well, and his report and that of the Register did not agree; the discrepancies of the respective tables of statement excited unfavorable comment in the financial circles of England as well as this country, according to an Assistant Secretary of the Treasury. As a consequence, the Register was ordered to make changes in his table so as to make it conform with that of the Secretary, or to omit it altogether.

AN EXTRAORDINARY ORDER.

Here is the letter of order (see testimony of Register Schofield, p. 5):

"SIR: I have to request that the statement of the public debt on the 1st day of January in each of the years from 1791 to 1842, inclusive, and at various dates in subsequent years, to July 1, 1870, as printed on page 276 of the Finance Report for 1870, may be omitted from your tables in the forthcoming reports, or else that it be corrected to conform to Table H on page xxv of the same report for the same year.

66

This request is made in consequence of a letter from the Assistant Secretary of the Treasury, now in London, who complains that these different tables are frequently referred to in England, and the discrepancies between them constantly and unfavorably commented upon.

66

The table found on page xxv is, I believe, as nearly correct as the examination of the accounts up to the present time will enable it to be made, though I am under the impression there will be some changes necessary in order to make it absolutely reliable.

This order certainly was a most singular one, for it commanded the Register of the Treasury, the bookkeeper of the government, either to falsify the results of his books, or to omit a practice which, if it had not the sanction of law, certainly had that of a long standing custom-a custom as old as the government itself, and therefore quite as binding. But the order was obeyed, and the Register's table of statement of the public debt for 1871 presented a wide discrepancy when compared with the one presented by himself in 1870.

This difference is what?

Large enough to startle even a Republican financier?

$247,767,341.66.

Below is presented the extraordinary statement, now a part of the records of the United States Senate:

STATEMENT F.-PREPARED BY SENATE COMMITTEE ON TREASURY ACCOUNTS.

Secretary's and Register's tabulated statements of the public debt for the fiscal years 1833 to 1870, inclusive.

Copied from the Finance Reports of 1870 and 1871.

Total. 20,233,160,879 33 19,985,393,537 67 332,843.895 54 85,076,553 88 20,233,160,879 33
19,985,393,537 67

85,076,553,88

247,767,341 66

19,985,393,537 67
247,767,341 66

WHERE LAYS THE POWER TO ORDER A CHANGE?

When Register Schofield was under examination before the Committee the following testimony was elicited (see testimony, page 9) :

Q. The Constitution of the United States, in the 7th clause of section 9, article 1, provides that "no money shall be drawn from the Treasury but in consequence of appropriations made by law; and a regular statement and account of the receipts and expenditures of all public money shall be published from time to ime;" and section 313 of the Revised Statutes of the United States makes it the

duty of the Register "to keep all accounts of the receipts and expenditures of the public money, and of all debts due to or from the United States." Now please state by what authority, if any, the Secretary or his chief clerk, or anybody else, could direct the Register either to change his reports or conform them to any view that the Secretary or any one else might have as to the proper mode of keeping and publishing them ?-A. I suppose the Secretary las authority to prescribe the manner in which the accounts shall be kept, but I do not suppose that any Secretary has the right to alter the books of the Treasury, and I have always understood that that was never done.

Q. Admitting that the Secretary had the right to prescribe rules for the future action of the Register, had he any sort of authority to give orders as to how past events should be stated or past records changed after they had been published and submitted to Congress under the constitutional requirement ?-A. I think that would be a question which your committee ought to answer in your report. By the CHAIRMAN:

Q. Are you not as Register the official bookkeeper of the government, and final custodian of all warrants and vouchers, whatever may have been paid for any expenditure or receipt of the government ?-A. Yes, sir.

Q. Can any money be received into or paid out of the Treasury without a warrant going through your office ?-A. Moneys are received into the Treasury by warrants and paid out on warrants, which by the act of 1789, Rev. Stat., sec. 305, must be drawn by the Secretary, countersigned by the Comptroller, and registered by the Register.

Q. I ask the general question whether any money can be paid out or received into the Treasury without the warrant going through your office?—A. It cannot. Q. You keep all accounts of the government, do you not, where money, or bonds, or anything which relates to the financial condition of the government is concerned ?-A. Yes, sir.

Q. When was the Register's office established ?—A. At the beginning of the government, by the act of 1789.

Q. When was the Secretary's office as a warrant division established ?-A. The Secretary always issued the warrants, but I think the warrant division as it now exists is of recent origin.

Q. Can you give us the time ?-A. I cannot without looking it up; I think about 1870.

This order of the Secretary of the Treasury resulted in an increase of over $247,000,000 in the public debt, as shown by the statement of it for the year 1871, going back to the year 1833, though during those years the statements made to Congress purported to be an accurate transcript of the books of the Register.

THE MODE OF STATING THE PUBLIC DEBT.

It appears that after 1870, in accordance with the order of the Secretary, there was a difference in the mode of stating the public debt. How these changes were made is well shown by William Guilford, who in the Register's Office had charge of making up the Receipts and Expenditures of the government. His testimony is as follows (see testimony, pp. 25 and 26):

Q. Did you prepare that statement for the committee in the Register's office (handing to witness statement marked Statement No. 2"), being a "statement of the Receipts, Expenditures and outstanding principal of the Public Debt, interest, and premium paid from 1860 to 1877, inclusive, compiled from the books in the Register's office?"-A. Yes, sir; I prepared that with my own hands.

*

Q. I see in a column headed "Amounts to be added to receipts," marked "b,' $2,019,776.10; and another one marked "c," $1,000,000; and then one marked "d," $3,274,051.69, making a total of $6,293,827.79, which you say is "to be added to receipts." What is meant by that ?-A. That is in accordance with the Secretary's Report of 1871. Those amounts do not appear upon our books. They

are added in accordance with the Secretary's order, in order to harmonize the two, as is shown in the report of 1871.

Q. I understand that these three items, amounting to between six and seven million dollars, do not appear upon your books ?-A. They do not.

Q. But are added here by order of the Secretary?-A. So I understand.

Q. How did you state the debt for 1870 and previously?-A. I did not state it myself, but it was stated by the Issues and Redemptions.

Q. How has it been stated since ?-A. It has been stated since by Receipts and Expenditures, and the table has been revised in accordance.

Q. In the revision you speak of, you changed the amounts as they had previously been reported from your office, commencing with 1833 ?-A. Yes, sir.

By Mr. ALLISON:

Q. Do I understand that you have charge of the books in the Register's office showing the Receipts and Expenditures of the government ?—A. No, sir; I compile from the books the Receipts and Expenditures.

Q. It is a part of your duty, then, to make up a tabulated statement annually of the Receipts and Expenditures from the books of the Register ?-A. Yes, sir.

A GREATER MAN THAN HAMILTON.

Alexander Hamilton, when Secretary of the Treasury, adopted the system of stating the public debt by "Issues and Redemptions," but Secretary Boutwell, being a greater man, changed the Hamiltonian system in 1870 to "Receipts and Disbursements,” with a consequent result of increasing the public debt statement by over $247,000,000. The testimony of Major Power, then Chief Clerk of the Treasury Department (p. 61), shows that not only an accurate statement could be made up from the Issues and Redemptions alone, but that it was the best way.

Why was the change in the mode of statement made? No improvement is the result, but upon the contrary a confusion most vexatious, as the following will show :

DIFFERENCE BETWEEN RECEIPTS AND EXPENDITURES.

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):

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.

Q. In the published reports in which year did it first appear to make a discrepancy? A. In 1870.

Q. Under what head? A. Under the head of tables K and L.

Q. What are their names? A. "Statement of the Receipts and Expenditures of the United States.'

Q. That made a discrepancy of $116,000,000 between that statement and what other statement? A. And the amount of the public debt as shown at that time by the debt statement.

Q. This $116,000,000, then, first appeared there? A. Yes, sir.

Mr. Bayley here says that he found a difference of $116,000,000 between the public debt statement at that time and the amount of debt stated from Receipts and Expenditures, and the discrepancy appeared for the first time in the Finance Report of 1871. That is to say, when the Receipts and Expenditures on account of the public debt were compared in 1870, there were $116,000,000 of public debt, according to the Secretary's debt statement, unaccounted for by a statement made up from the Receipts and Expenditures:

From the beginning of the government to June 30, 1871 :

But it is

This certainly is very remarkable bookkeeping, if it be no worse. not alone in these particulars that this looseness of administration is shown. Perceive how little check there is in the issue of bonds and how easy for a dis honest man to enrich himself when the opportunity presents itself.

William Fletcher, Chief of Loan Division, in answer to how bonds were issued, said (see testimony, pp. 126, 127 and 128):

Q. Please explain where, when you went into the office, and where at present, bonds were and are issued? A. I did not know much about it at the time I entered the office, and I do not know that I can tell how bonds were issued fifteen years ago. I was then a clerk of class one and had not the management; neither have I been over the papers so as to be able to tell how bonds were issued then. I can tell how an issue is made now and how it has been for a number of years. Q. State that. A. A deposit is made in the office of the Treasurer, for which he issues a certificate, and upon that certificate our office issues an order on the Register of the Treasury. On that order bonds are issued. I have a certificate here which I can show.

Q. Does the bond come back to your office? A. Yes, sir; and receives the seal and is initialed.

Q. Does it then go back to the Treasurer's office? A. No, sir; not to the Treasurer's. It is delivered in accordance with instructions indorsed on the Treasurer's certificate.

Q. The Treasurer, after giving the order, has nothing further to do with the bond in any way? A. No, sir.

Q. If you did so, the bond would come to you office for putting on the initials? A. Yes, sir.