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Q. I understand there is about $1,000,000 outside of the amount distributed ainong the States in 18361-A. Yes, sir.
Q. Is that the entire amount of defalcations and failures of banks and other things since 1836-a million dollars ?-A. I am not certain at what date the Comptroller declined to charge the amount to the Treasurer's account, and to the parties who were responsible for the defalcation. I think up to a certain time the accounting officers had permitted that, but Mr. Comptroller Tayler declined to do it any more.
Q. That must be of recent date if Comptroller Tavler was the first who did it?-A. It was. I see that the first after the distribution of the surplus revenue was from 1857 to 1869, in the United States Mint.
Q. How is the account of accrued interest upon bonds, when they are sold, kept?-A. Upon a bond sold to-day the party pays the accrued interest to to-day. That comes in as a credit to the interest account of the loan to which the bond belongs.
Q. Do you keep an interest account of each loan ?-A. I do not.
Q. You receive the interest as well as the principal, do you not?-A. Yes, sir.
Q. Do you separate the interest from the principal ?--A. No, sir; we keep our accounts on the warrants of the Secretary entirely. We separate it in the certificate of deposit, which goes to the Secretary
Q. If A buys a bond to-day of $1,000 principal and $10 accrued interinterest, are those two items kept separate ?-A. Yes, sir. Q. By you ?-A. They are kept separate in the transactions by me.
By Mr. DAWES: Q. All the way through, from beginning to end? Is there covered into the Treasury one sum of $1,010, or two sums, one of $1,000 and the other of $10?–A. The public debt covering warrants, my impression is, includes both principal and interest, although they would be separate in the certificate.
By the CHAIRMAN: Q. To put it practically, if you were asked to-day to furnish this committee with the total amount of interest and principal received last year in bonds which were sold, could you furnish it?-A. Not from the books, my impression is, without going through and taking the warrants and separating them.
Q. You understand that when the entry is made upon the books it is made in gross and not in separate entries, one of principal and the other of interest ?-A. Yes, sir. The items of receipts are internal revenue, lands, war, and navy (which are repayments), and miscellaneous. The miscellaneous includes the public debt and other receipts except those before named, which would include principal and interest. I think that was what you requested of me in my statement.
Q. Which you said you could not furnish ?-A. Yes, sir. It was said it could not be furnished as the books had been kept from 1861.
Q. Do I understand that your office cannot furnish this committee with the amount received on account of bonds, principal and interest separately?-A. It might be able to furnish the amount received at my office, but the receipts are all at sub-treasuries and depository banks.
Q. Do they not finally report to your office ?-A. Yes, sir; but I keep my accounts under the law by the warrants of the Secretary of the Treasury. I get their transcripts of account, but it is a cash account.
Q. I understand from you that you cannot separate accurately the interest from the principal of the bonds ?-A. I can for the future.
Q. But for the past 1-A. No, sir; I mean that it is kept separate now. We could probably arrive at it by taking the warrants and going through them, but they were not entered on the books in that way.
Q. No separate account on the books was kept of principal and interest ?-A. Of the receipts, no, sir.
Q. Can your office give the exact amount of bonds now in circulation 1-A. No, sir.
Q. Can they tell me the exact amount of legal-tender and fractional currency in circulation ?-Yes, sir, outstanding. Some might be destroyed and taken out of circulation, and yet be outstanding so far as the government is concerned.
Q. Can your office know when all the coupons of bonds that are in existence are redeemed? In other words, have you a check in your office upon the coupons when they are presented for payment ?-A. Yes, sir; that is, since 1869, I think. Before that we had not.
Q. If you can check off the coupons, why can you not tell us how many bonds are in circulation !-A. Because there might be a great many coupons out that were not paid. If they all came in, I could tell ; but they do not all come in.
Q. I am not asking whether all the coupons come in; I ask you whether you know when a coupon comes to you that it belongs to a bond, and whether you have a record by which you can check it I-A. Not the number of bonds outstanding; I never could do that.
Q. Then you might, so far as your office is concerned, pay coupons of duplicate numbers, or a greater amount of coupons than were out?--A. If they were genuine coupons.
Q. How would you know whether they were genuine or counterfeiton the same principle that you know whether a note is a counterfeit or not?-A. Exactly.
Q. But you have no means of knowing whether a bond has been fraudulently or illegally or wrongfully gotten into circulation or not?-A. Unless in the case of registered bonds, which are caveated, and we might have been notified; but we never should be notified of that, because it is not necessary.
Q. Tell us briefly how bonds are issued, and what connection you have with them when they are issued.-A. I have simply connection with subscriptions made at the Treasury in Washington. A person calls and deposits money in subscription to any loan, and the Treasurer issues his certificate of deposit in duplicate. The duplicate is given to the depositor, the original is sent to the Secretary of the Treasury, and on that the issue of the bond is authorized, and the money covered into the Treasury to the credit of the loan.
Q. How does the certificate get to you, and what do you do with it?A. I issue it as a receipt for the money.
Q. But how does it get to you through what office !-A. Through no office. The man brings his money to the counter, and I give him a receipt for it.
Q. What does he do with that?-A. He holds that as a receipt for his money.
Q. How does he get his bond ?-A. It is sent to him.
Q. How does the certificate which you have given get to the Register? Through what office does it go!-A. I simply send it to the Secretary of the Treasury.
Q. To what bureau in the Secretary's office ?-A. The Loan Division of the Secretary's office.
Q. Do you see that certificate or the bond again?-A. No, sir; I never see the certificate or the bond unless in case of four per cent. bonds. They are often sent to this office for delivery to those who subscribe here.
Q. Do you keep a record of them ?-A. Yes, sir.
Q. How do you know that a bond is issued for the same amount that you give a certificate for?-A. I have not any knowledge of the transaction after having given the receipt.
Q. If A applies for a $1,000 bond and pays you the principal and accrued interest, you give him a receipt for that $1,000. That then goes to the Loan Division of the Secretary's office, as I understand, and the Loan Division issues an order to the Register to issue the bond ?-A. Yes, sir.
Q. The Register issues the bond, and does what with it?-A. Transmits it usually to the subscriber, to the depositor.
By Mr. DAWES: Q. Before he does that, does he not send it to the Secretary?-A. This present loan, as I understand, goes back to the Loan Division of the Secretary's office. A part of the process is then completed; I think put. ting on the seal and an initial.
By the CHAIRMAN: Q. That is the same office that gave the order for the bond ?-A. Yes, sir. Whether they send the bonds or not I am not certain.
Q. Do you consider that a very safe way, or is it your judgment that there ought to be further checks upon the issuing ot bonds ? A. As a matter of fact, the original intention of the Treasury system, I suppose, was that the Register should issue bonds directly upon the Treasurer's receipt or the receipt of some assistant treasurer of the deposit of money in the Treasury.
Q. The question is, do you consider that as well guarded as it ought to be in regard to the issue of bonds, or can you think of any additional guards?-. I think it would be better, if it is possible, to arrange the business in that way that the bonds should be issued directly upon the certificate of deposit. That I would consider an improvement, unless there are some details of the system that would not permit it.
Q. What would be the effect as to an additional check, if the bond before it was delivered had to pass through your hands again for signature or in some way to verify that it was for the same amount that you had received in money? -A. That would do well enough for my office, but the certificates from all sub-treasuries and all national bank deposi. tories do not come to me at all; they go direct to the Secretary.
Q. Do they not go through some sub-treasury?-A. Each assistant treasurer receives deposits as I do. He transmits his original certificate to the Secretary as I do.
Q. Could they not go through the same party that issued the certificate for the purpose of showing whether the amount of the bond agreed with the certificate as sent on? Would not that be an additional checki-A. That would be a check. It would be expensive, of course. It would make two shipments by express necessary, probably.
Q. I do not understand how it would do that.-A. It might involve that. A great many of the deposits are made at this office, and at New York from parties at a distance by check, which is collected before the the certificate of deposit is issued. In my case, as to bonds that come here, I might be able to deliver them directly to the depositor here, or it might be a depositor in some distant place. Take the assistant treas. urer in New York. In the same way we should first send the bond to him and he might be compelled to transmit it to some party outside of New York City. Of course he would be obliged to do it by express, probably.
Q. It would have to go through the same party who held the certificate, let that be who it might?-A. Yes. It would cost one transportation to the sub-treasurer, and then one from there to the depositor, if the depositor lived outside of the place.
Q. Leaving out of view the cost of second shipment, would it be an additional check and an improvement on the present system ?-A. I do not know that I am prepared to give an opinion on that question.
Q. Is there anything other than the integrity of the officer to prevent the Loan Division, if it receives a certificate from you of $1,000, directing the Register to issue a bond of $2,000 ?-A. I do not know that there is, of my own knowledge.
'Q. Is there any check upon the Loan Division from making an order upon the Register to issue to A a bond of any given amount ?-A. Not that I am aware of.
Q. How long has the present system of issuing bonds been in practice !-A. I think ever since there has been a Loan Division. I know it was so in Mr. Boutwell's time.
Q. Was it organized in Mr. Boutwell's time upon the present system?-A. Yes, sir; I believe it was. One reason for the continuance, if it was in existence before, was that in the time of the syndicate they would get certificates for a large amount, say $100,000,000; 1 think the first certificate on which the first call of 5-20s was based was for $100,000,000. Of course the syndicate did not want $100,000,000 bonds issued at once, so they held the $100,000,000 certificate of deposit in the Secretary's office and directed the Register from time to time to issue bonds upon the basis of that certificate. Whether that was the beginning of the system or not I do not know, but it extended back to the time of Mr. Boutwell certainly.
Q. How was it previous to Mr. Boutwell, do you know?-A. My impression always has been that the certificates of deposit went directly to the Register, and that he issued bonds on the faith of the certificates.
By Mr. DAWES: Q. By whom is the order from the Register to the Loan Division signed !-A. I suppose by the chief of the division. Q. Not by the Secretary ?-A. I think not.
By the CHAIRMAN: Q. Are bonds issued withoui money being paid for them at the time they are issued to the syndicate, or banks, or any one else ?-A. That I do not know, of my own knowledge, but I suppose they are issued on the deposit of collateral under the present system.
Q. Do you issue any from your office before the money is covered into the Treasury I-A. No, sir; but a bank will make a certificate of deposit upon which no bonds will be issued until it has either paid the money into the Treasury actually, or has deposited United States bonds in the Treasury as security.
Q. Do your books and those of the Secretary, Register, and Comptroller always agree?-A. I do not know whether they do or not. I suppose they do, with the exception of the time. They might not at any particular definite period, as the business never ceases.
Q. My question would be this: The fiscal year closes June 30, and
you make annual statements to Congress about the 1st of December, five months having elapsed; ought not the different offices, having that much time, to have gotten in anything that was out? Ought they not to agree when the report is made to Congress ?-A. I suppose those accounts ought to agree.
Q. Do you compare with those different offices at stated periods to see whether your accounts agree?-A. I think not. At the close of a quarter we are notified of the last number of the warrant in the quarter, and we close on that; and they are all notified in the same way. The warrants pass through all the offices, and the bookkeepers understand that that number is the last warrant of that quarter.
Q. How often do you count the cash in the Treasury ?-A. We do not count the whole of it at any one time. We do not have any regular period of counting. We always count each teller's and each vault once a month or oftener. We cannot say that on the 10th of the month we will count the cash, because that would be useless.
Q. Since your connection with the office have you counted the cash at any time and found any difference between what was actually on hand and what ought to be from the books ?-A. No material difference.
Q. How do you get legal-tender notes that are in circulation !-A. From the Printing Bureau ; that is, they are delivered to the office by the Printing Bureau. They go into what is called the reserve of United States notes, which is kept in a vault by itself; that is, the stock of finished notes on hand which have not been taken up into the cash as issued, although they are complete.
Q. They are complete when they come to you from the Printing Bureau ?-A. Yes, sir.
Q. What check do you know of in the Printing Bureau on legal-tender notes getting into circulation before they reach you !-A. I do not know of any check except what is kept in the Secretary's office. He has a division which has the proper account, the issuing of paper to the Printing Bureau, and also has a report daily from the Treasurer of the United States of the notes delivered to the Treasurer.
Q. Do you know of any check upon the Printing Bureau, if they were dishonest there, to prevent them from putting legal-tender notes or fractional currency when it was in use, into circulation I-A. This division is intended as a complete check against an over-issue or fraudulent issue.
Q. Which division ?-A. I think it is the currency branch of the Loan Division of the Secretary's office.
Q. Do you give a receipt for the amount you receive from the Printing Bureau ?-A. Yes, sir; by denominations after actual count.
Q. Actual count by yourself ?-A. Yes, sir.
Q. Then you must account for the amount you receive from the Print. ing Bureau ?-A. Yes, sir.
Q. At your discretion, then, are the notes put in circulation ?-A. Under the law the amount of outstanding legal-tender notes is fixed. Whenever we destroy any notes, in order to keep the amount outstanding at that point, we issue an equal amount.
Q. Are you to designate when a note is unfit for further circulation, and issue a new note? Is that discretion left with you!--A. Yes, sir.
By Mr. DAWES: Q. Does the new one bear the same date of the old one in whose place it is put ?-A. No, sir. We are issuing to-day the series of 1878, and each note is an issue of the series of 1878, whatever might have been the series of the note which was retired.