on these statements in connection with other clerks in the Secretary's office, but how many were from the Secretary's office I do not know. I think they were at work less than a year.

And on page 72 the same witness says:

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.

The same witness, on page 97, says:

Q. In making these different statements since 1870, has a single figure been changed on the books of the department?-A. Not one.

Q. It is only a different method of putting together what the books state?-A. Precisely.

Q. Is the same true in relation to the statements of receipts and expenditures for past years?-A. It is the same, but receipts and expenditures have always been stated from what is called the Receipts and Expenditures account, the difference arising in them from a difference in stating, one by warrants paid, and the other by warrants issued. That is another class.

The revision of these tabulated statements, in addition to correcting errors in judgment, discovered and corrected numerous errors and blunders:

Glenni W. Scofield, on page 19, says:

Q. So that in fact the material changes, whether they were the system or what not, that occurred, occurred between 1869 and 1871?-A. I think they occurred in 1871 exclusively, with the exception of a blunder in this tabulated statement which was made by Mr. Nevin-he did not know how to make it-the blunder of deducting the cash in the Treasury.

#

*

Q. You speak of the great discrepancy in 1869 and 1870. How do you understand that that originated?-A. My understanding is that it originated in the Receipts and Expenditures Division, by the chief of that division taking the monthly public-debt statement as a guide to him instead of going to the books of that division; he thought that was an official statement. That is my understanding of it.

Q. And he deducted the cash in the Treasury from the amount of the debt?—A. That is apparently the way in which he arrived at the figures which were published in the Register's report.

William Guilford, on page 26, says:

Q. I understood you to say, in answer to Senator Davis, that there were clerical errors in the statements of 1869 and 1870. Will you now state the nature of those errors and the extent of them, as nearly as you can?-A. The public debt, in the statements for 1869 and 1870, was stated by the head of the division, who had no practical experience in the business, and he was told by Mr. Saville that he must make it agree with the public-debt statement of the Secretary. Instead of making it up from the books of the Register's office, he sent up-stairs and got the public-debt statement for the last month of that year from the Secretary's office. In this public-debt statement, as you are aware, I presume, there is a column "principal of the public debt"; there is then a column of interest, which added is carried out, making so much. Then there is a column of "cash in the Treasury" which is deducted, leaving a net total of so much. Instead of taking the figures of the principal of the public debt, he took the figures below, which gave the present debt plus the interest and minus the cash in the Treasury, making one hundred million dollars difference from what the real state of the public debt was. He took that for the two years 1869 and 1870, as you can readily see by referring to the public-debt statements of those two years. Q. That accounts for the errors there?-A. Yes, sir.

Of the fact that such a revision was necessary and proper there can be no possible doubt.

Joseph T. Power, on pages 79 and 80 of the testimony, says:

By the CHAIRMAN :

Q. In your judgment, was there a necessity for going back for 30 or 40 years (as was done in 1870) to get the items for stating the public debt in the way which you now think is the best way?-A. Yes; it could have commenced there, but not without going back and stating the account up to that date from some period when the public

debt was commencing or where it could be determined with perfect accuracy. The statement, as furnished in the report of 1870, at page 24, is the approximation to that; that is, to furnish the basis for the commencement of this account in 1870.

Q. Now explain why you could not have assumed that the debt was a given amount in 1870, and commenced your system from there? In other words, why you could not have taken what the debt appeared to be at that day and commenced your new sys tem?-A. The difficulty would be to tell what that day was when the two accounts could be brought together.

Q. Could you not have taken the year 1869 or 1870 as the basis and started from that, as well as to have gone back to 1833 and started from there?-A. The difficulty is to find a starting point at which both accounts would perfectly reconcile, and, considering the magnitude of this public-debt account in 1870, it was simply impossible to determine that without making this examination from the commencement of each loan Then in 1836 the accountants assumed from the best information at hand an amount with which they commenced, and to make that as small as possible they commenced in that year, noted in history as being the period when there was comparatively no public debt.

The correctness of this revision, which was made in the office of the Secretary in 1869 and 1870, and published in the Finance Report for the first time in 1870, is fully established by subsequent examinations. Joseph T. Power, on pages 81 and 82, says:

By the CHAIRMAN:

Q. By Receipts and Expenditures there are $116,000,000, in round numbers, unaccounted for, according to this report. There is the Revolutionary debt, estimated at $76,000,000, in round numbers. Could not that estimate have been $6,000,000 as well as $76,000,000?—A. That amount put in there as "estimated" is the amount which the present government assumed from the old government, $76,000,000.

Mr. DAWES. Does the chairman mean by that question to inquire the data on which that estimate was made?

The CHAIRMAN. Certainly.

Mr. DAWES. If the witness knows what were the data I should like to ascertain them.

The WITNESS. It is a historical fact, and I believe the public accounts have heretofore fixed that sum uniformly at $76,000,000. It was an assumed amount, and until the whole debt was paid it could never be determined how much was outstanding of these loans.

By the CHAIRMAN:

Q. Then you speak of Mississippi stock, the Louisiana purchase, Washington and Georgetown debt, United States Bank stock, Six per cent. Navy stock, Texas purchase, Mexican indemnity, and then add:

"In addition to the foregoing, the following amount is to be added, being composed of discounts suffered in placing loans, interest paid and erroneously charged as principal, and various errors in settling and stating loan accounts. All of these latter and the Revolutionary debt are now being investigated and will be explained in a future report in detail."

That amount is $10,057,406.41, unexplained in any way except in the way I have designated. The changes of figures we have referred to in the debt statement took place in 1870. This report is that of 1871, which says that examinations are yet to take place to explain over $10,000,000. Is it not a little singular that these changes, amounting to cents as well as many dollars, should have taken place a year before this examination was concluded, by which ten million was unaccounted for?-A. That ten million referred to there relates to discrepancies prior to 1836 in all cases; and in the Finance Reports of 1876, on page 18, a thorough examination brings it down to a discrepancy of $942,433.83 "as unenumerated items, consisting of premiums and discount, interest, commissions, brokerage, &c., the full details of which can only be given when the examination of the accounts of the domestic debt of the Revolution is completed."

The final result of the examination, as it now stands, is shown on page 18 of this report. It has all been explained except that $942,433.83, and the examination has not been brought further than that. The clerks have all been taken off this examination, as the reduction of force in the department does not enable us to continue the examination. We have but one clerk who is on all this general detail of statement, and there has been nothing done on it for two years; but I would state that it may be found that some of these accounts have been destroyed in the fire of 1812 and subsequent casualties, by which the accounts of the department have suffered, but even to the very penny it is capable of explanation with that exception. What makes it so very difficult to explain some of these earlier loans is that on the first loan of the government,

which took up the old debt and issued stock for two-thirds the amount of the debt at 6 per cent. and the other third deferred to 1808, the payment of interest was applied to the interest accrued and indents of interest were issued. The law authorizing the redemption of that, according to my recollection, provided for redeeming it in this way: Eight per cent. of the debt was redeemed every year. What was interest was first to be paid out of the 8 per cent. and the balance to go to a reduction of the principal, and thus it makes one of the most complicated accounts possible, and it would take years of examination to get out that single account itself to determine what was interest and what was principal.

By Mr. DAWES:

Q. How old is the transaction?-A. The first loan of 1792.

The same witness, on page 99, says:

Q. You read from the Finance Report of 1871 that the difference had been ascertained, with the exception of about $10,000,000, which would be explained hereafter when ascertained. What has been the result of the further examination ?-A. The Finance Report for 1876, on page 18, gives the explanation. That difference is there fully detailed down to the item of $942,433.83, which consists of unenumerated items, as premiums, interest, discount, &c.

Q. All these differences have been traced down to $942, 433.83, which has not yet been traced upon the books?—A. Yes, sir.

Q. Do you mean to say by that answer that somewhere, and in some account in the books, as heretofore kept, all these items, with the exception of the amount you have just stated, have been found ?-A. Yes, sir.

Q. You stated heretofore that of the first loan there has as yet been found no trace of the difference between the face of the loan and the actual amount received from it? -A. Under the act of Congress of August 4, 1790, what is called the six per cent. stock and deferred stock and the three per cent. stock were issued to take up the domestic debt, and interest accrued thereon, of the Revolution, and the floating debt. That constituted the funded debt of that period. These loans were redeemed in such a way as to make it almost impossible to exactly determine the amount of interest and the amount of principal paid upon the loans, as the first payment was made by redeeming eight per cent. of the bonds, which paid the interest, six per cent., and two per cent. of the principal. This eight per cent. payment each year increased the amount of payment on the principal every year, and diminished the amount of interest. The principal payments were increasing each year, and the interest decreasing; so that that is one of the difficulties of investigating that particular loan, and illustrates the difficulties of accurately determining the amount paid for principal.

The mode of making these tabulated statements, adopted in 1870 and pursued ever since, is the best and most accurate in the opinion of the most competent clerks in the department.

Mr. Guilford says, on page 27:

Q. How much time would such examination require for a given year-say 1869– in your office?-A. It probably would not take over about a month's time; but then I do not see what you could arrive at, for they are statements entirely different; one is a statement of the issues of a loan, and the other is a statement of the actual receipts from that loan, and they have no relation to each other. For instance, if you issue one hundred notes, and charge yourself as owing that amount as soon as you issue them, I think it would be an incorrect statement of your indebtedness. You do not owe anything until those notes have passed into other hands and you have received the money for them. The old statement was a statement of all the obligations which the United States issued. The present statement is the amount of money actually received by the United States, which I think is the true statement.

Q. Then you regard the present mode of statement as an improvement upon the old mode?-A. I do, and very materially so, and I think any business man would coincide in that view.

Q. It shows the true condition of the public debt?-A. Exactly, with the exception that I do not know about the classification of it; it may be wrongly classified, but the modus I consider far superior.

In reference to the relative merits of the two methods of s'ating the debt and the cause of the changes in the figures, Dr. Guilford says:

Q. I think you have stated fully that those changes occurring in the public-debt statement during the years 1870 and 1871, as appears from the tabulated statements

of the Register and the Secretary, arose from the different methods adopted in stating, and from no other cause or reason?-A. That is all; different methods of statement. One method was of stating it by issues and redemptions, and the other a different method of classification.

Q. And you regard the latter method as the best method of stating the debt?—A. The method that now obtains; I do.

The following statement from the testimony of Dr. Guilford further elucidates this subject:

By Mr. BECK:

Q. Your large experience in the office of the Register enables you to speak pretty fully of the duties of that office, and therefore I want you now, as briefly as you can, to tell us what you understand by the first subdivision of section 313 of the Revised Statutes, which provides that "it shall be the duty of the Register to keep the accounts of the receipts and expenditures of public money, and of all debts due to or from the United States."-A. That the Register's office shall be the bookkeepers of the government, to put it as condensed as possible.

Q. And every dollar that comes into the Treasury and every dollar that goes out of the Treasury must appear on the books of the Register?-A. Yes, sir.

Q. And his annual published reports import absolute verity as to those facts ?—A. They are supposed to do so.

Q. That is the object of them?-A. Yes, sir.

Q. He has, from the beginning of the government, or from a very early period of it, male these annual reports to Congress and the country, has he not?-A. Yes, sir.

Q. And up to 1870 the annual report so furnished was all that the country had to rely upon as to the truth of the condition of the Treasury?—A. Yes, sir.

Q. Now you say that in 1871 it was ascertained that all those statements had been false from the beginning of the government?—A. No, sir.

Q. What do you propose to tell us?-A. Not that they were false, but that they were not stated correctly; that they were not stated on a correct basis as far as the public debt was concerned. They stated the amount that the government professed to owe, but not the amount it did actually owe; the difference was that it stated the amount the government proposed to owe from year to year, and not what it did actually owe.

Q. Would, or not, each year then correct the other?-A. It might, and it did in a great measure correct the other, year by year, provided all the loans were negotiated. Q. So that what failed to appear in one year by reason of the issue not having been negotiated would appear in the next when it was?-A. Unless the loan was canceled or not wholly negotiated.

Q. And if it had been either canceled or not wholly negotiated, was it not the duty of the Register in the succeeding year, from that fact appearing, to so alter his statement as to make that appear?-A. He ought to do it, of course.

Q. The Secretary ascertained, or the Register and the Secretary together ascertained, in 1871, that from 1833 there had been wrong statements made to the public annually by the Register as to the truth of the debt?-A. I do not know that you can say it was wrong. For instance, on a certain basis you may say you owe a certain amount of money, and on another basis you may say you owe a different amount of money, and still both would be correct. For instance, you may say, "Lowe $100,000," which might be correct. You may say then that I owe $100,000, but I have $50,000 coming to me, and consequently I only owe $50,000. There would be a difference of $50,000, and yet both statements would be correct. It depends entirely on the basis of your statement. Q. You state this, however, that in 1871, and from that time on, the statement now goes forth to the country that each statement made by the Register from the time he began to make statements up to 1870 was made upon a false basis?-A. According to my opinion, they were.

Q. That is now the statement made to the country each year?-A. Yes, sir.

Q. Is it not true that you have for the years embracing 1869 and 1870, and back of them, in the last eight or nine years, repudiated all the former statements by the Register as to the state of his accounts?—A. Yes, sir; if you call it that, and according to my opinion very correctly.

Joseph T. Powers says on this subject, on page 79:

By the CHAIRMAN:

Q. In your judgment, which is the most proper way to keep the public-debt statement, by Receipts and Expenditures or by Issues and Redemptions, taking in view such transactions as the Massachusetts payment, and the Eads payment for the jetties not long ago, where bonds were issued without any receipts going into the Treasury?-A. The most unreliable way of stating the public debt is by Receipts

and Expenditures; the next more reliable way is by Issues and Redemptions; but the most reliable way, in my opinion, is, as it is now stated, by joining the two together, making one balance and check the other.

The same witness, on page 98 of the testimony, says:

By Mr. DAWES:

Q. In stating to Mr. Davis the difference between the method adopted by the Secretary and the method adopted by the Register of keeping the public debt account, you stated that the Secretary's was by the amount of receipts and expenditures on account of the public debt, and the Register's was by the amount of issues and redemptions, and you stated that the most perfect way of keeping the accounts was by yoking them together, as had been done since 1870. Will you state to us what you mean by that term "yoking them together," which you said was the most perfect way?-A. Under the present system, established in 1870, the Division of Issues and Redemptions reports at the end of every month the amount of the subscriptions to the loan or that they have ready to issue and will issue, and that amount of money is covered into the Treasury and charged to the Treasurer; also, all redemptions made by the Treasurer are credited to that officer in the same month the redemptions are made, so that at all times the one account balances and checks the other. Prior to 1870 money was covered into the Treasury under one fiscal year and bonds were issued in another fiscal year. Under the present system the money is covered into the Treasury in one fiscal year and the bonds are issued as of that same fiscal year, although there may be at the end of the month (as there was at the end of last month) a large amount of unissued bonds; but to keep the account correct the amount is charged to the Treasurer as of that date.

The committee's clerks found numerous instances where the original record books of the department had been altered by the erasure of words and figures and the writing of others over them, and in one or two instances where whole pages of record books had been cut out; but the evidence of the committee's own clerks, as well as of all other persons examined on this point, indicated that all these changes and mutilations occurred in the usual course of business, and were necessary to correct errors previously made.

John W. Gentry, one of the clerks to the committee, examined nine ledgers, and found upon them 2,527 "erasures and apparent alterations." This is the substance of his whole testimony, and the result of it all is the following, from page 176:

Q Have you found in any instance where you have examined the warrants that either a warrant covering in or a warrant paying out money now differs from the entry as it stands on the book?-A. Not as it stands at the present time.

Q. As the entry stands in the book at the present time, the warrant covering in or the warrant paying out agrees with it, so far as you have examined?-A. They agree. Q. You have found no discrepancy in that respect ?-A. None.

That such errors are not uncommon may be fully seen by the following passage from the testimony (page 178) of William Woodville, one of the committee's experts:

WILLIAM WOODVILLE recalled.

By the CHAIRMAN:

Question. Have you made a copy of the warrant No. 919, of 1869?-Answer. Yes, sir; this is it (producing a paper).

Q. Is that a true copy of the original warrant?-A. I am not prepared to say. Mr. Gentry and myself are going to compare it and hand it to the reporter to-morrow, and then we shall testify that it is a true copy.

Q. Did you make it for a true copy?-A. I did make it for a true copy and have copied it carefully, but I have not yet compared it with the original; I will do it; it is intended to be a true copy.

By Mr. DAWES:

Q. If you find in comparing your copy with the original that you have made a wrong entry of a word, you will erase it and put in the right word?-A. Yes, sir; in the copy.

Q. With the intention, of course, of making it right?—A. Yes, sir.