Louisiana, Texas, Massachusetts, Eads' jetties, &c., where no receipts come into the Treasury -A. By making a book-keeper's entry under a title as "public debt for which no receipts come into the Treasury."

Q. Have such entries been made?-A. Such entries have been made as the debt is now stated, in the case of several loans, one of which is the Texas indemnity. Other entries have been made of the same character, by having an amount stated under the law authorizing the expenditures, and this amount carried into the Treasury as receipts from that loan, as in the case of the issue to Eads of $500,000, and in the case of the issue of the certificates of indebtedness of 1870.

Q. If you were called upon to make a statement of the public debt at the end of each fiscal year from 1833 to 1870, and had to make it from Issues and Redemptions or from Receipts and Expenditures, on which system could you make the most correct debt statement, confining it to either one or the other?-A. I could make a much more accurate statement from Receipts and Expenditures, but it would not be so accurate as to the outstanding at the end of a particular year, but much more accurate in gross.

Q. Do I understand that you could not make a correct debt statement commencing with 1833 and coming to 1870 by Issues and Redemptions?— A. I could do it.

Q. Would it be correct?-A. It would be correct.

Q. Then do you mean that you could make a much more correct one by Receipts and Expenditures ?-A. The Issues and Redemptions would give a correct statement so far as the loan was concerned, but all cases of discounts and premiums would not be shown. The Receipts and Expenditures would show those.

Q. How could that affect the public debt? Would you not owe the face of the bond, let the amount be what it would, no more and no less?A. Notes are considered loans and treated as part of the public debt

Q. What notes ?—A. Treasury notes. They are frequently redeemed in fractions. The Issues and Redemptions would show the outstanding more correctly in that case; but the Receipts and Expenditures would show the more correct amount as to the cash paid on a loan.

Q. Has the cash paid on a bond anything to do with the indebtedness of the government?-A. The cash paid upon a note, a part of which has been destroyed and the indebtedness of the government thus canceled, shows that the government has not paid the face value of it, and therefore there is so much saved to the Treasury.

Q. Is it not a fact that, if the government issues a bond and gets fifty cents on the dollar for it or gets a dollar and a half for it, still the face of the bond shows nothing more and nothing less?-A. In that case the Issues and Redemptions account would not show how much money had been received for it, but it would show how much we owed accurately, and when redeemed it would show that the whole amount had been redeemed.

Q. The question is not how much money comes in or goes out of the Treasury, the question is as to the public debt of the country. A bond issued by the government is a debt. If it takes but fifty cents to buy it or if it takes a dollar and a half to redeem it, that is a question of saving or loss to the government. I take it that your explanations go to show that the account could not be kept by Receipts and Expenditures, because then you would have to take money into account, while I am speaking of the debt of the government?-A. I cannot answer that categorically.

Q. Answer it in your own way?-A. The debt would appear by discount account.

Q. Does discount account enter into the indebtedness of the country one way or the other, or is it the face of the bonds you issue?—A. The discount account shows the amount of an issue for which no receipts come into the Treasury; in other words, the receipts into the Treasury plus the discount account would be the face of the issue.

Q. My question was, whether the discount account showed the indebtedness of the government, or whether the bonds issued showed the indebtedness of the country?-A. Both will show it; it requires both.

Q. Explain how a discount account shows the indebtedness of the country when a bond has been issued to show that.-A. The bond also shows it in the Issues account.

Q. What does the public know about your premium or your discount account; they know your bonds, the total of which is the indebtedness of the country; but what do they know of the premium account on the bonds?-A. Both show the same thing.

Q. Explain how a discount account shows the indebtedness of the country when a bond has been issued for the debt. I am not asking how the books are kept in the department, but I want to know how the discount account shows the indebtedness of the country when a bond has been issued.-A. The bond account shows the indebtedness, and the receipts into the Treasury plus the discount account will also show it.

Q. If that be so, how is it that, when you made up in 1871 the receipts and expenditures from the beginning of the government, you were $116,000,000 short, which had to be explained?-A. We were not short $116,000,000.

Q. Will you take up the report of 1871 and see whether the difference between the actual indebtedness of the country at that date and the receipts and expenditures was not $116,000,000.-A. [After examining the Finance Report for 1871.] This statement in 1871 is a balance account of the books, and does not show that that amount is short on one account or another, but that there is this balance which the Receipts and Expenditures account has not taken into consideration; that is, it has not come through receipts into the Treasury, and therefore requires to be explained by certain accounts in the nature of discount accounts.

Q. If they were on the books and kept as you have described to show the actual indebtedness of the country, how is it that they have to be brought into a separate table and explanation made of them?-A. Prior to 1870 there was no discount account kept of the loans, and hence there appear in the receipts and expenditures certain apparent discrepancies in the account.

By Mr. DAWES:

Q. How far back?-A. From the commencement of the government. Q. Up to that time?-A. Up to that period; but from 1836 down, this re-examination of the accounts had in 1870 brought in all these matters to explain the two accounts.

Q. Brought them all in in their proper places?—A. In their proper places to reconcile the two statements.

By the CHAIRMAN:

Q. Mr. Dawes has repeated that these different items were brought in their proper places to reconcile the accounts. How do you know they were brought in in their proper places to reconcile the accounts? Is there not $10,000,000 in that very statement unaccounted for "to be hereafter accounted for "?-A. In the report of 1870, on page 24, for the

year 1849, there is $233,075 brought into the account on account of the war-bounty stock, of which there were no issues charged in the books. In the year 1851 there were $5,000,000 brought into the account on account of the Texas indemnity bonds, no issues charged in the books, and $303,573.92 for the fourth and fifth installments of the Mexican bonds, for which no issue was charged on the books. In the year 1854 there were $9,900 war-bounty stock brought into the account, the repayment for which no expenditure was charged in the books, being the balance due of that loan and $51.67 interest on old funded debt, also a repayment for which there was no expenditure charged on the books. Int year 1861 there was $2,019,776.10 discount brought into the account on the bonds of February 8, 1861, which required to be charged to the loan. And in the year 1868 there was $1,000,000 taken into the account, which should have been charged to the Navy pension-fund, on account of an error in covering it into the Treasury under the Navy Department in place of under the public debt. In 1869 there was $1,000 added to the redemption of the loan on account of a donation made by a Mr. Peters to the government. The bond was canceled, and of course there was no expenditure.

Q. You still leave my question unanswered.-A. I have now given my answer to the first part of the question.

By Mr. DAWES:

Q. You state these things have been brought ir. How do you know they have been? Do you know it from personal knowledge?-A. The table from which I quote shows that they have been brought into the account to make the balance.

By the CHAIRMAN:

Q. Now, as to the other part of my question?-A. There is not $10,000,000 difference in the account after these items have been brought

in.

By Mr. DAWES:

Q. How do you know the items were brought in in their proper place is the question?-A. From the statement which is taken from the books.

Q. And from personal examination of the books and reports?—A. I made personal examination of the books and reports, and my examination verifies the fact that they have been brought in just as they are stated in that table.

Q. The next part of the chairman's question is, Are there not $10,000,000 unaccounted for in that statement?—A. According to that table there is $10,000,000, with the exception of Mexican indemnity, which was explained before. That was excluded from the $10,000,000.

Q. How much was there unaccounted?—A. The $10,057,406.41 is an aggregation of differences.

Q. If the Mexican indemnity is accounted for it is not in the $10,000,000?--A. I do not like to use the term "unaccounted for," as it might convey the idea that I meant that there was a deficiency in the Treasury to that amount of money. I mean that this statement in the Finance Report of 1870, at page 20, shows that in addition to the items given there are $10,057,406.41 of unenumerated and unexplained items, By the CHAIRMAN:

Q. Now read what the report says in regard to that $10,000,000, and let it go down.-A. The report says:

In addition to the foregoing, the following amount is to be added, being composed of discount suffered in placing loans, interest paid and erroneously charged as princi

pal, and various errors in settling and stating loan accounts. All of these latter anp the revolutionary debt are now being investigated, and will be explained in a future report in detail.

Q. Suppose on account of the public debt a thousand dollars was paid into the Treasury for a bond and the bond was lost or stolen before being delivered to the party subscribing, what effect would that have on the account if it was kept by Receipts and Expenditures?—A. The Receipts and Expenditures would show $1,000 owed by the government. Q. And when a second bond was issued or given to the man who paid the thousand dollars in, would that show $2,000 owing or not?—A. The Receipts and Expenditures would not show $2,000.

Q. But the issues of the two bonds would show it ?—A. The issues would show it.

Q. If bonds of any description and amount should in any mysterious way get upon the market without being paid for, would the Receipts and Expenditures show that fact, or would the issues and redemptions show it-A. The Issues and Redemptions would show it, and the Receipts and Expenditures would discover the irregularity by showing the discrepancy in the two accounts.

Q. How would you know that a bond was upon the market or not by Receipts and Expenditures?-A. We would not know from the Receipts and Expenditures account alone.

When bonds are sold as in 1860 and 1861 and 1862, for less than their par value, will Receipts and Expenditures, as the accounts were kept then, show the amount issued?-A. Not without taking into consideration the amount of discount suffered.

Q. Were the books kept in a way at that time that would show it? A. No discount account proper was kept, but it is shown by the difference between the subscriptions and the receipts, one being the complement of the other.

Q. If you pay a premium on bonds when you redeemed them, will the accounts by Receipts and Expenditures show the exact amount of bonds received, or the exact amount of money you pay?—A. It will show both. A premium account has always been kept.

Q. Now explain in your own way, and with some little detail, how bonds are issued.-A. First, a subscriber to a loan makes a deposit with the Treasurer or any designated depositary, for which he receives a certificate of deposit. He sends that certificate of deposit to the office of the Secretary of the Treasury, where it is compared with the return from the Treasurer or depositary, and if found correct, that amount of money is covered into the Treasury by warrant on account of that loan and charged to the Treasurer, and on the authority of that certificate the Secretary issues an order to the Register to deliver a corresponding bond.

By Mr. DAWES:

Q. Now go right on in that connection and tell us all the accounts that are kept in the Treasury concerning that subscription?-A. The first account is kept by the Treasurer of receipts into the Treasury on account of the loan. The next in the Secretary's office in the Division of Public Moneys, which keeps a detailed account of all such subscriptions, and also in the Loan Branch of the Secretary's office where is kept also a detailed account of each subscription and the bonds issued. The Register keeps an account of the issue and redemption of all bonds in his Loan Division, and in his Receipts and Expenditures Division there is also an account of the money paid into the Treasury on account of each loan.

In the Warrant Division of the Secretary's office is kept the account of the receipts into the Treasury on account of the bonds under each loan. Q. Suppose this subscription to have been for $1,000, will you be particular and state what is the form of entry on each book in each bureau, following that $1,000 to the end of the transaction?-A. If the subscription was for $1,000 it would be entered in the Treasurer's office or the office of the depositary as a credit to the loan on account of a subscription and debited to cash.

Q. On one side of the ledger would be a credit of $1,000 from this subscription; it would be stated in that way?-A. Yes, sir; the Treas urer keeps a general account; he would debit himself with so much cash received and credit the loan. In the Secretary's office, in the Division of Public Moneys, that amount is credited as a subscription and charged to the depositary. In the Loan Branch an account is also kept with the loan, showing the subscriptions and issues in detail.

Q. State the form of entry.-A. A detailed registration of each subscription and each bond issued thereon. In the Register's office the loan is charged with the subscription, and the subscriber is credited with the amount, as the Register keeps the accounts with the public creditor, and as long as the bond is outstanding it represents so much due from the United States to the holder. In the Warrant Division the appropriation is charged and the loan is credited with the amount of the bond. The loan is not credited until the bond is redeemed.

Q. There stands against the loan the bond until it is redeemed ?—A. Exactly. These different entries are made all for different purposes in the different branches.

Q. In the Treasurer's account he charges himself with the cash; but what does he credit himself with, or does he stand debtor for the cash?— A. He stands debtor for the cash, and that cash goes into the Treasury. He does not get any credit for it until it is disbursed. The warrant covering this subscription into the Treasury charges the Treasurer with it on his general cash account.

Q. He gets that item balanced when he pays out that sum on a warrant from the Secretary for any disbursement?-A. Yes, sir.

By the CHAIRMAN:

Q. Let me see if I understand the process: A makes application for a $1,000 bond, for which he deposits the $1,000 and accrued interest, if any, with the Treasurer; the Treasurer issues a certificate for a $1,000 bond which goes to the Loan Division of the Secretary's office. The Loan Division then orders the Register to issue a bond for $1,000; the Register issues the bond; and does he deliver it?—A. He delivers it. Q. He issues it and delivers it?-A. Yes, sir; but the seal is added to the bond and checked in the Secretary's office, before it is completed. Q. Before it goes to the Register, or after?-A. After it goes to the Register. The Register and Secretary's office have to complete its execution: the Register signs it, and the Secretary adds the seal.

Q. Who is the last custodian ?-A. The Register delivers it.
Q. And makes a registry of it?-A. Yes, sir.

Q. What check is there on the Loan Branch of the Secretary's office as to the amount of the bond that has been ordered by the Treasurer? In other words, if a bond for $1,000 was subscribed for and the Loan Division gives an order for a $2,000 bond, where is the check to prevent that $2,000 bond from going upon the public?-A. If the order to the Register for the bond recites the certificate of deposit as a $2,000 deposit in place of $1,000, I believe there would be nothing to prevent the