury Department examined by the committee.

The committee have quoted largely from the testimony of Major Power, because he is a very intelligent man, with great experience in different divisions of the Treasury Department, was chief of Warrant Division of Treasury Department, and was selected by Secretary Sherman to furnish statements, books, and general information to the committee.

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